AMC ENTERTAINMENT INC - FORM 10-Q

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Table of Contents

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

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
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 1-8747

AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		43-1304369 (I.R.S. Employer Identification No.)
920 Main Kansas City, Missouri (Address of principal executive offices)		64105 (Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

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

Title of Each Class of Common Stock		Number of Shares Outstanding as of June 30, 2011

Common Stock, 1¢ par value		1

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

INDEX



PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 6.	Exhibits	40
	Signatures	43

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

				Thirteen Weeks Ended

				June 30, 2011			July 1, 2010
				(unaudited)
Revenues
	Admissions			$	478,090		$	448,597
	Concessions				192,564			175,959
	Other theatre				19,482			16,396

		Total revenues			690,136			640,952

Operating Costs and Expenses
	Film exhibition costs				259,215			238,823
	Concession costs				26,256			20,496
	Operating expense				179,730			147,641
	Rent				117,257			114,554
	General and administrative:
		Merger, acquisition and transaction costs			612			5,756
		Management fee			1,250			1,250
		Other			14,450			13,071
	Depreciation and amortization				51,818			48,603

		Operating costs and expenses			650,588			590,194

		Operating income			39,548			50,758
	Other expense (income)
		Other income			(2,097	)		(1,939	)
		Interest expense:
			Corporate borrowings		39,851			33,019
			Capital and financing lease obligations		1,498			1,383
		Equity in (earnings) losses of non-consolidated entities			(496	)		1,766
		Investment income			(27	)		(50	)

			Total other expense		38,729			34,179

Earnings from continuing operations before income taxes					819			16,579
Income tax provision					525			6,950

Earnings from continuing operations					294			9,629
Loss from discontinued operations, net of income taxes					(9	)		(17	)

Net earnings				$	285		$	9,612

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

			June 30, 2011			March 31, 2011

			(unaudited)
ASSETS
Current assets:
	Cash and equivalents		$	314,625		$	301,158
	Receivables, net			44,499			26,692
	Other current assets			93,423			88,149

		Total current assets		452,547			415,999
Property, net				944,102			958,722
Intangible assets, net				146,048			149,493
Goodwill				1,923,667			1,923,667
Other long-term assets				305,934			292,364

		Total assets	$	3,772,298		$	3,740,245

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
	Accounts payable		$	202,422		$	165,416
	Accrued expenses and other liabilities			133,516			138,987
	Deferred revenues and income			151,413			141,237
	Current maturities of corporate borrowings and capital and financing lease obligations			9,792			9,955

		Total current liabilities		497,143			455,595
Corporate borrowings				2,094,727			2,096,040
Capital and financing lease obligations				61,333			62,220
Deferred revenues—for exhibitor services agreement				332,534			333,792
Other long-term liabilities				431,370			432,439

		Total liabilities		3,417,107			3,380,086

Commitments and contingencies
Stockholder's equity:
	Common Stock, 1 share issued with 1¢ par value			—			—
	Additional paid-in capital			552,446			551,955
	Accumulated other comprehensive loss			(9,735	)		(3,991	)
	Accumulated deficit			(187,520	)		(187,805	)

		Total stockholder's equity		355,191			360,159

		Total liabilities and stockholder's equity	$	3,772,298		$	3,740,245

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			Thirteen Weeks Ended

			June 30, 2011			July 1, 2010
			(unaudited)
Cash flows from operating activities:
Net earnings			$	285		$	9,612
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Depreciation and amortization			51,818			48,603
	Theatre and other closure expense			2,544			196
	Equity in earnings and losses from non-consolidated entities, net of distributions			1,753			3,686
	Gain on dispositions			—			(10,056	)
	Change in assets and liabilities, net of acquisitions:
		Receivables		(17,044	)		(14,232	)
		Other assets		(5,274	)		(1,147	)
		Accounts payable		41,206			8,199
		Accrued expenses and other liabilities		1,150			(8,264	)
	Other, net			(1,111	)		(1,298	)

	Net cash provided by operating activities			75,327			35,299

Cash flows from investing activities:
	Capital expenditures			(32,018	)		(13,988	)
	Acquisition of Kerasotes, net of cash acquired			—			(276,798	)
	Proceeds from sale/leaseback of digital projection equipment			953			—
	Proceeds from disposition of Cinemex			—			876
	Investments in non-consolidated entities, net			(19,509	)		43
	Proceeds from the disposition of long-term assets			—			55,000
	Other, net			(1,180	)		(28	)

	Net cash used in investing activities			(51,754	)		(234,895	)

Cash flows from financing activities:
	Deferred financing costs			(231	)		(95	)
	Principal payments under capital and financing lease obligations			(1,050	)		(990	)
	Principal payments under Term Loan			(1,625	)		(1,625	)
	Change in construction payables			(6,913	)		(7,737	)

	Net cash used in financing activities			(9,819	)		(10,447	)
	Effect of exchange rate changes on cash and equivalents			(287	)		402

Net increase (decrease) in cash and equivalents				13,467			(209,641	)
Cash and equivalents at beginning of period				301,158			495,343

Cash and equivalents at end of period			$	314,625		$	285,702

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

AMC Entertainment® Inc. ("AMCE" or the "Company") is an intermediate holding company, which, through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC") and its subsidiaries, and AMC Entertainment International, Inc. ("AMCEI") and its subsidiaries (collectively with AMCE, unless the context otherwise requires, the "Company"), is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States, Canada, China (Hong Kong), France and the United Kingdom.

AMCE is a wholly owned subsidiary of AMC Entertainment Holdings, Inc. ("Parent"), which is owned by J.P. Morgan Partners, LLC and certain related investment funds ("JPMP"), Apollo Management, L.P. and certain related investment funds ("Apollo"), affiliates of Bain Capital Partners ("Bain"), The Carlyle Group ("Carlyle") and Spectrum Equity Investors ("Spectrum") (collectively the "Sponsors").

