As filed with the Securities and Exchange Commission on March 24,April 18, 2011

Registration No. 333-171819

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



AMENDMENT No. 23
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



AMC ENTERTAINMENT INC.
(See Schedule A for additional registrants)
(Exact name of registrants as specified in their charters)

DELAWARE 7832 43-1304369
(State or other jurisdiction of
Incorporation or organization)
 (Primary Standard Industrial
Classification Code Number)
 (I.R.S. Employer Identification No.)

920 Main Street
Kansas City, Missouri 64105
(816) 221-4000
(Address, including zip code, and telephone number, including
area code, of Registrant's Principal Executive Offices)



Craig R. Ramsey
Executive Vice President and Chief Financial Officer
AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105
(816) 221-4000
(Name, address, including zip code, and telephone number, including area code, of agent for service)



With a copy to:
Monica K. Thurmond, Esq.
O'Melveny & Myers LLP
7 Times Square
New York, New York 10036
(212) 326-2000



          Approximate date of commencement of proposed sale to public:As soon as practicable after this Registration Statement becomes effective.

          If any securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o



CALCULATION OF REGISTRATION FEE

 

Title of each Class of
Securities to be Registered

 Amount to be
Registered

 Proposed Maximum
Offering Price
Per Note

 Proposed Maximum
Aggregate Offering
Price(1)

 Amount of
Registration Fee(2)

 

9.75% Senior Subordinated Notes due 2020

 $600,000,000 100% $600,000,000 $69,660
 

Guarantee of 9.75% Senior Subordinated Notes due 2020(3)

    (4)

 

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended (the "Securities Act"). The proposed maximum offering price is estimated solely for purpose of calculating the registration fee.

(2)
Calculated pursuant to Rule 457(f) of the rules and regulations of the Security Act. Paid by wire transfer on January 21, 2011.

(3)
Each of AMC Entertainment Inc.'s existing wholly owned domestic subsidiaries jointly, severally and unconditionally guarantees the 9.75% Senior Subordinated Notes due 2020 on a unsecured senior subordinated basis.

(4)
See Schedule A on the inside facing page for table of additional registrant guarantors. Pursuant to Rule 457(n) of the rules and regulations under the Securities Act, no separate fee for the guarantee is payable.




          The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


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SCHEDULE A

Guarantor
 State or Other
Jurisdiction of
Incorporation or
Organization
 Address of
Registrants' Principal
Executive Offices
 I.R.S.
Employer
Identification
Number
 
AMC Card Processing Services, Inc.  Arizona  920 Main Street
Kansas City, Missouri 64105
  20-1879589 

AMC Entertainment International, Inc.

 

 

Delaware

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

43-1625326

 

AMC License Services, Inc.

 

 

Kansas

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

74-3233920

 

AMC ITD, Inc.

 

 

Kansas

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

27-3094167

 

AMC ShowPlace Theatres, Inc.

 

 

Delaware

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

27-1359022

 

American Multi-Cinema, Inc.

 

 

Missouri

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

43-0908577

 

Club Cinema of Mazza, Inc.

 

 

District of Columbia

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

04-3465019

 

LCE AcquisitionSub, Inc.

 

 

Delaware

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

20-1408861

 

LCE Mexican Holdings, Inc.

 

 

Delaware

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

20-1386585

 

Loews Citywalk Theatre Corporation

 

 

California

 

 

920 Main Street
Kansas City, Missouri 64105

 

 

95-4760311

 

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The information in this prospectus is not complete and may be changed. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell securities and it is not soliciting an offer to buy these securities in any state where the offer is not permitted.

Subject to Completion, dated March 24,April 18, 2011

PRELIMINARY PROSPECTUS

GRAPHIC

AMC Entertainment Inc.

OFFER TO EXCHANGE

        $600,000,000 aggregate principal amount of its 9.75% Senior Subordinated Notes due 2020, the issuance of each of which has been registered under the Securities Act of 1933, as amended (collectively, the "exchange notes"), for any and all of its outstanding 9.75% Senior Subordinated Notes due 2020 (the "original notes," and together with the exchange notes, the "notes").

        AMC Entertainment Inc. hereby offers, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (which together constitute the "exchange offer"), to exchange up to $600,000,000 in aggregate principal amount of our registered 9.75% Senior Subordinated Notes due 2020 and the guarantees thereof (the "exchange notes"), for a like principal amount of our unregistered 9.75% Senior Subordinated Notes due 2020 (the "original notes"). We refer to the original notes and exchange notes collectively as the "notes." The terms of the exchange notes and the guarantees thereof are identical to the terms of the original notes and the guarantees thereof in all material respects, except for the elimination of some transfer restrictions, registration rights and additional interest provisions relating to the original notes. The notes are fully and unconditionally guaranteed by all domestic restricted subsidiaries of AMC Entertainment Inc. that guarantee AMC Entertainment Inc's other indebtedness (the "guarantors"). The notes will be exchanged in denominations of $1,000 and in integral multiples of $1,000.

        We will exchange any and all original notes that are validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on                        , 2011, unless extended.

        We have not applied, and do not intend to apply, for listing of the notes on any national securities exchange or automated quotation system.

        See "Risk Factors" beginning on page 1516 of this prospectus for a discussion of certain risks that you should consider before participating in this exchange offer.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                    , 2011.


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 Page 

Prospectus Summary

  1 

Risk Factors

  1516 

Cautionary Statements Concerning Forward-Looking Statements

  2829 

Industry and Market Data

  2930 

The Exchange Offer

  3031 

Use of Proceeds

  4142 

Capitalization

  4142 

Unaudited Pro Forma Condensed Consolidated Financial Data

  4243 

Selected Historical Consolidated Financial Data

  5354 

Management's Discussion and Analysis of Financial Condition And Results of Operations

  5556 

Business

  8283 

Management

  9798 

Security Ownership of Certain Beneficial Owners and Management

  123124 

Certain Relationships and Related Party Transactions

  126127 

Description of Other Indebtedness

  131132 

Description of Exchange Notes

  134135 

Certain U.S. Federal Income Tax Considerations

  166167 

Plan of Distribution

  168169 

Legal Matters

  168169 

Experts

  168169 

Where You Can Find More Information

  169170 

Index To Consolidated Financial Statements

  F-1 

        We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities.

        The notes may not be offered or sold in or into the United Kingdom by means of any document except in circumstances that do not constitute an offer to the public within the meaning of the Public Offers of Securities Regulations 1995. All applicable provisions of the Financial Services and Markets Act 2000 must be complied with in respect of anything done in relation to the notes in, from or otherwise involving or having an effect in the United Kingdom.

        The notes have not been and will not be qualified under the securities laws of any province or territory of Canada. The notes are not being offered or sold, directly or indirectly, in Canada or to or for the account of any resident of Canada in contravention of the securities laws of any province or territory thereof.

        Until                        , 2011 (90 days after the date of this prospectus), all dealers effecting transactions in the exchange notes, whether or not participating in the exchange offer, may be required to deliver a prospectus.

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PROSPECTUS SUMMARY

        This summary highlights information appearing elsewhere in, or incorporated by reference into, this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in the notes. You should carefully read the entire prospectus, including the section entitled "Risk Factors", along with the financial data and related notes and the other documents that we incorporate by reference in this prospectus. Except as otherwise indicated or otherwise required by the context, references in this prospectus to "we", "us", "our", the "company" or the "Issuer" refer to the combined business of AMC Entertainment Inc. and its subsidiaries.

        As used in this prospectus, the term "pro forma" refers to, in the case of pro forma financial information, such information after giving pro forma effect to the Kerasotes Acquisition (as described under "Recent Developments").

        Our fiscal year ends on the Thursday closest to the last day of March and is either 52 or 53 weeks long, depending on the year. References to a fiscal year are to the 52- or 53-week period ending in that year. For example, our fiscal year 2010 ended on April 1, 2010.

Who We Are

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or held interests in 361 theatres with a total of 5,203 screens, approximately 99% of which were located in the United States and Canada. Our theatres are primarily located in major metropolitan markets, which we believe offer us strategic, operational and financial advantages. We also have a modern, highly productive theatre circuit that leads the theatrical exhibition industry in key asset quality and performance metrics, such as screens per theatre and per theatre productivity measures. Our industry-leading performance is largely driven by the quality of our theatre sites, our operating practices, which focus on delivering the best customer experience through consumer-focused innovation, and, most recently, our implementation of premium sight and sound formats, which we believe will be key components of the future movie-going experience. As of December 30, 2010, we are the largest IMAX exhibitor in the world with a 45% market share in the United States and more than twice the screen count of the second largest U.S. IMAX exhibitor, and each of our local installations is protected by geographic exclusivity.

        Approximately 200 million consumers have attended our theatres each year for the past five years. We offer these consumers a fully immersive out-of-home entertainment experience by featuring a wide array of entertainment alternatives, including popular movies, throughout the day and at different price points. This broad range of entertainment alternatives appeals to a wide variety of consumers across different age, gender, and socioeconomic demographics. For example, in addition to traditional film programming, we offer more diversified programming that includes independent and foreign films, performing arts, music and sports. We also offer food and beverage alternatives beyond traditional concession items, including made-to-order meals, customized coffee, healthy snacks and dine-in theatre options, all designed to create further service and selection for our consumers. We believe there is potential for us to further increase our annual attendance as we gain market share from other in-home and out-of-home entertainment options.

        Our large annual attendance makes us an important partner to content providers who want access and distribution to consumers. AMC currently generates 16% more estimated unique visitors per year (33.3 million) than HBO's subscribers (28.6 million) and 67% more than Netflix's subscribers (20.0 million) according to the October 14, 2010Hollywood Reporter, the December 31, 2010 Netflix Form 10-K and the Theatrical Market Statistics 2010 report from the Motion Picture Association of America. Further underscoring our importance to the content providers, AMC represents approximately 17% to 20%, on average, of each of the six largest grossing studios' U.S. box office


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revenues. Average annual film rental payments to each of these studios ranged from approximately $100 million to $160 million.

        For the 52 weeks ended December 30, 2010, the fiscal year ended April 1, 2010 and the 39 weeks ended December 30, 2010, we generated pro forma revenues of approximately $2.6 billion, $2.7 billion and $1.9 billion, respectively, pro forma Adjusted EBITDA (as defined on page 13) of $329.7 million, $365.6 million and $253.2 million, respectively, and pro forma earnings from continuing operations of $93.1$92.8 million, $84.8$84.1 million and $30.7$30.6 million, respectively. We reported revenues of approximately $2.4 billion, earnings from continuing operations of $77.3 million and net earnings of $69.8 million in fiscal 2010. For fiscal 2009 and 2008, we reported revenues of approximately $2.3 billion and $2.3 billion, earnings (losses) from continuing operations of $(90.9) million and $41.6 million, and net earnings (losses) of $(81.2) million and $43.4 million, respectively.

        We were founded in 1920 and since then have pioneered many of the theatrical exhibition industry's most important innovations, including the multiplex theatre format in the early 1960s and the North American megaplex theatre format in the mid-1990s. In addition, we have acquired some of the most respected companies in the theatrical exhibition industry, including Loews Cineplex Entertainment Corporation ("Loews"), General Cinema Corporation ("General Cinema") and, more recently, Kerasotes Showplace Theatres, LLC ("Kerasotes"), the acquisition of which is described under "—Recent Developments." Our historic growth has been driven by a combination of organic growth and acquisition strategies, in addition to strategic alliances and partnerships that highlight our ability to capture innovation and value beyond the traditional exhibition space. For example:

Recent Developments

Holdings Merger

        On March 31, 2011, Marquee Holdings Inc. ("Marquee" or "Holdings"), a direct, wholly-owned subsidiary of AMC Entertainment Holdings, Inc. ("Parent") and a holding company, the sole asset of which consisted of the capital stock of the company, was merged with and into Parent, with Parent continuing as the surviving entity (the "Holdings Merger"). As a result of the merger, the company became a direct subsidiary of Parent.


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Theatre and Other Closures

        During the fourth quarter of our fiscal year ending March 31, 2011, we evaluated excess capacity and vacant and under-utilized retail space throughout our theatre circuit. On March 28, 2011, management decided to permanently close 73 underperforming screens and auditoriums in six theatre locations in the United States and Canada while continuing to operate 89 screens at these locations. The permanently closed screens are physically segregated from the screens that will remain in operation and access to the closed space is restricted. Additionally, management decided to discontinue development of and cease use of (including for storage) certain vacant and under-utilized retail space at four other theatres in the United States and the United Kingdom. As a result of closing the screens and auditoriums and discontinuing the development and use of the other spaces, we anticipate recording a charge of $55 million to $60 million for theatre and other closure expense most of which is expected to be incurred during the fiscal year ending March 31, 2011. The charge to theatre and other closure expense reflects the discounted contractual amounts of the existing lease obligations for the remaining 7 to 13 year terms of the leases ($54 million to $58 million) as well as expected incremental cash outlays for related asset removal and shutdown costs ($1 million to $2 million). A significant portion of each of the affected properties will be closed and no longer used. The charges to theatre and other closure expense do not result in any new, increased or accelerated obligations for cash payments related to the underlying long-term operating lease agreements. We expect that the estimated future savings in rent expense and variable operating expenses as a result of our exit plan and from operating these ten theatres in a more efficient manner will exceed the estimated loss in attendance and revenues that we may experience related to the closed auditoriums.

NCM, Inc. Stock Sale

        All of our National CineMedia, LLC ("NCM") membership units are redeemable for, at the option of NCM, cash or shares of common stock of National CineMedia, Inc. ("NCM, Inc.") on a share-for-share basis. On August 18, 2010, we sold 6,500,000 shares of common stock of NCM, Inc., in an underwritten public offering for $16.00 per share and reduced our related investment in NCM by $36.7 million, the average carrying amount of the shares sold. Net proceeds received on this sale were $99.8 million, after deducting related underwriting fees and professional and consulting costs of $4.2


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million, resulting in a gain on sale of $63.1 million. In addition, on September 8, 2010, we sold 155,193 shares of NCM, Inc. to the underwriters to cover over allotments for $16.00 per share and reduced our related investment in NCM by $867,000, the average carrying amount of the shares owned. Net proceeds received on this sale were $2.4 million, after deducting related underwriting fees and professional and consulting costs of $99,000, resulting in a gain on sale of $1.5 million.

Kerasotes Acquisition

        On May 24, 2010, we completed the acquisition of 92 theatres and 928 screens from Kerasotes (the "Kerasotes Acquisition"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90% have been built since 1994. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired, and was subject to working capital and other purchase price adjustments. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts and have included this amount as part of the total estimated purchase price. The acquisition of Kerasotes significantly increased our size. For additional information about the Kerasotes Acquisition, see the notes to our unaudited consolidated financial statements for the 39-week period ended December 30, 2010 included elsewhere in this prospectus.


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Original Notes Offering, Cash Tender Offers and Redemptions

        On December 15, 2010, we issued $600,000,000 aggregate principal amount of the original notes pursuant to an indenture, dated as of December 15, 2010, among the Issuer, the guarantors named therein and U.S. Bank National Association, as trustee (the "Indenture"). The Indenture provides that the notes are general unsecured senior subordinated obligations of the company and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of our existing and future domestic restricted subsidiaries that guarantee our other indebtedness.

        Concurrently with the initial notes offering, we launched a cash tender offer and consent solicitation for any and all of our currently outstanding 11% Senior Subordinated Notes due 2016 (the "2016 Senior Subordinated Notes") at a purchase price of $1,031.00 plus a $30.00 consent fee for each $1,000.00 of principal amount of currently outstanding 2016 Subordinated Notes validly tendered and accepted by us on or before the early tender date, and Marquee Holdings Inc. ("Marquee" or "Holdings"), our direct parent, launched a tender offer for its 12% Senior Discount Notes due 2014 (the "Marquee Notes") at a purchase price of $797.00 plus a $30.00 consent fee for each $1,000.00 face amount (or $792.09 accreted value) of currently outstanding Marquee Notes validly tendered and accepted by Marquee on or before the early tender date (the "Cash Tender Offers"). As of December 29, 2010, we had purchased $95.1 million principal amount of our 2016 Senior Subordinated Notes for a total consideration of $104.8 million, and Marquee had purchased $215.5 million principal amount at face value (or $170.7 million accreted value) of the Marquee Notes for a total consideration of $185.0 million. We recorded a loss on extinguishment for the 2016 Senior Subordinated Notes and our Senior Secured Credit Facility Amendment of approximately $11.0 million and Marquee recorded a loss on extinguishment for the Marquee Notes of approximately $10.7 million.

        We used a portion of the net proceeds from the issuance of the original notes to pay the consideration for the 2016 Senior Subordinated Notes Cash Tender Offer plus any accrued and unpaid interest and distributed the remainder of such proceeds to Marquee to be applied to the Marquee Notes Cash Tender Offer. On January 3, 2011, Marquee redeemed $88.5 million principal amount at face value (or $70.1 million accreted value) of the Marquee Notes that remained outstanding after the closing of the Marquee Notes Cash Tender Offer at a price of $823.77 per $1,000.00 face amount (or $792.09 accreted value) of Marquee Notes for a total consideration of $76.1 million in accordance of the terms of the indenture governing the Marquee Notes, as amended pursuant to the consent


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solicitation. Marquee recorded an additional loss on extinguishment related to the Marquee Notes of approximately $4.1 million. On December 30, 2010, we issued an irrevocable notice of redemption in respect of the $229.9 million principal amount of 2016 Senior Subordinated Notes that remained outstanding after the closing of the Cash Tender Offers, and we redeemed the remaining 2016 Senior Subordinated Notes at a price of $1,055.00 per $1,000.00 principal amount of 2016 Senior Subordinated Notes on February 1, 2011 for a total consideration of $255.2 million in accordance with the terms of the indenture governing the 2016 Senior Subordinated Notes. We recognized an additional loss on extinguishment of approximately $16.7 million in the fourth quarter of fiscal 2011.

Senior Secured Credit Facility Amendment

        On December 15, 2010, we amended our senior secured credit facility dated January 26, 2006. The amendments, among other things,: (i) replaced the existing revolving facility with a new five year revolving facility (with higher interest rates than the existing revolving facility); (ii) extended the maturity of term loans held by term lenders who consented to such extension; (iii) increased the interest rates payable to holders of extended term loans; and (iv) included certain other modifications to the senior secured credit facility in connection with the foregoing. For more information regarding the senior secured credit facility, as amended, see "Description of Other Indebtedness—Senior Secured Credit Facility."


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Dividend

        During December of 2010 and January of 2011, AMC Entertainment Inc. ("AMC Entertainment" or "AMCE") made dividend payments to Marquee, totaling $261.2 million. Marquee used the available funds to pay the consideration for the Marquee Notes Cash Tender Offer and the redemption of all of Marquee Notes that remained outstanding after the closing of the Marquee Notes Cash Tender Offer.

        During September of 2010, AMCE made dividend payments to Marquee of $15.2 million, and Marquee made dividend payments to AMC Entertainment Holdings, Inc. ("Parent"),Parent, totaling $669,000 (the "Dividend"). Marquee and Parent used the available funds to make a cash interest payment on the Marquee Notes and pay corporate overhead expenses incurred in the ordinary course of business.

Launch of Open Road Films

        On March 7, 2011, AMCE and another major theatrical exhibition chain announced the launch of Open Road Films, a dynamic acquisition-based domestic theatrical distribution company that will concentrate on wide-release movies. Tim Ortenberg, who has more than 25 years of movie marketing, distribution and acquisition experience, will join as Chief Executive Officer of Open Road Films.

NCM 2010 Common Unit Adjustment

        On March 17, 2011, NCM, Inc., as sole manager of NCM, disclosed the changes in ownership interest in NCM LLC pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 by and among NCM, Inc., NCM, Regal CineMedia Holdings, LLC, American Multi-Cinema, Inc., Cinemark Media, Inc., Regal Cinemas, Inc. and Cinemark USA, Inc. (the "2010 Common Unit Adjustment"). This agreement provides for a mechanism for adjusting membership units based on increases or decreases in attendance associated with theatre additions and dispositions. Prior to the 2010 Common Unit Adjustment, we held 18,803,420 units, or a 16.98% ownership interest, in NCM as of December 30, 2010. As a result of theatre dispositions in fiscal 2010 and 2011, we surrendered 1,479,638 ownership units, leaving us with 17,323,782 units, or a 15.69% ownership interest, in NCM as of December 30, 2010, as adjusted for the 2010 Common Unit Adjustment.


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Summary of the Terms of the Exchange Offer

        In connection with the original notes offering, AMC Entertainment Inc. entered into a registration rights agreement with the initial purchasers of the original notes. Under that agreement, AMC Entertainment Inc. agreed to deliver to you this prospectus and to consummate the exchange offer.

Original Notes

  

Original Notes

 $600,000,000 aggregate principal amount of 9.75% Senior Subordinated Notes due 2020 and the guarantees thereof.

Notes Offered

  

Exchange Notes

 9.75% Senior Subordinated Notes due 2020. The terms of the "exchange notes" are substantially identical to those terms of the "original notes," except that the transfer restrictions, registration rights and provisions for additional interest relating to the original notes do not apply to the exchange notes. We refer to the exchange notes and the original notes collectively as the "notes."

Exchange Offer

 

The Issuer is offering to exchange:

 

•       up to $600,000,000 aggregate principal amount of its exchange notes that have been registered under the Securities Act, for an equal amount of its original notes.

 

    The Issuer is also offering to satisfy certain of its obligations under the registration rights agreement that the Issuer entered into when it issued the original notes in transactions exempt from registration under the Securities Act.

Expiration Date; Withdrawal of Tenders

 

The exchange offer will expire at 5:00 p.m., New York City time, on                    , 2011, or such later date and time to which the Issuer extends it. The Issuer does not currently intend to extend the expiration date. A tender of original notes pursuant to the exchange offer may be withdrawn at any time prior to the expiration date. Any original notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer.

Conditions to the Exchange Offer

 

The exchange offer is subject to customary conditions, some of which the Issuer may waive. For more information, see "The Exchange Offer—Certain Conditions to the Exchange Offer."


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Procedures for Tendering Original Notes

 

If you wish to accept the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a copy of the letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must also mail or otherwise deliver the letter of transmittal, or the copy, together with the original notes and any other required documents, to the exchange agent at the address set forth on the cover of the letter of transmittal. If you hold original notes through The Depository Trust Company ("DTC") and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, by which you will agree to be bound by the letter of transmittal.

 

By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

 

•       any exchange notes that you receive will be acquired in the ordinary course of your business;

 

•       you have no arrangement or understanding with any person or entity, including any of our affiliates, to participate in the distribution of the exchange notes;

 

•       if you are a broker-dealer that will receive exchange notes for your own account in exchange for original notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of the exchange notes; and

 

•       you are not our "affiliate" as defined in Rule 405 under the Securities Act, or, if you are an affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act.

Guaranteed Delivery Procedures

 

If you wish to tender your original notes and your original notes are not immediately available or you cannot deliver your original notes, the letter of transmittal or any other documents required by the letter of transmittal or comply with the applicable procedures under DTC's Automated Tender Offer Program prior to the expiration date, you must tender your original notes according to the guaranteed delivery procedures set forth in this prospectus under "The Exchange Offer—Guaranteed Delivery Procedures."


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Effect on Holders of Original Notes

 

As a result of the making of, and upon acceptance for exchange of all validly tendered original notes pursuant to the terms of, the exchange offer, the Issuer will have fulfilled a covenant contained in the registration rights agreement for the original notes and, accordingly, the Issuer will not be obligated to pay additional interest as described in the registration rights agreement. If you are a holder of original notes and do not tender your original notes in the exchange offer, you will continue to hold such original notes and you will be entitled to all the rights and limitations applicable to the original notes in the indenture, except for any rights under the registration rights agreement that, by their terms, terminate upon the consummation of the exchange offer.

Consequences of Failure to Exchange

 

All untendered original notes will continue to be subject to the restrictions on transfer provided for in the original notes and in the indenture. In general, the original notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, the Issuer does not currently anticipate that it will register the original notes under the Securities Act.

Resale of the Exchange Notes

 

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for original notes may be offered for resale, resold and otherwise transferred by you (unless you are the our "affiliate" within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that you:

 

•       are acquiring the exchange notes in the ordinary course of business; and

 

•       have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person or entity, including any of the Issuer's affiliates, to participate in, a distribution of the exchange notes.

 

In addition, each participating broker-dealer that receives exchange notes for its own account pursuant to the exchange offer in exchange for original notes that were acquired as a result of market-making or other trading activity must also acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. For more information, see "Plan of Distribution." Any holder of original notes, including any broker-dealer, who:

 

•       is our affiliate,


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•       does not acquire the exchange notes in the ordinary course of its business, or

 

•       tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes,

 

cannot rely on the position of the staff of the Commission expressed in Exxon Capital Holdings Corporation, Morgan Stanley & Co., Incorporated or similar no-action letters and, in the absence of an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the exchange notes.

Material Tax Consequences

 

The exchange of original notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. For more information, see "Certain U.S. Federal Income Tax Considerations."

Use of Proceeds

 

We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer.

Exchange Agent

 

U.S. Bank National Association is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth in the section captioned "The Exchange Offer—Exchange Agent."


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Summary of the Terms of the Exchange Notes

        The following summary highlights the material information regarding the exchange notes contained elsewhere in this prospectus. We urge you to read this entire prospectus, including the "Risk Factors" section and the consolidated financial statements and related notes.

Issuer AMC Entertainment Inc.

Notes Offered

 

 
Exchange Notes $600,000,000 aggregate principal amount of 9.75% Senior Subordinated Notes due 2020.

Maturity Date

 

December 1, 2020.

Interest Rate

 

Interest on the exchange notes will accrue at a rate of 9.75% per annum.

Interest Payment Dates

 

June 1 and December 1, commencing on June 1, 2011.

Guarantees

 

The exchange notes will be fully and unconditionally guaranteed on a joint and several unsecured senior subordinated basis by all of our existing and future domestic restricted subsidiaries that guarantee our other indebtedness. See "Description of Exchange Notes—Subsidiary Guarantees."

Ranking

 

The exchange notes and the guarantees will be our and our guarantors' unsecured senior subordinated obligations. The exchange notes will rank:

 

•       junior to all of our and our guarantors' existing and future senior indebtedness including borrowings under our senior secured credit facility and our existing senior notes;

 

•       equally in right of payment with all of our and our guarantors' existing and future unsecured subordinated indebtedness including our existing senior subordinated notes;

 

•       senior in right of payment to any of our and our guarantors' future indebtedness that is expressly subordinated in right of payment to the notes; and

 

•       effectively junior to all of the existing and future indebtedness, including trade payables, of our subsidiaries that do not guarantee the notes.


 

 

As of December 30, 2010, on an as adjusted basis to give effect to the original notes offering and the use of proceeds thereof, the notes and the guarantees would have ranked junior to approximately $1,272.9 million of our senior indebtedness, consisting of the borrowings under our senior secured credit facility, capital and financing lease obligations and our existing senior notes, and $192.5 million would have been available for borrowing as additional senior debt under our senior secured credit facility.

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  On an as adjusted basis to give effect to the original notes offering, our subsidiaries that are not guarantors would have accounted for approximately $18.7 million, or 0.7%, of our total revenues for the 52 weeks ended December 30, 2010 and approximately $134.5 million, or 3.2%, of our total assets and approximately $29.6 million, or 0.8%, of our total liabilities as of December 30, 2010.

Optional Redemption

 

We may redeem some or all of the exchange notes at any time on or after December 1, 2015 at the redemption prices listed under "Description of Notes—Optional Redemption." In addition, we may redeem up to 35% of the aggregate principal amount of the exchange notes using net proceeds from certain equity offerings completed on or prior to December 1, 2013.

Change of Control

 

If we experience a change of control (as defined in the indenture governing the notes), we will be required to make an offer to repurchase the notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See "Description of Notes—Change of Control."

Certain Covenants

 

The indenture governing the exchange notes will contain certain covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to:

 

•       incur additional indebtedness, including additional senior indebtedness;

 

• ��     pay dividends or make distributions to our stockholders;

 

•       repurchase or redeem capital stock;

 

•       enter into transactions with our affiliates; and

 

•       merge or consolidate with other companies or transfer all or substantially all of our assets.


 

 

All of these restrictive covenants are subject to a number of important exceptions and qualifications. In particular, there are no restrictions on our ability or the ability of our subsidiaries to make advances to, or invest in, other entities (including unaffiliated entities) or to sell assets. See "Risk Factors—Our senior secured credit facility and the indentures governing our existing debt securities, including the notes offered hereby, contain covenants that may limit our ability to take advantage of certain business opportunities advantageous to us that may arise" and "—Merger and Sale of Substantially All Assets."

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No Prior Market The exchange notes will be new securities for which there is no market. Although the initial purchasers have informed us that they intend to make a market in the notes and, if issued, the exchange notes, they are not obligated to do so and may discontinue market-making at any time without notice. Accordingly, we cannot assure you that a liquid market for the notes or exchange notes will develop or be maintained. We do not intend to list the notes on any securities exchange.

Risk Factors

 

See "Risk Factors" and other information in this prospectus for a discussion of factors you should carefully consider prior to participating in the exchange offer.


Additional Information

        Our principal executive offices are located at 920 Main Street, Kansas City, Missouri 64105-1977. Our telephone number is (816) 221-4000 and our website address iswww.amctheatres.com. This internet address is provided for informational purposes only and is not intended to be a hyperlink. Accordingly, no information in this internet address is included or incorporated herein.


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Summary Pro Forma and Historical Financial and Operating Data

        The following summary historical financial data sets forth our historical financial and operating data for the 39 weeks ended December 30, 2010 and December 31, 2009 and the fiscal years ended April 1, 2010, April 2, 2009 and April 3, 2008 and which have been derived from our consolidated financial statements and related notes for such periods included elsewhere in this prospectus. The following data should be read in conjunction with "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus.

        The following summary unaudited pro forma financial and operating data sets forth our unaudited pro forma combined statement of operations for the 39 weeks ended December 30, 2010, the 52 weeks ended December 30, 2010 and the 52 weeks ended April 1, 2010. The pro forma financial data has been derived from our historical consolidated financial information, including the notes thereto, and the Kerasotes historical financial information, including the notes thereto, included elsewhere herein, and has been prepared based on our historical consolidated financial statements and the Kerasotes historical financial statements included elsewhere in this prospectus. The unaudited pro forma combined statement of operations data gives pro forma effect to the Kerasotes Acquisition as if it had occurred on April 3, 2009. The summary unaudited pro forma financial and operating data is based on certain assumptions and adjustments and does not purport to present what our actual results of operations would have been had the Kerasotes Acquisition and events reflected by them in fact occurred on the dates specified, nor is it necessarily indicative of the results of operations that may be achieved in the future. The summary unaudited pro forma financial data should be read in conjunction with the "Unaudited Pro Forma Condensed Consolidated Financial Information" and our other financial data included elsewhere in this prospectus.



 Pro Forma Historical 
 Pro Forma Historical 


  
  
  
 39 Weeks Ended Years Ended(1)(2) 
  
  
  
 39 Weeks Ended Years Ended(1)(2) 


 39 Weeks
Ended
Dec. 30,
2010
 52 Weeks
Ended
Dec. 30,
2010(3)
 52 Weeks
Ended
April 1,
2010
 39 Weeks
Ended
Dec. 30,
2010
 39 Weeks
Ended
Dec. 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 
 39 Weeks
Ended
Dec. 30,
2010
 52 Weeks
Ended
Dec. 30,
2010(3)
 52 Weeks
Ended
April 1,
2010
 39 Weeks
Ended
Dec. 30,
2010
 39 Weeks
Ended
Dec. 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 


 (in thousands, except operating data)
 
 (in thousands, except operating data)
 

Statement of Operations Data:

Statement of Operations Data:

 

Statement of Operations Data:

 

Total revenues

Total revenues

 $1,925,453 $2,594,540 $2,683,755 $1,897,444 $1,813,546 $2,417,739 $2,265,487 $2,333,044 

Total revenues

 $1,925,453 $2,594,540 $2,683,755 $1,897,444 $1,813,546 $2,417,739 $2,265,487 $2,333,044 
                                   

Operating Costs and Expenses:

Operating Costs and Expenses:

 

Operating Costs and Expenses:

 

Cost of operations

Cost of operations

 1,292,078 1,747,747 1,785,080 1,264,853 1,199,317 1,612,260 1,486,457 1,502,578 

Cost of operations

 1,292,078 1,747,747 1,785,080 1,264,853 1,199,317 1,612,260 1,486,457 1,502,578 

Rent

Rent

 360,374 480,413 479,590 356,121 331,107 440,664 448,803 439,389 

Rent

 360,374 480,413 479,590 356,121 331,107 440,664 448,803 439,389 

General and administrative:

General and administrative:

 

General and administrative:

 

Merger, acquisition and transactions costs

Merger, acquisition and transactions costs

 13,171 14,745 2,280 13,171 706 2,280 650 3,739 

Merger, acquisition and transactions costs

 13,171 14,745 2,280 13,171 706 2,280 650 3,739 

Management fee

Management fee

 3,750 5,000 5,000 3,750 3,750 5,000 5,000 5,000 

Management fee

 3,750 5,000 5,000 3,750 3,750 5,000 5,000 5,000 

Other

Other

 42,901 64,207 74,825 41,250 40,768 57,858 53,628 39,102 

Other

 42,901 64,207 74,825 41,250 40,768 57,858 53,628 39,102 

Depreciation and amortization

Depreciation and amortization

 160,454 212,644 213,582 156,895 142,949 188,342 201,413 222,111 

Depreciation and amortization

 160,623 213,078 214,682 156,895 142,949 188,342 201,413 222,111 

Impairment of long-lived assets

Impairment of long-lived assets

  3,765 3,765   3,765 73,547 8,933 

Impairment of long-lived assets

  3,765 3,765   3,765 73,547 8,933 
                                   

Operating costs and expenses

Operating costs and expenses

 1,872,728 2,528,521 2,564,122 1,836,040 1,718,597 2,310,169 2,269,498 2,220,852 

Operating costs and expenses

 1,872,897 2,528,955 2,565,222 1,836,040 1,718,597 2,310,169 2,269,498 2,220,852 
                                   

Operating income (loss)

Operating income (loss)

 52,725 66,019 119,633 61,404 94,949 107,570 (4,011) 112,192 

Operating income (loss)

 52,556 65,585 118,533 61,404 94,949 107,570 (4,011) 112,192 

Other expense (income)

Other expense (income)

 (851) (3,110) (2,559) (851) (300) (2,559) (14,139) (12,932)

Other expense (income)

 (851) (3,110) (2,559) (851) (300) (2,559) (14,139) (12,932)

Interest expense

Interest expense

 105,632 139,396 132,110 105,416 97,698 132,110 121,747 137,662 

Interest expense

 105,632 139,396 132,110 105,416 97,698 132,110 121,747 137,662 

Equity in earnings of non-consolidated entities(4)

Equity in earnings of non-consolidated entities(4)

 (17,057) (29,230) (30,300) (17,057) (18,127) (30,300) (24,823) (43,019)

Equity in earnings of non-consolidated entities(4)

 (17,057) (29,230) (30,300) (17,057) (18,127) (30,300) (24,823) (43,019)

Gain on NCM, Inc. stock sale

Gain on NCM, Inc. stock sale

 (64,648) (64,648)  (64,648)     

Gain on NCM, Inc. stock sale

 (64,648) (64,648)  (64,648)     

Investment income(5)

Investment income(5)

 (309) (597) (7) (309) (167) (205) (1,696) (23,782)

Investment income(5)

 (309) (597) (7) (309) (167) (205) (1,696) (23,782)
                                   

Earnings (loss) from continuing operations before income taxes

 29,958 24,208 20,389 38,853 15,845 8,524 (85,100) 54,263 

Earnings (loss) from continuing operations before income taxes

 29,789 23,774 19,289 38,853 15,845 8,524 (85,100) 54,263 

Income tax provision (benefit)

 (750) (68,850) (64,400) 2,550  (68,800) 5,800 12,620 

Income tax provision (benefit)

 (850) (69,050) (64,800) 2,550  (68,800) 5,800 12,620 
                                   

Earnings (loss) from continuing operations

 $30,708 $93,058 $84,789 $36,303 $15,845 $77,324 $(90,900)$41,643 

Earnings (loss) from continuing operations

 $30,639 $92,824 $84,089 $36,303 $15,845 $77,324 $(90,900)$41,643 
                                   

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 Pro Forma Historical 
 
  
  
  
 39 Weeks Ended Years Ended(1)(2) 
 
 39 Weeks
Ended
Dec. 30,
2010
 52 Weeks
Ended
Dec. 30,
2010(3)
 52 Weeks
Ended
April 1,
2010
 39 Weeks
Ended
Dec. 30,
2010
 39 Weeks
Ended
Dec. 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 
 
 (in thousands, except operating data)
 

Balance Sheet Data (at period end):

                         

Cash and equivalents

          $686,167 $530,645 $495,343 $534,009 $106,181 

Corporate borrowings, including current portion

           2,335,384  1,834,197  1,832,854  1,687,941  1,615,672 

Other long-term liabilities

           354,940  309,542  309,591  308,701  351,310 

Capital and financing lease obligations, including current portion

           66,736  58,142  57,286  60,709  69,983 

Stockholder's equity

           599,198  729,710  760,559  1,039,603  1,133,495 
 

Total assets

           4,209,417  3,690,632  3,653,177  3,725,597  3,847,282 

Other Data:

                         

Adjusted EBITDA(6)

  253,165  329,746  365,578  248,229  259,164  328,275  294,877  347,620 

NCM cash distributions received

  21,404  35,732  34,633  21,404  20,305  34,633  28,104  22,175 

Net cash provided by operating activities

  119,747  150,602  295,318  114,811  246,380  258,015  200,701  220,208 

Capital expenditures

  (84,374) (123,711) (99,109) (84,085) (59,482) (97,011) (121,456) (171,100)

Ratio of earnings to fixed charges(7)

  1.2x 1.1x 1.1x 1.2x 1.1x 1.1x   1.2x

Proceeds from sale/leasebacks

      6,570      6,570     

Operating Data (at period end):

                         

Screen additions

  61  61  6  1,015  6  6  83  136 

Screen dispositions

  183  198  105  325  90  105  77  196 

Average screens—continuing operations(8)

  5,197  5,287  5,271  5,080  4,501  4,485  4,545  4,561 

Number of screens operated

  5,203  5,203  5,299  5,203  4,528  4,513  4,612  4,606 

Number of theatres operated

  361  361  378  361  299  297  307  309 

Screens per theatre

  14.4  14.4  14.0  14.4  15.1  15.2  15.0  14.9 

Attendance (in thousands)—continuing operations(8)

  155,479  209,583  225,222  152,895  152,147  200,285  196,184  207,603 

(1)
Dividends declared on common stock for fiscal 2010, 2009 and 2008 were $330.0 million, $36.0 million and $296.8 million, respectively. Dividends declared on common stock during the 39 weeks ended December 30, 2010 were $200.2 million.

