**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

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**FORM 10-Q/A**(AmendmentNo. 1)

| **(Mark One)** | ** ** | ** **                                                                                              |
|----------------|------------|---------------------------------------------------------------------------------------------------------|
| x              | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |

 

**For the quarterly period ended September 28,2006**

**OR**

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

 

**For the transition period from                       to                     **

**Commission file number 333-122636**

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**MARQUEE HOLDINGS INC.**

(Exactname of registrant as specified in its charter)

| **Delaware**                             |   | **77-0642885**      |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or organization)           |   | 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)

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Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yes    x            No    o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act. (Check one):

Largeaccelerated filer  o    Acceleratedfiler  o    Non-acceleratedfiler  x

Indicateby check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).

Yes    o            No    x

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.

|                                              |   | **Number of Shares**                          |
|----------------------------------------------|--------|-----------------------------------------------|
| **Title of Each Class of Common Stock** |   | **Outstanding as of September 28, 2006** |
| Class  A-1 Common Stock, 1¢ par value   |   | 382,475.00000                                 |
| Class  A-2 Common Stock, 1¢ par value   |   | 382,475.00000                                 |
| Class  N Common Stock, 1¢ par value     |   | 5,128.77496                                   |
| Class  L-1 Common Stock, 1¢ par value   |   | 256,085.61252                                 |
| Class  L-2 Common Stock, 1¢ par value   |   | 256,085.61252                                 |

 

 

ExplanatoryNote: Marquee Holdings Inc., hereby amends Parts I and II of its QuarterlyReport on Form 10-Q for the quarterly period ended September 28, 2006to include the amended Item 1. Financial Statements (unaudited), Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations, Item 4. Controls and Procedures and Item 6. Exhibits whichgives effect to the restatement for management-purchased shares and stockoption awards, reflects discontinued operations described in Note 3 andadds disclosure about a related material weakness in our internal control overfinancial reporting. There have been no other changes, events or other transactionsto recognize since the original filing date.

 

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**MARQUEE HOLDINGSINC. AND SUBSIDIARY**

**INDEX**

|             | ** ** | ** **                                                                                      | ** ** | **Page  Number** | ** ** |
|-------------|------------|-------------------------------------------------------------------------------------------------|------------|------------------|------------|
| ** **  |       | **PART I—FINANCIAL  INFORMATION**                                                     |       |             |       |   |   |
| **Item 1.** | ** ** | **Financial  Statements (unaudited)**                                                           |       |             | 3          |   |   |
|        |       | Consolidated Statements  of Operations                                                          |       |             | 6          |   |   |
|        |       | Consolidated  Balance Sheets                                                                    |       |             | 7          |   |   |
|        |       | Consolidated  Statements of Cash Flows                                                          |       |             | 8          |   |   |
|        |       | Notes to  Consolidated Financial Statements                                                     |       |             | 9          |   |   |
| **Item 2.** | ** ** | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations** |       |             | 30         |   |   |
| **Item 4.** | ** ** | **Controls and  Procedures**                                                                    |       |             | 46         |   |   |
| ** **  |       | **PART II—OTHER  INFORMATION**                                                        |       |             |       |   |   |
| **Item 6.** | ** ** | **Exhibits**                                                                                    |       |             | 48         |   |   |
|        | ** ** | **Signatures**                                                                                  |       |             | 49         |   |   |

 

2

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**PART I—FINANCIALINFORMATION**

**Item 1.**                        FinancialStatements. (Unaudited)

**Restatement ofFinancial Statements**

In connection with an ongoing review of its quarterlymark-to-market accounting for its liability classified shares and stock optionawards, the Company determined that its financial statements as of and for the thirteenand twenty-six weeks ended September 28, 2006, September 29, 2005 andas of March 30, 2006 needed to be restated to correct the following items:

*1.**                 Management-purchasedshares*

On December 23, 2004, certain members of managementpurchased common shares in the Company. Due to the existence of certain put options, at the time the shares werepurchased, the Company determined that the management-purchased shares for twomembers of management should be recorded as liabilities with changes in theestimated fair value of those shares recorded through a charge or credit to thestatement of operations. 

Additionally, under a Management Shareholders'Agreement, the Company has a call option allowing it to reacquire shares heldby management (including the management-purchased shares referred to above) fora period of six months following a change in control or the employee'stermination for any reason (including voluntary termination).  For all terminations except voluntarytermination, the call price for the shares is fair value.  For voluntary terminations, the call pricefor the shares is the lower of fair value on the call notice date or the pricepaid.

FAS 123R provides that if the Company has a calloption on shares held by employees and it is probable that the employer wouldprevent the employee from bearing those risks and rewards associated withequity share ownership for a reasonable period of time (six months or more)from the date the share is issued, then liability classification isrequired.  

During February 2007, the Company determined that themanagement-purchased shares should have been recorded as a component ofpermanent equity (rather than as liabilities) because (i) the put optionsreferred to above are conditional and do not contain any embedded redemptionrights and (ii) the Company has not exercised its call option on any of themanagement purchased shares and does not intend to do so.  Accordingly, the Company has restated thefinancial statements as of and for the thirteen and twenty-six weeks endedSeptember 28, 2006 and September 29, 2005 and as of March 30, 2006 toreverse the previously recorded mark to market effects (income) related to thecommon shares purchased by the two members of management that had beenincorrectly classified as liabilities since December 23, 2004 and to reflectthese shares within stockholders' equity. There was no impact on net cash provided by operating activities as aresult of the above mentioned items.

*2.**                 StockOption Awards*

On December 23, 2004, certain members of managementwere granted options to purchase Company common stock.  Due to the existence of certain put options,at the time the stock options were granted, the Company determined that thestock options for two members of management should be recorded as liabilitieswith changes in the estimated fair value of those options recorded through acharge or credit to the statement of operations.  The Company also has a call option relatingto the options (and the underlying shares) similar to the call option referredto above.  

During February 2007, the Company determined that theoptions held by one member of management that were previously recorded as aliability should have been recorded as a component of permanent equity becausethe Company does not intend to exercise its call option on the vested options(or shares obtained upon exercise of the options) and since the put option onthe vested options (or shares obtained 

3

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upon exercise of options)is not within the employee's control. Accordingly, the Company has restated itsfinancial statements as of and for the thirteen and twenty-six weeks endedSeptember 28, 2006 and September 29, 2005 and as of March 30, 2006 toreverse the previously recorded mark to market effects relating to the stockoptions awarded to this member of management that had been incorrectlyclassified as liabilities and to reflect these options as additional paid-incapital (rather than as liabilities). There was no impact on net cash providedby operating activities as a result of the above mentioned items. 

The Company has restated its financial statements asof and for the thirteen and twenty-six week periods ended September 28,2006 and September 29, 2005 and as of March 30, 2006 to record thenet effect of the adjustments discussed above. The net effects of theadjustments recorded to restate the financial statements are summarized asfollows (dollars in thousands):

| **Thirteen Weeks Ended September 28, 2006** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase (decrease) in  Net Loss                                     |       |       | $          | (188)                                          |       |                             |       | $         | 214        |   |   | $ | 26 |   |
|                                                                      |            |            |            |                                                |            |                                  |            |           |            |  |  |  |  |  |  |  |

 

| **Thirteen Weeks Ended September 29, 2005** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase (decrease) in  Net Loss                                     |       |       | $          | 547                                            |       |                             |       | $         | 722        |   |   | $ | 1,269 |   |
|                                                                      |            |            |            |                                                |            |                                  |            |           |            |  |  |  |  |  |  |  |

 

| **Twenty-Six Weeks Ended September 28, 2006** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Decrease in Other  Long-Term Liabilities (2).                          |       |       | $          | 816                                            |       |                             |       | $         | 3,040      |   |   | $ | 3,856 |   |
| Increase in  Additional Paid-in Capital (3)                            |       |       | $          | 3,341                                          |       |                             |       | $         | 3,814      |   |   | $ | 7,155 |   |
| Increase in  accumulated deficit                                       |       |       | $          | 2,114                                          |       |                             |       | $         | 1,894      |   |   | $ | 4,008 |   |
| Decrease (increase) in  Net Loss                                       |       |       | $          | (411)                                          |       |                             |       | $         | 1,120      |   |   | $ | 709 |   |

 

| **Twenty-Six Weeks Ended September 29, 2005** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase in  Deferred Income Taxes                                     |       |       | $          | 450                                            |       |                             |       | $    | 450        |   |   | $ | 900 |   |
| Decrease in Other  Long-Term Liabilities (2).                          |       |       | $          | 456                                            |       |                             |       | $    | 2,578      |   |   | $ | 3,034 |   |
| Increase in  Additional Paid-in Capital (3)                            |       |       | $          | 1,453                                          |       |                             |       | $         | 3,750      |   |   | $ | 5,203 |   |
| Increase in Net Loss                                                   |       |       | $          | 547                                            |       |                             |       | $         | 722        |   |   | $ | 1,269 |   |

 

(1)          Included within OtherG&A

(2)          Refer to discussion ofthe adjustment for the management purchased shares and stock option awardsabove

(3)          Refer to discussion ofthe adjustment for stock option awards above

All previously reported amounts affected by therestatement that appear elsewhere in these footnotes to the consolidatedfinancial statements have also been restated. See Note 1 to the Consolidated FinancialStatements for more information.

4

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**Reclassificationfor Discontinued Operations**

**As previously disclosed in our Form 10 Q for the periodended December 28, 2006, we have divested of certain operations that met thecriteria for reporting as discontinued operations. Under generally acceptedaccounting principles, we are required to reclassify previously reported priorperiod financial statements to reflect the discontinued operations on a basiscomparable to the current presentation. Generally accepted accountingprinciples require our financial statements that were included in our fiscal2006 Annual Report on Form 10 K to be updated for discontinued operations inour fiscal 2007 Annual Report on Form 10 K. We have previously provided certainfinancial information that has been revised in advance of filing our fiscal 2007Annual Report on Form 10 K in our Form 8-K filed on February 22, 2007 and ourForm 8-K/A as filed on April 16, 2007. The historical financialinformation included herein has been revised and updated from its originalpresentation to incorporate the following:**

**·****     **thereclassification of the results of operations for certain assets which we soldon May 11, 2006, that meet the criteria for discontinued operations to bepresented as such in accordance with Statement of Financial AccountingStandards No. 144, Accounting for the Impairment or Disposal of Long LivedAssets and the addition to Note 3 to the Notes to the Consolidated FinancialStatements in Item 1, Financial Statements (unaudited);

**·****     **reclassificationsin Management's Discussion and Analysis of Financial Condition and Results ofOperations in Item 2, Management’s Discussion and Analysis of FinancialCondition and Results of Operations;

**The information included in thisAmendment No. 1 on Form 10-Q/A is presented in connection with the changesdescribed above. The information, with respect to the reclassification fordiscontinued operations, contained in this Amendment No. 1 on Form 10-Q/A ispresented for the thirteen and twenty-six weeks ended September 28, 2006 andSeptember 29, 2005, and except as indicated above with respect torestatements, this information has not been updated to reflect financialresults subsequent to that date or any other changes since the date of theCompany's Current Report on Form 8-K dated February 22, 2007. Other thanthe reclassification and footnote disclosures discussed above related to thereclassification for discontinued operations and the changes related to therestatements discussed above there is no change to the Company's previouslyreported consolidated operating results. There is no change to the Company’s previously reported consolidatedfinancial condition or cash flows except as discussed above related to therestatement.  Therefore, this filingshould be read together with other documents we have filed with the SECsubsequent to the filing of the original Current Report on Form 8-K filed onFebruary 22, 2007 and our Form 8-K/A as filed on April 16, 2007.  Information in such reports and documentsupdates and supersedes certain information contained in this document.**

5

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**MARQUEEHOLDINGS INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS**

**(inthousands)**

| ** **                                                      | ** ** | **Thirteen Weeks Ended**           | ** ** | **Twenty-six Weeks Ended**         | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                      | ** ** | **September 28,  2006**

**(restated)** | ** ** | **September 29,  2005**

**(restated)** | ** ** | **September 28,  2006**

**(restated)** | ** ** | **September 29,  2005**

**(restated)** | ** ** |
| ** **                                                      | ** ** | **(unaudited)**                              | ** ** | **(unaudited)**                              | ** ** |
| Revenues                                                        |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                                                      |       |                                         | $          | 422,573                                      |       |   |   | $ | 262,223 |   |   |   | $ | 858,213 |   |   |   | $ | 532,177 |   |   |
| Concessions                                                     |       |                                         | 176,745    |                                         |       |   | 102,761 |   |   |   | 357,789 |   |   |   | 211,899 |   |   |
| Other revenue                                                   |       |                                         | 32,233     |                                         |       |   | 22,435 |   |   |   | 61,383 |   |   |   | 47,145 |   |   |
| Total revenues                                                  |       |                                         | 631,551    |                                         |       |   | 387,419 |   |   |   | 1,277,385 |   |   |   | 791,221 |   |   |
| Costs and Expenses                                              |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Film exhibition costs                                           |       |                                         | 219,220    |                                         |       |   | 139,491 |   |   |   | 447,171 |   |   |   | 288,118 |   |   |
| Concession costs                                                |       |                                         | 20,777     |                                         |       |   | 11,383 |   |   |   | 42,792 |   |   |   | 22,904 |   |   |
| Operating expense                                               |       |                                         | 163,259    |                                         |       |   | 105,157 |   |   |   | 318,440 |   |   |   | 208,811 |   |   |
| Rent                                                            |       |                                         | 111,753    |                                         |       |   | 75,179 |   |   |   | 224,072 |   |   |   | 150,984 |   |   |
| General and  administrative:                                    |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and acquisitions  costs                                  |       |                                         | 2,074      |                                         |       |   | 960 |   |   |   | 5,826 |   |   |   | 2,645 |   |   |
| Management fee                                                  |       |                                         | 1,250      |                                         |       |   | 500 |   |   |   | 2,500 |   |   |   | 1,000 |   |   |
| Other                                                           |       |                                         | 14,268     |                                         |       |   | 8,975 |   |   |   | 30,041 |   |   |   | 19,079 |   |   |
| Preopening expense                                              |       |                                         | 2,087      |                                         |       |   | 728 |   |   |   | 3,129 |   |   |   | 736 |   |   |
| Theatre and other  closure expense                              |       |                                         | 5,667      |                                         |       |   | 346 |   |   |   | 7,710 |   |   |   | 980 |   |   |
| Restructuring charges                                           |       |                                         | —     |                                         |       |   | 839 |   |   |   | — |   |   |   | 3,908 |   |   |
| Depreciation and  amortization                                  |       |                                         | 64,634     |                                         |       |   | 36,600 |   |   |   | 128,530 |   |   |   | 72,547 |   |   |
| Disposition of assets  and other gains                          |       |                                         | (7,286     | )                                            |       |   | (103 | ) |   |   | (5,850 | ) |   |   | (770 | ) |   |
| Total costs and expenses                                        |       |                                         | 597,703    |                                         |       |   | 380,055 |   |   |   | 1,204,361 |   |   |   | 770,942 |   |   |
| Other expense (income)                                          |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                                                           |       |                                         | (5,974     | )                                            |       |   | (4,931 | ) |   |   | (7,434 | ) |   |   | (6,047 | ) |   |
| Interest expense                                                |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate borrowings                                            |       |                                         | 56,600     |                                         |       |   | 30,035 |   |   |   | 112,800 |   |   |   | 60,332 |   |   |
| Capital and financing  lease obligations                        |       |                                         | 1,190      |                                         |       |   | 1,224 |   |   |   | 2,518 |   |   |   | 2,423 |   |   |
| Investment income                                               |       |                                         | (3,234     | )                                            |       |   | (975 | ) |   |   | (3,605 | ) |   |   | (479 | ) |   |
| Total other expense                                             |       |                                         | 48,582     |                                         |       |   | 25,353 |   |   |   | 104,279 |   |   |   | 56,229 |   |   |
| Loss from continuing  operations before income taxes            |       |                                         | (14,734    | )                                            |       |   | (17,989 | ) |   |   | (31,255 | ) |   |   | (35,950 | ) |   |
| Income tax provision (benefit)                                  |       |                                         | 1,900      |                                         |       |   | (6,900 | ) |   |   | 2,200 |   |   |   | (15,300 | ) |   |
| Earnings (loss) from  continuing operations                     |       |                                         | (16,634    | )                                            |       |   | (11,089 | ) |   |   | (33,455 | ) |   |   | (20,650 | ) |   |
| Loss from discontinued  operations, net of income tax provision |       |                                         | (239       | )                                            |       |   | (3,407 | ) |   |   | 2,440 |   |   |   | (25,037 | ) |   |
| Net loss                                                        |       |                                         | $          | (16,873                                      | )          |   |   | $ | (14,496 | ) |   |   | $ | (31,015 | ) |   |   | $ | (45,687 | ) |   |
| Basic and diluted loss  per share of common stock:              |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing  operations                                |       |                                         | $          | (12.97                                       | )          |   |   | $ | (14.41 | ) |   |   | $ | (26.09 | ) |   |   | $ | (26.84 | ) |   |
| Earnings (loss) from  discontinued operations                   |       |                                         | (0.19      | )                                            |       |   | (4.43 | ) |   |   | 1.90 |   |   |   | (32.54 | ) |   |
| Net loss per share                                              |       |                                         | $          | (13.16                                       | )          |   |   | $ | (18.84 | ) |   |   | $ | (24.19 | ) |   |   | $ | (59.38 | ) |   |
| Average shares  outstanding:                                    |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                               |       |                                         | 1,282.25   |                                         |       |   | 769.35 |   |   |   | 1,282.25 |   |   |   | 769.35 |   |   |

 

*See Notesto Consolidated Financial Statements.*

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**MARQUEE HOLDINGSINC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(in thousands, except share data)**

| ** **                                                                                                                                                                                            | ** ** | **September 28,  2006  (restated)** | ** ** | **March 30,  2006  (restated)** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                                                                                                                                            | ** ** | **(unaudited)**                          | ** ** |
| **ASSETS**                                                                                                                                                                                            |       |                                     |       |                                 |       |   |   |
| Current assets:                                                                                                                                                                                       |       |                                     |       |                                 |       |   |   |
| Cash and  equivalents                                                                                                                                                                                 |       |                                     | $          | 310,978                              |       |   | $ | 232,366 |   |
| Receivables, net  of allowance for doubtful accounts of $901 as of September 28, 2006 and  $1,339 as of March 30, 2006                                                                      |       |                                     | 58,298     |                                 |       | 54,725 |   |
| Other current  assets                                                                                                                                                                                 |       |                                     | 32,623     |                                 |       | 34,647 |   |
| Current assets  held for sale                                                                                                                                                                         |       |                                     | —     |                                 |       | 4,726 |   |
| Total current  assets                                                                                                                                                                                 |       |                                     | 401,899    |                                 |       | 326,464 |   |
| Property,  net                                                                                                                                                                                        |       |                                     | 1,337,343  |                                 |       | 1,501,048 |   |
| Intangible  assets, net                                                                                                                                                                               |       |                                     | 253,400    |                                 |       | 273,308 |   |
| Goodwill                                                                                                                                                                                              |       |                                     | 2,095,399  |                                 |       | 2,018,318 |   |
| Deferred  income taxes                                                                                                                                                                                |       |                                     | 20,403     |                                 |       | 3,564 |   |
| Other  long-term assets                                                                                                                                                                               |       |                                     | 167,469    |                                 |       | 172,312 |   |
| Noncurrent  assets held for sale                                                                                                                                                                      |       |                                     | 7,300      |                                 |       | 112,337 |   |
| Total assets                                                                                                                                                                                          |       |                                     | $          | 4,283,213                            |       |   | $ | 4,407,351 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                                                        |       |                                     |       |                                 |       |   |   |
| Current liabilities:                                                                                                                                                                                  |       |                                     |       |                                 |       |   |   |
| Accounts payable                                                                                                                                                                                      |       |                                     | $          | 113,570                              |       |   | $ | 150,383 |   |
| Accrued expenses  and other liabilities                                                                                                                                                               |       |                                     | 148,640    |                                 |       | 157,227 |   |
| Deferred revenues  and income                                                                                                                                                                         |       |                                     | 79,792     |                                 |       | 95,812 |   |
| Current maturities  of corporate borrowings and capital and financing lease obligations                                                                                                               |       |                                     | 39,864     |                                 |       | 30,804 |   |
| Current  liabilities held for sale                                                                                                                                                                    |       |                                     | —     |                                 |       | 8,233 |   |
| Total current  liabilities                                                                                                                                                                            |       |                                     | 381,866    |                                 |       | 442,459 |   |
| Corporate  borrowings                                                                                                                                                                                 |       |                                     | 2,425,584  |                                 |       | 2,428,996 |   |
| Capital  and financing lease obligations                                                                                                                                                              |       |                                     | 51,429     |                                 |       | 64,016 |   |
| Other  long-term liabilities                                                                                                                                                                          |       |                                     | 419,986    |                                 |       | 417,335 |   |
| Noncurrent liabilities held for sale                                                                                                                                                                  |       |                                     | —     |                                 |       | 11,903 |   |
| Total liabilities                                                                                                                                                                                     |       |                                     | 3,278,865  |                                 |       | 3,364,709 |   |
| Stockholders’ equity:                                                                                                                                                                            |       |                                     |       |                                 |       |   |   |
| Class A-1  Common Stock voting ($0.01 par value, 1,500,000 shares authorized;  382,475.00000 shares issued and outstanding as of September 28, 2006 and  March 30, 2006)               |       |                                     | 4          |                                 |       | 4 |   |
| Class A-2  Common Stock voting ($0.01 par value, 1,500,000 shares authorized;  382,475.00000 shares issued and outstanding as of September 28, 2006 and  March 30, 2006)               |       |                                     | 4          |                                 |       | 4 |   |
| Class N  Common Stock nonvoting ($0.01 par value, 375,000 shares authorized;  5,128.77496 shares issued and outstanding as of September 28, 2006 and  March 30, 2006)                  |       |                                     | —     |                                 |       | — |   |
| Class L-1  Common Stock voting ($0.01 par value, 1,500,000 shares authorized;  256,085.61252 shares issued and outstanding as of September 28, 2006 and  March 30, 2006)               |       |                                     | 3          |                                 |       | 3 |   |
| Class L-2  Common Stock voting ($0.01 par value, 1,500,000 shares authorized;  256,085.61252 shares issued and outstanding as of September 28, 2006 and  March 30, 2006, respectively) |       |                                     | 3          |                                 |       | 3 |   |
| Additional paid-in  capital                                                                                                                                                                           |       |                                     | 1,312,189  |                                 |       | 1,313,899 |   |
| Accumulated other  comprehensive loss                                                                                                                                                                 |       |                                     | (16,227    | )                                    |       | (10,658 | ) |
| Accumulated  deficit                                                                                                                                                                                  |       |                                     | (291,628   | )                                    |       | (260,613 | ) |
| Total  stockholders’ equity                                                                                                                                                                      |       |                                     | 1,004,348  |                                 |       | 1,042,642 |   |
| Total liabilities and stockholders’ equity                                                                                                                                                       |       |                                     | $          | 4,283,213                            |       |   | $ | 4,407,351 |   |