The accompanying unaudited consolidated financial statements have been prepared in response to the requirements of Form 10-Q and should be read in conjunction with the Company's Annual report on Form 10-K for the year ended March 31, 2011. The March 31, 2011 consolidated balance sheet data was derived from the audited balance sheet included in the Form 10-K, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company's financial position and results of operations. Due to the seasonal nature of the Company's business, results for the thirteen weeks ended June 30, 2011 are not necessarily indicative of the results to be expected for the fiscal year (52 weeks) ending March 29, 2012. The Company manages its business under one operating segment called Theatrical Exhibition.

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to: (1) Impairments, (2) Film exhibition costs, (3) Income and operating taxes, (4) Theatre and other closure expense and (5) Gift card and packaged ticket revenues. Actual results could differ from those estimates.

Guest Frequency Program: The Company has launched AMC Stubs™, a guest frequency program, which allows members to earn rewards, including $10 for each $100 spent, redeemable on future purchases at AMC locations. The portion of the admissions and concessions revenues attributed to the rewards is deferred as a reduction of admissions and concessions revenues, based on member redemptions. Rewards must be redeemed no later than 90 days from the date of issuance. Upon redemption, rewards are recognized as revenues along with associated cost of goods. Rewards not redeemed within 90 days are forfeited and recognized as admissions or concessions revenues based on original point of sale. The program's $12 annual membership fee is deferred, net of estimated refunds, and is recognized ratably over the one-year membership period.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)

Other Income: The following table sets forth the components of other income:

	Thirteen Weeks Ended

(In thousands)	June 30, 2011			July 1, 2010
Gift card redemptions considered to be remote	$	(2,437	)	$	(1,939	)
Loss on redemption of 11% Senior Subordinated Notes due 2016		42			—
Loss on modification of Senior Secured Credit Facility		298			—

Other income	$	(2,097	)	$	(1,939	)

NOTE 2—ACQUISITION

On May 24, 2010, the Company completed the acquisition of substantially all of the assets (92 theatres and 928 screens) of Kerasotes Showplace Theatres, LLC ("Kerasotes"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. The acquisition of Kerasotes was treated as a purchase in accordance with Accounting Standards Codification, ("ASC") 805, Business Combinations. The total purchase price for the Kerasotes theatres was $281,415,000. Results of operations of Kerasotes are included in the Company's Consolidated Statements of Operations from May 24, 2010.

During fiscal 2011, in connection with the acquisition of Kerasotes, the Company divested of seven Kerasotes theatres with 85 screens as required by the Antitrust Division of the United States Department of Justice. The Company was also required by the Antitrust Division of the United States Department of Justice to divest of four AMC theatres with 57 screens. Additionally, the Company acquired two theatres with 26 screens that were received in exchange for three of the AMC theatres with 43 screens during the fifty-two weeks ended March 31, 2011.

The following unaudited pro forma information summarizes the results of operations as if the Kerasotes acquisition and the required divestitures had occurred as of the beginning of fiscal 2011.

(In thousands)	Pro forma Thirteen Weeks Ended July 1, 2010

	(unaudited)
Total revenues	$	671,381
Net earnings		9,981

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 3—COMPREHENSIVE EARNINGS (LOSS)

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

	Thirteen Weeks Ended

(In thousands)	June 30, 2011			July 1, 2010
Net earnings	$	285		$	9,612
Foreign currency translation adjustment		(633	)		1,892
Pension and other benefit adjustments		(222	)		(62	)
Decrease in unrealized gain on marketable securities		(4,889	)		(320	)

Total comprehensive earnings (loss)	$	(5,459	)	$	11,122

NOTE 4—STOCKHOLDER'S EQUITY

AMCE has one share of Common Stock issued as of June 30, 2011, which is owned by Parent.

Stock-Based Compensation

The Company has no stock-based compensation arrangements of its own, but Parent has adopted a stock-based compensation plan. The Company has recorded stock-based compensation expense of $491,000 and $136,000 within general and administrative: other during the thirteen weeks ended June 30, 2011, and July 1, 2010, respectively. Compensation expense for stock options and restricted stock are recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The Company's financial statements reflect an increase to additional paid-in capital related to stock-based compensation of $491,000 during fiscal 2012. As of June 30, 2011, there was approximately $6,912,000 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements expected to be recognized over a weighted average 2.9 years.

2010 Equity Incentive Plan

The 2010 Equity Incentive Plan ("Plan") provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, other stock-based awards or performance-based compensation awards and permits a maximum of 39,312 shares of common stock of Parent to be issued under the Plan. As of June 30, 2011, approximately 27,208 shares were available for grant under the Plan, including 2,914 shares awarded that have not been granted. The Company accounts for stock options using the fair value method of accounting and has elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants, as it does not have enough historical experience to provide a reasonable estimate. The common stock value of $755 per share was based upon a contemporaneous valuation reflecting market conditions on June 22, 2011, which was prepared by an independent third party valuation specialist, and was used to estimate grant value of 1,346 shares of restricted stock (performance vesting) granted on June 22, 2011. The third party valuation was reviewed by management and provided to our Board of Directors and the Compensation Committee of our Board of Directors. In determining the fair market value of our common stock, the Board of Directors and the Compensation Committee of our Board of Directors

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 4—STOCKHOLDER'S EQUITY (Continued)

considered the valuation report and other qualitative and quantitative factors that they considered relevant.

