10-K 1 finaltagtwo.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 29, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to __________ ----------- -------- Commission file number 1-8747 AMC ENTERTAINMENT INC. (Exact name of registrant as specified in its charter) Delaware 43-1304369 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 106 West 14th Street P. O. Box 219615 Kansas City, Missouri 64121-9615 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (816) 221-4000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, 66 2/3 cents par value American Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates as of June 5, 2001, computed by reference to the closing price for such stock on the American Stock Exchange on such date, was $202,789,614. Number of shares Title of each class of common stock Outstanding as of May 11, 2001 Common Stock, 66 2/3 cents par value 19,427,098 Class B Stock, 66 2/3 cents par value 4,041,993 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's Proxy Statement for use in connection with the 2001 Annual Meeting of Stockholders to be filed are incorporated by reference into Part III of this report, to the extent set forth therein. PART I Item 1. Business. (a) General Development of Business AMC Entertainment Inc. ("AMCE") is a holding company. AMCE's principal subsidiaries are American Multi-Cinema, Inc. ("AMC"), AMC Theatres of Canada (a division of AMC Entertainment International, Inc.), AMC Entertainment International, Inc., National Cinema Network, Inc. and AMC Realty, Inc. Unless the context otherwise requires, references to "AMCE" or the "Company" refer to AMC Entertainment Inc. and its subsidiaries. The Company's North American theatrical exhibition business is conducted through AMC and AMC Theatres of Canada. The Company is developing theatres outside North America through AMC Entertainment International, Inc. and its subsidiaries. The Company engages in advertising services through National Cinema Network, Inc. ("NCN"). The Company's predecessor was founded in Kansas City, Missouri in 1920. AMCE was incorporated under the laws of the state of Delaware on June 13, 1983 and maintains its principal executive offices at 106 West 14th Street, P.O. Box 219615, Kansas City, Missouri 64121-9615. Its telephone number at such address is (816) 221-4000. (b) Financial Information about Industry Segments For information about the Company's operating segments and geographic areas, see Note 14 to the Consolidated Financial Statements on page 48. (c) Narrative Description of Business Company Overview and Theatre Circuit The Company is one of the leading theatrical exhibition companies in the world, based on revenues. As of March 29, 2001 (the Company's fiscal year end) the Company operated 180 theatres with a total of 2,768 screens located in 21 states and the District of Columbia in the U.S., Portugal, Japan, Spain, China (Hong Kong), France, Sweden and Canada. Approximately 83% of the Company's U.S. theatre circuit screens are in the top 25 "Designated Market Areas" as defined by Nielson Media Research. The Company is the industry leader in the development and operation of "megaplex" theatres, theatres generally with 14 or more screens with amenities to enhance the movie-going experience such as stadium seating (seating with an elevation between rows to provide unobstructed viewing), digital sound and enhanced seat design. The megaplex increases the number of film choices as well as starting times, making it more convenient for patrons. In addition to a superior entertainment experience, megaplexes generally realize economies of scale by serving more patrons from common support facilities. The Company introduced the megaplex theatre format in the United States in May of 1995. The Company believes that the introduction of the megaplex created the current industry replacement cycle that has accelerated the obsolescence of older, smaller theatres by setting new standards for moviegoers. As of March 29, 2001, the total screens per theatre for the Company was 15.4. The average number of screens per theatre for all North American theatrical exhibition companies was 6.9, based on the listing of exhibitors in the National Association of Theatre Owners 2000-01 Encyclopedia of Exhibition, as of June 1, 2000. The Company continually upgrades the quality of its theatre circuit by adding new screens through new builds, acquisitions and expansions and disposing of older screens through closures and sales. From April 1995 through March 29, 2001, the Company opened 90 new theatres with 1,902 screens and added 86 screens to existing theatres, representing 72% of its screens as of March 29, 2001, acquired four theatres with 29 screens and closed or disposed of 146 theatres with 879 screens. The following table sets forth information concerning additions (new builds, expansions and acquisitions), dispositions and end of period theatres and screens operated for the last six fiscal years.

Changes in Theatres Operated Additions Dispositions Total Theatres Operated --------- ----------- ----------------------- Number Number Number Number Number Number Fiscal Year of of of of of of Ended Theatres Screens Theatres Screens Theatres Screens ------- ------ ------- ------- ------- ------- March 28, 1996 7 150 13 61 226 1,719 April 3, 1997 17 314 15 76 228 1,957 April 2, 1998 24 608 23 123 229 2,442 April 1, 1999 20 380 16 87 233 2,735 March 30, 2000 20 450 42 282 211 2,903 March 29, 2001 6 115 37 250 180 2,768 -- ----- --- --- Total 94 2,017 146 879

As of March 29, 2001, the Company had 8 theatres with a total of 150 screens under construction. The following table provides detail with respect to the geographic location of the Company's theatre circuit as of March 29, 2001.

Total Total North America Screens Theatres ------------- ------- -------- Florida. 461 34 California 437 28 Texas 347 17 Arizona 138 7 Georgia 132 9 Missouri 121 10 Pennsylvania 115 12 Michigan 88 7 Ohio 80 4 Virginia 67 5 Illinois 60 2 Colorado 58 3 Kansas 50 3 New Jersey 50 5 North Carolina 46 2 Oklahoma 44 2 Maryland 42 5 Washington 40 4 New York 33 2 Nebraska 24 1 District of Columbia 9 1 Louisiana 8 1 ---- ----- Total United States 2,450 164 ----- ----- Canada 122 5 ----- ----- Total North America 2,572 169 ----- ----- International ------------- Japan 79 5 Spain 48 2 Portugal 20 1 France 20 1 Sweden 18 1 China (Hong Kong) 11 1 ----- ----- Total International 196 11 ----- ----- Total Theatre Circuit 2,768 180 ===== =====

Revenues for the Company are generated primarily from box office admissions and theatre concessions sales which accounted for 67% and 28%, respectively, of the Company's fiscal 2001 revenues. The balance of the Company's revenues are generated by advertising, video games located in theatre lobbies and the rental of theatre auditoriums. The Company believes there are opportunities to increase ancillary revenues by offering additional programming and entertainment options closely aligned with its current line of business and utilizing available capacity within its current facilities. Where appropriate, the Company may consider partnerships or joint ventures to share risk and resources. In fiscal 2000, the Company was a founding shareholder in MovieTickets.com, Inc., an Internet ticketing venture. MovieTickets.com, Inc. generates revenues from advertising, sponsorship and ticketing fees of which the Company presently owns an approximate 30% equity interest. Film Licensing The Company predominantly licenses "first-run" motion pictures from distributors owned by major film production companies and from independent distributors. Films are licensed on a film-by-film and theatre-by-theatre basis. The Company obtains these licenses based on several factors, including theatre location, competition, season of the year and motion picture content. Rental fees are paid by the Company under a negotiated license. North American film distributors typically establish geographic film licensing zones and generally allocate available film to one theatre within that 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 the Company is the sole exhibitor, the Company obtains film licenses by selecting a film from among those offered and negotiating directly with the distributor. In film zones where there is competition, a distributor will allocate its films among the exhibitors in the zone. As of March 29, 2001, approximately 77% of the Company's screens were located in non-competitive film zones. When motion pictures are licensed through a bidding process, the distributor decides whether to accept bids on a previewed basis or a non-previewed ("blind-bid") basis, subject to certain state law requirements. In most cases, the Company licenses its motion pictures on a previewed basis. When a film is bid on a previewed basis, exhibitors are permitted to review the film before bidding, whereas they are not permitted to do so when films are licensed on a non-previewed or "blind-bid" basis. In the past few years, bidding has been used less frequently by the industry. Presently, the Company licenses substantially all of its films on a negotiated basis. Licenses entered into through both negotiated and bid processes typically state that rental fees shall be based on the higher of a gross receipts formula or a theatre admissions revenue sharing formula. Under a gross receipts formula, the distributor receives a specified percentage of box office receipts, with the percentages declining over the term of the run. Under a theatre admissions revenue formula, the distributor receives a specified percentage of the excess of admissions revenues over a negotiated allowance for theatre expenses. First-run motion picture rental fees are generally the greater of (i) 70% of box office admissions, gradually declining to as low as 30% over a period of four to seven weeks, and (ii) a specified percentage (i.e., 90%) of the excess of box office receipts over a negotiated allowance for theatre expenses (commonly known as a "90/10" clause). The Company may pay non-refundable guarantees of film rentals or make advance payments of film rentals, or both, in order to obtain a license in a negotiated or bid process, subject, in some cases, to a per capita minimum license fee. There are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. These include Buena Vista Pictures (Disney), Paramount Pictures, Universal Pictures, Warner Bros. Distribution, New Line Cinema, SONY Pictures Releasing (Columbia Pictures and Tri-Star Pictures), Miramax, MGM/United Artists, USA Pictures, Twentieth Century Fox, Sony Classics and Dreamworks. According to information sourced from ACNielson EDI, Inc., these distributors accounted for 96% of industry admissions revenues from January 2, 2001 through May 6, 2001. The Company's 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 2001, no single distributor accounted for more than 9% of the motion pictures licensed by the Company or for more than 14% of the Company's box office admissions. During the period from January 1, 1990 to December 31, 2000, 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 490 in 1998, according to the Motion Picture Association of America. Concessions Concessions sales are the second largest source of revenue for the Company after box office admissions. Concessions items include popcorn, soft drinks, candy and other products. The Company's strategy emphasizes prominent and appealing concessions counters designed for rapid service and efficiency. The Company's primary concessions products are various sizes of popcorn, soft drinks, candy and hot dogs, all of which the Company sells at each of its theatres. However, different varieties of candy and soft drinks are offered at theatres based on preferences in that particular geographic region. The Company has also implemented "combo-meals" for patrons which offer a pre-selected assortment of concessions products. Megaplex theatres are designed to have more concession capacity to make it easier to serve larger numbers of customers. In addition, they generally feature the "pass-through" concept, which enables the concessionist serving patrons to simply sell concessions items instead of also preparing them, thus providing more rapid service to customers. Strategic placement of large concessions stands within theatres heightens their visibility, aids in reducing the length of lines, allows flexibility to introduce new concepts and improves traffic flow around the concessions stands. The Company negotiates prices for its 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. Theatrical Exhibition Industry and Competition Motion picture theatres are the primary initial distribution channel for new motion picture releases and the Company believes that the theatrical success of a motion picture is often the most important factor in establishing its value in the cable television, videocassette/DVD and other ancillary markets. The Company further believes that the emergence of alternative motion picture distribution channels has not adversely affected attendance at theatres and that these distribution channels do not provide an experience comparable to the out-of-home entertainment experience offered by moviegoing. The Company believes that alternative motion picture distribution channels have provided additional revenue sources for filmed entertainment product which have stimulated production. The Company believes that the public will continue to recognize the value of viewing a movie on a large screen with superior audio and visual quality, while enjoying a variety of concessions and sharing the experience with a larger audience. Annual industry attendance has averaged approximately one billion persons since the early 1960s. Since 1995, attendance for the industry has increased at a compound annual growth rate of 2.4%. Since 1995, industry attendance per screen declined from 46,900 to 38,700, primarily because the number of industry indoor screens has increased at a compound annual growth rate of 6.4%, according to information obtained from the Motion Picture Association of America. Variances in year-to-year attendance are primarily related to the overall popularity and supply of motion pictures while the increase in industry screens is due primarily to excess capacity within the theatrical exhibition industry. The following table represents information obtained from the Motion Picture Association of America for the most recent six years.

Attendance per Box Attendance Indoor Screen Average Office Sales Year (in millions) Screens (in thousands) Ticket Price (in millions) ----- ----------- ------ ------------- ------------ ---------- 1995 1,263 26,958 46.9 $4.35 $5,493 1996 1,339 28,864 46.4 $4.41 $5,911 1997 1,388 30,825 45.0 $4.59 $6,366 1998 1,481 33,440 44.3 $4.69 $6,949 1999 1,465 36,448 40.2 $5.08 $7,448 2000 1,421 36,679 38.7 $5.39 $7,661

There are over 500 companies competing in the North American theatrical exhibition industry, approximately 300 of which operate four or more screens. Industry participants vary substantially in size, from small independent operators to large international chains. Based on the June 1, 2000 listing of exhibitors in the National Association of Theatre Owners 2000-01 Encyclopedia of Exhibition, the Company believes that the ten largest exhibitors (in terms of number of screens) operated approximately 60% of the indoor screens in 2000. The following table presents the ten largest North American theatrical exhibition companies by box office revenues:

North American Box Office North North Revenues American American Company (millions)(1) Screens (2) Theatres (2) --------------------------------------------------------------------- Regal Cinemas, Inc. $814.0 4,449 424 AMC Entertainment Inc. $748.0 2,736 197 Loews Cineplex Entertainment Corp. $641.8 2,726 359 Cinemark USA, Inc. $375.8 2,227 192 United Artists Theatre Company $367.7 1,858 257 Carmike Cinemas $321.3 2,821 447 National Amusements, Inc. $310.4 1,076 107 Edwards Theatres Circuit, Inc. $238.1 743 70 GC Companies, Inc. $233.9 1,060 133 Hoyts Cinemas Corporation $174.1 967 113 (1)Source: AC Nielson EDI, Inc. data for the twelve months ended March 29, 2001 for exhibitors other than AMC Entertainment, Inc. AMC Entertainment Inc. revenues are based on actual North American admissions revenues for the year ended March 29, 2001. (2)Source: Listing of U.S. and Canadian Exhibitors (as of June 1, 2000) in the National Association of Theatre Owners 2000-01 Encyclopedia of Exhibition.

The Company's 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. The theatrical exhibition industry faces competition 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. 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 the Company was not a party, have a material impact on the industry and the Company. 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 the Company, on a film-by-film and theatre-by-theatre basis. Consequently, the Company cannot assure itself of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for its licenses on a film-by-film and theatre-by-theatre basis. The Company's theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "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, awards of damages to private litigants or additional capital expenditures to remedy such noncompliance. Although the Company believes that its theatres are in substantial compliance with the ADA, in January 1999, the Civil Rights Division of the Department of Justice filed suit against the Company alleging that certain of its theatres with stadium-style seating violate the ADA. See Item 3. Legal Proceedings on page 8. As an employer covered by the ADA, the Company 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 the Company's business. In addition, many of the Company's employees are covered by various government employment regulations, including minimum wage, overtime and working conditions regulations. Seasonality The Company's theatre business is seasonal in nature, with the highest attendance and revenues generally occurring during the summer months and holiday seasons. See Statements of Operations by Quarter (Unaudited) on page 52. Employees As of March 29, 2001, the Company had approximately 1,900 full-time and 12,000 part-time employees. Approximately 4% of the part-time employees were minors paid the minimum wage. Fewer than one percent of the Company'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. The Company believes that its relationship with this union is satisfactory. Item 2. Properties. The following tables set forth the general character and holding classification of the Company's theatre circuit as of March 29, 2001:

Total Total Owner/Lessee Theatres Screens ------------ -------- ------- American Multi-Cinema, Inc. 163 2,442 AMC Entertainment International, Inc. and subsidiaries 16 318 Third party (managed by American Multi-Cinema, Inc.) 1 8 --- ----- Total 180 2,768 === ===== Total Total Property Holding Classification Theatres Screens ------------------------------- -------- ------- Owned 9 144 Leased pursuant to ground leases 8 109 Leased pursuant to building leases 162 2,507 Managed 1 8 --- ----- Total 180 2,768 === =====