 

*See Notesto Consolidated Financial Statements.*

7

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**MARQUEE HOLDINGSINC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)**

| ** **                                                                                 | ** ** | **Twenty-six Weeks Ended**         | ** ** |
|--------------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                                 | ** ** | **September 28,  2006**

**(restated)** | ** ** | **September 29,  2005**

**(restated)** | ** ** |
| ** **                                                                                 | ** ** | **(unaudited)**                              | ** ** |
| **INCREASE IN CASH AND  EQUIVALENTS**                                                      |       |                                         |       |   |   |   |   |   |   |
| **Cash flows from operating  activities:**                                                 |       |                                         |       |   |   |   |   |   |   |
| Net  loss                                                                                  |       |                                         | $          | (31,015 | ) |   |   | $ | (45,687 | ) |   |
| Adjustments to reconcile  net loss to net cash provided by (used in) operating activities: |       |                                         |       |   |   |   |   |   |   |
| Depreciation  and amortization                                                             |       |                                         | 129,075    |   |   |   | 76,173 |   |   |
| Amortization  of discount on corporate borrowings                                          |       |                                         | 11,064     |   |   |   | 9,811 |   |   |
| Non-cash  portion of stock-based compensation                                              |       |                                         | 2,056      |   |   |   | 1,744 |   |   |
| Non-cash  portion of pension and postretirement expense                                    |       |                                         | 3,219      |   |   |   | 2,007 |   |   |
| Deferred  income taxes                                                                     |       |                                         | (596       | ) |   |   | 4,225 |   |   |
| Equity  in losses from investments                                                         |       |                                         | 2,455      |   |   |   | 659 |   |   |
| Disposition  of assets and other gains                                                     |       |                                         | (620       | ) |   |   | (95 | ) |   |
| Change  in assets and liabilities, net of effects from acquisition:                        |       |                                         |       |   |   |   |   |   |   |
| Receivables                                                                                |       |                                         | 6,001      |   |   |   | (5,264 | ) |   |
| Other  assets                                                                              |       |                                         | (2,353     | ) |   |   | 23,438 |   |   |
| Accounts  payable                                                                          |       |                                         | (29,723    | ) |   |   | (40,120 | ) |   |
| Accrued  expenses and other liabilities                                                    |       |                                         | (29,512    | ) |   |   | (32,976 | ) |   |
| Other,  net                                                                                |       |                                         | 5,602      |   |   |   | 1,046 |   |   |
| Net  cash provided by (used in) operating activities                                       |       |                                         | 65,653     |   |   |   | (5,039 | ) |   |
| **Cash flows from investing  activities:**                                                 |       |                                         |       |   |   |   |   |   |   |
| Capital  expenditures                                                                      |       |                                         | (64,105    | ) |   |   | (44,437 | ) |   |
| Construction  project costs:                                                               |       |                                         |       |   |   |   |   |   |   |
| Reimbursable  by landlord                                                                  |       |                                         | —     |   |   |   | (5,414 | ) |   |
| Reimbursed  by landlord                                                                    |       |                                         | —     |   |   |   | 1,734 |   |   |
| Proceeds  on disposal—discontinued operations                                         |       |                                         | —     |   |   |   | 53,456 |   |   |
| Proceeds  on disposal—continuing operations                                           |       |                                         | 99,639     |   |   |   | — |   |   |
| Net  change in reimbursable construction advances                                          |       |                                         | (4,984     | ) |   |   | (4,856 | ) |   |
| Other,  net                                                                                |       |                                         | (3,211     | ) |   |   | (1,021 | ) |   |
| Net  cash provided by (used in) investing activities                                       |       |                                         | 27,339     |   |   |   | (538 | ) |   |
| **Cash flows from financing  activities:**                                                 |       |                                         |       |   |   |   |   |   |   |
| Proceeds  from sale/leasebacks                                                             |       |                                         | —     |   |   |   | 6,661 |   |   |
| Repayment  of Cinemex Credit Facility                                                      |       |                                         | (744       | ) |   |   | — |   |   |
| Principal  payments under capital and financing lease obligations                          |       |                                         | (1,849     | ) |   |   | (1,717 | ) |   |
| Principal  payments under mortgage                                                         |       |                                         | (55        | ) |   |   | — |   |   |
| Payments  on Term Loan B                                                                   |       |                                         | (3,250     | ) |   |   | — |   |   |
| Change  in construction payables                                                           |       |                                         | (3,307     | ) |   |   | 2,449 |   |   |
| Deferred  financing costs                                                                  |       |                                         | (2,062     | ) |   |   | (938 | ) |   |
| Net  cash provided by (used in) financing activities                                       |       |                                         | (11,267    | ) |   |   | 6,455 |   |   |
| Effect  of exchange rate changes on cash and equivalents                                   |       |                                         | (3,113     | ) |   |   | 100 |   |   |
| **Net increase in cash and equivalents**                                                   |       |                                         | 78,612     |   |   |   | 978 |   |   |
| **Cash and equivalents at beginning of period**                                            |       |                                         | 232,366    |   |   |   | 72,945 |   |   |
| **Cash and equivalents at end of period**                                                  |       |                                         | $          | 310,978 |   |   |   | $ | 73,923 |   |   |
| **SUPPLEMENTAL DISCLOSURES OF  CASH FLOW INFORMATION**                                     |       |                                         |       |   |   |   |   |   |   |
| **Cash paid during the period  for:**                                                      |       |                                         |       |   |   |   |   |   |   |
| Interest  (including amounts capitalized of $968 and $1,332)                               |       |                                         | $          | 99,453 |   |   |   | $ | 54,062 |   |   |
| Income  taxes paid                                                                         |       |                                         | 546        |   |   |   | 850 |   |   |
| **Schedule of non-cash investing and  financing activities:**                              |       |                                         |       |   |   |   |   |   |   |
| Assets capitalized under  EITF 97-10                                                       |       |                                         | $          | 7,060 |   |   |   | $ | 5,414 |   |   |

 

*SeeNotes to Consolidated Financial Statements.*

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**MARQUEE HOLDINGS INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 28, 2006(Unaudited)**

**NOTE 1—BASIS OFPRESENTATION**

Marquee Holdings Inc. (“Holdings”) is an investmentvehicle owned by J.P. Morgan Partners, LLC, Apollo Management, L.P. and certainrelated investment funds and affiliates of Bain Capital Partners, The CarlyleGroup and Spectrum Equity Investors. Holdings was formed for the purpose ofacquiring AMC Entertainment Inc. (“AMCE”) pursuant to a definitive mergeragreement approved by AMCE’s Board of Directors on July 22, 2004. Holdingsis a holding company with no operations of its own and it has one direct subsidiary,AMCE.

AMCE, through its direct and indirect subsidiaries,including American Multi-Cinema, Inc. (“AMC”) and its subsidiaries’, GrupoCinemex, S.A. de C.V. (“Cinemex”) and AMCE Entertainment International, Inc.(“AMCEI”) and its subsidiaries (collectively with Holdings and AMCE, unless thecontext otherwise requires, the “Company”), is principally involved in thetheatrical exhibition business and owns, operates or has interests in theatreslocated in the United States and Canada (“U.S. and Canada” formerly, NorthAmerican theatrical exhibition) and in Mexico, Argentina, Brazil, Chile,Uruguay, China (Hong Kong), France, Spain and the United Kingdom. The Companydiscontinued its operations in Japan during the first quarter of fiscal 2006.The Company’s U.S. and Canada theatrical exhibition business is conductedthrough AMC and AMCEI. The Company’s international theatrical exhibitionbusiness is conducted primarily through Cinemex and AMCEI. See Note 2 fora discussion of the Merger with Loews on January 26, 2006.

The accompanying unaudited consolidated financialstatements have been prepared in response to the requirements of Form 10-Qand should be read in conjunction with Holdings’ annual report on Form 10-K/Afor the year (52 weeks) ended March 30, 2006. In the opinion ofmanagement, these interim financial statements reflect all adjustments(consisting of normal recurring adjustments) necessary for a fair statement ofthe Company’s financial position and results of operations. Due to the seasonalnature of the Company’s business, results for the twenty-six weeks ended September 28,2006 are not necessarily indicative of the results to be expected for thefiscal year (52 weeks) ended March 29, 2007.

The March 30, 2006 consolidated balance sheetdata was derived from the audited balance sheet included in the Form 10-K/A,but does not include all disclosures required by generally accepted accountingprinciples.

Certain amounts have been reclassified from priorperiod consolidated financial statements to conform with the current periodpresentation.

***Restatement:***In connection with an ongoingreview of its quarterly mark-to-market accounting for its liability classifiedshares and stock option awards, the Company determined that its financialstatements as of and for the thirteen and twenty-six weeks ended September 28,2006 and September 29, 2005 and as of March 30, 2006 to be restatedto correct the following items:

*1.**                 Management-purchasedshares*

On December 23, 2004, certain members of managementpurchased common shares in the Company. Due to the existence of certain put options, at the time the shares werepurchased, the Company determined that the management-purchased shares for twomembers of management should be recorded as liabilities with changes in theestimated fair value of those shares recorded through a charge or credit to thestatement of operations. 

Additionally, under a Management Shareholders'Agreement, the Company has a call option allowing it to reacquire shares heldby management (including the management-purchased shares referred to 

9

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above) for a period of sixmonths following a change in control or the employee's termination for any reason(including voluntary termination).  Forall terminations except voluntary termination, the call price for the shares isfair value.  For voluntary terminations,the call price for the shares is the lower of fair value on the call noticedate or the price paid.

FAS 123R provides that if the Company has a calloption on shares held by employees and it is probable that the employer wouldprevent the employee from bearing those risks and rewards associated withequity share ownership for a reasonable period of time (six months or more)from the date the share is issued, then liability classification isrequired.  

During February 2007, the Company determined that themanagement-purchased shares should have been recorded as a component ofpermanent equity (rather than as liabilities) because (i) the put optionsreferred to above are conditional and do not contain any embedded redemptionrights and (ii) the Company has not exercised its call option on any ofthe management purchased shares and does not intend to do so. Accordingly, theCompany has restated the financial statements as of and for the thirteen and twenty-sixweeks ended September 28, 2006 and September 29, 2005 and as ofMarch 30, 2006 to reverse the previously recorded mark to market effects(income) related to the common shares purchased by the two members ofmanagement that had been incorrectly classified as liabilities since December23, 2004 and to reflect these shares within stockholders' equity. There was noimpact on net cash provided by operating activities as a result of the above mentioneditems.

*2.**                 StockOption Awards*

On December 23, 2004, certain members of managementwere granted options to purchase Company common stock. Due to the existence ofcertain put options, at the time the stock options were granted, the Companydetermined that the stock options for two members of management should berecorded as liabilities with changes in the estimated fair value of thoseoptions recorded through a charge or credit to the statement of operations. TheCompany also has a call option relating to the options (and the underlyingshares) similar to the call option referred to above.  

During February 2007, the Company determined that theoptions held by one member of management that were previously recorded as aliability should have been recorded as a component of permanent equity becausethe Company does not intend to exercise its call option on the vested options(or shares obtained upon exercise of the options) and since the put option onthe vested options (or shares obtained upon exercise of options) is not withinthe employee's control. Accordingly, the Company has restated its financialstatements as of and for the thirteen and twenty-six weeks endedSeptember 28, 2006 and September 29, 2005 and as of March 30,2006 to reverse the previously recorded mark to market effects relating to thestock options awarded to this member of management that had been incorrectlyclassified as liabilities and to reflect these options as additional paid-incapital (rather than as liabilities). There was no impact on net cash providedby operating activities as a result of the above mentioned items. 

10

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TheCompany has restated its financial statements for the thirteen and twenty-sixweeks ended September 28, 2006 and September 29, 2005 and as ofMarch 30, 2006 to record the net effect of the adjustments discussedabove. The net effects of the adjustments recorded to restate the financialstatements are summarized as follows (dollars in thousands):

| **Thirteen Weeks Ended September 28, 2006** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase (decrease) in  Net Loss                                     |       |       | $          | (188)                                          |       |                             |       | $         | 214        |   |   | $ | 26 |   |
|                                                                      |            |            |            |                                                |            |                                  |            |           |            |  |  |  |  |  |  |  |

 

 

| **Thirteen Weeks Ended September 29, 2005** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase (decrease) in  Net Loss                                     |       |       | $          | 547                                            |       |                             |       | $         | 722        |   |   | $ | 1,269 |   |
|                                                                      |            |            |            |                                                |            |                                  |            |           |            |  |  |  |  |  |  |  |

 

| **Twenty-Six Weeks Ended September 28, 2006** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Decrease in Other  Long-Term Liabilities (2).                          |       |       | $          | 816                                            |       |                             |       | $         | 3,040      |   |   | $ | 3,856 |   |
| Increase in Additional  Paid-in Capital (3)                            |       |       | $          | 3,341                                          |       |                             |       | $         | 3,814      |   |   | $ | 7,155 |   |
| Increase in accumulated  deficit                                       |       |       | $2,114     |                                           |       |                             | $1,894     |      |       | $4,008 |   |
| Decrease (increase) in  Net Loss                                       |       |       | $          | (411)                                          |       |                             |       | $         | 1,120      |   |   | $ | 709 |   |

 

| **Twenty-Six Weeks Ended September 29, 2005** | ** ** | ** ** | ** ** | **Stock based  Compensation  Expense(1)** | ** ** | **Other Expense  (Income)** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| Increase in  Deferred Income Taxes                                     |       |       | $          |   450                                     |       |                             |       | $    |   450 |   |   | $ |   900 |   |
| Decrease in Other  Long-Term Liabilities (2).                          |       |       | $          |   456                                     |       |                             |       | $    | 2,578      |   |   | $ | 3,034 |   |
| Increase in  Additional Paid-in Capital (3)                            |       |       | $          | 1,453                                          |       |                             |       | $         | 3,750      |   |   | $ | 5,203 |   |
| Increase in Net Loss                                                   |       |       | $          |   547                                     |       |                             |       | $         |   722 |   |   | $ | 1,269 |   |

 

(1)          Included within OtherG&A

(2)          Refer to discussion ofthe adjustment for the management purchased shares and stock option awardsabove

(3)          Refer to discussion ofthe adjustment for stock option awards above

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

11

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| ** ** | ** ** | **Thirteen Weeks Ended  September 28, 2006** | ** ** | **Thirteen Weeks Ended  September 29, 2005** | ** ** |
|------------|------------|------------------------------------------------------------------|------------|------------------------------------------------------------------|------------|
| ** ** | ** ** | **As**                                                           | ** ** | ** **                                                       | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** | **As** | ** ** | ** ** | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** |
| ** ** | ** ** | **Reported**                                                     | ** ** | **Restatement(1)**                                               | ** ** | **Operations(2)** | ** ** | **& Adjusted** | ** ** | **Reported** | ** ** | **Restatement(1)** | ** ** | **Operations(2)** | ** ** | **& Adjusted** | ** ** |
| Revenues   |       |                                                             |       |                                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            |            |                                                                  |            |                                                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Admissions                                                         |   | $        | 422,573 |   |   | $      | — |   |   |   | $      | — |     |   |   | $      | 422,573 |   |   |   | $      | 270,414 |   |   |    | $      | — |   |    |   | $      | (8,191 | )      |   |   | $ | 262,223 |   |   |
|--------------------------------------------------------------------|--------|----------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|---|---------|--------|--------|
| Concessions                                                        |   | 176,745  |    |   | — |   |   |   | — |   |   |   | 176,745  |   |   |   | 105,679 |   |   |   | — |    |   |   | (2,918  | )      |   |   | 102,761 |   |   |
| Other revenue                                                      |   | 32,233   |    |   | — |   |   |   | — |   |   |   | 32,233   |   |   |   | 22,844  |   |   |   | — |    |   |   | (409    | )      |   |   | 22,435  |   |   |
| Total revenues                                                     |   | 631,551  |    |   | — |   |   |   | — |   |   |   | 631,551  |   |   |   | 398,937 |   |   |   | — |    |   |   | (11,518 | )      |   |   | 387,419 |   |   |
| Costs and Expenses                                                 |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Film exhibition costs                                              |   | 219,220  |    |   | — |   |   |   | — |   |   |   | 219,220  |   |   |   | 143,545 |   |   |   | — |    |   |   | (4,054  | )      |   |   | 139,491 |   |   |
| Concession costs                                                   |   | 20,777   |    |   | — |   |   |   | — |   |   |   | 20,777   |   |   |   | 12,039  |   |   |   | — |    |   |   | (656    | )      |   |   | 11,383  |   |   |
| Operating expense                                                  |   | 163,259  |    |   | — |   |   |   | — |   |   |   | 163,259  |   |   |   | 107,822 |   |   |   | — |    |   |   | (2,665  | )      |   |   | 105,157 |   |   |
| Rent                                                               |   | 111,753  |    |   | — |   |   |   | — |   |   |   | 111,753  |   |   |   | 78,006  |   |   |   | — |    |   |   | (2,827  | )      |   |   | 75,179  |   |   |
| General and administrative:                                        |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Merger and acquisition costs                                       |   | 2,074    |    |   | — |   |   |   | — |   |   |   | 2,074    |   |   |   | 960     |   |   |   | — |    |   |   | —  |   |   |   | 960     |   |   |
| Management fee                                                     |   | 1,250    |    |   | — |   |   |   | — |   |   |   | 1,250    |   |   |   | 500     |   |   |   | — |    |   |   | —  |   |   |   | 500     |   |   |
| Other                                                              |   | 14,080   |    |   | 188    |   |   |   | — |   |   |   | 14,268   |   |   |   | 8,005   |   |   |   | 997    |    |   |   | (27     | )      |   |   | 8,975   |   |   |
| Preopening expense                                                 |   | 2,087    |    |   | — |   |   |   | — |   |   |   | 2,087    |   |   |   | 728     |   |   |   | — |    |   |   | —  |   |   |   | 728     |   |   |
| Theatre and other closure expense                                  |   | 5,667    |    |   | — |   |   |   | — |   |   |   | 5,667    |   |   |   | 346     |   |   |   | — |    |   |   | —  |   |   |   | 346     |   |   |
| Restructuring charge                                               |   | —   |    |   | — |   |   |   | — |   |   |   | —   |   |   |   | 839     |   |   |   | — |    |   |   | —  |   |   |   | 839     |   |   |
| Depreciation and amortization                                      |   | 64,634   |    |   | — |   |   |   | — |   |   |   | 64,634   |   |   |   | 37,956  |   |   |   | — |    |   |   | (1,356  | )      |   |   | 36,600  |   |   |
| Impairment of long-lived assets                                    |   | —   |    |   | — |   |   |   | — |   |   |   | —   |   |   |   | —  |   |   |   | — |    |   |   | —  |   |   |   | —  |   |   |
| Disposition of assets and other gains                              |   | (7,047   | )       |   | — |   |   |   | (239   | )      |   |   | (7,286   | )      |   |   | (103    | )      |   |   | — |    |   |   | —  |   |   |   | (103    | )      |   |
| Total costs and expenses                                           |   | 597,754  |    |   | 188    |   |   |   | (239   | )      |   |   | 597,703  |   |   |   | 390,643 |   |   |   | 997    |    |   |   | (11,585 | )      |   |   | 380,055 |   |   |
| Other expense  (income)                                            |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Other income                                                       |   | (5,760   | )       |   | (214   | )      |   |   | — |   |   |   | (5,974   | )      |   |   | (6,103  | )      |   |   | 1,172  |    |   |   | —  |   |   |   | (4,931  | )      |   |
| Interest expense                                                   |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Corporate borrowings                                               |   | 56,600   |    |   | — |   |   |   | — |   |   |   | 56,600   |   |   |   | 30,035  |   |   |   | — |    |   |   | —  |   |   |   | 30,035  |   |   |
| Capital and financing lease obligations                            |   | 1,190    |    |   | — |   |   |   | — |   |   |   | 1,190    |   |   |   | 1,695   |   |   |   | — |    |   |   | (471    | )      |   |   | 1,224   |   |   |
| Investment income                                                  |   | (3,234   | )       |   | — |   |   |   | — |   |   |   | (3,234   | )      |   |   | (976    | )      |   |   | — |    |   |   | 1       |   |   |   | (975    | )      |   |
| Total other expense                                                |   | 48,796   |    |   | (214   | )      |   |   | — |   |   |   | 48,582   |   |   |   | 24,651  |   |   |   | 1,172  |    |   |   | (470    | )      |   |   | 25,353  |   |   |
| Earnings (loss)  from continuing operations before income taxes    |   | (14,999  | )       |   | 26     |   |   |   | 239    |   |   |   | (14,734  | )      |   |   | (16,357 | )      |   |   | (2,169 | )       |   |   | 537     |   |   |   | (17,989 | )      |   |
| Income tax  provision (benefit)                                    |   | 1,900    |    |   | — |   |   |   | — |   |   |   | 1,900    |   |   |   | (5,900  | )      |   |   | (900   | )       |   |   | (100    | )      |   |   | (6,900  | )      |   |
| Earnings (loss)  from continuing operations                        |   | (16,899  | )       |   | 26     |   |   |   | 239    |   |   |   | (16,634  | )      |   |   | (10,457 | )      |   |   | (1,269 | )       |   |   | 637     |   |   |   | (11,089 | )      |   |
| Earnings (loss)  from discontinued operations, net of income taxes |   | —   |    |   | — |   |   |   | (239   | )      |   |   | (239     | )      |   |   | (2,770  | )      |   |   | — |    |   |   | (637    | )      |   |   | (3,407  | )      |   |
| Net earnings  (loss)                                               |   | $        | (16,899 | )      |   | $      | 26     |   |   |   | $      | — |     |   |   | $      | (16,873 | )      |   |   | $      | (13,227 | )      |   |    | $      | (1,269 | )      |    |   | $      | — |   |   |   | $ | (14,496 | )      |   |
| Basic and diluted loss per share of common stock:                  |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Loss from continuing operations                                    |   | $        | (13.18  | )      |   |   |   |   |   |   |   |   |     | $      | (12.97 | )      |    |   | $      | (13.59 | )      |    |   |   |    |   |   |   |    |   |   | $      | (14.41 | )      |   |
| Loss from discontinued operations                                  |   | —   |    |   |   |   |   |   |   |   |   |   | (0.19    | )      |   |   | (3.60   | )      |   |   |   |    |   |   |    |   |   |   | (4.43   | )      |   |
| Net loss per share                                                 |   | $        | (13.18  | )      |   |   |   |   |   |   |   |   |     | $      | (13.16 | )      |    |   | $      | (17.19 | )      |    |   |   |    |   |   |   |    |   |   | $      | (18.84 | )      |   |
| Average shares outstanding:                                        |   |     |    |   |   |   |   |   |   |   |   |   |     |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Basic and diluted                                                  |   | 1,282.25 |    |   |   |   |   |   |   |   |   |   | 1,282.25 |   |   |   | 769.35  |   |   |   |   |    |   |   |    |   |   |   | 769.35  |   |   |