(2)
Fiscal 2008 includes 53 weeks. All other years have 52 weeks.

(3)
The pro forma statement of operations and other data for the 52 weeks ended December 30, 2010, which are unaudited, have been calculated by subtracting the pro forma data for the 39 weeks ended December 31, 2009 from the pro forma data for the 52 weeks ended April 1, 2010 and adding the data for the 39 weeks ended December 30, 2010. This presentation is not in accordance with U.S. GAAP. We believe that this presentation provides useful information to investors regarding our recent financial performance, and we view this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess our historical results. In addition, our management uses trailing four quarter financial information to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. We also use trailing four quarter financial data to test compliance with covenants under our senior secured credit facility. This presentation has limits as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. See "Unaudited Pro Forma Condensed Consolidated Financial Information" for further discussion of the calculation of unaudited pro forma financial data for the 52 weeks ended December 30, 2010.

(4)
During fiscal 2010, fiscal 2009 and fiscal 2008, equity in earnings of NCM (including cash distributions) was $34.4 million, $27.7 million and $22.2 million, respectively. During fiscal 2008, equity in (earnings) losses of non-consolidated entities includes a gain of $18.8 million from the sale of Hoyts General Cinema South America.

(5)
Includes gain of $16.0 million for the 53 weeks ended April 3, 2008 from the sale of our investment in Fandango, Inc. ("Fandango").

(6)
We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as earnings (loss) from continuing operations plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future

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 Pro Forma Historical 
 Pro Forma Historical 


  
  
  
 39 Weeks Ended Years Ended(1)(2) 
  
  
  
 39 Weeks Ended Years Ended(1)(2) 


 39 Weeks
Ended
Dec. 30,
2010
 52 Weeks
Ended
Dec. 30,
2010(3)
 52 Weeks
Ended
April 1,
2010
 39 Weeks
Ended
Dec. 30,
2010
 39 Weeks
Ended
Dec. 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 
 39 Weeks
Ended
Dec. 30,
2010
 52 Weeks
Ended
Dec. 30,
2010(3)
 52 Weeks
Ended
April 1,
2010
 39 Weeks
Ended
Dec. 30,
2010
 39 Weeks
Ended
Dec. 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 


 (in thousands)
 
 (in thousands)
 

Earnings (loss) from continuing operations

Earnings (loss) from continuing operations

 $30,708 $93,058 $84,789 $36,303 $15,845 $77,324 $(90,900)$41,643 

Earnings (loss) from continuing operations

 $30,639 $92,824 $84,089 $36,303 $15,845 $77,324 $(90,900)$41,643 

Plus:

Plus:

 

Plus:

 

Income tax provision (benefit)

 (750) (68,850) (64,400) 2,550  (68,800) 5,800 12,620 

Income tax provision (benefit)

 (850) (69,050) (64,800) 2,550  (68,800) 5,800 12,620 

Interest expense

 105,632 139,396 132,110 105,416 97,698 132,110 121,747 137,662 

Interest expense

 105,632 139,396 132,110 105,416 97,698 132,110 121,747 137,662 

Depreciation and amortization

 160,454 212,644 213,582 156,895 142,949 188,342 201,413 222,111 

Depreciation and amortization

 160,623 213,078 214,682 156,895 142,949 188,342 201,413 222,111 

Impairment of long-lived assets

  3,765 3,765   3,765 73,547 8,933 

Impairment of long-lived assets

  3,765 3,765   3,765 73,547 8,933 

Certain operating expenses(a)

 10,150 12,263 6,099 94 3,986 6,099 1,517 (16,248)

Certain operating expenses(a)

 10,150 12,263 6,099 94 3,986 6,099 1,517 (16,248)

Equity in earnings of non-consolidated entities

 (17,057) (29,230) (30,300) (17,057) (18,127) (30,300) (24,823) (43,019)

Equity in earnings of non-consolidated entities

 (17,057) (29,230) (30,300) (17,057) (18,127) (30,300) (24,823) (43,019)

Gain on NCM, Inc. stock sale

 (64,648) (64,648)  (64,648)     

Gain on NCM, Inc. stock sale

 (64,648) (64,648)  (64,648)     

Investment income

 (309) (597) (7) (309) (167) (205) (1,696) (23,782)

Investment income

 (309) (597) (7) (309) (167) (205) (1,696) (23,782)

Other (income) expense(b)

 11,044 11,044 11,276 11,044 11,276 11,276  (1,246)

Other (income) expense(b)

 11,044 11,044 11,276 11,044 11,276 11,276  (1,246)

General and administrative expense:

 

General and administrative expense:

 
 

Merger, acquisition and transaction costs

 13,171 14,745 2,280 13,171 706 2,280 650 3,739  

Merger, acquisition and transaction costs

 13,171 14,745 2,280 13,171 706 2,280 650 3,739 
 

Management Fee

 3,750 5,000 5,000 3,750 3,750 5,000 5,000 5,000  

Management Fee

 3,750 5,000 5,000 3,750 3,750 5,000 5,000 5,000 
 

Stock-based compensation expense

 1,020 1,156 1,384 1,020 1,248 1,384 2,622 207  

Stock-based compensation expense

 1,020 1,156 1,384 1,020 1,248 1,384 2,622 207 
                                   

Adjusted EBITDA(c)(d)

Adjusted EBITDA(c)(d)

 $253,165 $329,746 $365,578 $248,229 $259,164 $328,275 $294,877 $347,620 

Adjusted EBITDA(c)(d)

 $253,165 $329,746 $365,578 $248,229 $259,164 $328,275 $294,877 $347,620 
                                   


(7)
We had a deficiency of earnings to fixed charges for the 52 weeks ended April 2, 2009 of $78.7 million. After adjusting to give effect to the original notes offering and the use of proceeds thereof, the pro forma ratio of earnings to fixed charges for the 52 weeks ended December 30, 2010 would have been 1.0x.

(8)
Includes consolidated theatres only.

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RISK FACTORS

        You should carefully consider the risk factors set forth below, as well as the other information contained in this prospectus, before purchasing any notes. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. In such a case, you may lose all or a part of your original investment.


Risks Related to the Exchange Offer

You may have difficulty selling the original notes that you do not exchange.

        If you do not exchange your original notes for exchange notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your original notes described in the legend on your original notes. The restrictions on transfer of your original notes arise because we issued the original notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the original notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except as required by the registration rights agreements, we do not intend to register the original notes under the Securities Act. The tender of original notes under the exchange offer will reduce the principal amount of the currently outstanding original notes. Due to the corresponding reduction in liquidity, this may have an adverse effect upon, and increase the volatility of, the market price of any currently outstanding original notes that you continue to hold following completion of the exchange offer. See "The Exchange Offer—Consequences of Failure to Exchange."

There is no public market for the exchange notes, and we do not know if a market will ever develop or, if a market does develop, whether it will be sustained.

        The exchange notes are a new issue of securities for which there is no existing trading market. Accordingly, we cannot assure you that a liquid market will develop for the exchange notes, that you will be able to sell your exchange notes at a particular time or that the prices that you receive when you sell the exchange notes will be favorable.

        We do not intend to apply for listing or quotation of the notes on any securities exchange or automated quotation system, although our original notes trade on the PORTAL Market. The liquidity of any market for the exchange notes is subject to a number of factors, including:

        We understand that one or more of the initial purchasers of the original notes presently intend to make a market in the exchange notes. However, they are not obligated to do so, and any market-making activity with respect to the exchange notes may be discontinued at any time without notice. In addition, any market- making activity will be subject to the limits imposed by the Securities Act and the Exchange Act and may be limited during the exchange offer or the pendency of an applicable shelf


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registration statement. There can be no assurance that an active trading market will exist for the exchange notes or that any trading market that does develop will be liquid.

You must comply with the exchange offer procedures in order to receive new, freely tradable exchange notes.

        Delivery of exchange notes in exchange for original notes tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of book-entry transfer of original notes into the exchange agent's account at DTC, as depositary, including an agent's message (as defined herein). We are not required to notify you of defects or irregularities in tenders of original notes for exchange. Original notes that are not tendered or that are tendered but we do not accept for exchange will, following consummation of the exchange offer, continue to be subject to the existing transfer restrictions under the Securities Act and, upon consummation of the exchange offer certain registration and other rights under the registration rights agreements will terminate. See "The Exchange Offer—Procedures for Tendering" and "The Exchange Offer—Consequences of Failure to Exchange."

Some holders who exchange their original notes may be deemed to be underwriters, and these holders will be required to comply with the registration and prospectus delivery requirements in connection with any resale transaction.

        If you exchange your original notes in the exchange offer for the purpose of participating in a distribution of the exchange notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction


Risks Related to Our Indebtedness and the Notes

Our substantial debt could adversely affect our operations and your investment in the notes.

        We have a significant amount of debt. As of December 30, 2010, on an as adjusted basis to give effect to the original notes offering and the application of the proceeds thereof, we would have had outstanding $2,172.2 million of indebtedness, of which $600.0 million would have consisted of the notes offered hereby, and the balance would have consisted of $619.1 million under our senior secured credit facility, $587.0 million of our existing senior notes ($600.0 million face amount), $299.4 million of our existing subordinated notes and $66.7 million of existing capital and financing lease obligations, and $192.5 million would have been available for borrowing as additional senior debt under our senior secured credit facility. As of December 30, 2010, on an as adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof), we also had approximately $4.6 billion of undiscounted rental payments under operating leases (with initial base terms of between 10 and 25 years).

        The amount of our indebtedness and lease and other financial obligations could have important consequences to you as a holder of the notes. For example, it could:


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        If we fail to make any required payment under our senior secured credit facility or to comply with any of the financial and operating covenants contained therein, we would be in default. Lenders under our senior secured credit facility could then vote to accelerate the maturity of the indebtedness under the senior secured credit facility and foreclose upon the stock and personal property of our subsidiaries that is pledged to secure the senior secured credit facility. Other creditors might then accelerate other indebtedness. If the lenders under the senior secured credit facility accelerate the maturity of the indebtedness thereunder, we might not have sufficient assets to satisfy our obligations under the senior secured credit facility or our other indebtedness.

        Our indebtedness under our senior secured credit facility bears interest at rates that fluctuate with changes in certain prevailing interest rates (although, subject to certain conditions, such rates may be fixed for certain periods). If interest rates increase, we cannot assure you that we will have sufficient assets to satisfy our obligations under the senior secured credit facility or our other indebtedness, including the notes.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

        The terms of the indentures governing the notes and our existing notes, our senior secured credit facility and our other outstanding debt instruments will not fully prohibit us or our subsidiaries from incurring substantial additional indebtedness in the future. Moreover, none of our indentures, including the indenture governing the notes offered hereby, impose any limitation on our incurrence of liabilities that are not considered "Indebtedness" under the indentures (such as operating leases), nor do they impose any limitation on liabilities incurred by subsidiaries, if any, that might be designated as "unrestricted subsidiaries." If new debt or other liabilities are added to our and our subsidiaries' current levels, the related risks that we and they now face could intensify.

If our cash flows prove inadequate to service our debt and provide for our other obligations, we may be required to refinance all or a portion of our existing debt or future debt at terms unfavorable to us.

        Our ability to make payments on and refinance our debt, including the notes, and other financial obligations and to fund our capital expenditures and acquisitions will depend on our ability to generate substantial operating cash flow. This will depend on our future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond our control. Our $587.0 million of existing senior notes ($600.0 million face value), $299.4 million in aggregate principal amount of existing senior subordinated notes and the $619.1 million outstanding under our senior secured credit facility all have an earlier maturity date than that of the notes offered hereby, and we will be required to repay or refinance such indebtedness prior to when the notes offered hereby come due. For the 52 weeks ended December 30, 2010, on an as adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof), we would have a ratio of earnings to fixed charges of 1.0x. If our cash flows were to prove inadequate to meet our debt service, rental and other obligations in the future, we may be required to refinance all or a portion of our existing or future debt, including these notes, on or before maturity, to sell assets or to obtain additional financing. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facility and these notes, sell any such assets or obtain additional financing on commercially reasonable terms or at all.

        In addition, all of our notes require us to repay or refinance those notes when they come due. If our cash flows were to prove inadequate to meet our debt service, rental and other obligations in the future, we may be required to refinance all or a portion of our existing or future debt, including these


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notes, on or before maturity, to sell assets or to obtain additional financing. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facility and these notes, sell any such assets or obtain additional financing on commercially reasonable terms or at all.

Your right to receive payments on these notes is junior to our senior secured credit facility, our existing senior indebtedness and possibly all of our future borrowings. Further, the guarantees of these notes are junior to all our guarantors' existing senior indebtedness and possibly to all of our guarantors' future borrowings.

        The notes and the guarantees rank behind our senior secured credit facility and all of our and the guarantors' existing senior indebtedness and future borrowings (other than trade payables), except any indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to, the notes and the guarantees. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, the holders of our senior indebtedness and that of our guarantors will be entitled to be paid in full and in cash before any payment may be made with respect to the notes or the guarantees. In addition, the notes and the guarantees will also be effectively subordinated to any debt that is secured to the extent of the value of the property securing such debt.

        In addition, all payment on the notes and the guarantees will be blocked in the event of a payment default on senior debt and may be blocked in the event of certain non-payment defaults on senior debt.

        In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our guarantors, holders of the notes will participate with trade creditors and all other holders of our and the guarantors' senior subordinated indebtedness in assets remaining after we and the guarantors have paid all of our senior debt. However, because the indenture governing the notes requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead, holders of the notes may receive less, ratably, than holders of trade payables in any such proceeding. In any of these cases, we and the guarantors may not have sufficient funds to pay all of our creditors and holders of notes may receive less, ratably, than the holders of our senior debt.

        As of December 30, 2010, on an as adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof), the notes and the guarantees would have been subordinated to $1,272.9 million of senior debt, and $192.5 million would have been available for borrowing as additional senior debt under our senior secured credit facility. We will be permitted to borrow substantial additional indebtedness, including senior debt, in the future under the terms of the indenture.

Our subsidiaries will only be required to guarantee the notes if they guarantee our other indebtedness, including our senior secured credit facility, and in certain circumstances, their guarantees will be subject to automatic release.

        Our existing and future subsidiaries will only be required to guarantee the notes if they guarantee other indebtedness of ours or any of the subsidiary guarantors, including our senior secured credit facility. If a subsidiary guarantor is released from its guarantee of such other indebtedness for any reason whatsoever, or if such other guaranteed indebtedness is repaid in full or refinanced with other indebtedness that is not guaranteed by such subsidiary guarantor, then such subsidiary guarantor also will be released from its guarantee of the notes.

The notes are effectively subordinated to the existing and future liabilities of our non-guarantor subsidiaries.

        The notes are unsecured senior subordinated obligations of AMC Entertainment Inc. and the guarantors and will rank equal in right of payment to AMC Entertainment Inc.'s and the guarantors'


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other existing and future unsecured senior debt. The notes are not secured by any of our assets. Any future claims of secured lenders with respect to assets securing their loans will be prior to any claim of the holders of the notes with respect to those assets.

        Since virtually all of our operations are conducted through subsidiaries, a significant portion of our cash flow and, consequently, our ability to service debt, including the notes, is dependent upon the earnings of our subsidiaries and the transfer of funds by those subsidiaries to us in the form of dividends, payments of interest on intercompany indebtedness, or other transfers.

        Creditors of our non-guarantor subsidiaries would be entitled to a claim on the assets of our non-guarantor subsidiaries prior to any claims by us. Consequently, in the event of a liquidation or reorganization of any non-guarantor subsidiary, creditors of the non-guarantor subsidiary are likely to be paid in full before any distribution is made to us, except to the extent that we ourselves are recognized as a creditor of such non-guarantor subsidiary. Any of our claims as the creditor of our non-guarantor subsidiary would be subordinate to any security interest in the assets of such non-guarantor subsidiary and any indebtedness of our non-guarantor subsidiary senior to that held by us.

        As of December 30, 2010, on an as adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof), the notes would have been effectively junior to $29.6 million of indebtedness and other liabilities (including trade payables) of our non-guarantor subsidiaries. On an as adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof), our non-guarantor subsidiaries generated approximately 0.7% of our consolidated revenues for the 52 weeks ended December 30, 2010 and held approximately 3.2% of our consolidated assets as of December 30, 2010.

Our senior secured credit facility and the indentures governing our existing debt securities, including the notes offered hereby, contain covenants that may limit our ability to take advantage of certain business opportunities advantageous to us that may arise.

        Our senior secured credit facility and the indentures governing our debt securities, including the notes offered hereby, contain various covenants that limit our ability to, among other things:

        These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand economic downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise.

        Although the indentures governing our outstanding debt securities contain a fixed charge coverage test that limits our ability to incur indebtedness, this limitation is subject to a number of significant exceptions and qualifications. Moreover, the indentures do not impose any limitation on our incurrence of capital or finance lease obligations or liabilities that are not considered "Indebtedness" under the indentures (such as operating leases), nor do they impose any limitation on the amount of liabilities incurred by subsidiaries, if any, that might designated as "unrestricted subsidiaries" (as defined herein). See "—Our substantial debt could adversely affect our operations and your investment in the notes" and "Description of Notes—Certain Covenants—Limitation on Consolidated Indebtedness."


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        Furthermore, there are no restrictions in the indentures on our ability to invest in other entities (including unaffiliated entities) and no restrictions on the ability of our subsidiaries to enter into agreements restricting their ability to pay dividends or otherwise transfer funds to us. Also, although the indentures limit our ability to make restricted payments, these restrictions are subject to significant exceptions and qualifications. The maximum amount we were permitted to distribute to Marquee (or, subsequent to the Marquee Merger, Parent) in compliance with our senior secured credit facility and the indentures governing our debt securities, including the notes offered hereby, was approximately $325.8 million as of December 30, 2010, after giving effect to the original notes offering (and the application of the proceeds thereof).

We must offer to repurchase the notes upon a change of control, which could also result in an event of default under our senior secured credit facility.

        The indenture governing the notes will require that, upon the occurrence of a "change of control", as such term is defined in the indenture, we must make an offer to repurchase the notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.

        Certain events involving a change of control will result in an event of default under our senior secured credit facility and may result in an event of default under other indebtedness that we may incur in the future and would trigger a "change of control" under our existing notes. An event of default under our senior secured credit facility or other indebtedness could result in an acceleration of such indebtedness. See "Description of Notes—Change of Control." We cannot assure you that we would have sufficient resources to repurchase any of the notes or pay our obligations if the indebtedness under our senior secured credit facility or other indebtedness were accelerated upon the occurrence of a change of control. The acceleration of indebtedness and our inability to repurchase all the tendered notes would constitute events of default under the indenture governing the notes. No assurance can be given that the terms of any future indebtedness will not contain cross default provisions based upon a change of control or other defaults under such debt instruments.

Federal and state statutes allow courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors.

        Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debt of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee:


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        In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

        On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debt beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

There is no public trading market for the notes.

        The notes are new issues of securities for which there are currently no established trading markets. We do not intend to have the notes or the exchange notes listed on a national securities exchange. In addition, although the initial purchasers of the notes have advised us that they currently intend to make a market in the notes, they are not obligated to do so and may discontinue market-making activities at any time without notice. Furthermore, such market-making activity will be subject to limits imposed by the Securities Act and the Exchange Act. Because J.P. Morgan Securities LLC is our affiliate, J.P. Morgan Securities LLC will be required to deliver a current "market-making" prospectus and otherwise comply with the registration requirements of the Securities Act in any secondary market sale of the exchange notes following the exchange offer. Accordingly, the ability of J.P. Morgan Securities LLC to make a market in the exchange notes following the exchange offer may, in part, depend on our ability to maintain a current market-making prospectus. If we are unable to maintain a current market-making prospectus, J.P. Morgan Securities LLC may be required to discontinue market-making without notice.

We are controlled by our sponsors, whose interests may not be aligned with ours.

        All of our issued and outstanding capital stock is owned by Marquee, and all of the issued and outstanding capital stock of Marquee is owned by Parent, which is controlled by sponsors. Our sponsors have the ability to control our affairs and policies and the election of our directors and appointment of management. Seven of our nine directors have been appointed by the sponsors. Our sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us, as well as businesses that represent major customers of our business. They may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as our sponsors or their affiliates control our direct parent, they will continue to be able to strongly influence or effectively control our decisions. For a further description of the control arrangements of our sponsors, see "Certain Relationships and Related Party Transactions."


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Risks Related to Our Business

We have had significant financial losses in recent years.

        Prior to fiscal 2007, we had reported net losses in each of the prior nine fiscal years totaling approximately $510.1 million. For fiscal 2007, we reported net earnings of $134.1 million. For fiscal 2008 and 2009, we reported net earnings (losses) of $43.4 million and $(81.2) million, respectively. We reported net earnings of $69.8 million in fiscal 2010. If we experience losses in the future, we may be unable to meet our payment obligations while attempting to expand our theatre circuit and withstand competitive pressures or adverse economic conditions.

We face significant competition for new theatre sites, and we may not be able to build or acquire theatres on terms favorable to us.

        We anticipate significant competition from other exhibition companies and financial buyers when trying to acquire theatres, and there can be no assurance that we will be able to acquire such theatres at reasonable prices or on favorable terms. Moreover, some of these possible buyers may be stronger financially than we are. In addition, given our size and market share, as well as our recent experiences with the Antitrust Division of the United States Department of Justice in connection with the acquisition of Kerasotes and prior acquisitions, we may be required to dispose of theatres in connection with future acquisitions that we make. As a result of the foregoing, we may not succeed in acquiring theatres or may have to pay more than we would prefer to make an acquisition.

Acquiring or expanding existing circuits and theatres may require additional financing, and we cannot be certain that we will be able to obtain new financing on favorable terms, or at all.

        On a pro forma basis, our net capital expenditures aggregated approximately $99.1 million for fiscal 2010. We estimate that our planned capital expenditures will be between $140.0 million and $150.0 million in fiscal 2011 and will continue at this level or higher over the next three years. Actual capital expenditures in fiscal 2011 may differ materially from our estimates. We may have to seek additional financing or issue additional securities to fully implement our growth strategy. We cannot be certain that we will be able to obtain new financing on favorable terms, or at all. In addition, covenants under our existing indebtedness limit our ability to incur additional indebtedness, and the performance of any additional theatres may not be sufficient to service the related indebtedness that we are permitted to incur.

We may be reviewed by antitrust authorities in connection with acquisition opportunities that would increase our number of theatres in markets where we have a leading market share.

        Given our size and market share, pursuit of acquisition opportunities that would increase the number of our theatres in markets where we have a leading market share would likely result in significant review by the Antitrust Division of the United States Department of Justice, and we may be required to dispose of theatres in order to complete such acquisition opportunities. For example, in connection with the acquisition of Kerasotes, we were required to dispose of 11 theatres located in various markets across the United States, including Chicago, Denver and Indianapolis. As a result, we may not be able to succeed in acquiring other exhibition companies or we may have to dispose of a significant number of theatres in key markets in order to complete such acquisitions.

We may not generate sufficient cash flow from our theatre acquisitions to service our indebtedness.

        In any acquisition, we expect to benefit from cost savings through, for example, the reduction of overhead and theatre level costs, and from revenue enhancements resulting from the acquisition. However, there can be no assurance that we will be able to generate sufficient cash flow from these acquisitions to service any indebtedness incurred to finance such acquisitions or realize any other


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anticipated benefits. Nor can there be any assurance that our profitability will be improved by any one or more acquisitions. Any acquisition may involve operating risks, such as:

Optimizing our theatre circuit through new construction is subject to delay and unanticipated costs.

        The availability of attractive site locations is subject to various factors that are beyond our control. These factors include:

        In addition, we typically require 18 to 24 months in the United States and Canada from the time we identify a site to the opening of the theatre. We may also experience cost overruns from delays or other unanticipated costs. Furthermore, these new sites may not perform to our expectations.

Our investment in and revenues from NCM may be negatively impacted by the competitive environment in which NCM operates.

        We have maintained an investment in NCM. NCM's in-theatre advertising operations compete with other cinema advertising companies and other advertising mediums including, most notably, television, newspaper, radio and the Internet. There can be no guarantee that in-theatre advertising will continue to attract major advertisers or that NCM's in-theatre advertising format will be favorably received by the theatre-going public. If NCM is unable to generate expected sales of advertising, it may not maintain the level of profitability we hope to achieve, its results of operations and cash flows may be adversely affected and our investment in and revenues and dividends from NCM may be adversely impacted.

We may suffer future impairment losses and lease termination charges.

        The opening of large megaplexes by us and certain of our competitors has drawn audiences away from some of our older, multiplex theatres. In addition, demographic changes and competitive pressures have caused some of our theatres to become unprofitable. As a result, we may have to close certain theatres or recognize impairment losses related to the decrease in value of particular theatres. We review long-lived assets, including intangibles, for impairment as part of our annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We recognized non-cash impairment losses in 1996 and in each fiscal year thereafter except for 2005. Our impairment losses from continuing operations over this


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period aggregated to $285.0 million. Beginning fiscal 1999 through December 30, 2010, we also incurred theatre and other closure expenses, including theatre lease termination charges aggregating approximately $61.4 million. Deterioration in the performance of our theatres could require us to recognize additional impairment losses and close additional theatres, which could have an adverse effect on the results of our operations. We continually monitor the performance of our theatres, and factors such as changing consumer preferences for filmed entertainment in international markets and our inability to sublease vacant retail space could negatively impact operating results and result in future closures, sales, dispositions and significant theatre and other closure charges prior to expiration of underlying lease agreements.

We must comply with the ADA, which could entail significant cost.

        Our theatres must comply with Title III of the Americans with Disabilities Act of 1990, or ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, and an award of damages to private litigants or additional capital expenditures to remedy such noncompliance.

        On January 29, 1999, the Civil Rights Division of the Department of Justice, or the Department, filed suit alleging that our stadium-style theatres violated the ADA and related regulations. On December 5, 2003, the trial court entered a consent order and final judgment on non-line-of-sight issues under which we agreed to remedy certain violations at our stadium-style theatres and at certain theatres it may open in the future. Currently we estimate that remaining betterments are required at approximately 45 stadium-style theatres. We estimate that the unpaid costs of these betterments will be approximately $16.7 million. The estimate is based on actual costs incurred on remediation work completed to date. As to line-of-sight matters, the trial court approved a settlement on November 29, 2010 requiring us to make settlements over a five year term at an estimated cost of $5.0 million. The actual costs of betterments may vary based on the results of surveys of the remaining theatres. See Note 12—"Commitments and Contingencies" to our unaudited consolidated financial statements included elsewhere in this prospectus.

We are party to significant litigation.

        We are subject to a number of legal proceedings and claims that arise in the ordinary course of our business. We cannot be assured that we will succeed in defending any claims, that judgments will not be entered against us with respect to any litigation or that reserves we may set aside will be adequate to cover any such judgments. If any of these actions or proceedings against us is successful, we may be subject to significant damages awards. For a description of our legal proceedings, see Note 12—"Commitments and Contingencies" of our unaudited consolidated financial statements included elsewhere in this prospectus.

We may be subject to liability under environmental laws and regulations.

        We own and operate facilities throughout the United States and manage or own facilities in several foreign countries and are subject to the environmental laws and regulations of those jurisdictions, particularly laws governing the cleanup of hazardous materials and the management of properties. We might in the future be required to participate in the cleanup of a property that we own or lease, or at which we have been alleged to have disposed of hazardous materials from one of our facilities. In certain circumstances, we might be solely responsible for any such liability under environmental laws, and such claims could be material.


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We may not be able to generate additional ancillary revenues.

        We intend to continue to pursue ancillary revenue opportunities such as advertising, promotions and alternative uses of our theatres during non-peak hours. Our ability to achieve our business objectives may depend in part on our success in increasing these revenue streams. Some of our U.S. and Canadian competitors have stated that they intend to make significant capital investments in digital advertising delivery, and the success of this delivery system could make it more difficult for us to compete for advertising revenue. In addition, in March 2005 we contributed our cinema screen advertising business to NCM. As such, although we retain board seats and an ownership interest in NCM, we do not control this business, and therefore do not control our revenues attributable to cinema screen advertising. We cannot assure you that we will be able to effectively generate additional ancillary revenue and our inability to do so could have an adverse effect on our business and results of operations.

We depend on key personnel for our current and future performance.

        Our current and future performance depends to a significant degree upon the retention of our senior management team and other key personnel. The loss or unavailability to us of any member of our senior management team or a key employee could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that we would be able to locate or employ qualified replacements for senior management or key employees on acceptable terms.


Risks Related to Our Industry

We depend on motion picture production and performance.

        Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to license motion pictures and the performance of such motion pictures in our markets. We license first-run motion pictures, the success of which has increasingly depended on the marketing efforts of the major motion picture studios. Poor performance of, or any disruption in the production of these motion pictures (including by reason of a strike or lack of adequate financing), or a reduction in the marketing efforts of the major motion picture studios, could hurt our business and results of operations. Conversely, the successful performance of these motion pictures, particularly the sustained success of any one motion picture, or an increase in effective marketing efforts of the major motion picture studios, may generate positive results for our business and operations in a specific fiscal quarter or year that may not necessarily be indicative of, or comparable to, future results of operations. In addition, a change in the type and breadth of movies offered by motion picture studios may adversely affect the demographic base of moviegoers.

We have no control over distributors of the films and our business may be adversely affected if our access to motion pictures is limited or delayed.

        We rely on distributors of motion pictures, over whom we have no control, for the films that we exhibit. Major motion picture distributors are required by law to offer and license film to exhibitors, including us, on a film-by-film and theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a film-by-film and theatre-by-theatre basis. Our business depends on maintaining good relations with these distributors, as this affects our ability to negotiate commercially favorable licensing terms for first-run films or to obtain licenses at all. Our business may be adversely affected if our access to motion pictures is limited or delayed because of deterioration in our relationships with one or more distributors or for some other reason. To the extent that we are unable to license a popular film for exhibition in our theatres, our operating results may be adversely affected.


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We are subject, at times, to intense competition.

        Our theatres are subject to varying degrees of competition in the geographic areas in which we operate. Competitors may be national circuits, regional circuits or smaller independent exhibitors. Competition among theatre exhibition companies is often intense with respect to the following factors:

        The theatrical exhibition industry also faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events and from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems and from other forms of in-home entertainment.

Industry-wide screen growth has affected and may continue to affect the performance of some of our theatres.

        In recent years, theatrical exhibition companies have emphasized the development of large megaplexes, some of which have as many as 30 screens in a single theatre. The industry-wide strategy of aggressively building megaplexes generated significant competition and rendered many older, multiplex theatres obsolete more rapidly than expected. Many of these theatres are under long-term lease commitments that make closing them financially burdensome, and some companies have elected to continue operating them notwithstanding their lack of profitability. In other instances, because theatres are typically limited use design facilities, or for other reasons, landlords have been willing to make rent concessions to keep them open. In recent years, many older theatres that had closed are being reopened by small theatre operators and in some instances by sole proprietors that are able to negotiate significant rent and other concessions from landlords. As a result, there has been growth in the number of screens in the U.S. and Canadian exhibition industry from 2005 to 2008. This has affected and may continue to affect the performance of some of our theatres. The number of screens in the U.S. and Canadian exhibition industry slightly declined from 2008 to 2009.

An increase in the use of alternative film delivery methods or other forms of entertainment may drive down our attendance and limit our ticket prices.

        We compete with other film delivery methods, including network, syndicated cable and satellite television, DVDs and video cassettes, as well as video-on-demand, pay-per-view services and downloads via the Internet. We also compete for the public's leisure time and disposable income with other forms of entertainment, including sporting events, amusement parks, live music concerts, live theatre and restaurants. An increase in the popularity of these alternative film delivery methods and other forms of entertainment could reduce attendance at our theatres, limit the prices we can charge for admission and materially adversely affect our business and results of operations.


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Our results of operations may be impacted by shrinking video release windows.

        Over the last decade, the average video release window, which represents the time that elapses from the date of a film's theatrical release to the date a film is available on DVD, an important downstream market, has decreased from approximately six months to approximately three to four months. If patrons choose to wait for a DVD release rather than attend a theatre for viewing the film, it may adversely impact our business and results of operations, financial condition and cash flows. Film studios are currently considering a premium video on demand product which could also cause the release window to shrink further. We cannot assure you that this release window, which is determined by the film studios, will not shrink further or be eliminated altogether, which could have an adverse impact on our business and results of operations.

General political, social and economic conditions can reduce our attendance.

        Our success depends on general political, social and economic conditions and the willingness of consumers to spend money at movie theatres. If going to motion pictures becomes less popular or consumers spend less on concessions, which accounted for 27% of our revenues in fiscal 2010, our operations could be adversely affected. In addition, our operations could be adversely affected if consumers' discretionary income falls as a result of an economic downturn. Political events, such as terrorist attacks, could cause people to avoid our theatres or other public places where large crowds are in attendance.

Development of digital technology may increase our capital expenses.

        The industry is in the process of converting film-based media to digital-based media. We, along with some of our competitors, have commenced a roll-out of digital equipment for exhibiting feature films and plan to continue the roll-out through our joint venture DCIP. However, significant obstacles exist that impact such a roll-out plan, including the cost of digital projectors, and the supply of projectors by manufacturers. During fiscal 2010, DCIP completed its formation and $660 million funding to facilitate the financing and deployment of digital technology in our theatres. We cannot assure you that DCIP will be able to obtain sufficient additional financing to be able to purchase and lease to us the number of digital projectors ultimately needed for our roll-out or that the manufacturers will be able to supply the volume of projectors needed for our roll-out. As a result, our roll-out of digital equipment could be delayed or not completed at all.


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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

        All statements, other than statements of historical facts, included in this prospectus regarding the prospects of our industry and our prospects, plans, financial position and business strategy may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology.

        Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

        Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For a discussion of these and other risk factors, see "Risk Factors."

        All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this prospectus, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


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INDUSTRY AND MARKET DATA

        Information regarding market share, market position and industry data pertaining to our business contained in this prospectus consists of our estimates based on data and reports compiled by industry professional organizations, including the Motion Picture Association of America, the National Association of Theatre Owners ("NATO"), Nielsen Media Research, Rentrak Corporation ("Rentrak"), industry analysts and our management's knowledge of our business and markets. Unless otherwise noted in this prospectus, all information provided by the Motion Picture Association of America is for the 2009 calendar year, all information provided by NATO is for the 2009 calendar year and all information provided by Rentrak is as of April 1, 2010.

        Although we believe that the sources are reliable, we and the initial purchasers have not independently verified market industry data provided by third parties or by industry or general publications. Similarly, while we believe our internal estimates with respect to our industry are reliable, our estimates have not been verified by any independent sources. While we are not aware of any misstatements regarding any industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to changes based on various factors, including those discussed under "Risk Factors."


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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

        We have entered into a registration rights agreement with the initial purchasers of the original notes, in which we agreed to file a registration statement relating to an offer to exchange the original notes for exchange notes. The registration statement of which this prospectus forms a part was filed in compliance with this obligation. We also agreed to use our commercially reasonable efforts to file the registration statement with the SEC and to cause it to become effective under the Securities Act. The exchange notes will have terms substantially identical to the original notes except that the exchange notes will not contain terms with respect to transfer restrictions and registration rights and additional interest payable for the failure to consummate the exchange offer by the dates set forth in the registration rights agreement. Original notes in an aggregate principal amount of $600,000,000 were issued on December 15, 2010.

        Under the circumstances set forth below, we will use our commercially reasonable efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the original notes and to keep the shelf registration statement effective for up to two years after the effective date of the shelf registration statement. These circumstances include:

        Each holder of original notes that wishes to exchange such original notes for transferable exchange notes in the exchange offer will be required to make the following representations:

        In addition, each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See "Plan of Distribution."


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Resale of Exchange Notes

        Based on interpretations of the SEC staff set forth in no action letters issued to unrelated third parties, we believe that exchange notes issued in the exchange offer in exchange for original notes may be offered for resale, resold and otherwise transferred by any exchange note holder without compliance with the registration and prospectus delivery provisions of the Securities Act, if:

        Any holder who tenders in the exchange offer with the intention of participating in any manner in a distribution of the exchange notes:

        If, as stated above, a holder cannot rely on the position of the staff of the SEC set forth in "Exxon Capital Holdings Corporation" or similar interpretive letters, any effective registration statement used in connection with a secondary resale transaction must contain the selling security holder information required by Item 507 of Regulation S-K under the Securities Act.