The Company's leases generally have initial terms ranging from 13 to 25 years, with options to extend the lease 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 the Company to pay for property taxes, maintenance, insurance and certain other property-related expenses. In some cases, the Company's rights as tenant are subject and subordinate to the mortgage loans of lenders to its lessors, so that if a mortgage were to be foreclosed, the Company could lose its lease. Historically, this has never occurred. The majority of the concessions, projection, seating and other equipment required for each of the Company's theatres is owned. The Company leases its corporate headquarters, located in Kansas City, Missouri and a film licensing office is leased in Woodland Hills, California (Los Angeles). Item 3. Legal Proceedings. On January 29, 1999, the Department of Justice ("DOJ") filed suit against the Company in the United States District Court for the Central District of California, United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc. The complaint alleges that the Company has designed, constructed and operated two of its motion picture theatres in the Los Angeles area and unidentified theatres elsewhere that have stadium-style seating in violation of DOJ regulations implementing Title III of the ADA and related "Standards for Accessible Design" (the "Standards"). The complaint alleges various types of non-compliance with the DOJ's Standards, but relates primarily to issues relating to lines of sight. The DOJ seeks declaratory and injunctive relief regarding existing and future theatres with stadium-style seating, compensatory damages and a civil penalty. The current DOJ position appears to be that theatres must provide wheelchair seating locations and transfer seats with viewing angles to the screen that are at the median or better, counting all seats in the auditorium. Heretofore, the Company has attempted to conform to the evolving standards imposed by the DOJ and believes its theatres are in substantial compliance with the ADA. However, the Company believes that the DOJ's current position has no basis in the ADA or related regulations and is an attempt to amend the ADA regulations without complying with the Administrative Procedures Act. The Company has filed an answer denying the allegations and asserting that the DOJ is engaging in unlawful rulemaking. A similar claim has been made by another exhibitor, Cinemark USA, Inc. v. United States Department of Justice, United States District Court for the Northern District of Texas, Case No. 399CV0183-L. Although no assurances can be given, based on existing precedent involving stadiums or stadium seating, the Company believes that an adverse decision in this matter is not likely to have a material adverse effect on its financial condition, liquidity or results of operations. However, there have been only a few cases involving stadiums or stadium seating. The Company is the defendant in two coordinated cases now pending in California, Weaver v. AMC Entertainment Inc., (No. 310364, filed March 2000 in Superior Court of California, San Francisco County), and Geller v. AMC Entertainment Inc. (No. RCV047566, filed May 2000 in Superior Court of California, San Bernardino County). The litigation is based upon California Civil Code Section 1749.5, which provides that "on or after July 1, 1997, it is unlawful for any person or entity to sell a gift certificate to a purchaser containing an expiration date." Weaver is a purported class action on behalf of all persons in California who, on or after January 1, 1997, purchased or received an AMC Gift of Entertainment ("GOE") containing an expiration date. Geller is brought by a plaintiff who allegedly received an AMC discount ticket in California containing an expiration date and who purports to represent all California purchasers of these "gift certificates" purchased from any AMC theatre, store, location, web- site or other venue owned or controlled by AMC since January 1, 1997. Both complaints allege unfair competition and seek injunctive relief. Geller seeks restitution of all expired "gift certificates" purchased in California since January 1, 1997 and not redeemed. Weaver seeks disgorgement of all revenues and profits obtained since January 1997 from sales of "gift certificates" containing an expiration date, as well as actual and punitive damages. The Company has denied any liability, answering that GOEs and discount tickets are not a "gift certificate" under the statute and that, in any event, no damages have occurred. On May 11, 2001, following a special trial on the issue, the court ruled that the GOEs and discount tickets are "gift certificates." The Company intends to appeal this ruling and to continue defending the cases vigorously. Should the result of this litigation ultimately be adverse to the Company, it is presently unable to estimate the amount of the potential loss. The Company is party to various legal proceedings in the ordinary course of business, none of which is expected to have a material adverse effect on the Company except as noted above. Item 4. Submission of Matters to a Vote of Security Holders. There has been no submission of matters to a vote of security holders during the thirteen weeks ended March 29, 2001. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. AMC Entertainment Inc. Common Stock is traded on the American Stock Exchange under the symbol AEN. There is no established public trading market for Class B Stock. The table below sets forth, for the periods indicated, the high and low closing prices of the Common Stock as reported on the American Stock Exchange composite tape.

Fiscal 2001 Fiscal 2000 -------------- -------------- High Low High Low ---- ---- ---- ---- First Quarter $ 6.06 $ 3.63 $19.25 $ 14.00 Second Quarter 4.13 1.63 19.00 12.19 Third Quarter 3.63 1.00 13.94 8.56 Fourth Quarter 7.00 2.94 11.31 5.00

Common Stock On May 11, 2001, there were 478 stockholders of record of Common Stock and one stockholder of record (the 1992 Durwood, Inc. Voting Trust dated December 12, 1992) of Class B Stock. The Company's Certificate of Incorporation provides that holders of Common Stock and Class B Stock shall receive, pro rata per share, such cash dividends as may be declared from time to time by the Board of Directors. Certain provisions of the Indentures respecting the Company's 9 1/2% Senior Subordinated Notes due 2009, the Company's 9 1/2% Senior Subordinated Notes due 2011 and the Company's $425 million revolving credit facility (the "Credit Facility") restrict the Company's ability to declare or pay dividends on and purchase capital stock. As of March 29, 2001, under these provisions of the Notes due 2009 and the Notes due 2011, the Company is prohibited from paying cash dividends or purchasing capital stock. Under an Investment Agreement dated April 19, 2001 (the "Investment Agreement") with the Apollo Purchasers (as defined below) the Company may not pay dividends on Common Stock except with the consent of Apollo (as defined below) acting at the direction of the Apollo Purchasers. Such approval right continues for so long as the Apollo Purchasers continue to beneficially own 50% of the aggregate number of shares of Series A Convertible Preferred Stock, par value of 66 2/3 cents per share (the "Series A Preferred") and the Series B Exchangeable Preferred Stock, par value of 66 2/3 cents per share (the "Series B Preferred" and collectively with the Series A Preferred, the "Preferred Stock") issued pursuant to the Investment Agreement unless either, Apollo is terminated as investment manager of the Apollo Purchasers or an Apollo affiliate is removed as the general partner of the Apollo Purchasers and, in either case, is not replaced by another Apollo affiliate. The Company has not declared a dividend on shares of Common Stock or Class B Stock since fiscal 1989. Any payment of cash dividends on Common Stock or Class B Stock in the future will be at the discretion of the Board and will depend upon such factors as compliance with debt covenants, earnings levels, capital requirements, the Company's financial condition and other factors deemed relevant by the Board. Currently, the Company does not contemplate declaring or paying any dividends in respect of its Common Stock or Class B Stock. Preferred Stock On April 19, 2001, the Company entered into the Investment Agreement with Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, Apollo Overseas Partners V, L.P. (collectively, with any other partnership or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, the "Apollo Purchasers"), Apollo Management IV, L.P., and Apollo Management V, L.P. (together with their affiliates, "Apollo"). Pursuant to the Investment Agreement, the Company sold 92,000 shares of Series A Preferred at a price of $1,000 per share and 158,000 shares of Series B Preferred at a price of $1,000 per share. The sale was a negotiated transaction exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. Each of the Apollo Purchasers represented to the Company that it is an accredited investor and that it was acquiring the shares of Preferred Stock for investment and not with a view to or for the sale or distribution thereof. The aggregate purchase price for the Preferred Stock was $250 million. Net proceeds to the Company after fees to Apollo of $8.75 million, reimbursement of issuance costs incurred by Apollo of $3.75 million and financial advisory and other issuance costs were approximately $225 million. The terms upon which the Series A Preferred is convertible into Common Stock and the terms upon which the Series B Preferred are exchangeable for Series A Preferred are summarized in Note 5 of the Company's Notes to Consolidated Financial Statements included in Part I Item 8. of this Form 10-K and incorporated herein by reference. Item 6. Selected Financial Data.

Years Ended (1)(5) ------------------------------------ March 29, March 30, April 1, April 2, April 3, (In thousands, except per share and operating data) 2001 2000 1999 1998 1997 -------------------------- ------------------------------------------------------- Statement of Operations Data: Total revenues $1,214,801 $1,166,942 $1,023,456 $850,750 $751,664 Film exhibition costs 432,351 417,736 358,437 299,926 258,809 Concession costs 46,455 50,726 48,687 42,062 36,748 Theatre operating expense 300,773 290,072 260,145 219,593 189,908 Rent 229,314 198,762 165,370 106,383 80,061 Other 42,610 44,619 30,899 25,782 18,354 General and administrative 32,499 47,407 52,321 47,860 52,422 Preopening expense 3,808 6,795 2,265 2,243 2,414 Theatre and other closure expense (3) 24,169 16,661 2,801 - - Restructuring charge - 12,000 - - - Depreciation and amortization 105,260 95,974 89,221 70,117 52,572 Impairment of long-lived assets 68,776 5,897 4,935 46,998 7,231 (Gain) loss on disposition of assets (664) (944) (2,369) (3,704) 84 ------ ------ ------ ------ ------ Total costs and expenses 1,285,351 1,185,705 1,012,712 857,260 698,603 Operating income (loss) (70,550) (18,763) 10,744 (6,510) 53,061 Other income 9,996 - - - - Interest expense 77,000 62,703 38,628 35,679 22,022 Investment income 1,728 219 1,368 1,090 856 ------ ------ ------ ------ ------ Earnings (loss) before income taxes and cumulative effect of accounting changes (135,826) (81,247) (26,516) (41,099) 31,895 Income tax provision (45,700) (31,900) (10,500) (16,600) 12,900 ------ ------ ------ ------ ------ Earnings (loss) before cumulative effect of accounting changes (90,126) (49,347) (16,016) (24,499) 18,995 Cumulative effect of accounting changes (2) (15,760) (5,840) - - - ------ ------ ------ ------ ------ Net earnings (loss) $ (105,886) $ (55,187) $ (16,016) $ (24,499) $ 18,995 ====== ====== ====== ====== ====== Preferred dividends - - - 4,846 5,907 ------ ------ ------ ------ ------ Net earnings (loss) for common shares $ (105,886) $ (55,187) $ (16,016) $ (29,345) $ 13,088 ======== ====== ====== ====== ====== Earnings (loss) per share before cumulative effect of accounting changes: Basic $ (3.84) $ (2.10) $ (.69) $ (1.59) $ .75 Diluted (3.84) (2.10) (.69) (1.59) .74 Net earnings (loss) per share: Basic $ (4.51)(2)$ (2.35)(2)$ (.69) $(1.59) $ .75 Diluted (4.51)(2) (2.35)(2) (.69) (1.59) .74 Pro forma amounts assuming SAB No. 101 accounting change had been in effect in fiscal 2000, 1999, 1998 and 1997: Earnings (loss) for common shares before cumulative effect of accounting changes: $ (51,715) $ (17,726) $ (28,784) $ 11,025 Basic (2.20) (.76) (1.55) .63 Diluted (2.20) (.76) (1.55) .62 Net earnings (loss) for common shares:$ (70,297) $ (28,839) $ (40,458) $ 1,414 Basic (3.00) (1.23) (2.19) .08 Diluted (3.00) (1.23) (2.19) .08 Average shares outstanding: Basic 23,469 23,469 23,378 18,477 17,489 Diluted 23,469 23,469 23,378 18,477 17,784 Balance Sheet Data (at period end): Cash, equivalents and investments $34,075 $119,305 $ 13,239 $ 9,881 $ 24,715 Total assets 1,047,264 1,188,805 975,730 795,780 719,055 Corporate borrowings 694,172 754,105 561,045 348,990 315,072 Capital and financing lease obligations 56,684 68,506 48,575 54,622 58,652 Stockholders' equity (deficit) (59,045) 58,669 115,465 139,455 170,012 Years Ended (1)(5) --------------------------------------------------- March 29, March 30, April 1, April 2, April 3, (In thousands, except per share and operating data) 2001 2000 1999 1998 1997 -------------------------- ------------------------------------------------------ Other Financial Data: Capital expenditures $ 120,881 $ 274,932 $260,813 $389,217 $253,380 Proceeds from sale/leasebacks and financing lease obligations 11,226 98,313 - 283,800 - Net cash provided by operating activities 43,458 89,027 67,167 91,322 109,339 Net cash used in investing activities (84,018) (198,392) (239,317) (133,737) (283,917) Net cash (used in) provided by financing activities (43,199) 215,102 175,068 27,703 188,717 Adjusted EBITDA (4) 140,795 117,620 107,597 109,144 115,362 Operating Data (at period end): Screen additions 115 450 380 608 314 Screen dispositions 250 282 87 123 76 Average screens 2,818 2,754 2,560 2,097 1,818 Attendance (in thousands) 151,171 152,943 150,378 130,021 121,391 Number of screens operated 2,768 2,903 2,735 2,442 1,957 Number of theatres operated 180 211 233 229 228 Screens per theatre 15.4 13.8 11.7 10.7 8.6 (1)Fiscal 1997 consists of 53 weeks. All other fiscal years have 52 weeks. (2)Fiscal 2001 includes a $15,760 cumulative effect of an accounting change related to revenue recognition for gift certificates and discounted theatre tickets (net of income tax benefit of $10,950) which reduced earnings per share by $.67 per common share. Fiscal 2000 includes a $5,840 cumulative effect of an accounting change for preopening expenses (net of income tax benefit of $4,095) which reduced earnings per share by $.25 per common share. (3)Theatre and other closure expense relates to actual and estimated lease exit costs on older theatres and vacant restaurant space related to a terminated joint venture. (4)Represents net earnings (loss) before cumulative effect of accounting changes plus interest, income taxes, depreciation and amortization and adjusted for restructuring charge, impairment losses, preopening expense, theatre and other closure expense, gain (loss) on disposition of assets and equity in earnings of unconsolidated affiliates. Management of the Company has included Adjusted EBITDA because it believes that Adjusted EBITDA provides lenders and stockholders additional information for estimating the Company's value and evaluating its ability to service debt. Management of the Company believes that Adjusted EBITDA is a financial measure commonly used in the Company's industry and should not be construed as an alternative to operating income (as determined in accordance with GAAP). Adjusted EBITDA as determined by the Company may not be comparable to EBITDA as reported by other companies. In addition, Adjusted EBITDA is not intended to represent cash flow (as determined in accordance with GAAP) and does not represent the measure of cash available for discretionary uses. (5) There were no cash dividends declared on Common Stock during the last five fiscal years. (/table> Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section contains certain "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward- looking statements generally can be identified by use of statements that include words or phrases such as the Company or its management "believes," "expects," "anticipates," "intends," "plans," "foresees" or other words or phrases of similar import. Similarly, statements that describe the Company's objectives, plans or goals also are forward-looking statements. 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 the expectations of the Company include, among others: (i) the Company's ability to enter into various financing programs; (ii) the performance of films licensed by the Company; (iii) potential work stoppage within the film industry that could adversely impact the quality and quantity of films licensed by the Company; (iv) competition; (v) construction delays; (vi) the ability to open or close theatres and screens as currently planned; (vii) general economic conditions, including adverse changes in inflation and prevailing interest rates; (viii) demographic changes; (ix) increases in the demand for real estate; (x) changes in real estate, zoning and tax laws and (xi) unforeseen changes in operating requirements. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included herein are made only as of the date of this Form 10-K and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

OPERATING RESULTS

52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 29, March 30, April 1, (Dollars in thousands) 2001 2000 1999 ---------------------------------------------------------------------- Revenues North American theatrical exhibition Admissions $ 747,958 $ 714,340 $ 630,242 Concessions 320,866 319,725 300,374 Other theatre 23,680 28,709 20,841 ------------------------------------- 1,092,504 1,062,774 951,457 International theatrical exhibition Admissions 63,110 48,743 31,919 Concessions 13,358 10,130 6,973 Other theatre 2,372 1,304 925 ---------------------------------- 78,840 60,177 39,817 NCN and other 43,457 43,991 32,182 ---------------------------------- Total revenues $1,214,801 $1,166,942 $1,023,456 ================================== Cost of Operations North American theatrical exhibition Film exhibition costs $399,467 $ 392,414 $ 341,523 Concession costs 42,309 47,218 46,434 Theatre operating expense 277,338 272,886 249,916 Rent 204,310 183,214 157,282 Preopening expense 2,648 5,392 1,783 Theatre and other closure expense 24,169 16,661 2,801 ---------------------------------- 950,241 917,785 799,739 International theatrical exhibition Film exhibition costs 32,884 25,322 16,914 Concession costs 4,146 3,508 2,253 Theatre operating 23,435 17,186 10,229 Rent 25,004 15,548 8,088 Preopening expense 1,160 1,403 482 ---------------------------------- 86,629 62,967 37,966 NCN and other 42,610 44,619 30,899 General and administrative 32,499 47,407 52,321 Restructuring charge - 12,000 - Depreciation and amortization 105,260 95,974 89,221 Impairment of long-lived assets 68,776 5,897 4,935 Gain on disposition of assets (664) (944) (2,369) ---------------------------------- Total costs and expenses $,285,351 $1,185,705 $1,012,712 ========= ============= =============