 

12

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| ** ** | ** ** | **Twenty-six Weeks Ended** | ** ** | **Twenty-six Weeks Ended** | ** ** |
|------------|------------|--------------------------------------|------------|--------------------------------------|------------|
| ** ** | ** ** | **September 28, 2006**     | ** ** | **September 29, 2005**     | ** ** |
| ** ** | ** ** | **As**                               | ** ** | ** **                           | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** | **As** | ** ** | ** ** | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** |
| ** ** | ** ** | **Reported**                         | ** ** | **Restatement(1)**                   | ** ** | **Operations(2)** | ** ** | **& Adjusted** | ** ** | **Reported** | ** ** | **Restatement(1)** | ** ** | **Operations(2)** | ** ** | **& Adjusted** | ** ** |
| Revenues   |       |                                 |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            |            |                                      |            |                                      |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Admissions                                        |   | $         | 862,105 |   |   | $      | — |   |   |   | $      | (3,892 | )         |   |   | $      | 858,213 |   |   |   | $      | 546,820 |   |   |    | $      | — |   |    |   | $      | (14,643 | )      |   |   | $ | 532,177 |   |   |
|---------------------------------------------------|--------|-----------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---|---------|--------|--------|
| Concessions                                       |   | 359,081   |    |   | — |   |   |   | (1,292 | )      |   |   | 357,789   |   |   |   | 217,012 |   |   |   | — |    |   |   | (5,113  | )      |   |   | 211,899 |   |   |
| Other revenue                                     |   | 61,555    |    |   | — |   |   |   | (172   | )      |   |   | 61,383    |   |   |   | 47,887  |   |   |   | — |    |   |   | (742    | )      |   |   | 47,145  |   |   |
| Total revenues                                    |   | 1,282,741 |    |   | — |   |   |   | (5,356 | )      |   |   | 1,277,385 |   |   |   | 811,719 |   |   |   | — |    |   |   | (20,498 | )      |   |   | 791,221 |   |   |
| Costs and Expenses                                |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Film exhibition costs                             |   | 449,072   |    |   | — |   |   |   | (1,901 | )      |   |   | 447,171   |   |   |   | 295,262 |   |   |   | — |    |   |   | (7,144  | )      |   |   | 288,118 |   |   |
| Concession costs                                  |   | 43,047    |    |   | — |   |   |   | (255   | )      |   |   | 42,792    |   |   |   | 23,768  |   |   |   | — |    |   |   | (864    | )      |   |   | 22,904  |   |   |
| Operating expense                                 |   | 319,629   |    |   | — |   |   |   | (1,189 | )      |   |   | 318,440   |   |   |   | 214,343 |   |   |   | — |    |   |   | (5,532  | )      |   |   | 208,811 |   |   |
| Rent                                              |   | 225,482   |    |   | — |   |   |   | (1,410 | )      |   |   | 224,072   |   |   |   | 156,692 |   |   |   | — |    |   |   | (5,708  | )      |   |   | 150,984 |   |   |
| General and administrative:                       |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Merger and acquisition costs                      |   | 5,826     |    |   | — |   |   |   | — |   |   |   | 5,826     |   |   |   | 2,645   |   |   |   | — |    |   |   | —  |   |   |   | 2,645   |   |   |
| Management fee                                    |   | 2,500     |    |   | — |   |   |   | — |   |   |   | 2,500     |   |   |   | 1,000   |   |   |   | — |    |   |   | —  |   |   |   | 1,000   |   |   |
| Other                                             |   | 29,680    |    |   | 411    |   |   |   | (50    | )      |   |   | 30,041    |   |   |   | 18,199  |   |   |   | 997    |    |   |   | (117    | )      |   |   | 19,079  |   |   |
| Preopening expense                                |   | 3,129     |    |   | — |   |   |   | — |   |   |   | 3,129     |   |   |   | 736     |   |   |   | — |    |   |   | —  |   |   |   | 736     |   |   |
| Theatre and other closure expense                 |   | 7,710     |    |   | — |   |   |   | — |   |   |   | 7,710     |   |   |   | 980     |   |   |   | — |    |   |   | —  |   |   |   | 980     |   |   |
| Restructuring charge                              |   | —    |    |   | — |   |   |   | — |   |   |   | —    |   |   |   | 3,908   |   |   |   | — |    |   |   | —  |   |   |   | 3,908   |   |   |
| Depreciation and amortization                     |   | 129,075   |    |   | — |   |   |   | (545   | )      |   |   | 128,530   |   |   |   | 75,467  |   |   |   | — |    |   |   | (2,920  | )      |   |   | 72,547  |   |   |
| Disposition of assets and other gains             |   | (8,500    | )       |   | — |   |   |   | 2,650  |   |   |   | (5,850    | )      |   |   | (770    | )      |   |   | — |    |   |   | —  |   |   |   | (770    | )      |   |
| Total costs and expenses                          |   | 1,206,650 |    |   | 411    |   |   |   | (2,700 | )      |   |   | 1,204,361 |   |   |   | 792,230 |   |   |   | 997    |    |   |   | (22,285 | )      |   |   | 770,942 |   |   |
| Other expense (income)                            |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Other income                                      |   | (6,314    | )       |   | (1,120 | )      |   |   | — |   |   |   | (7,434    | )      |   |   | (7,219  | )      |   |   | 1,172  |    |   |   | —  |   |   |   | (6,047  | )      |   |
| Interest expense                                  |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Corporate borrowings                              |   | 112,800   |    |   | — |   |   |   | — |   |   |   | 112,800   |   |   |   | 60,332  |   |   |   | — |    |   |   | —  |   |   |   | 60,332  |   |   |
| Capital and financing lease obligations           |   | 2,738     |    |   | — |   |   |   | (220   | )      |   |   | 2,518     |   |   |   | 3,380   |   |   |   | — |    |   |   | (957    | )      |   |   | 2,423   |   |   |
| Investment income                                 |   | (3,609    | )       |   | — |   |   |   | 4      |   |   |   | (3,605    | )      |   |   | (480    | )      |   |   | — |    |   |   | 1       |   |   |   | (479    | )      |   |
| Total other expense                               |   | 105,615   |    |   | (1,120 | )      |   |   | (216   | )      |   |   | 104,279   |   |   |   | 56,013  |   |   |   | 1,172  |    |   |   | (956    | )      |   |   | 56,229  |   |   |
| Earnings (loss)  from continuing operations       |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| before income  taxes                              |   | (29,524   | )       |   | 709    |   |   |   | (2,440 | )      |   |   | (31,255   | )      |   |   | (36,524 | )      |   |   | (2,169 | )       |   |   | 2,743   |   |   |   | (35,950 | )      |   |
| Income tax  provision (benefit)                   |   | 2,200     |    |   | — |   |   |   | — |   |   |   | 2,200     |   |   |   | (14,200 | )      |   |   | (900   | )       |   |   | (200    | )      |   |   | (15,300 | )      |   |
| Earnings (loss)  from continuing operations       |   | (31,724   | )       |   | 709    |   |   |   | (2,440 | )      |   |   | (33,455   | )      |   |   | (22,324 | )      |   |   | (1,269 | )       |   |   | 2,943   |   |   |   | (20,650 | )      |   |
| Earnings (loss)  from discontinued operations,    |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| net of income  taxes                              |   | —    |    |   | — |   |   |   | 2,440  |   |   |   | 2,440     |   |   |   | (22,094 | )      |   |   | — |    |   |   | (2,943  | )      |   |   | (25,037 | )      |   |
| Net earnings  (loss)                              |   | $         | (31,724 | )      |   | $      | 709    |   |   |   | $      | — |      |   |   | $      | (31,015 | )      |   |   | $      | (44,418 | )      |   |    | $      | (1,269 | )      |    |   | $      | —  |   |   |   | $ | (45,687 | )      |   |
| Basic and diluted loss per share of common stock: |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Loss from continuing operations                   |   | $         | (24.74  | )      |   |   |   |   |   |   |   |   |      | $      | (26.09 | )      |    |   | $      | (29.02 | )      |    |   |   |    |   |   |   |    |   |   | $       | (26.84 | )      |   |
| Earnings (loss) from discontinued operations      |   | —    |    |   |   |   |   |   |   |   |   |   | 1.90      |   |   |   | (28.72  | )      |   |   |   |    |   |   |    |   |   |   | (32.54  | )      |   |
| Net loss per share                                |   | $         | (24.74  | )      |   |   |   |   |   |   |   |   |      | $      | (24.19 | )      |    |   | $      | (57.74 | )      |    |   |   |    |   |   |   |    |   |   | $       | (59.38 | )      |   |
| Average shares outstanding:                       |   |      |    |   |   |   |   |   |   |   |   |   |      |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Basic and diluted                                 |   | 1,282.25  |    |   |   |   |   |   |   |   |   |   | 1,282.25  |   |   |   | 769.35  |   |   |   |   |    |   |   |    |   |   |   | 769.35  |   |   |

 

13

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| ** **                                | ** ** | **As of September 28, 2006** | ** ** | **As of March 30, 2006** | ** ** |
|-------------------------------------------|------------|--------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                | ** ** | **As**                                           | ** ** | ** **                                   | ** ** | **As** | ** ** | **As** | ** ** | ** ** | ** ** | **As** | ** ** |
| ** **                                | ** ** | **Reported**                                     | ** ** | **Restatement(1)**                           | ** ** | **Restated** | ** ** | **Reported** | ** ** | **Restatement(1)** | ** ** | **Restated** | ** ** |
| **Assets**                                | ** ** | ** **                                       | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Current assets:                           |       |                                             |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                      |       | $                                                | 310,978    |                                         |       | $ | — |   |   | $ | 310,978 |   | $ | 232,366 |   |   | $ | — |   |   | $ | 232,366 |   |
| Receivables                               |       | 58,298                                           |       |                                         | —     |   |   | 58,298 |   | 54,725 |   |   | — |   |   | 54,725 |   |
| Other current assets                      |       | 32,623                                           |       |                                         | —     |   |   | 32,623 |   | 34,647 |   |   | — |   |   | 34,647 |   |
| Current assets held for  sale             |       | —                                           |       |                                         | —     |   |   | — |   | 4,726 |   |   | — |   |   | 4,726 |   |
| Total current  assets                     |       | 401,899                                          |       |                                         | —     |   |   | 401,899 |   | 326,464 |   |   | — |   |   | 326,464 |   |
| Property                                  |       | 1,337,343                                        |       |                                         | —     |   |   | 1,337,343 |   | 1,501,048 |   |   |   |   |   | 1,501,048 |   |
| Intangible assets                         |       | 253,400                                          |       |                                         | —     |   |   | 253,400 |   | 273,308 |   |   | — |   |   | 273,308 |   |
| Goodwill                                  |       | 2,095,399                                        |       |                                         | —     |   |   | 2,095,399 |   | 2,018,318 |   |   | — |   |   | 2,018,318 |   |
| Deferred income taxes                     |       | 20,403                                           |       |                                         | —     |   |   | 20,403 |   | 3,564 |   |   | — |   |   | 3,564 |   |
| Other long-term assets                    |       | 167,469                                          |       |                                         | —     |   |   | 167,469 |   | 172,312 |   |   | — |   |   | 172,312 |   |
| Non-current assets held  for sale         |       | 7,300                                            |       |                                         | —     |   |   | 7,300 |   | 112,337 |   |   | — |   |   | 112,337 |   |
| Total assets                              |       | $                                                | 4,283,213  |                                         |       | $ | — |   |   | $ | 4,283,213 |   | $ | 4,407,351 |   |   | $ | — |   |   | $ | 4,407,351 |   |
| **Liabilities and Stockholders'  Equity** |       |                                             |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                      |       |                                             |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable                          |       | $                                                | 113,570    |                                         |       | $ | — |   |   | $ | 113,570 |   | $ | 150,383 |   |   | $ | — |   |   | $ | 150,383 |   |
| Accrued expenses and  other liabilities   |       | 148,640                                          |       |                                         | —     |   |   | 148,640 |   | 157,227 |   |   | — |   |   | 157,227 |   |
| Deferred revenues and  income             |       | 79,792                                           |       |                                         | —     |   |   | 79,792 |   | 95,812 |   |   | — |   |   | 95,812 |   |
| Current maturities                        |       | 39,864                                           |       |                                         | —     |   |   | 39,864 |   | 30,804 |   |   | — |   |   | 30,804 |   |
| Current liabilities held  for sale        |       | —                                           |       |                                         | —     |   |   | — |   | 8,233 |   |   | — |   |   | 8,233 |   |
| Total current  liabilities                |       | 381,866                                          |       |                                         | —     |   |   | 381,866 |   | 442,459 |   |   | — |   |   | 442,459 |   |
| Corporate borrowings                      |       | 2,425,584                                        |       |                                         | —     |   |   | 2,425,584 |   | 2,428,996 |   |   | — |   |   | 2,428,996 |   |
| Capital and financing  lease obligations  |       | 51,429                                           |       |                                         | —     |   |   | 51,429 |   | 64,016 |   |   | — |   |   | 64,016 |   |
| Other long-term  liabilities              |       | 423,842                                          |       |                                         | (3,856     | ) |   | 419,986 |   | 419,474 |   |   | (2,139 | ) |   | 417,335 |   |
| Non-current liabilities  held for sale    |       | —                                           |       |                                         | —     |   |   | — |   | 11,903 |   |   | — |   |   | 11,903 |   |
| Total liabilities                         |       | 3,282,721                                        |       |                                         | (3,856     | ) |   | 3,278,865 |   | 3,366,848 |   |   | (2,139 | ) |   | 3,364,709 |   |
| Stockholders' equity:                     |       |                                             |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock                              |       | 14                                               |       |                                         | —     |   |   | 14 |   | 14 |   |   | — |   |   | 14 |   |
| Additional paid-in  capital               |       | 1,305,034                                        |       |                                         | 7,155      |   |   | 1,312,189 |   | 1,307,752 |   |   | 6,147 |   |   | 1,313,899 |   |
| Accumulated other  comprehensive income   |       | (16,227                                          | )          |                                         | —     |   |   | (16,227 | ) | (10,658 | ) |   | — |   |   | (10,658 | ) |
| Accumulated deficit                       |       | (288,329                                         | )          |                                         | (3,299     | ) |   | (291,628 | ) | (256,605 | ) |   | (4,008 | ) |   | (260,613 | ) |
| Total  stockholders' equity               |       | 1,000,492                                        |       |                                         | 3,856      |   |   | 1,004,348 |   | 1,040,503 |   |   | 2,139 |   |   | 1,042,642 |   |
| Total liabilities  and equity             |       | $                                                | 4,283,213  |                                         |       | $ | — |   |   | $ | 4,283,213 |   | $ | 4,407,351 |   |   | $ | — |   |   | $ | 4,407,351 |   |

----

(1)   As discussed in this Note, the Companyrestated its financial statements for management-purchased shares and stockoption awards.

(2)   As discussed in Note 3—Discontinued Operations,the Company classified the results of operations of its Iberia theatres asdiscontinued operations during the thirteen weeks ended December 28, 2006.As a result, conforming classifications are made for these periods. Thereclassification for discontinued operations was not an error in the priorfinancial statements, rather it was performed to be consistent with thetreatment in the annual financial statements.

***Discontinued Operations:  ***The results of operations for theCompany’s discontinued operations have been eliminated from the Company’scontinuing operations and classified as discontinued operations for each periodpresented within the Company’s Consolidated Statements of Operations.  See Note 3—Discontinued Operations.

***Assets held forSale:******  ***Inconjunction with the Merger (see Note 2), the Company entered into a FinalJudgment with the Antitrust Division of the United States Department of Justiceand judgments and con

14

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sent decrees with variousStates. These judgments and decrees required the Company to hold separate anddivest itself of 10 certain theatres. As a result, the Company classified theassets and liabilities of these theatres as *heldfor sale*. The Company sold six of these theatres during the 26 weeksended September 28, 2006, exchanged two of these theatres with anothertheatrical exhibitor for two theatres from that exhibitor in different markets,retained one of the theatres pursuant to an agreement reached with theCalifornia Attorney General and will close one remaining theatre during thethird quarter of fiscal 2007.

The Company entered into an agreement to sell itsconsolidated operations in Spain and Portugal and as a result, the Company classifiedthe assets and liabilities of these theatres as *held for sale* as of March 30, 2006. These sales weresubsequently consummated on May 11, 2006.

Additionally, the Company has classified certain realestate as available for sale based on an active marketing program to sell the assets,which is recorded in noncurrent assets held for sale.

***Loss pershare:******  ***Basicloss per share is computed by dividing net loss by the weighted-average numberof common shares outstanding. Diluted loss per share includes the effects ofoutstanding stock options, if dilutive. Options to purchase 39,476.72872 and38,876.272 shares of common stock at $1,000.00 per share were outstandingduring the thirteen and twenty-six weeks ended September 28, 2006 andSeptember 29, 2005, respectively, but were not included in the computationof diluted loss per share because the options were anti-dilutive.

**NOTE 2—ACQUISITIONS**

On June 20, 2005,Holdings entered into a merger agreement with LCE Holdings, Inc. (“LCEHoldings”), the parent of Loews Cineplex Entertainment Corporation (“Loews”),pursuant to which LCE Holdings merged with and into Holdings, with Holdingscontinuing as the holding company for the merged businesses, and Loews mergedwith and into the AMCE, with AMCE continuing after the merger (the “Merger” andcollectively, the “Mergers”). The transaction closed on January 26, 2006.Upon completion of the Mergers, the stockholders of Holdings immediately priorto the Mergers, including affiliates of CCMP Capital Advisors, LLC (formerly J.P.Morgan Partners, LLC) and Apollo Management, L.P., held approximately 60% ofthe outstanding capital stock of Holdings, and the stockholders of LCE Holdingsimmediately prior to the Merger, including affiliates of Bain Capital Partners,LLC, The Carlyle Group and Spectrum Equity Investors (collectively with CCMPCapital Advisors, LLC and Apollo Management, L.P., the “Sponsors”),held approximately 40% of the outstanding capital stock of Holdings.

The Company has accounted for the Merger as a purchasein accordance with SFAS No. 141, *BusinessCombinations,* for an estimated purchase price of $537,171,000.Results of operations of Loews are included in the Company’s ConsolidatedStatements of Operations from January 26, 2006. The acquisition included112 theatres with 1,308 screens in the United States, 40 theatres with 443screens in Mexico (Cinemex), 4 managed/joint venture theatres with 55 screensin the United States and a 50% interest in Yelmo Cineplex, S.L. operating 27theatres with 311 screens in Spain that is accounted for using the equitymethod. The Merger did not constitute a change in control.

15

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Thefollowing is a summary of the preliminary allocation of the purchase price tothe assets and liabilities of LCE Holdings based on management’s judgment afterevaluating several factors, including actuarial estimates for pensionliabilities, estimates of fair value for issuance of common stock and avaluation assessment prepared by a valuation specialist:

| **(In thousands)**                  | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------------------------------------|------------|------------|------------|------------|------------|
| Cash and equivalents                     |       | $          | 142,512    |       |
| Current assets                           |       | 44,872     |       |
| Property, net                            |       | 727,400    |       |
| Intangible assets, net                   |       | 107,269    |       |
| Goodwill                                 |       | 828,309    |       |
| Deferred income taxes                    |       | 22,403     |       |
| Other long-term  assets                  |       | 50,362     |       |
| Current liabilities                      |       | (193,568   | )          |
| Corporate borrowings                     |       | (1,054,192 | )          |
| Capital and financing  lease obligations |       | (32,524    | )          |
| Other long-term  liabilities             |       | (105,672   | )          |
| Total estimated purchase price           |       | $          | 537,171    |       |

 

Amounts recorded forgoodwill were not subject to amortization, and were not considered deductiblefor income tax purposes. Goodwill in the amount of $650,080,000 and $178,229,000was recorded at the Company’s U.S. and Canada theatrical exhibition operatingsegment and at the Cinemex reporting unit in the International operatingsegment, respectively. During the thirteen weeks ended September 28, 2006,the Company recorded fair value adjustments of approximately $109 millionto its preliminary allocation of purchase price related to property, which hadthe effect of reducing property and increasing goodwill. The adjustments tofair value resulted in an increase in deferred tax assets of $15 millionfor Cinemex. In connection with the adjustment to fair value, the Companyrecorded a cumulative adjustment to depreciation expense of $2.2 million. Thepreliminary allocation of purchase price and estimates of fair values may potentiallychange in the future as additional information becomes available.