        This prospectus may be used for an offer to resell, for the resale or for other retransfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the original notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market- making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read the section captioned "Plan of Distribution" for more details regarding these procedures for the transfer of exchange notes. We have agreed that, for a period starting from the date on which the exchange offer is consummated to the close of business one year after, we will make this prospectus available to any broker-dealer for use in connection with any resale of the exchange notes.

Terms of the Exchange Offer

        Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange any original notes properly tendered and not withdrawn prior to the expiration date. We will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of original notes surrendered under the exchange offer. Original notes may be tendered only in denominations of $1,000 and in integral multiples of $1,000.

        The form and terms of the exchange notes will be substantially identical to the form and terms of the original notes except the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any additional interest upon our failure to fulfill our obligations under the registration rights agreement to file, and cause to become effective, a registration statement. The exchange notes will evidence the same debt as the original notes. The exchange notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the outstanding original notes. Consequently, both series of notes will be treated as a single class of debt securities under the indenture.


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        The exchange offer is not conditioned upon any minimum aggregate principal amount of original notes being tendered for exchange.

        As of the date of this prospectus, $600,000,000 in aggregate principal amount of original notes was outstanding, and there was one registered holder, CEDE & Co., a nominee of DTC. This prospectus and the letter of transmittal are being sent to all registered holders of original notes. There will be no fixed record date for determining registered holders of original notes entitled to participate in the exchange offer.

        We will conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC. Original notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the indenture relating to the original notes.

        We will be deemed to have accepted for exchange properly tendered original notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us and delivering exchange notes to such holders. Subject to the terms of the registration rights agreement, we expressly reserve the right to amend or terminate the exchange offer, and not to accept for exchange any original notes not previously accepted for exchange, upon the occurrence of any of the conditions specified below under the caption "—Certain Conditions to the Exchange Offer."

        Holders who tender original notes in the exchange offer will not be required to pay brokerage commissions or fees, or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes. We will pay all charges and expenses, other than those transfer taxes described below, in connection with the exchange offer. It is important that you read the section labeled "—Fees and Expenses" below for more details regarding fees and expenses incurred in the exchange offer.

Expiration Date; Extensions; Amendments

        The exchange offer will expire at 5:00 p.m., New York City time on                                    , 2011 unless we extend it in our sole discretion.

        In order to extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We will notify in writing or by public announcement the registered holders of original notes of the extension no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

        We reserve the right, in our sole discretion:


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        Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice or public announcement thereof to the registered holders of original notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of original notes of such amendment, provided that in the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the exchange offer period, if necessary, so that at least five business days remain in the exchange offer following notice of the material change. If we terminate this exchange offer as provided in this prospectus before accepting any original notes for exchange or if we amend the terms of this exchange offer in a manner that constitutes a fundamental change in the information set forth in the registration statement of which this prospectus forms a part, we will promptly file a post-effective amendment to the registration statement of which this prospectus forms a part. In addition, we will in all events comply with our obligation to make prompt payment for all original notes properly tendered and accepted for exchange in the exchange offer.

        Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by issuing a timely press release to a financial news service.

Certain Conditions to the Exchange Offer

        Despite any other term of the exchange offer, we will not be required to accept for exchange, or exchange any exchange notes for, any original notes, and we may terminate the exchange offer as provided in this prospectus before accepting any original notes for exchange if in our reasonable judgment:

        In addition, we will not be obligated to accept for exchange the original notes of any holder that has not made:

        We expressly reserve the right, at any time or at various times on or prior to the scheduled expiration date of the exchange offer, to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any original notes by giving written notice of such extension to the registered holders of the original notes. During any such extensions, all original notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange unless they have been previously withdrawn. We will return any original notes that we do not accept for


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exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.

        We expressly reserve the right to amend or terminate the exchange offer on or prior to the scheduled expiration date of the exchange offer, and to reject for exchange any original notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. We will give written notice or public announcement of any extension, amendment, non-acceptance or termination to the registered holders of the original notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

        These conditions are for our sole benefit and we may, in our sole discretion, assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times except that all conditions to the exchange offer must be satisfied or waived by us prior to the expiration of the exchange offer. If we fail at any time to exercise any of the foregoing rights, that failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration of the exchange offer. Any waiver by us will be made by written notice or public announcement to the registered holders of the notes.

        In addition, we will not accept for exchange any original notes tendered, and will not issue exchange notes in exchange for any such original notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

Procedures for Tendering

        Only a holder of original notes may tender such original notes in the exchange offer. To tender in the exchange offer, a holder must:

        In addition, either:

        To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at the address set forth below under "—Exchange Agent" prior to the expiration date.

        The tender by a holder that is not withdrawn prior to the expiration date will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

        The method of delivery of original notes, the letter of transmittal and all other required documents to the exchange agent is at the holder's election and risk. Rather than mail these items, we recommend


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that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to the exchange agent before the expiration date. Holders should not send us the letter of transmittal or original notes. Holders may request their respective brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for them.

        Any beneficial owner whose original notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct it to tender on the owners' behalf. If such beneficial owner wishes to tender on its own behalf, it must, prior to completing and executing the letter of transmittal and delivering its original notes, either:

        The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date.

        Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another "eligible institution" within the meaning of Rule 17Ad-15 under the Exchange Act, unless the original notes tendered pursuant thereto are tendered:

        If the letter of transmittal is signed by a person other than the registered holder of any original notes listed on the original notes, such original notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder's name appears on the original notes and an eligible institution must guarantee the signature on the bond power.

        If the letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

        The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC's system may use DTC's Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the original notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent's message to the exchange agent. The term "agent's message" means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that:


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        We will determine in our sole discretion all questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered original notes and withdrawal of tendered original notes. Our determination will be final and binding. We reserve the absolute right to reject any original notes not properly tendered or any original notes the acceptance of which would, in the opinion of our counsel, be unlawful. Our interpretation of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of original notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of original notes, neither we, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of original notes will not be deemed made until such defects or irregularities have been cured or waived. Any original notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the exchange agent without cost to the tendering holder, unless otherwise provided in the letter of transmittal, promptly following the expiration date or termination of the exchange offer, as applicable.

        In all cases, we will issue exchange notes for original notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

        By signing the letter of transmittal, each tendering holder of original notes will represent that, among other things:

        In addition, each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See "Plan of Distribution."


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Book-Entry Transfer

        The exchange agent will make a request to establish an account with respect to the original notes at DTC for purposes of the exchange offer promptly after the date of this prospectus; and any financial institution participating in DTC's system may make book-entry delivery of original notes by causing DTC to transfer such original notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. Holders of original notes who are unable to deliver confirmation of the book-entry tender of their original notes into the exchange agent's account at DTC or all other documents of transmittal to the exchange agent on or prior to the expiration date must tender their original notes according to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

        Holders wishing to tender their original notes but whose original notes are not immediately available or who cannot deliver their original notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC's Automated Tender Offer Program prior to the expiration date may tender if:

setting forth the name and address of the holder, the registered number(s) of such original notes and the principal amount of original notes tendered;

stating that the tender is being made thereby; and

guaranteeing that, within three (3) New York Stock Exchange trading days after the expiration date, the letter of transmittal or facsimile thereof together with the original notes or a book-entry confirmation, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

the exchange agent receives such properly completed and executed letter of transmittal or facsimile thereof, as well as all tendered original notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three (3) New York Stock Exchange trading days after the expiration date.

        Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their original notes according to the guaranteed delivery procedures set forth above.

Withdrawal of Tenders

        Except as otherwise provided in this prospectus, holders of original notes may withdraw their tenders at any time prior to the expiration date.

        For a withdrawal to be effective:


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        Any such notice of withdrawal must:

        If certificates for original notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit:

        If original notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn original notes and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility, including time of receipt, of such notices, and our determination shall be final and binding on all parties. We will deem any original notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer. Any original notes that have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of original notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such original notes will be credited to an account maintained with DTC for original notes) promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn original notes may be retendered by following one of the procedures described under "—Procedures for Tendering" above at any time prior to the expiration date.

Exchange Agent

        U.S. Bank National Association has been appointed as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent addressed as follows:

U.S. Bank National Association
(Exchange Agent/Depositary addresses)

By Registered & Certified Mail: Regular Mail or Overnight Courier:
U.S. BANK NATIONAL ASSOCIATION U.S. BANK NATIONAL ASSOCIATION
Corporate Trust Services 60 Livingston Avenue
EP-MN-WS3C St. Paul, Minnesota 55107-1419
60 Livingston Avenue Attention: Specialized Finance
St. Paul, Minnesota 55107-1419  

In Person by Hand Only:

 

By Facsimile (for Eligible Institutions only):
  (651) 495-8158

U.S. BANK NATIONAL ASSOCIATION

 

 
60 Livingston Avenue For Information or Confirmation by Telephone:
1st Floor—Bond Drop Window 1-800-934-6802
St. Paul, Minnesota 55107  

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        DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.

Fees and Expenses

        We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail, however, we may make additional solicitations by telegraph, telephone or in person by our officers and regular employees and those of our affiliates.

        We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.

        Our expenses in connection with the exchange offer include:

Transfer Taxes

        We will pay all transfer taxes, if any, applicable to the exchange of original notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

        If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

        Holders who tender their original notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register exchange notes in the name of, or request that original notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.

Consequences of Failure to Exchange

        Holders of original notes who do not exchange their original notes for exchange notes under the exchange offer, including as a result of failing to timely deliver original notes to the exchange agent,


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together with all required documentation, including a properly completed and signed letter of transmittal, will remain subject to the restrictions on transfer of such original notes:

        In addition, you will no longer have any registration rights or be entitled to additional interest with respect to the original notes.

        In general, you may not offer or sell the original notes unless they are registered under the Securities Act, or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the original notes under the Securities Act. Based on interpretations of the SEC staff, exchange notes issued pursuant to the exchange offer may be offered for resale, resold or otherwise transferred by their holders, other than any such holder that is our "affiliate" within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holders acquired the exchange notes in the ordinary course of the holders' business and the holders have no arrangement or understanding with respect to the distribution of the exchange notes to be acquired in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange notes:

        After the exchange offer is consummated, if you continue to hold any original notes, you may have difficulty selling them because there will be fewer original notes outstanding.

Accounting Treatment

        We will record the exchange notes in our accounting records at the same carrying value as the original notes, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer.

Other

        Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

        We may in the future seek to acquire untendered original notes in the open market or privately negotiated transactions, through subsequent exchange offer or otherwise. We have no present plans to acquire any original notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered original notes.


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USE OF PROCEEDS

        This exchange offer is intended to satisfy certain of our obligations under the registration rights agreement. We will not receive any proceeds from the issuance of the exchange notes in the exchange offer. In exchange for each of the exchange notes, AMC Entertainment Inc. will receive original notes in like principal amount. AMC Entertainment Inc. will retire or cancel all of the original notes tendered in the exchange offer. Accordingly, issuance of the exchange notes will not result in any change in our capitalization.


CAPITALIZATION

        The following table sets forth the cash and cash equivalents and capitalization of AMC Entertainment Inc. as of December 30, 2010, on an actual basis and on an adjusted basis to give effect to the original notes offering (and the application of the proceeds thereof). The information in this table should be read in conjunction with the historical financial statements of AMC Entertainment Inc. and the respective accompanying notes thereto included elsewhere in this prospectus.

 
 As of December 30, 2010 
 
 Actual As adjusted 
 
 (in thousands)
 

Cash and cash equivalents(1)

 $686,167 $357,103 
      

Short-term debt (current maturities of long-term debt and capital and financing lease obligations)

 $240,052 $10,150 

Long-term debt:

       
 

Senior secured credit facility

       
  

Revolving loan facility(2)

     
  

Term loan

  612,625  612,625 
 

8.75% Senior Notes due 2019

  587,000  587,000 
 

8% Senior Subordinated Notes due 2014

  299,357  299,357 
 

Senior Subordinated Notes offered hereby

  600,000  600,000 
 

Capital and financing lease obligations

  63,086  63,086 
      

Total debt(3)

 $2,402,120 $2,172,218 
      

Stockholder's equity:

       
 

Common Stock (1¢ par value, 1 share issued)

     
 

Additional paid-in capital

  629,489  553,418 
 

Accumulated other comprehensive loss

  (2,216) (2,216)
 

Accumulated deficit

  (28,075) (44,749)
      
 

Total stockholder's equity

  599,198  506,453 
      

Total capitalization

 $3,001,318 $2,678,671 
      

(1)
$104.8 million was paid with respect to the 2016 Senior Subordinated Notes on December 16, 2010 and $192.5 million was paid on the redemption date, and $6.3 million aggregate additional interest was paid with respect to the Marquee Notes on December 16, 2010 and January 3, 2011. Cash and cash equivalents does not include $113.6 million of cash on hand at Parent and $2.6 million of cash on hand at Marquee.

(2)
The aggregate revolving loan commitment under our senior secured facility is $192.5 million.

(3)
Total debt excludes $70.1 million of Marquee Notes and $206.7 million of senior term loan indebtedness of Parent. We distributed a portion of the proceeds of the original notes offering to Marquee to be applied to the Marquee Notes Cash Tender Offer and subsequent redemption.

Table of Contents

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

        We derived the following unaudited pro forma condensed consolidated financial information by applying pro forma adjustments attributable to the Kerasotes Acquisition to our historical consolidated financial statements and the Kerasotes financial statements included elsewhere in this prospectus.

        These adjustments include:

        The unaudited pro forma condensed consolidated statement of operations data for the 39 weeks ended December 30, 2010, the 52 weeks ended April 1, 2010 and the 52 weeks ended December 30, 2010 gives effect to the Kerasotes Acquisition as if it had occurred on April 3, 2009. We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information.

        The pro forma statement of operations and other data for the 52 weeks ended December 30, 2010, which are unaudited, have been calculated by subtracting the pro forma data for the 39 weeks ended December 31, 2009 from the pro forma data for the 52 weeks ended April 1, 2010 and adding the data for the 39 weeks ended December 30, 2010. This presentation is not in accordance with U.S. GAAP. We believe that this presentation provides useful information to investors regarding our recent financial performance, and we view this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess our historical results. In addition, our management uses trailing four quarter financial information to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. We also use trailing four quarter financial data to test compliance with covenants under our senior secured credit facility. This presentation has limits as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

        The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and should not be considered indicative of the results that would have been achieved had the transactions been consummated on the dates or for the periods indicated and do not purport to represent consolidated balance sheet data or statement of operations data or other financial data as of any future date or any future period.

        The unaudited pro forma condensed consolidated financial information should be read in conjunction with our consolidated financial statements and accompanying notes and the Kerasotes financial statements included elsewhere in this prospectus.


Table of Contents


AMC ENTERTAINMENT INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

THIRTY-NINE WEEKS ENDED DECEMBER 30, 2010

(dollars in thousands)



 Thirty-nine Weeks Ended December 30, 2010 
 Thirty-nine Weeks Ended December 30, 2010 


 Company
39 Weeks Ended
Dec. 30, 2010
Historical
 Kerasotes
April 1,
2010
to May 24,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 
 Company
39 Weeks Ended
Dec. 30, 2010
Historical
 Kerasotes
April 1,
2010
to May 24,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 

Revenues

Revenues

 $1,897,444 $40,696 $(12,687)(1)$1,925,453 

Revenues

 $1,897,444 $40,696 $(12,687)(1)$1,925,453 

     (2)   

     (2)   

Cost of operations

Cost of operations

 1,264,853 25,802 (8,633)(1) 1,292,078 

Cost of operations

 1,264,853 25,802 (8,633)(1) 1,292,078 

     10,056(2)   

     10,056(2)   

Rent

Rent

 356,121 6,405 (2,854)(1) 360,374 

Rent

 356,121 6,405 (2,854)(1) 360,374 

     702(2)   

     702(2)   

General and administrative:

General and administrative:

 

General and administrative:

 

M&A Costs

 13,171   13,171 

M&A Costs

 13,171   13,171 

Management fee

 3,750   3,750 

Management fee

 3,750   3,750 

Other

 41,250 1,651  42,901 

Other

 41,250 1,651  42,901 

Depreciation and amortization

Depreciation and amortization

 156,895 2,702 (561)(1) 160,454 

Depreciation and amortization

 156,895 2,702 (561)(1) 160,623 

     1,418(2)   

     1,587(2)   
                   

Operating costs and expenses

 1,836,040 36,560 128 1,872,728 

Operating costs and expenses

 1,836,040 36,560 297 1,872,897 
                   

Operating income

 61,404 4,136 (12,815) 52,725 

Operating income

 61,404 4,136 (12,984) 52,556 

Other expense

Other expense

 (851)   (851)

Other expense

 (851)   (851)

Interest expense

Interest expense

 105,416 395 (179)(2) 105,632 

Interest expense

 105,416 395 (179)(2) 105,632 

Equity in earnings of non-consolidated entities

Equity in earnings of non-consolidated entities

 (17,057)   (17,057)

Equity in earnings of non-consolidated entities

 (17,057)   (17,057)

Gain on NCM, Inc. stock sale

Gain on NCM, Inc. stock sale

 (64,648)   (64,648)

Gain on NCM, Inc. stock sale

 (64,648)   (64,648)

Investment income

Investment income

 (309) (99) 99(2) (309)

Investment income

 (309) (99) 99(2) (309)
                   

Total other expense

Total other expense

 22,551 296 (80) 22,767 

Total other expense

 22,551 296 (80) 22,767 
                   

Earnings (loss) from continuing operations before income taxes

Earnings (loss) from continuing operations before income taxes

 38,853 3,840 (12,735) 29,958 

Earnings (loss) from continuing operations before income taxes

 38,853 3,840 (12,904) 29,789 

Income tax provision (benefit)

Income tax provision (benefit)

 2,550  (3,300)(3) (750)

Income tax provision (benefit)

 2,550  (3,400)(3) (850)
                   

Earnings (loss) from continuing operations

Earnings (loss) from continuing operations

 $36,303 $3,840 $(9,435)$30,708 

Earnings (loss) from continuing operations

 $36,303 $3,840 $(9,504)$30,639 
                   

        See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


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AMC ENTERTAINMENT INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

FIFTY-TWO WEEKS ENDED APRIL 1, 2010

(dollars in thousands)



 Fifty-two weeks ended April 1, 2010 
 Fifty-two weeks ended April 1, 2010 


 Company
52 Weeks
Ended
April 1,
2010
Historical
 Kerasotes
Year
Ended
Dec. 31,
2009
Historical
 Kerasotes
Three
Months
Ended Mar. 31,
2010
Historical
 Kerasotes
Three
Months
Ended Mar. 31,
2009
Historical
 Kerasotes
Twelve
Months
Ended Mar. 31,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 
 Company
52 Weeks
Ended
April 1,
2010
Historical
 Kerasotes
Year
Ended
Dec. 31,
2009
Historical
 Kerasotes
Three
Months
Ended Mar. 31,
2010
Historical
 Kerasotes
Three
Months
Ended Mar. 31,
2009
Historical
 Kerasotes
Twelve
Months
Ended Mar. 31,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 

Revenues

Revenues

 $2,417,739 $325,964 $79,723 $76,283 $329,404 $(62,611)(1)$2,683,755 

Revenues

 $2,417,739 $325,964 $79,723 $76,283 $329,404 $(62,611)(1)$2,683,755 

           (777)(2)   

           (777)(2)   

Cost of operations

Cost of operations

 1,612,260 210,990 53,942 50,428 214,504 (41,684)(1) 1,785,080 

Cost of operations

 1,612,260 210,990 53,942 50,428 214,504 (41,684)(1) 1,785,080 

Rent

Rent

 440,664 45,212 11,640 11,336 45,516 (11,365)(1) 479,590 

Rent

 440,664 45,212 11,640 11,336 45,516 (11,365)(1) 479,590 

           4,775  (2)   

           4,775  (2)   

General and administrative:

General and administrative:

 

General and administrative:

 

M&A costs

 2,280      2,280 

M&A costs

 2,280      2,280 

Management fee

 5,000      5,000 

Management fee

 5,000      5,000 

Other

 57,858 17,011 3,973 4,017 16,967  74,825 

Other

 57,858 17,011 3,973 4,017 16,967  74,825 

Depreciation and amortization

Depreciation and amortization

 188,342 21,894 4,628 5,252 21,270 (1,540)(1) 213,582 

Depreciation and amortization

 188,342 21,894 4,628 5,252 21,270 (1,540)(1) 214,682 

           5,510  (2)   

           6,610  (2)   

Impairment of long-lived assets

Impairment of long-lived assets

 3,765      3,765 

Impairment of long-lived assets

 3,765      3,765 
                               

Operating costs and expenses

 2,310,169 295,107 74,183 71,033 298,257 (44,304) 2,564,122 

Operating costs and expenses

 2,310,169 295,107 74,183 71,033 298,257 (43,204) 2,565,222 
                               

Operating income (loss)

 107,570 30,857 5,540 5,250 31,147 (19,084) 119,633 

Operating income (loss)

 107,570 30,857 5,540 5,250 31,147 (20,184) 118,533 

Other income

Other income

 (2,559)      (2,559)

Other income

 (2,559)      (2,559)

Interest expense

Interest expense

 132,110 4,150 744 1,042 3,852 (3,852)(2) 132,110 

Interest expense

 132,110 4,150 744 1,042 3,852 (3,852)(2) 132,110 

Equity in earnings of non-consolidated entities

Equity in earnings of non-consolidated entities

 (30,300)      (30,300)

Equity in earnings of non-consolidated entities

 (30,300)      (30,300)

Investment (income) expense

Investment (income) expense

 (205) 3,291 569 715 3,145 (2,947)(2) (7)

Investment (income) expense

 (205) 3,291 569 715 3,145 (2,947)(2) (7)
                               

Total other expense

Total other expense

 99,046 7,441 1,313 1,757 6,997 (6,799) 99,244 

Total other expense

 99,046 7,441 1,313 1,757 6,997 (6,799) 99,244 
                               

Earnings (loss) from continuing operations before income taxes

Earnings (loss) from continuing operations before income taxes

 8,524 23,416 4,227 3,493 24,150 (12,285) 20,389 

Earnings (loss) from continuing operations before income taxes

 8,524 23,416 4,227 3,493 24,150 (13,385) 19,289 

Income tax provision (benefit)

Income tax provision (benefit)

 (68,800)     4,400  (3) (64,400)

Income tax provision (benefit)

 (68,800)     4,000  (3) (64,800)
                               

Earnings (loss) from continuing operations

Earnings (loss) from continuing operations

 $77,324 $23,416 $4,227 $3,493 $24,150 $(16,685)$84,789 

Earnings (loss) from continuing operations

 $77,324 $23,416 $4,227 $3,493 $24,150 $(17,385)$84,089 
                               

        See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.


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AMC ENTERTAINMENT INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

FIFTY-TWO WEEKS ENDED DECEMBER 30, 2010

(dollars in thousands)



 Fifty-two Weeks ended December 30, 2010 
 Fifty-two Weeks ended December 30, 2010 


 Company
52 Weeks
Ended
April 1,
2010
Historical
 Company
39 Weeks
Ended
Dec. 30,
2010 Historical
 Company
39 Weeks
Ended
Dec. 31,
2009
Historical
 Company
52 Weeks
Ended
Dec. 30,
2010
Historical
 Kerasotes
Jan. 1,
2010 to May 24,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 
 Company
52 Weeks
Ended
April 1,
2010
Historical
 Company
39 Weeks
Ended
Dec. 30,
2010 Historical
 Company
39 Weeks
Ended
Dec. 31,
2009
Historical
 Company
52 Weeks
Ended
Dec. 30,
2010
Historical
 Kerasotes
Jan. 1,
2010 to May 24,
2010
Historical
 Kerasotes
Acquisition
Pro Forma
Adjustments
 Company
Pro Forma
Kerasotes
Acquisition
 

Revenues

Revenues

 $2,417,739 $1,897,444 $1,813,546 $2,501,637 $120,419 $(27,516)(1)$2,594,540 

Revenues

 $2,417,739 $1,897,444 $1,813,546 $2,501,637 $120,419 $(27,516)(1)$2,594,540 

             (2)   

             (2)   

Cost of operations

Cost of operations

 1,612,260 1,264,853 1,199,317 1,677,796 79,744 (19,849)(1) 1,747,747 

Cost of operations

 1,612,260 1,264,853 1,199,317 1,677,796 79,744 (19,849)(1) 1,747,747 

           10,056  (2)   

           10,056  (2)   

Rent

Rent

 440,664 356,121 331,107 465,678 18,045 (5,299)(1) 480,413 

Rent

 440,664 356,121 331,107 465,678 18,045 (5,299)(1) 480,413 

           1,989  (2)   

           1,989  (2)   

General and administrative:

General and administrative:

 

General and administrative:

 

M&A costs

 2,280 13,171 706 14,745   14,745 

M&A costs

 2,280 13,171 706 14,745   14,745 

Management fee

 5,000 3,750 3,750 5,000   5,000 

Management fee

 5,000 3,750 3,750 5,000   5,000 

Other

 57,858 41,250 40,768 58,340 5,867  64,207 

Other

 57,858 41,250 40,768 58,340 5,867  64,207 

Depreciation and amortization

Depreciation and amortization

 188,342 156,895 142,949 202,288 7,330 (801)(1) 212,644 

Depreciation and amortization

 188,342 156,895 142,949 202,288 7,330 (801)(1) 213,078 

           3,827  (2)   

           4,261  (2)   

Impairment of long-lived assets

Impairment of long-lived assets

 3,765   3,765   3,765 

Impairment of long-lived assets

 3,765   3,765   3,765 
                               

Operating costs and expenses

 2,310,169 1,836,040 1,718,597 2,427,612 110,986 (10,077) 2,528,521 

Operating costs and expenses

 2,310,169 1,836,040 1,718,597 2,427,612 110,986 (9,643) 2,528,955 
                               

Operating income

 107,570 61,404 94,949 74,025 9,433 (17,439) 66,019 

Operating income

 107,570 61,404 94,949 74,025 9,433 (17,873) 65,585 

Other expense (income)

Other expense (income)

 (2,559) (851) (300) (3,110)   (3,110)

Other expense (income)

 (2,559) (851) (300) (3,110)   (3,110)

Interest expense

Interest expense

 132,110 105,416 97,698 139,828 1,139 (1,571)(2) 139,396 

Interest expense

 132,110 105,416 97,698 139,828 1,139 (1,571)(2) 139,396 

Equity in earnings of non-consolidated entities

Equity in earnings of non-consolidated entities

 (30,300) (17,057) (18,127) (29,230)   (29,230)

Equity in earnings of non-consolidated entities

 (30,300) (17,057) (18,127) (29,230)   (29,230)

Gain on NCM, Inc. stock sale

Gain on NCM, Inc. stock sale

  (64,648)  (64,648)   (64,648)

Gain on NCM, Inc. stock sale

  (64,648)  (64,648)   (64,648)

Investment (income) expense

Investment (income) expense

 (205) (309) (167) (347) 470 (720)(2) (597)

Investment (income) expense

 (205) (309) (167) (347) 470 (720)(2) (597)
                               

Total other expense

Total other expense

 99,046 22,551 79,104 42,493 1,609 (2,291) 41,811 

Total other expense

 99,046 22,551 79,104 42,493 1,609 (2,291) 41,811 
                               

Earnings from continuing operations before income taxes

Earnings from continuing operations before income taxes

 8,524 38,853 15,845 31,532 7,824 (15,148) 24,208 

Earnings from continuing operations before income taxes

 8,524 38,853 15,845 31,532 7,824 (15,582) 23,774 

Income tax provision (benefit)

Income tax provision (benefit)

 (68,800) 2,550  (66,250)  (2,600)(3) (68,850)

Income tax provision (benefit)

 (68,800) 2,550  (66,250)  (2,800)(3) (69,050)
                               

Earnings from continuing operations

Earnings from continuing operations

 $77,324 $36,303 $15,845 $97,782 $7,824 $(12,548)$93,058 

Earnings from continuing operations

 $77,324 $36,303 $15,845 $97,782 $7,824 $(12,782)$92,824 
                               

        See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.


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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Kerasotes Acquisition

        On May 24, 2010, we completed the acquisition of substantially all of the assets (92 theatres and 928 screens) of Kerasotes. Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90% have been built since 1994. We acquired Kerasotes based on their highly complementary geographic presence in certain key markets. Additionally, we expect to realize synergies and cost savings related to the Kerasotes acquisition as a result of moving to our operating practices, decreasing costs for newspaper advertising and concessions and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired, and was subject to working capital and other purchase price adjustments. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts, and have included this amount as part of the total estimated purchase price.

        The acquisition of Kerasotes is being treated as a purchase in accordance with Accounting Standards Codification ("ASC") 805,Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including bid prices from potential buyers and a preliminary valuation assessment which falls under Level 3 of the valuation hierarchy. The allocation of purchase price is subject to changes as an appraisal of both tangible and intangible assets and liabilities is finalized and additional information becomes available, however, we do not expect material changes. The following is a summary of the preliminary allocation of the purchase price:

(In thousands)
 Total 

Cash

 $809 

Receivables, net(1)

  3,832 

Other current assets

  12,905 

Property, net

  205,104 

Intangible assets, net(2)

  17,387 

Goodwill(3)

  109,839 

Other long-term assets

  5,920 

Accounts payable

  (13,538)

Accrued expenses and other liabilities

  (12,439)

Deferred revenues and income

  (1,806)

Capital and financing lease obligations

  (12,583)

Other long-term liabilities(4)

  (34,015)
    

Total estimated purchase price

 $281,415 
    

(1)
Receivables consist of trade receivables recorded at fair value. We did not acquire any other class of receivables as a result of the acquisition of Kerasotes.

(2)
Intangible assets consist of certain Kerasotes' trade names, a non-compete agreement, and favorable leases. See Note 4 to our unaudited consolidated financial statements for

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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

(3)
Goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. Amounts recorded for goodwill are not subject to amortization and are expected to be deductible for tax purposes.

(4)
Other long-term liabilities consist of certain theatre and ground leases that have been identified as unfavorable.

        During the 39 weeks ended December 30, 2010, we incurred acquisition-related costs of approximately $12.1 million included in general and administrative expense: merger, acquisition and transaction costs in our consolidated statements of operations. We have expensed acquisition-related transaction costs as incurred pursuant to ASC 805-10.

        In connection with the acquisition of Kerasotes, we divested of seven Kerasotes theatres with 85 screens as required by the Antitrust Division of the United States Department of Justice. We also sold one vacant theatre that had previously been closed by Kerasotes. Proceeds from the divested theatres exceeded the carrying amount of such theatres by $10.7 million which was recorded as a reduction to goodwill.

        We were also required by the Antitrust Division of the United States Department of Justice to divest of four legacy AMC theatres with 57 screens. We recorded a gain on disposition of assets of $10.1 million for one divested legacy theatre with 14 screens during the 39 weeks ended December 30, 2010, which reduced operating expenses by approximately $10.1 million. Additionally, we acquired two theatres with 26 screens that were received in exchange for three of the legacy AMC theatres with 43 screens.

        A reconciliation of the $275.0 million purchase price as set forth in the acquisition agreement to the total estimated purchase price is as follows:

Base Purchase Price

 $275,000,000 

Swap Termination Costs

  1,798,000 

Closing Date Working Capital Amount

  4,617,000 
    

Total estimated purchase price

 $281,415,000 
    

Methods and Significant Assumptions Used in Valuation

Leases

        To evaluate whether the individual standard operating leases being acquired were either favorable or unfavorable, a representative sample of leases from both Kerasotes' and AMC's theatre portfolio was analyzed to develop an estimate of current market terms. Rent, as a percentage of revenue, was considered an appropriate metric to estimate a market term.

        Theatres considered at-market were the theatres in which rent-to-revenue ratio was within a calculated a range equal to one standard deviation around the average. As a secondary test, a comparison of all of the theatres' positive average annual operating cash flow ("OCF") margin was done. Similar to the rent to revenue analysis, a one standard deviation range from the average OCF margin was developed to represent reasonable profitability. Certain theatres within this at-market rent range were deemed favorable or unfavorable depending on the strength of their OCF margin.


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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

        To calculate the value of the favorable and unfavorable leases, the expected rent to be paid annually was compared to a normalized rent level based on the average rent-to-revenue ratio discussed above. The rent differential was calculated over the remaining term of the individual leases for the identified theatres. The difference in rent was then discounted at a rate of return based on rates for similar real property.

Trade Name

        The Royalty Savings or Relief-from-Royalty Method, an income approach (Level 3 fair value measurement), was used to estimate the Fair Value of the ShowPlace and Star trade names. The Royalty Savings Method, estimates the value of a trade name by capitalizing the royalties saved because we own the trade name. The relief from royalty analysis is comprised of two primary steps including: i) the determination of the appropriate royalty rate, and ii) the subsequent application of the relief from royalty method.

        The seller has retained the "Kerasotes" name but most of the theatres were branded as either ShowPlace or Star. Therefore we valued the ShowPlace and Star trade names. We plan to preserve the use all of the ShowPlace and Star Theatres' trade names on a total of 46 theatres.

        The royalty savings was calculated by multiplying the royalty rate by the annual revenues for all of the theatres with the ShowPlace or Star names. The royalty rate was established based on various quantitative and qualitative factors. The present value of the after-tax royalty savings was determined using a rate for intangible assets.

Non-Compete Agreement

        As part of the Kerasotes Acquisition, certain management members of the remaining Kerasotes company ("Potential Competitors") entered into five year non-competition agreements, which prevent them from competing against the sold Kerasotes theatres and all other AMC theatres over the duration of the agreement. The Differential Cash Flow Method, an income approach (Level 3 fair value measurement), was used to value the Non-Competition Agreements.

        Key assumptions used in the Differential Cash Flow Method included assumptions regarding theatre cash flows with and without the non-compete agreements in place, probabilities regarding competitors reentering the market, and a discount rate used to present value cash flows, appropriate for intangible assets.

        Our preliminary allocation of purchase price as of May 24, 2010 consisted primarily of:


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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

Kerasotes Acquisition Pro Forma Adjustments

(1)
Reflects the exclusion of revenues and expenses and disposition of assets and liabilities for theatres expected to be disposed of in connection with the approval of the Kerasotes Acquisition by the U.S. Department of Justice:

 
 39 Weeks Ended
December 30, 2010
 52 Weeks Ended
April 1, 2010
 52 Weeks Ended
December 30, 2010
 
 
 (thousands of dollars)
 

Revenues

 $12,687 $62,611 $27,516 

Cost of operations

  8,633  41,684  19,849 

Rent

  2,854  11,365  5,299 

Depreciation & amortization

  561  1,540  801 
(2)
Pro forma adjustments are made to the unaudited pro forma condensed consolidated financial statement of operations for purchase accounting to reflect the following:


 39 weeks
ended
December 30,
2010
 52 weeks
ended
April 1,
2010
 52 weeks
ended
December 30,
2010
 Estimated
Useful Life
 Balance Sheet
Classification
 39 weeks
ended
December 30,
2010
 52 weeks
ended
April 1,
2010
 52 weeks
ended
December 30,
2010
 Estimated
Useful Life
 Balance Sheet
Classification

 (thousands of dollars)
  
  
 (thousands of dollars)
  
  

Revenues:

  

Remove Kerasotes historical gift certificate breakage

 $ $(777)$    $ $(777)$   

Cost of operations:

  

Remove gain on sale of divested theatres

 10,056  10,056    10,056  10,056   

Depreciation and Amortization:

  

Remove Kerasotes historical amount

 $(2,702)$(21,270)$(7,330)    $(2,702)$(21,270)$(7,330)   

Buildings and improvements, furniture, fixtures and equipment and leasehold improvements

 3,800 24,700 10,291 7 Property, net 3,800 24,700 10,291 7 Property, net

Favorable leases

 123 800 333 3.6 Intangibles, net 292 1,900 767 3.6 Intangibles, net

Non-compete agreements

 197 1,280 533 5 Intangibles, net 197 1,280 533 5 Intangibles, net

Tradename

    Indefinite Intangibles, net    Indefinite Intangibles, net
                  

 $1,418 $5,510 $3,827    $1,587 $6,610 $4,261   
                  

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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

 
 39 weeks
ended
December 30,
2010
 52 weeks
ended
April 1,
2010
 52 weeks
ended
December 30,
2010
 Estimated
Useful Life
 Balance Sheet
Classification
 
 (thousands of dollars)
  
  

Rent:

              

Kerasotes amortization of deferred gain on sale-leaseback transactions

 $1,086 $7,275 $3,031     

Unfavorable leases

  (384) (2,500) (1,042) 15 Other long-term liabilities
            

 $702 $4,775 $1,989     
            

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AMC ENTERTAINMENT INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

 
 39 weeks
ended
December 30,
2010
 52 weeks
ended
April 1,
2010
 52 weeks
ended
December 30,
2010
 
 
 (thousands of dollars)
 

Interest Expense:

          

Interest expense to Kerasotes Showplace Theatres, LLC and other

 $(179)$(3,852)$(1,571)
        

 $(179)$(3,852)$(1,571)
        

 
 39 weeks
ended
December 30,
2010
 52 weeks
ended
April 1,
2010
 52 weeks
ended
December 30,
2010
 
 
 (thousands of dollars)
 

Investment Income:

          

Kerasotes expense related to interest rate swap and other

 $99 $(2,947)$(720)
        

 $99 $(2,947)$(720)
        
(3)
Represents the expected income tax impact of the Kerasotes Acquisition in U.S. tax jurisdictions at the expected state and federal rate of approximately 37.5%.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth certain of our selected historical financial and operating data. Our selected financial data for the fiscal years ended April 1, 2010, April 2, 2009, April 3, 2008, March 29, 2007 and March 30, 2006 and the 39 weeks ended December 30, 2010 and December 31, 2009 have been derived from the consolidated financial statements for such periods either included elsewhere in this prospectus or not included herein.