The award agreements, which consisted of grants of non-qualified stock options, restricted stock (time vesting), and restricted stock (performance vesting) to certain of its employees under the 2010 Equity Incentive Plan, generally have the following features, subject to discretionary approval by Parent's compensation committee:

•: Non-Qualified Stock Option Award Agreement: Twenty-five percent of the options will vest on each of the first four anniversaries of the date of grant; provided, however, that the options will become fully vested and exercisable if within one year following a Change of Control (as defined in the Plan), the participant's service is terminated by the Company without cause. The stock options have a ten year term from the date of grant. During the first quarter of fiscal 2012, there was a stock option grant for 7 shares.
•: Restricted Stock Award Agreement (Time Vesting): The restricted shares will become vested on the fourth anniversary of the date of grant; provided, however, that the restricted shares will become fully vested if within one year following a Change of Control, the participant's service is terminated by the Company without cause. During the first quarter of fiscal 2012, there was a restricted stock (time vesting) grant of 7 shares.
•: Restricted Stock Award Agreement (Performance Vesting): In fiscal 2011, the Board approved the award of 5,542 shares of restricted stock (performance vesting), of which 1,346 shares have been granted in fiscal 2012. Approximately twenty-five percent of the total restricted shares of 5,542 approved by the Board will be granted each year over a four-year period starting in fiscal 2011. Each grant has a vesting term of approximately one year conditioned upon the Company meeting certain pre-established annual performance targets; provided, however, that the restricted shares will become fully vested if within one year following a Change of Control, the participant's service is terminated by the Company without cause. The fiscal 2012 performance target was communicated on June 22, 2011 following ASC 718-10-55-95 and the estimated grant date fair value was $1,016,000, or approximately $755 per share.

A summary of stock option activity is as follows:

		Weighted Average Exercise Price Per Share

Outstanding at March 31, 2011	35,684.168	$	449.93
Granted	7.000		752.00

Outstanding at June 30, 2011	35,691.168	$	449.99

Exercisable at June 30, 2011	17,854.098	$	420.80

(1): Includes shares previously granted under the amended and restated 2004 Stock Option Plan. On July 23, 2010, the Board determined that the Company would no longer grant

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 4—STOCKHOLDER'S EQUITY (Continued)

any awards of shares of common stock of the Company under the amended and restated 2004 Stock Option Plan.

The following table represents the restricted stock activity for the thirteen weeks ended June 30, 2011:

		Weighted Average Grant Date Fair Value

Unvested at March 31, 2011	5,372	$	752.00
Granted	1,353		755.00

Unvested at June 30, 2011	6,725	$	752.60

NOTE 5—INVESTMENTS

Investments in non-consolidated affiliates and certain other investments accounted for following the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control. Investments in non-consolidated affiliates as of June 30, 2011, include a 15.63% interest in National CineMedia, LLC ("NCM"), a 50% interest in two U.S. theatres and one IMAX screen, a 26.22% equity interest in Movietickets.com ("MTC"), a 50% interest in Midland Empire Partners, LLC ("MEP"), a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"), and a 50% interest in Open Road Films, LLC ("ORF"). Indebtedness held by equity method investees is non-recourse to the Company.

Condensed financial information of our non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by the Company.

Operating Results(1):

	Thirteen Weeks Ended June 30, 2011

(In thousands)	NCM		DCIP			ORF			Other			Total
Revenues	$	113,963	$	29,150		$	—		$	4,572		$	147,685
Operating costs and expenses		76,401		33,842			2,264			4,824			117,331

Net earnings (loss)	$	37,562	$	(4,692	)	$	(2,264	)	$	(252	)	$	30,354

The Company's recorded equity in earnings (loss)	$	3,239	$	(1,498	)	$	(1,132	)	$	(113	)	$	496

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 5—INVESTMENTS (Continued)

	Thirteen Weeks Ended July 1, 2010

(In thousands)	NCM		DCIP			ORF		Other			Total
Revenues	$	98,998	$	5,286		$	—	$	10,688		$	114,972
Operating costs and expenses		71,452		23,440			—		10,455			105,347

Net earnings (loss)	$	27,546	$	(18,154	)	$	—	$	233		$	9,625

The Company's recorded equity in earnings (loss)	$	3,458	$	(5,169	)	$	—	$	(55	)	$	(1,766	)

(1): The difference between the Company's recorded investment for one U.S. theatre where it has a 50% interest, and its proportional ownership share resulting from the acquisition of the asset in a business combination where the investment was initially recorded at fair value, is amortized to equity in earnings or losses over the estimated useful life of approximately 20 years for the underlying building.

The Company recorded equity in earnings from NCM of $3,239,000 and $3,458,000 during the thirteen weeks ended June 30, 2011 and July 1, 2010, respectively. As of June 30, 2011, the Company owns 17,323,782 units, or a 15.63% interest, in NCM. As a founding member, the Company has the ability to exercise significant influence over the governance of NCM, and, accordingly accounts for its investment following the equity method. The estimated fair market value of the units in NCM was approximately $292,945,000, based on the price per share of NCM, Inc. on June 30, 2011 of $16.91 per share.

As of June 30, 2011 and March 31, 2011, the Company has recorded $2,352,000 and $1,708,000 respectively, of amounts due from NCM related to on-screen advertising revenue and theatre rent. As of June 30, 2011 and March 31, 2011, the Company had recorded $2,614,000 and $1,355,000 respectively, of amounts due to NCM related to the Exhibitor Services Agreement. The Company recorded revenues for advertising from NCM of $6,220,000 and $5,419,000 during the thirteen weeks ended June 30, 2011 and July 1, 2010, respectively. The Company recorded NCM advertising expenses related to beverage advertising of $3,630,000 and $3,264,000 during the thirteen weeks ended June 30, 2011 and July 1, 2010, respectively.

