UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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 December 26, 2002

OR

[     ]     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 1-8747

AMC ENTERTAINMENT INC.

(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes     x     No ____

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

Title of Each Class of Common Stock		Number of Shares Outstanding as of December 26, 2002
Common Stock, 66 2/3 par value		33,250,716
Class B Stock		3,051,597

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

INDEX

                      

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
  (in thousands, except per share data)

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
	December 26,		December 27,			December 26,		December 27,
	2002		2001			2002		2001
	(Unaudited)					(Unaudited)
Revenues
Admissions	$  292,117	$ 212,373		$   908,818			$  670,489
Concessions	109,984	83,449		356,300			268,461
Other theatre	13,483	8,349		36,742			32,433
NCN and other	16,836	12,582		43,284			32,471
Total revenues	432,420	316,753		1,345,144			1,003,854
Expenses
Film exhibition costs	158,458	114,989		502,516			367,106
Concession costs	13,217	9,831		44,746			33,949
Theatre operating expense	105,672	79,634		325,374			244,585
Rent	75,362	58,626		223,474			176,359
NCN and other	14,017	11,845		38,369			34,302
General and administrative	11,058	8,666		53,509			25,359
Preopening expense	1,630	2,182		2,878			3,988
Theatre and other closure expense	4,066	1,736		5,296			1,824
Depreciation and amortization	31,836	26,300		93,253			73,870
Loss (gain) on disposition of assets	390	16		(1,032)			(1,826)
Total costs and expenses	415,706	313,825		1,288,383			959,516
Other expense	-	-		-			3,754
Interest expense
Corporate borrowings	14,905	10,977		48,263			33,927
Capital and financing lease obligations	3,215	3,013		8,645			9,773
Investment income	(737)	(262)		(2,522)			(843)
Total other expense	17,383	13,728		54,386			46,611
Earnings (loss) before income taxes	(669)	(10,800)		2,375			(2,273)
Income tax provision	(2,000)	(1,800)		4,700			(400)
Net earnings (loss)	$     1,331	$    (9,000)		$    (2,325)			$    (1,873)
Preferred dividends	6,250	7,790		20,897			20,587
Net loss for common shares	$    (4,919)	$  (16,790)		$  (23,222)			$  (22,460)
Net loss per share:
Basic	$        (.14)	$        (.72)		$       (.64)			$        (.96)
Diluted	$        (.14)	$        (.72)		$       (.64)			$        (.96)
Average shares outstanding:
Basic	36,302	23,469		36,294			23,469
Diluted	36,302	23,469		36,294			23,469

 

See Notes to Consolidated Financial Statements.
AMC ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

	December 26,	March 28,
	2002	2002
	(Unaudited)
ASSETS
Current assets:
Cash and equivalents	$    241,164	$   219,432
Receivables, net of allowance for doubtful accounts of $2,155
as of December 26, 2002 and $1,297 as of March 28, 2002	42,742	24,195
Other current assets	50,964	48,416
Total current assets	334,870	292,043
Property, net	910,534	776,113
Intangible assets, net	35,885	5,369
Goodwill	58,691	30,276
Deferred income taxes	151,715	127,115
Other long-term assets	54,817	48,254
Total assets	$1,546,512	$1,279,170
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$   125,484	$  110,993
Accrued expenses and other liabilities	178,950	136,196
Current maturities of capital and financing lease obligations	2,861	2,627
Total current liabilities	307,295	249,816
Corporate borrowings	668,570	596,540
Capital and financing lease obligations	77,132	54,429
Other long-term liabilities	185,038	120,029
Total liabilities	1,238,035	1,020,814
Commitments and contingencies
Stockholders' equity:
Series A Convertible Preferred Stock, 66 2/3¢ par value; 275,463 shares issued and outstanding as of December 26, 2002 and 261,989 shares issued and outstanding as of March 28, 2002 (aggregate liquidation preference of $280,107 as of         December 26, 2002 and $266,406 as of March 28, 2002)	184	175
Common Stock, 66 2/3¢ par value; 33,286,103 shares issued as of December 26, 2002
and 30,038,046 shares issued as of March 28, 2002	22,191	20,025
Convertible Class B Stock, 66 2/3¢ par value; 3,051,597 shares
issued and outstanding as of December 26, 2002 and 3,801,545 shares issued and outstanding as of March 28, 2002	2,035	2,535
Additional paid-in capital	463,995	430,902
Accumulated other comprehensive income	(9,506)	(16,967)
Accumulated deficit	(169,840)	(167,515)
	309,059	269,155
Less:
Employee notes for Common Stock purchases	-	10,430
Common Stock in treasury, at cost, 35,387 shares as of
December 26, 2002 and March 28, 2002	582	369
Total stockholders' equity	308,477	258,356
Total liabilities and stockholders' equity	$1,546,512	$1,279,170