        The selected financial data presented herein should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," consolidated financial statements, including the notes thereto, and our other historical financial information, including the notes thereto, included elsewhere in this prospectus.

 
 Thirty-Nine Weeks Ended (unaudited) Years Ended(1)(2) 
 
 39 Weeks
Ended
December 30,
2010
 39 Weeks
Ended
December 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 52 Weeks
Ended
March 29,
2007
 52 Weeks
Ended
March 30,
2006(3)
 
 
 (in thousands, except operating data)
 

Statement of Operations Data:

                      

Revenues:

                      
 

Admissions

 $1,334,527 $1,281,145 $1,711,853 $1,580,328 $1,615,606 $1,576,924 $1,125,243 
 

Concessions

  515,709  487,908  646,716  626,251  648,330  631,924  448,086 
 

Other theatre

  47,208  44,493  59,170  58,908  69,108  94,374  90,631 
                
  

Total revenues

  1,897,444  1,813,546  2,417,739  2,265,487  2,333,044  2,303,222  1,663,960 
                

Operating Costs and Expenses:

                      
 

Film exhibition costs

  704,646  696,704  928,632  842,656  860,241  838,386  604,393 
 

Concession costs

  64,061  53,448  72,854  67,779  69,597  66,614  48,845 
 

Operating expense

  496,146  449,165  610,774  576,022  572,740  564,206  436,028 
 

Rent

  356,121  331,107  440,664  448,803  439,389  428,044  326,627 
 

General and administrative:

                      
  

Merger, acquisition and transactions costs

  13,171  706  2,280  650  3,739  9,996  12,487 
  

Management fee

  3,750  3,750  5,000  5,000  5,000  5,000  2,000 
  

Other

  41,250  40,768  57,858  53,628  39,102  45,860  38,029 
 

Restructuring charge

              3,980 
 

Depreciation and amortization

  156,895  142,949  188,342  201,413  222,111  228,437  158,098 
 

Impairment of long-lived assets

      3,765  73,547  8,933  10,686  11,974 
                
  

Operating costs and expenses

  1,836,040  1,718,597  2,310,169  2,269,498  2,220,852  2,197,229  1,642,461 
                
 

Operating income (loss)

  61,404  94,949  107,570  (4,011) 112,192  105,993  21,499 

Other expense (income)

  (851) (300) (2,559) (14,139) (12,932) (10,267) (9,818)

Interest expense:

                      
 

Corporate borrowings

  100,812  93,459  126,458  115,757  131,157  188,809  114,030 
 

Capital and financing lease obligations

  4,604  4,239  5,652  5,990  6,505  4,669  3,937 

Equity in (earnings) losses of non-consolidated entities(4)

  (17,057) (18,127) (30,300) (24,823) (43,019) (233,704) 7,807 

Gain on NCM, Inc. stock sale

  (64,648)            

Investment income(5)

  (309) (167) (205) (1,696) (23,782) (17,385) (3,075)
                

Earnings (loss) from continuing operations before income taxes

  38,853  15,845  8,524  (85,100) 54,263  173,871  (91,382)

Income tax provision (benefit)

  2,550    (68,800) 5,800  12,620  39,046  68,260 
                

Earnings (loss) from continuing operations

  36,303  15,845  77,324  (90,900) 41,643  134,825  (159,642)

Earnings (loss) from discontinued operations, net of income taxes(6)

  574  1,086  (7,534) 9,728  1,802  (746) (31,234)
                
 

Net earnings (loss)

 $36,877 $16,931 $69,790 $(81,172)$43,445 $134,079 $(190,876)
                

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 Thirty-Nine Weeks Ended (unaudited) Years Ended(1)(2) 
 
 39 Weeks
Ended
December 30,
2010
 39 Weeks
Ended
December 31,
2009
 52 Weeks
Ended
April 1,
2010
 52 Weeks
Ended
April 2,
2009
 53 Weeks
Ended
April 3,
2008
 52 Weeks
Ended
March 29,
2007
 52 Weeks
Ended
March 30,
2006(3)
 
 
 (in thousands, except operating data)
 

Balance Sheet Data (at period end):

                      

Cash and equivalents

 $686,167    $495,343 $534,009 $106,181 $317,163 $230,115 

Corporate borrowings, including current portion

  2,335,384     1,832,854  1,687,941  1,615,672  1,634,265  2,250,559 

Other long-term liabilities

  354,940     309,591  308,701  351,310  366,813  394,716 

Capital and financing lease obligations, including current portion

  66,736     57,286  60,709  69,983  53,125  68,130 

Stockholders' equity

  599,198     760,559  1,039,603  1,133,495  1,391,880  1,243,909 

Total assets

  4,209,417     3,653,177  3,725,597  3,847,282  4,104,260  4,402,590 

Other Data:

                      

Net cash provided by operating activities(7)

 $114,811 $246,380 $258,015 $200,701 $220,208 $417,751 $23,654 

Capital expenditures

  (84,085) (59,482) (97,011) (121,456) (171,100) (142,969) (123,838)

Ratio of Earnings to fixed charges(9)

  1.2x 1.1x 1.1x   1.2x 1.5x  

Proceeds from sale/leasebacks

      6,570        35,010 

Operating Data (at period end):

                      

Screen additions

  55  6  6  83  136  107  106 

Screen acquisitions

  960          32  1,363 

Screen dispositions

  325  90  105  77  196  243  60 

Average screens—continuing operations(8)

  5,080  4,501  4,485  4,545  4,561  4,627  3,583 

Number of screens operated

  5,203  4,528  4,513  4,612  4,606  4,666  4,770 

Number of theatres operated

  361  299  297  307  309  318  335 

Screens per theatre

  14.4  15.1  15.2  15.0  14.9  14.7  14.2 

Attendance (in thousands)—continuing operations(8)

  152,895  152,147  200,285  196,184  207,603  213,041  161,867 

(1)
Cash dividends declared on common stock for fiscal 2010, 2009 and 2008 were $330.0 million, $36.0 million and $296.8 million, respectively. Cash dividends declared on common stock during the 39 weeks ended December 30, 2010 were $200.2 million. There were no other cash dividends declared on common stock.

(2)
Fiscal 2008 includes 53 weeks. All other years have 52 weeks.

(3)
We acquired Loews Cineplex Entertainment Corporation on January 26, 2006, which significantly increased our size. In the Loews Acquisition we acquired 112 theatres with 1,308 screens throughout the United States that we consolidate.

(4)
During fiscal 2010, fiscal 2009 and fiscal 2008, equity in earnings including cash distributions from NCM were $34.4 million, $27.7 million and $22.2 million, respectively. During fiscal 2008, equity in (earnings) losses of non-consolidated entities includes a gain of $18.8 million from the sale of Hoyts General Cinema South America and during fiscal 2007 a gain of $238.8 million related to the NCM Inc. initial public offering.

(5)
Includes gain of $16.0 million for the 53 weeks ended April 3, 2008 from the sale of our investment in Fandango, Inc. Includes interest income on temporary cash investments of $17.3 million for the 52 weeks ended March 29, 2007.

(6)
All fiscal years presented include earnings and losses from discontinued operations related to 44 theatres in Mexico that were sold during fiscal 2009. Both fiscal 2007 and 2006 includes losses from discontinued operations related to five theatres in Japan that were sold during fiscal 2006 and five theatres in Iberia that were sold during fiscal 2007.

(7)
Cash flows provided by operating activities for the 52 weeks ended March 30, 2006 do not include $142.5 million of cash acquired in the Loews Mergers which is included in cash flows from investing activities.

(8)
Includes consolidated theatres only.

(9)
AMCE had a deficiency of earnings to fixed charges for the 52 weeks ended April 2, 2009 and the 52 weeks ended March 30, 2006 of $78.7 million and $84.6 million, respectively.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and related notes included elsewhere in this prospectus. This discussion contains forward- looking statements. Please see "Forward-Looking Statements" for a discussion of the risks, uncertainties and assumptions relating to these statements. Capitalized terms used but not defined in this section shall have the meanings ascribed to them elsewhere in this prospectus. Terms defined in this section shall only be used as such for the purposes of this section.

Overview

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or held interests in 361 theatres and 5,203 screens, approximately 99%, or 5,148, of our screens located in the U.S. and Canada, and 1%, or 55, of our screens in China (Hong Kong), France and the United Kingdom.

        During the 39 weeks ended December 30, 2010, we acquired 92 theatres with 928 screens from Kerasotes in the U.S. In connection with the acquisition of Kerasotes, we divested of 11 theatres with 142 screens as required by the Antitrust Division of the United States Department of Justice and acquired two theatres with 26 screens that were received in exchange for three of the divested theatres above with 43 screens. We also permanently closed 21 theatres with 142 screens in the U.S., temporarily closed and reopened four theatres with 41 screens in the U.S. as part of a remodeling project to allow for dine-in theatres at these locations. We opened one new managed theatre with 14 screens in the U.S. and acquired one theatre with 6 screens in the U.S. in the ordinary course of business.

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

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

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

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


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        During fiscal 2010, films licensed from our six largest distributors based on revenues accounted for approximately 84% of our U.S. and Canada admissions revenues. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year.

        During the period from 1990 to 2009, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high of 633 in 2008, according to Motion Picture Association of America 2009 MPAA Theatrical Market Statistics. The number of digital 3D films released annually increased to a high of 20 from a low of 0 during this same time period.

        We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through closures and sales. We are an industry leader in the development and operation of megaplex theatres, typically defined as a theatre having 14 or more screens and offering amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and enhanced seat design. We have increased our 3D screens by 446 to 810 screens and our IMAX screens by 29 to 107 screens since December 31, 2009; and as of December 30, 2010, approximately 15.6% of our screens were 3D screens and approximately 2.1% of our screens were IMAX screens.

Significant Events

        On March 31, 2011, Marquee Holdings Inc. ("Marquee" or "Holdings"), a direct, wholly-owned subsidiary of AMC Entertainment Holdings, Inc. ("Parent") and a holding company, the sole asset of which consisted of the capital stock of the company, was merged with and into Parent, with Parent continuing as the surviving entity. As a result of the merger, the company became a direct subsidiary of Parent.

        During the fourth quarter of our fiscal year ending March 31, 2011, we evaluated excess capacity and vacant and under-utilized retail space throughout our theatre circuit. On March 28, 2011, management decided to permanently close 73 underperforming screens and auditoriums in six theatre locations in the United States and Canada while continuing to operate 89 screens at these locations. The permanently closed screens are physically segregated form the screens that will remain in operation and access to the closed screens are physically segregated from the screens that will remain in operation and access to the closed space is restricted. Additionally, management decided to discontinue development of and cease use of (including for storage) certain vacant and under-utilized retail space at four other theatres in the United States and the United Kingdom. As a result of closing the screens and auditoriums and discontinuing the development and use of the other spaces, we anticipate recording a charge of $55.0 million to $60.0 million of theatre and other closure expense most of which is expected to be incurred during the fiscal year ending March 31,2011. The charge to theatre and other closure expense reflects the discounted contractual amounts of the existing lease obligations for the remaining 7 to 13 year terms of the leases ($54.0 million to $58.0 million) as well as expected incremental cash outlays for related asset removal and shutdown costs ($1.0 million to $2.0 million). A significant portion of each of the affected properties will be closed and no longer used. The charges to theatre and other closure expense do not result in any new, increased or accelerated obligations for cash payments related to the underlying long-term operating lease agreements. We expect that the estimated future savings in rent expense and variable operating expenses as a result of our exit plan and form operating these ten theatres in a more efficient manner will exceed the estimated loss in attendance and revenues that we may experience related to the closed auditoriums.

        During the thirty-nine weeks ended December 30, 2010, we permanently closed 21 theatres with 142 screens in the U.S., and recorded approximately $5.4 million for theatre and other closure expense, which is included with operating expense in the accompanying consolidated operating statements. Of the theatre closures, eight theatres with 33 screens are owned properties that will be marketed for sale;


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leases were allowed to expire at seven theatres with 67 screens; a management agreement expired at a single screen theatre; and five theatres with 41 screens were closed with remaining lease terms in excess of one month. 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.

        During January of 2011, AMCE made dividend payments to Marquee, totaling $76.1 million. Marquee used the available funds to pay the consideration for the Marquee Notes Cash Tender Offer and the redemption of all of Marquee Notes that remained outstanding after the closing of the Marquee Notes Cash Tender Offer.

        On December 15, 2010, we completed the offering of $600.0 million aggregate principal amount of the original notes. Concurrently with the initial notes offering, we launched a cash tender offer and consent solicitation for any and all of our then outstanding $325.0 million aggregate principal amount 11% Senior Subordinated Notes due 2016 (the "2016 Senior Subordinated Notes") at a purchase price of $1,031 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding 2016 Senior Subordinated Notes validly tendered and accepted by us on or before the early tender date (the "Cash Tender Offer"). We used the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $95.1 million principal amount of Notes due 2016 validly tendered. We recorded a loss on extinguishment related to the Cash Tender Offer of $7.6 million in other expense during the thirty-nine weeks ended December 30, 2010, which included previously capitalized deferred financing fees of $1.7 million, a tender offer and consent fee paid to the holders of $5.8 million and other expenses of $149,000. We intend to redeem the remaining $229.9 million aggregate principal amount of outstanding 2016 Senior Subordinated Notes at a price of $1,055 per $1,000 principal amount on or after February 1, 2011 in accordance with the terms of the indenture and have classified the 2016 Senior Subordinated Notes as current maturities of corporate borrowings.

        Concurrently with the initial notes offering and Cash Tender Offer, Marquee Holdings Inc. ("Marquee" or "Holdings"), our direct parent, launched a tender offer for its 12% Senior Discount Notes due 2014 (the "Marquee Notes") at a purchase price of $797.00 plus a $30.00 consent fee for each $1,000.00 face amount (or $792.09 accreted value) of currently outstanding Marquee Notes validly tendered and accepted by Marquee on or before the early tender date (together with the Cash Tender Offer, the "Cash Tender Offers"). As of December 30, 2010, Marquee had purchased $215.5 million principal amount at face value (or $170.7 million accreted value) of the Marquee Notes for a total consideration of $185.0 million. Marquee recorded a loss on extinguishment for the Marquee Notes of approximately $10.7 million.


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        We used a portion of the net proceeds from the issuance of the original notes to pay the consideration for the 2016 Senior Subordinated Notes Cash Tender Offer plus any accrued and unpaid interest and distributed the remainder of such proceeds to Marquee to be applied to the Marquee Notes Cash Tender Offer. On January 3, 2011, Marquee redeemed $88.5 million principal amount at face value (or $70.1 million accreted value) of the Marquee Notes that remained outstanding after the closing of the Marquee Notes Cash Tender Offer at a price of $823.77 per $1,000.00 face amount (or $792.09 accreted value) of Marquee Notes for a total consideration of $76.1 million in accordance of the terms of the indenture governing the Marquee Notes, as amended pursuant to the consent solicitation. Marquee recorded an additional loss on extinguishment related to the Marquee Notes of approximately $4.1 million. On December 30, 2010, we issued an irrevocable notice of redemption in respect of the $229.9 million principal amount of 2016 Senior Subordinated Notes that remained outstanding after the closing of the Cash Tender Offers, and we redeemed the remaining 2016 Senior Subordinated Notes at a price of $1,055.00 per $1,000.00 principal amount of 2016 Senior Subordinated Notes on or after February 1, 2011 for a total consideration of $255.2 million in accordance with the terms of the indenture governing the 2016 Senior Subordinated Notes. We recognized an additional loss on extinguishment of approximately $16.7 million in the fourth quarter of fiscal 2011.


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        On December 15, 2010, we entered into a third amendment to our senior secured credit facility dated as of January 26, 2006 to, among other things: (i) extend the maturity of the term loans held by accepting lenders of $476.6 million aggregate principal amount of term loans from January 26, 2013 to December 15, 2016 and to increase the interest rate with respect to such term loans, (ii) replace our existing revolving credit facility with a new five-year revolving credit facility (with higher interest rates and a longer maturity than the existing revolving credit facility), and (iii) amend certain of our existing covenants therein. We recorded a loss on the modification of our senior secured credit facility of $3.4 million in other expense during the thirty-nine weeks ended December 30, 2010, which included third party modification fees of $2.9 million, previously capitalized deferred financing fees related to the revolving credit facility of $367,000, and other expenses of $161,000.

        During the thirty-nine weeks ended December 30, 2010, AMCE made dividend payments to Marquee of $200.2 million, and Marquee made dividend payments to AMC Entertainment Holdings, Inc. ("Parent") totaling $0.7 million (the "Dividend"). Marquee and Parent used the available funds to make a cash interest payment on the Marquee Notes, the Cash Tender Offers, and pay corporate overhead expenses incurred in the ordinary course of business.

        All of our National CineMedia, LLC ("NCM") membership units are redeemable for, at the option of NCM, cash or shares of common stock of National CineMedia, Inc. ("NCM, Inc.") on a share-for-share basis. On August 18, 2010, we sold 6,500,000 shares of common stock of NCM, Inc., in an underwritten public offering for $16.00 per share and reduced our related investment in NCM by $36.7 million, the average carrying amount of the shares sold. Net proceeds received on this sale were $99.8 million, after deducting related underwriting fees and professional and consulting costs of $4.2 million, resulting in a gain on sale of $63.1 million. In addition, on September 8, 2010, we sold 155,193 shares of NCM, Inc. to the underwriters to cover over allotments for $16.00 per share and reduced our related investment in NCM by $867,000, the average carrying amount of the shares owned. Net proceeds received on this sale were $2.4 million, after deducting related underwriting fees and professional and consulting costs of $99,000, resulting in a gain on sale of $1.5 million.

        On May 24, 2010, we completed the acquisition of 92 theatres and 928 screens from Kerasotes (the "Kerasotes Acquisition"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90% have been built since 1994. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired, and was subject to working capital and other purchase price adjustments. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing


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date working capital and deferred revenue amounts and have included this amount as part of the total estimated purchase price. The acquisition of Kerasotes significantly increased our size. For additional information about the Kerasotes Acquisition, see the notes to our unaudited consolidated financial statements for the 39-week period ended December 30, 2010 included elsewhere in this prospectus.

        On March 10, 2010, Digital Cinema Implementation Partners, LLC ("DCIP") completed its financing transactions for the deployment of digital projection systems to nearly 14,000 movie theatre screens across North America, including screens operated or managed by the Company, Regal Entertainment Group ("Regal") and Cinemark Holdings, Inc ("Cinemark"). At closing, we contributed 342 projection systems that we owned to DCIP, which we recorded at estimated fair value as part of an additional investment in DCIP of $21.8 million. We also made cash investments in DCIP of $840,000 at closing and DCIP made a distribution of excess cash to us after the closing date and prior to year-end of $1.3 million. We recorded a loss on contribution of the 342 projection systems of $563,000, based on the difference between estimated fair value and our carrying value on the date of contribution. On March 26, 2010, we acquired 117 digital projectors from third party lessors for $6.8 million and sold them together with seven digital projectors that we owned to DCIP for $6.6 million. We recorded a loss on the sale of these 124 systems to DCIP of $697,000. As of April 1, 2010, we operated 568 digital


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projection systems leased from DCIP pursuant to operating leases and anticipate that we will have deployed 4,000 of these systems in our existing theatres over the next three to four years.

        The additional digital projection systems will allow us to add additional 3D screens to our circuit where we are generally able to charge a higher admission price than 2D. The digital projection systems leased from DCIP and its affiliates will replace most of our existing 35 millimeter projection systems in our U.S. theatres. We are examining the estimated depreciable lives for our existing 35 millimeter projection systems, with a net book value of $8.6 million as of December 30, 2010, and expect to adjust the depreciable lives in order to accelerate the depreciation of these existing 35 millimeter projection systems, so that such systems are fully depreciated at the end of the digital projection system deployment timeframe. We currently estimate that the increase to depreciation and amortization expense as a result of the acceleration will be $2.7 million, $0.3 million and $1.0 million in fiscal years 2011, 2012 and 2013, respectively. Upon full deployment of the digital projection systems, we expect the cash rent expense of such equipment to approximate $4.5 million, annually, and the deferred rent expense to approximate $5.5 million, annually, which will be recognized in our consolidated statements of operations as "Operating expense."

        On June 9, 2009, we completed the offering of $600.0 million aggregate principal amount of our 8.75% Senior Notes due 2019 (the "Notes due 2019"). Concurrently with the notes offering, we launched a cash tender offer and consent solicitation for any and all of our then outstanding $250.0 million aggregate principal amount of 85/8% Senior Notes due 2012 (the "Fixed Notes due 2012") at a purchase price of $1,000 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Fixed Notes due 2012 validly tendered and accepted by us on or before the early tender date (the "Cash Tender Offer"). We used the net proceeds from the issuance of the Notes due 2019 to pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $238.1 million principal amount of the Fixed Notes due 2012. We recorded a loss on extinguishment related to the Cash Tender Offer of $10.8 million in other expense during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $3.3 million consent fee paid to holders of $7.1 million and other expenses of $372,000. On August 15, 2009, we redeemed the remaining $11.9 million of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal in accordance with the terms of the indenture. We recorded a loss of $450,000 in Other expense related to the extinguishment of the remaining Fixed Notes due 2012 during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $157,000, a consent fee paid to the holders of $257,000 and other expenses of $36,000.


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        We acquired Grupo Cinemex, S.A. de C.V. ("Cinemex") in January 2006 as part of a larger acquisition of Loews Cineplex Entertainment Corporation. We do not operate any other theatres in Mexico and have divested of the majority of our other investments in international theatres in Japan, Hong Kong, Spain, Portugal, Argentina, Brazil, Chile, and Uruguay over the past several years as part of our overall business strategy.

        On December 29, 2008, we sold all of our interests in Cinemex, which then operated 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area, to Entretenimiento GM de Mexico S.A. de C.V. ("Entretenimiento"). The purchase price received at the date of the sale and in accordance with the Stock Purchase Agreement was $248.1 million. During the year ended April 1, 2010, we received payments of $4.3 million for purchase price adjustments in respect of tax payments and refunds, and a working capital calculation and post closing adjustments. Additionally, we estimate that as of April 1, 2010, we are contractually entitled to receive an additional $8.8 million in purchase price adjustments in respect of tax payments and refunds. While we believe we are entitled to these amounts from Cinemex, the collection thereof will require litigation, which was initiated by us on April 30, 2010. Resolution could take place over a prolonged period. As a result of the litigation, we have established an allowance for doubtful accounts related to this receivable in the amount of $7.5 million as of April 1, 2010 and further directly charged off $1.4 million of certain amounts as


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uncollectible with an offsetting charge of $8.9 million recorded to loss on disposal included as a component of discontinued operations in fiscal 2010.

        The operations and cash flows of the Cinemex theatres have been eliminated from our ongoing operations as a result of the disposal transaction. We do not have any significant continuing involvement in the operations of the Cinemex theatres. The results of operations of the Cinemex theatres have been classified as discontinued operations for all periods presented.

        In May 2007, we disposed of our investment in Fandango, accounted for using the cost method, for total proceeds of $20.4 million, of which $18.0 million was received in May and September 2007 and $2.4 million was received in November 2008, and have recorded a gain on the sale, included in investment income, of approximately $16.0 million during fiscal 2008 and $2.4 million during fiscal 2009. In July 2007, we disposed of our investment in Hoyts General Cinemas South America ("HGCSA"), an entity that operated 17 theatres in South America, for total proceeds of approximately $28.7 million and recorded a gain on the sale, included in equity earnings of non-consolidated entities, of approximately $18.8 million.

Stock-Based Compensation

        We account for stock-based employee compensation arrangements using the fair value method. The fair value of each stock option was estimated on the grant date using the Black-Scholes option pricing model using the following assumptions: common stock value on the grant date, risk-free interest rate, expected term, expected volatility, and dividend yield. We have elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants as we do not have enough historical experience to provide a reasonable estimate. Compensation cost is calculated on the date of the grant and then amortized over the vesting period.

        We granted 38,876.7 options on December 23, 2004, 600 options on January 26, 2006, 15,980.5 options on March 6, 2009 and 4,786 options on May 28, 2009 to employees to acquire our common stock. The fair value of these options on their respective grant dates was $22.4 million, $138,000, $2.1 million, and $0.65 million, respectively. All of these options currently outstanding are equity classified.

        On July 8, 2010, we granted 6,377 options and 6,693 shares of restricted stock. The fair value of these options and restricted shares on their respective grant dates was $1.9 million and $5.0 million, respectively. All of these options currently outstanding are equity classified.


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        The common stock value used to estimate the fair value of each option on the December 23, 2004 grant date was based upon a contemporaneous third party arms-length transaction on December 23, 2004 in which we sold 769,350 shares of our common stock for $1,000 per share to unrelated parties. The common stock value used to estimate the fair value of each option on the March 6, 2009 grant date was based upon a contemporaneous valuation reflecting market conditions as of January 1, 2009, a purchase of 2,542 shares by Parent for $323.95 per share from our former Chief Executive Officer pursuant to his Separation and General Release Agreement dated February 23, 2009 and a sale of 385.862 shares by Parent to our current Chief Executive Officer pursuant to his Employment Agreement dated February 23, 2009 for $323.95 per share.

        On June 11, 2007, Marquee Merger Sub Inc., a wholly-owned subsidiary of AMC Entertainment Holdings, Inc., merged with and into Holdings, with Holdings continuing as the surviving corporation (the "holdco merger"). In connection with this, Parent adopted an amended and restated 2004 stock option plan (formerly known as the 2004 Stock Option Plan of Marquee Holdings Inc.). The option exercise price per share of $1,000 was adjusted to $491 pursuant to the antidilution provisions of the 2004 Stock Option Plan to give effect to the payment of a one time non-recurring dividend paid by Parent on June 15, 2007 of $652.8 million to the holders of its 1,282,750 shares of common stock. The Company determined that there was no incremental value transferred as a result of the modification and as a result, no additional compensation cost to recognize.


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        The common stock value of $339.59 per share used to estimate the fair value of each option on the May 28, 2009 grant date was based upon a valuation prepared by management on behalf of the Compensation Committee of the Board of Directors. Management chose not to obtain a contemporaneous valuation performed by an unrelated valuation specialist as management believed that the valuation obtained at January 1, 2009 and the subsequent stock sales and purchases were recent and could easily be updated and rolled forward without engaging a third party and incurring additional costs. Additionally, management considered that the number of options granted generated a relatively low amount of annual expense over 5 years ($130,100) and that any differences in other estimates of fair value would not be expected to materially impact the related annual expense. The common stock value was estimated based on current estimates of annual operating cash flows multiplied by the current average peer group multiple for similar publicly traded competitors of 6.7x less net indebtedness, plus the current fair value of our investment in NCM. Management compared the estimated stock value of $339.59 per share with the $323.95 value per share discussed above related to the March 6, 2009 option grant and noted the overall increase in value was primarily due the following:

March 6, 2009 grant value per share

 $323.95 
    

Decline in net indebtedness

  20.15 

Increase in value of investment in NCM

  37.10 

Increase due to peer group multiple

  47.89 

Decrease in annual operating cash flows

  (89.50)
    

May 28, 2009 grant value per share

 $339.59 
    

        The common stock value of $752 per share used to estimate the fair value of each option and restricted share on July 8, 2010 was based upon a contemporaneous valuation reflecting market conditions. The estimated grant date fair value for 5,354 shares of restricted stock (time vesting) and 1,339 shares of restricted stock (performance vesting, where the performance targets were established at the grant date following ASC 718-10-55-95) was based on $752 per shares and was $4.0 million and $1.0 million, respectively. The estimated grant date fair value of the options granted on 5,354 shares was $293.72 per share, or $1.6 million, and was determined using the Black-Scholes option-pricing model. The option exercise price was $752 per share, and the estimated fair value of the shares was


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$752, $752, resulting in $0 intrinsic value for the option grants. As of December 30, 2010, total unrecognized stock based compensation expense related to the restricted stock awards and options under both the 2010 Equity Incentive Plan and the 2004 Stock Option Plan was $6.7 million.

Critical Accounting Estimates

        Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

        Our significant accounting policies are discussed in note 1 to our audited consolidated financial statements included elsewhere in this prospectus. A listing of some of the more critical accounting estimates that we believe merit additional discussion and aid in better understanding and evaluating our reported financial results are as follows.


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        Impairment charges.    We evaluate goodwill and other indefinite lived intangible assets for impairment annually, or more frequently as specific events or circumstances dictate. Impairment for other long lived assets (including finite lived intangibles) is done whenever events or changes in circumstances indicate that these assets may not be fully recoverable. We have invested material amounts of capital in goodwill and other intangible assets in addition to other long lived assets. We operate in a very competitive business environment and our revenues are highly dependent on movie content supplied by film producers. In addition, it is not uncommon for us to closely monitor certain locations where operating performance may not meet our expectations. Because of these and other reasons over the past three years we have recorded material impairment charges primarily related to long lived assets. For the last three years, impairment charges were $3.8 million in fiscal 2010, $73.5 million in fiscal 2009 and $8.9 million in fiscal year 2008. There are a number of estimates and significant judgments that are made by management in performing these impairment evaluations. Such judgments and estimates include estimates of future revenues, cash flows, capital expenditures, and the cost of capital, among others. Management believes we have used reasonable and appropriate business judgments. These estimates determine whether an impairment has been incurred and also quantify the amount of any related impairment charge. Given the nature of our business and our recent history, future impairments are possible and they may be material based upon business conditions that are constantly changing.

        Our recorded goodwill was $1,913.9 million, $1,814.7 million and $1,814.7 million as of December 30, 2010, April 1, 2010 and April 2, 2009, respectively. We evaluate goodwill and our trademark for impairment annually during our fourth fiscal quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount. Our goodwill is recorded in our Theatrical Exhibition operating segment, which is also the reporting unit for purposes of evaluating recorded goodwill for impairment. If the carrying value of the reporting unit exceeds its fair value we are required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. We determine fair value by using an enterprise valuation methodology determined by applying multiples to cash flow estimates less net indebtedness, which we believe is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow estimates and appropriate multiples and discount rates


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to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates which fall under Level 3 within the fair value measurement hierarchy.

        We performed our annual goodwill impairment analysis during the fourth quarter of fiscal 2010. The estimated fair value of our Theatrical Exhibition reporting unit exceeded its carrying value by approximately $500.0 million, which we believe is substantial. While the fair value of our Theatrical Exhibition operations exceed the carrying value at the present time, small changes in certain assumptions can have a significant impact on fair value. Facts and circumstances could change, including further deterioration of general economic conditions, the number of motion pictures released by the studios, and the popularity of films supplied by our distributors. These and/or other factors could result in changes to the assumptions underlying the calculation of fair value which could result in future impairment of our remaining goodwill.

        We evaluated our enterprise value as of April 1, 2010 and April 2, 2009 based on a contemporaneous valuation reflecting market conditions. Two valuation approaches were utilized; the income approach and the market approach. The income approach provides an estimate of enterprise value by measuring estimated annual cash flows over a discrete projection period and applying a present value rate to the cash flows. The present value of the cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the business. The residual value represents the present value of the projected cash flows beyond the discrete projection period. The discount rate is determined using a rate of return deemed appropriate for the risk of achieving the projected cash flows. The market approach used publicly traded peer


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companies and reported transactions in the industry. Due to conditions and the relatively few sale transactions, the market approach was used to provide additional support for the value achieved in the income approach.

        Key rates used in the income approach for fiscal 2010 and 2009 follow:

Description
 Fiscal 2010 Fiscal 2009

Discount rate

 9.0% 10.0%

Market risk premium

 5.5% 6.0%

Hypothetical capital structure: Debt/Equity

 40%/60% 40%/60%

        The discount rate is an estimate of the weighted average cost of debt and equity capital. The required return on common equity was estimated by adding the risk-free required rate of return, the market risk premium (which is adjusted for the Company's estimated market volatility, or beta), and small stock premium. The discount rate used for fiscal 2010 was 9.0% and the discount rate used for fiscal 2009 was 10.0%. The lower discount rate was due to a number of factors, such as a decrease in corporate bond yields, decrease in betas, and decrease in market risk premiums, given current market conditions.

        The aggregate annual cash flows were determined based on management projections on a theatre-by-theatre basis further adjusted by non-theatre cash flows. The projections considered various factors including theatre lease terms, a reduction in attendance, and a reduction in capital investments in new theatres, given current market conditions and the resulting difficulty with obtaining contracts for new-builds. Cash flow estimates included in the analysis reflect our best estimate of the impact of the roll-out of digital projectors throughout our theatre circuit. Because we entered into a definitive agreement to acquire Kerasotes on December 9, 2009 and consummated the acquisition on May 24, 2010, the valuation study includes our projected cash flows for Kerasotes. Based on the seasonal nature of our business, fluctuations in attendance from period to period are expected and we do not believe that the results would significantly decrease our projections for the full fiscal year 2011, or impact our conclusions regarding goodwill impairment. The anticipated acceleration of depreciation of the 35mm equipment described above under "—Significant Events" does not have an impact on our estimation of


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fair value as depreciation does not impact our projected available cash flow. The expected increases in rent expense upon full deployment of the digital projection systems also described under "—Significant Events" were included in the cash flow projections used to estimate our fair value as a part of our fiscal 2010 annual goodwill impairment analysis, and had the impact of reducing the projected cash flows. Because Cinemex was sold in December 2008, cash flows for the fiscal 2009 study did not include results from Cinemex. Cash flows were projected through fiscal 2017 and assumed revenues would increase approximately 3.25% annually primarily due to projected increases in ticket and concession pricing. Costs and expenses, as a percentage of revenue are projected to decrease from 85.5% to 85.1% through fiscal 2017. The residual value is a function of the estimated cash flow for fiscal 2018 divided by a capitalization rate (discount rate less long-term growth rate of 2%) then discounted back to represent the present value of the cash flows beyond the discrete projection period. You should note that we utilized the foregoing assumptions about future revenues and costs and expenses for the limited purpose of performing our annual goodwill impairment analysis. These assumptions should not be viewed as "projections" or as representations by us as to expected future performance or results of operations, and you should not rely on them in deciding whether to invest in our common stock. See "Special Note Regarding Forward-Looking Statements."

        As the expectations of the average investor are not directly observable, the market risk premium must be inferred. One approach is to use the long-run historical arithmetic average premiums that investors have historically earned over and above the returns on long-term Treasury bonds. The premium obtained using the historical approach is sensitive to the time period over which one calculates the average. Depending on the time period chosen, the historical approach yields an average premium in a range of 5.0% to 8.0%.


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        There was no goodwill impairment as of December 30, 2010, April 1, 2010 or April 2, 2009.

        Film exhibition costs.    We have agreements with film companies who provide the content we make available to our customers. We are required to routinely make estimates and judgments about box office receipts for certain films and for films provided by specific film distributors in closing our books each period. These estimates are subject to adjustments based upon final settlements and determinations of final amounts due to our content providers that are typically based on a films box office receipts and how well it performs. In certain instances this evaluation is done on a film by film basis or in the aggregate by film production suppliers. We rely upon our industry experience and professional judgment in determining amounts to fairly record these obligations at any given point in time. The accrual made for film costs have historically been material and we expect they will continue to be so into the future. During fiscal years 2010, 2009 and 2008 our film exhibition costs totaled $928.6 million, $842.7 million and $860.2 million, respectively.

        Income and operating taxes.    Income and operating taxes are inherently difficult to estimate and record. This is due to the complex nature of the tax code which we use to file our tax returns and also because our returns are routinely subject to examination by government tax authorities, including federal, state and local officials. Most of these examinations take place a few years after we have filed our tax returns. Our tax audits in many instances raise questions regarding our tax filing positions, the timing and amount of deductions claimed and the allocation of income among various tax jurisdictions. Our federal and state tax operating loss carried forward of approximately $407.3 million and $846.5 million, respectively at April 1, 2010, require us to estimate the amount of carry forward losses that we can reasonably be expected to realize using feasible and prudent tax planning strategies that are available to us. Future changes in conditions and in the tax code may change these strategies and thus change the amount of carry forward losses that we expect to realize and the amount of valuation allowances we have recorded. Accordingly future reported results could be materially impacted by changes in tax matters, positions, rules and estimates and these changes could be material.


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        Gift card and packaged ticket revenues.    As noted in our significant accounting policies for revenue we defer 100% of these items and recognize these amounts as they are redeemed by customers or when we estimate the likelihood of future redemption is remote based upon applicable laws and regulations. A vast majority of gift cards are used or partially used. However a portion of the gift cards and packaged ticket sales we sell to our customers are not redeemed and not used in whole or in part. Non-redeemed or partially redeemed cards or packaged tickets are known as "breakage" in our industry. We are required to estimate breakage and do so based upon our historical redemption patterns. Our history indicates that if a card or packaged ticket is not used for 18 months or longer, its likelihood of being used past this 18 month period is remote. When it is determined that a future redemption is remote we record income for unused cards and tickets. We changed our estimate on when packaged tickets would be considered remote in terms of future redemption in fiscal 2008 and changed our estimate of redemption rates for packaged tickets in 2009. Prior to 2008 dates we had estimated that unused packaged tickets would not become remote in terms of future use until 24 months after they were issued. The change we made to shorten this period from 24 to 18 months and align redemption patterns for packaged tickets with our gift card program represented our best judgment based on continued development of specific historical redemption patterns in our gift cards at AMC. We believe this 18 month period continues to be appropriate and do not anticipate any changes to this policy given our historical experience. We monitor redemptions and if we were to determine changes in our redemption statistics had taken place we would be required to change the current 18 month time period to a period that was determined to be more appropriate. This could cause us to either accelerate or lengthen the amount of time a gift card or packaged ticket is outstanding prior to being remote in terms of any future redemption.