**Pro Forma Effect of Merger Transactions**

The proforma financial information presented below sets forth the Company’s pro formaconsolidated statement of operations for the thirteen and twenty-six weeksended September 29, 2005 to give effect to the Mergers and the relateddebt issuances as if each transaction occurred on April 1, 2005. Suchinformation is presented for comparative purposes only and does not purport torepresent what the Company’s results of operations would actually have been hadthese transactions occurred on the date indicated or to project its results ofoperations for any future period or date.

| ** **                     | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended**                                 | ** ** |
|--------------------------------|------------|------------------------------------|------------|----------------------------------------------------------------------|------------|
| **(In thousands)**        | ** ** | ** **                         | ** ** | **Pro Forma    September 29, 2005   (restated)** | ** ** | **Pro Forma    September 29, 2005   (restated)** | ** ** |
| Revenues                       |       |                               |       |                                                                 |       |   |   |   |   |
| Admissions                     |       |                               | $398,280   |                                                                 |       |   | $ | 800,921 |   |   |
| Concessions                    |       |                               | 160,321    |                                                                 |       |   | 327,009 |   |   |
| Other revenue                  |       |                               | 33,864     |                                                                 |       |   | 68,486 |   |   |
| Total revenues                 |       |                               | 592,465    |                                                                 |       |   | 1,196,416 |   |   |
| Cost of operations             |       |                               | 384,262    |                                                                 |       |   | 776,064 |   |   |
| Rent                           |       |                               | 104,911    |                                                                 |       |   | 209,718 |   |   |
| General and  administrative:   |       |                               |       |                                                                 |       |   |   |   |   |
| Merger and acquisition  costs* |       |                               | 987        |                                                                 |       |   | 4,813 |   |   |
| Management fee                 |       |                               | 1,250      |                                                                 |       |   | 2,500 |   |   |
|                                |            |                                    |            |                                                                      |            |  |  |  |  |  |  |  |

16

----

 

| Other                                                |   |   | 21,021   |    |   |   | 42,114    |   |     |
|------------------------------------------------------|--------|--------|----------|---------|--------|--------|-----------|--------|----------|
| Preopening expense                                   |   |   | 901      |    |   |   | 1,010     |   |     |
| Theatre and other closure expense                    |   |   | 346      |    |   |   | 980       |   |     |
| Restructuring charge                                 |   |   | 1,206    |    |   |   | 4,289     |   |     |
| Depreciation and amortization                        |   |   | 66,937   |    |   |   | 131,051   |   |     |
| Disposition of assets and other gains                |   |   | 857      |    |   |   | 389       |   |     |
| Total costs and expenses                             |   |   | 582,678  |    |   |   | 1,172,928 |   |     |
| Other income                                         |   |   | (4,931   | )       |   |   | (6,047    | )      |     |
| Interest expense                                     |   |   | 56,884   |    |   |   | 114,421   |   |     |
| Investment expense (income)                          |   |   | (1,175   | )       |   |   | 776       |   |     |
| Total other expense                                  |   |   | 50,778   |    |   |   | 109,150   |   |     |
| Loss from continuing operations before income taxes  |   |   | (40,991  | )       |   |   | (85,662   | )      |     |
| Income tax provision                                 |   |   | 1,500    |    |   |   | 3,900     |   |     |
| Loss from continuing operations                      |   |   | (42,491  | )       |   |   | (89,562   | )      |     |
| Loss from discontinued operations                    |   |   | (3,407   | )       |   |   | (25,037   | )      |     |
| Net loss                                             |   |   | $        | (45,898 | )      |   |      | $      | (114,599 | ) |   |
| Basic and diluted  loss per share of common stock:   |   |   |     |    |   |   |      |   |     |
| Loss from  continuing operations                     |   |   | $        | (33.14  | )      |   |      | $      | (69.85   | ) |   |
| Loss from  discontinued operations                   |   |   | (2.66    | )       |   |   | (19.52    | )      |     |
| Net loss per share                                   |   |   | $        | (35.80  | )      |   |      | $      | (89.37   | ) |   |
| Average shares outstanding:                          |   |   |     |    |   |   |      |   |     |
| Basic and diluted                                    |   |   | 1,282.25 |    |   |   | 1,282.25  |   |     |
| Operating Data (at period end):                      |   |   |     |    |   |   |      |   |     |
| Average screens—continuing operations           |   |   | 5,033    |    |   |   | 5,037     |   |     |
| Number of screens operated                           |   |   |     |    |   |   | 5,870     |   |     |
| Number of theatres operated                          |   |   |     |    |   |   | 442       |   |     |
| Screens per theatre                                  |   |   |     |    |   |   | 13.3      |   |     |
| Attendance (in thousands)—continuing operations |   |   | 60,415   |    |   |   | 121,339   |   |     |

----

*       Primarilyrepresents nonrecurring costs for the Merger Transactions.

**NOTE 3—DISCONTINUEDOPERATIONS**

On May 11, 2006, the Company sold two of itswholly-owned subsidiaries, AMC Entertainment España S.A. and ActividadesMulti-Cinemeas E Espectáculos, LDA (collectively “Iberia”), which owned andoperated 4 theatres with 86 screens in Spain and 1 theatre with 20 screens inPortugal, for a cash sales price of $35,446,000. At the date of the sale theseoperations did not meet the criteria for discontinued operations because ofcontinuing involvement in the region through an equity method investment inYelmo. In December 2006, the company disposed of its investment in Yelmo, whichowned and operated 27 theatres with 310 screens in Spain, for proceeds of$52,137,000. There was no gain or loss recorded on the sale of Yelmo. Theinvestment in Yelmo was reported within other long-term assets at September 28,2006 and March 30, 2006. The Company no longer has continuing involvement inthe region as a result of the sale of Yelmo and the results of the operationsin Iberia have been classified as discontinued operations as the Company nolonger has operations or significant cash flows from the Iberia component.

Informationpresented for all periods reflects the discontinued classification. Allaffected amounts within the consolidated financial statements have beenadjusted accordingly. The results of operations of the Iberia theatres werepreviously reported in the Company’s International theatrical exhibitionoperation segment. The Company has recorded a gain on sale of Iberia ofapproximately $2,650,000 during fiscal 2007 which is included in discontinuedoperations. Goodwill of $11.7 million was allocated to the Iberia theatres inconnection with the sale. The Iberia assets and liabilities were classified asheld for sale at March 30, 2006.

17

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Components of amounts reflected as earnings (loss)from discontinued operations for Iberia in the Company’s ConsolidatedStatements of Operations are presented in the following table.

**Statements of operations data:**

| ** **                                    | ** ** | **Thirteen Weeks   Ended** | ** ** | **Thirteen Weeks   Ended** | ** ** | **Twenty-Six   Weeks  Ended** | ** ** | **Twenty-Six   Weeks  Ended** | ** ** |
|-----------------------------------------------|------------|----------------------------|------------|----------------------------|------------|-------------------------------|------------|-------------------------------|------------|
| ** **                                    | ** ** | **September 28,   2006**   | ** ** | **September 29,   2005**   | ** ** | **September 28,   2006**      | ** ** | **September 29,   2005**      | ** ** |
| Revenues                                      | ** ** | ** **                 | ** ** | ** **                 | ** ** | ** **                    | ** ** | ** **                    | ** ** |
| Admissions                                    | ** ** | $                          | —     |                       | $          | 8,191                         |       | $                             | 3,892      |   | $ | 14,643 |   |
| Concessions                                   | ** ** | —                     |       | 2,918                      |       | 1,292                         |       | 5,113                         |       |
| Other Revenue                                 | ** ** | —                     |       | 409                        |       | 172                           |       | 742                           |       |
| Total Revenues                                | ** ** | —                     |       | 11,518                     |       | 5,356                         |       | 20,498                        |       |
| Costs and  Expenses                           | ** ** |                       |       |                       |       |                          |       |                          |       |
| Film exhibition costs                         | ** ** | —                     |       | 4,054                      |       | 1,901                         |       | 7,144                         |       |
| Concession costs                              | ** ** | —                     |       | 656                        |       | 255                           |       | 864                           |       |
| Operating expense                             | ** ** | —                     |       | 2,665                      |       | 1,189                         |       | 5,532                         |       |
| Rent                                          | ** ** | —                     |       | 2,827                      |       | 1,410                         |       | 5,708                         |       |
| General and administrative—other         | ** ** | —                     |       | 27                         |       | 50                            |       | 117                           |       |
| Depreciation and amortization                 | ** ** | —                     |       | 1,356                      |       | 545                           |       | 2,920                         |       |
| Disposition of  assets and other gains        | ** ** | 239                        |       | —                     |       | (2,650                        | )          | —                        |       |
| Total costs and  expenses                     | ** ** | 239                        |       | 11,585                     |       | 2,700                         |       | 22,285                        |       |
| Interest expense                              | ** ** | —                     |       | 471                        |       | 220                           |       | 957                           |       |
| Investment income                             | ** ** | —                     |       | (1                         | )          | (4                            | )          | (1                            | )          |
| Total other  expense                          | ** ** | —                     |       | 470                        |       | 216                           |       | 956                           |       |
| Earnings (loss) before  income taxes          | ** ** | (239                       | )          | (537                       | )          | 2,440                         |       | (2,743                        | )          |
| Income tax  provision                         | ** ** | —                     |       | 100                        |       | —                        |       | 200                           |       |
| Earnings (loss)  from discontinued operations | ** ** | $                          | (239       | )                          | $          | (637                          | )          | $                             | 2,440      |   | $ | (2,943 | ) |

 

On June 30, 2005, the Company sold one of itswholly-owned subsidiaries, Japan AMC Theatres Inc., including fourof its five theatres in Japan. The Company sold its remaining Japanese theatrein September 2005. The Company opened its first theatre in Japan duringfiscal 1997 and since that time the Company had incurred pre-tax losses of$38,689,000, including a $4,998,000 impairment charge in fiscal 2003.

18

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The operations and cashflows of the Japan theatres were eliminated from the Company’s ongoingoperations. The Company does not have any significant continuing involvement inthe operations of the Japan theatres. The results of operations of the Japantheatres have been classified as discontinued operations, and informationpresented for all periods reflects the classification. The operations of theJapan theatres were previously reported in the Company’s Internationaltheatrical exhibition operating segment. Components of amounts reflected asloss from discontinued operations in the Company’s Consolidated Statements ofOperations during the prior fiscal year are presented in the following table:

**Statementsof operations data:**

| ** **                                     | ** ** | **Thirteen Weeks  Ended** | ** ** | **Twenty-Six Weeks  Ended**   | ** ** |
|------------------------------------------------|------------|--------------------------------|------------|------------------------------------|------------|
| **(In thousands)**                        | ** ** | ** **                     | ** ** | **September 29,   2005** | ** ** | **September 29,   2005** | ** ** |
| Revenues                                       |       |                           |       |                               |       |   |   |   |   |
| Admissions                                     |       |                           | $          | 2,138                              |       |   |   | $ | 11,293 |   |   |
| Concessions                                    |       |                           | 398        |                               |       |   | 2,134 |   |   |
| Other                                          |       |                           | 111        |                               |       |   | 315 |   |   |
| Total revenues                                 |       |                           | 2,647      |                               |       |   | 13,742 |   |   |
| Expense                                        |       |                           |       |                               |       |   |   |   |   |
| Film exhibition  costs                         |       |                           | 1,221      |                               |       |   | 6,076 |   |   |
| Concession costs                               |       |                           | 70         |                               |       |   | 382 |   |   |
| Operating expense                              |       |                           | 505        |                               |       |   | 3,231 |   |   |
| Rent                                           |       |                           | 664        |                               |       |   | 3,918 |   |   |
| General and  administrative expense—other |       |                           | 455        |                               |       |   | 1,223 |   |   |
| Depreciation and  amortization                 |       |                           | 2          |                               |       |   | 706 |   |   |
| Total costs and  expenses                      |       |                           | 2,917      |                               |       |   | 15,536 |   |   |
| Loss before income taxes                       |       |                           | (270       | )                                  |       |   | (1,794 | ) |   |
| Income tax provision                           |       |                           | 2,500      |                               |       |   | 20,300 |   |   |
| Loss from discontinued operations              |       |                           | $          | (2,770                             | )          |   |   | $ | (22,094 | ) |   |
|                                                |            |                                |            |                                    |            |  |  |  |  |  |  |  |  |

 

Goodwill of $44,774,000was allocated to Japan AMC Theatres Inc. and goodwill of $6,599,000 was allocatedto the Company’s Japan branch and disposed of in connection with theconsummation of the sale of that entity on June 30, 2005. The goodwill isnot deductible for tax purposes as discussed in Note 9.

**NOTE 4—COMPREHENSIVELOSS**

Thecomponents of comprehensive loss are as follows (in thousands):

| ** **                                                   | ** ** | **Thirteen Weeks Ended**       | ** ** | **Twenty-Six Weeks Ended**     | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                   | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** |
| Net loss                                                     |       |                                     | $          | (16,873                                  | )          |   |   | $ | (14,496 | ) |   |   | $(31,015 | ) |   |   | $ | (45,687 | ) |   |
| Foreign currency  translation adjustment                     |       |                                     | 4,250      |                                     |       |   | — |   |   |   | (5,126 | ) |   |   | (2,364 | ) |   |
| Unrealized loss on  Cinemex swap agreement                   |       |                                     | (995       | )                                        |       |   | — |   |   |   | (539 | ) |   |   | — |   |   |
| Increase in unrealized  gain on marketable equity securities |       |                                     | 96         |                                     |       |   | 114 |   |   |   | 96 |   |   |   | 34 |   |   |
| Total comprehensive loss                                     |       |                                     | $          | (13,522                                  | )          |   |   | $ | (14,382 | ) |   |   | $ | (36,584 | ) |   |   | $ | (48,017 | ) |   |
|                                                              |            |                                          |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

19

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**NOTE 5—GOODWILL ANDOTHER INTANGIBLE ASSETS**

Activityof goodwill by operating segment is presented below.

| **(In thousands)**                     | ** ** | ** ** | ** ** | **U.S. and  Canada** | ** ** | **International** | ** ** | **Total** | ** ** |
|---------------------------------------------|------------|------------|------------|---------------------------|------------|-------------------|------------|-----------|------------|
| Balance as of March 30,  2006          |       | $          | 1,893,716  |                      |       | $                 | 124,602    |      |       | $ | 2,018,318 |   |
| Currency translation  adjustment            |       | —     |       |                      | (2,516     | )                 |       | (2,516    | )          |
| Fair value  adjustments(1)                  |       | 40,497     |       |                      | 49,068     |              |       | 89,565    |       |
| Goodwill allocated to  sale of divestitures |       | (9,968     | )          |                      | —     |              |       | (9,968    | )          |
| Balance as of September 28, 2006       |       | $          | 1,924,245  |                      |       | $                 | 171,154    |      |       | $ | 2,095,399 |   |

----

(1)          Adjustmentsto fair value relate primarily to changes in the preliminary estimated fairvalues of property, net (see Note 2-Acquisitions).

| ** **                                        | ** ** | ** **     | ** ** | **September 28, 2006** | ** ** | **March 30, 2006**    | ** ** |
|---------------------------------------------------|------------|----------------|------------|----------------------------------|------------|---------------------------------|------------|
| **(In thousands)**                           | ** ** | ** **     | ** ** | **Remaining  Useful Life**  | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
| Acquired Intangible  Assets:                      |       |           |       |                             |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortizable  Intangible Assets:                   |       |           |       |                             |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Favorable leases                                  |       | 1 to  13 years |       |                             | $          | 117,633                         |       |   |   | $ | (18,725 | ) |   |   | $ | 117,645 |   |   |   | $ | (13,079 | ) |   |
| Loyalty program                                   |       | 4  years       |       |                             | 46,000     |                            |       |   | (19,205 | ) |   |   | 46,000 |   |   |   | (14,950 | ) |   |
| LCE trade name                                    |       | 5  years       |       |                             | 2,300      |                            |       |   | (310 | ) |   |   | 2,300 |   |   |   | (80 | ) |   |
| LCE/Cinemex  advertising and management contracts |       | 3 to  25 years |       |                             | 51,262     |                            |       |   | (9,707 | ) |   |   | 52,159 |   |   |   | (2,841 | ) |   |
| Cinemex non-compete                               |       | —         |       |                             | 1,592      |                            |       |   | (1,592 | ) |   |   | 1,656 |   |   |   | (313 | ) |   |
| Other intangible  assets                          |       | 1 to  16 years |       |                             | 26,665     |                            |       |   | (23,481 | ) |   |   | 30,701 |   |   |   | (26,922 | ) |   |
| Total,  amortizable                               |       |           |       |                             | $          | 245,452                         |       |   |   | $ | (73,020 | ) |   |   | $ | 250,461 |   |   |   | $ | (58,185 | ) |   |
| Unamortized  Intangible Assets:                   |       |           |       |                             |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| AMC trademark                                     |       |           |       |                             | $          | 74,000                          |       |   |   |   |   |   |   | $ | 74,000 |   |   |   |   |   |   |
| Cinemex trademark                                 |       |           |       |                             | 6,968      |                            |       |   |   |   |   |   | 7,032 |   |   |   |   |   |   |
| Total, unamortized                                |       |           |       |                             | $          | 80,968                          |       |   |   |   |   |   |   | $ | 81,032 |   |   |   |   |   |   |
|                                                   |            |                |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Amortizationexpense associated with the intangible assets noted above is as follows:

| ** **             | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|------------------------|------------|------------------------------------|------------|--------------------------------------|------------|
| ** **             | ** ** | **September 28,  2006**       | ** ** | **September 29,  2005**         | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| Recorded  Amortization |       |                               | $          | 9,006                                |       |   |   | $ | 4,467 |   |   |   | $ | 19,305 |   |   |   | $ | 8,415 |   |   |
|                        |            |                                    |            |                                      |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Estimatedamortization expense for the next five fiscal years for intangible assets ownedas of September 28, 2006 is projected below:

| **(In thousands)**         | ** ** | ** ** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** |
|---------------------------------|------------|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| Projected  amortization expense |       | $          | 38,890     |     | $          | 31,565   |       | $        | 25,430     |     | $          | 18,514   |       | $ | 12,734 |   |
|                                 |            |            |            |          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

 

20

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**NOTE 6—STOCKHOLDERS’EQUITY**

Holdings accounts for stock options using the fairvalue method of accounting as prescribed by SFAS 123 (R) and SAB 107and has valued the options using the Black-Scholes formula. Holdings hasrecorded $1,036,000 and $628,000 of stock-based compensation expense related tothese options within General and Administrative:  Other and has recognized an income tax benefitof $0 and $291,000 in its Consolidated Statements of Operations during thethirteen weeks ended September 28, 2006 and September 29, 2005,respectively. Holdings has recorded $2,056,000 and $1,744,000 of stock-basedcompensation expense related to these options within General andAdministrative: Other and has recognized an income tax benefit of approximately$0 and $749,000 in its Consolidated Statements of Operations during thetwenty-six weeks ended September 28, 2006 and September 29, 2005,respectively. One of the holders of Holdings’ stock options has written putrights deemed to be in the holder’s control associated with his options wherebyhe can require Holdings to repurchase his options. These liability-classifiedoptions are required to be remeasured during each reporting period. A liabilityof $408,000 and $142,000 is recorded within other long term liabilities in theConsolidated Balance Sheets as of September 28, 2006 and March 30,2006, respectively, for all options containing written put rights.

During the twenty-sixweeks ended September 28, 2006 the Company revised its preliminaryestimated purchase price for the Merger by $3,500,000 which reduced additionalpaid-in capital, recorded an increase to additional paid-in capital of $846,000related to stock-based compensation expense and recorded a $64,000 decrease toadditional paid-in capital related to the reclassification of liability—classifiedshares.

**NOTE 7—THEATRE ANDOTHER CLOSURE AND DISPOSITION OF ASSETS**

Arollforward of reserves for theatre and other closure is as follows (inthousands):

| ** **                                               | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|----------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                               | ** ** | **September 28, 2006**     | ** ** | **September 29, 2005** | ** ** |
| ** **                                               | ** ** | **Theatre and Other**      | ** ** | **Merger  Exit costs(1)** | ** ** | **Total** | ** ** | **Total** | ** ** |
| Beginning balance                                        |       |                                 | $          | 21,716 |   |   |   | $ | 4,618 |   |   | $ | 26,334 |   |   | $ | 28,506 |   |   |
| Theatre and other  closure expense                       |       |                                 | 7,531      |   |   |   | 179 |   |   | 7,710 |   |   | 980 |   |   |
| Transfer of  deferred rent and capital lease obligations |       |                                 | —     |   |   |   | — |   |   | — |   |   | 641 |   |   |
| Purchase price  adjustment                               |       |                                 | —     |   |   |   | (988 | ) |   | (988 | ) |   | — |   |   |
| Payments                                                 |       |                                 | (9,868     | ) |   |   | (1,434 | ) |   | (11,302 | ) |   | (4,747 | ) |   |
| Ending balance                                           |       |                                 | $          | 19,379 |   |   |   | $ | 2,375 |   |   | $ | 21,754 |   |   | $ | 25,380 |   |   |

----

(1)          There were no mergerexit costs recorded during the twenty-six weeks ended September 29, 2005.

Theatre and other closure reserves for leases thathave not been terminated are recorded at the present value of the future contractualcommitments for the base rents, taxes and maintenance.

21

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Theatreclosure reserves at September 28, 2006 and March 30, 2006 byoperating segment are as follows (in thousands):

| ** **                             | ** ** | **September 28,  2006  (restated)** | ** ** | **March 30,  2006  (restated)** | ** ** |
|----------------------------------------|------------|------------------------------------------|------------|--------------------------------------|------------|
| U.S. and Canada  Theatrical Exhibition |       |                                     | $          | 18,549                               |       |   |   | $ | 20,811 |   |   |
| International  Theatrical Exhibition   |       |                                     | 503        |                                 |       |   | 471 |   |   |
| Other                                  |       |                                     | 205        |                                 |       |   | 315 |   |   |
| Total segment reserves                 |       |                                     | 19,257     |                                 |       |   | 21,597 |   |   |
| Corporate                              |       |                                     | 2,497      |                                 |       |   | 4,737 |   |   |
|                                   |       |                                     | $          | 21,754                               |       |   |   | $ | 26,334 |   |   |

 

**NOTE 8—RESTRUCTURING**

The Company recognizes restructuring charges basedupon the nature of the costs incurred. Costs resulting from one-time terminationbenefits where employees are not required to render future service to receivethe benefits are recognized and a liability is recorded when management commitsto a plan of termination which identifies the number of employees to beterminated, their job classifications, locations, expected termination datesand when the plan is communicated to the employees and establishes the detailedterms of the benefits to be received by employees.

If employees are required to render service until theyare terminated in order to receive the termination benefits, the benefits aremeasured at the fair value of the costs and related liabilities at thecommunication date and are recognized ratably over the future service periodfrom the communication date.

During fiscal 2006, the Company recorded a liabilityof $27,090,000 related to one-time termination benefits and other costs for thedisplacement of approximately 230 associates in connection with the Mergers aspart of purchase accounting. The Company recorded an additional $4,845,000liability related to closures of Loews’ duplicate administrative facilities inconnection with the Mergers as part of purchase accounting. There were norestructuring activities or charges during the twenty-six weeks ended September 29,2005.

Asummary of restructuring activity, is set forth below (in thousands):

| ** **              | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|-------------------------|------------|--------------------------------------|------------|
| ** **              | ** ** | **September 28, 2006**     | ** ** |
| **(In thousands**) | ** ** | ** **                           | ** ** | **Merger  Severance  Benefits** | ** ** |
| Beginning balance       |       |                                 | $          | 10,571 |   |   |
| Merger adjustment(1)    |       |                                 | (1,231     | ) |   |
| Payments                |       |                                 | (8,420     | ) |   |
| Ending balance          |       |                                 | $          | 920 |   |   |
|                         |            |                                      |            |  |  |  |  |  |

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(1)          Represents adjustmentsto goodwill for changes in estimated termination benefits based on actualamounts.