As of June 30, 2011 and March 31, 2011, the Company has recorded $4,117,000 and $3,376,000 respectively, of amounts due from DCIP related to equipment purchases made on behalf of DCIP for the installation of digital projection systems. The Company pays equipment rent monthly, in advance, to DCIP and has recorded prepaid rent of $313,000 and $275,000 as of June 30, 2011 and March 31, 2011, respectively. The Company records the equipment rental expense on a straight-line basis, including scheduled escalations of rent to commence after six and one-half years from the inception of the agreement. The difference between the cash rent and straight-line rent is recorded to deferred rent, a long-term liability account. As of June 30, 2011 and March 31, 2011, the Company has recorded $2,190,000 and $1,471,000 of deferred rent liability, respectively. The Company recorded digital equipment rental expense of $1,525,000 and $360,000 during the thirteen weeks ended June 30, 2011 and July 1, 2010, respectively.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 5—INVESTMENTS (Continued)

The Company recorded the following changes in the carrying amount of its investment in NCM and equity in (earnings) losses of NCM during the thirteen weeks ended June 30, 2011:

(In thousands)	Investment in NCM(1)			Deferred Revenue(2)			Cash Received (Paid)		Equity in (Earnings) Losses			Advertising (Revenue)

Beginning balance March 31, 2011	$	74,551		$	(333,792	)	$	—	$	—		$	—
Receipt of excess cash distributions		(447	)		—			1,755		(1,308	)		—
Receipt under Tax Receivable Agreement		(35	)		—			494		(459	)		—
Amortization of deferred revenue		—			1,258			—		—			(1,258	)
Equity in earnings(3)		1,472			—			—		(1,472	)		—

Ending balance June 30, 2011	$	75,541		$	(332,534	)	$	2,249	$	(3,239	)	$	(1,258	)

(1): Represents AMC's investment in 519,979 common membership units originally valued at March 27, 2008 and 224,828 common membership units originally valued at March 17, 2009, 70,424 common membership units originally valued at March 17, 2010, and 3,601,811 common membership units originally valued at June 14, 2010 received under the Common Unit Adjustment Agreement dated as of February 13, 2007 (Tranche 2 Investments). AMC's investment in 12,906,740 common membership units (Tranche 1 Investment) is carried at zero cost.
(2): Represents the unamortized portion of the Exhibitor Services Agreement (ESA) modifications payment received from NCM. Such amounts are being amortized to revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues).
(3): Represents equity in earnings on the Tranche 2 Investments only.

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 5—INVESTMENTS (Continued)

Equity Method Accounting for Tranche 1 and Tranche 2 Investments in NCM

On February 13, 2007, NCM, Inc., the sole manager of NCM, completed its Initial Public Offering ("IPO") and used the net proceeds from the IPO to purchase a 44.8% interest in NCM, paying NCM $746,100,000 and paying the Founding Members $78,500,000 for a portion of the NCM units owned by them. NCM then paid $686,300,000 of the funds received from NCM, Inc. to the Founding Members as consideration for their agreement to modify the then-existing ESA. Also in connection with the IPO, NCM used $59,800,000 of the proceeds it received from NCM, Inc. and $709,700,000 of net proceeds from its new senior secured credit facility entered into concurrently with the completion of the IPO to redeem $769,500,000 in NCM preferred units held by the Founding Members. The redemption distribution to the Founding Members described above related to the IPO resulted in large Members' Deficit amounts for the Founding Members.

The Company received approximately $259,300,000 for the redemption of all of its preferred units in NCM and approximately $26,500,000 from selling common units in NCM to NCM, Inc. In addition, the Company received $231,300,000 as consideration for modifying the ESA.

Following the NCM IPO, the Company will not recognize undistributed equity in the earnings on the original NCM membership units (Tranche 1 Investment) until NCM's future net earnings, less distributions received, surpass the amount of the excess distribution. The Company will recognize equity in earnings only to the extent it receives cash distributions from NCM. The Company considers the excess distribution described above as an advance on NCM's future earnings and, accordingly, future earnings of NCM should not be recognized through the application of equity method accounting until such time as the Company's share of NCM's future earnings, net of distributions received, exceeds the excess distribution. The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor's basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution.

The Company has received 7,983,723 additional units in NCM subsequent to the IPO as a result of Common Unit Adjustments received from March 27, 2008 through June 14, 2010 (Tranche 2 Investments). The Company follows the guidance in ASC 323-10-35-29 (formerly EITF 02-18, Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition) by analogy, which also refers to AICPA Technical Practice Aid 2220.14. Both sets of literature indicate that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the Common Unit adjustments included in its Tranche 2 Investments equates to making additional investments in NCM. The Company has evaluated the receipt of the additional common units in NCM and the assets exchanged for these additional units and has determined that the right to use its incremental new screens would not be considered funding of prior losses. This determination was formed by considering that (i) NCM does not receive any additional funds from the Tranche 2 Investments, (ii) both NCM and AMC record their respective increases to Members' Equity and Investment at the same amount (fair value of the units issued), (iii) the additional investments result in additional ownership in NCM

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 5—INVESTMENTS (Continued)

and (iv) the investments in additional common units are not subordinate to the other equity of NCM. As such, the additional common units received would be accounted for as a Tranche 2 Investment separate from the Company's initial investment following the equity method. The Company's Tranche 2 Investments correspond with the NCM Members' equity amounts in its capital account.

NOTE 6—FAIR VALUE MEASUREMENTS

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:


	Level 1:		Quoted market prices in active markets for identical assets or liabilities.
	Level 2:		Observable market based inputs or unobservable inputs that are corroborated by market data.
	Level 3:		Unobservable inputs that are not corroborated by market data.

The following table summarizes the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis as of June 30, 2011:

					Fair Value Measurements at June 30, 2011 Using

(In thousands)			Total Carrying Value at June 30, 2011		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
*Cash and Equivalents:*
	Money Market Mutual Funds		$	79	$	79	$	—	$	—
*Other long-term assets:*
	Equity securities, available-for-sale:
		RealD Inc. Common Stock		28,601		28,601		—		—
		Mutual Fund Large U.S. Equity		2,435		2,435		—		—
		Mutual Fund Small/Mid U.S. Equity		325		325		—		—
		Mutual Fund International		146		146		—		—
		Mutual Fund Broad U.S. Equity		29		29		—		—
		Mutual Fund Balance		64		64		—		—
		Mutual Fund Fixed Income		276		276		—		—

Total assets at fair value			$	31,955	$	31,955	$	—	$	—

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

Valuation Techniques. The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices. The unrecognized gain on the equity securities recorded in accumulated other comprehensive loss as of June 30, 2011 was $1,547,000.