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Operating Results

        The following table sets forth our revenues, costs and expenses attributable to our operations. Reference is made to note 15 to the audited consolidated financial statements included elsewhere in this prospectus for additional information therein.


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        Both fiscal years 2010 and 2009 include 52 weeks and fiscal year 2008 includes 53 weeks.

(In thousands)
 39 Weeks
Ended
Dec. 30, 2010
 39 Weeks
Ended
Dec. 31, 2009
 52 Weeks
Ended
April 1, 2010
 52 Weeks
Ended
April 2, 2009
 53 Weeks
Ended
April 3, 2008
 

Revenues

                

Theatrical exhibition

                
 

Admissions

 $1,334,527 $1,281,145 $1,711,853 $1,580,328 $1,615,606 
 

Concessions

  515,709  487,908  646,716  626,251  648,330 
 

Other theatre

  47,208  44,493  59,170  58,908  69,108 
            
 

Total revenues

 $1,897,444 $1,813,546 $2,417,739 $2,265,487 $2,333,044 
            

Operating Costs and Expenses

                

Theatrical exhibition

                
 

Film exhibition costs

 $704,646 $696,704 $928,632 $842,656 $860,241 
 

Concession costs

  64,061  53,448  72,854  67,779  69,597 
 

Operating expense

  496,146  449,165  610,774  576,022  572,740 
 

Rent

  356,121  331,107  440,664  448,803  439,389 

General and administrative expense:

                
 

Merger, acquisition and transaction costs

  13,171  706  2,280  650  3,739 
 

Management fee

  3,750  3,750  5,000  5,000  5,000 
 

Other

  41,250  40,768  57,858  53,628  39,102 

Depreciation and amortization

  156,895  142,949  188,342  201,413  222,111 

Impairment of long-lived assets

      3,765  73,547  8,933 
            
 

Operating costs and expenses

 $1,836,040 $1,718,597 $2,310,169 $2,269,498 $2,220,852 
            

Operating Data (at period end—unaudited)

                
 

Screen additions

  55  6  6  83  136 
 

Screen acquisitions

  960         
 

Screen dispositions

  325  90  105  77  196 
 

Average screens—continuing operations(1)

  5,080  4,501  4,485  4,545  4,561 
 

Number of screens operated

  5,203  4,528  4,513  4,612  4,606 
 

Number of theatres operated

  361  299  297  307  309 
 

Screens per theatre

  14.4  15.1  15.2  15.0  14.9 
 

Attendance (in thousands)—continuing operations(1)

  152,895  152,147  200,285  196,184  207,603 

(1)
Includes consolidated theatres only.

        We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as earnings (loss) from continuing operations plus (i) income tax provisions, (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.


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Reconciliation of Adjusted EBITDA
(unaudited)

(In thousands)
 39 Weeks
Ended
Dec. 30, 2010
 39 Weeks
Ended
Dec. 31, 2009
 52 Weeks
Ended
April 1, 2010
 52 Weeks
Ended
April 2, 2009
 53 Weeks
Ended
April 3, 2008
 

Earnings (loss) from continuing operations

 $36,303 $15,845 $77,324 $(90,900)$41,643 

Plus:

                
 

Income tax provision (benefit)

  2,550    (68,800) 5,800  12,620 
 

Interest expense

  105,416  97,698  132,110  121,747  137,662 
 

Depreciation and amortization

  156,895  142,949  188,342  201,413  222,111 
 

Impairment of long-lived assets

      3,765  73,547  8,933 
 

Certain operating expenses(1)

  94  3,986  6,099  1,517  (16,248)
 

Equity in earnings of non-consolidated entities

  (17,057) (18,127) (30,300) (24,823) (43,019)
 

Gain on NCM, Inc. stock sale

  (64,648)           
 

Investment income

  (309) (167) (205) (1,696) (23,782)
 

Other (income) expense(2)

  11,044  11,276  11,276    (1,246)
 

General and administrative expense:

                
  

Merger, acquisition and transaction costs

  13,171  706  2,280  650  3,739 
  

Management fee

  3,750  3,750  5,000  5,000  5,000 
  

Stock-based compensation expense

  1,020  1,248  1,384  2,622  207 
            

Adjusted EBITDA(3)(4)

 $248,229 $259,164 $328,275 $294,877 $347,620 
            

(1)
Amounts represent preopening expense, theatre and other closure expense (income) and disposition of assets and other gains included in operating expenses.

(2)
Other expense for fiscal 2011 is comprised of the loss on extinguishment of indebtedness related to the redemption of our 11% senior notes due 2016 of $7.6 million and expense related to the modification of the senior secured credit facility of $3.4 million. Other expense for fiscal 2010 is comprised of the loss on extinguishment of indebtedness related to the cash tender offer for our 85/8% senior notes due 2012 conducted in May 2009 and remaining redemption with respect to such notes. Other income for fiscal 2008 is comprised of recoveries for property loss related to Hurricane Katrina.

(3)
Does not reflect reduction in costs we anticipate that we will achieve relating to modifications made to our RealD and IMAX agreements in fiscal 2011. Had the modifications to the RealD and IMAX agreements been in place at the beginning of our fiscal 2010, we would have reduced our operating costs by $8.6 million. Also does not reflect the anticipated synergies and cost savings related to the Kerasotes Acquisition that we expect to derive from increased ticket and concession revenues at the former Kerasotes locations as a result of moving to our operating practices, decreased costs for newspaper advertising and concessions for those locations, and general and administrative expense savings, particularly with respect to the consolidation of corporate overhead functions and elimination of redundancies. Based on the cost savings initiatives we have implemented since the Kerasotes Acquisition, which include reductions in salaries, reductions in newspaper advertising costs, savings achieved in respect of concession costs and theatre operating expenses, as well as reduced rent expense, we estimate that we will achieve annual savings of $12.8 million.

(4)
The acquisition of Kerasotes contributed approximately $26.6 million in Adjusted EBITDA during the thirty-nine weeks ended December 30, 2010.

        Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net earnings (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides


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management and investors with additional information to measure our performance and liquidity, estimate our value and evaluate our ability to service debt. In addition, we use Adjusted EBITDA for incentive compensation purposes.

        Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. For example, Adjusted EBITDA:

For the 39 Weeks Ended December 30, 2010 and December 31, 2009

        Revenues.    Total revenues increased 4.6%, or $83.9 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. This increase included approximately $168.3 million of additional revenues resulting from the acquisition of Kerasotes. Admissions revenues increased 4.2%, or $53.4 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, due to a 3.7% increase in average ticket prices and a 0.5% increase in attendance. The increase in attendance and increase in admissions revenues includes the increased attendance and admissions revenues of approximately $111.0 million from Kerasotes. The increase in average ticket price was primarily due to an increase in attendance from 3D film product for which we are able to charge more per ticket than for a standard 2D film. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2010) decreased 3.1%, or $38.7 million, during the thirty-nine weeks ended December 30, 2010 from the comparable period last year. Attendance was negatively impacted by less favorable film product during the thirty-nine weeks ended December 30, 2010 as compared to the thirty-nine weeks ended December 31, 2009. Concessions revenues increased 5.7%, or $27.8 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, due to a 5.0% increase in average concessions per patron and the increase in attendance, which was primarily due to the acquisition of Kerasotes. The increase in concession revenues includes approximately $54.6 million from Kerasotes. The increase in concessions per patron includes the impact of concession price and size increases placed in effect during the third quarter of fiscal 2010 and the second and third quarters of fiscal 2011, and a shift in product mix to higher priced items. Other theatre revenues increased 6.1%, or $2.7 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, primarily due to increases in advertising revenues, package ticket sales, and theatre rentals. The increase in other theatre revenues includes $2.7 million from Kerasotes.

        Operating Costs and Expenses.    Operating costs and expenses increased 6.8%, or $117.4 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. The effect of the acquisition of Kerasotes was an increase in operating costs and expenses of approximately $174.9 million. Film exhibition costs increased 1.1%, or $7.9 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31,


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2009 due to the increase in admissions revenues, partially offset by the decrease in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were 52.8% in the current period and 54.4% in the prior year period. Concession costs increased 19.9%, or $10.6 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009 due to an increase in concession costs as a percentage of concession revenues and the increase in concession revenues. As a percentage of concessions revenues, concession costs were 12.4% in the current period compared with 11.0% in the prior period, primarily due to the concession price and size increases, a shift in product mix from higher to lower margin items, and concession offers targeting attendance growth. As a percentage of revenues, operating expense was 26.1% in the current period as compared to 24.8% in the prior period. Gains were recorded on disposition of assets during the thirty-nine weeks ended December 30, 2010 which reduced operating expenses by approximately $10.3 million, primarily due to the sale of a divested legacy AMC theatre in conjunction with the acquisition of Kerasotes. Rent expense increased 7.6%, or $25.0 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, primarily due to increased rent as a result of the acquisition of Kerasotes of approximately $30.4 million.

        We continually monitor the performance of our theatres, and factors such as changing consumer preferences for filmed entertainment and our inability to sublease or utilize vacant space could negatively impact operating results and result in future screen closures, abandonments, sales, dispositions and significant theatre and other closure charges prior to expiration of underlying lease agreements.

General and Administrative Expense:

        Merger, Acquisition and Transaction Costs.    Merger, acquisition and transaction costs increased $12.5 million during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. Current year costs primarily consist of costs related to the acquisition of Kerasotes.

        Management Fees.    Management fees were unchanged during the thirty-nine weeks ended December 30, 2010. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 1.2%, or $482,000, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009 primarily due to increases in salaries expense and estimated expense related to our complete withdrawal from a union-sponsored pension plan of $2.7 million, partially offset by decreases in incentive compensation expense related to declines in operating performance. During the thirty-nine weeks ended December 31, 2009, we recorded $1.4 million of expense related to a complete withdrawal from a union-sponsored pension plan.

        Depreciation and Amortization.    Depreciation and amortization increased 9.8%, or $13.9 million, compared to the prior period. Increases in depreciation and amortization expense during the thirty-nine weeks ended December 30, 2010 are the result of increased net book value of theatre assets primarily due to the acquisition of Kerasotes, which contributed $20.5 million of depreciation expense, partially offset by decreases in the declining net book value of legacy theatre assets.

        Other Expense (Income).    Other expense (income) includes $(11.8) million and $(11.5) million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Other expense (income) includes a loss on extinguishment of indebtedness related to the redemption of our 11% Senior Subordinated Notes due 2016 of $7.6 million and expense related to the


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modification of our senior secured credit facility term loan due 2013 of $3.0 million, and senior secured credit facility revolver of $367,000. Other expense (income) includes a loss of $11.3 million related to the redemption of our 85/8% Senior Notes due 2012 during the thirty-nine weeks ended December 31, 2009.

        Interest Expense.    Interest expense increased 7.9%, or $7.7 million, primarily due to an increase in interest expense related to the issuance of our 8.75% Senior Notes due 2019 (the "Notes due 2019") on June 9, 2009 and the original notes on December 15, 2010.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $17.1 million in the current period compared to $18.1 million in the prior period. Equity in earnings related to our investment in National CineMedia, LLC were $23.1 million and $20.7 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Equity in losses related to our investment in Digital Cinema Implementation Partners, LLC ("DCIP") were $5.4 million and $2.2 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively.

        Gain on NCM, Inc. Stock Sale.    The gain on NCM, Inc. shares of common stock sold during the thirty-nine weeks ended December 30, 2010 was $64.6 million. See Note 6—"Investments" to our unaudited consolidated financial statements included elsewhere in this prospectus for further information.

        Investment Income.    Investment income was $309,000 for the thirty-nine weeks ended December 30, 2010 compared to $167,000 for the thirty-nine weeks ended December 31, 2009.

        Income Tax Provision.    The income tax provision from continuing operations was $2.6 million for the thirty-nine weeks ended December 30, 2010 and $0 for the thirty-nine weeks ended December 31, 2009. See Note 8—"Income Taxes" to our unaudited consolidated financial statements included elsewhere in this prospectus for further information.

        Earnings from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations for all periods presented.

        Net Earnings.    Net earnings were $36.8 million and $16.9 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Net earnings during the thirty-nine weeks ended December 30, 2010 were positively impacted by a gain on sale of NCM, Inc. shares of $64.6 million and a gain on disposition of assets of approximately $10.3 million, and negatively impacted by merger and acquisition costs of approximately $13.2 million primarily due to the acquisition of Kerasotes, loss on extinguishment and modification of indebtedness of $11.0 million and increased interest expense of $7.7 million. Net earnings during the thirty-nine weeks ended December 31, 2009 were negatively impacted by an expense of $11.3 million related to the redemption of our 85/8% Senior Notes due 2012.

For the Year Ended April 1, 2010 and April 2, 2009

        Revenues.    Total revenues increased 6.7%, or $152.3 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009. Admissions revenues increased 8.3%, or $131.5 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009, due to a 6.1% increase in average ticket prices and a 2.1% increase in attendance. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2009) increased 8.5%, or $131.5 million, during the year ended April 1, 2010 from the comparable period last year. The increase in average ticket price was primarily due to increases in attendance from IMAX and 3D film product where we are able to charge more per ticket than for a standard 2D film, as well as our practice of periodically reviewing


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ticket prices and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Attendance was positively impacted by more favorable 3D and IMAX film product during the year ended April 1, 2010 as compared to the year ended April 2, 2009, as well as by an increase in the number of IMAX and 3D screens that we operate. Concessions revenues increased 3.3%, or $20.5 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009, due primarily to the increase in attendance. Other theatre revenues increased 0.4%, or $262,000, during the year ended April 1, 2010 compared to the year ended April 2, 2009, primarily due to increases in on-line ticket fees, partially offset by a reduction in theatre rentals.

        Operating costs and expenses.    Operating costs and expenses increased 1.8%, or $40.7 million during the year ended April 1, 2010 compared to the year ended April 2, 2009. Film exhibition costs increased 10.2%, or $86.0 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due to the increase in admissions revenues and the increase in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were 54.2% in the current period and 53.3% in the prior year period primarily due to an increase in admissions revenues on higher grossing films, which typically carry a higher film cost as a percentage of admissions revenues. Concession costs increased 7.5%, or $5.1 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due to an increase in concession costs as a percentage of concessions revenues and the increase in concession revenues. As a percentage of concessions revenues, concession costs were 11.3% in the current period compared with 10.8% in the prior period. As a percentage of revenues, operating expense was 25.3% in the current period as compared to 25.4% in the prior period. Rent expense decreased 1.8%, or $8.1 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 primarily due to rent reductions from landlords related to their failure to meet co-tenancy provisions in certain lease agreements and renegotiations on more favorable terms. Rent reductions related to co-tenancy may not continue should our landlords meet the related co-tenancy provisions in the future.

        Merger, acquisition and transaction costs.    Merger, acquisition and transaction costs increased $1.6 million during the year ended April 1, 2010 compared to the year ended April 2, 2009 primarily due to costs incurred related to the Kerasotes acquisition during the current year.

        Management fees.    Management fees were unchanged during the year ended April 1, 2010. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 7.9%, or $4.2 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due primarily to increases in annual incentive compensation of approximately $12.0 million based on improved operating performance and increases in net periodic pension expense of $4.7 million, partially offset by decreases in cash severance payments of $7.0 million to our former Chief Executive Officer made in the prior year and a decrease in expense related to a union-sponsored pension plan of $3.9 million. During the year ended April 2, 2009, we recorded $5.3 million of expense related to our partial withdrawal liability for a union-sponsored pension plan. During the year ended April 1, 2010, we recorded $1.4 million of expense related to our estimated complete withdrawal from the union-sponsored pension plan.

        Depreciation and Amortization.    Depreciation and amortization decreased 6.5%, or $13.1 million, compared to the prior year due primarily to the impairment of long-lived assets in fiscal 2009.

        Impairment of Long-Lived Assets.    During the year ended April 1, 2010, we recognized non-cash impairment losses of $3.8 million related to theatre fixed assets and real estate recorded in other long-term assets. We recognized an impairment loss of $2.3 million on five theatres with 41 screens (in


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Florida, California, New York, Utah and Maryland). Of the theatre charge, $2.3 million was related to property, net. We also adjusted the carrying value of undeveloped real estate assets based on a recent appraisal which resulted in an impairment charge of $1.4 million. During the year ended April 2, 2009, we recognized non-cash impairment losses of $73.5 million related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65.6 million on 34 theatres with 520 screens (in Arizona, California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge, $1.4 million was related to intangible assets, net, and $64.3 million was related to property, net. We recognized an impairment loss on abandonment of internal use software, recorded in other long-term assets of $7.1 million when management determined that the carrying value would not be realized through future use. We adjusted the carrying value of our assets held for sale to reflect the subsequent sales proceeds received in January 2009 and declines in fair value, which resulted in impairment charges of $786,000.

        Other (Income) Expense.    Other (income) expense includes $13.6 million and $14.1 million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the year ended April 1, 2010 and April 2, 2009, respectively. Other (income) expense includes loss on extinguishment of indebtedness of $11.3 million related to the Cash Tender Offer during the year ended April 1, 2010.

        Interest Expense.    Interest expense increased 8.5%, or $10.4 million, primarily due to an increase in interest expense related to the issuance of the Notes due 2019 partially offset by a decrease in interest rates on the senior secured credit facility and extinguishment of debt from the Cash Tender Offer.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $30.3 million in the current year compared to $24.8 million in the prior year. Equity in earnings related to our investment in NCM LLC were $34.4 million and $27.7 million for the year ended April 1, 2010 and April 2, 2009, respectively. We recognized an impairment loss of $2.7 million related to an equity method investment in one U.S. motion picture theatre during the year ended April 2, 2009.

        Investment Income.    Investment income was $205,000 for the year ended April 1, 2010 compared to $1.7 million for the year ended April 2, 2009. The year ended April 2, 2009 includes a gain of $2.4 million from the May 2008 sale of our investment in Fandango, which was the result of receiving the final distribution from the general claims escrow account. During the year ended April 2, 2009, we recognized an impairment loss of $1.5 million related to unrealized losses previously recorded in accumulated other comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical cost to be other than temporary.

        Income Tax Provision (Benefit).    The income tax provision (benefit) from continuing operations was a benefit of $68.8 million for the year ended April 1, 2010 and a provision of $5.8 million for the year ended April 2, 2009. Our income tax benefit in fiscal 2010 includes the release of $71.8 million of valuation allowance for deferred tax assets. See note 9 to the audited consolidated financial statements included elsewhere in this prospectus for our effective income tax rate reconciliation.

        Earnings (Loss) from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations for all years presented and include bad debt expense related to amounts due from Cinemex of $8.9 million for the year ended April 1, 2010. See note 2 to the audited consolidated financial statements included elsewhere in this prospectus for the components of the earnings from discontinued operations.


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        Net Earnings (Loss).    Net earnings (loss) were $69.8 million and $(81.2) million for the year ended April 1, 2010 and April 2, 2009, respectively. Net earnings were favorably impacted by a $71.8 million reduction in the valuation allowance for deferred income tax assets. Net earnings during the year ended April 1, 2010 were negatively impacted by an expense of $11.3 million related to the Cash Tender Offer and by losses of $8.9 million related to the allowance for doubtful accounts and direct write-offs of amounts due from Cinemex included in discontinued operations. Net loss for the year ended April 2, 2009 was primarily due to impairment charges of $73.5 million.

For the Year Ended April 2, 2009 and April 3, 2008

        Revenues.    Total revenues decreased 2.9%, or $67.6 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. Fiscal year 2009 includes 52 weeks and fiscal year 2008 includes 53 weeks which we estimate contributed approximately $30.0 million to the decline in our total revenues. Admissions revenues decreased 2.2%, or $35.3 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008, due to a 5.5% decrease in attendance partially offset by a 3.6% increase in average ticket price. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2008) decreased 4.1%, or $63.8 million, during the year ended April 2, 2009 from the comparable period last year. Based upon available industry sources, box office revenues of our comparable theatres slightly underperformed the overall industry comparable theatres in the markets where we operate. We believe our underperformance is primarily the result of changes in distribution patterns and an increase in the number of prints released in our markets. While our box office performance on such films was in line with our expectations, the increase in prints in our market diluted our overall performance against the industry. Concessions revenues decreased 3.4%, or $22.1 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in attendance partially offset by a 2.2% increase in average concessions per patron. Other theatre revenues decreased 14.8%, or $10.2 million, during the year ended April 2, 2009 compared to year ended April 3, 2008, primarily due to a decrease in advertising revenues. See note 1 to the audited consolidated financial statements included elsewhere in this prospectus for discussion of the change in estimate for revenues recorded during the years ended April 2, 2009 and April 3, 2008.

        Operating costs and expenses.    Operating costs and expenses increased 2.2%, or $48.6 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. Film exhibition costs decreased 2.0%, or $17.6 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in admissions revenues partially offset by an increase in film exhibition costs as a percentage of admission revenues. As a percentage of admissions revenues, film exhibition costs were 53.3% in the current year as compared with 53.2% in the prior year. Concession costs decreased 2.6%, or $1.8 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in concession revenues partially offset by an increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.8% in the current year and 10.7% in the prior year. As a percentage of revenues, operating expense was 25.4% in the current year and 24.5% in the prior year. Operating expense in the current and prior year includes $2.3 million and $21.0 million of theatre and other closure income, respectively, due primarily to lease terminations negotiated on favorable terms. Rent expense increased 2.1%, or $9.4 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due primarily to the opening of new theatres. Preopening expense decreased $1.7 million during the year ended April 2, 2009 due to a decline in screen additions.


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        Merger, acquisition and transaction costs.    Merger, acquisition and transaction costs decreased $3.1 million during the year ended April 2, 2009 compared to the year ended April 3, 2008. Prior year costs are primarily comprised of professional and consulting expenses related to a proposed initial public offering of common stock that was withdrawn on June 19, 2007 and preacquisition expenses for casualty insurance losses that occurred prior to the merger with Loews.

        Management fees.    Management fees were unchanged during the year ended April 2, 2009. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 37.1%, or $14.5 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. The increase in other general and administrative expenses is primarily due to a cash severance payment of $7.0 million to our former Chief Executive Officer and an expense of $5.3 million related to our partial withdrawal liability for a union-sponsored pension plan, partially offset by a pension curtailment gain of $1.1 million as a result of the retirement of our former chief executive officer.

        Depreciation and Amortization.    Depreciation and amortization decreased 9.3%, or $20.7 million, compared to the prior year due primarily to certain intangible assets becoming fully amortized, the closing of theatres and impairment of long-lived assets.

        Impairment of Long-Lived Assets.    During fiscal 2009 we recognized non-cash impairment losses of $73.5 million related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65.6 million on 34 theatres with 520 screens (in Arizona, California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge, $1.4 million was related to intangible assets, net, and $64.3 million was related to property, net. We recognized an impairment loss on abandonment of internal use software, recorded in other long-term assets of $7.1 million when management determined that the carrying value would not be realized through future use, we adjusted the carrying value of our assets held for sale to reflect the sales proceeds received in fiscal 2009 and declines in fair value, which resulted in impairment charges of $786,000. During fiscal 2008 we recognized a non-cash impairment loss of $8.9 million that reduced property, net on 17 theatres with 176 screens (in New York, Maryland, Indiana, Illinois, Nebraska, Oklahoma, California, Arkansas, Pennsylvania, Washington, and the District of Columbia).

        Other Income.    Other income includes $14.1 million and $11.3 million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the year ended April 2, 2009 and April 3, 2008, respectively. Other income includes insurance recoveries related to Hurricane Katrina of $1.2 million for property losses in excess of property carrying cost and $397,000 for business interruption during the year ended April 3, 2008.

        Interest Expense.    Interest expense decreased 11.6%, or $15.9 million, primarily due to decreased interest rates on the senior secured credit facility.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $24.8 million in the current year compared to $43.0 million in the prior year. Equity in earnings related to our investment in NCM LLC were $27.7 million and $22.2 million for the year ended April 2, 2009 and April 3, 2008, respectively. Equity in earnings related to HGCSA was $18.7 million during the year ended April 3, 2008 and includes the gain related to the disposition of $18.8 million. We recognized an impairment loss of $2.7 million related to an equity method investment in one U.S. motion picture theatre during the year ended April 2, 2009.


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        Investment Income.    Investment income was $1.7 million for the year ended April 2, 2009 compared to $23.8 million for the year ended April 3, 2008. The year ended April 2, 2009 and April 3, 2008 include a gain on the sale of our investment in Fandango of $2.4 million and $16.0 million, respectively. Interest income decreased $6.6 million from the prior year primarily due to decreases in temporary investments and decreases in rates of interest earned on temporary investments. During the year ended April 2, 2009, we recognized an impairment loss of $1.5 million related to unrealized losses previously recorded in accumulated other comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical cost to be other than temporary.

        Income Tax Provision (Benefit).    The income tax provision from continuing operations was $5.8 million for the year ended April 2, 2009 and $12.6 million for the year ended April 3, 2008 with the reduction due primarily to the decrease in earnings from continuing operations before income taxes. See note 9 to the audited consolidated financial statements included elsewhere in this prospectus.

        Earnings from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations, and information presented for all years reflects the new classification. See note 2 to the audited consolidated financial statements included elsewhere in this prospectus for the components of the earnings from discontinued operations.

        Net Earnings (loss).    Net earnings (loss) were $(81.2) million and $43.4 million for the year ended April 2, 2009 and April 3, 2008, respectively. The decrease in net earnings was primarily due to impairment charges of $73.5 million in the current year and the recognition of a gain on the disposition of HGCSA of $18.8 million, a gain on the disposition of Fandango of $16.0 million and theatre and other closure income of $21.0 million which were recorded in the prior year.

Liquidity and Capital Resources

        Our consolidated revenues are primarily collected in cash, principally through box office admissions and theatre concessions sales. We have an operating "float" which partially finances our operations and which generally permits us to maintain a smaller amount of working capital capacity. This float exists because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues. Film distributors generally release the films which they anticipate will be the most successful during the summer and holiday seasons. Consequently, we typically generate higher revenues during such periods.

        We fund the costs of constructing, maintaining and remodeling new theatres through existing cash balances, cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

        We believe that cash generated from operations and existing cash and equivalents will be sufficient to fund operations and planned capital expenditures and acquisitions currently and for at least the next 12 months and enable us to maintain compliance with covenants related to the senior secured credit facility and our 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"), the 2016 Senior Subordinated Notes, the Notes due 2019 and the notes. We are considering various options with respect to the utilization of cash and equivalents on hand in excess of our anticipated operating needs. Such options might include, but are not limited to, acquisitions of theatres or theatre companies, repayment of our corporate borrowings and payment of dividends.


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Cash Flows from Operating Activities

        Cash flows provided by operating activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $114.8 million and $246.4 million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. The decrease in cash flows provided by operating activities for the thirty-nine weeks ended December 30, 2010 was primarily due to an increase in payments on accounts payables and accrued expenses and other liabilities, including payments of amounts acquired in the Kerasotes acquisition as well as payments made for merger, acquisition and transaction costs in connection with the Kerasotes acquisition. Cash flows during the thirty-nine weeks ended December 30, 2010 include third party modification fees of $2.9 million related to the modification of our senior secured credit facility, which reduced our cash flows from operating activities. Cash flows during the thirty-nine weeks ended December 31, 2009 include consent fee payments of $7.4 million related to the redemption of our 85/8% Senior Notes due 2012, which reduced our cash flows from operating activities. We had working capital surplus as of December 30, 2010 and April 1, 2010 of $103.8 million and $143.2 million, respectively. Working capital includes $165.6 million and $125.8 million of deferred revenues as of December 30, 2010 and April 1, 2010, respectively. We have the ability to borrow against our senior secured credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and could incur indebtedness of $192.5 million on our senior secured credit facility to meet these obligations as of December 30, 2010.

        Cash flows provided by operating activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $258.0 million, $200.7 million and $220.2 million during the years ended April 1, 2010, April 2, 2009 and April 3, 2008 respectively. The increase in operating cash flows during the year ended April 1, 2010 is primarily due to an increase in accrued expenses and other liabilities as a result of increases in accrued interest and annual incentive compensation and the increase in attendance. The decrease in operating cash flows during the year ended April 2, 2009 is primarily due to the decrease in net earnings, which was partially offset by an increase in non-cash impairment charges. We had working capital surplus as of April 1, 2010 and April 2, 2009 of $143.2 million and $259.3 million, respectively. Working capital includes $125.8 million and $121.6 million of deferred revenue as of April 1, 2010 and April 2, 2009, respectively.

Cash Flows from Investing Activities

        Cash flows used in investing activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $198.3 million and $59.7 million, during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Cash outflows from investing activities include capital expenditures of $84.1 million and $59.5 million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Our capital expenditures primarily consisted of maintaining our theatre circuit, technology upgrades, strategic initiatives and remodels. We expect that our gross capital expenditures cash outflows will be approximately $140.0 million to $150.0 million for fiscal 2011.

        During the thirty-nine weeks ended December 30, 2010, we paid $280.6 million for the purchase of Kerasotes theatres at closing, net of cash acquired. The purchase included working capital and other purchase price adjustments as described in the Unit Purchase Agreement.

        During the thirty-nine weeks ended December 30, 2010, we received net proceeds of $102.2 million from the sale of 6,655,193 shares of common stock of NCM, Inc. for $16.00 per share and reduced our related investment in NCM by $37.6 million, the average carrying amount of the shares sold.

        We received $57.4 million in cash proceeds from the sale of certain theatres required to be divested in connection with the Kerasotes acquisition during the thirty-nine weeks ended December 30, 2010 and received $991,000 for the sale of real estate acquired from Kerasotes.


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        Cash provided by (used in) investing activities, as reflected in the consolidated statement of cash flows included elsewhere in this prospectus were $(96.3) million, $100.9 million and $(139.4) million during the years ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively. On March 26, 2010, we acquired 117 digital projection systems from third party lessors for $6.8 million and sold these systems together with seven digital projectors that we owned to DCIP for cash proceeds of $6.6 million on the same day. Cash outflows from investing activities include capital expenditures of $97.0 million during the year ended April 1, 2010.

        Cash flows for the year ended April 2, 2009 include proceeds from the sale of Cinemex of $224.4 million and proceeds from the sale of Fandango of $2.4 million. We have received an additional $4.3 million in purchase price adjustments from Cinemex in respect of tax payments and refunds and a working capital calculation and post closing adjustments during the year ended April 1, 2010. Cash flows for the year ended April 3, 2008 include proceeds from the disposal of HGCSA and Fandango of $28.7 million and $18.0 million, respectively.

        We fund the costs of constructing new theatres using existing cash balances; cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

Cash Flows from Financing Activities

        Cash flows provided by (used in) financing activities, as reflected in the consolidated statement of cash flows included elsewhere in this prospectus, were $274.8 million and $(187.8) million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively.

        During the thirty-nine weeks ended December 30, 2010 and December 31, 2009, we made dividend payments of $200.2 million and $315.4 million to our stockholder, Holdings, and Holdings made dividend payments to its stockholder, Parent, totaling $669,000 and $300.7 million, respectively, which was treated as a reduction of additional paid-in capital.

        Proceeds from the issuance of the notes were $600.0 million and deferred financing costs paid related to the issuance of the 9.75% Senior Notes due 2020 were $12.0 million during the thirty-nine weeks ended December 30, 2010. In addition, deferred financing costs paid related to the senior secured credit facility were $1.7 million. During the thirty-nine weeks ended December 31, 2009, proceeds from the issuance of the 8.75% Senior Notes due 2019 were $585.5 million and deferred financing costs paid related to the issuance of the 8.75% Senior Notes due 2019 were $16.3 million.

        During the thirty-nine weeks ended December 30, 2010, we made principal payments of $95.1 million to repurchase a portion of our 11% Senior Subordinated Notes due 2016. In addition, we made payments for tender offer and consent consideration of $5.8 million for our Notes due 2016. We intend to redeem the remaining $229.9 million aggregate principal amount outstanding Notes due 2016 at a price of $1,055 per $1,000 principal amount on or after February 1, 2011 in accordance with the terms of the indenture. During the thirty-nine weeks ended December 31, 2009, we made principal payments of $250.0 million in connection with the redemption of our 85/8% Senior Notes due 2012 and repaid $185.0 million of borrowings under our revolving credit facility.

        During fiscal 2010, we used cash on hand to pay two dividend distributions to our stockholder, Holdings in an aggregate amount of $330.0 million, and Holdings made two dividend payments to its stockholder, Parent, totaling $300.9 million, which were treated as reductions of additional paid-in capital. Holdings used the available funds to make cash interest payments on its 12% Senior Discount Notes due 2014, to pay corporate overhead expenses incurred in the ordinary course of business and to


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pay a dividend to Parent. Parent made payments to purchase term loans and reduced the principal balance of its parent term loan facility from $466.9 million to $193.3 million with a portion of the dividend proceeds. During fiscal 2009, we paid two cash dividends totaling $36.0 million to Holdings and borrowed $185.0 million under our senior secured credit facility. During fiscal 2008, we made principal payments of $26.3 million on our corporate borrowings, capital and financing lease obligation, and mortgage obligations. We also paid two cash dividends to Holdings totaling $293.6 million.

        Concurrently with the closing of the merger of Loews with AMCE, AMCE entered into a senior secured credit facility, which is with a syndicate of banks and other financial institutions and provides financing of up to $850.0 million, consisting of a $650.0 million term loan facility with a maturity date of January 26, 2013 and a $200.0 million revolving credit facility that matures in 2012. The revolving credit facility includes borrowing capacity for available letters of credit and for swingline borrowings on same-day notice.

        Borrowings under our senior secured credit facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. The current applicable margin for borrowings under the revolving credit facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings, and the current applicable margin for borrowings under the term loan facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings. The applicable margin for such borrowings may be reduced, subject to attaining certain leverage ratios. In addition to paying interest on outstanding principal under the senior secured credit facility, we are required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.25%. We also pay customary letter of credit fees. We may voluntarily repay outstanding loans under the senior secured credit facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. We are required to repay $1.6 million of the term loan quarterly, beginning March 30, 2006 through September 30, 2012, with any remaining balance due on January 26, 2013.

        On February 24, 2004, AMCE sold $300 million aggregate principal amount of the Notes due 2014. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes due 2014 are redeemable at our option, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date.

        On January 26, 2006, AMCE sold $325.0 million aggregate principal amount of the 2016 Senior Subordinated Notes. The 2016 Senior Subordinated Notes bear interest at the rate of 11% per annum, payable February 1 and August 1 of each year. The 2016 Senior Subordinated Notes are redeemable at our option, in whole or in part, at any time on or after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2014, plus in each case interest accrued to the redemption date.

        On June 9, 2009, AMCE issued $600.0 million aggregate principal amount of Notes due 2019. Proceeds from the issuance of the notes were $585.5 million and were used to redeem the then outstanding $250.0 million aggregate principal amount of the Fixed Notes due 2012. Deferred financing costs paid related to the issuance of the notes were $16.3 million. The Notes due 2019 bear interest at the rate of 8.75% per annum, payable in June and December of each year. The Notes due 2019 are redeemable at our option, in whole or in part, at any time on or after June 1, 2014 at 104.375% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 1, 2017, plus interest accrued to the redemption date.

        On December 15, 2010, we completed the offering of $600.0 million aggregate principal amount of our 9.75% Senior Subordinated Notes due 2020. The notes mature on December 1, 2020, pursuant to an indenture dated as of December 15, 2010, among the Issuer, the Guarantors named therein and


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U.S. Bank National Association, as trustee (the "Indenture"). The Indenture provides that the notes are our general unsecured senior subordinated obligations and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of our existing and future domestic restricted subsidiaries that guarantee its other indebtedness. We will pay interest on the notes at 9.75% per annum, semi-annually in arrears on June 1 and December 1, commencing on June 1, 2011. We may redeem some or all of the notes at any time on or after December 1, 2015, at the redemption prices set forth in the Indenture. We may redeem the notes on or after December 1, 2018 at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to the redemption date. In addition, we may redeem up to 35% of the aggregate principal amount of the notes using net proceeds from certain equity offerings completed prior to December 1, 2013.

        On December 15, 2010, we entered into a third amendment to our senior secured credit facility dated as of January 26, 2006 to, among other things: (i) extend the maturity of the term loans held by accepting lenders and to increase the interest rate with respect to such term loans, (ii) replace our existing revolving credit facility (with higher interest rates and a longer maturity than the existing revolving credit facility), and (iii) amend certain of the existing covenants therein. The following are key terms of the amendment:

        As of December 30, 2010, we were in compliance with all financial covenants relating to our senior secured credit facility, the Notes due 2014, the 2016 Senior Subordinated Notes, the Notes due 2019 and the notes.

