**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

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**FORM 10-Q**

| **(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 telephonenumber, 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

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the ExchangeAct. (Check one):

Largeaccelerated filer  o    Acceleratedfiler  o    Non-acceleratedfiler  x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2of 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                                 |

 

 

 

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**MARQUEE HOLDINGS INC. AND SUBSIDIARY**

**INDEX**
|              | ** ** | ** **                                                                                      | ** ** | **Page  Number** | ** ** |
|--------------|------------|-------------------------------------------------------------------------------------------------|------------|------------------|------------|
| ** **   |       | **PART  I—FINANCIAL INFORMATION**                                                          |       |             |       |   |   |
| **Item 1.**  | ** ** | **Financial  Statements (unaudited)**                                                           |       |             |       |   |   |
|         |       | Consolidated Statements of Operations                                                           |       |             | 3          |   |   |
|         |       | Consolidated  Balance Sheets                                                                    |       |             | 4          |   |   |
|         |       | Consolidated Statements of Cash Flows                                                           |       |             | 5          |   |   |
|         |       | Notes  to Consolidated Financial Statements                                                     |       |             | 6          |   |   |
| **Item 2.**  | ** ** | **Management’s Discussion and Analysis of Financial  Condition and Results of Operations** |       |             | 20         |   |   |
| **Item 3.**  | ** ** | **Quantitative and Qualitative Disclosures About Market  Risk**                                 |       |             | 36         |   |   |
| **Item 4.**  | ** ** | **Controls and Procedures**                                                                     |       |             | 37         |   |   |
| ** **   |       | **PART II—OTHER  INFORMATION**                                                        |       |             |       |   |   |
| **Item  1.** | ** ** | **Legal  Proceedings**                                                                          |       |             | 38         |   |   |
| **Item 4.**  | ** ** | **Submission of Matters to a Vote of Security Holders**                                         |       |             | 38         |   |   |
| **Item 6.**  | ** ** | **Exhibits**                                                                                    |       |             | 38         |   |   |
|         | ** ** | **Signatures**                                                                                  |       |             | 39         |   |   |

 

2

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**PART I—FINANCIALINFORMATION**

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

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

|                                                                 | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-six Weeks Ended** | ** ** |
|-----------------------------------------------------------------|------------|------------------------------------|------------|--------------------------------------|------------|
| ** **                                                      | ** ** | **September 28,  2006**       | ** ** | **September 29,  2005**         | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| ** **                                                      | ** ** | **(unaudited)**                    | ** ** | **(unaudited)**                      | ** ** |
| Revenues                                                        |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                                                      |       |                               | $          | 422,573                              |       |   |   | $ | 270,414 |   |   |   | $ | 862,105 |   |   |   | $ | 546,820 |   |   |
| Concessions                                                     |       |                               | 176,745    |                                 |       |   | 105,679 |   |   |   | 359,081 |   |   |   | 217,012 |   |   |
| Other revenue                                                   |       |                               | 32,233     |                                 |       |   | 22,844 |   |   |   | 61,555 |   |   |   | 47,887 |   |   |
| Total revenues                                                  |       |                               | 631,551    |                                 |       |   | 398,937 |   |   |   | 1,282,741 |   |   |   | 811,719 |   |   |
| Costs and Expenses                                              |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Film exhibition  costs                                          |       |                               | 219,220    |                                 |       |   | 143,545 |   |   |   | 449,072 |   |   |   | 295,262 |   |   |
| Concession costs                                                |       |                               | 20,777     |                                 |       |   | 12,039 |   |   |   | 43,047 |   |   |   | 23,768 |   |   |
| Operating expense                                               |       |                               | 163,259    |                                 |       |   | 107,822 |   |   |   | 319,629 |   |   |   | 214,343 |   |   |
| Rent                                                            |       |                               | 111,753    |                                 |       |   | 78,006 |   |   |   | 225,482 |   |   |   | 156,692 |   |   |
| General and  administrative:                                    |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and  acquisitions costs                                  |       |                               | 2,074      |                                 |       |   | 960 |   |   |   | 5,826 |   |   |   | 2,645 |   |   |
| Management fee                                                  |       |                               | 1,250      |                                 |       |   | 500 |   |   |   | 2,500 |   |   |   | 1,000 |   |   |
| Other                                                           |       |                               | 14,080     |                                 |       |   | 8,005 |   |   |   | 29,680 |   |   |   | 18,199 |   |   |
| 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     |                                 |       |   | 37,956 |   |   |   | 129,075 |   |   |   | 75,467 |   |   |
| Disposition of assets  and other gains                          |       |                               | (7,047     | )                                    |       |   | (103 | ) |   |   | (8,500 | ) |   |   | (770 | ) |   |
| Total costs and  expenses                                       |       |                               | 597,754    |                                 |       |   | 390,643 |   |   |   | 1,206,650 |   |   |   | 792,230 |   |   |
| Other expense (income)                                          |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                                                           |       |                               | (5,760     | )                                    |       |   | (6,103 | ) |   |   | (6,314 | ) |   |   | (7,219 | ) |   |
| Interest expense                                                |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate  borrowings                                           |       |                               | 56,600     |                                 |       |   | 30,035 |   |   |   | 112,800 |   |   |   | 60,332 |   |   |
| Capital and  financing lease obligations                        |       |                               | 1,190      |                                 |       |   | 1,695 |   |   |   | 2,738 |   |   |   | 3,380 |   |   |
| Investment income                                               |       |                               | (3,234     | )                                    |       |   | (976 | ) |   |   | (3,609 | ) |   |   | (480 | ) |   |
| Total other  expense                                            |       |                               | 48,796     |                                 |       |   | 24,651 |   |   |   | 105,615 |   |   |   | 56,013 |   |   |
| Loss from continuing  operations before income taxes            |       |                               | (14,999    | )                                    |       |   | (16,357 | ) |   |   | (29,524 | ) |   |   | (36,524 | ) |   |
| Income tax provision  (benefit)                                 |       |                               | 1,900      |                                 |       |   | (5,900 | ) |   |   | 2,200 |   |   |   | (14,200 | ) |   |
| Loss from continuing  operations                                |       |                               | (16,899    | )                                    |       |   | (10,457 | ) |   |   | (31,724 | ) |   |   | (22,324 | ) |   |
| Loss from discontinued  operations, net of income tax provision |       |                               | —     |                                 |       |   | (2,770 | ) |   |   | — |   |   |   | (22,094 | ) |   |
| Net loss                                                        |       |                               | $          | (16,899                              | )          |   |   | $ | (13,227 | ) |   |   | $ | (31,724 | ) |   |   | $ | (44,418 | ) |   |

 

*See Notes to Consolidated Financial Statements.*

3

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**MARQUEE HOLDINGS INC. ANDSUBSIDIARYCONSOLIDATED BALANCE SHEETS(in thousands, except share data)**

|                                                                                                                                                                                                  | ** ** | **September 28,  2006** | ** ** | **March 30,  2006** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|--------------------------|------------|
| ** **                                                                                                                                                                                       | ** ** | **(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                                                                                                                                                                     |       |                         | 423,842    |                     |       | 419,474 |   |
| Noncurrent liabilities  held for sale                                                                                                                                                            |       |                         | —     |                     |       | 11,903 |   |
| Total liabilities                                                                                                                                                                                |       |                         | 3,282,721  |                     |       | 3,366,848 |   |
| 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                                                                                                                                                                      |       |                         | 1,305,034  |                     |       | 1,307,752 |   |
| Accumulated other  comprehensive loss                                                                                                                                                            |       |                         | (16,227    | )                        |       | (10,658 | ) |
| Accumulated  deficit                                                                                                                                                                             |       |                         | (288,329   | )                        |       | (256,605 | ) |
| Total stockholders’  equity                                                                                                                                                                 |       |                         | 1,000,492  |                     |       | 1,040,503 |   |
| Total liabilities and stockholders’ equity                                                                                                                                                  |       |                         | $          | 4,283,213                |       |   | $ | 4,407,351 |   |