See Notes to Consolidated Financial Statements.

AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)

See Note 2 - Acquisitions for information about the non-cash components of the acquisition of GC Companies, Inc.

 

See Notes to Consolidated Financial Statements.

AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 26, 2002
(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

            AMC Entertainment Inc. ("AMCE") is a holding company which, through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC") and its wholly-owned subsidiary AMC-GCT, Inc. (formerly known as GC Companies, Inc., "AMC-GCT"), AMC Theatres of Canada (a division of AMC Entertainment International, Inc.), AMC Entertainment International, Inc. and National Cinema Network, Inc. ("NCN"). (collectively with AMCE, unless the context otherwise requires, the "Company"), is principally involved in the theatrical exhibition business throughout North America and in China (Hong Kong), Japan, France, Portugal, Spain, Sweden and the United Kingdom.  The Company's North American theatrical exhibition business is conducted under the AMC Theatres brand through AMC, AMC-GCT and AMC Theatres of Canada.  The Company's International theatrical exhibition business is conducted through AMC Entertainment International, Inc.  The Company is also involved in the business of providing advertising services to AMC Theatres and other theatre circuits through NCN.

            The accompanying unaudited consolidated financial statements have been prepared in response to the requirements of Form 10-Q and should be read in conjunction with the Company's annual report on Form 10-K for the year (52 weeks) ended March 28, 2002.  In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations.  Due to the seasonal nature of the Company's business, results for the thirty-nine weeks ended December 26, 2002 are not necessarily indicative of the results to be expected for the fiscal year (53 weeks) ending April 3, 2003.

            The March 28, 2002 consolidated balance sheet data was derived from the audited balance sheet, but does not include all disclosures required by generally accepted accounting principles.

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

NOTE 2 – ACQUISITIONS

On March 15, 2002, the Company acquired the operations and related assets of Gulf States Theatres ("GST") for a cash purchase price of approximately $45,758,000.  In connection with the acquisition, the Company leased five theatres with 68 screens in the New Orleans, Louisiana area.  All five of the theatres feature stadium seating and have been built since 1997 and strengthen the Company’s position in the New Orleans market.  The following is a summary of the allocation of the purchase price to the assets acquired from GST, based on a preliminary independent third party valuation study:

(In thousands)
Property, net		$  11,396
Intangible assets		8,540
Goodwill		25,822
Total purchase price		$  45,758

Amounts recorded for goodwill are not subject to amortization, are recorded at the Company's North American theatrical exhibition operating segment (the reporting unit) and are expected to be deductible for tax purposes.  The Company has completed the first step of the transitional goodwill impairment test under Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets and has concluded that the fair value of its North American theatrical exhibition operating segment exceeds the carrying value of that segment.  The Company will perform annual impairment tests for goodwill during its fourth fiscal quarter.

Amounts allocated to intangible assets relate to $8,200,000 for a non-competition and consulting agreement and $340,000 for an acquired trademark.  The amortization periods for the non-competition and consulting agreement and trademark are seven years and 20 years, respectively.  Amortization expense and accumulated amortization are as follows:

				Thirteen Weeks Ended							Thirty-nine Weeks Ended
	December 26,					December 27,					December 26,			December 27,
(In thousands)	2002					2001					2002			2001
Amortization expense of non-competition and consulting agreement		$        292			$           -					$      877			$           -
Amortization expense of trademark	4				- -					13			- -
Total	$        296				$           - -					$      890			$           - -
											As of December 26,			As of March 28,
(In thousands)											2002			2002
Accumulated amortization of non-competition and consulting agreement								$      877					$           -
Accumulated amortization of trademark								13					- -
Total								$      890					$           - -

Estimated amortization expense for the current and each of the next five fiscal years is $1,171,000 under the non-competition and consulting agreement and $17,000 for the trademark.