Contractual Obligations

        Minimum annual cash payments required under existing capital and financing lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating leases, furniture, fixtures, and equipment and leasehold purchase provisions, ADA related betterments and


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pension funding that have initial or remaining non-cancelable terms in excess of one year as of April 1, 2010 are as follows:

(In thousands)
 Minimum
Capital and
Financing
Lease
Payments
 Principal
Amount of
Corporate
Borrowings(1)
 Interest
Payments on
Corporate
Borrowings(2)
 Minimum
Operating
Lease
Payments
 Acquisitions
and Capital
Related
Betterments(3)
 Pension
Funding(4)
 Total
Commitments
 

2011

 $10,096 $331,500 $142,604 $436,448 $19,234 $4,754 $944,636 

2012

  8,894  6,500  154,064  438,158  14,061  976  622,653 

2013

  7,926  145,287  153,454  425,731  1,000    733,398 

2014

  7,612  305,004  149,227  399,275  1,000    862,118 

2015

  7,683  5,004  127,051  395,984  1,000    536,722 

Thereafter

  76,304  1,654,080  581,638  2,500,207      4,812,229 
                

Total

 $118,515 $2,447,375 $1,308,038 $4,595,803 $36,295 $5,730 $8,511,756 
                

(1)
Represents cash requirements for the payment of principal on corporate borrowings. Total amount does not equal carrying amount due to unamortized discounts on issuance. Fiscal 2011 principal payments include the expected repayment of $325.0 million on the 2016 Senior Subordinated Notes, of which $95.1 million has been paid through December 30, 2010.

(2)
Interest expense on the term loan portion of our senior secured credit facility was estimated at 1.76% for the Term Loan due 2013 and 3.51% for the Term Loan due 2016 based upon the interest rates in effect as of December 30, 2010.

(3)
Includes committed capital expenditures and acquisitions, including the estimated cost of ADA related betterments. Does not include planned, but non-committed capital expenditures.

(4)
We fund our pension plan such that the plan is in compliance with Employee Retirement Income Security Act ("ERISA") and the plan is not considered "at risk" as defined by ERISA guidelines. The plan has been frozen effective December 31, 2006. Also included are payments due under a withdrawal liability for a union sponsored plan. The retiree health plan is not funded.

        We have recognized an obligation for unrecognized benefits of $28.2 million and $28.5 million as of December 30, 2010 and April 1, 2010, respectively. There are currently unrecognized tax benefits which we anticipate will be resolved in the next 12 months; however, we are unable at this time to estimate what the impact on our effective tax rate will be. Any amounts related to these items are not included in the tables above.

Fee Agreement

        In connection with the holdco merger, on June 11, 2007, Parent, Holdings, AMCE and the Sponsors entered into a Fee Agreement (the "Management Fee Agreement"), which replaced the December 23, 2004 fee agreement among Holdings, AMCE and the Sponsors, as amended and restated on January 26, 2006 entered into in connection with the merger with LCE Holdings (the "original fee agreement"). The Management Fee Agreement provides for an annual management fee of $5.0 million, payable quarterly and in advance to our Sponsors, on a pro rata basis, until the twelfth anniversary from December 23, 2004, as well as reimbursements for each Sponsor's respective out-of-pocket expenses in connection with the management services provided under the Management Fee Agreement.

        In addition, the Management Fee Agreement provides for reimbursements by AMCE to the Sponsors for their out-of-pocket expenses, and by AMCE to Parent of up to $3.5 million for fees payable by Parent in any single fiscal year in order to maintain Parent's and AMCE's corporate existence, corporate overhead expenses and salaries or other compensation of certain employees.


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      �� Upon the consummation of a change in control transaction or an IPO, the Sponsors will receive, in lieu of quarterly payments of the annual management fee, an automatic fee equal to the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date. As of December 30, 2010, we estimate this amount would be $26.1 million should a change in control transaction or an IPO occur. We expect to record any lump sum payment to the Sponsors as a dividend.

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

Investment in NCM LLC

        We hold an investment in 16.98% of NCM LLC accounted for following the equity method as of December 30, 2010. The fair market value of these shares is approximately $375.5 million as of December 30, 2010. Because we have little tax basis in these units, the sale of all these units at December 30, 2010 would require us to report taxable income of approximately $508.8 million, including distributions received from NCM LLC that were previously deferred. Our investment in NCM LLC is a source of liquidity for us and we expect that any sales we may make of NCM LLC units would be made in such a manner to most efficiently manage any related tax liability. We have available net operating loss carry-forwards which could reduce any related tax liability.

Impact of Inflation

        Historically, the principal impact of inflation and changing prices upon us has been to increase the costs of the construction of new theatres, the purchase of theatre equipment, rent and the utility and labor costs incurred in connection with continuing theatre operations. Film exhibition costs, our largest cost of operations, are customarily paid as a percentage of admissions revenues and hence, while the film exhibition costs may increase on an absolute basis, the percentage of admissions revenues represented by such expense is not directly affected by inflation. Except as set forth above, inflation and changing prices have not had a significant impact on our total revenues and results of operations.

New Accounting Pronouncements

        See note 1 to the audited consolidated financial statements included elsewhere in this prospectus for further information regarding recently issued accounting standards.

Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to various market risks including interest rate risk and foreign currency exchange rate risk.

        Market risk on variable-rate financial instruments.    We maintain a senior secured credit facility, comprised of a $192.5 million revolving credit facility and a $650.0 million term loan facility, which permits borrowings at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. Increases in market interest rates would cause interest expense to increase and earnings before income taxes to decrease. The change in interest expense and earnings before income taxes would be dependent upon the weighted average outstanding borrowings during the reporting period following an increase in market interest rates. We had no borrowings on our revolving credit facility as of December 30, 2010 and had $619.1 million outstanding under the term loan facility on December 30, 2010. A 100 basis point change in market interest rates would have increased or decreased interest


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expense on our senior secured credit facility by $6.5 million during the 52 weeks ended April 1, 2010 and $4.7 million during the 39 weeks ended December 30, 2010.

        Market risk on fixed-rate financial instruments.    Included in current maturities and long-term corporate borrowings are principal amounts of $229.9 million of our 2016 Senior Subordinated Notes, $300.0 million of our Notes due 2014, $600.0 million of our Notes due 2019, and $600.0 million of our Notes due 2020. Increases in market interest rates would generally cause a decrease in the fair value of the 2016 Senior Subordinated Notes, Notes due 2014, Notes due 2019, and the notes and a decrease in market interest rates would generally cause an increase in fair value of the 2016 Senior Subordinated Notes, Notes due 2014, Notes due 2019 and the notes.

        Foreign currency exchange rates.    We currently operate theatres in Canada, France and the United Kingdom. As a result of these operations, we have assets, liabilities, revenues and expenses denominated in foreign currencies. The strengthening of the U.S. dollar against the respective currencies causes a decrease in the carrying values of assets, liabilities, revenues and expenses denominated in such foreign currencies and the weakening of the U.S. dollar against the respective currencies causes an increase in the carrying values of these items. The increases and decreases in assets, liabilities, revenues and expenses are included in accumulated other comprehensive income. Changes in foreign currency exchange rates also impact the comparability of earnings in these countries on a year-to-year basis. As the U.S. dollar strengthens, comparative translated earnings decrease, and as the U.S. dollar weakens comparative translated earnings from foreign operations increase. A 10% increase in the value of the U.S. dollar against all foreign currencies of countries where we currently operate theatres would increase earnings before income taxes by approximately $608,000 for the thirty-nine weeks ended December 30, 2010 and decrease accumulated other comprehensive loss by approximately $8.2 million as of December 30, 2010. A 10% decrease in the value of the U.S. dollar against all foreign currencies of countries where we currently operate theatres would increase earnings before income taxes by approximately $202,000 for the thirty-nine weeks ended December 30, 2010 and increase accumulated other comprehensive loss by approximately $10.0 million as of December 30, 2010.


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BUSINESS

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or held interests in 361 movie theatres with a total of 5,203 screens, approximately 99% of which were located in the United States and Canada. Our theatres are primarily located in major metropolitan markets, which we believe offer strategic, operational and financial advantages. We also have a modern, highly productive theatre circuit that leads the theatrical exhibition industry in key asset quality and performance metrics, such as screens per theatre and per theatre productivity measures. Our industry leading performance is largely driven by the quality of our theatre sites, our operating practices, which focus on delivering the best customer experience through consumer focused innovation, and, most recently, our implementation of premium sight and sound formats, which we believe will be key components of the future movie-going experience. As of December 30, 2010, we are the largest IMAX exhibitor in the world with a 45% market share in the United States and more than twice the screen count of the second largest U.S. IMAX exhibitor, and each of our local installations is protected by geographic exclusivity.

        Approximately 200 million consumers have attended our theatres each year for the past five years. We offer these consumers a fully immersive out-of-home entertainment experience by featuring a wide array of entertainment alternatives, including popular movies, throughout the day and at different price points. This broad range of entertainment alternatives appeals to a wide variety of consumers across different age, gender, and socioeconomic demographics. For example, in addition to traditional film programming, we offer more diversified programming that includes independent and foreign films, performing arts, music and sports. We also offer food and beverage alternatives beyond traditional concession items, including made-to-order meals, customized coffee, healthy snacks and dine-in theatre options, all designed to create further service and selection for our consumers. We believe there is potential for us to further increase in our annual attendance as we gain market share from other in-home and out-of-home entertainment options.

        Our large annual attendance made us an important partner to content providers who want access and distribution to consumers. We currently generate 16% more estimated unique visitors per year (33.3 million) than HBO's subscribers (28.6 million) and 67% more than Netflix's subscribers (20.0 million) according to the October 14, 2010Hollywood Reporter, the December 31, 2010 Netflix Form 10-K and the Theatrical Market Statistics 2010 report from the Motion Picture Association of America. Further underscoring our importance to the content providers, we represent approximately 17% to 20%, on average, of each of the 6 largest grossing studios' U.S. box office revenues. Average annual film rental payments to each of these studios ranged from approximately $100 million to $160 million.

        For the 52 weeks ended December 30, 2010, the fiscal year ended April 1, 2010 and the 39 weeks ended December 30, 2010, we generated pro forma revenues of approximately $2.6 billion, $2.7 billion and $1.9 billion, respectively, pro forma Adjusted EBITDA (as defined on page 13) of $329.7 million, $365.6 million and $253.2 million, respectively, and pro forma earnings from continuing operations of $93.1$92.8 million, $84.8$84.1 million and $30.7$30.6 million, respectively. We reported revenues of approximately $2.4 billion, earnings from continuing operations of $77.3 million and net earnings of $69.8 million in fiscal 2010. For fiscal 2009 and 2008, we reported revenues of approximately $2.3 billion and $2.3 billion, earnings (losses) from continuing operations of $(90.9) million and $41.6 million, and net earnings (losses) of $(81.2) million and $43.4 million, respectively.


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        The following table provides detail with respect to digital delivery, 3D projection, large screen formats, such as IMAX and our proprietary ETX, and deployment of our enhanced food and beverage offerings as deployed throughout our circuit on December 30, 2010.

Format
 Theatres Screens Planned
Deployed Screens
FYE 2011
 Planned
Deployed Screens
FYE 2012
  Theatres Screens Planned
Deployed Screens
FYE 2011
 Planned
Deployed Screens
FYE 2012
 

Digital

 292 1,649 2,241 3,849  292 1,660 2,255 3,866 

3D

 292 810 1,561 2,245  292 810 1,561 2,245 

IMAX

 107 107 107 127 

ETX

 11 11 14 17 

IMAX (3D enabled)

 107 107 107 127 

ETX (3D enabled)

 11 11 14 17 

Dine-in theatres

 7 61 61 87  7 61 61 87 

        The following table provides detail with respect to the geographic location of our Theatrical Exhibition circuit as of December 30, 2010:

Theatrical Exhibition
 Theatres(1) Screens(1) 
California  44  672 
Illinois  46  506 
Texas  21  413 
Florida  20  366 
New Jersey  23  304 
New York  24  266 
Indiana  22  262 
Michigan  10  184 
Arizona  9  183 
Georgia  11  177 
Colorado  13  173 
Missouri  12  140 
Washington  11  137 
Massachusetts  10  129 
Maryland  12  127 
Pennsylvania  10  126 
Virginia  7  113 
Minnesota  7  111 
Ohio  6  94 
Louisiana  5  68 
Wisconsin  4  63 
North Carolina  3  60 
Oklahoma  3  60 
Kansas  2  48 
Connecticut  2  36 
Iowa  2  31 
Nebraska  1  24 
District of Columbia  3  22 
Kentucky  1  20 
Arkansas  1  16 
South Carolina  1  14 
Nevada  1  10 
Utah  1  9 
Canada  8  184 
China (Hong Kong)(2)  2  13 
France  1  14 
United Kingdom  2  28 
      
 Total Theatrical Exhibition  361  5,203 
      

(1)
Included in the above table are 8 theatres and 96 screens that we manage or in which we have a partial interest. We manage 3 theatres where we receive a fee from the owner and where we do not own any economic interest in the theatre. We manage and own 50%

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(2)
In Hong Kong, we maintain a partial interest represented by a license agreement for use of our trademark.

        We were founded in 1920 and since then have pioneered many of the theatrical exhibition industry's most important innovations, including the multiplex theatre format in the early 1960s and the North American megaplex theatre format in the mid-1990s. In addition, we have acquired some of the most respected companies in the theatrical exhibition industry, including Loews, General Cinema and, more recently, Kerasotes. Our historic growth has been driven by a combination of organic growth and acquisition strategies, in addition to strategic alliances and partnerships that highlight our ability to capture innovation and value beyond the traditional exhibition space. For example:

        Consistent with our history and culture of innovation, we believe we have pioneered a new way of thinking about theatrical exhibition: as a consumer entertainment provider. This vision, which introduces a strategic and marketing overlay to traditional theatrical exhibition, has been instrumental in driving and redirecting our future strategy.

        The following table sets forth our historical information, on a continuing operations basis, concerning new builds (including expansions), acquisitions and dispositions and end-of-period operated theatres and screens through December 30, 2010:

 
 New Builds Acquisitions Closures/Dispositions Total Theatres 
Fiscal Year
 Number of
Theatres
 Number of
Screens
 Number of
Theatres
 Number of
Screens
 Number of
Theatres
 Number of
Screens
 Number of
Theatres
 Number of
Screens
 

2006

  7  106  116  1,363  7  60  335  4,770 

2007

  7  107  2  32  26  243  318  4,666 

2008

  9  136      18  196  309  4,606 

2009

  6  83      8  77  307  4,612 

2010

  1  6      11  105  297  4,513 

2011 through December 30, 2010

  4  55  95  960  35  325  361  5,203 
                    

  34  493  213  2,355  105  1,006       
                    

        We have also created and invested in a number of allied businesses and strategic initiatives that have created differentiated viewing formats and experiences, greater variety in food and beverage


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options and value appreciation for our company. We believe these initiatives will continue to generate incremental value for our company in the future. For example:


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Our Competitive Strengths

        We believe our leadership in major metropolitan markets, superior asset quality and continuous focus on innovation and the guest experience have positioned us well to capitalize disproportionately on trends providing momentum to the theatrical exhibition industry as a whole, particularly the mass adoption of digital and 3D technologies. We believe we can gain additional share of wallet from the consumer by broadening our offerings to them and increasing our engagement with them. We can then enable marketers and partners, such as NCM, to engage with our guests deriving further financial value and benefit. We believe our management team is uniquely equipped to execute our strategy to realize these opportunities, making us a particularly effective competitor in our industry and positioning us well for future growth. Our competitive strengths include:

        Broad National Reach.    Thirty-nine percent (39%) of Americans (or approximately 120 million consumers) live within 10 miles of an AMC theatre. This proximity and convenience, along with the affordability and diversity of our film product, drive approximately 200 million consumers into our theatres each year, or approximately 33.3 million unique visitors annually. We believe our ability to serve a broad consumer base across numerous entertainment occasions, such as teenage socializing, romantic dates and group events, is a competitive advantage. Our consumer reach, operating scale, access to diverse content and marketing platforms are valuable to content providers and marketers who want to access this broad and diverse audience.

        Major Market Leader.    We maintain the leading market share within our markets. As of December 30, 2010, we operated in 24 of the top 25 DMAs and had the number one or two market share in each of the top 15 DMAs, including New York City, Los Angeles, Chicago, Philadelphia, San Francisco, Boston and Dallas. In addition, 75% of our screens were located in the top 25 DMAs and 89% were located in the top 50 DMAs. Population growth from 2008 through 2013 is projected by Nielsen Claritas to be 5.8% in the top 25 DMAs and 5.9% in the top 50 DMAs, compared to only 2.9% in all other DMAs. Our strong presence in the top DMAs makes our theatres more visible and therefore strategically more important to content providers who rely on these markets for a disproportionately large share of box office receipts. According to Rentrak, during the 52 weeks ended December 30, 2010, 59% of all U.S. box office receipts were derived from the top 25 DMAs and 75% were derived from the top 50 DMAs. In certain of our densely populated major metropolitan markets, we believe a scarcity of attractive retail real estate opportunities enhances the strategic value of our existing theatres. We also believe the complexity inherent in operating in these major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.

        We believe that customers in our major metropolitan markets are generally more affluent and culturally diverse than those in smaller markets. Traditionally, our strong presence in these markets has created a greater opportunity to exhibit a broad array of programming and premium formats, which we believe drives higher levels of attendance at our theatres. This has allowed us to generate higher per screen and per theatre operating metrics. For example, our pro forma average ticket price in the United States was $8.80 for our 52 weeks ended December 30, 2010, as compared to $7.89 for the industry as a whole for the 12 months ended December 31, 2010.

        Modern, Highly Productive Theatre Circuit.    We believe the combination of our strong major market presence, focus on a superior guest experience and core operating strategies enables us to deliver industry-leading theatre level operating metrics. Our circuit averages 14 screens per theatre, which is


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more than twice the National Association of Theatre Owners average of 6.7 for calendar year 2010 and higher than any of our peers. For the 52 weeks ended December 30, 2010, on a pro forma basis, our theatre exhibition circuit generated attendance per average theatre of 568,000 (higher than any of our peers) revenues per average theatre of $7.0 million and operating cash flows before rent (defined as Adjusted EBITDA before rent and G&A-Other) per average theatre of $2.4 million. Over the past five fiscal years, we invested an average of $131.3 million per year to improve and expand our theatre circuit, contributing to the modern portfolio of theatres we operate today.

        Leader in Deployment of Premium Formats.    We also believe our strong major market presence and our highly productive theatre circuit allow us to take greater advantage of incremental revenue-generating opportunities associated with the premium services that will define the future of the theatrical business, including digital delivery, 3D projection, large screen formats, such as IMAX and our proprietary ETX offering, and alternative programming. As the industry's digital conversion accelerates, we believe we have established a differentiated leadership position in premium formats. For example, we are the world's largest IMAX exhibitor with 107 screens as of December 30, 2010, all of which are 3D enabled, and we expect to increase our IMAX screen count to 127 by the end of fiscal year 2012. We are able to charge a premium price for the IMAX experience, which, in combination with higher attendance levels, produces average weekly box office per print that is 300% greater than standard 2D versions of the same movie. The availability of IMAX and 3D content has increased significantly from calendar year 2005 to 2010. During this period, available 3D content increased from 3 titles to 26 titles while available IMAX content increased from 5 titles to 14 titles. Industry film grosses for available 3D products increased from $191.0 million to approximately $3.0 billion, while industry film grosses for available IMAX products increased from $864.0 million to approximately $3.0 billion over this time period. This favorable trend continues in calendar year 2011 with 34 3D titles and 20 IMAX titles slated to open, including highly successful franchise installments such asPirates of the Caribbean: On Stranger Tides, Kung Fu Panda: The Kaboom of D, Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows, Part 2 andMission Impossible-Ghost Protocal.The film release calendar for calendar year 2012 is beginning to solidify with 22 3D titles and 4 IMAX titles already announced, including sequels of high profile franchises such as Spiderman, Men in Black, James Bond, Bourne Legacy, Batman and a 3D version ofStar Wars.We expect that additional 3D and IMAX titles will be announced as the beginning of 2012 approaches.

        Innovative Growth Initiatives in Food and Beverage.    We believe our theatre circuit is better positioned than our peer competitors' to generate additional revenue from broader and more diverse food and beverage offerings, in part due to our markets' larger, more diverse and more affluent customer base and our management's extensive experience in guest services, specifically within the food and beverage industry. Our annual food and beverage sales exceed the domestic food service sales generated from 18 of the top 75 ranked restaurants chains in the U.S., while representing only approximately 27% of our total revenue. To capitalize on this opportunity, we have introduced proprietary food and beverage offerings in seven theatres as of December 30, 2010, and we intend to deploy these offerings across our theatre circuit based on the needs and specific circumstances of each theatre. Our wide range of food and beverage offerings feature expanded menus, enhanced concession formats and unique dine-in theatre options, which we believe appeals to a larger cross section of potential customers. For example, in fiscal 2009 we converted a small, six-screen theatre in Atlanta, Georgia to a dine-in theatre facility with full kitchen facilities, seat side services and with a separate bar and lounge area. From fiscal 2008 to fiscal 2010, this theatre's attendance increased over 60%, revenues more than doubled, and operating cash flow and margins increased significantly. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Our current food and beverage initiatives include:


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        Strong Cash Flow Generation.    We believe that our major market focus and highly productive theatre circuit have enabled us to generate significant and stable cash flow provided by operating activities. For the 52 weeks ended December 30, 2010, on a pro forma basis, our net cash provided by operating activities totaled $150.6 million. For the fiscal year ended April 1, 2010, on a pro forma basis, our net cash provided by operating activities totaled $295.3 million. This strong cash flow will enable us to continue our deployment of premium formats and services and to finance planned capital expenditures without relying on the capital markets for funding. In addition, in future years, we expect to continue to generate cash flow sufficient to allow us to grow our revenues, maintain our facilities, service our indebtedness and make dividend payments to our stockholder.

        Management Team Uniquely Positioned to Execute.    Our management team has a unique combination of industry experiences and skill-sets, equipping them to effectively execute our strategies. Our CEO's broad experience in a number of consumer packaged goods and entertainment-related businesses expands our growth perspectives beyond traditional theatrical exhibition and has increased our focus on providing more value to our guests. Recent additions, including a Chief Marketing Officer, heads of Food and Beverage, Programming and Development/Real Estate and a Senior Vice President for Strategy and Strategic Partnerships, augment our deep bench of industry experience. The expanded breadth of our management team complements the established team that is focused on for operational excellence, innovation and successful industry consolidation.

Our Strategy

        Our strategy is to leverage our modern theatre circuit and major market position to lead the industry in consumer-focused innovation and financial operating metrics. The use of emerging premium formats and our focus on the guest experience give us a unique opportunity to leverage our theatre circuit and major market position across our platform. Our primary goal is to maintain our company's and the industry's social relevance and to offer consumers distinctive, affordable and compelling out-of-home entertainment alternatives that capture a greater share of their personal time and spend. We have a two-pronged strategy to accomplish this goal: first, drive consumer-related growth and second, focus on operational excellence.

        Drive Consumer-Related Growth    

        Capitalize on Premium Formats.    Technical innovation has allowed us to enhance the consumer experience through premium formats such as IMAX and 3D. Our customers are willing to pay a premium price for this differentiated entertainment experience. When combined with our major markets' customer base, operating a theatre circuit will enhance our capacity utilization and dynamic pricing capabilities, enabling us to achieve higher ticket prices for premium formats, and provide incremental revenue from the exhibition of alternative content such as live concerts, sporting events, Broadway shows, opera and other non-traditional programming. We have already seen success from the Metropolitan Opera, with respect to which, during fiscal 2010, we programmed 23 performances in 75 theatres and charged an average ticket price of $18. Within each of our major markets, we are able to charge a premium for these services relative to our smaller markets. We will continue to broaden


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our content offerings through the installation of additional IMAX, ETX and RealD systems and the presentation of attractive alternative content. For example:

        Broaden and Enhance Food and Beverage Offerings.    To address consumer trends, we are expanding our menu of premium food and beverage products to include made-to-order meals, customized coffee, healthy snacks, alcohol and other gourmet products. We plan to invest across a spectrum of enhanced food and beverage formats, from simple, less capital-intensive concession design improvements to the development of new dine-in theatre options. We have successfully implemented our dine-in theatre offerings to rejuvenate theatres approaching the end of their useful lives as traditional movie theatres and, in some of our larger theatres to more efficiently leverage their additional capacity. The costs of these conversions in some cases are partially covered by investments from the theatre landlord. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Maximize Guest Engagement and Loyalty.    In addition to differentiating the AMC Entertainment movie-going experience by deploying new sight and sound formats, as well as food and beverage offerings, we are also focused on creating differentiation through guest marketing. We are already the most recognized theatre exhibition brand, with almost 60% brand awareness in the United States. We are actively marketing our own "AMC experience" message to our customers, focusing on every aspect of a customer's engagement with AMC, from the moment a guest visits our website or purchases a ticket to the moment he leaves our theatre. We have also refocused our marketing to drive active engagement with our customers through a redesigned website, Facebook, Twitter and push email campaigns. As of March 8, 2011, we had approximately 567,000 "likes" on Facebook, and we engaged directly with our guests via close to 32 million emails in fiscal 2010. In addition, our frequent


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moviegoer loyalty program is scheduled to re-launch during 2011 with a new, more robust fee-based program. Our loyalty program currently has approximately 1.5 million active members and a database of over 5.0 million moviegoers. Additional marketing initiatives include:

        Disciplined Approach to Theatre Portfolio Management.    We evaluate the potential for new theatres and, where appropriate, replace underperforming theatres with newer, more modern theatres that offer amenities consistent with our portfolio. We also intend to selectively pursue acquisitions where the characteristics of the location, overall market and facilities further enhance the quality of our theatre portfolio. We presently have no current plans, proposals or understandings regarding any such acquisitions. Historically, we have demonstrated a successful track record of integrating acquisitions such as Loews, General Cinema and Kerasotes. For example, our January 2006 acquisition of Loews combined two leading theatrical exhibition companies, each with a long history of operating in the industry, thereby increasing the number of screens we operated by 47%.

        Continue to Achieve Operating Efficiencies.    We believe that the size of our theatre circuit, our major market concentration and the breadth of our operations will allow us to continue to achieve economies of scale and further improve operating margins. Our operating strategies are focused in the following areas:


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Film Licensing

        We predominantly license "first-run" motion pictures from distributors owned by major film production companies and from independent distributors. We license films on a film-by-film and theatre-by-theatre basis. We obtain these licenses based on several factors, including number of seats and screens available for a particular picture, revenue potential and the location and condition of our theatres. We pay rental fees on a negotiated basis.

        During the period from 1990 to 2009, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high of 633 in 2008, according to the Motion Picture Association 2009 Theatrical Market Statistics.

        North American film distributors typically establish geographic film licensing zones and generally allocate available film to one theatre within each zone. Film zones generally encompass a radius of three to five miles in metropolitan and suburban markets, depending primarily upon population density. In film zones where we are the sole exhibitor, we obtain film licenses by selecting a film from among those offered and negotiating directly with the distributor. As of April 1, 2010, approximately 88% of our screens in the United States and Canada were located in film licensing zones where we are the sole exhibitor.

        Our licenses typically state that rental fees are based on either aggregate terms established prior to the opening of the picture or on a mutually agreed settlement upon the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts or pay based on a scale of percentages tied to different amounts of box office gross. The settlement process allows for negotiation based upon how a film actually performs.

        There are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. These include Paramount Pictures, Twentieth Century Fox, Warner Bros. Distribution, Buena Vista Pictures (Disney), Sony Pictures Releasing, and Universal Pictures. Films licensed from these distributors accounted for approximately 84% of our U.S. and Canadian admissions revenues during fiscal 2010. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year. In fiscal 2010, no single distributor accounted for more than 20% of our box office admissions.

Concessions

        Concessions sales are our second largest source of revenue after box office admissions. Concessions items include popcorn, soft drinks, candy, hot dogs and other products. Different varieties of candy and soft drinks are offered at our theatres based on preferences in that particular geographic region. We have also implemented "combo-meals", which offer a pre-selected assortment of concessions products and offer co-branded and private label products that are unique to us.

        Our strategy emphasizes prominent and appealing concessions counters designed for rapid service and efficiency. We design our megaplex theatres to have more concessions capacity to make it easier to serve larger numbers of customers. Strategic placement of large concessions stands within theatres increases their visibility, aids in reducing the length of lines, allows flexibility to introduce new concepts and improves traffic flow around the concessions stands.

        We negotiate prices for our concessions products and supplies directly with concessions vendors on a national or regional basis to obtain high volume discounts or bulk rates and marketing incentives.

        Our entertainment and dining experience at certain theatres features casual and premium upscale dine-in theatre options as well as bar and lounge areas.


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Properties

        The following table sets forth the general character and ownership classification of our theatre circuit, excluding unconsolidated joint ventures and managed theatres, as of December 30, 2010:

Property Holding Classification
 Theatres Screens 

Owned

  26  195 

Leased pursuant to ground leases

  6  73 

Leased pursuant to building leases

  321  4,839 
      
 

Total

  353  5,107 
      

        Our theatre leases generally have initial terms ranging from 15 to 20 years, with options to extend the leases for up to 20 additional years. The leases typically require escalating minimum annual rent payments and additional rent payments based on a percentage of the leased theatre's revenue above a base amount and require us to pay for property taxes, maintenance, insurance and certain other property-related expenses. In some instances, our escalating minimum annual rent payments are contingent upon increases in the consumer price index. In some cases, our rights as tenant are subject and subordinate to the mortgage loans of lenders to our lessors, so that if a mortgage were to be foreclosed, we could lose our lease. Historically, this has never occurred.

        We lease our corporate headquarters in Kansas City, Missouri.

        Currently, the majority of the concessions, projection, seating and other equipment required for each of our theatres are owned. In the future, we expect the majority of our digital projection equipment to be leased from DCIP.

Employees

        As of December 30, 2010, we employed approximately 1,000 full-time and 17,000 part-time employees. Approximately 40% of our U.S. theatre associates were paid the minimum wage.

        Fewer than 2% of our U.S. employees, consisting primarily of motion picture projectionists, are represented by a union, the International Alliance of Theatrical Stagehand Employees and Motion Picture Machine Operators (and affiliated local unions). We believe that our relationship with this union is satisfactory. We consider our employee relations to be good.

Theatrical Exhibition Industry and Competition

        Theatrical exhibition is the primary initial distribution channel for new motion picture releases, and we believe that the theatrical success of a motion picture is often the most important factor in establishing the film's value in the other parts of the product life cycle (DVD, cable television and other ancillary markets).

        Theatrical exhibition has demonstrated long-term steady growth. U.S. and Canadian box office revenues increased from $5.0 billion in 1989 to $10.5 billion in 2010, driven by increases in both ticket prices and attendance. In calendar 2010, industry box office revenues for the United States and Canada were $10.5 billion, essentially unchanged from 2009.


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        The following table represents information about the exhibition industry obtained from the National Association of Theatre Owners ("NATO") and Rentrak.

Calendar Year
 Box Office
Revenues
(in millions)
 Attendance
(in millions)
 Average
Ticket
Price
 Number of
Theatres
 Indoor
Screens
 Screens
Per Theatre
 

2010

 $10,515  1,334 $7.89  5,773  38,892  6.7 

2009

  10,600  1,414  7.50  5,561  38,605  6.9 

2008

  9,634  1,341  7.18  5,403  38,934  7.2 

2007

  9,632  1,400  6.88  5,545  38,159  6.9 

2006

  9,170  1,401  6.55  5,543  37,776  6.8 

2005

  8,820  1,376  6.41  5,713  37,092  6.5 

        There are approximately 816 companies competing in the North American theatrical exhibition industry, approximately 442 of which operate four or more screens. Industry participants vary substantially in size, from small independent operators to large international chains. Based on information obtained from Rentrak, we believe that the four largest exhibitors (in terms of box office revenue) generated approximately 59% of the box office revenues in 2010. This statistic is up from 33% in 2000 and is evidence that the theatrical exhibition business in the United States and Canada has been consolidating. According to NATO, average screens per theatre have increased from 6.5 in 2005 to 6.7 in 2010, which we believe is indicative of the industry's development of megaplex theatres.

        Our theatres are subject to varying degrees of competition in the geographic areas in which they operate. Competition is often intense with respect to attracting patrons, licensing motion pictures and finding new theatre sites. Where real estate is readily available, there are few barriers preventing another company from opening a theatre near one of our theatres, which may adversely affect operations at our theatre. However, in certain of our densely populated major metropolitan markets, we believe a scarcity of attractive retail real estate opportunities enhances the strategic value of our existing theatres. We also believe the complexity inherent in operating in these major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.

        The theatrical exhibition industry faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events, and from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems, as well as from all other forms of entertainment.

        Movie-going is a compelling consumer out-of-home entertainment experience. Movie theatres currently garner a relatively small share of consumer entertainment time and spend, leaving significant room for expansion and growth in the U.S. In addition, our industry benefits from available capacity to satisfy additional consumer demand without capital investment.

        As major studio releases have declined in recent years, we believe companies like Open Road Films could fill an important gap that exists in the market today for consumers, movie producers and theatrical exhibitors by providing a broader availability of movies to consumers. Theatrical exhibitors are uniquely positioned to not only support, but also benefit from new distribution companies and content providers. We believe the theatrical exhibition industry will continue to be attractive for a number of key reasons, including:

        A Highly Popular and Affordable Out-of-Home Entertainment Experience.    Going to the movies has been one of the most popular and affordable out-of-home entertainment options for decades. The estimated average price of a movie ticket was $7.89 in calendar 2010, considerably less than other out-of-home entertainment alternatives such as concerts and sporting events. In calendar 2010, attendance at indoor movie theatres in the United States and Canada was 1.3 billion. This contrasts to the 111 million combined annual attendance generated by professional baseball, basketball and football over the same period.


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        We believe the theatrical exhibition industry will continue to be attractive for a number of key reasons, including:

        Adoption of Digital Technology.    The theatrical exhibition industry is well underway in its overall conversion from film-based to digital projection technology. This digital conversion will position the industry with lower distribution and exhibition expenses, efficient delivery of alternative content and niche programming, and premium experiences for consumers. Digital projection also results in a premium visual experience for patrons, and digital content gives the theatre operator greater flexibility in programming. The industry will benefit from the conversion to digital delivery, alternative content, 3D formats and dynamic pricing models. As theatre exhibitors have adopted digital technology, the theatre circuits have shown enhanced productivity, profitability and efficiency. Digital technology has increased attendance and average ticket prices. Digital technology also facilitates live and pre-recorded networked and single-site meetings and corporate events in movie theatres and will allow for the distribution of live and pre-recorded entertainment content and the sale of associated sponsorships.

        Long History of Steady Growth.    The theatrical exhibition industry has produced steady growth in revenues over the past several decades. In recent years, net new build activity has slowed, and screen count has rationalized and is expected to decline in the near term before stabilizing, thereby increasing revenue per screen for existing theatres. The combination of the popularity of movie-going, its steady long-term growth characteristics and consolidation and the industry's relative maturity makes theatrical exhibition a high cash flow generating business today. Box office revenues in the United States and Canada have increased from $5.0 billion in 1989 to $10.5 billion in 2010, driven by increases in both ticket prices and attendance across multiple economic cycles. The industry has also demonstrated its resilience to economic downturns; during four of the last six recessions, attendance and box office revenues grew an average of 8.1% and 12.3%, respectively. In 2009, 32 films grossed over $100.0 million, compared to 25 in the prior year, helping to establish a new industry box office record for the year.

        Importance to Content Providers.    We believe that the theatrical success of a motion picture is often the key determinant in establishing the film's value in the other parts of the product life cycle, such as DVD, cable television, merchandising and other ancillary markets. For each $1.00 of theatrical box office receipts, an average of $1.33 of additional revenue is generated in the remainder of a film's product life cycle. As a result, we believe motion picture studios will continue to work cooperatively with theatrical exhibitors to ensure the continued value of the theatrical window.

Regulatory Environment

        The distribution of motion pictures is, in large part, regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. The consent decrees resulting from one of those cases, to which we were not a party, have a material impact on the industry and us. Those consent decrees bind certain major motion picture distributors and require the motion pictures of such distributors to be offered and licensed to exhibitors, including us, on a film-by-film and theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a film-by-film and theatre-by-theatre basis.

        Our theatres must comply with Title III of the Americans with Disabilities Act, or ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, and awards of damages to private litigants or additional capital expenditures to remedy such noncompliance. Although we believe that our theatres are in substantial compliance with the ADA, in January 1999 the Civil Rights Division of the Department of Justice, or the Department, filed suit


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against us alleging that certain of our theatres with stadium-style seating violate the ADA. In separate rulings in 2002 and 2003, the Court ruled against us in the "line of sight" and the "non-line of sight" aspects of this case. In 2003, the Court entered a consent order and final judgment about the non-line of sight aspects of this case. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. The Company and the Department have reached a settlement regarding the extent of betterments related to the remaining remedies required for line-of-sight violations which the parties believe are consistent with the Ninth Circuit's decision. The trial court approved the settlement on November 29, 2010. The improvements will likely be made over a five year term. The company has recorded a liability of $75,000 for compensation to claimants and fines related to this matter.

        As an employer covered by the ADA, we must make reasonable accommodations to the limitations of employees and qualified applicants with disabilities, provided that such reasonable accommodations do not pose an undue hardship on the operation of our business. In addition, many of our employees are covered by various government employment regulations, including minimum wage, overtime and working conditions regulations.

        Our operations also are subject to federal, state and local laws regulating such matters as construction, renovation and operation of theatres as well as wages and working conditions, citizenship, health and sanitation requirements and licensing. We believe our theatres are in material compliance with such requirements.

        We also own and operate theatres and other properties which may be subject to federal, state and local laws and regulations relating to environmental protection. Certain of these laws and regulations may impose joint and several liability on certain statutory classes of persons for the costs of investigation or remediation of contamination, regardless of fault or the legality of original disposal. We believe our theatres are in material compliance with such requirements.