Other Fair Value Measurement Disclosures. The Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position for which it is practicable to estimate that value. At June 30, 2011, the carrying amount of the Company's liabilities for corporate borrowings was approximately $2,101,227,000 and the fair value was approximately $2,149,315,000. At March 31, 2011, the carrying amount of the corporate borrowings was approximately $2,102,540,000 and the fair value was approximately $2,212,100,000. Quoted market prices were used to value publicly held corporate borrowings. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments.

NOTE 7—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

A rollforward of reserves for theatre and other closure is as follows:

		Thirteen Weeks Ended

(In thousands)		June 30, 2011			July 1, 2010
Beginning balance		$	73,852		$	6,694
	Theatre and other closure expense		2,544			196
	Transfer of deferred rent		—			15
	Cash payments		(3,889	)		(359	)

Ending balance		$	72,507		$	6,546

During the thirteen weeks ended June 30, 2011, the Company recognized $2,544,000 of theatre and other closure expense primarily related to accretion on previously closed properties with remaining lease obligations.

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

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AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 8—INCOME TAXES

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

	Thirteen Weeks Ended

	June 30, 2011			July 1, 2010
Income tax expense (benefit) at the federal statutory rate	$	275		$	5,800
Effect of:
State income taxes		525			4,800
Permanent items		—			(100	)
Change in ASC 740 (formally FIN 48) reserve		(900	)		—
Valuation allowance		625			(3,600	)
Other, net		—			50

Income tax expense	$	525		$	6,950

Effective income tax rate		64.1	%		41.9	%

The accounting for income taxes requires that deferred tax assets and liabilities be recognized, using enacted tax rates, for the tax effect of temporary differences between the financial reporting and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized.

The state tax provision was for the states that impose their income based taxes on a gross sales method, that impose a margin tax or that have suspended the use of net operating loss carryforwards into the current tax year.

NOTE 9—EMPLOYEE BENEFIT PLANS

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who were not covered by a collective bargaining agreement. The Company also offers eligible retirees the opportunity to participate in a health plan (medical and dental). Certain employees are eligible for subsidized postretirement medical benefits. The eligibility for these benefits is based upon a participant's age and service as of January 1, 2009.

The Company expects to make pension contributions of approximately $967,000 per quarter for a total of approximately $3,868,000 during fiscal 2012.

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 9—EMPLOYEE BENEFIT PLANS (Continued)

Net periodic benefit cost recognized for the plans during the thirteen weeks ended June 30, 2011 and July 1, 2010 consists of the following:

		Pension Benefits						Other Benefits

(In thousands)		June 30, 2011			July 1, 2010			June 30, 2011			July 1, 2010
Components of net periodic benefit cost:
	Service cost	$	45		$	46		$	37		$	38
	Interest cost		1,160			1,151			295			319
	Expected return on plan assets		(1,116	)		(996	)		—			—
	Amortization of net loss		1			154			—			—
	Amortization of prior service credit		—			—			(223	)		(216	)

Net periodic benefit cost		$	90		$	355		$	109		$	141

During the first quarter of fiscal 2012, the Company recorded an additional estimated withdrawal liability of approximately $301,000 related to a multiemployer pension plan where it had ceased making contributions. As of June 30, 2011, the Company's liability related to these collectively bargained multiemployer pension plan withdrawals, net of quarterly payments, is $4,284,000.

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10, Financial statements of guarantors and issuers of guaranteed securities registered or being registered. Each of the subsidiary guarantors are 100% owned by AMCE. The subsidiary guarantees of AMCE's Notes due 2014, Notes due 2019, and Notes due 2020 are full and unconditional and joint and several. There are significant restrictions on the Company's ability to obtain funds from any of its subsidiaries through dividends, loans or advances. The Company and its subsidiary guarantor's investments in its consolidated subsidiaries are presented under the equity method of accounting.

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Thirteen weeks ended June 30, 2011:

(In thousands)			AMCE			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Inc.

Revenues
	Admissions		$	—		$	474,603		$	3,487		$	—		$	478,090
	Concessions			—			191,233			1,331			—			192,564
	Other theatre			—			19,172			310			—			19,482

		Total revenues		—			685,008			5,128			—			690,136

Operating Costs and Expenses
	Film exhibition costs			—			257,628			1,587			—			259,215
	Concession costs			—			25,994			262			—			26,256
	Operating expense			—			177,329			2,401			—			179,730
	Rent			—			115,944			1,313			—			117,257
	General and administrative:
		Merger, acquisition and transaction costs		—			612			—			—			612
		Management fee		—			1,250			—			—			1,250
		Other		—			14,414			36			—			14,450
	Depreciation and amortization			—			51,708			110			—			51,818

Operating costs and expenses				—			644,879			5,709			—			650,588

		Operating income (loss)		—			40,129			(581	)		—			39,548
Other expense (income)
	Equity in net loss of subsidiaries			2,946			846			—			(3,792	)		—
	Other income			—			(2,097	)		—			—			(2,097	)
	Interest expense:
		Corporate borrowings		39,874			50,936			—			(50,959	)		39,851
		Capital and financing lease obligations		—			1,498			—			—			1,498
	Equity in (earnings) losses of non-consolidated entities			(92	)		(669	)		265			—			(496	)
	Investment income			(43,538	)		(7,448	)		—			50,959			(27	)

Total other expense				(810	)		43,066			265			(3,792	)		38,729

Earnings (loss) from continuing operations before income taxes				810			(2,937	)		(846	)		3,792			819
Income tax provision				525			—			—			—			525

Earnings (loss) from continuing operations				285			(2,937	)		(846	)		3,792			294
Loss from discontinued operations, net of income taxes				—			(9	)		—			—			(9	)

Net earnings (loss)			$	285		$	(2,946	)	$	(846	)	$	3,792		$	285

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Thirteen weeks ended July 1, 2010:

(In thousands)			AMCE			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Inc.

