Mail Stop 03-05
March 25, 2005
Via U.S. Mail
Mr. Craig R. Ramsey
Executive Vice President and Chief Financial Officer
AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105
Re: AMC Entertainment Inc.
Amendment No. 1 to Form S-2, filed on March 15, 2005, File
No.
333-122389
Amendment No. 1 to Form S-4, filed on March 15, 2005, File
No.
333-122376
Form 10-Q for the quarterly period ended December 30, 2004,
File
No. 001-08747
Dear Mr. Ramsey,
We have reviewed your Form S-2 and Form 10-Q and have the
following comments. We are also monitoring your Form S-4 for
compliance with the comments below and for the signature page.
Where
indicated, we think you should revise your document in response to
these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects and welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
FORM S-2
Summary Historical and Pro Forma Financial and Operating Data,
page
11
1. Expand the first paragraph to indicate whether AMCE, as the
accounting acquiree, was renamed as well. We note that Marquee,
as
the accounting acquiror, had been "dissolved" and renamed as AMCE.
Clarify the disclosure to describe how Marquee was dissolved,
given
that this is the legal acquirer.
Risk Factors, page 15
Our substantial debt could adversely affect our operations, page
15
2. We note that as of December 30, 2004, you had $162.2 million of
additional borrowing capacity under your amended credit facility
that
"would be effectively senior to the notes." Please clarify
whether
you are referring to the Senior Notes or to the Senior
Subordinated
Notes.
Marquee Inc. Audited Financial Statements
Note 1 - Basis of Presentation, page F-6
3. We note that the merger with AMCE occurred on December 23, 2004
and that AMCE deconsolidated Holding`s assets and liabilities
subsequent to that date. It appears that it would be appropriate
to
present the financial statements of Marquee Inc. through the date
of
the merger and deconsolidation. Please revise or supplementally
explain why financial statements have been presented through
December
2, 2004 only.
4. Supplementally indicate the date or dates upon which the
$769.350
million in equity was contributed to Marquee Holdings, Inc.
5. Please expand your disclosure to briefly explain why Marquee
and
Holdings each constituted variable interest entities, the nature
of
the variable interests and why AMCE was considered to be the
primary
beneficiary. In addition, please fully explain why it was
appropriate for AMCE to deconsolidate Holding`s assets and
liabilities subsequent to December 23, 2004.
AMCE December 30, 2004 Interim Financial Statements
Note 2 - Acquisitions, page F-19
6. We have reviewed your disclosures in response to prior comment
33
and your supplemental response that you do not believe the
valuation
specialist rises to the level of an expert. However, we believe
as
previously requested, that the valuation specialist should be
identified and his consent included in the Registration Statement,
as
your revised disclosures still infers and gives preference to the
use
of the valuation specialist in determining the allocation of the
purchase price, not only in the Merger transaction, but also on
pages
F-73 and F-76 with respect to the Gulf States Theatres and GC
Companies` acquisitions. Please revise and also provide a
consent,
or revise to clarify the allocation of the purchase price was
solely
based on management`s judgment. We will not object if you wish to
represent that management considered a number of factors,
including a
valuation assessment, in preparing its estimates.
Signatures, page II-13
7. We note your response to prior comment 24. Please revise to
reflect that the controller or principal accounting officer of AMC
Entertainment Inc. has signed the registration statement,
individually, in that capacity as required by the instructions for
signatures on Form S-2. Accordingly, please revise the signatures
for the guarantor subsidiaries.
Exhibit 5.1
8. Refer to the first paragraph. Please revise the aggregate
principal amount of the 9 1/2% Senior Subordinate Notes due 2011
that
you refer to in (iii). Also, please revise the year due to
"2011."
9. We notice that none of the opinions opine on the enforceability
of
the guarantees by the guarantors from jurisdictions not covered by
your opinion. Please revise your opinion or have the appropriate
backup opinions revised.