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Restructuringreserves at September 28, 2006 and March 30, 2006 by operatingsegment are as follows (in thousands):

| ** **                             | ** ** | **September 28,  2006** | ** ** | **March 30,  2006** | ** ** |
|----------------------------------------|------------|------------------------------|------------|--------------------------|------------|
| U.S. and Canada  Theatrical Exhibition |       |                         | $          | —                   |       |   |   | $ | — |   |   |
| International  Theatrical Exhibition   |       |                         | —     |                     |       |   | — |   |   |
| Other                                  |       |                         | —     |                     |       |   | — |   |   |
| Total Segment reserves                 |       |                         | —     |                     |       |   | — |   |   |
| Corporate                              |       |                         | 920        |                     |       |   | 10,571 |   |   |
|                                   |       |                         | $          | 920                      |       |   |   | $ | 10,571 |   |   |

 

**NOTE 9—INCOME TAXES**

Thedifference between the effective tax rate on earnings before income taxes andthe U.S. federal income tax statutory rate is as follows:

| ** **                                      | ** ** | **Twenty-Six Weeks Ended**     | ** ** |
|-------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                      | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** |
| Federal statutory  rate                         |       |                                     | 35.0       | % |   |   | 35.0 | % |   |
| Non-deductible  goodwill                        |       |                                     | —     |   |   |   | (46.6 | ) |   |
| Valuation  allowance                            |       |                                     | (41.4      | ) |   |   | (1.4 | ) |   |
| State income  taxes, net of federal tax benefit |       |                                     | (0.1       | ) |   |   | (2.0 | ) |   |
| Other, net                                      |       |                                     | (1.1       | ) |   |   | 2.2 |   |   |
| Effective tax rate                              |       |                                     | (7.6       | )% |   |   | (12.8 | )% |   |

 

The Company accounts for income taxes in accordancewith 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, usingenacted tax rates, for the tax effect of temporary differences between thefinancial reporting and tax bases of recorded assets and liabilities.SFAS 109 also requires that deferred tax assets be reduced by a valuationallowance if it is more likely than not that some or all of the deferred taxassets will not be realized.

Based upon the consideration of all availableevidence, the Company has provided a valuation allowance on deferred tax assetsrecorded beginning in the fourth quarter of fiscal year 2006. The Companycontinues to record a full valuation allowance against its deferred tax assetsdue to the uncertainty regarding the ultimate realization of those assets inall taxing jurisdictions with the exception of Mexico.

The Company determinesincome tax expense for interim periods by applying SFAS No. 109and APB Opinion No. 28, *InterimFinancial Reporting*, which prescribes the use of the full year’sestimated effective tax rate in financial statements for interim periods. Assuch, permanent differences such as state income taxes and changes in valuationallowance impact the Company’s effective tax rate. During the current period,income tax expense differed from the expected tax benefit using theU.S. federal statutory tax rate of 35% primarily due to state income taxesand the change in valuation allowance recorded against net deferred tax assets.Additionally, income tax expense reflects the net expense related to the impactof the recently enacted Texas gross margins tax. The current year dispositionof Portugal and Spain operations did not have a material impact on the incometax provision as the tax benefit derived from the sale was fully offset by anincrease in valuation allowance. Non-deductible goodwill relates to thegoodwill disposed of with the Japan theatres, which is discussed inNote 3.

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**NOTE 10—EMPLOYEEBENEFIT PLANS**

The Company sponsors anon-contributory qualified defined benefit pension plan generally covering allemployees age 21 or older who have completed at least 1,000 hours ofservice in their first twelve months of employment, or in a calendar yearending thereafter, and who are not covered by a collective bargainingagreement. The Company also offers eligible retirees the opportunity toparticipate in a health plan (medical and dental) and a life insurance plan.Employees may become eligible for these benefits at retirement provided theemployee is at least age 55 and has at least 15 years of credited serviceafter age 40. The Company also sponsors a postretirement deferred compensationplan.

As a result of the Merger,the Company acquired two pension plans in the U.S. and one in Mexico. One ofthe U.S. plans is a frozen cash balance plan and neither of the U.S. plans haveadmitted new participants post-merger. The future existence of the U.S. planswill serve to pay benefits to the current participants under the requirementsof the plan. In Mexico, a Seniority Premium and Termination Indemnity forRetirement Plan (the “Mexico Plan”) is provided to all eligible employees ofServicios Cinematograficos Especializados, S.A. de C.V. (“SCE”) and aTermination Indemnity Retirement Plan to all eligible employees of Servino,S.A. de C.V. (“Servino”). Both SCE and Servino are wholly owned subsidiaries ofCinemex. The Mexico Plan establishes compensation upon retirement (pension andseniority premium) based on years of service rendered and the employee’s ageand salary at the date of retirement.

The Company made itsannual pension contribution of $1,400,000 during its second fiscal quarter of2007.

The measurement date usedto determine pension and other postretirement benefits is January 1 of thefiscal year for which measurements are made.

Netperiodic benefit cost recognized for the Company’s plans during the thirteenweeks ended September 28, 2006 and September 29, 2005 consists of thefollowing:

| ** **                                | ** ** | **Pension Benefits** | ** ** | **Other Benefits**      | ** ** |
|-------------------------------------------|------------|---------------------------|------------|------------------------------|------------|
| **(In thousands)**                   | ** ** | ** **                | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| Componets of net  periodic benefit costs: |       |                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                              |       |                      | $          | 795                          |       |   |   | $ | 959 |   |   |   | $ | 228 |   |   |   | $ | 112 |   |   |
| Interest cost                             |       |                      | 1,314      |                         |       |   | 1,150 |   |   |   | 387 |   |   |   | 171 |   |   |
| Expected return on plan assets            |       |                      | (1,116     | )                            |       |   | (909 | ) |   |   | — |   |   |   | — |   |   |
| Curtailment gain                          |       |                      | —     |                         |       |   | — |   |   |   | — |   |   |   | (323 | ) |   |
| Net periodic benefit  cost                |       |                      | $          | 993                          |       |   |   | $ | 1,200 |   |   |   | $ | 615 |   |   |   | $ | (40 | ) |   |
|                                           |            |                           |            |                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Netperiodic benefits cost recognized for the Company’s plans during the twenty-sixweeks ended September 28, 2006 and September 29, 2005 consists of thefollowing:

| ** **                                | ** ** | **Pension Benefits** | ** ** | **Other Benefits**          | ** ** |
|-------------------------------------------|------------|---------------------------|------------|----------------------------------|------------|
| **(In thousands)**                   | ** ** | ** **                | ** ** | **September 28,**

**2006** | ** ** | **September 29,  2005** | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| Componets of net  periodic benefit costs: |       |                      |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                              |       |                      | $          | 1,592                            |       |   |   | $ | 1,918 |   |   |   | $ | 456 |   |   |   | $ | 285 |   |   |
| Interest cost                             |       |                      | 2,629      |                             |       |   | 2,300 |   |   |   | 774 |   |   |   | 432 |   |   |
| Expected return on plan assets            |       |                      | (2,232     | )                                |       |   | (1,818 | ) |   |   | — |   |   |   | — |   |   |
| Curtailment gain                          |       |                      | —     |                             |       |   | — |   |   |   | — |   |   |   | (1,110 | ) |   |
| Net periodic benefit  cost                |       |                      | $          | 1,989                            |       |   |   | $ | 2,400 |   |   |   | $ | 1,230 |   |   |   | $ | (393 | ) |   |
|                                           |            |                           |            |                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The Company’sreorganization activities commencing during fiscal 2005 resulted in a partialcurtailment of the Company’s postretirement deferred compensation plan. TheCompany defers curtailment gains until they are realized and, as such,curtailment gains of $1,110,000 were recognized during the twenty-six weeksended September 29, 2005.

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**NOTE 11—OPERATINGSEGMENTS**

Informationabout the Company’s operations by operating segment is as follows (inthousands):

| ** **                             | ** ** | **Thirteen Weeks Ended**       | ** ** | **Twenty-Six Weeks Ended**    | ** ** |
|----------------------------------------|------------|------------------------------------------|------------|-----------------------------------------|------------|
| ** **                             | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29  2005  (restated)** | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** |
| **Revenues**                           |       |                                     |       |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. and Canada  theatrical exhibition |       |                                     | $          | 585,298                                 |       |   |   | $ | 377,004 |   |   |   | $ | 1,182,989 |   |   |   | $ | 770,350 |   |   |
| International  theatrical exhibition   |       |                                     | 46,231     |                                    |       |   | 5,317 |   |   |   | 94,360 |   |   |   | 10,318 |   |   |
| Other                                  |       |                                     | 22         |                                    |       |   | 5,098 |   |   |   | 36 |   |   |   | 10,553 |   |   |
| Total revenues                         |       |                                     | $          | 631,551                                 |       |   |   | $ | 387,419 |   |   |   | $ | 1,277,385 |   |   |   | $ | 791,221 |   |   |
| **Segment  Adjusted EBITDA**           |       |                                     |       |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. and Canada  theatrical exhibition |       |                                     | $          | 109,231                                 |       |   |   | $ | 62,440 |   |   |   | $ | 225,478 |   |   |   | $ | 129,952 |   |   |
| International  theatrical exhibition   |       |                                     | 13,784     |                                    |       |   | (1,185 | ) |   |   | 27,776 |   |   |   | (2,872 | ) |   |
| Other                                  |       |                                     | (499       | )                                       |       |   | (115 | ) |   |   | (910 | ) |   |   | (629 | ) |   |
| Segment Adjusted EBITDA                |       |                                     | $          | 122,516                                 |       |   |   | $ | 61,140 |   |   |   | $ | 252,344 |   |   |   | $ | 126,451 |   |   |

 

Areconciliation of earnings from continuing operations before income taxes toSegment Adjusted EBITDA is as follows (in thousands):

| ** **                                           | ** ** | **Thirteen Weeks Ended**       | ** ** | **Twenty-Six Weeks Ended**     | ** ** |
|------------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| ** **                                           | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** | **September 28,  2006  (restated)** | ** ** | **September 29,  2005  (restated)** | ** ** |
| Loss from  continuing operations before income taxes |       |                                     | $          | (14,734                                  | )          |   |   | $ | (17,989 | ) |   |   | $ | (31,255 | ) |   |   | $ | (35,950 | ) |   |
| Plus:                                                |       |                                     |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                     |       |                                     | 57,790     |                                     |       |   | 31,259 |   |   |   | 115,318 |   |   |   | 62,755 |   |   |
| Depreciation and amortization                        |       |                                     | 64,634     |                                     |       |   | 36,600 |   |   |   | 128,530 |   |   |   | 72,547 |   |   |
| Preopening expense                                   |       |                                     | 2,087      |                                     |       |   | 728 |   |   |   | 3,129 |   |   |   | 736 |   |   |
| Theatre and other closure expense                    |       |                                     | 5,667      |                                     |       |   | 346 |   |   |   | 7,710 |   |   |   | 980 |   |   |
| Restructuring charges                                |       |                                     | —     |                                     |       |   | 839 |   |   |   | — |   |   |   | 3,908 |   |   |
| Disposition of assets and other gains                |       |                                     | (7,286     | )                                        |       |   | (103 | ) |   |   | (5,850 | ) |   |   | (770 | ) |   |
| Investment income(1)                                 |       |                                     | (3,234     | )                                        |       |   | (975 | ) |   |   | (3,605 | ) |   |   | (479 | ) |   |
| General and administrative expense—unallocated: |       |                                     |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and acquisition costs                         |       |                                     | 2,074      |                                     |       |   | 960 |   |   |   | 5,826 |   |   |   | 2,645 |   |   |
| Management fee                                       |       |                                     | 1,250      |                                     |       |   | 500 |   |   |   | 2,500 |   |   |   | 1,000 |   |   |
| Other(2)                                             |       |                                     | 14,268     |                                     |       |   | 8,975 |   |   |   | 30,041 |   |   |   | 19,079 |   |   |
| Segment Adjusted EBITDA                              |       |                                     | $          | 122,516                                  |       |   |   | $ | 61,140 |   |   |   | $ | 252,344 |   |   |   | $ | 126,451 |   |   |

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(1)          Investmentincome includes equity in losses from investments of $298,000 and $13,000during the thirteen weeks ended September 28, 2006 and September 29,2005, respectively. Investment income includes equity in losses frominvestments of $2,455,000 and $659,000 during the twenty-six weeks ended September 28,2006 and September 29, 2005, respectively.

(2)          Including stock-basedcompensation expense of $1,036,000 and $628,000 for the thirteen weeks ended September 28, 2006and September 29, 2005, respectively. Including stock-based compensation expenseof $2,056,000 and $1,744,000 for the twenty-six weeks ended September 28,2006 and September 29, 2005, respectively.

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**NOTE 12—COMMITMENTSAND CONTINGENCIES**

The Company, in the normal course of business, isparty to various legal actions. Except as described below, management believesthat the potential exposure, if any, from such matters would not have a materialadverse effect on the financial condition, cash flows or results of operationsof the Company.

*UnitedStates of America v. AMC Entertainment Inc. and American Multi Cinema, Inc.*   (No. 9901034 FMC (SHx), filed in the U.S. District Court for the Central District ofCalifornia). On January 29, 1999, the Department of Justice (the “Department”)filed suit alleging that AMCE’s stadium style theatres violate the ADA andrelated regulations. The Department alleged that AMCE had failed to provide personsin wheelchairs seating arrangements with lines of sight comparable to thegeneral public. The Department alleged various non-line of sight violations aswell. The Department sought declaratory and injunctive relief regardingexisting and future theatres with stadium style seating, compensatory damagesin the approximate amount of $75,000 and a civil penalty of $110,000.

On November 20, 2002 the trial court enteredsummary judgment in favor of the Justice Department on the line of sightaspects of this case. The trial court ruled that wheelchair spaces locatedsolely on the sloped floor portion of the stadium-style auditoriums failto provide lines of sight comparable to the general public. The trial court didnot address specific changes that might be required of AMCE’s existing stadium-styleauditoriums, holding that *per se* rules aresimply not possible because the requirements of comparable lines of sight willvary based on theatre layout.

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

AMCE estimates that the cost of the bettermentsrelated to the remedies for line of sight violations of the ADA will be$20 million, which is expected to be incurred over a 4-5 yearterm. Additionally, the order calls for payments of $300,000 to the UnitedStates and individual complainants. AMCE has appealed the court’s order to theNinth Circuit Court of Appeals and both parties have filed their briefs.

As a result of the new order AMCE estimates the rangeof the loss to be between $349,350 and $443,938. Accordingly, AMCE has recordedthe related liability at $349,350.

On January 21, 2003, the trial court enteredsummary judgment in favor of the Department on non-line of sight aspects of thecase, which involve such matters as parking areas, signage, ramps, location oftoilets, counter heights, ramp slopes, companion seating and the location andsize of handrails. In its non-line of sight decision, the trial court concludedthat AMCE has violated numerous sections of the ADA and engaged in a patternand practice of violating the ADA.

On December 5, 2003, the trial court entered aconsent order and final judgment on non-line of sight issues under which AMCEagreed to remedy certain violations at twelve of its stadium-styletheatres and to survey and make required betterments for its patrons withdisabilities at its stadium-style theatres and at certain theatres it mayopen in the future. Currently AMCE estimates that these betterments will be requiredat approximately 140 stadium-style theatres. AMC estimates that the totalcost of these betterments will be $47.5 million, which is expected to beincurred over the remaining term of the consent order of 2.5 years.Through September 28, 2006 AMCE has incurred approximately$9.3 million of these costs. The estimate is based on actual costsincurred on remediation work completed to date. The actual costs of bettermentsmay vary based on the results of surveys of the remaining theatres.

*AmericanMulti Cinema, Inc. v. Midwest Drywall Company, Inc., HaskellConstructors, Ltd. etal.*   (Case No. 00CV84908,Circuit Court of Platte County, Missouri) and *AmericanMulti Cinema, Inc. v. Bovis Con*

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*struction Corp. et al.* (Civil Action No. 0207139, Court of Common Pleas of Bucks County,Pennsylvania). AMCE is the plaintiff in these and related suits in which itseeks to recover damages from the construction manager, certain fireproofingapplicators and other parties to correct the defective application of certainfireproofing materials at 21 theatres. AMCE currently estimates its claim forrepair costs at these theatres will aggregate approximately $33.6 million ofwhich it has expended approximately $27.4 million through June 29, 2006.The remainder is for projected costs of repairs yet to be performed. AMCE alsois seeking additional damages for lost profits, interest and legal and otherexpenses incurred.

AMCE has received settlement payments from variousparties in connection with this matter of $7,880,000, $935,000, $2,610,000 and$925,000 during fiscal 2007, 2006, 2005 and 2004, respectively. AMCE hasentered into settlement agreements with various parties providing foradditional settlement payments and has received additional payments totaling$5,250,000 subsequent to September 28, 2006. Gain contingencies arerecognized upon receipt and recorded in disposition of assets and other gainsin the Consolidated Statements of Operations.

*MetreonArbitration.**  *InMay 1997, Loews entered into a 21-year lease with Metreon, Inc.(“Metreon”) to operate a megaplex theatre in an entertainment/retail centerdeveloped by Metreon in San Francisco. Since that theatre opened in June 1999,Loews has had a dispute with Metreon with respect to (1) constructioncosts that Metreon claims are Loews’ responsibility under the lease and (2) thepercentage of the center occupied by the theatre and the nature, magnitude andallocation of the costs that Metreon is seeking to include as operatingexpenses under the lease. The amount of operating expenses claimed by Metreonto be allocable to this theatre is based upon the landlord’s assertion thatLoews occupies at least 48.5% of the center. Loews asserted that it occupiedsubstantially less of the center and that various expenses included inoperating expenses charged to Loews were improper. Loews arbitrated thisdispute in June 2003 and prevailed but the award was later vacated by theCalifornia Court of Appeals. Westfield Group purchased the property in April 2006.AMCE has reached an agreement in principle with the counterparties to settlethis matter.

The Company is a party tovarious other legal proceedings in the ordinary course of business, none ofwhich is expected to have a material adverse effect on us.

**NOTE 13—NEWACCOUNTING PRONOUNCEMENTS**

In October 2006, the Financial AccountingStandards Board (“FASB”) released Statement of Financial Accounting Standards (“SFAS”)No. 158, *Employers’ Accounting for Defined BenefitPension and Other Postretirement Plans, an amendment of FASB Statements No. 87,88, 106 and 132(R)*. SFAS No. 158 requires an entity to (1) recognizein its statement of financial position an asset for a defined benefitpostretirement plan’s overfunded status or a liability for a plan’s underfundedstatus, (2) measure a defined benefit retirement plan’s assets andobligations that determine its funded status as of the end of the employer’sfiscal year, and (3) recognize changes in the funded status of a definedbenefit postretirement plan in comprehensive income in the year in which thechanges occur. The requirement to recognize the funded status of a definedbenefit postretirement plan and the disclosure requirements are effective forfiscal years ending after June 15, 2007, for an employer without publiclytraded equity securities, or April 3, 2008 for the Company. Therequirement to measure plan assets and benefit obligations as of the date ofthe employer’s fiscal year-end statement of financial position is effective forfiscal years ending after December 15, 2008, or April 2, 2009 for theCompany. Earlier application of the recognition or measurement date provisionsis encouraged; however, early application must be for all of an employer’sbenefit plans. The Company believes that as of March 30, 2006, its mostrecent fiscal year-end, this standard would have resulted in decreasedliabilities and decreased accumulated other comprehensive loss of approximately$5,365,000.

In September 2006, the FASB released SFAS No. 157,*Fair Value Measurements*which provides enhancedguidance for using fair value to measure assets and liabilities. The standardapplies whenever other 

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standards require (orpermit) assets or liabilities to be measured at fair value. It does not expandthe use of fair value in any new circumstances. Under the standard, fair valuerefers to the price that would be received to sell an asset or paid to transfera liability in an orderly transaction between market participants in the marketin which the reporting entity transacts. It clarifies the principle that fairvalue should be based on the assumptions market participants would use whenpricing the asset or liability. SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years, or the first quarter of fiscal 2009for the Company. Early adoption is permitted. The Company does not anticipatethis standard having a material effect on its consolidated financialstatements.

In September 2006, the Securities and ExchangeCommission (the “SEC”) issued Staff Accounting Bulletin No. 108 (“SAB 108”),*Considering the Effects of Prior Year MisstatementsWhen Quantifying Misstatements in Current Year Financial Statements*whichprovides interpretive guidance on the consideration of the effects of prioryear misstatements in quantifiying current year misstatements for the purposeof a materiality assessment. SAB 108 is effective for companies with fiscalyears ending after November 15, 2006 and is required to be adopted by theCompany in its fiscal year ending March 29, 2007. However, earlyapplication is encouraged in any report for an interim period of the firstfiscal year ending after November 15, 2006, filed after the publication ofthis guidance. The Company does not anticipate an effect on its consolidatedfinancial statements with the adoption of SAB 108.

In July 2006, the FASB released FASBInterpretation No. 48, *Accounting forUncertainty in Income Taxes—an Interpretation of FASB Statement 109*(“FIN 48” or the “Interpretation”), which clarifies the accounting foruncertainty in income taxes recognized in companies’ financial statements inaccordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN48 prescribes a recognition threshold and measurement attribute for thefinancial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. The evaluation of a tax position inaccordance with FIN 48 is a two-step process. The first step is recognitionwhereby companies must determine whether it is more likely than not that a taxposition will be sustained upon examination. The second step is measurementwhereby a tax position that meets the more-likely-than-not recognitionthreshold is measured to determine the amount of benefit to recognize in thefinancial statements. The interpretation also provides guidance on derecognitionof recognized tax benefits, classification, interest and penalties, accountingin interim periods, disclosure and transition. FIN 48 is effective for fiscalyears beginning after December 15, 2006. The Company expects to adopt thenew requirements in the first quarter of fiscal 2008 and is currentlyevaluating the impact that the adoption of FIN 48 will have on its consolidatedfinancial statements.

In June 2005, the Emerging Issues Task Force (“EITF”)reached a consensus on Issue No. 05-06, *Determiningthe Amortization Period for Leasehold Improvements Purchased after LeaseInception or Acquired in a Business Combination* (“EITF 05-06”).EITF 05-06 concludes that the amortization period for leaseholdimprovements acquired in a business combination and leasehold improvements thatare in service significantly after and not contemplated at the beginning of thelease term should be amortized over the shorter of the useful life of theassets or a term that includes required lease periods and renewals that aredeemed to be reasonably assured at the date of inception. The adoption of thispronouncement did not have a material effect on the Company’s consolidatedfinancial statements.