Revenues
	Admissions		$	—		$	445,870		$	2,727		$	—		$	448,597
	Concessions			—			174,976			983			—			175,959
	Other theatre			—			16,123			273			—			16,396

		Total revenues		—			636,969			3,983			—			640,952

Costs and Expenses
	Film exhibition costs			—			237,617			1,206			—			238,823
	Concession costs			—			20,259			237			—			20,496
	Operating expense			—			145,909			1,732			—			147,641
	Rent			—			112,794			1,760			—			114,554
	General and administrative:
		Merger, acquisition and transaction costs		—			5,756			—			—			5,756
		Management fee		—			1,250			—			—			1,250
		Other		—			13,062			9			—			13,071
Depreciation and amortization				—			48,548			55			—			48,603

Operating costs and expenses				—			585,195			4,999			—			590,194

		Operating income (loss)		—			51,774			(1,016	)		—			50,758
Other expense (income)
	Equity in net (earnings) losses of subsidiaries			(9,103	)		1,123			—			7,980			—
	Other income			—			(1,939	)		—			—			(1,939	)
	Interest expense:
		Corporate borrowings		33,021			42,178			—			(42,180	)		33,019
		Capital and financing lease obligations		—			1,383			—			—			1,383
	Equity in (earnings) losses of non-consolidated entities			(143	)		1,802			107			—			1,766
	Investment income			(36,087	)		(6,143	)		—			42,180			(50	)

Total other expense (income)				(12,312	)		38,404			107			7,980			34,179

Earnings (loss) from continuing operations before income taxes				12,312			13,370			(1,123	)		(7,980	)		16,579
Income tax provision				2,700			4,250			—			—			6,950

Earnings (loss) from continuing operations				9,612			9,120			(1,123	)		(7,980	)		9,629
Loss from discontinued operations, net of income taxes				—			(17	)		—			—			(17	)

Net earnings (loss)			$	9,612		$	9,103		$	(1,123	)	$	(7,980	)	$	9,612

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

As of June 30, 2011:

(In thousands)			AMCE			Subsidiary Guarantors			Subsidiary Non-Guarantors		Consolidating Adjustments		Consolidated AMC Entertainment Inc.

Assets
Current assets:
	Cash and equivalents		$	—		$	274,104		$	40,521	$	—	$	314,625
	Receivables, net			910			43,331			258		—		44,499
	Other current assets			—			91,237			2,186		—		93,423

		Total current assets		910			408,672			42,965		—		452,547
Investment in equity of subsidiaries				(243,823	)		79,145			—		164,678		—
Property, net				—			943,134			968		—		944,102
Intangible assets, net				—			146,048			—		—		146,048
Intercompany advances				2,676,391			(2,757,395	)		81,004		—		—
Goodwill				—			1,923,667			—		—		1,923,667
Other long-term assets				36,571			269,166			197		—		305,934

	Total assets		$	2,470,049		$	1,012,437		$	125,134	$	164,678	$	3,772,298

Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable			$	—		$	201,269		$	1,153	$	—	$	202,422
Accrued expenses and other liabilities				13,631			118,409			1,476		—		133,516
Deferred revenues and income				—			150,871			542		—		151,413
Current maturities of corporate borrowings and capital and financing lease obligations				6,500			3,292			—		—		9,792

		Total current liabilities		20,131			473,841			3,171		—		497,143
Corporate borrowings				2,094,727			—			—		—		2,094,727
Capital and financing lease obligations				—			61,333			—		—		61,333
Deferred revenues—for exhibitor services agreement				—			332,534			—		—		332,534
Other long-term liabilities				—			388,552			42,818		—		431,370

		Total liabilities		2,114,858			1,256,260			45,989		—		3,417,107
		Stockholder's equity (deficit)		355,191			(243,823	)		79,145		164,678		355,191

		Total liabilities and stockholder's equity	$	2,470,049		$	1,012,437		$	125,134	$	164,678	$	3,772,298

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

As of March 31, 2011:

(In thousands)				AMCE			Subsidiary Guarantors			Subsidiary Non-Guarantors		Consolidating Adjustments		Consolidated AMC Entertainment Inc.

Assets
Current assets:
	Cash and equivalents			$	—		$	261,096		$	40,062	$	—	$	301,158
	Receivables, net				129			26,341			222		—		26,692
	Other current assets				—			85,987			2,162		—		88,149

		Total current assets			129			373,424			42,446		—		415,999
Investment in equity of subsidiaries					(235,409	)		79,567			—		155,842		—
Property, net					—			957,738			984		—		958,722
Intangible assets, net					—			149,493			—		—		149,493
Intercompany advances					2,694,299			(2,775,489	)		81,190		—		—
Goodwill					—			1,923,667			—		—		1,923,667
Other long-term assets					37,278			254,629			457		—		292,364

		Total assets		$	2,496,297		$	963,029		$	125,077	$	155,842	$	3,740,245

Liabilities and Stockholder's Equity
Current liabilities
	Accounts payable			$	—		$	164,553		$	863	$	—	$	165,416
	Accrued expenses and other liabilities				33,598			104,519			870		—		138,987
	Deferred revenues and income				—			140,766			471		—		141,237
	Current maturities of corporate borrowings and capital and financing lease obligations				6,500			3,455			—		—		9,955

			Total current liabilities		40,098			413,293			2,204		—		455,595
Corporate borrowings					2,096,040			—			—		—		2,096,040
Capital and financing lease obligations					—			62,220			—		—		62,220
Deferred revenues for exhibitor services agreement					—			333,792			—		—		333,792
Other long-term liabilities					—			389,133			43,306		—		432,439

		Total liabilities			2,136,138			1,198,438			45,510		—		3,380,086
		Stockholder's equity (deficit)			360,159			(235,409	)		79,567		155,842		360,159

		Total liabilities and stockholder's equity		$	2,496,297		$	963,029		$	125,077	$	155,842	$	3,740,245

Table of Contents

AMC ENTERTAINMENT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2011

(Unaudited)

NOTE 10—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

(In thousands)

AMCE

Subsidiary
Guarantors

Subsidiary
Non-Guarantors

Consolidating
Adjustments

Consolidated
AMC Entertainment Inc.