Seasonality

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

Legal Proceedings

        In the normal course of business, we are party to various legal actions. Except as described below, management believes that the potential exposure, if any, from such matters would not have a material adverse effect on the financial condition, cash flows or results of operations of the Company.

        United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc.    (No. 99 01034 FMC (SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department filed suit alleging that the company's stadium style theatres violated the ADA and related regulations. The Department alleged the company had failed to provide persons in wheelchairs seating arrangements with lines-of-sightcomparable to the general public. The Department alleged various non-line-of-sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future theatres with stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

        As to line-of-sight matters, the trial court entered summary judgment in favor of the Department as to both liability and as to the appropriate remedy. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. The company and the Department reached a settlement


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regarding the extent of betterments and remedies required for line-of-sight violations which the parties believe are consistent with the Ninth Circuit's decision. The trial court approved the settlement on November 29, 2010. The betterments will be made over a 5 year term and the company estimates the unpaid cost of such betterments to be approximately $5.0 million. The company has recorded a liability of $75,000 for compensation to claimants and fines related to this matter.

        As to the non-line-of-sight aspects of the case, on January 21, 2003, the trial court entered summary judgment in favor of the Department on matters such as parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. On December 5, 2003, the trial court entered a consent order and final judgment on nonline-of-sight issues under which the company agreed to remedy certain violations at its stadium-style theatres and at certain theatres it may open in the future. Currently, the company estimates that remaining betterments are required at approximately 45 stadium-style theatres. The Company estimates that the unpaid costs of these betterments will be approximately $16.7 million. The estimate is based on actual costs incurred on remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

        Michael Bateman v. American Multi-Cinema, Inc.    (No. CV07-00171). In January 2007, a class action complaint was filed against the company in the Central District of the United States District Court of California (the "District Court") alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA"). FACTA provides in part that neither expiration dates nor more than the last 5 numbers of a credit or debit card may be printed on receipts given to customers. FACTA imposes significant penalties upon violators where the violation is deemed to have been willful. Otherwise damages are limited to actual losses incurred by the card holder. On October 24, 2008, the District Court denied plaintiff's renewed motion for class certification. On September 27, 2010, the Ninth Circuit Court of Appeals vacated the District Court's order and remanded the proceedings for a new determination consistent with their opinion. The company filed its Petition for En Banc and/or Panel Rehearing on October 8, 2010. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact to the company's financial condition.

        On May 14, 2009, Harout Jarchafjian filed a similar lawsuit alleging that the company willfully violated FACTA and seeking statutory damages, but without alleging any actual injury (Jarchafjian v. American Multi-Cinema, Inc. (C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to the Bateman case and was stayed pending a Ninth Circuit decision in the Bateman case, which has now been issued. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact to the company's financial condition.


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MANAGEMENT

Executive Officers and Directors

        Our business and affairs are managed by our board of directors currently consisting of nine members. Gerardo I. Lopez, our Chief Executive Officer, is a director of Parent. Aaron J. Stone is our Chairman of the Board and a non-employee director. The role of Chairman of the Board is held by Mr. Stone to represent the interest of stockholders.

        The following table sets forth certain information regarding our directors, executive officers and key employees as of December 31, 2010:

Name
 Age Position(s) Held
Aaron J. Stone  37 Chairman of the Board, Director (Parent Holdings and AMCE)
Gerardo I. Lopez  51 Chief Executive Officer, President and Director (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Dana B. Ardi  62 Director (Parent Holdings and AMCE)
Stephen P. Murray  48 Director (Parent Holdings and AMCE)
Stan Parker  34 Director (Parent Holdings and AMCE)
Phillip H. Loughlin  43 Director (Parent Holdings and AMCE)
Eliot P. S. Merrill  40 Director (Parent Holdings and AMCE)
Kevin J. Maroni  48 Director (Parent Holdings and AMCE)
Craig R. Ramsey  59 Executive Vice President and Chief Financial Officer (Parent, Holdings, AMCE and America Multi-Cinema, Inc.); Director (America Multi-Cinema, Inc.)
John D. McDonald  53 Executive Vice President, U.S. Operations (Parent, Holdings, AMCE and America Multi-Cinema, Inc.); Director (America Multi-Cinema, Inc.)
Mark A. McDonald  52 Executive Vice President, Global Development (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Stephen A. Colanero  44 Executive Vice President and Chief Marketing Officer (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Robert J. Lenihan  56 President, Film Programming (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Samuel D. Gourley  59 President, AMC Film Programming (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Kevin M. Connor  48 Senior Vice President, General Counsel and Secretary (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Michael W. Zwonitzer  46 Senior Vice President Finance (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Chris A. Cox  44 Senior Vice President and Chief Accounting Officer (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
Terry W. Crawford  53 Senior Vice President and Treasurer (Parent, Holdings, AMCE and America Multi-Cinema, Inc.)
George Patterson  57 Senior Vice President, Food and Beverage (America Multi-Cinema, Inc.)
Elizabeth Frank  41 Senior Vice President, Strategy and Strategic Partnerships (AMCE)

        All our current executive officers hold their offices at the pleasure of our board of directors, subject to rights under their respective employment agreements in some cases. There are no family relationships between or among any directors and executive officers, except that Messrs. John D. McDonald and Mark A. McDonald are brothers.


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        Mr. Aaron J. Stone has served as Chairman of the Board of Parent Holdings and AMCE since February 2009. Mr. Stone has served as a Director of Parent since June 2007, and has served as a Director of Holdings and AMCE since December 2004. Mr. Stone is a Senior Partner of Apollo Management, L.P., where he has been employed since 1997 and which, together with its affiliates, acts as manager of Apollo and related private securities investment funds. Mr. Stone also serves on the boards of directors of Connections Academy, LLC, Hughes Communications, Inc., Hughes Network Systems, LLC, Hughes Telematics, Inc., and Parallel Petroleum. Mr. Stone currently serves on the compensation committee of Hughes Communications, Inc. and the audit committee of Hughes Network Systems, LLC. Mr. Stone has also served on the boards of directors of Educate Inc.; Intelstat, Ltd.; and Skyterra Communications Inc., among others. Mr. Stone served on the audit committees of Educate Inc. and Intelstat, Ltd. Prior to joining Apollo, Mr. Stone was a member of the Mergers and Acquisition Group at Smith Barney, Inc. Mr. Stone graduated cum laude with an A.B. degree from Harvard College. Mr. Stone has over 15 years of experience in analyzing and investing in public and private companies and led the diligence of Apollo's investment in AMC, and he provides our board with insight into strategic and financial matters of interest to AMC's management and shareholders.

        Mr. Gerardo I. Lopez has served as Chief Executive Officer, President and a Director of Parent Holdings and AMCE since March 2009. Prior to joining the Company, Mr. Lopez served as Executive Vice President of Starbucks Coffee Company and President of its Global Consumer Products, Seattle's Best Coffee and Foodservice divisions from September 2004 to March 2009. Prior thereto, Mr. Lopez served as President of the Handleman Entertainment Resources division of Handleman Company from November 2001 to September 2004. Mr. Lopez also serves on the boards of directors of SilkRoute Global, NCM LLC and DCIP. Mr. Lopez holds a B.S. degree in Marketing from George Washington University and a M.B.A. in Finance from Harvard Business School. Mr. Lopez has over 24 years of experience in marketing, sales and operations and management in public and private companies. His prior experience includes management of multi-billion-dollar operations and groups of over 2,500 associates.

        Dr. Dana B. Ardi has served as a Director of Parent Holdings and AMCE since April 2009. Dr. Ardi serves as Managing Director and Founder of Corporate Anthropology Advisors LLC, a human capital advisory firm that provides consulting and restructuring services to companies across diverse industry sectors. Prior to founding Corporate Anthropology Advisors LLC in 2009, Dr. Ardi served as a Managing Director at CCMP Capital Advisors, LLC from August 2006 through January 2009, as a Partner at J.P. Morgan Partners, LLC from June 2001 to July 2006, as a Partner at Flatiron Partners, LLC from 1999 to June 2001, as Co-chair of the Global Communications, Entertainment and Technology practice of TMP Worldwide from 1995 to 1999 and prior thereto, Dr. Ardi served as Senior Vice President of New Media at R.R. Donnelley & Sons Company. Dr. Ardi also serves on the board of directors of New Yorkers for Parks and the board of trustees of Chancellor University's Jack Welch Management Institute. Dr. Ardi provides our board of directors with insight and perspective on organizational design, succession planning, leadership training, executive search and tactical human resources matters. Dr. Ardi holds a B.S. degree from the State University of New York at Buffalo and M.S. and Ph.D. degrees in Education from Boston College.

        Mr. Stephen P. Murray has served as a Director of Parent since June 2007, and has served as a Director of Holdings and AMCE since December 2004. Mr. Murray serves on the compensation committee of Parent. Since March 2007 Mr. Murray has served as President and Chief Executive Officer of CCMP Capital Advisors, LLC, a private equity firm formed in August 2006 by the former buyout and growth equity investment team of J.P. Morgan Partners, LLC, a private equity division of JPMorgan Chase & Co. From August 2006 to March 2007, Mr. Murray served as President and Chief Operating Officer of CCMP Capital Advisors, LLC. From 1989 through July 2006, Mr. Murray was employed by J.P. Morgan Partners and its predecessor entities, and became a Partner in 1994. Prior to joining J.P. Morgan Partners, LLC in 1989, Mr. Murray served as a Vice President with the Middle-Middle-Market


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Market Lending Division of Manufacturers Hanover. Mr. Murray focuses on investments in Consumer, Retail and Services, and Healthcare Infrastructure. Mr. Murray also serves on the boards of directors of ARAMARK Holdings Corporation, Caremore Medical Enterprises, Generac Power Systems, Chef's Warehouse, Crestcom, Jetro Holdings, Inc., LHP Hospital Group, Noble Environmental Power, Octagon Credit Investors, Quiznos Subs, Strongwood Insurance and Warner Chilcott. Mr. Murray holds a B.A. degree from Boston College and a M.B.A. from Columbia Business School. Mr. Murray has over 20 years of experience as a private equity investment professional and provides our board with insight and perspective on general investment and financial matters.

        Mr. Stan Parker has served as a Director of Parent since June 2007, and has served as a Director of Holdings and AMCE since December 2004. Mr. Parker has been affiliated with Apollo and its related investment advisors and investment managers since 2000 and has been a Partner since 2005. Prior to joining Apollo in 2000, Mr. Parker was employed by Salomon Smith Barney, Inc. Mr. Parker also serves on the boards of directors of Affinion, CEVA Group Plc and Momentive Performance Materials. Mr. Parker holds a B.S. degree in Economics from The Wharton School of Business at the University of Pennsylvania. Mr. Parker has over 12 years of experience in analyzing and investing in public and private companies. Mr. Parker participated in the diligence of Apollo's investment in AMC and provides our board with insight into strategic and financial matters of interest to AMC's management and shareholders.

        Mr. Philip H. Loughlin has served as a Director of Parent Holdings and AMCE since January 2009. Mr. Loughlin joined Bain Capital in 1996 and has been a Managing Director since 2003. Prior to joining Bain Capital, Mr. Loughlin was a Consultant at Bain & Company, where he worked in the telecommunications, industrial manufacturing and consumer products industries. Mr. Loughlin has also served in operating roles at Eagle Snacks, Inc. and Norton Company. Mr. Loughlin also serves on the boards of directors of OSI Restaurant Partners, Inc., Ariel Holdings, Ltd., Applied Systems, Inc. and the National Pancreas Foundation. Mr. Loughlin serves on the audit committee of OSI Restaurant Partners. Mr. Loughlin previously served on the boards of directors of Burger King Corporation, Loews Cineplex Entertainment, Brenntag A.G., Professional Services Industries, Inc. and Cinemex and on the audit committees of Burger King Corporation and Loews Cineplex Entertainment. Mr. Loughlin received a M.B.A. from Harvard Business School where he was a Baker Scholar and graduated cum laude with an A.B. degree from Dartmouth College. Mr. Loughlin has 14 years of experience as a private equity investor, participated in the evaluation of Bain Capital's original investment in Loews and has significant experience in serving on boards of directors.

        Mr. Eliot P. S. Merrill has served as a Director of Parent Holdings and AMCE since January 2008. Mr. Merrill is a Managing Director of The Carlyle Group focusing on buyout opportunities in the media and telecommunications sectors. Prior to joining Carlyle in 2001, Mr. Merrill was a Principal at Freeman Spogli & Co., a buyout fund with offices in New York and Los Angeles. From 1995 to 1997, Mr. Merrill worked at Dillon Read & Co. Inc. Prior thereto, Mr. Merrill worked at Doyle Sailmakers, Inc. Mr. Merrill also serves as a director of The Nielsen Company B.V. Mr. Merrill holds an A.B. degree from Harvard College. Mr. Merrill has over 13 years of experience in the private equity industry and has focused on the analysis, assessment and capitalization of new acquisitions and existing portfolio companies. Prior to the Loews Mergers, Mr. Merrill served on the audit committee of Loews Cineplex Entertainment Corporation.

        Mr. Kevin J. Maroni has served as a Director of Parent Holdings and AMCE since April 2008. Mr. Maroni serves as Senior Managing Director of Spectrum Equity Investors ("Spectrum"), an investment firm with offices in Boston and Menlo Park. Mr. Maroni has served on the boards of directors of numerous public and private companies, including most recently Consolidated Communications, Inc. from 2002 - 2005; NEP Broadcasting, L.P. from 2004-2007; and Classic Media, L.P. from 2006-2007. Prior to joining Spectrum at inception in 1994, Mr. Maroni worked at Time Warner, Inc. and Harvard Management Company's private equity affiliate. Mr. Maroni has also served as a trustee of numerous


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served as a trustee of numerous non-profit institutions, which currently include National Geographic Ventures; the John F. Kennedy Library Foundation and the Park School. Mr. Maroni holds a B.A. degree from the University of Michigan and a M.B.A. from Harvard University. Mr. Maroni has over 20 years of experience as a private equity investor and has experience in serving on a number of public and private company boards of directors.

        Mr. Craig R. Ramsey has served as Executive Vice President and Chief Financial Officer of Parent and Holdings since June 2007 and December 2004, respectively.2007. Mr. Ramsey has served as Executive Vice President and Chief Financial Officer of AMCE and American Multi-Cinema, Inc. since April 2003. Previously, Mr. Ramsey served as Executive Vice President, Chief Financial Officer and Secretary of AMCE and American Multi-Cinema, Inc. since April 2002. Mr. Ramsey served as Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer, of AMCE and American Multi-Cinema, Inc. from August 1998 until May 2002. Mr. Ramsey has served as a Director of American Multi-Cinema, Inc. since September 1999. Mr. Ramsey was elected Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. in February 2000. Mr. Ramsey served as Vice President, Finance from January 1997 to October 1999 and prior thereto, Mr. Ramsey served as Director of Information Systems and Director of Financial Reporting since joining American Multi-Cinema, Inc. in February 1995. Mr. Ramsey currently serves as a member of the board of directors of Movietickets.com and has previously served on the board of directors of Bank Midwest. Mr. Ramsey holds a B.S. degree in Accounting and Business Administration from the University of Kansas.

        Mr. John D. McDonald has served as Executive Vice President, U.S. Operations of Parent Holdings and AMCE since July 2009. Mr. McDonald has served as Director of American Multi-Cinema, Inc. since November 2007 and has served as Executive Vice President, U.S. Operations of American Multi-Cinema, Inc. since July 2009. Prior to July 2009, Mr. McDonald served as Executive Vice President, U.S. and Canada Operations of American Multi-Cinema, Inc. effective October 1998. Mr. McDonald served as Senior Vice President, Corporate Operations from November 1995 to October 1998. Mr. McDonald is a member of the National Association of Theatre Owners Advisory board of directors. Mr. McDonald has successfully managed the integration for the Gulf States, General Cinema, and Loews mergers and acquisitions. Mr. McDonald attended California State Polytechnic University where he studied economics and history.

        Mr. Mark A. McDonald has served as Executive Vice President, Global Development since July 2009 of Parent Holdings and AMCE. Prior thereto, Mr. McDonald served as Executive Vice President, International Operations of Parent, Holdings and AMCE from October 2008 to July 2009. Mr. McDonald has served as Executive Vice President, International Operations of American Multi-Cinema, Inc., and American Multi-Cinema, Inc. Entertainment International, Inc. ("AMCEI"), a subsidiary of AMC, since March 2007 and December 1998, respectively. Prior thereto, Mr. McDonald served as Senior Vice President, Asia Operations from November 1995 until his appointment as Executive Vice President, International Operations and Film in December 1998. Mr. McDonald served on the board of directors of AMCEI from March 2007 to May 2010. Mr. McDonald holds a B.A. degree from the University of Southern California and a M.B.A. from the Anderson School at University of California Los Angeles.

        Mr. Stephen A. Colanero has served as Executive Vice President and Chief Marketing Officer of Parent Holdings and AMCE since December 2009. Prior to joining AMC, Mr. Colanero served as Vice President of Marketing for RadioShack Corporation from April 2008 to December 2009. Mr. Colanero also served as Senior Vice President of Retail Marketing for Washington Mutual Inc. from February 2006 to August 2007 and as Senior Vice President, Strategic Marketing for Blockbuster Inc. from November 1994 to January 2006. Mr. Colanero holds a B.S. degree in Accounting from Villanova University and a M.B.A. in Marketing and Strategic Management from The Wharton School at the University of Pennsylvania.


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        Mr. Robert J. Lenihan has served as President, Programming, of Parent Holdings and AMCE since April 2009. Prior to joining AMC, Mr. Lenihan served as Executive Vice President for Loews Cineplex Entertainment Corp from August 1998 to February 2002. Mr. Lenihan was appointed Senior Vice President and Head Film Buyer at Mann Theatres in 1985 and served in that capacity at Act III Theatres, Century Theatres, Sundance Cinemas and most recently at Village Roadshow. Mr. Lenihan holds a B.S. degree from Rowan University.

        Mr. Samuel D. "Sonny" Gourley has served as President of AMC Film Programming of Parent Holdings and AMCE since December 2009. Mr. Gourley has served as President of AMC Film Programming a Division of AMC since November 2005. Prior thereto, Mr. Gourley served as Executive Vice President, National Film from November 2002 to November 2005 and Executive Vice President, East Film from November 1999 to November 2002. Mr. Gourley currently serves on the advisory board of Tent 25 Variety—The Children's Charity located in Los Angeles, as well as serving on the board of the local Tent 8 Variety—The Children's Charity in Kansas City. Mr. Gourley holds a B.A. degree in English from Miami University in Oxford, Ohio.

        Mr. Kevin M. Connor has served as Senior Vice President, General Counsel and Secretary of Parent and Holdings since June 2007 and December 2004, respectively.2007. Mr. Connor has served as Senior Vice President, General Counsel and Secretary of AMCE and American Multi-Cinema, Inc. since April 2003. Prior to April 2003, Mr. Connor served as Senior Vice President, Legal of AMCE and American Multi-Cinema, Inc. beginning November 2002. Prior thereto, Mr. Connor was in private practice in Kansas City, Missouri as a partner with the firm Seigfreid, Bingham, Levy, Selzer and Gee from October 1995. Mr. Connor holds a Bachelor of Arts degree in English and History from Vanderbilt University, a Juris Doctorate degree from the University of Kansas School of Law and a LLM in Taxation from the University of Missouri—Kansas City.

        Mr. Michael W. Zwonitzer has served as Senior Vice President, Finance of Parent Holdings and AMCE since July 2009. Prior thereto, Mr. Zwonitzer served as Vice President, Finance of Parent and Holdings since June 2007 and December 2004, respectively. Mr. Zwonitzer has served as Vice President, Finance of AMCE and American Multi-Cinema, Inc. since September 2004 and prior thereto, Mr. Zwonitzer served as Director of Finance from December 2002 to September 2004 and Manager of Financial Analysis from November 2000 to December 2002. Mr. Zwonitzer joined AMC in June 1998. Mr. Zwonitzer holds a B.S. degree in Accounting from the University of Missouri.

        Mr. Chris A. Cox has served as Senior Vice President and Chief Accounting Officer of Parent and Holdings since June 2010. Prior thereto Mr. Cox served as Vice President and Chief Accounting Officer of Parent and Holdings since June 2007 and December 2004, respectively. Mr. Cox has served as Vice President and Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. since May 2002. Prior to May 2002, Mr. Cox served as Vice President and Controller of American Multi-Cinema, Inc. since November 2000. Previously, Mr. Cox served as Director of Corporate Accounting for the Dial Corporation from December 1999 until November 2000. Mr. Cox holds a Bachelor's of Business Administration in Accounting and Finance degree from the University of Iowa.

        Mr. Terry W. Crawford has served as Senior Vice President and Treasurer of Parent since June 2010. Previously, Mr. Crawford served as Vice President and Treasurer of Parent since June 2007 and of Holdings, AMCE and American Multi-Cinema, Inc. since April 2005. Prior thereto, Mr. Crawford served as Vice President and Assistant Treasurer of Holdings, AMCE and American Multi-Cinema, Inc. from December 2004 until April 2005. Previously, Mr. Crawford served as Vice President, Assistant Treasurer and Assistant Secretary of AMCE from May 2002 until December 2004 and American Multi-Cinema, Inc. from January 2000 until December 2004. Mr. Crawford served as Assistant Treasurer and Assistant Secretary of AMCE from September 2001 until May 2002 and AMC from November 1999 until December 2004. Mr. Crawford served as Assistant Secretary of AMCE from March 1997 until September 2001 and American Multi-Cinema, Inc. from March 1997 until November 1999. Prior to joining AMC, Mr. Crawford served as Vice President and Treasurer for Metmor Financial, Inc., a


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wholly-owned subsidiary of Metropolitan Life Insurance Company. Mr. Crawford holds a B.S. degree in Business from Emporia State University and a M.B.A. from the University of Missouri—Kansas City.


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        Mr. George Patterson has served as Senior Vice President of Food and Beverage of American Multi-Cinema, Inc. since February 2010. Prior to joining the Company, Mr. Patterson served as Director of Asset Strategy and Multibrand Execution for YUM Brands from 2002 to 2010. Prior to joining YUM Brands, Mr. Patterson was Co-founder and COO of Cool Mountain Creamery and Café from 1997 to 2002. Prior to developing Cool Mountain Creamery and Café, Mr. Patterson was Regional Vice President for Wendy's International restaurants. Mr. Patterson holds a B.A. degree from the University of Florida.

        Ms. Elizabeth Frank has served as Senior Vice President of Strategy and Strategic Partnerships for AMCE since July 2010. Prior to joining AMCE, Ms. Frank served as Senior Vice President of Global Programs for AmeriCares. Prior to AmeriCares, Ms. Frank served as Vice President of Corporate Strategic Planning for Time Warner Inc. Prior to Time Warner Inc., Ms. Frank was a partner at McKinsey & Company for nine years. Ms. Frank currently serves on the Board of Directors for the Global Health Council. Ms. Frank holds a Bachelor of Business Administration degree from Lehigh University and a Masters of Business Administration from Harvard University.

Executive Compensation

Compensation Discussion and Analysis

        This section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer, our principal financial officer, our three other most highly compensated executive officers as well as an additional executive officer whose compensation otherwise would have been subject to reporting had there not been any option grants in fiscal 2010. These individuals are referred to as the "Named Executive Officers."

        Our executive compensation programs are determined and approved by our Compensation Committee. None of the Named Executive Officers are members of the Compensation Committee or otherwise had any role in determining the compensation of other Named Executive Officers, although the Compensation Committee does consider the recommendations of our Chief Executive Officer in setting compensation levels for our executive officers other than the Chief Executive Officer.

        The goals of the Compensation Committee with respect to executive compensation are to attract, retain, motivate and reward talented executives, to tie annual and long-term compensation incentives to the achievement of specified performance objectives, and to achieve long-term creation of value for our stockholders by aligning the interests of these executives with those of our stockholders. To achieve these goals, we endeavor to maintain compensation plans that are intended to tie a substantial portion of executives' overall compensation to key strategic, operational and financial goals such as achievement of budgeted levels of adjusted EBITDA or revenue, and other non-financial goals that the Compensation Committee deems important. From time to time, the Compensation Committee evaluates individual executive performance with a goal of setting compensation at levels they believe, based on industry comparables and their general business and industry knowledge and experience, are comparable with executives in other companies of similar size and stage of development operating in the theatrical exhibition industry and similar retail type businesses, while taking into account our relative performance and our own strategic goals.

        We conduct a periodic review of the aggregate level of our executive compensation as part of the annual budget review and annual performance review processes, which includes determining the operating metrics and non-financial elements used to measure our performance and to compensate our executive officers. This review is based on our knowledge of how other theatrical exhibition industry and similar retail type businesses measure their executive performance and on the key operating metrics that are critical in our effort to increase the value of our company.


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        Our executive compensation program consists of the elements described in the following sections. The Compensation Committee determines the portion of compensation allocated to each element for each individual Named Executive Officer. Our Compensation Committee expects to continue these policies in the short term but will reevaluate the current policies and practices as it considers advisable.

        The Compensation Committee believes based on their general business and industry experience and knowledge that the use of the combination of base salary, discretionary annual performance bonuses, and long-term incentives (including stock option or other stock-based awards) offers the best approach to achieving our compensation goals, including attracting and retaining talented and capable executives and motivating our executives and other officers to expend maximum effort to improve the business results, earnings and overall value of our business.

        Base Salaries.    Base salaries for our Named Executive Officers are established based on the scope of their responsibilities, taking into account competitive market compensation for similar positions, as well as seniority of the individual, our ability to replace the individual and other primarily judgmental factors deemed relevant by the Compensation Committee. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities at comparable companies, in line with our compensation philosophy, but we do not make any determinations or changes in compensation in reaction to market data alone. The Compensation Committee's goal is to provide total compensation packages that are competitive with prevailing practices in our industry and in the geographic markets in which we conduct business. However, the Compensation Committee retains flexibility within the compensation program to respond to and adjust for specific circumstances and our evolving business environment. Periodically, the Company obtains information regarding the salaries of employees at comparable companies, including approximately 150 multi-unit businesses in the retail, entertainment and food service industries. Base salaries for our Named Executive Officers are reviewed at appropriate times by the Compensation Committee and may be increased from time to time pursuant to such review and/or in accordance with guidelines contained in the various employment agreements in order to realign salaries with market levels after taking into account individual responsibilities, performance and experience. Base salaries for our Named Executive Officers were essentially unchanged from fiscal 2009 to fiscal 2010.

        Annual Performance Bonus.    The Compensation Committee has the authority to award annual performance bonuses to our Named Executive Officers. Under the current employment agreements, each Named Executive Officer is eligible for an annual bonus based on our annual incentive compensation program as it may exist from time to time. We believe that annual bonuses based on performance serve to align the interests of management and stockholders, and our annual bonus program is primarily designed to reward increases in adjusted EBITDA. Individual bonuses are performance based and, as such, can be highly variable from year to year. The annual incentive bonuses for our Named Executive Officers are determined by our Compensation Committee and, except with respect to his own bonus, our chief executive officer, based on our annual incentive compensation program as it may exist from time to time. For fiscal 2010, the annual incentive compensation program was based on a company component and an individual component. The company component was based primarily on attainment of an adjusted EBITDA target of $314,811,000. The plan guideline was that no company performance component of the bonus would be paid below attainment of 90% of targeted adjusted EBITDA and that upon attainment of 100% of targeted adjusted EBITDA, each Named Executive Officer would receive 100% of his assigned bonus target. Upon attainment of 110% of targeted adjusted EBITDA, each Named Executive Officer would receive a maximum of 200% of his assigned bonus target. The individual component of the bonus does not have an adjusted EBITDA threshold but is based on achievement of key performance measures and overall performance and contribution to our strategic and financial goals. Under the annual incentive compensation program, our Compensation Committee and, except with respect to his own bonus, chief executive officer, retain


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discretion to decrease or increase bonuses relative to the guidelines based on qualitative or other objective factors deemed relevant by the Compensation Committee.

        The following table summarizes the company component upon attainment of 100% of targeted adjusted EBITDA and the individual component of the annual performance bonus plan for fiscal 2010:

 
 Company
Component at
100% Target
 Individual
Component
 

Gerardo I. Lopez

 $392,000 $98,000 

Craig R. Ramsey

  200,200  50,050 

John D. McDonald

  200,200  50,050 

Robert J. Lenihan

  151,400  37,850 

Kevin M. Connor

  156,000  39,000 

Samuel D. Gourley

  138,000  34,500 

        Our annual bonuses have historically been paid in cash and traditionally have been paid in a single installment in the first quarter following the completion of a given fiscal year. Pursuant to current employment agreements, each Named Executive Officer is eligible for an annual bonus pursuant to the annual incentive plan in place at the time. The Compensation Committee has discretion to increase the annual bonus paid to our Named Executive Officers using its judgment if the Company exceeds certain financial goals, or to reward for achievement of individual annual performance objectives. Our Compensation Committee and the Board of Directors have approved bonus amounts that have been paid in fiscal 2011 for the performance during fiscal 2010. We obtained an adjusted EBITDA of 104% of target for fiscal 2010 which is equivalent to an approximate 142% payout of the assigned bonus target. The individual component of the bonus was determined following a review of each Named Executive Officer's individual performance and contribution to our strategic and financial goals. For fiscal 2010, this review was conducted during the first quarter of fiscal 2011.

        Special Incentive Bonus.    Pursuant to his employment agreement, Mr. Gerardo Lopez is entitled to a one-time special incentive bonus of $2,000,000 that vests at the rate of $400,000 per year over five years, effective March 2009, provided that he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. The special incentive bonus of $2,000,000 shall immediately vest in full upon Mr. Lopez's involuntary termination within twelve months after a change of control, as defined in the employment agreement. As of April 1, 2010, Mr. Lopez has vested in one-fifth, or $400,000, of this special incentive bonus to be paid on his third anniversary.

        Long Term Incentive Equity Awards.    In connection with the holdco merger, on June 11, 2007, we adopted an amended and restated 2004 stock option plan (formerly known as the 2004 Stock Option Plan), which provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code) and non-qualified stock options to acquire our common stock to eligible employees and consultants and our non-employee directors. Options granted under the plan vest in equal installments over three to five years from the grant date, subject to the optionee's continued service with Parent or one of its subsidiaries. The Compensation Committee approved stock option grants to Mr. Robert Lenihan and Mr. Samuel Gourley during fiscal 2010.

        Retirement Benefits.    We provide retirement benefits to the Named Executive Officers under both qualified and non-qualified defined-benefit and defined-contribution retirement plans. The Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. ("AMC Defined Benefit Retirement Income Plan") and the AMC 401(k) Savings Plan are both tax-qualified retirement plans in which the Named Executive Officers participate on substantially the same terms as our other participating employees. However, due to maximum limitations imposed by the Employee


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Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code on the annual amount of a pension which may be paid under a qualified defined-benefit plan and on the maximum amount that may be contributed to a qualified defined-contribution plan, the benefits that would otherwise be payable to the Named Executive Officers under the Defined Benefit Retirement Income Plan are limited. Because we did not believe that it was appropriate for the Named Executive Officers' retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we had established non-qualified supplemental defined-benefit plans that permit the Named Executive Officers to receive the same benefit that would be paid under our qualified defined-benefit plan up to the old IRS limit, as indexed, as if the Omnibus Budget Reconciliation Act of 1993 had not been in effect. On November 7, 2006, our Board of Directors approved a proposal to freeze the AMC Defined Benefit Retirement Income Plan and our supplemental defined-benefit plans, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan, effective as of December 31, 2006. The Compensation Committee determined that these types of plans are not as effective as other elements of compensation in aligning executives' interests with the interests of stockholders, a particularly important consideration for a public company. As a result, the Compensation Committee determined to freeze these plans. Benefits no longer accrue under the AMC Defined Benefit Retirement Income Plan, the AMC Supplemental Executive Retirement Plan or the AMC Retirement Enhancement Plan for our Named Executive Officers or for other participants.

        Effective for fiscal year 2010, under our 401(k) Savings Plan, we matched 50% of each eligible employee's elective contributions up to 6% of the employee's eligible compensation. Previously, Holdings matched 100% of elective contributions up to 5% of employee compensation.

        The "Pension Benefits" table and related narrative section "—Pension and Other Retirement Plans" below describes our qualified and non-qualified defined-benefit plans in which our Named Executive Officers participate.

        Non-Qualified Deferred Compensation Program.    Named Executive Officers are permitted to elect to defer base salaries and their annual bonuses under the AMC Non-Qualified Deferred Compensation Plan. We believe that providing the Named Executive Officers with deferred compensation opportunities is a cost-effective way to permit officers to receive the tax benefits associated with delaying the income tax event on the compensation deferred, even though the related deduction for the Companies is also deferred.

        The "Non-Qualified Deferred Compensation" table and related narrative section "—Non-Qualified Deferred Compensation Plan" below describe the non-qualified deferred compensation plan and the benefits thereunder.

        Severance and Other Benefits Upon Termination of Employment.    We believe that severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, we provide such protections for each of the Named Executive Officers and for other of our senior officers in their respective employment agreements. The Compensation Committee evaluates the level of severance benefits provided to Named Executive Officers on a case-by-case basis. We consider these severance protections consistent with competitive practices.

        As described in more detail below under "—Potential Payments Upon Termination or Change in Control" pursuant to their employment agreements, each of the Named Executive Officers would be entitled to severance benefits in the event of termination of employment without cause and certain Named Executive Officers would be entitled to severance benefits due to death or disability. In the case of Mr. Lopez, resignation for good reason would also entitle the employee to severance benefits. We have determined that it is appropriate to provide these executives with severance benefits under these circumstances in light of their positions and as part of their overall compensation package.


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        We believe that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage certain of our executive officers to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide the executives with severance benefits if they terminate their employment within a certain number of days following specified changes in their compensation, responsibilities or benefits following a change in control. No claim for severance due to a change in control has been made by an executive who is a party to an employment agreement providing for such severance benefits since the merger of Marquee Inc. with AMCE (then a change in control for purposes of the agreements). The severance benefits for these executives are generally determined as if they continued to remain employed by us for two years following their actual termination date.

        Perquisites.    The perquisites provided to each Named Executive Officer during fiscal 2010, 2009 and 2008 are reported in the All Other Compensation column of the "Summary Compensation Table" below, and are further described in footnote (5) to that table. Perquisites consist of matching contributions under our 401(k) savings plan, which is a qualified defined contribution plan, life insurance premiums, awards and gifts, relocation expenses, on-site parking, and an award of theatre chairs. Perquisites are benchmarked and reviewed, revised and approved by the Compensation Committee every year.

        Policy with Respect to Section 162(m).    Section 162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officers and the four other most highly compensated executive officers unless certain performance and other requirements are met. Our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive compensation program (including the stock options and other awards that may be granted to our Named Executive Officers as described above) satisfies the requirements for exemption from the $1,000,000 deduction limitation. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance-based and consistent with the goals of AMC Entertainment and our stockholders.

        Actions Taken After Fiscal 2010.    On July 8, 2010, our board of directors approved the adoption of the AMC Entertainment Holdings,  Inc. 2010 Equity Incentive Plan, which is described in more detail under "—Equity Incentive Plans" below. Our Compensation Committee intends that future equity-based awards will be made pursuant to the 2010 Equity Incentive Plan.


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Summary Compensation Table

        The following table presents information regarding compensation of our principal executive officer, our principal financial officer, our three other most highly compensated executive officers for services rendered during fiscal 2010 as well as an additional executive officer whose compensation otherwise would have been subject to reporting had there not been any option grants in fiscal 2010. These individuals are referred to as "Named Executive Officers."

Name and Principal
Position(1)
 Year Salary
($)
 Bonus
($)
 Stock
Awards
($)
 Option
Awards
($)(2)
 Non-Equity
Incentive
Plan
Compensation
($)(3)
 Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
 All Other
Compensation
($)(5)
 Total
($)
 
Gerardo I. Lopez  2010 $700,003 $400,000 $ $ $674,240 $ $66,220 $1,840,463 
 Chief Executive Officer, President and Director (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)  2009  64,615      2,068,847      16,570  2,150,032 
Craig R. Ramsey  2010  385,000        346,847  83,470  6,656  821,973 
 Executive Vice President  2009  383,508            16,634  400,142 
 and Chief Financial Officer (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)  2008  374,183            29,365  403,548 
John D. McDonald  2010  385,000        344,344  134,080  9,419  872,843 
 Executive Vice President  2009  383,508            21,626  405,134 
 North American Operations (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)  2008  374,182            28,356  402,538 
Robert J. Lenihan  2010  376,885      138,833  252,838    48,762  817,318 
 President, Film Programming (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)                            
Kevin M. Connor  2010  325,000        260,520  12,201  8,205  605,926 
 Senior Vice President,  2009  323,658            16,123  339,781 
 General Counsel and Secretary (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)  2008  321,696            25,230  346,926 
Samuel D. Gourley  2010  287,500      92,962  230,460  169,091  40,393  820,406 
 President, AMC Film Programming (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)                            

(1)
The principal positions shown are at April 1, 2010. Compensation for Mr. Gerardo Lopez, Mr. Robert Lenihan, and Mr. Samuel Gourley is provided for years where they were Named Executive Officers only.

(2)
As required by the SEC Rules, amounts shown in the column, "Option Awards," presents the aggregate grant date fair value of option awards granted in the fiscal year in accordance with accounting rules ASC 718,Compensation—Stock Compensation. These amounts reflect the Company's accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officers. Options are to acquire shares of our common stock.

In May 2009, Mr. Robert Lenihan and Mr. Samuel Gourley received a stock option grant to purchase 1,023 and 685 of our common shares, respectively, at a price equal to $339.59 per share. The options will vest in five equal annual installments, subject to continued employment. The options will expire after ten years from the date of the grant. The valuation assumptions used for these option awards are provided in note 1 to the Company's consolidated financial statements contained elsewhere in this prospectus.