 

*See Notes to Consolidated Financial Statements.*

4

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**MARQUEE HOLDINGS INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)**
|                                                                                            | ** ** | **Twenty-six Weeks Ended** | ** ** |
|--------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                                 | ** ** | **September 28,  2006**         | ** ** | **September 29,  2005** | ** ** |
| ** **                                                                                 | ** ** | **(unaudited)**                      | ** ** |
| **INCREASE IN CASH AND EQUIVALENTS**                                                       |       |                                 |       |   |   |   |   |   |   |
| **Cash flows from operating activities:**                                                  |       |                                 |       |   |   |   |   |   |   |
| Net loss                                                                                   |       |                                 | $          | (31,724 | ) |   |   | $ | (44,418 | ) |   |
| 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                                              |       |                                 | 1,645      |   |   |   | 747 |   |   |
| Non-cash portion of  pension and postretirement expense                                    |       |                                 | 3,219      |   |   |   | 2,007 |   |   |
| Deferred income taxes                                                                      |       |                                 | (596       | ) |   |   | 5,125 |   |   |
| 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                                                    |       |                                 | (28,392    | ) |   |   | (34,148 | ) |   |
| 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 |   |   |

 

*See Notes to ConsolidatedFinancial Statements.*

5

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**MARQUEEHOLDINGS INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**September 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 the contextotherwise requires, the “Company”), is principally involved in the theatricalexhibition business and owns, operates or has interests in theatres located inthe United States and Canada (“U.S. and Canada” formerly, North Americantheatrical exhibition) and in Mexico, Argentina, Brazil, Chile, Uruguay, China(Hong Kong), France, Spain and the United Kingdom. The Company discontinued itsoperations in Japan during the first quarter of fiscal 2006. The Company’s U.S.and Canada theatrical exhibition business is conducted through AMC and AMCEI.The Company’s international theatrical exhibition business is conducted primarilythrough Cinemex and AMCEI. See Note 2 for a discussion of the Merger withLoews 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 onForm 10-K for the year (52 weeks) ended March 30, 2006. In theopinion of management, these interim financial statements reflect alladjustments (consisting of normal recurring adjustments) necessary for a fairstatement of the Company’s financial position and results of operations. Due tothe seasonal nature of the Company’s business, results for the twenty-six weeksended September 28, 2006 are not necessarily indicative of the results to beexpected for the fiscal year (52 weeks) ended March 29, 2007.

The March 30, 2006 consolidated balance sheetdata was derived from the audited balance sheet, but does not include all disclosuresrequired by generally accepted accounting principles.

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

***Assets held forSale:******  ***In conjunction with the Merger (seeNote 2), the Company entered into a Final Judgment with the Antitrust Divisionof the United States Department of Justice and judgments and consent decreeswith various States. These judgments and decrees required the Company to holdseparate and divest itself of 10 certain theatres. As a result, the Companyclassified the assets and liabilities of these theatres as *held for sale*. The Company sold six ofthese theatres during the 26 weeks ended September 28, 2006, exchanged twoof these theatres with another theatrical exhibitor for two theatres from thatexhibitor in different markets, retained one of the theatres pursuant to anagreement reached with the California Attorney General and will close oneremaining theatre during the third 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 Companyhas classified certain real estate as available for sale based on an activemarketing program to sell the assets, which is recorded in noncurrent assetsheld for sale.

6

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**NOTE 2—ACQUISITIONS**

On June 20, 2005, Holdings 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 the AMCE,with AMCE continuing after the merger (the “Merger” and collectively, the “Mergers”).The transaction closed on January 26, 2006. Upon completion of theMergers, the stockholders of Holdings immediately prior to the Mergers,including affiliates of CCMP Capital Advisors, LLC (formerly J.P. MorganPartners, LLC) and Apollo Management, L.P., held approximately 60% of theoutstanding 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 approximately40% 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.

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.

7

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**Pro Forma Effect ofMerger Transactions**

Thepro forma financial information presented below sets forth the Company’s proforma consolidated statement of operations for the thirteen and twenty-sixweeks ended September 29, 2005 to give effect to the Mergers and therelated debt issuances as if each transaction occurred on April 1, 2005.Such information is presented for comparative purposes only and does notpurport to represent what the Company’s results of operations would actuallyhave been had these transactions occurred on the date indicated or to projectits results of operations for any future period or date.

|                                                       | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended**                   | ** ** |
|-------------------------------------------------------|------------|------------------------------------|------------|--------------------------------------------------------|------------|
| **(In thousands)**                               | ** ** | ** **                         | ** ** | **Pro Forma   September 29, 2005** | ** ** | **Pro Forma   September 29, 2005** | ** ** |
| Revenues                                              |       |                               |       |                                                   |       |   |   |   |   |
| Admissions                                            |       |                               | $          | 406,471                                                |       |   |   | $ | 815,564 |   |   |
| Concessions                                           |       |                               | 163,239    |                                                   |       |   | 332,122 |   |   |
| Other revenue                                         |       |                               | 34,273     |                                                   |       |   | 69,228 |   |   |
| Total revenues                                        |       |                               | 603,983    |                                                   |       |   | 1,216,914 |   |   |
| Cost of  operations                                   |       |                               | 391,637    |                                                   |       |   | 789,604 |   |   |
| Rent                                                  |       |                               | 107,738    |                                                   |       |   | 215,426 |   |   |
| General and  administrative:                          |       |                               |       |                                                   |       |   |   |   |   |
| Merger and acquisition costs*                         |       |                               | 987        |                                                   |       |   | 4,813 |   |   |
| Management fee                                        |       |                               | 1,250      |                                                   |       |   | 2,500 |   |   |
| Other                                                 |       |                               | 20,051     |                                                   |       |   | 41,234 |   |   |
| Preopening  expense                                   |       |                               | 901        |                                                   |       |   | 1,010 |   |   |
| Theatre and other  closure expense                    |       |                               | 346        |                                                   |       |   | 980 |   |   |
| Restructuring  charge                                 |       |                               | 1,206      |                                                   |       |   | 4,289 |   |   |
| Depreciation and  amortization                        |       |                               | 68,293     |                                                   |       |   | 133,971 |   |   |
| Disposition of  assets and other gains                |       |                               | 857        |                                                   |       |   | 389 |   |   |
| Total costs and expenses                              |       |                               | 593,266    |                                                   |       |   | 1,194,216 |   |   |
| Other income                                          |       |                               | (6,103     | )                                                      |       |   | (7,219 | ) |   |
| Interest expense                                      |       |                               | 57,355     |                                                   |       |   | 115,378 |   |   |
| Investment  expense (income)                          |       |                               | (1,176     | )                                                      |       |   | 775 |   |   |
| Total other  expense                                  |       |                               | 50,076     |                                                   |       |   | 108,934 |   |   |
| Loss from  continuing operations before income taxes  |       |                               | (39,359    | )                                                      |       |   | (86,236 | ) |   |
| Income tax  provision                                 |       |                               | 2,500      |                                                   |       |   | 5,000 |   |   |
| Loss from  continuing operations                      |       |                               | (41,859    | )                                                      |       |   | (91,236 | ) |   |
| Loss from  discontinued operations                    |       |                               | (2,770     | )                                                      |       |   | (22,094 | ) |   |
| Net loss                                              |       |                               | $          | (44,629                                                | )          |   |   | $ | (113,330 | ) |   |
| Operating Data  (at period end):                      |       |                               |       |                                                   |       |   |   |   |   |
| Average  screens—continuing operations           |       |                               | 5,139      |                                                   |       |   | 5,143 |   |   |
| Number of screens  operated                           |       |                               |       |                                                   |       |   | 5,870 |   |   |
| Number of  theatres operated                          |       |                               |       |                                                   |       |   | 442 |   |   |
| Screens per  theatre                                  |       |                               |       |                                                   |       |   | 13.3 |   |   |
| Attendance (in  thousands)—continuing operations |       |                               | 61,880     |                                                   |       |   | 123,924 |   |   |
|                                                       |            |                                    |            |                                                        |            |  |  |  |  |  |  |  |  |

----

*                    Primarilyrepresents nonrecurring costs for the Merger Transactions.