Cash flows from operating activities:

Net cash provided by operating activities

(22,656

)

97,371

612

—

75,327

Cash flows from investing activities:

Capital expenditures

—

(31,931

)

(87

)

—

(32,018

)

Proceeds from sale/leaseback transactions

—

953

—

953

Investments in non-consolidated entities, net

—

(19,508

)

—

(19,509

)

Other, net

—

(1,180

)

—

(1,180

)

Net cash used in investing activities

—

(51,666

)

(88

)

—

(51,754

)

Cash flows from financing activities:

Deferred financing costs

(231

)

—

(231

)

Principal payments under capital and financing lease obligations

—

(1,050

)

—

(1,050

)

Principle payments under Term Loan

(1,625

)

—

(1,625

)

Change in construction payables

—

(6,913

)

—

(6,913

)

Change in intercompany advances

24,512

(24,698

)

186

—

Net cash provided by (used in) financing activities

22,656

(32,661

)

186

—

(9,819

)

Effect of exchange rate changes on cash and equivalents

—

(36

)

(251

)

—

(287

)

Net increase in cash and equivalents

—

13,008

459

—

13,467

Cash and equivalents at beginning of period

—

261,096

40,062

—

301,158

Cash and equivalents at end of period

—

274,104

40,521

—

314,625

(In thousands)

AMCE

Subsidiary
Guarantors

Subsidiary
Non-Guarantors

Consolidating
Adjustments

Consolidated
AMC Entertainment Inc.

Cash flows from operating activities:

Net cash provided by operating activities

5,961

29,113

225

—

35,299

Cash flows from investing activities:

Capital expenditures

—

(13,945

)

(43

)

—

(13,988

)

Acquisition of Kerasotes, net of cash acquired

—

(276,798

)

—

(276,798

)

Proceeds from disposition of Cinemex

—

876

—

876

Investments in non-consolidated entities, net

—

Proceeds from the disposition of long-term assets

—

55,000

—

55,000

Other, net

—

(28

)

—

(28

)

Net cash used in investing activities

—

(234,852

)

(43

)

—

(234,895

)

Cash flows from financing activities:

Deferred financing costs

(95

)

—

(95

)

Principal payments under capital and financing lease obligations

—

(990

)

—

(990

)

Principal payments on Term Loan

(1,625

)

—

(1,625

)

Change in construction payables

—

(7,737

)

—

(7,737

)

Change in intercompany advances

(4,241

)

4,443

(202

)

—

Net cash used in financing activities

(5,961

)

(4,284

)

(202

)

—

(10,447

)

Effect of exchange rate changes on cash and equivalents

—

148

254

—

402

Net increase (decrease) in cash and equivalents

—

(209,875

)

234

—

(209,641

)

Cash and equivalents at beginning of period

—

455,242

40,101

—

495,343

Cash and equivalents at end of period

—

245,367

40,335

—

285,702

AMC Stubs Revenue for
Thirteen Weeks Ended June 30, 2011

(In thousands)

Deferred
Membership
Fees

Deferred
Rewards

Other Theatre
Revenues
(Membership
Fees)

Admissions
Revenues

Concessions
Revenues

Balance, March 31, 2011

858

579

—

Membership fees received

7,529

—

Rewards accumulated:

Admissions

—

3,776

—

(3,776

)

—

Concession purchases

—

6,050

—

(6,050

)

Rewards redeemed and expired:

Admissions

—

(858

)

—

858

—

Concessions

—

(1,375

)

—

1,375

Amortization of deferred revenue

(1,144

)

—

1,144

—

Balance, June 30, 2011

7,243

8,172

1,144

(2,918

)

(4,675

)

Thirteen Weeks Ended

(In thousands)

June 30,
2011

July 1,
2010

% Change

Revenues

Theatrical exhibition

Admissions

478,090

448,597

6.6

Concessions

192,564

175,959

9.4

Other theatre

19,482

16,396

18.8

Total revenues

690,136

640,952

7.7

Operating Costs and Expenses

Theatrical exhibition

Film exhibition costs

259,215

238,823

8.5

Concession costs

26,256

20,496

28.1

Operating expense

179,730

147,641

21.7

Rent

117,257

114,554

2.4

General and administrative expense:

Merger, acquisition and transaction costs

612

5,756

-89.4

Management Fee

1,250

—

Other

14,450

13,071

10.6

Depreciation and amortization

51,818

48,603

6.6

Operating costs and expenses

650,588

590,194

10.2

Thirteen Weeks Ended

June 30,
2011

July 1,
2010

Operating Data—Continuing Operations:

New theatre screens

—

Screens acquired

—

960

Screen dispositions

131

Average screens—continuing operations(1)

5,008

4,834

Number of screens operated

5,098

5,342

Number of theatres operated

357

382

Screens per theatre

14.3

14.0

Attendance (in thousands)—continuing operations(1)

53,887

51,619

Thirteen Weeks Ended

(In thousands)

June 30,
2011

July 1,
2010

Earnings from continuing operations

294

9,629

Plus:

Income tax provision

525

6,950

Interest expense

41,349

34,402

Depreciation and amortization

51,818

48,603

Certain operating expenses (income)(1)

4,924

(9,475

)

Equity in (earnings) losses of non-consolidated entities

(496

)

1,766

Investment income

(27

)

(50

)

Other expense(2)

340

—

General and administrative expense—unallocated:

Merger, acquisition and transaction costs

612

5,756

Management fee

1,250

Stock-based compensation expense

491

136

Adjusted EBITDA(3)

101,080

98,967

EXHIBIT
NUMBER

DESCRIPTION

2.3

Unit Purchase Agreement among Kerasotes ShowPlace Theatres Holdings, LLC, Kerasotes ShowPlace Theatres, LLC, ShowPlace Theatres Holding Company, LLC, AMC ShowPlace Theatres, Inc. and American Multi-Cinema, Inc. (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010).