Years Ended March 29, 2001 and March 30, 2000 Revenues. Total revenues increased 4.1% during the year ended March 29, 2001 compared to the year ended March 30, 2000. North American theatrical exhibition revenues increased 2.8% from the prior year. Admissions revenues increased 4.7% due to a 7.8% increase in average ticket price offset by a 2.9% decrease in attendance. The increase in average ticket prices was due primarily to a strategic initiative implemented by the Company during fiscal 2000 and 2001 to selectively increase ticket and concession prices. Attendance decreased due to a 6.8% decrease in attendance at comparable theatres (theatres opened before fiscal 2000), the closure or sale of 36 theatres with 244 screens since March 30, 2000 offset by attendance increases from 4 new theatres with 75 screens added since March 30, 2000. The decline in attendance at comparable theatres was related to certain older multiplexes (theatres generally without stadium seating) experiencing competition from megaplexes (theatres with predominantly stadium seating) operated by the Company and other competing theatre circuits, a trend the Company generally anticipates will continue, and a decline in the popularity of film product, primarily in the summer, during the year ended March 29, 2001 as compared with the prior year. Concessions revenues increased 0.4% due to a 3.3% increase in average concessions per patron offset by the decrease in attendance. The increase in average concessions per patron was attributable primarily to selective price increases. International theatrical exhibition revenues increased 31.0% from the prior year. Admissions revenues increased 29.5% due to an increase in attendance from the addition of 2 new theatres with a total of 34 screens since March 30, 2000. Attendance at comparable theatres decreased 1.7%. Concession revenues increased 31.9% due primarily to the increase in total attendance. International revenues were negatively impacted by a stronger U.S. dollar, although this did not contribute materially to consolidated net loss. Revenues from NCN and other decreased 1.2% from the prior year due to a decline in revenues at NCN. Costs and expenses. Total costs and expenses increased 8.4% during the year ended March 29, 2001 compared to the year ended March 30, 2000. North American theatrical exhibition costs and expenses increased 3.5% from the prior year. Film exhibition costs increased 1.8% due to higher admissions revenues offset by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 53.4% in the current year as compared with 54.9% in the prior year. The decrease in film exhibition costs as a percentage of admissions revenues was impacted primarily by Star Wars Episode I: The Phantom Menace, a film whose audience appeal led to higher than normal film rental terms during the prior year. Concession costs decreased 10.4% due to additional marketing incentives from vendors under renegotiated contract terms and the Company's initiative to consolidate purchasing to obtain more favorable pricing. As a percentage of concessions revenues, concession costs were 13.2% in the current year compared with 14.8% in the prior year. As a percentage of revenues, theatre operating expense was 25.4% in the current year as compared to 25.7% in the prior year. Rent expense increased 11.5% due to the higher number of screens in operation and the growing number of megaplexes in the Company's theatre circuit, which generally have higher rent per screen than multiplexes. During the year, the Company incurred $24,169,000 of theatre and other closure expenses primarily comprised of expected payments to landlords to terminate leases related to the closure of 34 multiplexes with 211 screens and vacant restaurant space related to a terminated joint venture. The Company closed these theatres as a result of negative operating cash flows which were not expected to improve in the future. The Company anticipates that it will incur approximately $5,000,000 of costs related to the closure of approximately 75 multiplex screens in fiscal 2002 and $6,000,000 of costs related to the closure of approximately 75 multiplex screens in fiscal 2003. International theatrical exhibition costs and expenses increased 37.6% from the prior year. Film exhibition costs increased 29.9% primarily due to higher admission revenues. Rent expense increased 60.8% and theatre operating expense increased 36.4% from the prior year, due to the increased number of screens in operation. International theatrical exhibition costs and expenses were positively impacted by a stronger U.S. dollar, although this did not contribute materially to consolidated net loss. Costs and expenses from NCN and other decreased 4.5% due primarily to a decrease in costs at NCN. General and administrative expenses decreased 31.4% from the prior year due to cost savings associated with the consolidation of the Company's divisional operations. As a percentage of total revenues, recurring general and administrative expenses declined from 3.8% in the prior year to 2.7% in the current year. On September 30, 1999, the Company recorded a restructuring charge of $12,000,000 ($7,200,000 net of income tax benefit or $.31 per share) related to the consolidation of its three U.S. divisional operations offices into its corporate headquarters and a decision to discontinue direct involvement with pre-development activities associated with certain retail/entertainment projects conducted through its wholly-owned subsidiary, Centertainment, Inc. As a result of the restructuring, the Company realized general and administrative expense reductions of approximately $15,000,000 in fiscal 2001. Depreciation and amortization increased 9.7%, or $9,286,000, during the year ended March 29, 2001. This increase was primarily caused by an increase in depreciation of $10,514,000 related to the Company's new megaplexes. During fiscal 2001, the Company recognized a non-cash impairment loss of $68,776,000 ($40,576,000 net of income tax benefit, or $1.73 per share) on 76 theatres with 719 screens. The Company recognized an impairment loss of $35,263,000 on 5 Canadian theatres with 122 screens, $19,762,000 on 17 U.S. theatres with 202 screens, (primarily in Arizona, Texas, Florida, California and Maryland) including 2 theatres with 44 screens opened since 1995, $4,891,000 on one French theatre with 20 screens, $3,592,000 on 34 U.S. theatres with 222 screens (primarily in Texas, Florida and Michigan) that were closed during fiscal 2001, $3,476,000 on 19 U.S. theatres with 153 screens (primarily in Georgia, Florida and Missouri) that are expected to be closed in the near future, $1,042,000 on the discontinued development of a theatre in Taiwan and $750,000 related to real estate held for sale. Included in these losses, is an impairment of $3,855,000 on 41 theatres with 317 screens that were included in impairment losses recognized in previous periods. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. The Company is evaluating its future plans for many of its theatres, which may include selling theatres, subleasing properties to other exhibitors or for other uses, or closing theatres and terminating the leases. The Company expects to close approximately 150 screens in fiscal 2002 and 2003. Prior to and including fiscal 2001, $8,608,000 of impairment charges have been taken on these expected closures and the economic life of these theatre assets have been revised to reflect management's best estimate of the economic life of the theatre assets for purposes of recording depreciation. Closure or other dispositions of certain theatres will result in expenses which are primarily comprised of expected payments to landlords to terminate leases and will be recorded as theatre and other closure expense. During the fourth quarter of fiscal 2000, the Company recognized a non-cash impairment loss of $5,897,000 ($3,479,000 net of income tax benefit, or $.15 per share) on 13 theatres with 111 screens in 6 states (primarily Florida, Michigan and Louisiana) including a loss of $690,000 associated with one theatre that was included in impairment losses recognized in previous periods. Gain on disposition of assets decreased from a gain of $944,000 in the prior year to a gain of $664,000 during the current year. Current year results include a gain on the sale of real estate held for investment offset by the loss on the sale of furniture, fixtures and equipment. Prior year results include a gain on the sale of real estate held for investment and gains related to the sales of the real estate assets associated with two theatres. Other Income. During fiscal 2001, the Company recognized non- cash income of $9,996,000 ($5,898,000 net of income tax benefit, or $.25 per share) related to the extinguishment of gift certificate liabilities. Interest Expense. Interest expense increased 22.8% during the year ended March 29, 2001 compared to the prior year, due to an increase in average outstanding borrowings and interest rates. Income Tax Provision. The provision for income taxes decreased to a benefit of $45,700,000 during the current year from a benefit of $31,900,000 in the prior year. The effective tax rate was 33.6% for the current year compared to 39.3% for the previous year. The decline in effective rate was primarily due to a $5,200,000 increase in valuation allowance for state and foreign net operating loss carryforwards. Management believes that it is more likely than not that these net operating loss carryforwards will not be realized due to uncertainties as to the timing and amounts of future taxable income. Net Loss. Net loss increased during the year ended March 29, 2001 to a loss of $105,886,000 from a loss of $55,187,000 in the prior year due primarily to the impairment loss and the cumulative effect of an accounting change recorded in the current year. Net loss per share was $4.51 compared to a loss of $2.35 in the prior year. Current year results include the cumulative effect of an accounting change of $15,760,000 (net of income tax benefit of $10,950,000) and an impairment loss of $68,776,000 ($40,576,000 net of income tax benefit) which reduced earnings per share by $.67 and $1.73, respectively, for the year ended March 29, 2001. Prior year results include the cumulative effect of an accounting change of $5,840,000 (net of income tax benefit of $4,095,000) and a restructuring charge of $12,000,000 ($7,200,000 net of income tax benefit of $4,800,000), which reduced earnings per share by $.25 and $.31, respectively, for the year ended March 30, 2000. Years Ended March 30, 2000 and April 1, 1999 Revenues. Total revenues increased 14.0% during the year ended March 30, 2000 compared to the year ended April 1, 1999. North American theatrical exhibition revenues increased 11.7% from the prior year. Admissions revenues increased 13.3% due to a 13.4% increase in average ticket price. The increase in average ticket prices was due primarily to a strategic initiative implemented by the Company to selectively increase ticket and concession prices. Attendance decreased due to the closure or sale of 42 theatres with 279 screens since April 1, 1999 and a 7.6% decrease in attendance at comparable theatres (theatres opened before fiscal 1999) offset by attendance increases from 15 new theatres with 342 screens added since April 1, 1999. The decline in attendance at comparable theatres was related to certain older multiplexes experiencing competition from new megaplexes operated by the Company and other competing theatre circuits, a trend the Company generally anticipates will continue, and a decline in the popularity of film product during the year ended March 30, 2000 as compared with the prior year. Concessions revenues increased 6.4% due to a 6.5% increase in average concessions per patron. The increase in average concessions per patron was attributable primarily to selective price increases. International theatrical exhibition revenues increased 51.1% from the prior year. Admissions revenues increased 52.7% due to an increase in attendance from the addition of 4 new theatres with a total of 78 screens since April 1, 1999. Attendance at comparable theatres decreased 11.4% due to a decline in the popularity of film product in Japan and competition from new theatrical exhibitors in Japan. Concession revenues increased 45.3% due primarily to the increase in total attendance. International revenues were positively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated net loss. Revenues from NCN and other increased 36.7% from the prior year due to increased sales of rolling stock advertising at NCN. Costs and expenses. Total costs and expenses increased 17.1% during the year ended March 30, 2000 compared to the year ended April 1, 1999. North American theatrical exhibition costs and expenses increased 14.8% from the prior year. Film exhibition costs increased 14.9% due to higher admissions revenues and an increase in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 54.9% in the current year as compared with 54.2% in the prior year. The increase in film exhibition costs as a percentage of admissions revenues was primarily due to Star Wars Episode I: The Phantom Menace, a film whose audience appeal led to higher than normal film rental terms. Concession costs increased 1.7% due to the increase in concessions revenues offset by a decrease in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 14.8% in the current year compared with 15.5% in the prior year, due to the concession price increases. As a percentage of revenues, theatre operating expense was 25.7% in the current year as compared to 26.3% in the prior year. Rent expense increased 16.5% due to the higher number of screens in operation and the growing number of megaplexes in the Company's theatre circuit, which generally have higher rent per screen than multiplexes. During the year, the Company incurred $16,661,000 of theatre closure expenses primarily comprised of expected payments to landlords to terminate leases related to the closure of 35 multiplexes with 242 screens. The Company closed these theatres as a result of negative operating cash flows which were not expected to improve in the future. International theatrical exhibition costs and expenses increased 65.9% from the prior year. Film exhibition costs increased 49.7% primarily due to higher admission revenues, offset by a decrease in the percentage of admissions paid to film distributors. Rent expense increased 92.2% and theatre operating expense increased 68.0% from the prior year, due to the increased number of screens in operation. International theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated net loss. Costs and expenses from NCN and other increased 44.4% due primarily to an increase in costs associated with the increased sales of rolling stock advertising at NCN. General and administrative expenses decreased 9.4% from the prior year due to cost savings associated with the consolidation of the Company's divisional operations as discussed below. The Company also incurred $2,500,000 of non-recurring relocation costs related to this consolidation. As a percentage of total revenues, recurring general and administrative expenses declined from 5.1% in the prior year to 3.8% in the current year. On September 30, 1999, the Company recorded a restructuring charge of $12,000,000 ($7,200,000 net of income tax benefit or $.31 per share) related to the consolidation of its three U.S. divisional operations offices into its corporate headquarters and a decision to discontinue direct involvement with pre-development activities associated with certain retail/entertainment projects conducted through its wholly-owned subsidiary, Centertainment, Inc. Included in this total are severance and other employee related costs of $5,300,000, lease termination costs of $700,000 and the write-off of capitalized pre-development costs of $6,000,000. As a result of the restructuring, the Company realized general and administrative expense reductions of approximately $5,500,000 in fiscal 2000. Depreciation and amortization increased 7.6%, or $6,753,000, during the year ended March 30, 2000. This increase was caused by an increase in depreciation of $12,930,000 related to the Company's new megaplexes, which was partially offset by a $8,728,000 decrease in amortization due to a change in accounting for start-up activities. During the fourth quarter of the current year, the Company recognized a non-cash impairment loss of $5,897,000 ($3,479,000 net of income tax benefit, or $.15 per share) on 13 theatres with 111 screens in 6 states (primarily Florida, Michigan and Louisiana) including a loss of $690,000 associated with one theatre that was included in impairment losses recognized in previous periods. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. During the fourth quarter of fiscal 1999, the Company recognized a non-cash impairment loss of $4,935,000 ($2,912,000 net of income tax benefit, or $.13 per share) on 24 theatres with 186 screens in 11 states (primarily Georgia, Ohio, Texas and Colorado) including a loss of $937,000 associated with 7 theatres that were included in impairment losses recognized in previous periods. Gain on disposition of assets decreased from a gain of $2,369,000 in the prior year to a gain of $944,000 during the current year. Current year results include a gain on the sale of real estate held for investment and gains related to the sales of the real estate assets associated with two theatres. Prior year results include gains related to the sales of real estate assets associated with three theatres. Interest Expense. Interest expense increased 62.3% during the year ended March 30, 2000 compared to the prior year, due to an increase in average outstanding borrowings and interest rates. The increase in average interest rates was primarily due to the issuance of $225,000,000 of 9 1/2% Senior Subordinated Notes due 2011 on January 27, 1999. Income Tax Provision. The provision for income taxes decreased to a benefit of $31,900,000 during the current year from a benefit of $10,500,000 in the prior year. The effective tax rate was 39.3% for the current year compared to 39.6% for the previous year. Net Loss. Net loss increased during the year ended March 30, 2000 to a loss of $55,187,000 from a loss of $16,016,000 in the prior year. Net loss per share was $2.35 compared to a loss of $.69 in the prior year. Current year results include the cumulative effect of an accounting change of $5,840,000 (net of income tax benefit of $4,095,000) and a restructuring charge of $12,000,000 ($7,200,000 net of income tax benefit of $4,800,000), which reduced earnings per share by $.25 and $.31, respectively, for the year ended March 30, 2000. LIQUIDITY AND CAPITAL RESOURCES The Company's revenues are collected in cash, principally through box office admissions and theatre concessions sales. The Company has an operating "float" which partially finances its operations and which generally permits the Company 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 30 to 45 days following receipt of box office admissions revenues. The Company is only occasionally required to make advance or early payments or non-refundable guaranties of film rentals. Film distributors generally release during the summer and holiday seasons the films which they anticipate will be the most successful. Consequently, the Company typically generates higher revenues during such periods. Cash flows from operating activities, as reflected in the Consolidated Statements of Cash Flows, were $43,458,000, $89,027,000 and $67,167,000 in fiscal years 2001, 2000 and 1999, respectively. The decrease in operating cash flows from fiscal year 2000 to fiscal year 2001 is primarily due to increased competition, the decline in the performance of films and an increase in rent, interest and theatre closure payments. The Company had a net working capital deficit as of March 29, 2001 and March 30, 2000 of $148,519,000 and $29,602,000, respectively. The increase in working capital deficit is attributed primarily to a decrease in temporary cash investments of $82,000,000, a $15,000,000 increase in deferred income and a $14,000,000 increase in theatre and other closure reserves which management classifies as current based on its intention to negotiate termination of the related lease obligations within one year. The increase in working capital deficit is not expected to negatively impact the Company's ability to fund operations or planned capital expenditures for the next 12 months. The Company borrows against its Credit Facility to meet obligations as they come due and had approximately $150,000,000 and $85,000,000 available on its Credit Facility to meet these obligations as of March 29, 2001 and March 30, 2000, respectively. The Company continues to expand its North American and International theatre circuits. During the current fiscal year, the Company opened 6 theatres with 109 screens and added 6 screens to an existing theatre. In addition, the Company closed 37 theatres with 250 screens resulting in a circuit total of 180 theatres with 2,768 screens as of March 29, 2001. The costs of constructing new theatres are funded by the Company through internally generated cash flow or borrowed funds. The Company generally leases its theatres pursuant to long-term non- cancelable operating leases which require the developer, who owns the property, to reimburse the Company for a portion of the construction costs. However, the Company 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. During fiscal 2001, the Company leased 5 new theatres with 97 screens from developers and leased one theatre with 12 screens pursuant to a ground lease. The Company has granted an option to Entertainment Properties Trust ("EPT"), a real estate investment trust, to acquire the land at one megaplex theatre for the cost to the Company. In addition, for a period of five years subsequent to November 1997, EPT will have a right of first refusal and first offer to purchase and leaseback to the Company the real estate assets associated with any megaplex theatre and related entertainment property owned or ground-leased by the Company, exercisable upon the Company's intended disposition of such property. As of March 29, 2001, the Company had 4 open megaplexes that would be subject to EPT's right of first refusal and first offer to purchase should the Company seek to dispose of such megaplexes. Historically, the Company has owned and paid for the equipment necessary to fixture a theatre. However, the Company entered into master lease agreements in fiscal 2000 and 1999 in the amount of $21,200,000 and $25,000,000, respectively, for equipment necessary to fixture certain theatres. The master lease agreements have an initial term of six years and include early termination and purchase options. The Company classifies these leases as operating leases. As of March 29, 2001, the Company had construction in progress of $58,858,000 and reimbursable construction advances (amounts due from developers on leased theatres) of $733,000. The Company had four theatres in the U.S. with a total of 74 screens, two theatres in Canada with 38 screens and two theatres in Spain with 38 screens under construction on March 29, 2001. During the fifty-two weeks ended March 29, 2001, the Company had capital expenditures of $120,881,000. The Company expects that the net cash requirements for capital expenditures, giving effect to proceeds of $7,500,000 on an anticipated sale and leaseback transaction, will approximate $85,000,000 in fiscal 2002. The Company's Credit Facility permits borrowings at interest rates based on either the bank's base rate or LIBOR and requires an annual commitment fee based on margin ratios that could result in a rate of .375% or .500% on the unused portion of the commitment. The Credit Facility matures on April 10, 2004. The commitment thereunder will be reduced by $25,000,000 on each of December 31, 2002, March 31, 2003, June 30, 2003 and September 30, 2003 and by $50,000,000 on December 31, 2003. The total commitment under the Credit Facility is $425,000,000, but the facility contains covenants that limit the Company's ability to incur debt (whether under the Credit Facility or from other sources). As of March 29, 2001, the Company had outstanding borrowings of $270,000,000 under the Credit Facility at an average interest rate of 7.7% per annum, and approximately $150,000,000 was available for borrowing under the Credit Facility. On April 19, 2001, the Company issued Preferred Stock for an aggregate purchase price of $250,000,000. Net proceeds from the sale of approximately $225,000,000 were used to reduce outstanding indebtedness under the Credit Facility and increase available borrowing amounts under the Credit Facility. Covenants under the Credit Facility impose limitations on indebtedness, creation of liens, change of control, transactions with affiliates, mergers, investments, guaranties, asset sales, dividends, business activities and pledges. In addition, the Credit Facility contains certain financial covenants. Covenants under the Indentures relating to the Company's $225,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2011 (the "Notes due 2011") and $200,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2009 (the "Notes due 2009") are substantially the same and impose limitations on the incurrence of indebtedness, dividends, purchases or redemptions of stock, transactions with affiliates, and mergers and sales of assets, and require the Company to make an offer to purchase the Notes upon the occurrence of a change in control, as defined in the Indentures. Upon a change of control, the Company will be required to make an offer to repurchase each holder's Notes due 2009 and Notes due 2011 at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. As of March 29, 2001, the Company was in compliance with all financial covenants relating to the Credit Facility, the Notes due 2009 and the Notes due 2011. However, as of such date, under provisions of the Indentures related to the Notes due 2009 and the Notes due 2011, the Company is currently prohibited from incurring additional indebtedness other than additional borrowings under the Credit Facility and other permitted indebtedness, as defined in the Indentures, and paying cash dividends or making distributions in respect of its capital stock. The Indentures relating to the Notes due 2009 and 2011 (collectively, the "Notes") contain certain provisions subordinating the obligations of the Company under the Notes to its obligations under the Credit Facility and other senior indebtedness. These include a provision that applies if there is a payment default under the Credit Facility or other senior indebtedness and one that applies if there is a non-payment default that permits acceleration of indebtedness under the Credit Facility. If there is a payment default under the Credit Facility or other senior indebtedness, generally no payment may be made on the Notes until such payment default has been cured or waived or such senior indebtedness had been discharged or paid in full. If there is a non-payment default under the Credit Facility that would permit the lenders to accelerate the maturity date of the Credit Facility, no payment may be made on the Notes for a period (the "Payment Blockage Period") commencing upon the receipt by the Indenture trustees for the Notes of notice of such default and ending up to 179 days thereafter. Not more than one Payment Blockage Period may be commenced during any period of 365 consecutive days. Failure of the Company to make payment on either series of Notes when due or within any applicable grace period, whether or not occurring under a Payment Blockage Period, will be an event of default with respect to such Notes. As of March 29, 2001, the Company was in compliance with all financial covenants relating to the Credit Facility and the Notes. On April 19, 2001, the Company issued shares of Series A Preferred Stock and Series B Preferred Stock for an aggregate purchase price of $250,000,000. Net proceeds from the sale of approximately $225,000,000 were used to reduce outstanding indebtedness under the Company's Credit Facility. As described in Note 5 to the Company's Notes to Consolidated Financial Statements included in Part I Item 8. of this Form 10-K, dividends on the Preferred Stock are payable in additional shares of Preferred Stock until April 2004. Thereafter, at the Company's option, dividends on Series B Preferred Stock may be paid in additional shares of Series B Preferred Stock until April 2006 and dividends on Series A Preferred Stock may be paid in additional shares of Series A Preferred Stock until April 2008. Reference is made to Note 5 for information describing circumstances in which holders of Preferred Stock may be entitled to special in-kind dividends and other circumstances under which holders of Preferred Stock may be required to receive payments-in-kind in lieu of cash and shares of Series B Preferred Stock instead of Series A Preferred Stock. Reference is also made to Note 5 for information relating to conversion rights, exchange obligations, the Company's redemption option, the holders' redemption option, voting rights, election of directors and liquidation preferences of the Preferred Stock. The Company believes that cash generated from operations, existing cash and equivalents, expected reimbursements from developers and the available commitment amount under its Credit Facility will be sufficient to fund operations, including amounts due under credit agreements, and planned capital expenditures for the next 12 months and enable the Company to maintain compliance with covenants related to the Credit Facility and the Notes. However, the performance of films licensed by the Company and unforeseen changes in operating requirements could affect the Company's ability to continue its business strategy as well as comply with certain financial covenants. Certain Factors That May Affect Future Results and Financial Condition The Company's ability to operate successfully depends upon a number of factors, the most important of which are the availability and appeal of motion pictures, the Company's ability to license motion pictures and the performance of such motion pictures in its markets. The Company predominantly licenses first-run motion pictures. Poor relationships with distributors, poor performance of motion pictures or disruption in the production of motion pictures by the major studios and/or independent producers may have an adverse effect upon the business of the Company. Because film distributors usually release films that they anticipate will be the most successful during the summer and holiday seasons, poor performance of these films or disruption in the release of films during such periods could adversely impact the Company's results of operations for those particular periods or for any fiscal year. The Screen Actors Guild ("SAG") has a contract with the Alliance of Motion Picture and Television Producers ("AMPTP"). The SAG contract with AMPTP will expire on June 30, 2001. The SAG is currently negotiating a new contract with AMPTP; however, failure to successfully negotiate and execute a new contract could result in work stoppage within the film industry that could adversely impact the quality and quantity of films licensed by the Company. As discussed in Part I Item 1. "Theatrical Exhibition Industry and Competition", the annual growth rate for indoor screens has exceeded the annual growth rate for attendance from 1995-2000. Management believes that the industry is rationalizing the excess capacity of screens as many theatrical exhibitors appear to be curtailing expansion plans and are expected to accelerate the closure of underperforming screens. If excess capacity in the industry does not subside, the Company is at risk for increased erosion of its theatre base and continued declines in comparable theatre attendance. As the Company expands internationally, it becomes subject to regulation by foreign governments. There are significant differences between the theatrical exhibition industry regulatory environment in the United States and in international markets. Regulatory barriers affecting such matters as the size of theatres, the issuance of licenses and the ownership of land may restrict market entry. Vertical integration of production and exhibition companies in international markets may also have an adverse effect on the Company's ability to license motion pictures for international exhibition. Quota systems used by some countries to protect their domestic film industry may adversely affect revenues from theatres that the Company develops in such markets. Such differences in industry structure and regulatory and trade practices may adversely affect the Company's ability to expand internationally or to operate at a profit following such expansion. Contingencies that may affect future results and financial condition are summarized in Note 10 of the Company's Notes to Consolidated Financial Statements included in Part I Item 8. of this Form 10-K and incorporated herein by reference. Deferred Tax Assets Readers are cautioned that forward looking statements contained in this section should be read in conjunction with the Company's disclosures under the heading "forward looking statements". The following special factors could particularly affect the Company's ability to achieve the required level of future taxable income to enable it to realize its deferred tax assets: (i) competition; (ii) the ability to open or close screens as currently planned; (iii) the performance of films licensed by the Company; and (iv) future theatre attendance levels. The Company has recorded net current and non-current deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, of approximately $150,000,000 as of March 29, 2001, and estimates that it must generate at least $385,000,000 of future taxable income to realize those deferred tax assets. To achieve this level of future taxable income, the Company intends to pursue its current business strategy that includes expansion of its theatre circuit and closing less profitable theatres, reduction of Credit Facility borrowings and related interest expense with the net proceeds from the sale of Preferred Stock and company-wide cost control initiatives. The theatrical exhibition industry is cyclical and the Company believes that it is capable of generating future taxable income once the current industry replacement cycle is completed. Management believes it is more likely than not that the Company will realize future taxable income sufficient to utilize its deferred tax assets except as follows. As of March 29, 2001, management believed it was more likely than not that certain deferred tax assets related to state tax net operating loss carryforwards, a net operating loss carryforward of its French subsidiary in the amount of $3,500,000 (expiring in 2003 through 2006) and other deferred tax assets of its French subsidiary totaling $1,600,000 will not be realized due to uncertainties as to the timing and amounts of related future taxable income, accordingly, a valuation allowance of $5,561,000 was established. While management believes it is more likely than not that the Company will realize future taxable income sufficient to realize its net current and non-current deferred tax asset of $150,000,000, it is possible that these deferred taxes may not be realized in the future. The table below reconciles loss before income taxes and cumulative effect of an accounting change for financial statement purposes with taxable loss for income tax purposes:

(estimated) 52 Weeks Ended 52 Weeks Ended 52 Weeks Ended March 29, March 30, April 1, (Dollars in thousands) 2001 2000 1999 -------------------------------------------------------------------------------- Loss before income taxes and Cumulative effect of an accounting change $(135,826) $(81,247) $(26,516) Cumulative effect of an accounting change 26,710 (9,935) - Reserve for future dispositions 13,810 15,364 (421) Depreciation and amortization (16,600) (3,740) (17,790) Gain on disposition of assets (1,358) (16,000) (1,247) Impairment of long-lived assets 50,961 (5,896) 3,542 Foreign corporation activity (640) 5,779 4,274 Other (24,180) 32,517 4,807 ------- ------------------ ------------- Taxable loss before special deductions and net operating loss carrybacks $ (87,123) $(63,158) $ (33,351) ======== =============== ==============

The Company's foreign subsidiaries have net operating loss carryforwards in Portugal, Spain and the United Kingdom aggregating $8,000,000, $417,000 of which may be carried forward indefinitely and the balance of which expires from 2003 through 2008. The Company's Federal income tax loss carryforward of $147,000,000 expires in 2020 and 2021 and will be limited to approximately $8,500,000 annually due to the sale of Preferred Stock to the Apollo Purchasers. The Company's state income tax loss carryforwards of $52,000,000, net of valuation allowance, may be used over various periods ranging from 5 to 20 years. The Company anticipates that net temporary differences should reverse and become available as tax deductions as follows: 2002 $ 55,000,000 2003 33,000,000 2004 20,000,000 2005 38,000,000 2006 8,000,000 Thereafter 231,000,000 ------------ Total $385,000,000 ============ Euro Conversion In January 1999, certain member countries of the European Union established irrevocable, fixed conversion rates between their existing currencies and the European Union's common currency (the "Euro"). The introduction of the Euro is scheduled to be phased in over a period ending January 1, 2002, when Euro notes and coins will come into circulation. The existing currencies are due to be completely removed from circulation on February 28, 2002. The Company currently operates one theatre in Portugal, two theatres in Spain and one in France. These countries are member countries that adopted the Euro as of January 1, 1999. The Company is implementing necessary changes to accounting, operational, and payment systems to accommodate the introduction of the Euro. The Company does not anticipate that the conversion will have a material impact on its consolidated financial position, results of operations or cash flows. Impact of Inflation Historically, the principal impact of inflation and changing prices upon the Company has been to increase the costs of the construction of new theatres, the purchase of theatre equipment and the utility and labor costs incurred in connection with continuing theatre operations. Film exhibition costs, the largest cost of operations of the Company, is 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 the Company's total revenues and results of operations. New Accounting Pronouncements During fiscal 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), Accounting for Derivative Instruments and Hedging Activities which was amended by Statement of Financial Accounting Standards No. 138 issued in June 2000. The statement requires companies to recognize all derivatives as either assets or liabilities, with the instruments measured at fair value. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and the resulting designation. The statement is effective for all fiscal years beginning after June 15, 2000. The statement will become effective for the Company in fiscal 2002. Adoption of this statement is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements. SAB 101 draws upon the existing accounting rules and explains those rules, by analogy, to other transactions that the existing rules do not specifically address. The Company adopted SAB 101, as required, retroactive to the beginning of fiscal year 2001. The impact of adopting SAB 101 on the Company's consolidated financial position and results of operations is summarized in Note 1 of the Company's Notes to Consolidated Financial Statements included in Part I Item 8. of this Form 10-K and incorporated herein by reference. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to various market risks including interest rate risk and foreign currency exchange rate risk. The Company does not hold any significant derivative financial instruments. Market risk on variable-rate financial instruments. The Company maintains a $425,000,000 credit facility (the "Credit Facility"), which permits borrowings at interest rates based on either the bank's 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. Based on the Company's outstanding borrowings under the Credit Facility as of March 29, 2001 at an average interest rate of 7.7% per annum, a 100 basis point increase in market interest rates would increase annual interest expense and decrease earnings before income taxes by approximately $2,700,000. Market risk on fixed-rate financial instruments. Included in long- term debt are $200,000,000 of 9 1/2% Senior Subordinated Notes due 2009 and $225,000,000 of 9 1/2% Senior Subordinated Notes due 2011. Increases in market interest rates would generally cause a decrease in the fair value of the Notes due 2009 and the Notes due 2011 and a decrease in market interest rates would generally cause an increase in fair value of the Notes due 2009 and the Notes due 2011. Foreign currency exchange rates. The Company currently operates theatres in Canada, Portugal, Spain, France, Japan, Sweden, and China (Hong Kong) and is currently developing theatres in the United Kingdom. As a result of these operations, the Company has 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. Although the Company does not currently hedge against foreign currency exchange rate risk, it does not intend to repatriate funds from the operations of its international theatres but instead intends to use them to fund current and future operations. A 10% fluctuation in the value of the U.S. dollar against all foreign currencies of countries where the Company currently operates theatres would either increase or decrease earnings before income taxes and accumulated other comprehensive income by approximately $2,300,000 and $14,300,000, respectively. Item 8. Financial Statements and Supplementary Data. RESPONSIBILITY FOR PREPARATION OF FINANCIAL STATEMENTS AMC Entertainment Inc. TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC. The accompanying consolidated financial statements and related notes of AMC Entertainment Inc. and subsidiaries were prepared by management in conformity with accounting principles generally accepted in the United States of America appropriate in the circumstances. In preparing the financial statements, management has made judgments and estimates based on currently available information. Management is responsible for the information; representations contained elsewhere in this Annual Report are consistent with the financial statements. The Company has a formalized system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that its financial records are reliable. Management monitors the system for compliance to measure its effectiveness and recommends possible improvements. In addition, as part of their audit of the consolidated financial statements, the Company's independent accountants review and test the internal accounting controls on a selected basis to establish a basis of reliance in determining the nature, extent and timing of audit tests to be applied. The Audit Committee of the Board of Directors (consisting solely of Directors from outside the Company) reviews the process involved in the preparation of the Company's annual audited financial statements, and in this regard meets (jointly and separately) with the independent accountants, management and internal auditors to review matters relating to financial reporting and accounting procedures and policies, the adequacy of internal controls and the scope and results of the audit performed by the independent accountants. /s/ Craig R. Ramsey Senior Vice President, Finance Chief Financial Officer and Chief Accounting Officer REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF AMC ENTERTAINMENT INC. KANSAS CITY, MISSOURI In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows present fairly, in all material respects, the financial position of AMC Entertainment Inc. and subsidiaries (the "Company") at March 29, 2001 and March 30, 2000, and the results of their operations and their cash flows for each of the three fiscal years in the period ended March 29, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1 to the financial statements, the Company adopted Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, retroactive to the beginning of fiscal year 2001 and adopted the American Institute of Certified Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-up Activities, during fiscal year 2000. /s/ PricewaterhouseCoopers LLP Kansas City, Missouri May 21, 2001 AMC Entertainment Inc. CONSOLIDATED STATEMENTS OF OPERATIONS