**NOTE 3—DISCONTINUEDOPERATIONS**

On June 30, 2005, theCompany sold one of its wholly-owned subsidiaries, Japan AMCTheatres Inc., including four of its five theatres in Japan. The Companysold its remaining Japanese theatre in 

8

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September 2005.The Company opened its first theatre in Japan during fiscal 1997 and since thattime the Company had incurred pre-tax losses of $38,689,000, including a$4,998,000 impairment charge in fiscal 2003.

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 information presentedfor all periods reflects the classification. The operations of the Japantheatres were previously reported in the Company’s International theatricalexhibition operating segment. Components of amounts reflected as loss fromdiscontinued operations in the Company’s Consolidated Statements of Operationsduring the prior fiscal year are presented in the following table:

**Statements of 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**       | ** ** | **September 29,  2005**         | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| Net loss                                                     |       |                               | $          | (16,899                              | )          |   |   | $ | (13,227 | ) |   |   | $(31,724 | ) |   |   | $ | (44,418 | ) |   |
| 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                                     |       |                               | $          | (13,548                              | )          |   |   | $ | (13,113 | ) |   |   | $ | (37,293 | ) |   |   | $ | (46,748 | ) |   |
|                                                              |            |                                    |            |                                      |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

9

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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)          Adjustments to fairvalue relate primarily to changes in the preliminary estimated fair values ofproperty, 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 |   |
|                                 |            |            |            |          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

 

 

10

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**NOTE 6—STOCKHOLDERS’EQUITY**

Holdings accounts forstock options using the fair value method of accounting as prescribed bySFAS 123 (R) and SAB 107 and has valued the options using the Black-Scholesformula. Holdings has recorded $848,000 and $(369,000) of stock-basedcompensation expense related to these options within General andAdministrative:  Other and has recognizedan income tax expense of $0 and $159,000 in its Consolidated Statements ofOperations during the thirteen weeks ended September 28, 2006 and September 29,2005, respectively. Holdings has recorded $1,645,000 and $747,000 of stock-basedcompensation expense related to these options within General and Administrative:Other and has recognized an income tax benefit of approximately $0 and $299,000in its Consolidated Statements of Operations during the twenty-six weeks ended September 28,2006 and September 29, 2005, respectively. Two of the holders of Holdings’stock and stock options have written put rights associated with their optionsand underlying shares whereby they can require Holdings to repurchase theiroptions and shares. These liability-classified options and shares are requiredto be remeasured during each reporting period. Holdings has recorded $214,000and ($1,172,000) of other (income) expense related to the re-measurement of theliability-classified shares during the thirteen weeks ended September 28, 2006and September 29, 2005, respectively. Holdings has recorded $1,120,000 and($1,172,000) of other (income) expense related to the re-measurement of theliability-classified shares during the twenty-six weeks ended September 28,2006 and September 29, 2005, respectively. One holder of Holdings’ stock has anamount-specific put right whereby the holder can require Holdings to repurchasehis shares for $600,000 on or prior to December 31, 2006. A liability of$4,865,000 and $2,881,000 is recorded within other long term liabilities in theConsolidated Balance Sheets as of September 28, 2006 and March 30, 2006,respectively, for all shares and options containing written put rights.

During the twenty-sixweeks ended September 28, 2006 the Company revised its preliminary estimatedpurchase price for the Merger by $3,500,000 which reduced additional paid-incapital, recorded an increase to additional paid-in capital of $846,000 relatedto 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**

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

 

| ** **                                               | ** ** | **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.

11

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

|                                        | ** ** | **September 28,  2006** | ** ** | **March 30,  2006** | ** ** |
|----------------------------------------|------------|------------------------------|------------|--------------------------|------------|
| 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 recognizesrestructuring charges based upon the nature of the costs incurred. Costsresulting from one-time termination benefits where employees are not requiredto render future service to receive the benefits are recognized and a liabilityis recorded when management commits to a plan of termination which identifiesthe number of employees to be terminated, their job classifications, locations,expected termination dates and when the plan is communicated to the employeesand establishes the detailed terms 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 $4,845,000 liabilityrelated to closures of Loews’ duplicate administrative facilities in connectionwith the Mergers as part of purchase accounting. There were no restructuringactivities 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 |   |   |
|                         |            |                                      |            |  |  |  |  |  |

----

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

12

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Restructuring reserves at September 28,2006 and March 30, 2006 by operating segment 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 |   |   |

 

**NOTE9—INCOME TAXES**

The difference between theeffective tax rate on earnings before income taxes and the U.S. federal incometax statutory rate is as follows:

|                                                 | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|-------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                      | ** ** | **September 28,  2006**         | ** ** | **September 29,  2005** | ** ** |
| 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                                      |       |                                 | (1.0       | ) |   |   | (0.9 | ) |   |
| Effective tax rate                              |       |                                 | (7.5       | )% |   |   | (15.9 | )% |   |

 

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

Based upon theconsideration of all available evidence, the Company has provided a valuationallowance on deferred tax assets recorded beginning in the fourth quarter offiscal year 2006. The Company continues to record a full valuation allowanceagainst its deferred tax assets due to the uncertainty regarding the ultimaterealization of those assets in all taxing jurisdictions with the exception ofMexico.

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 the U.S. federalstatutory tax rate of 35% primarily due to state income taxes and the change invaluation allowance recorded against net deferred tax assets. Additionally,income tax expense reflects the net expense related to the impact of therecently enacted Texas gross margins tax. The current year disposition ofPortugal and Spain operations did not have a material impact on the income taxprovision 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.

**NOTE 10—EMPLOYEE BENEFIT 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 

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monthsof employment, or in a calendar year ending thereafter, and who are not coveredby a collective bargaining agreement. The Company also offers eligible retireesthe opportunity to participate in a health plan (medical and dental) and a lifeinsurance plan. Employees may become eligible for these benefits at retirementprovided the employee is at least age 55 and has at least 15 years ofcredited service after age 40. The Company also sponsors a postretirementdeferred compensation plan.

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 its annual pension contribution of$1,400,000 during its second fiscal quarter of 2007.

The measurement date used to determine pension andother postretirement benefits is January 1 of the fiscal year for whichmeasurements 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—OPERATING SEGMENTS**

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

|                                        | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|----------------------------------------|------------|------------------------------------|------------|--------------------------------------|------------|
| ** **                             | ** ** | **September 28,  2006**       | ** ** | **September 29  2005**          | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| **Revenues**                           |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. and Canada  theatrical exhibition |       |                               | $          | 585,298                              |       |   |   | $ | 377,004 |   |   |   | $ | 1,182,989 |   |   |   | $ | 770,350 |   |   |
| International  theatrical exhibition   |       |                               | 46,231     |                                 |       |   | 16,835 |   |   |   | 99,716 |   |   |   | 30,816 |   |   |
| Other                                  |       |                               | 22         |                                 |       |   | 5,098 |   |   |   | 36 |   |   |   | 10,553 |   |   |
| Total revenues                         |       |                               | $          | 631,551                              |       |   |   | $ | 398,937 |   |   |   | $ | 1,282,741 |   |   |   | $ | 811,719 |   |   |
| **Segment  Adjusted EBITDA**           |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. and Canada  theatrical exhibition |       |                               | $          | 109,231                              |       |   |   | $ | 62,440 |   |   |   | $ | 225,478 |   |   |   | $ | 129,952 |   |   |
| International  theatrical exhibition   |       |                               | 13,784     |                                 |       |   | 131 |   |   |   | 28,377 |   |   |   | (1,622 | ) |   |
| Other                                  |       |                               | (499       | )                                    |       |   | (115 | ) |   |   | (910 | ) |   |   | (629 | ) |   |
| Segment Adjusted EBITDA                |       |                               | $          | 122,516                              |       |   |   | $ | 62,456 |   |   |   | $ | 252,945 |   |   |   | $ | 127,701 |   |   |