3.1

Restated and Amended Certificate of Incorporation of AMC Entertainment Inc. (as amended on December 2, 1997, September 18, 2001 and December 23, 2004) (incorporated by reference from Exhibit 3.1 to the AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 27, 2004).

3.2

Amended and Restated By-laws of AMC Entertainment Inc. (incorporated by reference from Exhibit 3.2 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 27, 2004).

Certificates of Incorporation or corresponding instruments, with amendments, of the following additional registrants:

3.3.1

Loews Citywalk Theatre Corporation (incorporated by reference from Exhibit 3.3.1 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.3.2

LCE Mexican Holdings, Inc. (incorporated by reference from Exhibit 3.3.9 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.3.3

AMC Card Processing Services, Inc. (incorporated by reference from Exhibit 3.3.93 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.3.4

AMC Entertainment International, Inc. (incorporated by reference from Exhibit 3.3.94 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.3.5

American Multi-Cinema, Inc. (incorporated by reference from Exhibit 3.3.10 to AMCE's Form 10-Q (File No. 1-8747) filed on February 8, 2008).

3.3.6

Club Cinema of Mazza, Inc. (incorporated by reference from Exhibit 3.3.97 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.3.7

AMC ShowPlace Theatres, Inc. (incorporated by reference from Exhibit 3.3.8 to AMCE's Form 10-Q (File No. 1-8747) filed on August 10, 2010).

3.3.8

AMC ITD, Inc. (incorporated by reference from Exhibit 3.3.10 to AMCE's Registration Statement on Form S-4 (File No. 333-171819) filed on January 21, 2011).

3.4

By-laws of the following Additional Registrants: (incorporated by reference from Exhibit 3.4 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006):

Loews Citywalk Theatre Corporation

3.5

By-laws of LCE Mexican Holdings, Inc. (incorporated by reference from Exhibit 3.5 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

EXHIBIT
NUMBER

DESCRIPTION

3.6

By-laws of AMC Card Processing Services, Inc. (incorporated by reference from Exhibit 3.20 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.7

By-laws of AMC Entertainment International, Inc. (incorporated by reference from Exhibit 3.21 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.8

By-laws of American Multi-Cinema, Inc. (incorporated by reference from Exhibit 3.9 to AMCE's Form 10-Q (File No. 1-8747) filed on February 8, 2008).

3.9

By-laws of Club Cinema of Mazza, Inc. (incorporated by reference from Exhibit 3.24 to AMCE's Registration Statement on Form S-4 (File No. 333-133574) filed on April 27, 2006).

3.10

By-laws of AMC ShowPlace Theatres, Inc. (incorporated by reference from Exhibit 3.10 to AMCE's Form 10-Q (File No. 1-8747) filed on August 10, 2010).

3.11

By-laws of AMC ITD, Inc. (incorporated by reference from Exhibit 3.11 to AMCE's Registration Statement on Form S-4 (File No. 333-171819) filed on January 21, 2011).

4.1

Indenture, dated as of December 15, 2010, respecting AMC Entertainment Inc.'s 9.75% Senior Subordinated Notes due 2020, among AMC Entertainment Inc., the Guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.1 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 17, 2010).

4.2

Registration Rights Agreement, dated December 15, 2010, respecting AMC Entertainment Inc.'s 9.75% Senior Subordinated Notes due 2020, among Goldman, Sachs & Co., J.P. Morgan Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Foros Securities LLC, as representatives of the initial purchasers of the 2020 Senior Subordinated Notes and J.P. Morgan Securities LLC, as market maker (incorporated by reference from Exhibit 4.2 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 17, 2010).

4.3

Fifth Supplemental Indenture, dated November 30, 2010, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014, pursuant to which AMC ITD, Inc. guaranteed the 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.3 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 17, 2010).

4.4

Second Supplemental Indenture, dated November 30, 2010, respecting AMC Entertainment Inc.'s 8.75% Senior Notes due 2019, pursuant to which AMC ITD, Inc. guaranteed the 8.75% Senior Notes due 2019 (incorporated by reference from Exhibit 4.4 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 17, 2010).

4.5

Amendment No. 3 to Credit Agreement, dated December 15, 2010 among AMC Entertainment Inc., Citibank, N.A. as issuer and Citicorp North America, Inc., as swing lender and as administrative agent (incorporated by reference from Exhibit 10.1 to AMCE's Current Report on Form 8-K (File No. 1-8747) filed on December 17, 2010).

*31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.

EXHIBIT
NUMBER

DESCRIPTION

*31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.

*32.1

Section 906 Certifications of Gerardo I. Lopez (Chief Executive Officer) and Craig R. Ramsey (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.

**101.INS

XBRL Instance Document

**101.SCH

XBRL Taxonomy Extension Schema Document

**101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

**101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

**101.LAB

XBRL Taxonomy Extension Label Linkbase Document

**101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document


		AMC ENTERTAINMENT INC.
Date: August 12, 2011		/s/ GERARDO I. LOPEZ Gerardo I. Lopez Chief Executive Officer, Director and President
Date: August 12, 2011		/s/ CRAIG R. RAMSEY Craig R. Ramsey Executive Vice President and Chief Financial Officer

AMC ENTERTAINMENT INC - FORM 10-Q - August 12, 2011

Attached files

AMC ENTERTAINMENT INC Reports