52 Weeks Ended 52 Weeks Ended 52 Weeks Ended March 29, March 30, April 1, (In thousands, except per share data) 2001 2000 1999 ---------------------------------------------------------------------------------------- Revenues Admissions $ 811,068 $ 763,083 $ 662,161 Concessions 334,224 329,855 307,347 Other theatre 26,052 30,013 21,766 Other 43,457 43,991 32,182 ---------------------------------------------- Total revenues 1,214,801 1,166,942 1,023,456 Expenses Film exhibition costs 432,351 417,736 358,437 Concession costs 46,455 50,726 48,687 Theatre operating expense 300,773 290,072 260,145 Rent 229,314 198,762 165,370 Other 42,610 44,619 30,899 General and administrative 32,499 47,407 52,321 Preopening expense 3,808 6,795 2,265 Theatre and other closure expense 24,169 16,661 2,801 Restructuring charge - 12,000 - Depreciation and amortization 105,260 95,974 89,221 Impairment of long-lived assets 68,776 5,897 4,935 Gain on disposition of assets (664) (944) (2,369) ---------------------------------------------- Total costs and expenses 1,285,351 1,185,705 1,012,712 ---------------------------------------------- Operating income (loss) (70,550) (18,763) 10,744 Other expense (income) Other income (9,996) - - Interest expense Corporate borrowings 64,347 54,088 30,195 Capital and financing lease obligations 12,653 8,615 8,433 Investment income (1,728) (219) (1,368) --------------------------------------------- Loss before income taxes and cumulative effect of accounting changes (135,826) (81,247) (26,516) Income tax provision (45,700) (31,900) (10,500) --------------------------------------------- Loss before cumulative effect of accounting changes (90,126) (49,347) (16,016) Cumulative effect of accounting changes (net of income tax benefit of $10,950 and $4,095 in 2001 and 2000, respectively) (15,760) (5,840) - --------------------------------------------- Net loss $(105,886) $ (55,187) $ (16,016) ============================================= Loss per share before cumulative effect of an accounting change: Basic $ (3.84) $ (2.10) $ (0.69) ============================================= Diluted $ (3.84) $ (2.10) $ (0.69) ============================================= Loss per share Basic $ (4.51) $ (2.35) $ (0.69) ============================================= Diluted $ (4.51) $ (2.35) $ (0.69) ============================================= Pro forma amounts assuming SAB No. 101 accounting change had been in effect in fiscal 2000 and 1999: Loss before cumulative effect of accounting changes $ (51,715) $ (17,726) ======= ======= Basic (2.20) (.76) ====== ====== Diluted (2.20) (.76) ====== ====== Net Loss $ (70,297) $ (28,839) ======= ======= Basic (3.00) (1.23) ======= ======= Diluted (3.00) (1.23) ======= ======= See Notes to Consolidated Financial Statements.

AMC Entertainment Inc. CONSOLIDATED BALANCE SHEETS

March 29, March 30, (In thousands, except share data) 2001 2000 ---------------------------------------------------------------------- Assets Current assets: Cash and equivalents $ 34,075 $ 119,305 Receivables, net of allowance for doubtful accounts of $1,137 as of March 29, 2001 and $3,576 as of March 30, 2000 13,498 18,468 Reimbursable construction advances 733 10,955 Other current assets 45,075 45,275 -------------------- Total current assets 93,381 194,003 Property, net 757,518 822,295 Intangible assets, net 7,639 15,289 Deferred income taxes 135,491 81,955 Other long-term assets 53,235 75,263 -------------------- Total assets $1,047,264 $1,188,805 ==================== Liabilities and Stockholders' Equity (Deficit) Current liabilities: Accounts payable $ 92,276 $ 99,466 Construction payables 8,713 6,897 Accrued expenses and other liabilities 138,193 114,037 Current maturities of corporate borrowings and capital and financing lease obligations 2,718 3,205 -------------------- Total current liabilities 241,900 223,605 Corporate borrowings 694,172 754,105 Capital and financing lease obligations 53,966 65,301 Other long-term liabilities 116,271 87,125 -------------------- Total liabilities 1,106,309 1,130,136 Commitments and contingencies Stockholders' equity (deficit): Common Stock, 66 2/3 cents par value; 19,447,598 shares issued and outstanding as of March 29, 2001 and March 30, 2000 12,965 12,965 Convertible Class B Stock, 66 2/3 cents par value; 4,041,993 shares issued and outstanding as of March 29, 2001 and March 30, 2000 2,695 2,695 Additional paid-in capital 106,713 106,713 Accumulated other comprehensive loss (15,121) (3,812) Accumulated deficit (156,047) (50,161) -------------------- (48,795) 68,400 Less: Employee notes for Common Stock purchases 9,881 9,362 Common Stock in treasury, at cost, 20,500 shares as of March 29, 2001 and March 30, 2000 369 369 -------------------- Total stockholders' equity (deficit) (59,045) 58,669 -------------------- Total liabilities and stockholders' equity (deficit) $1,047,264 $1,188,805 ====================== See Notes to Consolidated Financial Statements.

AMC Entertainment Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS

52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 29, March 30, April 1, (In thousands) 2001 2000 1999 --------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND EQUIVALENTS Cash flows from operating activities: Net loss $(105,886) $(55,187) $(16,016) Adjustments to reconcile net loss to net cash provided by operating activities: Restructuring charge - 5,629 - Depreciation and amortization 105,260 95,974 89,221 Impairment of long-lived assets 68,776 5,897 4,935 Deferred income taxes (41,909) (28,090) 2,562 Gain on disposition of long-term assets (664) (944) (2,369) Cumulative effect of accounting changes 15,760 5,840 - Change in assets and liabilities: Receivables 6,047 (1,999) (5,307) Other current assets (1,295) 4,839 (19,694) Accounts payable (14,591) 15,798 (1,736) Accrued expenses and other liabilities 5,954 26,993 15,118 Liabilities for theatre closure 5,275 8,804 - Other, net 731 5,473 453 -------------------------------------- Net cash provided by operating activities 43,458 89,027 67,167 -------------------------------------- Cash flows from investing activities: Capital expenditures (120,881) (274,932) (260,813) Proceeds from sale/leasebacks 6 69,647 - Investments in real estate - - (8,935) Change in reimbursable construction advances 7,684 13,984 36,171 Preopening expenditures - - (8,049) Proceeds from disposition of long-term assets 29,594 6,862 10,255 Other, net (421) (13,953) (7,946) -------------------------------------- Net cash used in investing activities (84,018) (198,392) (239,317) -------------------------------------- Cash flows from financing activities: Net borrowings (repayments) under Credit Facility (60,000) 207,000 (27,000) Principal payments under corporate borrowings - (14,000) - Proceeds from issuance of 9 1/2% Senior Subordinated Notes due 2011 - - 225,000 Proceeds from financing lease obligations 11,220 28,666 - Principal payments under capital and financing lease obligations and other (2,755) (3,146) (6,047) Change in cash overdrafts 6,520 14,287 (1,516) Change in construction payables 1,816 (17,457) (234) Funding of employee notes for Common Stock purchases, net - - (8,579) Deferred financing costs and other - (248) (6,556) -------------------------------------- Net cash (used in) provided by financing activities (43,199) 215,102 175,068 -------------------------------------- Effect of exchange rate changes on cash and equivalents (1,471) 329 440 -------------------------------------- Net increase (decrease) in cash and equivalents(85,230) 106,066 3,358 Cash and equivalents at beginning of year 119,305 13,239 9,881 -------------------------------------- Cash and equivalents at end of year $ 34,075 $119,305 $ 13,239 ======================================

52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 29, March 30, April 1, (In thousands) 2001 2000 1999 ----------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (refunded) during the period for: Interest (net of amounts capitalized of $4,186, $7,899 and $7,040) $85,261 $ 62,642 $ 40,928 Income taxes, net (6,583) (9,531) 3,267 Schedule of non-cash investing and financing activities: Mortgage note incurred directly for Investments in real estate $ - $ - $ 14,000 Receivable from sale/leaseback included in reimbursable construction advances - 2,622 - See Notes to Consolidated Financial Statements.

AMC Entertainment Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

Employee Accumulated Retained Notes for $1.75 Cumulative Convertible Additional Other Earnings Common Common Stock Total Preferred Stock Common Stock Class B Stock Paid-in Comprehensive (Accumulated Stock in Treasury Stockholders' Shares Amount Shares Amount Shares Amount Capital Loss Deficit) Purchases Shares Amount Equity(Deficit) (In thousands, except share and per share data) ------------------------------------------------------------------------------------------------------------------------ Balance, April 3, 1998 1,800,331 $1,200 15,376,821 $10,251 5,015,657 $ 3,344 $107,676 $(3,689) $21,042 $ - 20,500 $ (369) $139,455 Comprehensive Loss: Net loss - - - - - - - - (16,016) - - - (16,016) Foreign currency translation adjustment - - - - - - - 999 - - - - 999 -------- Comprehensive Loss (15,017) -------- $1.75 Preferred Stock conversions(1,800,331) (1,200) 3,097,113 2,065 - - (963) - - - -- (98) Class B Stock conversions - - 973,664 649 (973,664) (649) - - - - -- - Issuance of employee notes for Common Stock purchases - - - - - - - - - (8,875) -- (8,875) ------------------------------------------------------------------------------------------------------------ Balance, April 1, 1999 - - 19,447,598 12,965 4,041,993 2,695 106,713 (2,690) 5,026 (8,875) 20,500 (369) 115,465 Comprehensive Loss: Net loss - - - - - - - - (55,187) - - - (55,187) Foreign currency translation adjustment- - - - - - - (1,059) - - - - (1,059) Unrealized loss on marketable securities (net of income tax benefit of $44) - - - - - - - (63) - - - - (63) ----- Comprehensive Loss (56,309) ----- Accrued interest on employee notes Common Stock purchases - - - - - - - - - (487) - - (487) ------------------------------------------------------------------------------------------------------------------ Balance, March 30, 2000 - - 19,447,598 12,965 4,041,993 2,695 106,713 (3,812) (50,161)(9,362) 20,500 (369) 58,669 Comprehensive Loss: Net loss - - - - - - - - (105,886) - - - (105,886) Foreign currency translation adjustment - - - - - - - (10,899) - - - - (10,899) Unrealized loss on marketable securities (net of income tax benefit of $145) - - - - - - - (209) - - - - (209) Additional minimum pension liability - - - - - - - (201) - - - - (201) ------- Comprehensive Loss (117,195) ------- Accrued interest on employee notes for Common Stock purchases - - - - - - - - - (519) - - (519) ------------------------------------------------------------------------------------------------------------------- Balance, March 29, 2001 - $ - 19,447,598 $12,965 4,041,993 $2,695 $106,713 $(15,121) $(156,047) $(9,881) 20,500 $(369) $(59,045) ======================================================================================================================= See Notes to Consolidated Financial Statements