10. It is inappropriate to assume due organization, valid
existence
and good standing for the guarantors for which there are
additional
opinions. You are entitled to rely on those opinions. Please
revise
accordingly.
Exhibit 5.2
11. Refer to page 2. Stating that your opinions relate only to
the
documents listed in the letter is an impermissible statement which
qualifies your opinion.
12. In the next amendment please delete the first new paragraph on
page 3 of your opinion or refile it dated the date of
effectiveness.
Exhibit 5.3
13. Refer to page 2. Stating that your opinions relate only to
the
documents listed is an impermissible statement which qualifies
your
opinion.
14. Refer to the last paragraph on page 2. We note that you
express
no opinion relating to "the legality, validity, or enforceability
of
the Opinion Documents." We note that you refer to the guarantees
given by GCT Pacific as Opinion Documents. Please revise to
provide
an opinion as to whether the guarantees given by GCT Pacific
constitute legal and valid corporate actions.
15. Either delete the first new paragraph on page 3 of your
opinion
or refile it dated the date of effectiveness.
Exhibit 5.4
16. Refer to the first paragraph. Please revise the aggregate
principal amount of the 9 1/2% Senior Subordinate Notes due 2011
that
you refer to in (iii). Also, please revise the year due to
"2011."
17. Please delete the next-to-last paragraph of your opinion. You
may not refer to interpretive rules outside the text of the
opinion
itself.
Exhibit 5.5
18. In the next amendment delete the assumption that AMC
Entertainment has become the Company within the meaning of the
Indentures.
19. Also delete the final paragraph on page 3 of your opinion and
the
final sentence of the next-to-last paragraph of your opinion.
20. Either remove the first and third sentences of the last
paragraph
of the opinion or refile it dated the date of effectiveness.
Also
omit the last sentence of the opinion: you may limit the subject
of
the opinion but you may not limit reliance.
Exhibit 5.6
21. Refer to page 1. In the second to last paragraph you refer to
Exhibit A. We could not locate Exhibit A. Please provide or
revise.
22. Please revise to either omit the next-to-last paragraph or
refile
the opinion dated the date of effectiveness.
23. Revise the final paragraph to clarify that anyone can rely
upon
your opinion.
Exhibit 5.7
24. Refer to the first paragraph. In (iii), please revise the
year
due on the 2011 Notes to "2011."
25. Either delete the final paragraph on page 2 or refile the
opinion
dated the date of effectiveness.
Other
26. Please continue to consider the financial statement updating
requirements set forth in Rule 3-12 of Regulation S-X.
27. Amendments should contain currently dated accountants`
consents.
Manually signed consents should be kept on file for five years.
Reference is made to Rule 402 of Regulation C.
28. Refer to the audited financial statements for AMC
Entertainment,
pages F-56 through F-122. We note that, when a change has been
made
in the financial statements, the financial statements as a whole
are
underlined. In future amendments, please underline or mark only
the
actual changes made to the financial statements. Alternatively,
please also supplementally describe the nature and location of
each
changed item to facilitate the staff`s review.
FORM 10-Q for the quarterly period ended December 30, 2004
General
29. The following comments are also applicable to the December 31,
2004 unaudited interim financial statements included in the
Registration Statement on Form S-2.
Note 1 - Basis of Presentation, page 8
30. Refer to your response to prior comment 32. We understand,
from
your response, that you initially considered Holdings to be the
accounting acquirer. Therefore, the assets and liabilities of
AMCE
were required to be recorded at fair value in the financial
statements of Holdings. However, since AMCE had outstanding
public
debt, you concluded that push down accounting would not be
required
in the ongoing financial statements of AMCE, as discussed in the
Interpretive Response to Question 2 of SAB Topic 5-J. Please
confirm
our understanding, supplementally.
31. Subsequent to December 30, 2004 you determined that Marquee
Inc.
was a "substantive" transitory Newco and the acquirer of AMCE. As
a
result you concluded that the assets and liabilities of AMCE
should
be reported at fair value. If our understanding is correct,
please
further explain your analysis and why you reached this
determination.