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(3)
The Compensation Committee has determined the amounts of the annual incentive plan compensation that will be paid to each Named Executive Officer for fiscal 2010. We paid those amounts during the first quarter of fiscal 2011. No bonuses were earned in fiscal 2009 and 2008 under the annual incentive bonus program as we did not meet the minimum targeted adjusted EBITDA threshold established by the Compensation Committee. Further discussion on the annual incentive bonus program for the Named Executive Officers can be found in theCompensation Discussion and AnalysisAnnual Performance Bonus section.

(4)
The following table represents the aggregate increases and decreases in actuarial present value of each officer's accumulated benefit amounts. The aggregate decreases in actuarial present value amounts have been omitted from the Summary Compensation Table:

 
  
 Defined
Benefit Plan
 Supplemental
Executive
Retirement
Plan
 

Craig R. Ramsey

  2010 $42,764 $22,173 

  2009  (2,109) (1,094)

  2008  (3,426) (1,776)

John D. McDonald

  2010  87,134  45,179 

  2009  (35,248) (18,276)

  2008  (13,050) (6,766)

Kevin M. Connor

  2010  8,635  3,566 

  2009  (4,394) (1,814)

  2008  (1,849) (3,567)

Samuel D. Gourley

  2010  113,326  55,765 
(5)
All Other Compensation is comprised of Company matching contributions under our 401(k) savings plan which is a qualified defined contribution plan, life insurance premiums, automobile related benefits, awards / gifts, relocation expenses,

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 Additional All Other
Compensation
 
 
  
 Perquisites and Other Personal Benefits Company
Matching
Contributions
to 401(k)
Plan
  
 
 
  
 Car
Allowance
 Awards/Gifts Theatre
Chairs
 Relocation
Expenses
 On-Site
Parking
 Life Insurance
Premiums
 

Gerardo I. Lopez

  2010 $ $100 $ $64,326 $ $ $1,794 

  2009        16,570       

Craig R. Ramsey

  2010    100        3,202  3,354 

  2009  1,500  305        11,475  3,354 

  2008  13,500  254        12,128  3,483 

John D. McDonald

  2010    1,500        6,125  1,794 

  2009  1,500  305        18,027  1,794 

  2008  13,500  254        12,739  1,863 

Robert J. Lenihan

  2010        45,883  170    2,709 

Kevin M. Connor

  2010            7,125  1,080 

  2009  1,350  305  2,366      11,061  1,041 

  2008  12,150  254        11,781  1,045 

Samuel D. Gourley

  2010    1,502    31,107  170  4,900  2,714 

Compensation of Named Executive Officers

        The Summary Compensation Table above quantifies the value of the different forms of compensation earned by or awarded to our Named Executive Officers in fiscal 2010. The primary elements of each Named Executive Officer's total compensation reported in the table are base salary and annual bonus.

        The Summary Compensation Table should be read in conjunction with the tables and narrative descriptions that follow. A description of the material terms of each Named Executive Officer's base salary and annual bonus is provided below.

        The "Pension Benefits" table and related description of the material terms of our pension plans describe each Named Executive Officer's retirement benefits under the Companies' defined-benefit pension plans to provide context to the amounts listed in the Summary Compensation Table. The discussion in the section "Potential Payments Upon Termination or Change in Control" explains the potential future payments that may become payable to our Named Executive Officers.

        We have entered into employment agreements with each of Messrs. Lopez, Ramsey, McDonald, Lenihan, Connor, and Gourley. Provisions of these agreements relating to outstanding equity incentive awards and post-termination of employment benefits are discussed below.

        Gerardo I. Lopez.    On February 23, 2009, we entered into an employment agreement with Gerardo I. Lopez to serve as its Chief Executive Officer and President. The term of the agreement is for three years, with automatic one-year extensions each year. The agreement provides that Mr. Lopez will receive an initial annualized base salary of $700,000. The Compensation Committee, based on its review, has discretion to increase (but not reduce) the base salary each year. Mr. Lopez's target incentive bonus for fiscal 2010 was equal to 70% of his annual base salary. In addition, Mr. Lopez is receiving a one-time special incentive bonus that vests at the rate of $400,000 per year over five years, effective March 2009, provided he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. Upon approval by the Compensation Committee, Mr. Lopez received a grant of options to purchase 15,980.45 shares of Parent's common stock. The options will vest in five equal annual installments, subject to Mr. Lopez's continued employment. In making its determination with


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respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. The agreement also provides that Mr. Lopez will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with related business expenses and travel. Change in control, severance arrangements and restrictive covenants in Mr. Lopez's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Craig R. Ramsey.    On July 1, 2001, we entered into an employment agreement with Craig R. Ramsey who serves as the Executive Vice President and Chief Financial Officer and reports directly to our President and Chief Executive Officer. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Ramsey will receive an initial annualized base salary of $275,000. The agreement also provides for annual bonuses for Mr. Ramsey based on the applicable incentive compensation program of the company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Ramsey will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. Ramsey's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        John D. McDonald.    On July 1, 2001, we entered into an employment agreement with John D. McDonald, who serves as an Executive Vice President, North America Operations. Mr. McDonald reports directly to our President and Chief Operating Officer or such officer's designee. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. McDonald will receive an initial annualized base salary of $275,000. The agreement also provides for annual bonuses for Mr. McDonald based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. McDonald will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. McDonalds' employment agreements are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Robert J. Lenihan.    On April 7, 2009, we entered into an employment agreement with Robert J. Lenihan who serves as the President of Film Programming. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Lenihan will receive an initial annualized base salary of $410,000 subject to review by the Board of Directors or the Compensation Committee. Based on their review, the Board of Directors or the Compensation Committee have discretion to increase (but not reduce) the base salary each year. The agreement also provides for annual bonuses for Mr. Lenihan based on the applicable incentive compensation program of the Company. The target incentive bonus for each fiscal year during the period of employment shall equal 50% of the base salary. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Lenihan will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with carrying out the Executive's duties for the Company. Change in control and severance arrangements in


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Mr. Lenihan's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Kevin M. Connor.    On November 6, 2002, we entered into an employment agreement with Kevin M. Connor who serves as the Senior Vice President, General Counsel and Secretary of the Company. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Connor will receive an initial annualized base salary of $225,000. The agreement also provides for annual bonuses for Mr. Connor based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Connor will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. Connor's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Samuel D. Gourley.    On July 1, 2001, we entered into an employment agreement with Samuel D. Gourley who serves as the President of AMC Film Programming. The term of the agreement is for one year, with automatic one-year extensions each year. The agreement provides that Mr. Gourley will receive an initial annualized base salary of $197,608 plus an additional $17,500 on an annual basis as a market allowance subject to review by the President, AMC Film Marketing and EVP North America Film Operations, with the approval of our President and Chief Operating Officer. The agreement also provides for annual bonuses for Mr. Gourley based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Gourley will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. Gourley's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."


Grants of Plan-based Awards—Fiscal 2010

        The following table summarizes equity awards granted to named executive officers during fiscal 2010:

 
  
  
  
  
  
  
  
 All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
 All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  
  
 
 
  
 Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
 Estimated Future Payouts
Under Equity Incentive
Plan Awards
 Exercise
Or Base
Price of
Option
Awards
($/Sh)
 Grant Date
Fair Value
of Stock
and
Option
Awards
 
Name
 Grant
Date
 Threshold
($)
 Target
($)
 Maximum
($)
 Threshold
($)
 Target
($)
 Maximum
($)
 

Robert J. Lenihan

  05/28/2009 $ $ $ $ $ $    1,023 $339.59 $138,833 

Samuel D. Gourley

  05/28/2009 $ $ $ $ $ $    685 $339.59 $92,962 

        On May 28, 2009, Mr. Lenihan and Mr. Gourley received a grant of stock options to purchase 1,023 and 685 shares, respectively of Class N Common Stock at a price equal to $339.59 per share. The options will vest in five equal annual installments, subject to their continued employment. The options shall expire after ten years from the date of the grant. 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 for "plain vanilla" share option grants as it does not have enough historical experience


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to provide a reasonable estimate. See note 8 to the Company's consolidated financial statements contained elsewhere in this prospectus for more information.


Outstanding Equity Awards at end of Fiscal 2010

        The following table presents information regarding the outstanding equity awards held by each of our Named Executive Officers as of April 1, 2010, including the vesting dates for the portions of these awards that had not vested as of that date:

 
 Option Awards Stock Awards 
Name
 Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
 Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
 Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
 Option
Exercise
Price
($)
 Option
Expiration
Date
 Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)
 Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)
 Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
 Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
 

Gerardo I. Lopez(1)

  3,196.09000  12,784.36000   $323.95  03/06/2019         

Craig R. Ramsey(2)(3)

  4,092.28723      491.00  12/23/2014         

John D. McDonald(2)(3)

  2,046.14362      491.00  12/23/2014         

Robert J. Lenihan(4)

    1,023.00000    339.59  05/28/2019         

Kevin M. Connor(2)(3)

  2,046.14362      491.00  12/23/2014         

Samuel D. Gourley(4)

    685.00000    339.59  05/28/2019         

(1)
The options vest at a rate of 20% per year commencing on March 6, 2010.

(2)
The options vest at a rate of 20% per year commencing on December 23, 2005.

(3)
The option exercise price per share of $1,000 was adjusted to $491 per share pursuant to the anti-dilution provisions of the 2004 Stock Option Plan to give effect to the payment of a one-time nonrecurring dividend on June 15, 2007 of $652.8 million to the holders of our then outstanding 1,282,750 shares of common stock.

(4)
The options vest at a rate of 20% per year commencing on May 28, 2010.


Option Exercises and Stock Vested—Fiscal 2010

        None of our Named Executive Officers exercised options or held any outstanding stock awards during fiscal 2010.


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Pension Benefits

        The following table presents information regarding the present value of accumulated benefits that may become payable to the Named Executive Officers under our qualified and nonqualified defined-benefit pension plans.

Name
 Plan Name Number of
Years Credited
Service
(#)
 Present Value
of Accumulated
Benefit(1)
($)
 Payments
During Last
Fiscal Year
($)
 

Gerardo I. Lopez

    $ $ 

Craig R. Ramsey

 Defined Benefit Retirement Income Plan  12.00  179,849   

 Supplemental Executive Retirement Plan  12.00  93,250   

John D. McDonald

 Defined Benefit Retirement Income Plan  31.05  317,871   

 Supplemental Executive Retirement Plan  31.05  164,814   

Robert J. Lenihan

        

Kevin M. Connor

 Defined Benefit Retirement Income Plan  4.00  27,596   

 Supplemental Executive Retirement Plan  4.00  11,396   

Samuel D. Gourley

 Defined Benefit Retirement Income Plan  31.80  476,600   

 Supplemental Executive Retirement Plan  31.80  234,524   

(1)
The accumulated benefit is based on service and earnings considered by the plans for the period through April 1, 2010. It includes the value of contributions made by the Named Executive Officers throughout their careers. The present value has been calculated assuming the Named Executive Officers will remain in service until age 65, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable under the available forms of annuity consistent with the plans. The interest assumption is 6.16%. The post-retirement mortality assumption is based on the 2010 IRS Prescribed Mortality-Static Annuitant, male and female mortality table. See note 11 to the Company's consolidated financial statements contained elsewhere in this prospectus for more information.

Pension and Other Retirement Plans

        We provide retirement benefits to the Named Executive Officers under the terms of qualified and non-qualified defined-benefit plans. The AMC Defined Benefit Retirement Income Plan is a tax-qualified retirement plan in which the Named Executive Officers participate on substantially the same terms as our other participating employees. However, due to maximum limitations imposed by ERISA and the Internal Revenue Code on the annual amount of a pension which may be paid under a qualified defined-benefit plan, the benefits that would otherwise be payable to the Named Executive Officers under the Defined Benefit Retirement Income Plan are limited. Because we did not believe that it was appropriate for the Named Executive Officers' retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we have non-qualified supplemental defined-benefit plans that permit the Named Executive Officers to receive the same benefit that would be paid under our qualified defined-benefit plan up to the old IRS limit, as indexed, as if the Omnibus Budget Reconciliation Act of 1993 had not been in effect. On November 7, 2006, our Board of Directors approved a proposal to freeze the AMC Defined Benefit Retirement Income Plan, and our supplemental plans, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan, effective as of December 31, 2006. As amended, benefits do not accrue after December 31, 2006, but vesting continues for associates with less than five years of vesting service. The material terms of the AMC Defined Benefit Retirement Income Plan, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan are described below.


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        AMC Defined Benefit Retirement Income Plan.    The AMC Defined Benefit Retirement Income Plan is a non-contributory defined-benefit pension plan subject to the provisions of ERISA. As mentioned above, the plan was frozen effective December 31, 2006.

        The plan provides benefits to certain of our employees based upon years of credited service and the highest consecutive five-year average annual remuneration for each participant. For purposes of calculating benefits, average annual compensation is limited by Section 401(a)(17) of the Internal Revenue Code, and is based upon wages, salaries and other amounts paid to the employee for personal services, excluding certain special compensation. Under the defined benefit plan, a participant earns a vested right to an accrued benefit upon completion of five years of vesting service.

        AMC Supplemental Executive Retirement Plan.    AMC also sponsors a Supplemental Executive Retirement Plan to provide the same level of retirement benefits that would have been provided under the retirement plan had the federal tax law not been changed in the Omnibus Budget Reconciliation Act of 1993 to reduce the amount of compensation which can be taken into account in a qualified retirement plan. The plan was frozen, effective December 31, 2006, and no new participants can enter the plan and no additional benefits can accrue thereafter.

        Subject to the forgoing, any individual who is eligible to receive a benefit from the AMC Defined Benefit Retirement Income Plan after qualifying for early, normal or late retirement benefits thereunder, the amount of which is reduced by application of the maximum limitations imposed by the Internal Revenue Code, is eligible to participate in the Supplemental Executive Retirement Plan.

        The benefit payable to a participant equals the monthly amount the participant would receive under the AMC Defined Benefit Retirement Income Plan without giving effect to the maximum recognizable compensation for qualified retirement plan purposes imposed by the Internal Revenue Code, as amended by Omnibus Budget Reconciliation Act of 1993, less the monthly amount of the retirement benefit actually payable to the participant under the AMC Defined Benefit Retirement Income Plan, each as calculated as of December 31, 2006. The benefit is an amount equal to the actuarial equivalent of his/her benefit, computed by the formula above, payable in either a lump sum (in certain limited circumstances, specified in the plan) or equal semi-annual installments over a period of two to ten years, with such form, and, if applicable, period, having been irrevocably elected by the participant.

        If a participant's employment terminates for any reason (or no reason) before the earliest date he/she qualifies for early, normal or late retirement benefits under the AMC Defined Benefit Retirement Income Plan, no benefit is payable under the Supplemental Executive Retirement Plan.


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Nonqualified Deferred Compensation

        The following table presents information regarding the contributions to and earnings on the Named Executive Officers' deferred compensation balances during fiscal 2010, and also shows the total deferred amounts for the Named Executive Officers at the end of fiscal 2010:

Name
 Executive
Contributions
in Last FY
($)
 Registrant
Contributions
in Last FY
($)(1)
 Aggregate
Earnings in
Last FY
($)
 Aggregate
Withdrawals/
Distributions
($)
 Aggregate
Balance at
Last FYE
($)
 

Gerardo I. Lopez

 $ $400,000 $ $ $400,000 

Craig R. Ramsey

  11,550    24,530    137,887 

John D. McDonald

  10,661    2,414    14,636 

Robert J. Lenihan

           

Kevin M. Connor

           

Samuel D. Gourley

           

(1)
The activity for Mr. Lopez reflects the vested portion of his Special Incentive Bonus.

Non-Qualified Deferred Compensation Plan

        We permit the Named Executive Officers and other key employees to elect to receive a portion of their compensation reported in the Summary Compensation Table on a deferred basis. Deferrals of compensation during fiscal 2010 and in recent years have been made under the AMC Non-Qualified Deferred Compensation Plan. Participants of the plan are able to defer annual salary and bonus (excluding commissions, expense reimbursement or allowances, cash and non-cash fringe benefits and any stock-based incentive compensation). Amounts deferred under the plans are credited with an investment return determined as if the participant's account were invested in one or more investment funds made available by the Committee and selected by the participant. We may, but need not, credit the deferred compensation account of any participant with a discretionary or profit sharing credit as determined by us. The deferred compensation account will be distributed either in a lump sum payment or in equal annual installments over a term not to exceed 10 years as elected by the participant and may be distributed pursuant to in-service withdrawals pursuant to certain circumstances. Any such payment shall commence upon the date of a "Qualifying Distribution Event" (as such term is defined in the Non-Qualified Deferred Compensation Plan). The Qualifying Distribution Events are designed to be compliant with Section 409A of the Internal Revenue Code.

        Pursuant to his employment agreement, Mr. Gerardo Lopez is entitled to a one-time special incentive bonus of $2,000,000 that vests at the rate of $400,000 per year over five years, effective March 2009, provided that he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. The special incentive bonus of $2,000,000 shall immediately vest in full upon Mr. Lopez's involuntary termination within twelve months after a change of control, as defined in the employment agreement. As of April 1, 2010, Mr. Lopez has vested in one-fifth, or $400,000, of this special incentive bonus to be paid on his third anniversary.

Potential Payments Upon Termination or Change in Control

        The following section describes the benefits that may become payable to certain Named Executive Officers in connection with a termination of their employment and/or a change in control, changes in responsibilities, salary or benefits. In addition to the benefits described below, outstanding equity-based awards held by our Named Executive Officers may also be subject to accelerated vesting in connection with a change in control of Holdings under the terms of our 2004 Stock Option Plan. Furthermore, upon a termination following a "Change of Control" (as such term is defined in the AMC Retirement


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Enhancement Plan), the Named Executive Officer is entitled to his accrued benefits payable thereunder in a form of payment that he has previously chosen. The Retirement Enhancement Plan and the present value of benefits accumulated under the plan are described above in the table "Pension Benefits" and the accompanying narrative "Pension and Other Retirement Plans."

        Assumptions.    As prescribed by the SEC's disclosure rules, in calculating the amount of any potential payments to the Named Executive Officers under the arrangements described below, we have assumed that the applicable triggering event (i.e., termination of employment and/or change in control) occurred on the last business day of fiscal 2010 and that the price per share of our common stock is equal to the fair market value of a share of our common stock as of that date.

        Mr. Lopez's employment agreement, described above under "—Description of Employment Agreements—Salary and Bonus Amounts," provides for certain benefits to be paid to Mr. Lopez in connection with a termination of his employment under the circumstances described below.

        Severance Benefits.    In the event Mr. Lopez's employment is terminated as a result of an involuntary termination during the employment term without cause pursuant to a termination for death, "Disability", or by Mr. Lopez pursuant to a termination for "Good Reason" or after a "Change of Control" (as those terms are defined in the employment agreement), Mr. Lopez will be entitled to severance pay equal to two times the sum of his base salary plus the average of each Incentive Bonus paid to the Executive during the 24 months preceding the severance date (or previous year, if he has not been employed for two bonus cycles as of the severance date). If his employment is terminated before determination of the first Incentive Bonus for which he is eligible under the agreement, then the amount shall be based upon the average actual percentage of target bonus paid to executive officers who participated in the Company's annual bonus plan in the preceding year. In addition, upon such a qualifying termination, the stock options granted pursuant to the employment agreement shall vest in full. The special incentive bonus equal to $2,000,000, which vests in equal annual installments over five years, shall immediately vest and be paid in full upon the involuntary termination of employment within twelve months after a change of control.

        If Mr. Lopez had terminated employment with us on April 1, 2010 pursuant to his employment agreement under the circumstances described in the preceding paragraph, we estimate that he would have been entitled to a cash payment equal to $1,400,000. This amount is derived by multiplying two by the sum of $700,000, which represents Mr. Lopez's annualized base salary rate in effect on April 1, 2010. Additionally, Mr. Lopez would have been entitled to accelerated vesting of unvested stock options with a grant date fair value of $2,068,847 (based on a Black Sholes formula as of March 6, 2009). The special incentive bonus of $2,000,000 shall immediately vest and be paid in full upon Mr. Lopez's involuntary termination within twelve months after a change of control.

        The employment agreements for each of the other Named Executive Officers, described above under "—Description of Employment Agreements—Salary and Bonus Amounts," provide for certain benefits to be paid to the executive in connection with a termination of his employment under the circumstances described below and/or a change in control.

        Severance Benefits.    In the event the executive's employment is terminated during the employment term as a result of the executive's death or "Disability" or by us pursuant to a "Termination Without Cause" or by the executive following certain changes in his responsibilities, annual base salary or benefits, the executive (or his personal representative) will be entitled to a lump cash severance payment equal to one or two years of his base salary then in effect.


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        Upon a termination of employment with us on April 1, 2010 under the circumstances described in the preceding paragraph, we estimate that each Named Executive Officer (other than Mr. Lopez) would have been entitled to a lump sum cash payment as follows: Mr. Craig Ramsey—$770,000; Mr. John McDonald—$770,000; Mr. Robert Lenihan—$820,000; Mr. Kevin Connor—$650,000; and Mr. Samuel Gourley—$287,500. These amounts are derived by multiplying two by the respective executive's annualized base salary rate in effect on April 1, 2010, except for Mr. Gourley who would receive a lump sum amount equal to one year base salary plus the amount of any annual market allowance. Mr. Lenihan is not entitled to severance benefits for an employment termination resulting from death or "Disability."

        Restrictive Covenants.    Pursuant to each Named Executive Officer's employment agreement, the executive has agreed not to disclose any confidential information of ours at any time during or after his employment with American Multi-Cinema, Inc./AMCE.

Director Compensation—Fiscal 2010

        The following section presents information regarding the compensation paid during fiscal 2010 to members of our Board of Directors who are not also our employees (referred to herein as "Non-Employee Directors"). The compensation paid to Mr. Gerardo I. Lopez, who is also an employee, is presented above in the Summary Compensation Table and the related explanatory tables. Mr. Lopez did not receive additional compensation for his service as a director.

        We paid our directors an annual cash retainer of $50,000, plus $1,500 for each meeting of the board of directors they attended in person or by phone, plus $1,000 for each committee meeting they attended. We also reimbursed all directors for any out-of-pocket expenses incurred by them in connection with their services provided in such capacity.

        The following table presents information regarding the compensation of our non-employee Directors in fiscal 2010:

Name
 Fees
earned or
paid in
cash
($)
 Stock
Awards
($)
 Option
Awards
($)
 Non-equity
Incentive
Plan
Compensation
($)
 Changes in
Pension
Value and
Nonqualified
Deferred
Compensation
($)
 All other
Compensation
($)
 Total
($)
 

Aaron J. Stone

 $59,000 $ $ $ $ $ $59,000 

Dr. Dana B. Ardi

 $56,000           $56,000 

Stephen P. Murray

 $58,000           $58,000 

Stan Parker

 $60,000           $60,000 

Philip H. Loughlin

 $59,000           $59,000 

Eliot P. S. Merrill

 $57,000           $57,000 

Kevin Maroni

 $59,000           $59,000 

Travis Reid

 $60,000           $60,000 

Compensation Committee Interlocks and Insider Participation

        The Compensation Committee members whose names appear on the Compensation Committee Report were committee members during all of fiscal 2010. No member of the Compensation Committee is or has been a former or current executive officer of the Company or has had any relationships requiring disclosure by the Company under the SEC's rules requiring disclosure of certain relationships and related-party transactions. None of the Company's executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent


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function) of any other entity that has one or more executive officers serving on our Board of Directors or on the Compensation Committee during the fiscal year ended April 1, 2010.

Risk Oversight

        The Board of Directors executes its oversight responsibility for risk management directly and through its Committees, as follows:

        The Audit Committee has primary responsibility for overseeing the Company's Enterprise Risk Management, or "ERM", program. The Company's Director of Reporting and Control, who reports to the Audit Committee quarterly, facilitates the ERM program with consideration given to our Annual Operating Plan and with direct input obtained from the Senior Leadership Team, or "SLT"—the heads of our principal business and corporate functions—and their direct reports, under the executive sponsorship of our Executive Vice President and Chief Financial Officer and our Vice President and Chief Accounting Officer. The Audit Committee's meeting agendas include discussions of individual risk areas throughout the year, as well as an annual summary of the ERM process.

        The Board of Directors' other committees oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally. The Board of Directors is kept abreast of its committees' risk oversight and other activities via reports of the Committee Chairmen to the full Board. These reports are presented at every regular Board of Directors meeting and include discussions of committee agenda topics, including matters involving risk oversight.

        The Board of Directors considers specific risk topics, including risks associated with our Annual Operating Plan and our capital structure. In addition, the Board of Directors receives detailed regular reports from the members of our SLT that include discussions of the risks and exposures involved in their respective areas of responsibility. Further, the Board of Directors is routinely informed of developments that could affect our risk profile or other aspects of our business.

        The Compensation Committee believes the elements of the Company's executive compensation program effectively link performance-based compensation to financial goals and stockholder interests without encouraging executives to take unnecessary or excessive risks in the pursuit of those objectives. The Compensation Committee believes that the overall mix of compensation elements is appropriately balanced and does not encourage the taking of short-term risks at the expense of long-term results. Long-term incentives for our executives are awarded in the form of equity instruments reflecting, or valued by reference to, our common stock. Long-term incentive awards are generally made on an annual basis and are subject to a multi-year vesting schedule which helps ensure that award recipients always have significant value tied to long-term stock price performance. The Compensation Committee believes that the combination of granting the majority of long-term incentives in the form of option awards, together with the Company stock actually owned by our executives, appropriately links the long-term interests of executives and stockholders, and balances the short-term nature of annual incentive cash bonuses and any incentives for undue risk-taking in our other compensation arrangements.


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Equity Incentive Plans

        As of the date of this prospectus, our employees and directors hold outstanding stock options for the purchase of up to approximately 35,691 shares of Parent's common stock. Those options were granted under the AMC Entertainment Holdings, Inc. Amended and Restated 2004 Stock Option Plan (the "2004 Plan") and our 2010 Equity Incentive Plan. As of January 21, 2011, approximately 14,179 of those options had vested and the balance were not vested. The exercise prices of the outstanding options ranged from $323.95 per share to $752 per share and each of those options had a maximum term of ten years from the applicable date of grant.

        The following sections provide more detailed information concerning our incentive plans and the shares that are available for future awards under these plans. Each summary below is qualified in its entirety by the full text of the relevant plan document and/or option agreement, which has been filed with the Securities and Exchange Commission and is an exhibit to the Form S-1 Registration Statement of which this prospectus is a part and is available through the Securities and Exchange Commission's internet site at http://www.sec.gov.

        We adopted the 2004 Plan as amended and restated as of July 11, 2007. Under the 2004 Plan, we are generally authorized to grant options to purchase shares of our common stock to certain of our employees, non-employee directors and consultants and certain employees of our subsidiaries. Options under the 2004 Plan are either incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, or nonqualified stock options. All options granted under the plan expire no later than ten years from their date of grant. No new awards will be granted under the 2004 Plan after the consummation of this exchange offer.

        Our Compensation Committee administers the 2004 Plan. As is customary in incentive plans of this nature, the number of shares subject to outstanding awards under the 2004 Plan and the exercise prices of those awards, are subject to adjustment in the event of changes in our capital structure, reorganizations and other extraordinary events. In the event of a corporate event (as defined in the plan), the plan administrator has discretion to provide for the accelerated vesting of awards, among other things.

        Our board of directors or our Compensation Committee may amend or terminate the 2004 Plan at any time. The 2004 Plan requires that certain amendments, to the extent required by applicable law or any applicable listing agency or deemed necessary or advisable by the board of directors, be submitted to stockholders for their approval.

        On July 8, 2010, our board of directors and our stockholders approved the adoption of the AMC Entertainment Holdings, Inc. 2010 Equity Incentive Plan (the "2010 Plan").

        Purpose.    The purpose of the 2010 Plan is to attract, retain and motivate the officers, employees, non-employee directors, and consultants of us, and any of our subsidiaries and affiliates and to promote the success of our business by providing the participants with appropriate incentives.

        Administration.    The 2010 Plan will be administered by the Compensation Committee.

        Available Shares.    The aggregate number of shares of Parent's common stock for delivery pursuant to awards granted under the 2010 Plan is 39,312 shares (subject to adjustment), which may be either authorized and unissued shares of our common stock or shares of common stock held in or acquired in treasury.


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        Subject to adjustment as provided for in the 2010 Plan, (i) the number of shares available for granting incentive stock options under the 2010 Plan will not exceed 19,652 shares and (ii) the maximum number of shares that may be granted to a participant each year is 7,862. To the extent shares subject to an award are not issued or delivered by reason of (i) the expiration, cancellation, forfeiture or other termination of an award, (ii) the withholding of such shares in satisfaction of applicable taxes or (iii) the settlement of all or a portion of an award in cash, then such shares will again be available for issuance under the 2010 Plan.

        Eligibility.    Directors, officers and other employees of us and of any of our subsidiaries and affiliates, as well as others performing consulting services for us or any of our subsidiaries or affiliates will be eligible for grants under the 2010 Plan.

        Awards.    The 2010 Plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights ("SARs"), restricted stock awards, other stock-based awards or performance-based compensation awards.

        Award agreements under the 2010 Plan generally have the following features, subject to change by the Compensation Committee:

        "Change of Control" unless otherwise specified in the award agreement, means an event or series of events that results in any of the following: (a) a change in our ownership occurs on the date that any one person or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than our subsidiaries, acquires ownership of our stock that, together with stock held by such person or group, constitutes more than fifty percent (50%) of our total voting power. However, if any one person (or more than one person acting as a group) is considered to own more than fifty percent (50%) of the total fair market value or total voting power of our stock prior to the acquisition, any acquisition of additional stock by the same person or persons is not considered to cause a change in our ownership; (b) a change in our effective control occurs if, during any twelve-month period, the individuals, who at the beginning of such period constitute our board of directors (the "Incumbent Board"), cease for any reason to constitute at least a majority of the board of directors, provided, however, that if the election, or nomination for election by our stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, and provided, further, that any reductions in the size of the Board that are instituted voluntarily by the Incumbent Board shall not constitute a "Change of Control", and after any such reduction the "Incumbent Board" shall mean the board of directors as so reduced; or (c) a change in the ownership of a substantial portion of our assets occurs on the date that any one person, or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than any of our subsidiaries, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition


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by such person or persons) our assets that have a total gross fair market value of more than fifty percent (50%) of the total gross fair market value of all our assets immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of our assets, or the value of the assets being disposed of, determined in good faith by the board of directors without regard to any liabilities associated with such assets; provided, that, in no event shall a Change of Control be deemed to occur under clause (a), (b) or (c) hereof, for purposes of the 2010 Plan and any award agreement, as a result of (i) an initial public offering of our stock or (ii) a change in the majority of the Incumbent Board in connection with an initial public offering of our stock or a secondary public offering of our stock.

        "Cause" means, (i) a material breach by the participant of any of the participant's obligations under any written agreement with us or any of our affiliates, (ii) a material violation by the participant of any of our policies, procedures, rules and regulations applicable to employees generally or to similarly situated employees, in each case, as they may be amended from time to time in our sole discretion; (iii) the failure by the participant to reasonably and substantially perform his or her duties to us or our affiliates (other than as a result of physical or mental illness or injury) or the failure by the participant to comply with reasonable directives of our board of directors; (iv) the participant's willful misconduct (including abuse of controlled substances) or gross negligence that is injurious to us, our affiliates or any of our respective customers, clients or employees; (v) the participant's fraud, embezzlement, misappropriation of funds or beach of fiduciary duty against us or any of our affiliates (or any predecessor thereto or successor thereof); or (vi) the commission by the participant of a felony or other serious crime involving moral turpitude. Notwithstanding the foregoing, if the participant is a party to an employment agreement with us or any of our affiliates at the time of his or her termination of employment and such employment agreement contains a different definition of "cause" (or any derivation thereof), the definition in such employment agreement will control for purposes of the award agreement.

        In consideration for the grants of the awards, the award agreements subject the participants to certain restrictive covenants and confidentiality obligations.

        Adjustment.    In the event of any corporate event or transaction involving us, any of our subsidiaries and/or affiliates such as a merger, reorganization, capitalization, stock split, spin-off, or any similar corporate event or transaction, the Compensation Committee will, to prevent dilution or enlargement of participants' rights under the 2010 Plan, substitute or adjust in its sole discretion the awards.

        Amendment and Termination.    Subject to the terms of the 2010 Plan, the Compensation Committee, in its sole discretion, may amend, alter, suspend, discontinue or terminate the 2010 Plan, or any part thereof or any award (or award agreement), at any time. In the event any award is subject to Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), the Compensation Committee may amend the 2010 Plan and/or any award agreement without the applicable participant's prior consent to exempt the 2010 Plan and/or any award from the application of Section 409A, preserve the intended tax treatment of any such award or comply with the requirements of Section 409A.


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Equity Compensation Plan Information

        The following is a summary of securities authorized for issuance under Parent's equity compensation plans as of April 1, 2010.

 
 Number of shares to be
issued upon exercise of
outstanding options,
warrants and rights
 Weighted average of exercise
price of outstanding
options, warrants and rights
 Number of securities
remaining available for
future issuance under equity
compensation plans(1)
 

Equity compensation plans approved by security holders

  31,597.168095 $383.58  9,325.7042495 

Equity compensation plans not approved by security holders

       
        

Total

  31,597.168095 $383.58  9,325.7042495 
        

(1)
These shares are available under the 2004 Stock Option Plan of Parent. The number of shares shown is as of April 1, 2010.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        All of the issued and outstanding capital stock of AMCE is owned by Holdings, and all of the issued and outstanding capital stock of Holdings is owned by Parent. Parent has common stock issued and outstanding. The table below sets forth certain information regarding beneficial ownership of the common stock of Parent held as of December 30, 2010 by (i) each of its directors and our Named Executive Officers, (ii) all directors and executive officers of Parent as a group and (iii) each person known by Parent to own beneficially more than 5% of Parent common stock. Parent believes that each individual or entity named has sole investment and voting power with respect to shares of common stock of Parent as beneficially owned by them, except as otherwise noted.

Name and Address
 Shares of Class A-1 Common Stock Shares of Class A-2 Common Stock Shares of Class N Common Stock Shares of Class L-1 Common Stock Shares of Class L-1 Common Stock Percentage of Ownership 

J.P. Morgan Partners (BHCA), L.P. and Related Funds(1)(2)

  249,225.00(2) 249,225.00(2)       38.98%

Apollo Investment Fund V, L.P. and Related Funds(3)(4)

  249,225.00(4) 249,225.00(4)       38.98%

Bain Capital Investors, LLC and Related Funds(5)(6)

        96,743.45  96,743.45  15.13%

The Carlyle Group Partners III Loews, L.P. and Related Funds(7)(8)

        96,743.45  96,743.45  15.13%

Spectrum Equity Investors IV. L.P. and Related Funds(9)(10)

        62,598.71  62,598.71  9.79%

Gerardo I. Lopez(11)(12)

      385.86      * 

Craig R. Ramsey(11)(13)

      153.00      * 

John D. McDonald(11)(14)

      127.00      * 

Robert J. Lenihan(11)(15)

            * 

Kevin M. Connor(11)(16)

      51.00      * 

Samuel D. Gourley(11)(17)

            * 

Dr. Dana B. Ardi(1)

            * 

Stephen P. Murray(1)

            * 

Stan Parker(18)

            * 

Aaron J. Stone(18)

            * 

Philip H. Loughlin(5)(6)

            * 

Eliot P. S. Merrill(7)

            * 

Kevin Maroni(9)(10)

            * 

All directors and executive officers as a group (17 persons)

      14,587.27      * 

*
less than 1%

(1)
Represents 18,012.61 shares of Class A-1 common stock and 18,012.61 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors, L.P., 7,712.95 shares of Class A-1 common stock and 7,712.95 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors Cayman, L.P., 1,011.31 shares of Class A-1 common stock and 1,011.31 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors Cayman II, L.P., 2,767.70 shares of Class A-1 common stock and 2,767.70 shares of Class A-2 common stock owned by AMCE (Ginger), L.P., 1,330.19 shares of Class A-1 common stock and 1,330.19 shares of Class A-2 common stock owned by AMCE (Luke), L.P., 2,881.66 shares of Class A-1 common stock and 2,881.66 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors (Selldown), L.P., 3,217.09 shares of Class A-1 common stock and 3,217.09 shares of Class A-2 common stock owned by AMCE (Scarlett), L.P., 12,661.15 shares of Class A-1 common stock and 12,661.15 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors (Selldown) II, L.P., 1,253.55 shares of Class A-1 common stock and 1,253.55 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Fund/AMC /Selldown II, L.P., 7,260.06 shares of Class A-1 common stock and 7,260.06 shares of Class A-2 common stock owned by J.P. Morgan Partners Global Investors (Selldown) II-C, L.P., (collectively, the "Global Investor Funds") and 75,141.71 shares of Class A-1 common stock and 75,141.71 shares of Class A-2 common stock owned by J.P. Morgan Partners (BHCA), L.P. ("JPMP BHCA"). The general partner of the Global Investor Funds is JPMP Global Investors, L.P. ("JPMP Global"). The general partner of JPMP BHCA is JPMP Master Fund Manager, L.P. ("JPMP MFM"). The general partner of JPMP Global and JPMP MFM is JPMP Capital Corp. ("JPMP Capital"), a wholly owned subsidiary of JPMorgan Chase & Co., a publicly

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