AMC Entertainment Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended March 29, 2001, March 30, 2000 and April 1, 1999 NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES AMC Entertainment Inc. ("AMCE") is a holding company which, through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC"), AMC Theatres of Canada (a division of AMC Entertainment International, Inc.), AMC Entertainment International, Inc., National Cinema Network, Inc. ("NCN") and AMC Realty, Inc. (collectively with AMCE, unless the context otherwise requires, the "Company"), is principally involved in the theatrical exhibition business throughout North America and in Portugal, Spain, France, Japan, Sweden, and China (Hong Kong). The Company's North American theatrical exhibition business is conducted through AMC and AMC Theatres of Canada. The Company's International theatrical exhibition business is conducted through AMC Entertainment International, Inc. The Company is also involved in the business of providing on-screen advertising and other services to AMC and other theatre circuits through a wholly-owned subsidiary, National Cinema Network, Inc., and in miscellaneous ventures through AMC Realty, Inc. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation: The consolidated financial statements include the accounts of AMCE and all subsidiaries. All significant intercompany balances and transactions have been eliminated. Fiscal Year: The Company has a 52/53 week fiscal year ending on the Thursday closest to the last day of March. The 2001, 2000 and 1999 fiscal years reflect a 52 week period. Fiscal year 2002 will reflect a 52 week period. Revenues and Film Exhibition Costs: Revenues are recognized when admissions and concessions sales are received at the theatres. Film exhibition costs are accrued based on the applicable box office receipts and estimates of the final settlement pursuant to the film licenses. Cash and Equivalents: Cash and equivalents consist of cash on hand and temporary cash investments with original maturities of three months or less. The Company invests excess cash in deposits with major banks and in temporary cash investments. Such investments are made only in instruments issued or enhanced by high quality financial institutions (investment grade or better). Amounts invested in a single institution are limited to minimize risk. Under the Company's cash management system, checks issued but not presented to banks frequently result in overdraft balances for accounting purposes and are classified within accounts payable in the balance sheet. The amount of these checks included in accounts payable as of March 29, 2001 and March 30, 2000 was $35,157,000 and $28,637,000, respectively. Reimbursable Construction Advances: Reimbursable construction advances consist of amounts due from developers to fund a portion of the construction costs of new theatres that are to be operated by the Company pursuant to lease agreements. The amounts are repaid by the developers either during construction or shortly after completion of the theatre. Property: Property is recorded at cost. The Company uses the straight-line method in computing depreciation and amortization for financial reporting purposes and accelerated methods, with respect to certain assets, for income tax purposes. The estimated useful lives are as follows: Buildings and improvements 3 to 40 years Leasehold improvements 1 to 20 years Furniture, fixtures and equipment 3 to 10 years Expenditures for additions (including interest during construction), major renewals and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation and amortization are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are credited or charged to operations currently. Occasionally, the Company is responsible for the construction of leased theatres and for paying project costs that are in excess of an agreed upon amount to be reimbursed from the developer. The Company is considered the owner (for accounting purposes) of these types of projects during the construction period. As a result, the Company has recorded $29,439,000 and $31,055,000 as financing lease obligations on its Balance Sheet related to these types of projects as of March 29, 2001 and March 30, 2000, respectively. Intangible Assets: Intangible assets are recorded at cost and are comprised of lease rights, amounts assigned to theatre leases assumed under favorable terms, and location premiums on acquired theatres, each of which are being amortized on a straight-line basis over the estimated remaining useful lives of the theatres. Accumulated amortization on intangible assets was $35,687,000 and $33,586,000 as of March 29, 2001 and March 30, 2000, respectively. The original useful lives of these assets ranged from 4 to 36 years and the remaining useful lives ranged from 1 to 10 years. Other Long-term Assets: Other long-term assets are comprised principally of costs incurred in connection with the issuance of debt securities which are being amortized over the respective lives of the issuances and investments in real estate. Preopening Expense: Preopening expense consists primarily of advertising and other start-up costs incurred prior to the operation of new theatres which are expensed as incurred. In April of 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5 ("SOP 98-5"), Reporting on the Costs of Start-up Activities. SOP 98-5 requires costs of start-up activities to be expensed when incurred. The Company previously capitalized such costs and amortized them over a two-year period. The Company adopted this statement in fiscal 2000, which resulted in a cumulative effect adjustment to the Company's results of operations and financial position of $5,840,000 (net of income tax benefit of $4,095,000). Theatre and Other Closure Expense: Theatre and other closure expense is primarily related to payments made or expected to be made to landlords to terminate leases on certain of the Company's closed theatres, other vacant space and theatres where development has been discontinued. Theatre and other closure expense is recognized at the time the theatre closes, other space becomes vacant and development is discontinued. Expected payments to landlords are based on actual or discounted contractual amounts. During fiscal 2001, the Company recognized $24,169,000 of theatre and other closure expense primarily on 31 theatres with 203 screens, vacant restaurant space related to a terminated joint venture and the discontinued development of a theatre in North America. Accrued theatre and other closure expense is classified as current based upon management's intention to negotiate termination of the related lease obligations within one year. Impairment of Long-lived Assets: Management reviews long-lived assets, including intangibles, for impairment as part of the Company's annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. Management reviews internal management reports on a quarterly basis as well as monitors current and potential future competition in film markets for indicators of triggering events or circumstances that indicate impairment of individual theatre assets. Management evaluates its theatres using historical and projected data of theatre level cash flow as its primary indicator of potential impairment and considers the seasonality of its business when evaluating theatres for impairment. Because Christmas and New Years holiday results comprise a significant portion of the Company's operating cash flow, the actual results from this period which are available during the fourth quarter of each fiscal year are an integral part of the Company's impairment analysis. As a result of these analyses, if the sum of the estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount of the asset, an impairment loss is recognized on the amount by which the carrying value of the asset exceeds its estimated fair value. Assets are evaluated for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. The impairment evaluation is based on the estimated cash flows from continuing use until the expected disposal date plus the expected terminal value. The expected disposal date does not exceed the remaining lease period and is often less than the remaining lease period when management does not expect to operate the theatre to the end of its lease term. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows plus the terminal value. There is considerable management judgement necessary to determine the future cash flows, terminal value and the expected operating period of a theatre, and accordingly, actual results could vary significantly from such estimates. If theatres currently have sufficient estimated future cash flows to realize the related carrying amount of theatre assets, but management believes that it is not likely the theatre will be operated to the end of its lease term, the estimated economic life of the theatre assets are revised to reflect management's best estimate of the economic life of the theatre assets for purposes of recording depreciation. During fiscal 2001, the Company recognized a non-cash impairment loss of $68,776,000 ($40,576,000 net of income tax benefit) on 76 theatres with 719 screens. The Company recognized an impairment loss of $35,263,000 on 5 Canadian theatres with 122 screens, $19,762,000 on 17 U.S. theatres with 202 screens including 2 theatres with 44 screens opened since 1995, $4,891,000 on one French theatre with 20 screens, $3,592,000 on 34 U.S. theatres with 222 screens that were closed during fiscal 2001, $3,476,000 on 19 U.S. theatres with 153 screens that are expected to be closed in the near future, $1,042,000 on the discontinued development of a theatre in Taiwan and $750,000 related to real estate held for sale. These impairment losses reduced property, intangible assets and other long-term assets by $63,547,000, $4,397,000 and $832,000, respectively, during fiscal 2001. In fiscal 2000, the Company recognized a non-cash impairment loss of $5,897,000 ($3,479,000 net of income tax benefit, or $.15 per share) on 13 theatres with 111 screens, while in fiscal 1999, the Company recognized an impairment loss of $4,935,000 ($2,912,000 net of income tax benefit, or $.13 per share) on 24 theatres with 186 screens. Foreign Currency Translation: Operations outside the United States are generally measured using the local currency as the functional currency. Assets and liabilities are translated at the rates of exchange at the balance sheet date. Income and expense items are translated at average rates of exchange. The resultant translation adjustments are included in foreign currency translation adjustment, a separate component of accumulated other comprehensive income. Gains and losses from foreign currency transactions, except those intercompany transactions of a long-term investment nature, are included in net earnings and have not been material. Loss per Share: Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted loss per share includes the effects of outstanding stock options, if dilutive. Stock-based Compensation: The Company accounts for stock-based awards to employees and directors using the intrinsic value-based method. Income taxes: The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes. Under SFAS 109, deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are recorded by the liability method. This method gives consideration to the future tax consequences of deferred income or expense items and immediately recognizes changes in income tax laws upon enactment. The income statement effect is generally derived from changes in deferred income taxes on the balance sheet. New Accounting Pronouncements: During fiscal 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), Accounting for Derivative Instruments and Hedging Activities which was amended by Statement of Financial Accounting Standards No. 138 issued in June 2000. The statement requires companies to recognize all derivatives as either assets or liabilities, with the instruments measured at fair value. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and the resulting designation. The statement is effective for all fiscal years beginning after June 15, 2000. The statement will become effective for the Company in fiscal 2002. Adoption of this statement is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements. SAB 101 draws upon the existing accounting rules and explains those rules, by analogy, to other transactions that the existing rules do not specifically address. The Company adopted SAB 101, as required, retroactive to the beginning of fiscal year 2001. The Company sells gift certificates and discounted theatre tickets in exchange for cash. Gift certificates do not expire and can be redeemed at their face value for theatre tickets and concession items. Any excess between the face value of the gift certificate and the selling price of the purchased item is paid to the customer in cash at the time of redemption. Discounted tickets generally expire 18 months after the date of issuance and can be redeemed for theatre tickets and concession items only. The Company has historically deferred the revenue associated with sales of gift certificates and discounted theatre tickets at an anticipated redemption value after deducting estimated amounts for non-presentments. Estimated amounts for non-presentments have been recorded as revenue when the gift certificates and discounted theatre tickets are sold. When gift certificates and discounted tickets were redeemed, the Company recognized the related admission and concession revenue and reduced the related deferred liability. In connection with the adoption of SAB No. 101, the Company changed its revenue recognition policy related to the sales of gift certificates and discounted theatre tickets. The Company defers 100% of the revenue associated with the sales of these items (no revenue or income recognition for non-presentment) until such time as the items are redeemed or the gift certificate liabilities are extinguished and the discounted theatre tickets expire. The Company adopted SAB No. 101 in the fourth fiscal quarter of 2001 retroactive to the beginning of the fiscal year. As a result, the Company reported a cumulative effect adjustment to increase its net loss for the year ended March 29, 2001 by $15,760,000 (net of income tax benefit of $10,950,000). This amount reflects the aggregate liability for non-presentments since 1987 for gift certificates of $9,730,000 (net of income tax benefit of $6,860,000) and for discounted theatre tickets that have not expired of $6,030,000 (net of income tax benefit of $4,090,000). Previously reported net loss per share for the fourth quarter of fiscal 2000 increased by $.05 on a pro forma basis. Statements of Operations by Quarter for the current fiscal year have been revised to reflect the adoption of SAB 101. The Company recognized $6,620,000 of revenue for expiration of discounted theatre tickets and $9,996,000 of other income for the extinguishment of gift certificate liabilities during fiscal year 2001 that was included in the cumulative effect adjustment. Presentation: Certain amounts have been reclassified from prior period consolidated financial statements to conform with the current year presentation. NOTE 2 - PROPERTY A summary of property is as follows:

(In thousands) 2001 2000 --------------------------------------------------------- Property owned: Land $ 46,257 $ 49,164 Buildings and improvements 225,845 207,119 Leasehold improvements 403,118 384,142 Furniture, fixtures and equipment 525,474 545,423 ---------------------- 1,200,694 1,185,848 Less-accumulated depreciation and amortization 450,276 376,277 ---------------------- 750,418 809,571 Property leased under capital leases: Buildings and improvements 33,635 44,555 Less-accumulated amortization 26,535 31,831 ---------------------- 7,100 12,724 ---------------------- $757,518 $ 822,295 ====================== Included in property is $58,858,000 and $78,681,000 of construction in progress as of March 29, 2001 and March 30, 2000, respectively.

NOTE 3 - SUPPLEMENTAL BALANCE SHEET INFORMATION Other assets and liabilities consist of the following:

(In thousands) 2001 2000 -------------------------------------------------------- Other current assets: Prepaid rent $ 17,978 $ 16,498 Deferred income taxes 14,694 15,226 Income taxes receivable 3,636 6,428 Other 8,767 7,123 ------------------------- $ 45,075 $ 45,275 ========================= Other long-term assets: Investments in real estate $ 12,134 $ 34,671 Deferred financing costs 11,123 12,443 Other 29,978 28,149 ------------------------- $ 53,235 $ 75,263 ========================= The decline in investments in real estate is due to the sale of a real estate property for $22,906,000 during fiscal 2001. The gain on disposition of this real estate property was $573,000. Accrued expenses and other liabilities: Taxes other than income $ 20,152 $ 22,938 Interest 6,038 11,777 Payroll and vacation 5,415 6,082 Casualty claims and premiums 4,862 6,028 Deferred income 56,127 41,104 Accrued bonus 7,781 2,799 Theatre and other closure 31,174 16,989 Other 6,644 6,320 ------------------- $ 138,193 $ 114,037 =================== Other long-term liabilities: Deferred rent $ 44,060 $ 35,001 Casualty claims and premiums 16,493 15,534 Pension and post retirement obligations 15,451 14,431 Deferred income 12,542 - Deferred gain 12,314 14,028 Advance sale leaseback proceeds 8,591 - Food court reserve 918 1,030 Other 5,902 7,101 ------------------- $116,271 $ 87,125 ===================

NOTE 4 - CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS A summary of corporate borrowings and capital and financing lease obligations is as follows:

(In thousands) 2001 2000 ------------------------------------------------------------------- $425 million Credit Facility due 2004 $270,000 $330,000 9 1/2% Senior Subordinated Notes due 2011 225,000 225,000 9 1/2% Senior Subordinated Notes due 2009 199,172 199,105 Capital and financing lease obligations, interest ranging from 7 1/4% to 20% 56,684 68,506 ------------------- 750,856 822,611 Less-current maturities 2,718 3,205 ------------------- $748,138 $819,406 ===================

The Company maintains a $425,000,000 credit facility (the "Credit Facility"), which permits borrowings at interest rates based on either the bank's base rate or LIBOR and requires an annual commitment fee based on margin ratios that could result in a rate of .375% or .500% on the unused portion of the commitment. The Credit Facility matures on April 10, 2004. The commitment thereunder will be reduced by $25,000,000 on each of December 31, 2002, March 31, 2003, June 30, 2003 and September 30, 2003 and by $50,000,000 on December 31, 2003. The total commitment under the Credit Facility is $425,000,000; however, the Credit Facility contains covenants that limit the Company's ability to incur debt. As of March 29, 2001, the Company had outstanding borrowings of $270,000,000 under the Credit Facility at an average interest rate of 7.7% per annum, and approximately $150,000,000 was available for borrowing under the Credit Facility. Covenants under the Credit Facility impose limitations on indebtedness, creation of liens, change of control, transactions with affiliates, mergers, investments, guaranties, asset sales, dividends, business activities and pledges. In addition, the Credit Facility contains certain financial covenants. As of March 29, 2001, the Company was in compliance with all financial covenants relating to the Credit Facility. Costs related to the establishment of the Credit Facility were capitalized and are charged to interest expense over the life of the Credit Facility. Unamortized issuance costs of $1,788,000 as of March 29, 2001 are included in other long-term assets. On March 19, 1997, the Company sold $200,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2009 (the "Notes due 2009"). The Notes due 2009 bear interest at the rate of 9 1/2% per annum, payable in March and September. The Notes due 2009 are redeemable at the option of the Company, in whole or in part, at any time on or after March 15, 2002 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 15, 2006, plus in each case interest accrued to the redemption date. Upon a change of control (as defined in the Indenture), each holder of the Notes due 2009 will have the right to require the Company to repurchase such holder's Notes due 2009 at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Notes due 2009 are subordinated to all existing and future senior indebtedness, as defined in the Indenture, of the Company. The Notes due 2009 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2011. The Indenture to the Notes due 2009 contains certain covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or make distributions in respect of their capital stock. If the Notes due 2009 attain "investment grade status", the covenants in the Indenture limiting the Company's ability to incur additional indebtedness and pay dividends will cease to apply. As of March 29, 2001, the Company was in compliance with all financial covenants relating to the Notes due 2009; however, as of such date, the Company is prohibited from incurring additional indebtedness other than additional borrowings under the Credit Facility and other permitted indebtedness, as defined in the Indenture, and paying cash dividends or making distributions in respect of its capital stock. The discount on the Notes due 2009 is being amortized to interest expense following the interest method. Costs related to the issuance of the Notes due 2009 were capitalized and are charged to interest expense, following the interest method, over the life of the securities. Unamortized issuance costs of $4,425,000 as of March 29, 2001 are included in other long-term assets. As of March 29, 2001 and March 30, 2000, $200 million aggregate principal amount of the Notes due 2009 was issued and outstanding. On January 27, 1999, the Company sold $225,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2011 (the "Notes due 2011"). The Notes due 2011 bear interest at the rate of 9 1/2% per annum, payable in February and August. The Notes due 2011 are redeemable at the option of the Company, in whole or in part, at any time on or after February 1, 2004 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2007, plus in each case interest accrued to the redemption date. Upon a change of control (as defined in the Indenture), the Company will be required to make an offer to repurchase each holder's notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Notes due 2011 are subordinated to all existing and future senior indebtedness of the Company. The Notes due 2011 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2009. The Indenture to the Notes due 2011 contains certain covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or make distributions in respect of their capital stock. If the Notes due 2011 attain "investment grade status", the covenants in the Indenture limiting the Company's ability to incur additional indebtedness and pay dividends will cease to apply. As of March 29, 2001, the Company was in compliance with all financial covenants relating to the Notes due 2011; however, as of such date, the Company is prohibited from incurring additional indebtedness other than additional borrowings under the Credit Facility and other permitted indebtedness, as defined in the Indenture, and paying cash dividends or making distributions in respect of its capital stock. Costs related to the issuance of the Notes due 2011 were capitalized and are charged to interest expense, following the interest method, over the life of the securities. Unamortized issuance costs of $4,910,000 as of March 29, 2001 are included in other long-term assets. As of March 29, 2001 and March 30, 2000, $225,000,000 aggregate principal amount of the Notes due 2011 was issued and outstanding. Occasionally, the Company is responsible for the construction of leased theatres and for paying project costs that are in excess of an agreed upon amount to be reimbursed from the developer. EITF Issue No. 97-10 requires the Company to be considered the owner (for accounting purposes) of these types of projects during the construction period. As a result, the Company has recorded $29,439,000 and $31,055,000 as financing lease obligations on its Consolidated Balance Sheets related to these types of projects as of March 29, 2001 and March 30, 2000, respectively. Minimum annual payments required under existing capital and financing lease obligations (net present value thereof) and maturities of corporate borrowings as of March 29, 2001, are as follows:

Capital and Financing Lease Obligations ---------------------------------------------- Minimum Net Lease Less Present Corporate (In thousands) Payments Interest Value Borrowings Total -------------------------------------------------------------------------- 2002 $ 10,045 $ 7,327 $ 2,718 $ - $ 2,718 2003 9,787 6,886 2,901 - 2,901 2004 9,723 6,407 3,316 - 3,316 2005 9,102 5,891 3,211 270,000 273,211 2006 8,705 5,414 3,291 - 3,291 Thereafter 79,971 38,724 41,247 424,172 465,419 ------------------------------------------------------------- Total $127,333 $70,649 $56,684 $ 694,172 $750,856 ==============================================================