 

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**       | ** ** | **September 29,  2005**         | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** |
| Loss from  continuing operations before income taxes |       |                               | $          | (14,999                              | )          |   |   | $ | (16,357 | ) |   |   | $ | (29,524 | ) |   |   | $ | (36,524 | ) |   |
| Plus:                                                |       |                               |       |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                     |       |                               | 57,790     |                                 |       |   | 31,730 |   |   |   | 115,538 |   |   |   | 63,712 |   |   |
| Depreciation and amortization                        |       |                               | 64,634     |                                 |       |   | 37,956 |   |   |   | 129,075 |   |   |   | 75,467 |   |   |
| 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                |       |                               | (7,047     | )                                    |       |   | (103 | ) |   |   | (8,500 | ) |   |   | (770 | ) |   |
| Investment income(1)                                 |       |                               | (3,234     | )                                    |       |   | (976 | ) |   |   | (3,609 | ) |   |   | (480 | ) |   |
| Other expense (income)(2)                            |       |                               | 214        |                                 |       |   | (1,172 | ) |   |   | 1,120 |   |   |   | (1,172 | ) |   |
| 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(3)                                             |       |                               | 14,080     |                                 |       |   | 8,005 |   |   |   | 29,680 |   |   |   | 18,199 |   |   |
| Segment Adjusted EBITDA                              |       |                               | $          | 122,516                              |       |   |   | $ | 62,456 |   |   |   | $ | 252,945 |   |   |   | $ | 127,701 |   |   |

 

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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)          Otherexpense (income) is related to the remeasurement of liability-classified sharesof Common Stock.

(3)          Including stock-basedcompensation expense of $848,000 and $(369,000) for the thirteen weeks ended September 28, 2006and September 29, 2005, respectively. Including stock-based compensation expenseof $1,645,000 and $747,000 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.

*United States of America v. AMC Entertainment Inc.and American Multi Cinema, Inc.*(No. 99 01034 FMC (SHx),filed in the U.S. District Court for the Central District of California). OnJanuary 29, 1999, the Department of Justice (the “Department”) filed suitalleging that AMCE’s stadium style theatres violate the ADA and relatedregulations. The Department alleged that AMCE had failed to provide persons inwheelchairs seating arrangements with lines of sight comparable to the generalpublic. The Department alleged various non-line of sight violations as well.The Department sought declaratory and injunctive relief regarding existing andfuture theatres with stadium style seating, compensatory damages in theapproximate 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., Haskell Constructors, Ltd.etal.* (Case No. 00CV84908, Circuit Court of Platte County,Missouri) and *American Multi Cinema, Inc. v. Bovis*

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*ConstructionCorp. et al.* (Civil Action No. 0207139,Court of Common Pleas of Bucks County, Pennsylvania). AMCE is the plaintiff inthese and related suits in which it seeks to recover damages from theconstruction manager, certain fireproofing applicators and other parties tocorrect the defective application of certain fireproofing materials at 21theatres. AMCE currently estimates its claim for repair costs at these theatreswill aggregate approximately $33.6 million of which it has expendedapproximately $27.4 million through June 29, 2006. The remainder is forprojected costs of repairs yet to be performed. AMCE also is seeking additionaldamages for lost profits, interest and legal and other expenses 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 for additionalsettlement payments and has received additional payments totaling $5,250,000subsequent to September 28, 2006. Gain contingencies are recognized uponreceipt and recorded in disposition of assets and other gains in theConsolidated 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 leasehold improvementsacquired in a business combination and leasehold improvements that are inservice significantly after and not contemplated at the beginning of the leaseterm should be amortized over the shorter of the useful life of the assets or aterm that includes required lease periods and renewals that are deemed to bereasonably assured at the date of inception. The adoption of this pronouncementdid not have a material effect on the Company’s 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 the contingentevent that permits or 

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requires cashsettlement is not considered probable of occurring. The adoption of FSP 123 R-4did not have an impact on consolidated financial position, results ofoperations, 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, the Company is no longer able tocapitalize rental costs during the construction period and began expensing themas preopening expense prior to the theatre opening date. This FSP was effectivefor the first reporting period beginning after December 15, 2005. TheCompany early adopted this FSP during the fourth quarter of fiscal 2006 whichresults in 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 the sole managerof National CineMedia, LLC, announced that it filed a registration statementwith the SEC for an initial public offering, or IPO, of up to $700 million ofits common stock. Net proceeds from the IPO will be used to acquire newlyissued equity interests from National CineMedia, LLC and National CineMedia,LLC will distribute the net proceeds to each of AMC, Cinemark and Regal on apro rata basis in connection with modifying payment obligations for access toour theatres. In connection with the completion of the IPO, National CineMedia,LLC also intends to enter into an approximately $725 million term loan facilitythe net proceeds of which will be used to redeem preferred units to be held byeach 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 the IPOor 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.Under the 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 plan to100% 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., opened twonew 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.

On March 29, 2005, wealong with Regal Entertainment Group (“Regal”) combined our respective cinemascreen advertising businesses into a new joint venture company called NationalCineMedia, LLC (“NCM”). The company engages in the marketing and sale of cinemaadvertising and promotions products; business communications and trainingservices; and the distribution of digital alternative content. We record ourshare of on-screen advertising revenues generated by our advertising subsidiary(NCN) and NCM in other theatre revenues. We contributed fixed assets, exhibitoragreements and goodwill (recorded in connection with the merger with Marquee)of our cinema screen advertising subsidiary NCN to NCM. Additionally, we paidtermination benefits related to the displacement of certain NCN associates. Inconsideration of the NCN contributions described above, NCM, issued a 37%interest in its Class A units to NCN. Since that date, NCN’s interest in NCMhas declined to 29% due to the 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 did not meet the criteriafor reporting as discontinued operations because we have continuing involvementwith another circuit in this region.

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 andtheatre-by-theatre basis. Film exhibition costs are accrued based on theapplicable admissions revenues and estimates of the final settlement pursuantto our film licenses. Licenses that we enter into typically state that rentalfees are based on either aggregate terms established prior to the opening ofthe picture or on a mutually agreed settlement upon the conclusion of thepicture run. Under an aggregate terms formula, we pay the distributor aspecified percentage of box office receipts. The settlement process allows fornegotiation based upon how a film actually 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 individualdistributors may vary significantly from year to year depending upon thecommercial success of each distributor’s motion pictures in any given year.