In February 2006, the FASB agreed to issue FASBStaff Position (FSP) No. 123(R)-4, *Classificationof Options and Similar Instruments Issued as Employee Compensation That Allowfor Cash Settlement upon the Occurrence of a Contingent Event,* whichrequires companies to consider the probability of the occurrence of a contingentevent that is outside the employees’ control (i.e., change in control, or deathor disability) in determining the classification of an employee stock option orsimilar instrument under FASB Statement No. 123(R), *Share-BasedPayment*, where the award requires or permits cash settlement uponthe contingent event. The FSP requires companies to classify employee stockoptions and similar instruments with contingent cash settlement features asequity awards provided the contingent event that permits or re

28

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quires cash settlement isnot considered probable of occurring. The adoption of FSP 123 R-4 did nothave an impact on consolidated financial position, results of operations, orcash flows.

In October 2005, the FASB issued FASB StaffPosition (FSP) 13-1, *Accounting forRental Costs Incurred during a Construction Period*. FSP 13-1clarifies there is no distinction between the right to use a leased assetduring the construction period and the right to use that asset after theconstruction period. Accordingly, the Company is no longer able to capitalizerental costs during the construction period and began expensing them aspreopening expense prior to the theatre opening date. This FSP was effectivefor the first reporting period beginning after December 15, 2005. The Companyearly adopted this FSP during the fourth quarter of fiscal 2006 which resultsin recognition of preopening expense during the “rent holiday”.

In May 2005, the FASBissued SFAS No. 154, *Accounting Changesand Error Corrections a replacement of APB Opinion No. 20 and FASBStatement No. 3* (SFAS 154), which requires retrospectiveapplication to prior periods’ financial statements of changes in accountingprinciple, unless it is impracticable to determine either the period-specificeffects or the cumulative effect of the change. It also requires that a changein depreciation, amortization, or depletion method for long-lived, nonfinancialassets be accounted for as a change in accounting estimate affected by a changein accounting principle. The Company is not currently contemplating anaccounting change which would be impacted by SFAS 154.

**NOTE 14—SUBSEQUENTEVENTS**

**Initial PublicOffering of National CineMedia, Inc.**

On October 12, 2006,National CineMedia, Inc., a newly-formed entity that will serve as thesole manager of National CineMedia, LLC, announced that it filed a registrationstatement with the SEC for an initial public offering, or IPO, of up to $700million of its common stock. Net proceeds from the IPO will be used to acquirenewly issued equity interests from National CineMedia, LLC and NationalCineMedia, LLC will distribute the net proceeds to each of AMC, Cinemark andRegal on a pro rata basis in connection with modifying payment obligations foraccess to our theatres. In connection with the completion of the IPO, NationalCineMedia, LLC also intends to enter into an approximately $725 million termloan facility the net proceeds of which will be used to redeem preferred unitsto be held by each of AMC, Cinemark and Regal on a pro rata basis pursuant to arecapitalization of National CineMedia, LLC prior to completion of the IPO.There can be no guarantee that National CineMedia, Inc. will complete theIPO or debt transactions or that AMC will receive any of the expected proceeds.

**Pension Plan Freeze**

On November 7, 2006,the Company’s Board of Directors approved a proposal to freeze the Company’sDefined Benefit Retirement Income Plan, Supplemental Executive Retirement Planand Retirement Enhancement Plan (the “Plans”) as of December 31, 2006. Underthe proposal there would be no further benefits accrued after December 31,2006, but continued vesting (for associates with less than five years ofvesting service), the Company would continue to fund existing benefitobligations and there would be no new participants in the future. The Companyis in the process of evaluating the impact of the proposed plan freeze on itsconsolidated financial statements. The Company’s Board of Directors also approveda proposal to increase the Company’s matching in its 401(k) savings planto 100% of an employee’s contribution up to 5% of the employee’s compensation.

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**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

**Forward LookingStatements**

This report includes “forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933 and Section 21Eof the Securities Exchange Act of 1934. All statements, other than statementsof historical facts, included in this Quarterly Report on Form 10-Qregarding the prospects of our industry and our prospects, plans, financialposition and business strategy may constitute forward-looking statements.In addition, forward-looking statements generally can be identified bythe use of forward-looking terminology such as “may,” “will,” “expect,” “intend,”“estimate,” “anticipate,” “plan,” “foresee,” “believe” or “continue” or thenegatives of these terms or variations of them or similar terminology. Althoughwe believe that the expectations reflected in these forward-lookingstatements are reasonable, we can give no assurance that these expectationswill prove to have been correct. All such forward-looking statements aresubject to certain risks and uncertainties that could cause actual results todiffer materially from those contemplated by the relevant forward-lookingstatement. Important factors that could cause actual results to differmaterially from our expectations include, among others: (i) the cost andavailability of films and the performance of films licensed by us; (ii) competition,including the introduction of alternative forms of entertainment; (iii) constructiondelays; (iv) the ability to open or close theatres and screens ascurrently planned; (v) the ability to sub-lease vacant retail space; (vi) domesticand international political, social and economic conditions; (vii) demographicchanges; (viii) increases in the demand for real estate; (ix) changesin real estate, zoning and tax laws; (x) unforeseen changes in operatingrequirements; (xi) our ability to identify suitable acquisition candidatesand successfully integrate acquisitions into our operations, including theintegration of Loews Cineplex Entertainment Corporation and the achievement ofestimated cost savings and synergies as a result of the Mergers (as definedbelow) on a timely basis; (xii) results of significant litigation; and(xiii) our ability to enter into various financing programs. Readers areurged to consider these factors carefully in evaluating the forward-lookingstatements. For further information about these and other risks anduncertainties, see Item 1A. “Risk Factors” in our Annual Report on Form 10-Kfor the fiscal year ended March 30, 2006.

All subsequent written andoral forward-looking statements attributable to us or persons acting onour behalf are expressly qualified in their entirety by these cautionarystatements. The forward-looking statements included herein are made onlyas of the date of this Quarterly Report on Form 10-Q, and we do notundertake any obligation to release publicly any revisions to such forward-lookingstatements to reflect events or circumstances after the date hereof or toreflect the occurrence of unanticipated events.

**Overview**

We are one of the world’s leading theatricalexhibition companies. During the twenty-six weeks ended September 28,2006, we sold 4 theatres in Spain with 86 screens, sold one theatrein Portugal with 20 screens, disposed of 8 theatres with100 screens in the U.S. as required by and in connection with the approvalof the Mergers discussed below, closed 7 theatres with 54 screens inthe U.S., closed one managed theatre with 6 screens in the U.S., openedtwo new theatres with 33 screens in the U.S., acquired two theatres with32 screens in the U.S., added 6 screens to an existing theatre in theU.S., opened one new theatre with 9 screens in Mexico, and disposed of onetheatre in Argentina with 8 screens resulting in a circuit total of411 theatres and 5,635 screens. As of September 28, 2006, we owned,operated or had interests in 411 theatres and 5,635 screens with 82%,or 4,628 of our screens in the U.S. and Canada, and 18%, or 1,007 of ourscreens in Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong),France, Spain and the United Kingdom.

In connection with the Mergers as discussed below, weacquired Loews on January 26, 2006, which significantly increased oursize. In the Merger, we acquired 112 theatres with 1,308 screens in the UnitedStates (included in our U.S. and Canada operating segment) and 40 theatres with443 screens in Mexico 

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(included in ourInternational operating segment), that are included in our consolidated resultsof operations from January 26, 2006. Accordingly, results of operationsfor the thirteen and twenty-six weeks ended September 28, 2006, whichinclude thirteen and twenty-six weeks of operations of the businesses we acquired,are not comparable to our results for the thirteen and twenty-six weeks ended September 29,2005. For additional information about the Mergers, see Note 2 to theConsolidated Financial Statements under Part I Item 1. of this Report on Form 10-Q/A.

On March 29, 2005, we along with RegalEntertainment Group (“Regal”) combined our respective cinema screen advertisingbusinesses into a new joint venture company called National CineMedia, LLC (“NCM”).The company engages in the marketing and sale of cinema advertising andpromotions products; business communications and training services; and thedistribution of digital alternative content. We record our share of on-screenadvertising revenues generated by our advertising subsidiary (NCN) and NCM inother theatre revenues. We contributed fixed assets, exhibitor agreements andgoodwill (recorded in connection with the merger with Marquee) of our cinemascreen advertising subsidiary NCN to NCM. Additionally, we paid terminationbenefits related to the displacement of certain NCN associates. In considerationof the NCN contributions described above, NCM, issued a 37% interest in its Class Aunits to NCN. Since that date, NCN’s interest in NCM has declined to 29% due tothe entry of Cinemark as an investor.

On June 20, 2005, Marquee Holdings Inc. (“Holdings”),the parent company of AMC Entertainment Inc. (“AMCE”), entered into amerger agreement with LCE Holdings, Inc. (“LCE Holdings”), the parent ofLoews Cineplex Entertainment Corporation (“Loews”), pursuant to which LCEHoldings merged with and into Holdings, with Holdings continuing as the holdingcompany for the merged businesses, and Loews merged with and into AMCE, withAMCE continuing after the merger (the “Merger” and collectively, “the Mergers”).The transactions closed on January 26, 2006. Upon completion of theMergers, the stockholders of Holdings immediately prior to the Mergers heldapproximately 60% of its outstanding capital stock, and the stockholders of LCEHoldings, including affiliates of Bain Capital Partners, LLC, The Carlyle Groupand Spectrum Equity Investors, immediately prior to the Mergers heldapproximately 40% of Holding’s outstanding capital stock.

In connection withthe Merger, on January 26, 2006, AMCE entered into the following financingtransactions:

·                    theissuance of $325,000,000 in aggregate principal amount of 11% SeniorSubordinated Notes due 2016 (the “Notes due 2016”);

·                    anew senior secured credit facility with Citicorp North America, Inc.,Banco Nacional de México, S.A., integrante del Grupo Financiero Banamex and thelenders named therein, consisting of a $650,000,000 term loan facility and a$200,000,000 revolving credit facility (the “New Credit Facility”);

·                    thetermination of AMCE’s March 25, 2004 senior secured credit facility, underwhich no amounts were outstanding;

·                    therepayment of all outstanding amounts under Loews’ senior secured creditfacility and the termination of all commitments thereunder (the “Loews Facility”);and

·                    thecompletion of a tender offer and consent solicitation (the “Tender Offer”) forall $315,000,000 aggregate principal amount of Loews’ 9.0% senior subordinatednotes due 2014.

The proceeds of the financing transactions were usedto repay amounts outstanding under the Loews Facility, to fund the TenderOffer, to pay related fees and expenses, and to pay fees and expenses relatedto the Merger.

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On June 30, 2005, we sold one of our wholly-ownedsubsidiaries, Japan AMC Theatres Inc., including four of our five theatresin Japan. We sold our remaining Japan theatre on September 1, 2005. Theoperations and cash flows of the Japan theatres were eliminated from ourongoing operations as a result of the disposal transactions. We do not have anysignificant continuing involvement in the operations of the Japan theatres. Theresults of operations of the Japan theatres have been classified asdiscontinued operations, and information presented for all periods reflects thenew classification. The operations of the Japan theatres were previouslyreported in our International theatrical exhibition operating segment.

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

In May 2006, AMCEI and its subsidiary, AMCEntertainment International Limited, sold its interests in AMC EntertainmentEspaña S.A., which owned and operated 4 theatres with 86 screens in Spain, andActividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1theatre with 20 screens in Portugal. These operations have been classified asdiscontinued operations as a result of our disposition of Yelmo Cineplex, S.C.(“Yelmo”) in December 2006 as we no longer have continuing involvement with anothercircuit in this region.

In December 2006 we disposed of our equity methodinvestment in Yelmo which owned and operated 27 theatres with 310 screens inSpain on the date of the sale.

For financial reporting purposes we have threesegments, U.S. and Canada theatrical exhibition (formerly, North Americantheatrical exhibition), International theatrical exhibition and Other, with themost significant activity in Other related to on-screen advertising.

Our U.S. and Canada and International theatricalexhibition revenues are generated primarily from box office admissions andtheatre concession sales. The balance of our revenues are generated from ancillarysources, including on-screen advertising, rental of theatre auditoriums, feesand other revenues generated from the sale of gift certificates and theatretickets and arcade games located in theatre lobbies.

Box office admissions are our largest source ofrevenue. We predominantly license “first-run” motion pictures from distributorsowned by major film production companies and from independent distributors.

We license films on a film-by-film and theatre-by-theatrebasis. Film exhibition costs are accrued based on the applicable admissionsrevenues and estimates of the final settlement pursuant to our film licenses.Licenses that we enter into typically state that rental fees are based oneither aggregate terms established prior to the opening of the picture or on amutually agreed settlement upon the conclusion of the picture run. Under anaggregate terms formula, we pay the distributor a specified percentage of box officereceipts. The settlement process allows for negotiation based upon how a filmactually performs.

Concessions sales are our second largest source ofrevenue after box office admissions. Concessions items include popcorn, softdrinks, candy, hot dogs and other products. We negotiate prices for our concessionsproducts and supplies directly with concessions vendors on a national orregional basis to obtain high volume discounts or bulk rates and marketingincentives.

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

During fiscal 2006, films licensed from our tenlargest distributors based on revenues accounted for approximately 88% of ourU.S. and Canada admissions revenues. Our revenues attributable to individual 

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distributors may varysignificantly from year to year depending upon the commercial success of eachdistributor’s motion pictures in any given year.

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

We continually upgrade the quality of our theatrecircuit by adding new screens through new builds (including expansions) andacquisitions and by disposing of older screens through closures and sales. Webelieve our introduction of the megaplex concept in 1995 has led to the currentindustry replacement cycle, which has accelerated the obsolescence of older,smaller theatres by setting new standards for moviegoers. From 1995 through March 30,2006, AMC Entertainment and Loews added 191 theatres with 3,475 new screens,acquired 431 theatres with 3,007 screens and disposed of 666 theatres with4,018 screens. As of September 28, 2006, approximately 71% of our screensin the U.S. and Canada were located in megaplex theatres.

 

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**Operating Results**

Setforth in the table below is a summary of revenues, costs and expensesattributable to the Company’s U.S. and Canada and International theatricalexhibition operations and Other businesses. Reference is made to Note 11to the Notes to Consolidated Financial Statements for additional informationabout our operations by operating segment.

| ** **                             | ** ** | **Thirteen Weeks Ended**                                         | ** ** | **Twenty-Six Weeks Ended**               | ** ** |
|----------------------------------------|------------|----------------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                             | ** ** | **September 28,  2006  (restated)(2)**                                | ** ** | **September 29,  2005  (restated)(2)**        | ** ** | **% Change** | ** ** | **September 28,  2006  (restated)(2)** | ** ** | **September 29,  2005  (restated)(2)** | ** ** | **% Change** | ** ** |
| ** **                             | ** ** | **(thousands of dollars, except operating data)** | ** ** | **(thousands of  dollars, except operating data)** | ** ** |
| **Revenues**                           | ** ** |                                                                       | ** ** | ** **                                         |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| U.S. and Canada  theatrical exhibition |       |                                                                       |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                             |       |                                                                       | $          | 398,590                                            |       |   |   | $ | 258,276 |   |   |   | 54.3 | % |   |   | $ | 807,429 |   |   |   | $ | 524,640 |   |   |   | 53.9 | % |   |
| Concessions                            |       |                                                                       | 161,440    |                                               |       |   | 101,639 |   |   |   | 58.8 | % |   |   | 325,749 |   |   |   | 209,715 |   |   |   | 55.3 | % |   |
| Other  theatre                         |       |                                                                       | 25,268     |                                               |       |   | 17,089 |   |   |   | 47.9 | % |   |   | 49,811 |   |   |   | 35,995 |   |   |   | 38.4 | % |   |
|                                   |       |                                                                       | 585,298    |                                               |       |   | 377,004 |   |   |   | 55.2 | % |   |   | 1,182,989 |   |   |   | 770,350 |   |   |   | 53.6 | % |   |
| International theatrical  exhibition   |       |                                                                       |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                             |       |                                                                       | 23,983     |                                               |       |   | 3,947 |   |   |   | * |   |   |   | 50,784 |   |   |   | 7,537 |   |   |   | * |   |   |
| Concessions                            |       |                                                                       | 15,305     |                                               |       |   | 1,122 |   |   |   | * |   |   |   | 32,040 |   |   |   | 2,184 |   |   |   | * |   |   |
| Other  theatre                         |       |                                                                       | 6,943      |                                               |       |   | 248 |   |   |   | * |   |   |   | 11,536 |   |   |   | 597 |   |   |   | * |   |   |
|                                   |       |                                                                       | 46,231     |                                               |       |   | 5,317 |   |   |   | * |   |   |   | 94,360 |   |   |   | 10,318 |   |   |   | * |   |   |
| Other                                  |       |                                                                       | 22         |                                               |       |   | 5,098 |   |   |   | (99.6 | )% |   |   | 36 |   |   |   | 10,553 |   |   |   | (99.7 | )% |   |
| Total  revenues                        |       |                                                                       | $          | 631,551                                            |       |   |   | $ | 387,419 |   |   |   | 63.0 | % |   |   | $ | 1,277,385 |   |   |   | $ | 791,221 |   |   |   | 61.4 | % |   |
| **Cost of Operations**                 | ** ** |                                                                       | ** ** | ** **                                         |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| U.S. and Canada  theatrical exhibition |       |                                                                       |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Film  exhibition costs                 |       |                                                                       | $          | 208,911                                            |       |   |   | $ | 137,643 |   |   |   | 51.8 | % |   |   | $ | 425,027 |   |   |   | $ | 284,588 |   |   |   | 49.3 | % |   |
| Concession  costs                      |       |                                                                       | 16,980     |                                               |       |   | 11,157 |   |   |   | 52.2 | % |   |   | 35,054 |   |   |   | 22,438 |   |   |   | 56.2 | % |   |
| Theatre  operating expense             |       |                                                                       | 151,153    |                                               |       |   | 97,908 |   |   |   | 54.4 | % |   |   | 294,300 |   |   |   | 193,399 |   |   |   | 52.2 | % |   |
| Rent                                   |       |                                                                       | 104,997    |                                               |       |   | 72,787 |   |   |   | 44.3 | % |   |   | 210,564 |   |   |   | 146,020 |   |   |   | 44.2 | % |   |
| Preopening  expense                    |       |                                                                       | 1,625      |                                               |       |   | 728 |   |   |   | * |   |   |   | 2,190 |   |   |   | 736 |   |   |   | * |   |   |
| Theatre  and other closure expense     |       |                                                                       | 5,680      |                                               |       |   | 322 |   |   |   | * |   |   |   | 7,690 |   |   |   | 931 |   |   |   | * |   |   |
|                                   |       |                                                                       | 489,346    |                                               |       |   | 320,545 |   |   |   | 52.7 | % |   |   | 974,825 |   |   |   | 648,112 |   |   |   | 50.4 | % |   |
| International theatrical  exhibition   |       |                                                                       |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Film  exhibition costs                 |       |                                                                       | 10,309     |                                               |       |   | 1,848 |   |   |   | * |   |   |   | 22,144 |   |   |   | 3,530 |   |   |   | * |   |   |
| Concession  costs                      |       |                                                                       | 3,797      |                                               |       |   | 226 |   |   |   | * |   |   |   | 7,738 |   |   |   | 466 |   |   |   | * |   |   |
| Theatre  operating expense             |       |                                                                       | 11,585     |                                               |       |   | 2,036 |   |   |   | * |   |   |   | 23,194 |   |   |   | 4,230 |   |   |   | * |   |   |
| Rent                                   |       |                                                                       | 6,756      |                                               |       |   | 2,392 |   |   |   | * |   |   |   | 13,508 |   |   |   | 4,964 |   |   |   | * |   |   |
| Preopening  expense                    |       |                                                                       | 462        |                                               |       |   | — |   |   |   | * |   |   |   | 939 |   |   |   | — |   |   |   | * |   |   |
| Theatre  closure                       |       |                                                                       | (13        | )                                                  |       |   | 24 |   |   |   | * |   |   |   | 20 |   |   |   | 49 |   |   |   | (59.2 | )% |   |
|                                   |       |                                                                       | 32,896     |                                               |       |   | 6,526 |   |   |   | * |   |   |   | 67,543 |   |   |   | 13,239 |   |   |   | * |   |   |
| Other                                  |       |                                                                       | 521        |                                               |       |   | 5,213 |   |   |   | (90.0 | )% |   |   | 946 |   |   |   | 11,182 |   |   |   | (91.5 | )% |   |
| General and  administrative expense:   |       |                                                                       |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger  and Acquisition costs          |       |                                                                       | 2,074      |                                               |       |   | 960 |   |   |   | * |   |   |   | 5,826 |   |   |   | 2,645 |   |   |   | * |   |   |
| Management  Fee                        |       |                                                                       | 1,250      |                                               |       |   | 500 |   |   |   | * |   |   |   | 2,500 |   |   |   | 1,000 |   |   |   | * |   |   |
| Other                                  |       |                                                                       | 14,268     |                                               |       |   | 8,975 |   |   |   | 59.0 | % |   |   | 30,041 |   |   |   | 19,079 |   |   |   | 57.5 | % |   |
| Restructuring  charge                  |       |                                                                       | —     |                                               |       |   | 839 |   |   |   | * |   |   |   | — |   |   |   | 3,908 |   |   |   | * |   |   |
| Depreciation and  amortization         |       |                                                                       | 64,634     |                                               |       |   | 36,600 |   |   |   | 76.6 | % |   |   | 128,530 |   |   |   | 72,547 |   |   |   | 77.2 | % |   |
| Disposition of assets and  other gains |       |                                                                       | (7,286     | )                                                  |       |   | (103 | ) |   |   | * |   |   |   | (5,850 | ) |   |   | (770 | ) |   |   | * |   |   |
| Total costs and expenses               |       |                                                                       | $          | 597,703                                            |       |   |   | $ | 380,055 |   |   |   | 57.3 | % |   |   | $ | 1,204,361 |   |   |   | $ | 770,942 |   |   |   | 56.2 | % |   |

 

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| ** **                                                 | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|------------------------------------------------------------|------------|------------------------------------|------------|--------------------------------------|------------|
| ** **                                                 | ** ** | **September 28,  2006**       | ** ** | **September 29,  2005**         | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| **Operating Data (at period end):**                        |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Screen additions                                           |       |                               | 18         |                                 |       |   | 16 |   |   |   | 48 |   |   |   | 16 |   |   |
| Screen acquisitions                                        |       |                               | 32         |                                 |       |   | — |   |   |   | 32 |   |   |   | — |   |   |
| Screen dispositions                                        |       |                               | 94         |                                 |       |   | 16 |   |   |   | 274 |   |   |   | 87 |   |   |
| Average screens—  continuing operations(1)            |       |                               | 5,103      |                                 |       |   | 3,339 |   |   |   | 5,121 |   |   |   | 3,342 |   |   |
| Number of screens operated                                 |       |                               | —     |                                 |       |   | — |   |   |   | 5,635 |   |   |   | 3,643 |   |   |
| Number of theatres operated                                |       |                               | —     |                                 |       |   | — |   |   |   | 411 |   |   |   | 242 |   |   |
| Screens per theatre                                        |       |                               | —     |                                 |       |   | — |   |   |   | 13.7 |   |   |   | 15.1 |   |   |
| Attendance—  continuing operations(1)  (in thousands) |       |                               | 62,349     |                                 |       |   | 37,929 |   |   |   | 127,318 |   |   |   | 77,070 |   |   |

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(1)          Includesconsolidated theatres only.