The Company issues letters of credit in the normal course of its business. The outstanding amount on these letters of credit was $4,928,000 as of March 29, 2001 with maturity dates ranging from April 1, 2001 to September 1, 2001. NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT) The authorized common stock of AMCE consists of two classes of stock. Except for the election of directors, each holder of Common Stock (66 2/3 cents par value; 45,000,000 shares authorized) is entitled to one vote per share, and each holder of Class B Stock (66 2/3 cents par value; 30,000,000 shares authorized) is entitled to 10 votes per share. As of March 29, 2001, Common stockholders voting as a class were entitled to elect two of the five members of AMCE's Board of Directors with Class B stockholders electing the remainder. Holders of the Company's stock have no pre-emptive or subscription rights. Holders of Common Stock have no conversion rights, but holders of Class B Stock may elect to convert at any time on a share- for-share basis into Common Stock. During fiscal 1999, various holders of the Company's $1.75 Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") converted 1,796,485 shares into 3,097,113 shares of Common Stock at a conversion rate of 1.724 shares of Common Stock for each share of Convertible Preferred Stock. On April 14, 1998, the Company redeemed the remaining 3,846 shares of Convertible Preferred Stock at a redemption price of $25.75 per share plus accrued and unpaid dividends. The Company has authorized 10,000,000 shares of Preferred Stock (66 2/3 cents par value), of which no shares were issued and outstanding as of March 29, 2001. On April 19, 2001, the Company issued 92,000 shares of Series A Convertible Preferred Stock (the "Series A Preferred") and 158,000 shares of Series B Exchangeable Preferred Stock (the "Series B Preferred" and collectively with the Series A Preferred, the "Preferred Stock") at a price of $1,000 per share to the Apollo Purchasers. Net proceeds from the issuance of approximately $225,000,000 were used to repay borrowings under the Credit Facility. The Preferred Stock was created pursuant to a Certificate of Designations filed with the Delaware Secretary of State on April 19, 2001 and has preference in liquidation equal to the greater of $1,000 per share plus accrued and unpaid dividends, or the amount that would have been payable if the Preferred Stock were converted into Common Stock. The Series A Preferred is convertible at the option of the holder into shares of Common Stock at a conversion price of $7.15 per Common Stock share (as adjusted, the "Conversion Price") resulting in a current conversion rate of 139.86 shares of Common Stock for each share of Series A Preferred. The Series B Preferred shares will automatically be exchanged into an equal number of Series A Preferred shares upon approval by the Company's Common Stockholders of additional authorized Common Stock ("Stockholder Approval"). The Company is required to seek Stockholder Approval at every annual and special stockholder meeting until such approval is obtained. The Apollo Purchasers have entered into a Standstill Agreement with the Company which, for a period of five years ending April 19, 2006 (the "Standstill period"), among other matters, restricts their ability to (i) acquire additional voting securities of the Company, (ii) propose certain extraordinary corporate transactions, (iii) seek to elect or remove members of the Company's Board of Directors not elected by the Apollo Purchasers or (iv) engage in election contests. Further, if during the Standstill Period an Apollo Purchaser wishes to convert Series A Preferred to Common Stock, it may do so only in connection with a permitted disposition under the Standstill Agreement. Dividends on the Series A Preferred accumulate at an annual rate of 6.75% and are payable when, as and if declared by the Company's Board of Directors. Dividends on the Series A Preferred must be paid with additional Series A Preferred shares for the first three years from April 19, 2001. Between April 20, 2004 and April 19, 2008, dividends may be paid in either additional Series A Preferred shares or cash at the Company's option, and must be paid in cash after April 19, 2008, unless prohibited by the Indentures for the Notes due 2009 and 2011, in which case such dividends are payable in additional Series A Preferred shares. Dividends on the Series B Preferred accumulate at an annual rate of 12.00% and are payable when, as and if declared by the Company's board of directors. Dividends on the Series B Preferred shares must be paid with additional Series B Preferred shares for the first three years from April 19, 2001. Between April 20, 2004 and April 19, 2006, dividends may be paid in either additional Series B Preferred shares or cash, at the Company's option, and must be paid in cash after April 19, 2006, unless prohibited by the Indentures for the Notes due 2009 and 2011, in which case such dividends are payable in additional Series B Preferred shares. If the Company obtains Stockholder Approval within 270 days after April 19, 2001, the Series B Preferred dividend rate, as to the then outstanding shares of Series B Preferred Stock, will be reduced retroactively to April 19, 2001 from 12.00% to 6.75%. The holders of Series A and B Preferred shares are also entitled to a special dividend of additional Series A or B Preferred shares if a Change of Control (as defined in the Certificate of Designations) of the Company occurs prior to April 19, 2006 equal to the dividends that they would have received through April 19, 2006 if the Change of Control had not occurred. If dividends are paid on the Common Stock in any fiscal period, the holders of Series A Preferred shares are entitled to receive dividends on an "as converted" basis to the extent such dividends are greater than the Series A Preferred dividends otherwise payable in such fiscal period. The holders of Series B Preferred shares are entitled to a special dividend of additional Series B Preferred shares upon the Company exercising its right of redemption after the Standstill Period or upon a Change of Control during the Standstill Period in an amount equal to the (i) quotient of (x) the difference between the average closing price of the Common Stock for the 20 trading days preceding such event and the Conversion Price (as defined below), divided by (y) the Conversion Price, (as defined in the Certificate of Designations) (ii) less the amount of certain other special dividends. The holders of Series B Preferred are entitled to a special dividend of additional Series B Preferred shares on April 19, 2011, in an amount equal to the quotient of (i) the difference between the average closing price of the Common Stock for the 20 trading days preceding such event and the Conversion Price, divided by (ii) the Conversion Price. Additionally, the holders of Series B Preferred are entitled to a special dividend of additional Series B Preferred shares upon the occurrence of a Change of Control in an amount equal to (i) the quotient of (x) the difference between the value per share of the consideration received by the holders of Common Stock as a result of the Change of Control and the Conversion Price divided by (y) the Conversion Price, less (ii) the amount of certain other special dividends. The holders of Series B Preferred are also entitled to a special dividend of additional Series B Preferred shares at any time after October 19, 2002, upon a sale of Series A Preferred or the Common Stock into which Series A Preferred were converted equal to the product of (i) the percentage of such shares sold in such transaction, multiplied by (ii) the quotient of (x) the difference between the sales price of the Series A Preferred or Common Stock on an "as converted" basis and the Conversion Price, divided by (y) the Conversion Price. To qualify for the special dividend, the sale must be the initial sale of the Series A Preferred to a purchaser that is not an Apollo affiliate and the seller must be a holder of both Series A Preferred and Series B Preferred shares at the time of the sale. The Preferred Stock may be redeemed in whole and not in part by the Company at the Company's option at any time after April 19, 2006 for cash equal to the liquidation preference, provided that the average Common Stock closing price for the 20 trading days preceding the notice of redemption exceeds 150% of the Conversion Price. The Series A Preferred must be redeemed by the Company at the option of a holder at any time after April 19, 2011 for cash or Common Stock, at the Company's option, at a price equal to the Series A Preferred liquidation preference, subject to a maximum redemption price of $130,035,684 or 18,186,809 shares of Common Stock in the event that Stockholder Approval is not obtained. Except as otherwise provided by law and in addition to any rights to designate directors to the Board of Directors of the Company, the Apollo Purchasers do not have any voting rights with respect to any Preferred Stock held by such Apollo Purchasers; provided, however that such Apollo Purchasers have certain rights to elect directors. The Apollo Purchasers also have certain Preferred Stock Approval Rights (as defined and set forth in the Investment Agreement). Upon transfer of Series A Preferred shares to a transferee that is not an affiliate of an Apollo Purchaser, consistent with the Standstill Agreement, the transferee holder of Series A Preferred shares is entitled to vote on an as-converted basis with the holders of Common Stock and Class B Stock on all matters except the election of directors and any matter reserved by law or the Company's Certificate of Incorporation for consideration exclusively by the holders of Common Stock or Class B Stock. The Series A Preferred also has the right to vote as a class on the creation, authorization or issuance of any class, series or shares of senior stock, parity stock or junior stock (if the junior stock may be redeemed at the option of the holders thereof prior to April 19, 2011) and on any adverse change to the preferences, rights and powers of the Preferred Stock. So long as the Apollo Purchasers continue to hold Preferred Stock Approval Rights, the Apollo Purchasers have the right to elect three directors to the Company's Board of Directors. Pursuant to the Investment Agreement, the Company amended its Bylaws to increase the number of directors to eight, and the Apollo Purchasers elected three directors to the Company's Board of Directors. If an Event of Default (as defined in the Certificate of Designations) occurs and is not cured or waived within 45 days, then the holders of the Preferred Stock have the right to elect that number of directors of the Company that, when added to those directors already elected by the holders of Preferred Stock, constitute a majority of the Board of Directors. During fiscal 1999, the Company and its then Co-Chairman and Chief Executive Officer, Mr. Stanley H. Durwood, together with his six children (the "Durwood Family Stockholders") completed a registered secondary offering of 3,300,000 shares of Common Stock (the "Secondary Offering") owned by the Durwood Family Stockholders. In connection with the Secondary Offering, Mr. Stanley H. Durwood converted 500,000 shares of Convertible Class B Stock to 500,000 shares of Common Stock. Additionally, pursuant to an agreement with his children, Mr. Stanley H. Durwood converted 473,664 shares of Convertible Class B Stock to Common Stock for delivery to his children. During fiscal 1999, a company affiliated with the Durwood Family Stockholders reimbursed the Company $698,000 for expenses related to the Secondary Offering. During fiscal 2001 and 2000, the largest balance owed by this affiliated company to the Company was $11,322. This balance was reimbursed to the Company on June 7, 2000. During fiscal 1999, the Company loaned one of its executive officers $5,625,000 to purchase 375,000 shares of Common Stock of the Company in the Secondary Offering. On September 14, 1998, the Company loaned $3,765,000 to another of its executive officers to purchase 250,000 shares of Common Stock of the Company. The 250,000 shares were purchased in the open market and unused proceeds of $811,000 were repaid to the Company leaving a remaining unpaid principal balance of $2,954,000. The loans are unsecured and are due in August and September of 2003, respectively, may be prepaid in part or full without penalty, and are represented by promissory notes which bear interest at a rate (6% per annum) at least equal to the applicable federal rate prescribed by Section 1274 (d) of the Internal Revenue Code in effect on the date of such loans, payable at maturity. Accrued interest on the loans as of March 29, 2001 was $1,302,000. Stock-Based Compensation In November 1994, AMCE adopted a stock option and incentive plan (the "1994 Plan"). This plan, which expired in 1999 except as to outstanding awards, provided for three basic types of awards: (i) grants of stock options which are either incentive or non-qualified stock options, (ii) grants of stock awards, which may be either performance or restricted stock awards, and (iii) performance unit awards. The maximum number of shares of Common Stock which may have been awarded or granted under the plan was 1,000,000 shares. The 1994 Plan provided that the option exercise price for stock options may not have been less than the fair market value of the stock at the date of grant and unexercised options expire no later than ten years after date of grant. Options issued under the 1994 Plan during fiscal 2000 vest 50% at issuance and 50% one year from issuance; options issued under the 1994 Plan during fiscal 1999 vested immediately; and all other options issued under the 1994 Plan vested two years from the date of issuance. In December 1999, AMCE adopted a stock option and incentive plan for Outside Directors (the "1999 Outside Directors Plan"). This plan provided for a one-time grant to outside directors of non-qualified stock options and permits directors to receive up to all of their annual cash retainer in options in lieu of cash. The number of shares of Common Stock which may be sold or granted under the plan may not exceed 200,000 shares. The 1999 Outside Directors Plan provides that the option exercise price for stock options be equal to the fair market value of the stock at the date of grant and unexercised options expire no later than ten years after date of grant. Options issued under the 1999 Outside Directors Plan during fiscal 2001 and 2000 vest one year from the date of issuance. In December 1999, AMCE adopted a stock option and incentive plan (the "1999 Plan"). This plan provides for three basic types of awards: (i) grants of stock options which are either incentive or non-qualified stock options (ii) grants of stock awards, which may be either performance or restricted stock awards, and (iii) performance unit awards. The number of shares of Common Stock which may be sold or granted under the plan may not exceed 2,100,000 shares. The 1999 Plan provides that the option exercise price for stock options may not be less than the fair market value of the stock at the date of grant and unexercised options expire no later than ten years after date of grant. No options have been issued under the 1999 Plan as of March 29, 2001. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock- Based Compensation. Accordingly, no compensation expense has been recognized for the Company's stock-based compensation in fiscal 2001, 2000 and 1999. Had compensation expense for the Company's stock options been determined based on the fair value at the grant dates, the Company's net loss and net loss would have been the following:

(In thousands, except per share data) 2001 2000 1999 --------------------------------------------------------------- Net loss: As reported $(105,886) $(55,187) $(16,016) Pro forma $(106,593) $(57,033) $(17,877) Net loss per common share: As reported $ (4.51) $ (2.35) $ (.69) Pro forma $ (4.54) $ (2.43) $ (.76)

The following table reflects the weighted average fair value per option granted during the year, as well as the significant weighted average assumptions used in determining fair value using the Black- Scholes option-pricing model:

2001 2000 1999 ------------------------------------------------------------- Fair value on grant date $ 1.36 $ 7.84 $ 8.07 Risk-free interest rate 5.5% 6.0% 5.2% Expected life (years) 5 5 5 Expected volatility 61.1% 46.2% 42.7 % Expected dividend yield - - -

A summary of stock option activity under all plans is as follows:

2001 2000 1999 ------------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Number Price Number Price Number Price of Shares Per Share of Shares Per Share of Shares Per Share ----------- ---------- ----------- -------- ---- ------- Outstanding at beginning of year 1,428,290 $15.41 894,850 $14.92 519,850 $ 12.69 Granted 61,330 $ 2.38 538,690 $16.23 375,000 $ 18.01 Canceled (315,500) $18.68 (5,250) - - - Exercised - - - - - - ------------------------------------------------------------ Outstanding at end of year 1,174,120 $14.07 1,428,290 $15.41 894,850 $ 14.92 ============================================================ Exercisable at end of year 1,112,790 $14.72 1,124,600 $15.38 893,725 $ 14.91 ============================================================ Available for grant at end of year 2,169,980 2,231,310 470,750 ========= ========= =======

The following table summarizes information about stock options as of March 29, 2001:

Outstanding Stock Options Exercisable Stock Options ------------------------- -------------------- Weighted- Range of Average Weighted- Weighted- Exercise Number Remaining Average Number Average Prices of Contractual Exercise of Exercise Shares Life Price Shares Price ---------------------------------------------------------------------- $ 2.38 61,330 9.7 years $ 2.38 - - $ 9.25 to $ 12.50 444,790 3.7 years $ 9.65 444,790 $ 9.65 $14.50 to $ 20.75 645,500 7.8 years $ 17.80 645,500 $17.80 $22.13 to $ 26.38 22,500 5.1 years $ 26.38 22,500 $26.38 ---------------------------------------------------------------------- $ 2.38 to $ 26.38 1,174,120 6.3 years $ 14.07 1,112,790 $14.72 ======================================================================

NOTE 6 - LOSS PER SHARE The following table sets forth the computation of basic and diluted earnings per share:

(In thousands, except per share data) 2001 2000 1999 ---------------------------------------------------------------------- Numerator: Net loss before cumulative effect of accounting changes $(90,126) $(49,347) $ (16,016) ============================== Denominator: Shares for basic and diluted earnings per share - average shares outstanding 23,469 23,469 23,378 ============================== Basic loss per share before cumulative effect of accounting changes $(3.84) $ (2.10) $ (.69) ============================== Diluted loss per share before cumulative effect of accounting changes $ (3.84) $ (2.10) $ (.69) ==============================