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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**                                               | ** ** | **September 29,  2005**         | ** ** | **% Change** | ** ** | **September 28,  2006** | ** ** | **September 29,  2005** | ** ** | **% Change** | ** ** |
| ** **                             | ** ** | **(thousands of dollars, except operating data)** | ** ** | **(Dollars in thousands)** | ** ** |
| **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     |                                 |       |   | 12,138 |   |   |   | 97.6 | % |   |   | 54,676 |   |   |   | 22,180 |   |   |   | * |   |   |
| Concessions                            |       |                                                                       | 15,305     |                                 |       |   | 4,040 |   |   |   | * |   |   |   | 33,332 |   |   |   | 7,297 |   |   |   | * |   |   |
| Other  theatre                         |       |                                                                       | 6,943      |                                 |       |   | 657 |   |   |   | * |   |   |   | 11,708 |   |   |   | 1,339 |   |   |   | * |   |   |
|                                   |       |                                                                       | 46,231     |                                 |       |   | 16,835 |   |   |   | * |   |   |   | 99,716 |   |   |   | 30,816 |   |   |   | * |   |   |
| Other                                  |       |                                                                       | 22         |                                 |       |   | 5,098 |   |   |   | (99.6 | )% |   |   | 36 |   |   |   | 10,553 |   |   |   | (99.7 | )% |   |
| Total  revenues                        |       |                                                                       | $          | 631,551                              |       |   |   | $ | 398,937 |   |   |   | 58.3 | % |   |   | $ | 1,282,741 |   |   |   | $ | 811,719 |   |   |   | 58.0 | % |   |
| **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     |                                 |       |   | 5,902 |   |   |   | 74.7 | % |   |   | 24,045 |   |   |   | 10,674 |   |   |   | * |   |   |
| Concession  costs                      |       |                                                                       | 3,797      |                                 |       |   | 882 |   |   |   | * |   |   |   | 7,993 |   |   |   | 1,330 |   |   |   | * |   |   |
| Theatre  operating expense             |       |                                                                       | 11,585     |                                 |       |   | 4,701 |   |   |   | * |   |   |   | 24,383 |   |   |   | 9,762 |   |   |   | * |   |   |
| Rent                                   |       |                                                                       | 6,756      |                                 |       |   | 5,219 |   |   |   | 29.5 | % |   |   | 14,918 |   |   |   | 10,672 |   |   |   | 39.8 | % |   |
| Preopening  expense                    |       |                                                                       | 462        |                                 |       |   | — |   |   |   | * |   |   |   | 939 |   |   |   | — |   |   |   | * |   |   |
| Theatre  closure                       |       |                                                                       | (13        | )                                    |       |   | 24 |   |   |   | * |   |   |   | 20 |   |   |   | 49 |   |   |   | (59.2 | )% |   |
|                                   |       |                                                                       | 32,896     |                                 |       |   | 16,728 |   |   |   | 96.7 | % |   |   | 72,298 |   |   |   | 32,487 |   |   |   | * |   |   |
| 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                                  |       |                                                                       | 14,080     |                                 |       |   | 8,005 |   |   |   | 75.9 | % |   |   | 29,680 |   |   |   | 18,199 |   |   |   | 63.1 | % |   |
| Restructuring  charge                  |       |                                                                       | —     |                                 |       |   | 839 |   |   |   | * |   |   |   | — |   |   |   | 3,908 |   |   |   | * |   |   |
| Depreciation and  amortization         |       |                                                                       | 64,634     |                                 |       |   | 37,956 |   |   |   | 70.3 | % |   |   | 129,075 |   |   |   | 75,467 |   |   |   | 71.0 | % |   |
| Disposition of assets and  other gains |       |                                                                       | (7,047     | )                                    |       |   | (103 | ) |   |   | * |   |   |   | (8,500 | ) |   |   | (770 | ) |   |   | * |   |   |
| Total costs and expenses               |       |                                                                       | $          | 597,754                              |       |   |   | $ | 390,643 |   |   |   | 53.0 | % |   |   | $ | 1,206,650 |   |   |   | $ | 792,230 |   |   |   | 52.3 | % |   |

 

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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      |                                 |       |   | 3,445 |   |   |   | 5,146 |   |   |   | 3,448 |   |   |
| 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     |                                 |       |   | 39,394 |   |   |   | 128,009 |   |   |   | 79,655 |   |   |

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(1)           Includes consolidated theatres only.

*                     Percentage change in excess of 100%

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

**Revenues.****  **Total revenues increased 58.3%, or$232,614,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. This increaseincluded approximately $189,655,000 of additional admission and concessionsrevenues resulting from the Merger.

U.S. and Canada theatrical exhibition revenuesincreased 55.2%, or $208,294,000, during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005. Admissionsrevenues 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.

International theatricalexhibition revenues increased $29,396,000 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, partially offset by a decline in admissions revenues of $9,880,000 dueto the theatres we sold in Spain and Portugal. Overall, admissions revenuesincreased $11,845,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to anincrease of 274.7% in total attendance, partially 

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offset by a 47.2%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, partiallyoffset by a decline in concessions revenues of $3,177,000 due to the theatreswe sold in Spain and Portugal. Overall, concession revenues increased$11,265,000 during the thirteen weeks ended September 28, 2006compared to the thirteen weeks ended September 29, 2005 due to theincrease in attendance and a 1.0% 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.

**Costsand expenses.****  **Totalcosts and expenses increased 53.0%, or $207,111,000 during the thirteen weeksended September 28, 2006 compared to the thirteen weeks ended September 29, 2005.The effect of the Merger was an increase in total costs and expenses of approximately$170,461,000.

U.S. and Canada theatricalexhibition costs and expenses increased 52.7%, or $168,801,000, during thethirteen weeks ended September 28, 2006 compared to the thirteenweeks ended September 29, 2005. Film exhibition costs increased51.8%, 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 theatricalexhibition costs and expenses increased $16,168,000 during the thirteen weeksended September 28, 2006 compared to the thirteen weeks year ended September 29, 2005.Film exhibition costs increased $4,407,000 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 48.6% in the prior period due to the effect of more favorablefilm rental terms in Mexico. Concession costs increased $2,915,000 during thethirteen weeks ended September 28, 2006 compared to the thirteenweeks ended September 29, 2005 due to the increase in concessionrevenues and an increase in concession costs as a percentage of revenue from21.8% in the prior period to 24.8% in the current period. This increase inconcession costs as a percentage of revenues was due to the effect of higherconcession costs as a percentage of concession revenues in Mexico caused by ahigher number of concession products offered for sale with lower margins. As 

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a percentageof revenues, theatre operating expense was 25.1% in the current period comparedto 27.9% in the prior period. Theatre operating expense as a percentage ofrevenues in Mexico were 22.4% in the current period. Rent expense increased29.5%, or $1,537,000, 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 fromOther 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 and Administrative Expense:**

**Merger and acquisitioncosts.****  **Mergerand acquisition costs increased $1,114,000 from $960,000 to $2,074,000 duringthe thirteen weeks ended September 28, 2006 compared to the thirteenweeks ended September 29, 2005. Current year costs are primarilycomprised of professional and consulting, repairs and maintenance to updatecertain of the Loews theatres and salaries costs related to the Merger andother potential divestiture activities.

**Management fees.****  **Management fees increased $750,000during the current period. For fiscal 2007, management fees of $1,250,000 willbe paid quarterly, in advance, to our Sponsors in exchange for consulting andother services.

**Other.****  **Other general and administrativeexpense increased 75.9%, or $6,075,000, 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.

**Restructuring Charges.****  **Restructuring charges were $0 duringthe thirteen weeks ended September 28, 2006 as compared to $839,000during the thirteen weeks ended September 29, 2005. The prior periodexpenses are primarily related to one-time termination benefits and other costsrelated to the displacement of approximately 200 associates related to anorganizational restructuring, which was completed to create a simplifiedorganizational structure and contribution of assets by NCN to NCM.

**Depreciation andAmortization.****  **Depreciationand amortization increased 70.3%, or $26,678,000, 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 endedSeptember 28, 2006.

**Disposition of Assets andOther Gains.****  **Dispositionof assets and other gains were $7,047,000 in the current period compared to$103,000 in the prior period. The current and prior periods include $6,530,000and $0, respectively, of settlements received related to fireproofing claims atvarious theatres (see Note 13—Commitments and Contingencies toConsolidated Financial Statements). The current period includes a gain on U.S.dispositions of theatres as required by and in connection with the Mergers ofapproximately $517,000.