(2)          Werestated our financial statements for management-purchased shares and stockoption awards and to reflect reclassifications for discontinued operations. SeeNotes 1 and 3 to our consolidated financial statements.

*                    Percentagechange in excess of 100%

**Thirteen weeksEnded September 28, 2006 and September 29, 2005**

**Revenues.****  **Total revenues increased 63.0%, or $244,132,000,during the thirteen weeks ended September 28, 2006 compared to thethirteen weeks ended September 29, 2005. This increase includedapproximately $189,655,000 of additional admission and concessions revenuesresulting from the Merger.

U.S. and Canadatheatrical exhibition revenues increased 55.2%, or $208,294,000, during thethirteen weeks ended September 28, 2006 compared to the thirteenweeks ended September 29, 2005. Admissions revenues increased 54.3%,or $140,314,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005, due to a46.1% increase in total attendance, including the increased attendance andadmissions revenues of $111,877,000 due to the Merger, and a 5.6% increase inaverage ticket prices. Admissions revenues at comparable theatres (theatresopened on or before the second quarter of fiscal 2006) increased 6.8% duringthe thirteen weeks ended September 28, 2006 over the comparableperiod last year, primarily due to a 3.4% increase in attendance at comparabletheatres. The increase in average ticket price was primarily due to ourpractice of periodically reviewing ticket prices and the discounts we offer andmaking selective adjustments based upon such factors as general inflationarytrends and conditions in local markets. Based upon available industry sources,box office revenues of our comparable theatres (including comparable theatresacquired in the Merger) performed in line with overall performance of industrycomparable theatres in the markets where we operate. Concessions revenuesincreased 58.8%, or $59,801,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in attendance and an 8.7% increase in average concessions per patronrelated primarily to price increases. Concession revenues increased by$42,252,000 due to the Merger. Other theatre revenues increased 47.9%, or $8,179,000,during the thirteen weeks ended September 28, 2006 compared to thethirteen weeks ended September 29, 2005. Included in other theatrerevenues are our share of on-screen advertising revenues generated by NCN andNCM. The increase in other theatre revenues was primarily due to increases inon-screen advertising revenues as a result of the Merger.

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International theatrical exhibition revenues increased$40,914,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. Admissionsrevenues increased by $21,345,000 due to the theatres acquired in Mexico in theMerger. Overall, admissions revenues increased $20,036,000 during the thirteenweeks ended September 28, 2006 compared to the thirteen weeks ended September 29, 2005due to an increase of 7,214,000 in total attendance, partially offset by a 51.3%decrease in average ticket price due primarily to the lower average ticketprices from the theatres acquired in Mexico. Concessions revenues increased$14,181,000 due to the theatres acquired in Mexico in the Merger. Overall, concessionrevenues increased $14,183,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in attendance and a 9.2% increase in concessions per patron.International revenues were positively impacted by a weaker U.S. dollar,although this did not contribute materially to consolidated loss fromcontinuing operations.

Revenues from Other decreased 99.6%, or $5,076,000,during the thirteen weeks ended September 28, 2006 compared to thethirteen weeks ended September 29, 2005 due to the contribution ofNCN’s net assets to NCM on March 29, 2005 and the related run-off ofcustomer contracts. The revenues of NCN during fiscal 2006 and 2007 arecomprised of customer contracts entered into prior to March 29, 2005. Ourshare of advertising revenues generated by NCM are included in U.S. and CanadaOther theatre revenues.

**Costs and expenses.****  **Total costs and expenses increased 57.3%,or $217,648,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. The effectof the Merger was an increase in total costs and expenses of approximately $170,461,000.

U.S. and Canadatheatrical exhibition costs and expenses increased 52.7%, or $168,801,000,during the thirteen weeks ended September 28, 2006 compared to thethirteen weeks ended September 29, 2005. Film exhibition costsincreased 51.8%, or $71,268,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in admissions revenues, offset by a decrease in the percentage ofadmissions paid to film distributors. As a percentage of admissions revenues,film exhibition costs were 52.4% in the current period as compared with 53.3%in the prior period due to more favorable film rental terms primarily fromtheatres acquired in the Merger. Concession costs increased 52.2%, or$5,823,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in concessions revenues and a decrease in concession costs as apercentage of concessions revenues. As a percentage of concessions revenues, concessioncosts were 10.5% in the current period compared with 11.0% in the prior period.As a percentage of revenues, theatre operating expense was 25.8% in the currentperiod as compared to 26.0% in the prior period. Rent expense increased 44.3%,or $32,210,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 primarily dueto the Merger, which increased rent expense by approximately $25,528,000.During the thirteen weeks ended September 28, 2006, we recognized$5,680,000 of theatre and other closure expense due primarily to the closure oftwo theatres with 14 screens and to accretion of the closure liability relatedto theatres closed during prior periods. During the thirteen weeks ended September 29, 2005,we recognized $322,000 of theatre and other closure expense related primarilyto accretion of the closure liability related to theatres closed during priorperiods.

International theatrical exhibition costs and expensesincreased $26,370,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks year ended September 29, 2005. Filmexhibition costs increased $8,461,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in admissions revenues, partially offset by a decrease in thepercentage of admissions paid to film distributors. As a percentage ofadmissions revenues, film exhibition costs were 43.0% in the current period ascompared with 46.8% in the prior period due to the effect of more favorablefilm rental terms in Mexico. Concession costs increased $3,571,000 during thethirteen weeks ended September 28, 2006 compared to the thirteenweeks ended September 29, 2005 due 

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to the increase inconcession revenues and an increase in concession costs as a percentage ofrevenue from 20.1% in the prior period to 24.8% in the current period. Thisincrease in concession costs as a percentage of revenues was due to the effectof higher concession costs as a percentage of concession revenues in Mexicocaused by a higher number of concession products offered for sale with lowermargins. As a percentage of revenues, theatre operating expense was 25.1%in the current period compared to 38.3% in the prior period. Theatre operatingexpense as a percentage of revenues in Mexico were 22.4% in the current period.Rent expense increased $4,364,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 primarily asa result of the Merger. We continually monitor the performance of ourinternational theatres, and factors such as changing consumer preferences forfilmed entertainment in international markets and our ability to subleasevacant retail space could negatively impact operating results and result infuture closures, sales, dispositions and theatre closure charges prior toexpiration of underlying lease agreements. International theatrical exhibitioncosts and expenses were negatively impacted by a weaker U.S. dollar, althoughthis did not contribute materially to consolidated loss from continuingoperations.

Costs and expenses from Other decreased 90.0%, or$4,692,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to thecontribution of net assets by NCN to NCM and run-off of customer contracts.

**General andAdministrative Expense:**

**Mergerand acquisition costs.****  **Merger and acquisition costs increased $1,114,000 from$960,000 to $2,074,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. Current yearcosts are primarily comprised of professional and consulting, repairs andmaintenance to update certain of the Loews theatres and salaries costs relatedto the Merger and other potential divestiture activities.

**Managementfees.****  **Managementfees increased $750,000 during the current period. For fiscal 2007, managementfees of $1,250,000 will be paid quarterly, in advance, to our Sponsors inexchange for consulting and other services.

**Other.****  **Other general and administrativeexpense increased 59.0%, or $5,293,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. We incurredexpense at Cinemex of $2,513,000, incentive-based compensation increased$1,485,000 due to improvements in operating results and we experiencedincreases in other salaries of $782,000 primarily related to the Merger.

**RestructuringCharges.****  **Restructuringcharges were $0 during the thirteen weeks ended September 28, 2006 ascompared to $839,000 during the thirteen weeks ended September 29, 2005.The prior period expenses are primarily related to one-time terminationbenefits and other costs related to the displacement of approximately 200associates related to an organizational restructuring, which was completed tocreate a simplified organizational structure and contribution of assets by NCNto NCM.

**Depreciationand Amortization.****  **Depreciationand amortization increased 76.6%, or $28,034,000, compared to the prior period,due primarily to increased asset values associated with fair value adjustmentsrecorded as a result of the Merger. See Note 2—Acquisitions for discussionof the cumulative adjustment recorded during the thirteen weeks ended September 28,2006.

**Dispositionof Assets and Other Gains.****  **Disposition of assets and other gains were $7,286,000in the current period compared to $103,000 in the prior period. The current andprior periods include $6,530,000 and $0, respectively, of settlements receivedrelated to fireproofing claims at various theatres (see Note 13—Commitmentsand Contingencies to Consolidated Financial Statements). The current period includesa gain on U.S. dispositions of theatres as required by and in connection withthe Mergers of approximately $517,000.

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**OtherIncome.****  **Otherincome includes $5,974,000 and $4,931,000 of income related to the derecognitionof stored value card liabilities where we believe future redemption to beremote, during the thirteen weeks ended September 28, 2006 and September 29, 2005,respectively. 

**InterestExpense.****  **Interestexpense increased 84.9%, or $26,531,000, primarily due to increased borrowings.

On January 26, 2006, AMCE issued $325,000,000 of theNotes due 2016 and entered into the New Credit Facility for $850,000,000, ofwhich $646,750,000 is currently outstanding as a variable rate term note. Wealso incurred interest expense related to debt held by Cinemex of $3,159,000during the thirteen weeks ended September 28, 2006.

**InvestmentIncome.****  **Investmentincome was $3,234,000 for the thirteen weeks ended September 28, 2006compared to income of $975,000 for the thirteen weeks ended September 29, 2005.Interest income increased $3,058,000 from the prior period due primarily tolarger amounts of cash and equivalents available for investment. Equity inlosses of non-consolidated entities were $298,000 in the current periodcompared to $13,000 in the prior period. Current year equity in losses relatedto our investment in NCM and (earnings) related to Yelmo Cineplex, S.L. were$1,224,000 and ($783,000), respectively.

**IncomeTax Provision (Benefit).****  **The provision for income taxes from continuingoperations was $1,900,000 for the thirteen weeks ended September 28, 2006compared to a benefit of $6,900,000 for the thirteen weeks ended September 29, 2005.See Note 9—Income Taxes to the Consolidated Financial Statements.

**LossFrom Discontinued Operations, Net.  ****On May 11, 2006, we sold AMCEntertainment España S.A. and Actividades Multi-Cinemeas E Espectáculos, LDA(collectively “Iberia”), including 4 theatres with 86 screens in Spain and 1theatre with 20 screens in Portugal. At the date of the sale these operationsdid not meet the criteria for discontinued operations because of continuinginvolvement in the region through an equity method investment in Yelmo. InDecember 2006, we disposed of our investment in Yelmo, including 27 theatreswith 310 screens in Spain, and the results of the operations in Iberia have nowbeen classified as discontinued operations.**   On June 30, 2005 we soldJapan AMC Theatres, Inc., including four theatres in Japan with 63screens. The results of operations of these theatres are classified asdiscontinued operations. Additionally, on September 1, 2005 we sold theremaining Japan theatre with 16 screens and classified its operations asdiscontinued operations. The information presented for all periods reflect theseas discontinued operations. See Note 3-Discontinued Operations tothe Consolidated Financial Statements for the components of the loss from discontinuedoperations.

**Net Loss.****  **Net loss was $16,873,000 and $14,496,000for the thirteen weeks ended September 28, 2006 and the thirteenweeks ended September 29, 2005, respectively.

**Twenty-six weeksEnded September 28, 2006 and September 29, 2005**

**Revenues.****  **Total revenues increased 61.4%, or $486,164,000,during the twenty-six weeks ended September 28, 2006 compared to thetwenty-six weeks ended September 29, 2005. This increase includedapproximately $385,142,000 of additional admission and concessions revenues resultingfrom the Merger.

U.S. and Canadatheatrical exhibition revenues increased 53.6%, or $412,639,000, during thetwenty-six weeks ended September 28, 2006 compared to the tweny-sixweeks ended September 29, 2005. Admissions revenues increased 53.9%,or $282,789,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005, due to a45.8% increase in total attendance, including the increased attendance andadmissions revenues of $224,695,000 due to the Merger, and a 5.6% increase inaverage ticket prices. Admissions revenues at comparable theatres (theatresopened on or before the first quarter of fiscal 2006) increased 6.2% during thetwenty-six weeks ended September 28, 2006 over the comparable periodlast year, primarily due to a 2.8% increase in attendance at 

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comparable theatres. Theincrease in average ticket price was primarily due to our practice of periodicallyreviewing ticket prices and the discounts we offer and making selectiveadjustments based upon such factors as general inflationary trends andconditions in local markets. Based upon available industry sources, box officerevenues of our comparable theatres (including comparable theatres acquired inthe Merger) performed in line with overall performance of industry comparabletheatres in the markets where we operate. Concessions revenues increased 55.3%,or $116,034,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to theincrease in attendance and a 6.5% increase in average concessions per patronrelated primarily to price increases. Concession revenues increased by$85,470,000 due to the Merger. Other theatre revenues increased 38.4%, or$13,816,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. Includedin other theatre revenues are our share of on-screen advertising revenuesgenerated by NCN and NCM. The increase in other theatre revenues was primarilydue to increases in on-screen advertising revenues as a result of the Merger.

International theatrical exhibition revenues increased$84,042,000 during the twenty-six weeks ended September 28, 2006 comparedto the twenty-six weeks ended September 29, 2005. Admissions revenuesincreased by $45,190,000 due to the theatres acquired in Mexico in the Merger.Overall, admissions revenues increased $43,247,000 during the twenty-six weeksended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005due to an increase of 15,493,000 in total attendance, partially offset by a 51.6%decrease in average ticket price due primarily to the lower average ticketprices from the theatres acquired in Mexico. Concessions revenues increased$29,787,000 due to the theatres acquired in Mexico in the Merger. Overall, concessionrevenues increased $29,856,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to theincrease in attendance and a 5.3% increase in concessions per patron.International revenues were positively impacted by a weaker U.S. dollar, althoughthis did not contribute materially to consolidated loss from continuing operations.

Revenues from Other decreased 99.7%, or $10,517,000,during the twenty-six weeks ended September 28, 2006 compared to thetwenty-six weeks ended September 29, 2005 due to the contribution ofNCN’s net assets to NCM on March 29, 2005 and the related run-off ofcustomer contracts. The revenues of NCN during fiscal 2006 and 2007 arecomprised of customer contracts entered into prior to March 29, 2005. Ourshare of advertising revenues generated by NCM are included in U.S. and CanadaOther theatre revenues.

**Costs and expenses.****  **Total costs and expenses increased 56.2%,or $433,419,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. The effectof the Merger was an increase in total costs and expenses of approximately $345,893,000.

U.S. and Canadatheatrical exhibition costs and expenses increased 50.4%, or $326,713,000,during the twenty-six weeks ended September 28, 2006 compared to thetwenty-six weeks ended September 29, 2005. Film exhibition costs increased49.3%, or $140,439,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to theincrease in admissions revenues, offset by a decrease in the percentage ofadmissions paid to film distributors. As a percentage of admissions revenues,film exhibition costs were 52.6% in the current period as compared with 54.2%in the prior period due to more favorable film rental terms primarily fromtheatres acquired in the Merger. Concession costs increased 56.2%, or$12,616,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to theincrease in concessions revenues and an increase in concession costs as apercentage of concessions revenues. As a percentage of concessions revenues,concession costs were 10.8% in the current period compared with 10.7% in theprior period. As a percentage of revenues, theatre operating expense was 24.9%in the current period as compared to 25.1% in the prior period. Rent expenseincreased 44.2%, or $64,544,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 primarily 

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due to the Merger, whichincreased rent expense by $50,409,000. During the twenty-six weeks ended September 28, 2006,we recognized $7,690,000 of theatre and other closure expense due primarily tothe closure of three theatres with 22 screens and to accretion of the closureliability related to theatres closed during prior periods. During thetwenty-six weeks ended September 29, 2005, we recognized $931,000 oftheatre and other closure expense related primarily to accretion of the closureliability related to theatres closed during prior periods.

International theatrical exhibition costs and expensesincreased $54,304,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. Film exhibitioncosts increased $18,614,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to theincrease in admissions revenues, partially offset by a decrease in thepercentage of admissions paid to film distributors. As a percentage ofadmissions revenues, film exhibition costs were 43.6% in the current period ascompared with 46.8% in the prior period due to the effect of more favorablefilm rental terms in Mexico. Concession costs increased $7,272,000 during thetwenty-six weeks ended September 28, 2006 compared to the twenty-sixweeks ended September 29, 2005 due to the increase in concessionrevenues and an increase in concession costs as a percentage of revenue from 21.3%in the prior period to 24.2% in the current period. This increase in concessioncosts as a percentage of revenues was due to the effect of higher concessioncosts as of percentage of concession revenues in Mexico caused by a highernumber of concession products offered for sale with lower margins. As apercentage of revenues, theatre operating expense was 24.6% in the currentperiod compared to 41.0% in the prior period. Theatre operating expense as apercentage of revenues in Mexico were 22.8% in the current period. Rent expenseincreased $8,544,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005, primarilyas a result of the Merger. We continually monitor the performance of ourinternational theatres and factors such as changing consumer preferences for filmedentertainment in international markets and our ability to sublease vacantretail space could negatively impact operating results and result in futureclosures, sales, dispositions and theatre closure charges prior to expirationof underlying lease agreements. International theatrical exhibition costs andexpenses were negatively impacted by a weaker U.S. dollar, although this didnot contribute materially to consolidated loss from continuing operations.

Costs and expenses from Other decreased 91.5%, or$10,236,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to thecontribution of net assets by NCN to NCM and run-off of customer contracts.

**General andAdministrative Expense:**

**Mergerand acquisition costs.****  **Merger and acquisition costs increased $3,081,000 from$2,645,000 to $5,826,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. Currentyear costs are primarily comprised of professional and consulting, repairs andmaintenance to update certain of the Loews theaters and salaries costs relatedto the Merger and other potential divestiture activities.

**Managementfees.****  **Managementfees increased $1,500,000 during the twenty-six weeks ended September 28,2006. For fiscal 2007, management fees of $1,250,000 will be paid quarterly, inadvance, to our Sponsors in exchange for consulting and other services.

**Other.****  **Other general and administrativeexpense increased 57.5%, or $10,962,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. We incurredexpense at Cinemex of $5,118,000, incentive-based compensation increased$2,283,000 due to improvements in operating results and we experiencedincreases in other salaries of $1,151,000 primarily related to the Merger.

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**RestructuringCharges.****  **Restructuringcharges were $0 during the twenty-six weeks ended September 28, 2006as compared to $3,908,000 during the twenty-six weeks ended September 29, 2005.The prior period expenses are primarily related to one-time terminationbenefits and other costs related to the displacement of approximately 200associates related to an organizational restructuring, which was completed tocreate a simplified organizational structure and contribution of assets by NCNto NCM.

**Depreciationand Amortization.****  **Depreciationand amortization increased 77.2%, or $55,983,000, compared to the prior period,due primarily to increased asset values associated with fair value adjustmentsrecorded as a result of the Merger. See Note 2—Acquisitions for discussion ofthe cumulative adjustment recorded during the thirteen weeks ended September 28,2006.

**Dispositionof Assets and Other Gains.****  **Disposition of assetsand other gains were $5,850,000 in the current period compared to $770,000 inthe prior period. The current and prior periods include $7,880,000 and$675,000, respectively, of settlements received related to fireproofing claims atvarious theatres (see Note 13—Commitments and Contingencies toConsolidated Financial Statements). The current period includes a loss on theU.S. dispositions of theatres as required by and in connection with the Mergersof $2,030,000.

**OtherIncome.****  **Other income includes $7,434,000 and$6,047,000 of income related to the derecognition of stored value card liabilitieswhere we believe future redemption to be remote, during the twenty-six weeksended September 28, 2006 and September 29, 2005, respectively.

**InterestExpense.****  **Interestexpense increased 83.8%, or $52,563,000, primarily due to increased borrowings.

On January 26, 2006, we issued $325,000,000 of11% senior subordinated notes due 2016 (“Notes due 2016”) and issued the newSenior Secured Credit Facility for $850,000,000, of which $646,750,000 is currentlyoutstanding as a variable rate term note. We also incurred interest expenserelated to debt held by Cinemex of $6,311,000 during fiscal 2007.

**InvestmentIncome.****  **Investmentincome was $3,605,000 for the twenty-six weeks ended September 28, 2006compared to income of $479,000 for the twenty-six weeks ended September 29,2005. Interest income increased $5,326,000 from the prior period due primarilyto larger amounts of cash and equivalents available for investment. Equity inlosses of non-consolidated entities were $2,455,000 in the current periodcompared to losses of $659,000 in the prior period. Current year equity inlosses related to our investments in NCM and Yelmo Cineplex, S.L. were $2,532,000and $311,000, respectively.

**IncomeTax Provision (Benefit).****  **The provision for income taxes from continuingoperations was $2,200,000 for the twenty-six weeks ended September 28, 2006compared to a benefit of $15,300,000 for the twenty-six weeks ended September 29, 2005.See Note 9—Income Taxes to the Consolidated Financial Statements.

**LossFrom Discontinued Operations, Net.  ****On May 11, 2006, we sold AMCEntertainment España S.A. and Actividades Multi-Cinemeas E Espectáculos, LDA(collectively “Iberia”), including 4 theatres with 86 screens in Spain and 1theatre with 20 screens in Portugal. At the date of the sale these operationsdid not meet the criteria for discontinued operations because of continuinginvolvement in the region through an equity method investment in Yelmo. InDecember 2006, we disposed of our investment in Yelmo, including 27 theatreswith 310 screens in Spain, and the results of the operations in Iberia have nowbeen classified as discontinued operations.**   On June 30, 2005 we soldJapan AMC Theatres, Inc., including four theatres in Japan with 63screens. The results of operations of these theatres are classified asdiscontinued operations. Additionally, on September 1, 2005 we sold theremaining Japan theatre with 16 screens and classified its operations asdiscontinued operations. The information presented for all periods reflectthese as discontinued operations. See Note 3-Discontinued Operationsto the Consolidated Financial Statements for the components of the loss fromdiscontinued operations.

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**Net Loss.****  **Net loss was $31,015,000 and $45,687,000 for thetwenty-six weeks ended September 28, 2006 and the twenty-six weeksended September 29, 2005, respectively.