On March 29, 2002, the Company acquired GC Companies, Inc. pursuant to a plan of reorganization sponsored by the Company for an estimated purchase price of $168,492,000 (net of $6,500,000 from the sale of GC Companies’ portfolio of venture capital investments on the effective date), which includes cash payments of $70,054,000, the issuance of $72,880,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2011 with a fair value of $71,787,000 and the issuance of 2,430,429 shares of common stock, with an aggregate fair value of $33,151,000 based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan).  As of December 26, 2002, $5,420,000 of the cash portion of the purchase price was unpaid.  Acquisition of the GC theatre circuit expands the Company’s national footprint of industry-leading theatres, especially in key markets in the Northeast and upper Midwest. The acquisition includes 66 theatres with 621 screens in the United States, 3 managed theatres with 20 screens in the United States and a 50% interest in a joint venture that operates 17 theatres with 160 screens in Argentina, Chile, Brazil and Uruguay. 

AMC-GCT became the Company's consolidated subsidiary in the acquisition.  The following is a summary of the allocation of the purchase price to the assets and liabilities of AMC-GCT based on management estimates of fair value, which could change depending on the results of an independent third party valuation study that is currently being performed and the final settlement of liabilities assumed from GC Companies, Inc.:

(In thousands)
Cash and equivalents		$   10,725
Current assets		11,503
Property, net		142,402
Intangible assets		27,699
Goodwill		32,869
Deferred income taxes		27,500
Other long-term assets		7,738
Current liabilities		(34,756)
Other long-term liabilities		(57,188)
Total purchase price		$ 168,492

Amounts recorded for goodwill are not subject to amortization, are recorded at the Company’s North American theatrical exhibition operating segment (the reporting unit) and are not expected to be deductible for tax purposes.  The Company will perform annual impairment tests for goodwill during its fourth fiscal quarter.

            Amounts allocated to intangible assets relate to $24,045,000 of favorable leases assumed by AMC-GCT and gift certificate and discount ticket customer lists of $3,654,000.  The weighted average amortization period for favorable leases and customer lists is approximately 10 years and 2 years, respectively.  Amortization expense and accumulated amortization are as follows:

	Thirteen Weeks Ended									Thirty-nine Weeks Ended
	December 26,				December 27,					December 26,		December 27,
(In thousands)	2002				2001					2002		2001
Amortization expense of favorable leases		$       663		$           -				$      1,913			$           -
Amortization expense of customer lists	469			- -				1,197			­         - -
Total	$    1,132			$           - -				$      3,110			$           - -
										As of December 26,		As of March 28,
(In thousands)										2002		2002
Accumulated amortization of favorable leases								$     1,913			$        -
Accumulated amortization of customer lists								1,197			-
Total								$     3,110			$          -

           

Estimated amortization expense for the current and next five fiscal years is as follows:

(In thousands)		Favorable Leases			Customer Lists				Total
2003		$   2,689			$  1,827			$  4,516
2004		2,474			1,827			4,301
2005		2,467			-			2,467
2006		2,467			-			2,467
2007		2,366			-			2,366
2008		2,329			-			2,329

            The pro forma financial information presented below sets forth the Company's historical statements of operations and balance sheet for the periods indicated and give effect to the acquisitions of GC Companies, Inc. and Gulf States Theatres as adjusted for the related preliminary purchase price allocations.  The Company believes that the final allocation of purchase price will not differ materially from the preliminary allocation.  Such information is presented for comparative purposes only and does not purport to represent what the Company's results of operations would actually have been had these transactions occurred on the date indicated or to project its results of operations for any future period or date.         

(In thousands, except per share data)

Thirteen Weeks Ended December 26, 2002

Pro Forma Thirteen Weeks Ended December 27, 2001

Thirty-nine Weeks   Ended December 26, 2002