**Other Income.****  **Other income includes $5,974,000 and$4,931,000 of income related to the derecognition of stored value card liabilitieswhere we believe future redemption to be remote, during the thirteen weeksended September 28, 2006 and September 29, 2005,respectively. Other income includes $214,000 of 

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expense and$1,172,000 of income related to the remeasurement of liability-classifiedshares of common stock during the thirteen weeks ended September 28, 2006and September 29, 2005, respectively.

**Interest Expense.****  **Interest expense increased 82.1%, or$26,060,000, primarily due to increased borrowings.

On January 26, 2006, AMCEissued $325,000,000 of the Notes due 2016 and entered into the New CreditFacility for $850,000,000, of which $646,750,000 is currently outstanding as avariable rate term note. We also incurred interest expense related to debt heldby Cinemex of $3,159,000 during the thirteen weeks ended September 28, 2006.

**Investment Income.****  **Investment income was $3,234,000 forthe thirteen weeks ended September 28, 2006 compared to income of $976,000for the thirteen weeks ended September 29, 2005. Interest incomeincreased $3,057,000 from the prior period due primarily to larger amounts ofcash and equivalents available for investment. Equity in losses ofnon-consolidated entities were $298,000 in the current period compared to$13,000 in the prior period. Current year equity in losses related to ourinvestment in NCM and (earnings) related to Yelmo Cineplex, S.L. were$1,224,000 and ($783,000), respectively.

**Income Tax Provision(Benefit).****  **Theprovision for income taxes from continuing operations was $1,900,000 for thethirteen weeks ended September 28, 2006 compared to a benefit of $5,900,000for the thirteen weeks ended September 29, 2005. See Note 9—IncomeTaxes to the Consolidated Financial Statements.

**Loss From DiscontinuedOperations, Net.****  **OnJune 30, 2005 we sold Japan AMC Theatres, Inc., including fourtheatres in Japan with 63 screens. The results of operations of these theatresare classified as discontinued operations. Additionally, on September 1,2005 we sold the remaining Japan theatre with 16 screens and classified itsoperations as discontinued operations. The information presented for all fiscal2006 reflects the new classification. See Note 3-DiscontinuedOperations to the Consolidated Financial Statements for the components of theloss from discontinued operations.

**Net Loss.****  **Net loss was $(16,899,000) and $13,227,000for the thirteen weeks ended September 28, 2006 and the thirteenweeks ended September 29, 2005, respectively.

**Twenty-six weeks Ended September 28, 2006 and September 29,2005**

**Revenues.****  **Total revenues increased 58.0%, or$471,022,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. Thisincrease included approximately $385,142,000 of additional admission and concessionsrevenues resulting from the Merger.

U.S. and Canada theatricalexhibition revenues increased 53.6%, or $412,639,000, during the twenty-sixweeks ended September 28, 2006 compared to the tweny-six weeks ended September 29, 2005.Admissions revenues increased 53.9%, or $282,789,000, during the twenty-sixweeks ended September 28, 2006 compared to the twenty-six weeks endedSeptember 29, 2005, due to a 45.8% increase in total attendance,including the increased attendance and admissions revenues of $224,695,000 dueto the Merger, and a 5.6% increase in average ticket prices. Admissionsrevenues at comparable theatres (theatres opened on or before the first quarterof fiscal 2006) increased 6.2% during the twenty-six weeks ended September 28, 2006over the comparable period last year, primarily due to a 2.8% increase inattendance at comparable theatres. The increase in average ticket price wasprimarily due to our practice of periodically reviewing ticket prices and thediscounts we offer and making selective adjustments based upon such factors asgeneral inflationary trends and conditions in local markets. Based uponavailable industry sources, box office revenues of our comparable theatres (includingcomparable theatres acquired in the Merger) performed in line with overallperformance of industry comparable theatres in the markets where we operate. Concessionsrevenues 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. 

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Concessionrevenues increased by $85,470,000 due to the Merger. Other theatre revenuesincreased 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 theatricalexhibition revenues increased $68,900,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005. Admissionsrevenues increased by $45,190,000 due to the theatres acquired in Mexico in theMerger, partially offset by a decline in admissions revenues of $13,741,000 dueto the theatres we sold in Spain and Portugal. Overall, admissions revenuesincreased $32,496,000 during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to anincrease of 359.5% in total attendance, partially offset by a 46.3% decrease inaverage ticket price due primarily to the lower average ticket prices from thetheatres acquired in Mexico. Concessions revenues increased $29,787,000 due tothe theatres acquired in Mexico in the Merger, partially offset by a decline inconcessions revenues of $4,263,000 due to the theatres we sold in Spain andPortugal. Overall, concession revenues increased $26,035,000 during thetwenty-six weeks ended September 28, 2006 compared to the twenty-sixweeks ended September 29, 2005 due to the increase in attendance,partially offset by a 0.6% decrease in concessions per patron. Internationalrevenues were positively impacted by a weaker U.S. dollar, although this didnot contribute materially to consolidated loss from continuing operations.

Revenues from Otherdecreased 99.7%, or $10,517,000, during the twenty-six weeks ended September 28, 2006compared to the twenty-six weeks ended September 29, 2005 due to thecontribution of NCN’s net assets to NCM on March 29, 2005 and the relatedrun-off of customer contracts. The revenues of NCN during fiscal 2006 and 2007are comprised of customer contracts entered into prior to March 29, 2005.Our share of advertising revenues generated by NCM are included in U.S. andCanada Other theatre revenues.

**Costs and expenses.****  **Total costs and expenses increased52.3%, or $414,420,000, 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 Canada theatricalexhibition costs and expenses increased 50.4%, or $326,713,000, during thetwenty-six weeks ended September 28, 2006 compared to the twenty-sixweeks 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 primarilydue to the Merger, which increased rent expense by $50,409,000. During thetwenty-six weeks ended September 28, 2006, we recognized $7,690,000of theatre and other closure expense due primarily to the closure of threetheatres with 22 screens and to accretion of the closure liability related totheatres closed during prior periods. During the twenty-six weeks ended September 29, 2005,we recognized $931,000 of theatre and other closure expense related primarilyto accretion of the closure liability related to theatres closed during priorperiods.

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International theatricalexhibition costs and expenses increased $39,811,000 during the twenty-six weeksended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005.Film exhibition costs increased $13,371,000 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 44.0% in the current period ascompared with 48.1% in the prior period due to the effect of more favorablefilm rental terms in Mexico. Concession costs increased $6,663,000 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 from18.2% in the prior period to 24.0% in the current period. This increase inconcession costs as a percentage of revenues was due to the effect of higherconcession costs as of percentage of concession revenues in Mexico caused by ahigher number of concession products offered for sale with lower margins. As apercentage of revenues, theatre operating expense was 24.5% in the currentperiod compared to 31.7% in the prior period. Theatre operating expense as apercentage of revenues in Mexico were 22.8% in the current period. Rent expenseincreased 39.8%, or $4,246,000 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 our internationaltheatres 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 fromOther 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 and Administrative Expense:**

**Merger and acquisitioncosts.****  **Mergerand acquisition costs increased $3,081,000 from $2,645,000 to $5,826,000 duringthe twenty-six weeks ended September 28, 2006 compared to thetwenty-six weeks ended September 29, 2005. Current year costs areprimarily comprised of professional and consulting, repairs and maintenance toupdate certain of the Loews theaters and salaries costs related to the Mergerand other potential divestiture activities.

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

**Other.****  **Other general and administrativeexpense increased 63.1%, or $11,481,000, 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.

**Restructuring Charges.****  **Restructuring charges were $0 duringthe twenty-six weeks ended September 28, 2006 as compared to$3,908,000 during the twenty-six weeks ended September 29, 2005. Theprior period expenses are primarily related to one-time termination benefitsand other costs related to the displacement of approximately 200 associatesrelated to an organizational restructuring, which was completed to create asimplified organizational structure and contribution of assets by NCN to NCM.