**LIQUIDITY AND CAPITAL RESOURCES**

Our revenues are primarilycollected in cash, principally through box office admissions and theatreconcessions sales. We have an operating “float” which partially finances ouroperations and which generally permits us to maintain a smaller amount ofworking capital capacity. This float exists because admissions revenues arereceived in cash, while exhibition costs (primarily film rentals) areordinarily paid to distributors from 20 to 45 days following receipt ofbox office admissions revenues. Film distributors generally release the filmswhich they anticipate will be the most successful during the summer and holidayseasons. Consequently, we typically generate higher revenues during suchperiods.

**Cash Flows from Operating Activities**

Cash flows provided by(used in) operating activities, as reflected in the Consolidated Statements ofCash Flows, were $65,653,000 and $(5,039,000) during the twenty-six weeks endedSeptember 28, 2006 and September 29, 2005, respectively. Theincrease in operating cash flows during the twenty-six weeks ended September 28, 2006is primarily due to increases in attendance and improvement in operating results, includingamounts related to the Merger. We had a working capital surplus and (deficit)as of September 28, 2006 and March 30, 2006 of $20,033,000 and$(115,995,000), respectively. We received fireproofing checks totaling$7,880,000 during the twenty-six weeks ended September 28, 2006. Subsequentto September 28, 2006 we received additional fireproofing checks totaling$5,250,000. We have the ability to borrow against our credit facility to meetobligations as they come due (subject to limitations on the incurrence ofindebtedness in our various debt instruments) and had approximately $151,000,000and $90,000,000 available on our credit facility to meet these obligations for theperiods ended September 28, 2006 and March 30, 2006,respectively.

During the twenty-sixweeks ended September 28, 2006, we sold 4 theatres in Spain with86 screens, sold one theatre in Portugal with 20 screens, disposed of8 theatres with 100 screens in the U.S. as required by and inconnection with the approval of the Mergers, closed 7 theatres with54 screens in the U.S., closed one managed theatre with 6 screens inthe U.S., opened 2 new theatres with 33 screens in the U.S., acquired2 theatres with 32 screens in the U.S., added 6 screens to anexisting theatre in the U.S., opened one new theatre with 9 screens inMexico and disposed of one theatre in Argentina with 8 screens resultingin a circuit total of 411 theatres and 5,635 screens.

**Cash Flows from Investing Activities**

Cash provided by (used in)investing activities, as reflected in the Consolidated Statements of Cash Flowswere $27,339,000 and $(538,000), during the twenty-six weeks ended September 28, 2006and September 29, 2005, respectively. As of September 28, 2006,we had construction in progress of $28,257,000. We had 8 U.S. theatres with atotal of 117 screens and one Mexico theatre with 12 screens under constructionon September 28, 2006 that we expect to open in fiscal 2007. Cashoutflows from investing activities include capital expenditures of $64,105,000and $44,437,000 during the twenty-six weeks ended September 28, 2006and September 29, 2005, respectively. We expect that our grosscapital expenditures in fiscal 2007 will be approximately $143,000,000.

In May 2006, AMCEIand its subsidiary AMC Entertainment International Limited sold its interestsin AMC Entertainment España S.A., which owned and operated 4 theatres with 86screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA,which owned and operated 1 theatre with 20 screens in Portugal for a net salesprice of approximately $35,446,000.

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During the twenty-sixweeks ended September 28, 2006, we sold six theatres with 68 screens, exchangedtwo theatres with 32 screens, and closed one theatre with eight screens in theU.S. as required by and in connection with the approval of the Mergers for anaggregate sales price of $64,193,000.

On June 30, 2005, wedisposed of Japan AMC Theatres, Inc., including four of our five theatresin Japan, for a cash sales price of $44,861,000 and on September 1, 2005,sold our remaining Japan theatre for a sales price of $8,595,000.

We fund the costs ofconstructing new theatres using existing cash balances, cash generated from operationsor borrowed funds, as necessary. We generally lease our theatres pursuant tolong-term non-cancelable operating leases which may require the developer, whoowns the property, to reimburse us for a portion of the construction costs.However, we may decide to own the real estate assets of new theatres and,following construction, sell and leaseback the real estate assets pursuant tolong-term non-cancelable operating leases.

**Historically,we have either paid for or leased the equipment used in a theatre**

Subsequent to the quarterended September 28, 2006, National CineMedia, Inc., a newly-formed entitythat will serve as the sole manager of National CineMedia, LLC, announced thatit filed a registration statement with the SEC for an initial public offering,or IPO, of up to $700 million of its common stock. Net proceeds from the IPOwill be used to acquire newly issued equity interests from National CineMedia,LLC, and National CineMedia, LLC will distribute the net proceeds to each of AMC,Cinemark and Regal on a pro rata basis in connection with modifying paymentobligations for access to our theatres. In connection with the completion ofthe IPO, National CineMedia also intends to enter into an approximately $725million term loan facility the net proceeds of which will be used to redeempreferred units to be held by each of AMC, Cinemark and Regal on a pro ratabasis pursuant to a recapitalization of National CineMedia, LLC prior tocompletion of the IPO. AMC expects to receive net IPO and debt proceeds uponcompletion of such transactions of approximately $425-$475 million. AMCis currently exploring alternatives for using the IPO and debt proceeds, andmay use some or all of the proceeds to reduce debt or other discretionarytransactions. There can be no guarantee that National CineMedia, Inc. willcomplete the IPO or debt transactions or that AMC will receive any of the expectedproceeds.

In connection with thecompletion of the IPO, AMC intends to amend and restate its existing servicesagreement with National CineMedia, LLC whereby in exchange for our pro ratashare of the IPO proceeds, AMC will agree to a modification of NationalCineMedia, LLC’s payment obligation under the existing agreement. Themodification will extend the term of the agreement to 30 years, provideNational CineMedia, LLC with a five year right of first refusal beginning oneyear prior to the end of the term and change the basis upon which AMC is paidby National CineMedia, LLC from a percentage of revenues associated withadvertising contracts entered into by National CineMedia, LLC to a monthlytheatre access fee. The theatre access fee would be composed of a fixed paymentper patron and a fixed payment per digital screen, which would increase by 8%every five years starting at the end of fiscal 2011 for payments per patron andby 5% annually starting at the end of fiscal 2007 for payments per digitalscreen. Additionally, AMC will enter into the Loews Screen IntegrationAgreement with National CineMedia, LLC pursuant to which AMC will pay NationalCineMedia, LLC an amount that approximates the EBITDA that National CineMedia,LLC would generate if it were able to sell advertising in the Loews theatrechain on an exclusive basis commencing upon the completion of this IPO, andNational CineMedia, LLC will issue to AMC common membership units in NationalCineMedia, LLC; increasing it’s expected ownership interest to approximately34%, such Loews payments will be made quarterly until May 2008. Also, withrespect to any on-screen advertising time provided to our beverageconcessionaire, AMC would be required to purchase such time from NationalCineMedia, LLC at a negotiated rate. In addition, after completion of the IPO,AMC expects to receive mandatory quarterly distributions of excess cash from NationalCineMedia, LLC. There can be no guarantee that the amendment to the existingservices agreement will occur.

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**Cash Flows from Financing Activities**

Cash flows provided by(used in) financing activities, as reflected in the Consolidated Statement ofCash Flows, were $(11,267,000) and $6,455,000 during the twenty-six weeks endedSeptember 28, 2006 and September 29, 2005, respectively.

Reference is made toManagement’s Discussion and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources in our Annual Report on Form 10-K/Afor the fiscal year ended March 30, 2006 for certain information about ourNew Credit Facility, the Cinemex Credit Facility, our Notes due 2011, Notes due2012, Notes due 2014, Notes due 2016, Fixed Notes due 2012, Floating Notes due2010 and Discount Notes due 2014.

The New Credit Facility iswith a syndicate of banks and other financial institutions and provides financingof up to $850,000,000, consisting of a $650,000,000 term loan facility with amaturity of seven years and a $200,000,000 revolving credit facility with amaturity of six years. The revolving credit facility includes borrowingcapacity available for Mexican peso-denominated revolving loans, for letters ofcredit and for swingline borrowings on same-day notice. As of September 28, 2006,we had no borrowings under the revolving credit facility and $646,750,000 wasoutstanding under the term loan facility.

Borrowings under the NewCredit Facility bear interest at a rate equal to an applicable margin plus, atour option, either a base rate or LIBOR. The initial applicable margin forborrowings under the revolving credit facility is 0.75% with respect to baserate borrowings and 1.75% with respect to LIBOR borrowings, and the initialapplicable margin for borrowings under the term loan facility is 1.50% withrespect to base rate borrowings and 2.125% with respect to LIBOR borrowings.The applicable margin for such borrowings may be reduced, subject to AMCEattaining certain leverage ratios. In addition to paying interest onoutstanding principal under the New Credit Facility, we are required to pay acommitment fee to the lenders under the revolving credit facility in respect ofthe unutilized commitments thereunder at a rate equal to 0.375% (subject toreduction upon attainment of certain leverage ratios). We will also paycustomary letter of credit fees. We may voluntarily repay outstanding loansunder the New Credit Facility at any time without premium or penalty, otherthan customary “breakage” costs with respect to LIBOR loans. We are required torepay $1,625,000 of the term loan quarterly, beginning March 30, 2006through September 30, 2012, with any remaining balance due on January 26,2013.

The indentures relating toour outstanding notes allow us to incur all permitted indebtedness (as definedtherein) without restriction, which includes all amounts borrowed under ourcredit facility. The indentures also allow us to incur any amount of additionaldebt as long as we can satisfy the coverage ratio of each indenture, both atthe time of the event (under the indenture for the Notes due 2011) and after givingeffect thereto on a pro forma basis (under the indentures for the Notes due2011, Notes due 2012, Fixed Notes due 2012, Floating Notes due 2010, Notes due2014, Notes due 2016 and Discount Notes due 2014). Under the indenturesrelating to the Notes due 2012, Notes due 2014 and Notes due 2016, the mostrestrictive of the indentures, we could borrow approximately $163,000,000 and$6,300,000 in addition to permitted indebtedness (assuming an interest rate of 10%per annum on the additional borrowings) as of September 28, 2006 and March 30,2006, respectively. If we cannot satisfy the coverage ratios of the indentures,generally we can incur, in addition to amounts borrowed under the creditfacility, no more than $100,000,000 of new “permitted indebtedness” under theterms of the indentures relating to the 2011, 2012, 2014 and 2016 notes and theDiscount Notes due 2014.

The indentures relating tothe above-described notes also contain covenants limiting dividends, purchasesor redemptions of stock, transactions with affiliates, and mergers and sales ofassets, and require us to make an offer to purchase the notes upon theoccurrence of a change in control, as defined in the indentures. Upon a changeof control (as defined in the indentures), we would be required to make offersto repurchase all of the outstanding notes at a price equal to 101% of theprincipal amount thereof plus accrued and unpaid interest to the date ofrepurchase.

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As of September 28, 2006,we were in compliance with all financial covenants relating to the New CreditFacility, the Cinemex Credit Facility, the Notes due 2016, the Notes due 2011,the Notes due 2012, Notes due 2014, the Fixed Notes due 2012, the FloatingNotes due 2010 and Discount Notes due 2014.

We believe that cashgenerated from operations and existing cash and equivalents will be sufficientto fund operations and planned capital expenditures for at least the next twelvemonths and enable us to maintain compliance with covenants related to the newCredit Facility.

**NEW ACCOUNTING PRONOUNCEMENTS**

In October 2006, theFinancial Accounting Standards Board (“FASB”) released Statement of FinancialAccounting Standards (“SFAS”) No. 158, *Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans, an amendment of FASBStatements No. 87, 88, 106 and 132(R)*. SFAS No. 158requires an entity to (1) recognize in its statement of financial positionan asset for a defined benefit postretirement plan’s overfunded status or aliability for a plan’s underfunded status, (2) measure a defined benefit retirementplan’s assets and obligations that determine its funded status as of the end ofthe employer’s fiscal year, and (3) recognize changes in the funded statusof a defined benefit postretirement plan in comprehensive income in the year inwhich the changes occur. The requirement to recognize the funded status of adefined benefit postretirement plan and the disclosure requirements areeffective for fiscal years ending after June 15, 2007, for an employerwithout publicly traded equity securities, or April 3, 2008 for AMCE. Therequirement to measure plan assets and benefit obligations as of the date ofthe employer’s fiscal year-end statement of financial position is effective forfiscal years ending after December 15, 2008, or April 2, 2009 forAMCE Earlier application of the recognition or measurement date provisions isencouraged; however, early application must be for all of an employer’s benefitplans. We believe that as of March 30, 2006, our most recent fiscalyear-end, this standard would have resulted in decreased liabilities and decreasedaccumulated other comprehensive loss of approximately $5,365,000.

In September 2006,the FASB released SFAS No. 157, *Fair Value Measurements*whichprovides enhanced guidance for using fair value to measure assets andliabilities. The standard applies whenever other standards require (or permit)assets or liabilities to be measured at fair value. It does not expand the useof fair value in any new circumstances. Under the standard, fair value refersto the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants in the marketin which the reporting entity transacts. It clarifies the principle that fairvalue should be based on the assumptions market participants would use whenpricing the asset or liability. SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years, or the first quarter of fiscal 2009for AMCE. Early adoption is permitted. We do not anticipate this standardhaving a material effect on our consolidated financial statements.

In September 2006,the Securities and Exchange Commission (the “SEC”) issued Staff AccountingBulletin No. 108 (“SAB 108”), *Considering the Effects ofPrior Year Misstatements When Quantifying Misstatements in Current Year FinancialStatements* which provides interpretive guidance on the considerationof the effects of prior year misstatements in quantifying current yearmisstatements for the purpose of a materiality assessment. SAB 108 is effectivefor companies with fiscal years ending after November 15, 2006 and isrequired to be adopted by us in our fiscal year ending March 29, 2007. However,early application is encouraged in any report for an interim period of thefirst fiscal year ending after November 15, 2006, filed after thepublication of this guidance. We do not anticipate an effect on ourconsolidated financials statements with the adoption of SAB 108.

In July 2006, theFASB released FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes—an Interpretation of FASB Statement 109*(“FIN 48” or the “Interpretation”), which clarifies the accounting foruncertainty in income taxes recognized in companies’ financial statements inaccordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN48 prescribes a recognition threshold and measurement attribute for thefinancial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. The evaluation of a tax position inaccordance with FIN 48 is a two-

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stepprocess. The first step is recognition whereby companies must determine whetherit is more likely than not that a tax position will be sustained uponexamination. The second step is measurement whereby a tax position that meetsthe more-likely-than-not recognition threshold is measured to determine theamount of benefit to recognize in the financial statements. The interpretationalso provides guidance on derecognition of recognized tax benefits,classification, interest and penalties, accounting in interim periods,disclosure and transition. FIN 48 is effective for fiscal years beginning afterDecember 15, 2006. We expect to adopt the new requirements in the firstquarter of fiscal 2008 and are currently evaluating the impact that theadoption of FIN 48 will have on our consolidated financial statements.

In June 2005, theEmerging Issues Task Force (“EITF”) reached a consensus on Issue No. 05-06,Determining the Amortization Period for Leasehold Improvements Purchased afterLease Inception or Acquired in a Business Combination (“EITF 05-06”).EITF 05-06 concludes that the amortization period for leaseholdimprovements acquired in a business combination and leasehold improvements thatare in service significantly after and not contemplated at the beginning of thelease term should be amortized over the shorter of the useful life of theassets or a term that includes required lease periods and renewals that aredeemed to be reasonably assured at the date of inception. The adoption of thispronouncement did not have a material effect on our consolidated financialstatements.

In February 2006, theFASB agreed to issue FASB Staff Position (FSP) No. 123(R)-4, *Classification of Options and Similar Instruments Issued as EmployeeCompensation That Allow for Cash Settlement upon the Occurrence of a ContingentEvent*, which requires companies to consider the probability of theoccurrence of a contingent event that is outside the employees’ control (i.e.,change in control, or death or disability) in determining the classification ofan employee stock option or similar instrument under FASB Statement No. 123(R),*Share-Based Payment*, where theaward requires or permits cash settlement upon the contingent event. The FSPrequires companies to classify employee stock options and similar instrumentswith contingent cash settlement features as equity awards provided thecontingent event that permits or requires cash settlement is not consideredprobable of occurring. The adoption of FSP 123 R-4 did not have an impacton our consolidated financial position, results of operations, or cash flows.

In October 2005, theFASB issued FASB Staff Position (FSP) 13-1, *Accounting for Rental Costs Incurred during a Construction Period*.FSP 13-1 clarifies there is no distinction between the right to use aleased asset during the construction period and the right to use that assetafter the construction period. Accordingly, we are no longer able to capitalizerental costs during the construction period and began expensing them aspreopening expense prior to the theatre opening date. This FSP is effective forthe first reporting period beginning after December 15, 2005. We haveadopted this FSP during the fourth quarter of fiscal 2006 which results inrecognition of preopening expense during the “rent holiday”.

In May 2005, the FASBissued SFAS No. 154, *Accounting Changesand Error Corrections a replacement of APB Opinion No. 20 and FASBStatement No. 3* (SFAS 154), which requires retrospectiveapplication to prior periods’ financial statements of changes in accountingprinciple, unless it is impracticable to determine either the period-specificeffects or the cumulative effect of the change. It also requires that a changein depreciation, amortization, or depletion method for long-lived, nonfinancialassets be accounted for as a change in accounting estimate affected by a changein accounting principle. We are not currently contemplating an accountingchange which would be impacted by SFAS 154.

**Item4. Controls and Procedures.**

***Disclosure Controlsand Procedures***

(a)          Evaluationof disclosure controls and procedures.

Our senior management isresponsible for establishing and maintaining disclosure controls and procedures(as defined in Rule 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934, or the Exchange Act) designed to ensurethat information required to be disclosed by Marquee Holdings Inc. in thereports that it files or submits under the Exchange Act is recorded, processed,summarized and re

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ported,within the time periods specified in the Securities and Exchange Commission’srules and forms. Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports that it files or submitsunder the Exchange Act is accumulated and communicated to the issuer’smanagement, including its principal executive officer or officers and principalfinancial officer or officers, or persons performing similar functions, asappropriate to allow timely decisions regarding required disclosure.

We have evaluated theeffectiveness of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) under the ExchangeAct) as of September 28, 2006, with the participation of our ChiefExecutive Officer and Chief Financial Officer, as well as other key members ofour management. As a result of the identification of the material weakness inour internal control over financial reporting discussed below, we haveconcluded that our disclosure controls and procedures were not effective as of September 28,2006.

***Material Weaknessin Internal Control Over Financial Reporting***

Amaterial weakness is a control deficiency, or combination of controldeficiencies, that results in more than a remote likelihood that a materialmisstatement of the annual or interim financial statements will not beprevented or detected. As of September 28, 2006, we identified thefollowing material weakness in our internal control over financial reporting:

·       TheCompany did not maintain effective internal controls to ensure that itsstock-based compensation awards and management-purchased shares areappropriately recorded in its financial statements in accordance with generallyaccepted accounting principles. Specifically, the Company did not appropriatelyand timely identify the relevant characteristic of certain put rights which resultedin the Company’s failure to properly identify the appropriate financialstatement classification of certain options and shares as a component of equity(as opposed to liabilities) which resulted in the inappropriate application ofmark-to-market accounting and incorrect expense recognition in the incomestatement. This control deficiency resulted in misstatements in theconsolidated financial statements for the annual and interim periods includedin this filing. Additionally, this control deficiency could result in materialmisstatements to annual or interim financial statements that would not beprevented or detected.

***Remediation ofMaterial Weaknesses***

The Company will takeactions to remediate the material weakness in our internal control over financialreporting surrounding the application of generally accepted accountingprinciples with respect to stock-based compensation and management-purchasedshares for the reporting period ending March 29, 2007. Specifically, theCompany will make improvements with respect to the design, precision and rigorof review controls over the application of stock-based compensation andmanagement-purchased shares accounting in that appropriate levels of managementand legal counsel now review proposed accounting for all newly issuedstock-based compensation awards and management-purchased shares. Further, managementwill consider using a qualified independent third-party advisor, as deemedappropriate, with respect to more complex stock-based compensationtransactions. In addition, the put rights associated with the stock options andunderlying shares which resulted in previous awards being inappropriatelyclassified as liabilities and subject to mark-to-mark accounting in the incomestatement were cancelled and terminated during the period ended March 29,2007.

(b) Changes in internal controls.

There has been no changein internal control over financial reporting during the thirteen and twenty-sixweek periods ended September 28, 2006 that has materially affected, or isreasonably likely to materially affect our internal control over financialreporting.

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**PART II—OTHERINFORMATION**

**Item 6.        Exhibits.**

**EXHIBIT INDEX**

| EXHIBIT NUMBER | ** ** | ** **                                                                                                                                                                                                                                          | ** ** | **DESCRIPTION** | ** ** | ** ** |
|----------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|------------|------------|
| *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 the Company’s Form 8-K  filed on June 24, 2005).   |
| *2.2           |       | Agreement and Plan of  Merger, dated as of July 22, 2004 by and among Marquee  Holdings Inc., Marquee Inc. and AMC Entertainment Inc.  (incorporated by reference from Exhibit 2.1 to Form 8-K filed  June 23, 2004). |
| *3.1           |       | Second Amended and  Restated Certificate of Incorporation of Marquee Holdings Inc.  (incorporated by reference from Exhibit 3.1 to the Company’s Form 8-K  (File No. 333-122636) filed on January 31, 2006.           |
| *3.2           |       | Second Amended and  Restated Bylaws of Marquee Holdings Inc. (incorporated by reference from  Exhibit 3.2 to the Company’s Form 8-K (File No. 333-122636)  filed January 31, 2006).                                   |
| **31.1         |       | Certification of Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of  2002.                                                                                                                                         |
| **31.2         |       | Certification of Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of  2002.                                                                                                                                         |
| **32.1         |       | Section 906 Certifications of Peter C.  Brown (Chief Executive Officer) and Craig R. Ramsey (Chief Financial  Officer) furnished in accordance with Securities Act Release 33-8212.                                             |

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*                    Previouslyfiled

**             Filed herewith

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

|                      | **MARQUEE HOLDINGS INC.**                                     |
|----------------------|---------------------------------------------------------------|
|                 |                                                          |
|                 |                                                          |
| Date: April 16, 2007 | /s/**  **PETER C. BROWN                             |
|                 | Peter C. Brown                                                |
|                 | Chairman of the Board,  Chief Executive Officer and President |
|                 |                                                          |
|                 |                                                          |
| Date: April 16, 2007 | /s/**  **CRAIG R. RAMSEY                            |
|                 | Craig R. Ramsey                                               |
|                 | Executive Vice President and  Chief Financial Officer         |

 

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