Your explanation should be significantly more detailed and
specific
than the discussion provided in your last response.
32. We also note your separate correspondence letter to us dated
March 16, 2005 which includes Annex A, "Supplement to SEC Comment
#32
- - Transitory Guidance." Please tell us the date upon which the
staff
was "recently" asked to comment on the fact pattern presented in
the
no-name inquiry and identify the company or individual firm that
submitted the request. In addition, please indicate the name,
position and office of the SEC staff member who responded to the
inquiry. Finally, please provide a comparison of your fact
pattern
with the fact pattern described in the supplement to your letter.
Explain, in detail, how each of your events and circumstances
resembles or differs from the specific events and circumstances
described in Annex A. We may have further comments upon review of
your response.
33. As a related matter, we note the staff`s cautionary remarks
regarding the fact that no conclusion has been expressed on this
particular question since the situation had not actually been
encountered in a live registrant fact pattern. Have you consulted
with the staff about your specific fact pattern as their comments
appear to suggest?
Note 2 - Acquisitions, page 9
34. We have reviewed your response to prior comment 36. Please
supplementally describe the significant terms of the program.
Specifically, we note that you award items such as free movie
passes
or free concession items based on established levels of ticket
purchases. You state that you record the estimated incremental
cost
of providing free concession items for awards when the awards are
earned. Does your statement apply to the costs associated with
free
movie passes and any other applicable award items, as well? If it
does not, supplementally explain how the costs of other awards are
estimated and recorded. In addition, as awards are based upon the
volume of ticket purchases, supplementally explain when and how
you
determine the date or dates upon which awards are "earned" for
purposes of recording the liability. Finally, we assume that not
all
awards are ever utilized. Are there time limits on the use of
these
awards? When and how is the related liability account reduced in
these circumstances?
35. We note that you consider the costs associated with these
programs to be insignificant. Please supplementally quantify the
liability assumed by the acquirer. In addition, please provide us
with a schedule of activity for that liability account during
fiscal
2004 and fiscal 2005, to date.
36. Consideration should be given to disclosing that allocation of
the purchase price for the Moviewatcher Customer Loyalty Program
is
considered to be a `customer relationship` intangible asset.
Further, we are unclear as to how you can attribute that a useful
life of eight years is appropriate, given the nature of the movie
industry and a customer base that is not contractually obligated
to
continue to participate. It would appear that a shorter useful
life
of, for example, three to five years, would be more reasonable.
Please revise or supplementally provide us with details of the
Moviewatcher program, including date of implementation, number of
member customers and average length of membership.
FORM S-4
General
37. Please amend this Registration Statement on Form S-4 to
reflect
comments issued on your Registration Statement on Form S-2.
38. Please continue to consider the financial statement updating
requirements set forth in Rule 3-12 of Regulation S-X.
39. Amendments should contain currently dated accountants`
consents.
Manually signed consents should be kept on file for five years.
Reference is made to Rule 402 of Regulation C.
Signatures, page II-14
40. We note your response to prior comment 24. Please revise to
reflect that the controller or principal accounting officer of AMC
Entertainment Inc. has signed the registration statement,
individually, in that capacity. Accordingly, please revise the
signatures for the guarantor subsidiaries.
* * * * *
As appropriate, please amend the registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Beverly Singleton at (202) 942-1912 or
Margery
Reich at (202) 942-1839 if you have questions regarding comments
on
the financial statements and related matters. Please contact
Rolaine
Bancroft at (202) 824-5537 or me at (202) 942-1850 with any other
questions.
Regards,
Max A. Webb
Assistant Director
cc: Gregory Ezring, Esq.
Latham & Watkins LLP
via facsimile: (212) 751-4864
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Mr. Craig R. Ramsey
AMC Entertainment Inc.
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