**Depreciation andAmortization.****  **Depreciationand amortization increased 71.0%, or $53,608,000, compared to the prior period,due primarily to increased asset values associated with fair value adjust

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ments recorded as aresult of the Merger. See Note 2—Acquisitions for discussion of the cumulativeadjustment recorded during the thirteen weeks ended September 28, 2006.

**Disposition of Assets andOther Gains.****  **Disposition of assets and othergains were $8,500,000 in the current period compared to $770,000 in the priorperiod. The current and prior periods include $7,880,000 and $675,000,respectively, of settlements received related to fireproofing claims at varioustheatres (see Note 13—Commitments and Contingencies to ConsolidatedFinancial Statements). The current period includes a gain on disposition of theSpain and Portugal theatres and the U.S. dispositions of theatres as requiredby and in connection with the Mergers of $620,000.

**Other Income.****  **Other incomeincludes $7,434,000 and $6,047,000 of income related to the derecognition ofstored value card liabilities where we believe future redemption to be remote,during the twenty-six weeks ended September 28, 2006 andSeptember 29, 2005, respectively. Other income includes $1,120,000 ofexpense and $1,172,000 of income related to the remeasurement of liability-classifiedshares of common stock during the twenty-six weeks endedSeptember 28, 2006 and September 29, 2005, respectively.

**Interest Expense.****  **Interest expense increased 81.3%, or$51,826,000, primarily due to increased borrowings.

OnJanuary 26, 2006, we issued $325,000,000 of 11% senior subordinated notesdue 2016 (“Notes due 2016”) and issued the new Senior Secured Credit Facilityfor $850,000,000, of which $646,750,000 is currently outstanding as a variablerate term note. We also incurred interest expense related to debt held byCinemex of $6,311,000 during fiscal 2007.

**Investment Income.****  **Investment income was $3,609,000 forthe twenty-six weeks ended September 28, 2006 compared to income of $480,000for the twenty-six weeks ended September 29, 2005. Interest incomeincreased $5,329,000 from the prior period due primarily to larger amounts ofcash and equivalents available for investment. Equity in losses ofnon-consolidated entities were $2,455,000 in the current period compared tolosses of $659,000 in the prior period. Current year equity in losses relatedto our investments in NCM and Yelmo Cineplex, S.L. were $2,532,000 and$311,000, respectively.

**Income Tax Provision(Benefit).****  **Theprovision for income taxes from continuing operations was $2,200,000 for thetwenty-six weeks ended September 28, 2006 compared to a benefit of $14,200,000for the twenty-six weeks ended September 29, 2005. See Note 9—IncomeTaxes to the Consolidated Financial Statements.

**Loss From DiscontinuedOperations, Net.****  **OnJune 30, 2005 we sold Japan AMC Theatres, Inc., including fourtheatres in Japan with 63 screens. The results of operations of these theatresare classified as discontinued operations. Additionally, on September 1,2005 we sold the remaining Japan theatre with 16 screens and classified itsoperations as discontinued operations. The information presented for all fiscal2006 reflects the new classification. See Note 3-DiscontinuedOperations to the Consolidated Financial Statements for the components of theloss from discontinued operations.

**Net Loss.****  **Net loss was $31,724,000 and $44,418,000for the twenty-six weeks ended September 28, 2006 and the twenty-sixweeks ended 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.

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**Cash Flows from Operating Activities**

Cashflows provided by (used in) operating activities, as reflected in theConsolidated Statements of Cash Flows, were $65,653,000 and $(5,039,000) duringthe twenty-six weeks ended September 28, 2006 and September 29,2005, respectively. The increase in operating cash flows during the twenty-sixweeks ended September 28, 2006 is primarily due to increases inattendance and improvement in operating results, including amounts relatedto the Merger. We had a working capital surplus and (deficit) as of September 28, 2006and March 30, 2006 of $20,033,000 and $(115,995,000), respectively. Wereceived fireproofing checks totaling $7,880,000 during the twenty-six weeksended September 28, 2006. Subsequent to September 28, 2006 wereceived additional fireproofing checks totaling $5,250,000. We have theability to borrow against our credit facility to meet obligations as they comedue (subject to limitations on the incurrence of indebtedness in our variousdebt instruments) and had approximately $151,000,000 and $90,000,000 availableon our credit facility to meet these obligations for the periods ended September 28, 2006and 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.

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 of constructing new theatres usingexisting cash balances, cash generated from operations or borrowed funds, asnecessary. We generally lease our theatres pursuant to long-term non-cancelableoperating leases which may require the developer, who owns the property, toreimburse us for a portion of the construction costs. However, we may decide toown the real estate assets of new theatres and, following construction, selland leaseback the real estate assets pursuant to long-term non-cancelableoperating leases.

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

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**Subsequentto the quarter ended September 28, 2006, National CineMedia, Inc., anewly-formed entity that will serve as the sole manager of National CineMedia,LLC, announced that it filed a registration statement with the SEC for aninitial public offering, or IPO, of up to $700 million of its common stock. Netproceeds from the IPO will be used to acquire newly issued equity interestsfrom National CineMedia, LLC, and National CineMedia, LLC will distribute thenet proceeds to each of AMC, Cinemark and Regal on a pro rata basis inconnection with modifying payment obligations for access to our theatres. Inconnection with the completion of the IPO, National CineMedia also intends toenter into an approximately $725 million term loan facility the net proceeds ofwhich will be used to redeem preferred units to be held by each of AMC,Cinemark and Regal on a pro rata basis pursuant to a recapitalization ofNational CineMedia, LLC prior to completion of the IPO. AMC expects to receivenet IPO and debt proceeds upon completion of such transactions of approximately$425-$475 million. AMC is currently exploring alternatives for using the IPOand debt proceeds, and may use some or all of the proceeds to reduce debt orother discretionary transactions. There can be no guarantee that NationalCineMedia, Inc. will complete the IPO or debt transactions or that AMC will receiveany of the expected proceeds.**

**Inconnection with the completion of the IPO, AMC intends to amend and restate itsexisting services agreement with National CineMedia, LLC whereby in exchangefor our pro rata share of the IPO proceeds, AMC will agree to a modification ofNational CineMedia, 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 National CineMedia,LLC; increasing it’s expected ownership interest to approximately 34%, suchLoews payments will be made quarterly until May 2008. Also, with respect to anyon-screen advertising time provided to our beverage concessionaire, AMC wouldbe required to purchase such time from National CineMedia, LLC at a negotiatedrate. In addition, after completion of the IPO, AMC expects to receivemandatory quarterly distributions of excess cash from National CineMedia, LLC.There can be no guarantee that the amendment to the existing services agreementwill occur.**

**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-Kfor 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 is with a syndicate of banksand other financial institutions and provides financing of up to $850,000,000,consisting of a $650,000,000 term loan facility with a maturity of seven yearsand a $200,000,000 revolving credit facility with a maturity of six years. Therevolving credit facility includes 

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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.

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 Floating Notesdue 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 nexttwelve months and enable us to maintain compliance with covenants related tothe new Credit Facility.

**NEW ACCOUNTING 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 

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the employer’s fiscal year, and (3) recognizechanges in the funded status of a defined benefit postretirement plan in comprehensiveincome in the year in which the changes occur. The requirement to recognize thefunded status of a defined benefit postretirement plan and the disclosurerequirements are effective for fiscal years ending after June 15, 2007,for an employer without publicly traded equity securities, or April 3,2008 for AMCE. The requirement to measure plan assets and benefit obligationsas of the date of the employer’s fiscal year-end statement of financial positionis effective for fiscal years ending after December 15, 2008, or April 2,2009 for AMCE Earlier application of the recognition or measurement dateprovisions is encouraged; however, early application must be for all of anemployer’s benefit plans. We believe that as of March 30, 2006, our 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*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 YearFinancial Statements* which provides interpretive guidance on theconsideration of the effects of prior year misstatements in quantifying currentyear misstatements for the purpose of a materiality assessment. SAB 108 iseffective for companies with fiscal years ending after November 15, 2006and is required to be adopted by us in our fiscal year ending March 29,2007. However, early application is encouraged in any report for an interimperiod of the first fiscal year ending after November 15, 2006, filedafter the publication 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-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 recognition thresholdis measured to determine the amount of benefit to recognize in the financialstatements. The interpretation also provides guidance on derecognition ofrecognized tax benefits, classification, interest and penalties, accounting ininterim periods, disclosure and transition. FIN 48 is effective for fiscalyears beginning after December 15, 2006. We expect to adopt the newrequirements in the first quarter of fiscal 2008 and are currently evaluatingthe impact that the adoption of FIN 48 will have on our consolidated financialstatements.

In June 2005, the Emerging Issues Task Force (“EITF”)reached a consensus on Issue No. 05-06, Determining the AmortizationPeriod for Leasehold Improvements Purchased after Lease Inception or Acquiredin a Business Combination (“EITF 05-06”). EITF 05-06 concludes thatthe amortization period for leasehold improvements acquired in a businesscombination and leasehold improvements that are in 

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servicesignificantly after and not contemplated at the beginning of the lease term shouldbe amortized over the shorter of the useful life of the assets or a term thatincludes required lease periods and renewals that are deemed to be reasonablyassured at the date of inception. The adoption of this pronouncement did nothave a material effect on our consolidated financial statements.

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 accounting principle,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.

**Item3.**              Quantitative andQualitative Disclosures about Market Risk.

We areexposed to various market risks including interest rate risk and foreigncurrency exchange rate risk. We do not hold any significant derivativefinancial instruments.

**Marketrisk on variable-rate financial instruments.****  **We maintain an $850,000,000 NewCredit Facility comprised of a $200,000,000 revolving credit facility and a$650,000,000 term loan facility, which permits borrowings at a rate equal to anapplicable margin plus, at our option, either a base rate or LIBOR. Increasesin market interest rates would cause interest expense to increase and earningsbefore income taxes to decrease. The change in interest expense and earningsbefore income taxes would be dependent upon the weighted average outstandingborrowings during the reporting period following an increase in market interestrates. We had no borrowings on our new revolving credit facility as of September 28, 2006and had $646,750,000 outstanding under the term loan facility; therefore, a 100basis point fluctuation in market interest rates would have increased ordecreased interest expense on the new credit facility by approximately $3,202,000during the twenty-six weeks ended September 28, 2006. Also included inlong-term debt are $205,000,000 of our Floating Notes due 2010. A 100 basispoint fluctuation in market interest rates would have increased or decreasedinterest expense on the Floating Notes due 2010 by $1,025,000 during thetwenty-six weeks ended September 28, 2006.

**Market risk on fixed-ratefinancial instruments.****  **Included in long-term debt are $325,000,000 of ourNotes due 2016, $212,811,000 of our Notes due 2011, $175,000,000 of our Notesdue 2012, $300,000,000 of our Notes due 2014, $250,000,000 of our Fixed Notesdue 2012 and $217,453,000 carrying value of our Dis

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count Notes due2014. Increases in market interest rates would generally cause a decrease inthe fair value of the Notes due 2016, Notes due 2011, Notes due 2012, Notes due2014, Fixed Notes due 2012 and Discount Notes due 2014 and a decrease in marketinterest rates would generally cause an increase in fair value of the Notes due2016, Notes due 2011, Notes due 2012, Notes due 2014, Fixed Notes due 2012 andDiscount Notes due 2014.

**Foreign currency exchangerates.****  **Wecurrently operate or have interests in theatres in Mexico, Argentina, Brazil,Chile, Uruguay, France, Spain, the United Kingdom and Canada. As a result ofthese operations, we have assets, liabilities, revenues and expensesdenominated in foreign currencies. The strengthening of the U.S. dollar againstthe respective currencies causes a decrease in the carrying values of assets,liabilities, revenues and expenses denominated in such foreign currencies andthe weakening of the U.S. dollar against the respective currencies causes anincrease in the carrying values of these items. The increases and decreases inassets, liabilities, revenues and expenses are included in accumulated othercomprehensive income. Changes in foreign currency exchange rates also impactthe comparability of earnings in these countries on a year-to-year basis. Asthe U.S. dollar strengthens, comparative translated earnings decrease, and asthe U.S. dollar weakens comparative translated earnings from foreign operationsincrease. Although we do not currently hedge against foreign currency exchangerate risk, we do not intend to repatriate funds from the operations of ourinternational theatres but instead intend to use them to fund current andfuture operations. A 10% fluctuation in the value of the U.S. dollar againstall foreign currencies of countries where we currently operate theatres wouldeither increase or decrease loss before income taxes and accumulated othercomprehensive income (loss) by approximately $0.3 million and $44 million,respectively.

**Item4.**              Controls andProcedures.

(a)   Evaluation of disclosure controls and procedures.

TheCompany maintains a set of disclosure controls and procedures designed toensure that material information required to be disclosed in its filings underthe Securities Exchange act of 1934 is recorded, processed, summarized andreported within the time periods specified in the Securities and ExchangeCommission’s rules and forms and that material information is accumulatedand communicated to the Company’s management, including its Chief ExecutiveOfficer and Chief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosure. The Company’s Chief Executive Officer and ChiefFinancial Officer have evaluated these disclosure controls and procedures as ofthe end of the period covered by this Quarterly Report on Form 10-Qand have determined that such disclosure controls and procedures wereeffective.

(b)   Changes in internal controls.

There has been no changein our internal control over financial reporting during our most recent fiscalquarter that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

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**PART II—OTHERINFORMATION**

**Item1.**              Legal Proceedings.

Referenceis made to Part I. Item 3. Legal Proceedings in our Annual Report on Form 10-Kfor the fiscal year ended March 30, 2006 for information on certainlitigation to which we are a party.

One ofthe cases referred to in our Annual Report on Form 10-K is *MetreonArbitration*. The Company has reached an agreement in principle withthe counterparties to settle this matter.

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

**Item4.**              Submission ofMatters to a Vote of Security Holders.

On June 6,2006 the Requisite Stockholder majority of Marquee Holdings Inc. approvedsettlement of fireproofing litigation where the Company has filed suit torecover damages as dislosed in Note 12—Commitments and Contingencies.

On June 6,2006 the Requisite Stockholder majority of Marquee Holdings Inc. approved theasset purchase agreement and such other related agreements for the sale and/orexchange of all the Company’s leasehold interests in the followingtheatres:  Fenway 13, Boston,Massachusetts; Keystone Park 16, Dallas, Texas; Meridian 16, Settle,Washington, and E-Walk 13, New York, New York, as well as associated intangiblepersonal property, to Regal Cinemas, Inc., for a purchase price of$33,501,100 plus the transfer of Regal’s leasehold interest in the CrossroadsMall 16 theatre, Oklahoma City, Oklahoma and the Fiesta Square 16 theatre,Fayetteville, Arkansas.

**Item6.**              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

**             Filedherewith

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                             | **MARQUEE HOLDINGS INC.**                                     |
|-----------------------------|---------------------------------------------------------------|
|                        |                                                          |
|                        |                                                          |
| Date: November 9, 2006 | /s/**  **PETER C. BROWN                             |
|                        | Peter C. Brown                                                |
|                        | Chairman of the Board,  Chief Executive Officer and President |
|                        |                                                          |
|                        |                                                          |
| Date: November 9, 2006 | /s/**  **CRAIG R. RAMSEY                            |
|                        | Craig R. Ramsey                                               |
|                        | Executive Vice President and  Chief Financial Officer         |

 

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