Shares from options to purchase shares of Common Stock were excluded from the diluted earnings per share calculation because they were anti-dilutive. In 2001, 2000 and 1999, shares, from options to purchase 9,999, 63,024 and 134,485 shares of Common Stock, respectively, were excluded because they were anti-dilutive. As discussed in Note 5, the Company issued shares of Series A and Series B Preferred on April 19, 2001. The 92,000 shares of Series A Preferred are currently convertible into 12,867,133 shares of Common Stock and the 158,000 shares of Series B Preferred are currently contingently convertible into 22,097,902 shares of Common Stock. NOTE 7 - INCOME TAXES Income tax provision reflected in the Consolidated Statements of Operations for the three years ended March 29, 2001 consists of the following components:

(In thousands) 2001 2000 1999 Current: Federal $ (3,685) $ (1,485) $ (11,776) Foreign - - - State (106) (2,325) (1,286) ----------------------------------- Total current (3,791) (3,810) (13,062) Deferred: Federal (51,837) (26,395) 4,149 Foreign 1,688 (2,419) (1,589) State (2,710) (3,371) 2 ----------------------------------- Total deferred (52,859) (32,185) 2,562 ----------------------------------- Total provision (56,650) (35,995) (10,500) Tax benefit of cumulative effect of accounting changes 10,950 4,095 - ----------------------------------- Total provision before cumulative effect of an accounting change $ (45,700) $ (31,900) $ (10,500) ===================================

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

2001 2000 1999 ---------------------------------------------------------------------- Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit 3.1 4.6 6.0 Valuation allowance (3.9) (.4) - Other, net (.6) .1 (1.4) ----------------------------- Effective tax rate 33.6% 39.3% 39.6% =============================

The significant components of deferred income tax assets and liabilities as of March 29, 2001 and March 30, 2000 are as follows:

2001 2000 ------------------------------------ Deferred Income Tax Deferred Income Tax (In thousands) Assets Liabilities Assets Liabilities ------------------------- --------------------------------------------- Property $ 21,974 $ - $ 976 $ - Capital lease obligations 8,250 - 9,816 - Accrued reserves and liabilities 38,378 - 24,707 - Deferred rents 14,888 - 12,193 - Alternative minimum tax credit carryover 8,511 - 10,853 - Net operating loss carryforward 58,030 - 33,031 - Other 6,368 653 6,863 928 ------------------------------------------------- Total 156,399 653 98,439 928 Less: Valuation allowance 5,561 - 330 - ------------------------------------------------- Net 150,838 653 98,109 928 Less: Current deferred income taxes 14,694 - 15,226 - ------------------------------------------------- Total noncurrent deferred income taxes $136,144 $ 653 $ 82,883 $ 928 =============================================== Net noncurrent deferred income taxes $135,491 $ 81,955 ======== ======

The Company's foreign subsidiaries have net operating loss carryforwards in Portugal, Spain and the United Kingdom aggregating $8,000,000, $417,000 of which may be carried forward indefinitely and the balance of which expires from 2003 through 2008. The Company's Federal income tax loss carryforward of $147,000,000 expires in 2020 and 2021 and will be limited to approximately $8,500,000 annually due to the sale of Preferred Stock to the Apollo Purchasers. The Company's state income tax loss carryforwards of $52,000,000, net of valuation allowance, may be used over various periods ranging from 5 to 20 years. Management believes it is more likely than not that the Company will realize future taxable income sufficient to utilize its deferred tax assets except as follows. As of March 29, 2001, management believed it was more likely than not that certain deferred tax assets related to state tax net operating loss carryforwards would not be realized due to uncertainties as to the timing and amounts of future taxable income. Accordingly a valuation allowance of $2,885,000 was established. The amount of the deferred tax asset considered realizable could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The Company's foreign subsidiary in France has a net operating loss carryforward of $3,500,000 expiring in 2003 through 2006. The France subsidiary has other deferred tax assets totaling $1,600,000. As of March 29, 2001 management believes that it is more likely than not that the deferred tax assets of the French subsidiary will not be realized due to uncertainties as to the timing and amounts of future taxable income. Accordingly a valuation allowance of $2,676,000 was established. NOTE 8 - LEASES The majority of the Company's operations are conducted in premises occupied under lease agreements with initial base terms ranging generally from 13 to 25 years, with certain leases containing options to extend the leases for up to an additional 20 years. The leases provide for fixed rentals and/or rentals based on revenues with a guaranteed minimum. The majority of the leases provide that the Company will pay all, or substantially all, taxes, maintenance, insurance and certain other operating expenses. Assets held under capital lease obligations are included in property. During fiscal 1998, the Company sold the real estate assets associated with 13 theatres to Entertainment Properties Trust ("EPT"), a real estate investment trust, for an aggregate purchase price of $283,800,000 (the "Sale and Lease Back Transaction"). The Company leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with terms ranging from 13 to 15 years at an initial lease rate of 10.5% with options to extend for up to an additional 20 years. The leases are triple net leases that require the Company to pay substantially all expenses associated with the operation of the theatres, such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments. The Company has accounted for this transaction as a sale and leaseback in accordance with Statement of Financial Accounting Standards No. 98, Accounting for Leases. The land and building and improvements have been removed from the Consolidated Balance Sheets and a gain of $15,130,000 on the sales has been deferred and is being amortized to rent expense over the life of the leases. The Company leases four additional theatres from EPT under the same terms as those included in the Sale and Lease Back Transaction. Annual rentals for these four theatres are based on an estimated fair value of $95,100,000 for the theatres. During fiscal 2000, the Company sold the building and improvements associated with one of its theatres to EPT for proceeds of $17,600,000 under terms similar to the above Sale and Leaseback Transaction. The Company has granted an option to EPT to acquire the land at this theatre for the cost to the Company. In addition, for a period of five years subsequent to November 1997, EPT will have a right of first refusal and first offer to purchase and lease back to the Company the real estate assets associated with any theatre and related entertainment property owned or ground-leased by the Company, exercisable upon the Company's intended disposition of such property. The Chairman of the Board, Chief Executive Officer and President of AMCE is also the Chairman of the Board of Trustees of EPT. During fiscal 2000 and 1999, the Company entered into master lease agreements for approximately $21,200,000 and $25,000,000, respectively, of equipment necessary to fixture certain theatres. The master lease agreements have a term of six years and include early termination and purchase options. The Company classifies these leases as operating leases. Following is a schedule, by year, of future minimum rental payments required under existing operating leases that have initial or remaining non-cancelable terms in excess of one year as of March 29, 2001: (In thousands) --------------------------------------------------- 2002 $ 206,377 2003 206,345 2004 205,690 2005 205,033 2006 200,420 Thereafter 2,033,130 --------- Total minimum payments required $3,056,995 ========= The Company has also entered into agreements to lease space for the operation of theatres not yet fully constructed. The scheduled completion of construction and theatre openings are at various dates during fiscal 2002. The future minimum rental payments required under the terms of these leases total approximately $284,000,000. The Company records rent expense on a straight-line basis over the term of the lease. Included in long-term liabilities as of March 29, 2001 and March 30, 2000 is $44,060,000 and $35,001,000, respectively, of deferred rent representing pro rata future minimum rental payments for leases with scheduled rent increases. Rent expense is summarized as follows:

(In thousands) 2001 2000 1999 ------------------------------------------------------------ Minimum rentals $197,754 $ 176,315 $ 150,891 Common area expenses 19,200 17,318 14,087 Percentage rentals based on revenues 2,592 2,899 2,783 Furniture, fixtures and equipment rentals 12,407 5,109 469 ------------------------------------- $231,953 $201,641 $168,230 =====================================

NOTE 9 - EMPLOYEE BENEFIT PLANS The Company sponsors a non-contributory defined benefit pension plan covering, after a minimum of one year of employment, all employees age 21 or older who have completed 1,000 hours of service in their first twelve months of employment or in a calendar year and who are not covered by a collective bargaining agreement. The plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of credited service with the Company (not exceeding thirty-five) and the employee's highest five year average compensation. Contributions to the plan reflect benefits attributed to employees' services to date, as well as services expected to be earned in the future. Plan assets are invested in pooled separate accounts with an insurance company pursuant to which the plan's benefits are paid to retired and terminated employees and the beneficiaries of deceased employees. The Company also sponsors two non-contributory deferred compensation plans which provide certain employees additional pension benefits. The Company currently offers eligible retirees the opportunity to participate in a health plan (medical and dental) and a life insurance plan. Substantially all employees may become eligible for these benefits provided that the employee must be at least 55 years of age and have 15 years of credited service at retirement. The health plan is contributory, with retiree contributions adjusted annually; the life insurance plan is noncontributory. The accounting for the health plan anticipates future modifications to the cost-sharing provisions to provide for retiree premium contributions of approximately 20% of total premiums, increases in deductibles and co-insurance at the medical inflation rate and coordination with Medicare. Retiree health and life insurance plans are not funded. The Company is amortizing the transition obligation on the straight-line method over a period of 20 years. Net periodic benefit cost for the plans consists of the following:

Pension Benefits Other Benefits ---------------- --------------- (In thousands) 2001 2000 1999 2001 2000 1999 ------------------------------------------------------------ Components of net periodic benefit cost: Service cost $1,346 $ 2,118 $ 1,910 $ 315 $ 257 $ 234 Interest cost 1,655 1,905 1,612 357 232 247 Expected return on plan assets (1,351) (1,257) (1,118) - - - Recognized net actuarial (gain) loss (387) 103 - - (21) - Amortization of unrecognized transition obligation 231 231 231 50 50 50 ------ ------ ------ ------ ------ ------ Net periodic benefit cost $1,494 $3,100 $2,635 $ 722 $ 518 $ 531 ====== ====== ===== ====== ===== ======

The following tables set forth the plans' change in benefit obligations and plan assets and the accrued liability for benefit cost included in the Consolidated Balance Sheets for the years ended March 29, 2001 and March 30, 2000:

Pension Benefits Other Benefits ---------------- -------------- (In thousands) 2001 2000 2001 2000 ---------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year $22,892 $29,622 $4,199 $3,105 Service cost 1,346 2,118 315 257 Interest cost 1,655 1,905 357 232 Plan participants' contributions - - 23 23 Actuarial (gain) loss 1,129 (9,366) (327) 650 Benefits paid (1,264) (1,387) (40) (68) ------ ------ ------ ------ Benefit obligation at end of year $25,758 $22,892 $4,527 $4,199 ====== ====== ====== ====== Pension Benefits Other Benefits ----------------- --------------- (In thousands) 2001 2000 2001 2000 ---------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year $ 15,763 $ 15,043 $ - $ - Actual return on plan assets 325 755 - - Employer contribution 1,333 1,352 17 45 Plan participants' contributions - - 23 23 Benefits paid (1,264) (1,387) (40) (68) ------ ------ ----- ------ Fair value of plan assets at end of year $ 16,157 $ 15,763 $ - $ - ====== ====== ====== ====== Accrued liability for benefit cost: Funded status $ (9,601) $ (7,129) $(4,527) $ (4,199) Unrecognized net actuarial (gain) loss (2,601) (5,143) (156) 221 Unrecognized prior service cost 1,292 1,523 497 497 ------ ------ ------ ------ Accrued benefit cost $(10,910) $(10,749) $(4,186) $ (3,481) ====== ====== ====== ======

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $25,758,000, $17,514,000 and $16,157,000, respectively, as of March 29, 2001; and $22,892,000, $15,920,000 and $15,763,000, respectively, as of March 30, 2000. The assumptions used in computing the preceding information are as follows:

Pension Benefits Other Benefits ---------------- -------------- (In thousands) 2001 2000 2001 2000 ------------------------------------------------------------------- Weighted-average assumptions: Discount rate 7.25% 7.25% 7.75% 8.00% Expected return on plan assets 8.50% 8.50% - - Rate of compensation increase 6.00% 6.00% 6.50% 6.50%

For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits assumed for 2001 was 11.0% for medical and 4.0% for dental. The rates were assumed to decrease gradually to 5.0% for medical and 3.0% for dental at 2014 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of March 29, 2001 by $979,000 and the aggregate of the service and interest cost components of postretirement expense for fiscal 2001 by $186,000. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement expense for fiscal 2001 by $739,000 and the aggregate service and interest cost components of postretirement expense for fiscal 2001 by $147,000. The Company sponsors a voluntary thrift savings plan covering the same employees eligible for the pension plan. Since inception of the savings plan, the Company has matched 50% of each eligible employee's elective contributions, limited to 3% of the employee's salary. The Company's expense under the thrift savings plan was $1,362,000, $1,373,000, and $1,319,000 for fiscal 2001, 2000 and 1999, respectively. NOTE 10 - CONTINGENCIES The Company, in the normal course of business, is 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. The Company is the defendant in two coordinated cases now pending in California, Weaver v. AMC Entertainment Inc., (filed March 2000 in Superior Court of California, San Francisco County), and Geller v. AMC Entertainment Inc. (filed May 2000 in Superior Court of California, San Bernardino County). The litigation is based upon California Civil Code Section 1749.5, which provides that "on or after July 1, 1997, it is unlawful for any person or entity to sell a gift certificate to a purchaser containing an expiration date." Weaver is a purported class action on behalf of all persons in California who, on or after January 1, 1997, purchased or received an AMC Gift of Entertainment ("GOE") containing an expiration date. Geller is brought by a plaintiff who allegedly received an AMC discount ticket in California containing an expiration date and who purports to represent all California purchasers of these "gift certificates" purchased from any AMC theatre, store, location, web-site or other venue owned or controlled by AMC since January 1, 1997. Both complaints allege unfair competition and seek injunctive relief. Geller seeks restitution of all expired "gift certificates" purchased in California since January 1, 1997 and not redeemed. Weaver seeks disgorgement of all revenues and profits obtained since January 1997 from sales of "gift certificates" containing an expiration date, as well as actual and punitive damages. The Company has denied any liability, answering that GOEs and discount tickets are not a "gift certificate" under the statute and that, in any event, no damages have occurred. On May 11, 2001, following a special trial on the issue, the court ruled that the GOEs and discount tickets are "gift certificates." The Company intends to appeal this ruling and to continue defending the cases vigorously. Should the result of this litigation ultimately be adverse to the Company, it is presently unable to estimate the amount of the potential loss. NOTE 11 - THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS The Company has provided reserves for estimated losses from theatres which have been closed and from discontinuing the operation of fast food and other restaurants operated adjacent to certain of the Company's theatres. During fiscal 2001, the Company discontinued operation of 37 theatres with 250 screens. As of March 29, 2001, the Company has reserved $31,174,000 related primarily to 18 of these theatres with 130 screens and 19 theatres with 143 screens closed in prior years, vacant restaurant space related to a terminated joint venture and the discontinued development of a theatre in North America for which lease terminations have either not been consummated or paid. The Company is obligated under long-term lease commitments with remaining terms of up to 19 years. As of March 29, 2001, the base rents aggregated approximately $8,200,000 annually, and $50,900,000 over the remaining terms of the leases. In conjunction with the opening of certain new theatres in 1986 through 1988, the Company expanded its food services by leasing additional space adjacent to those theatres to operate specialty fast food restaurants. The Company discontinued operating the restaurants due to unprofitability, and has reserved $918,000 for which lease terminations have not been consummated. The Company continues to sub- lease or convert to other uses the space leased for these restaurants. The Company is obligated under non-cancelable long-term lease commitments with remaining terms of up to 10 years. As of March 29, 2001, the base rents aggregated approximately $559,000 annually, and $3,978,000 over the remaining terms of the leases. As of March 29, 2001, the Company had subleased approximately 53% of the space with remaining terms ranging from six months to 117 months. Non-cancelable subleases aggregated approximately $346,000 annually, and $1,665,000 over the remaining terms of the subleases. A rollforward of reserves for theatre and other closure and the discontinuing operation of fast food restaurants is as follows:

(In thousands) 2001 2000 1999 ------------------------------------------------------------------ Beginning Balance $18,019 $ 874 $ 701 Theatre and other closure expense and interest 28,393 16,661 2,801 General and administrative expense 400 680 - Payments (23,600) (8,819) (2,628) Transfer of capital lease obligations 8,880 8,623 - ------ ------ ------ Ending balance $32,092 $18,019 $ 874 ====== ====== ======

NOTE 12 - RESTRUCTURING CHARGE On September 30, 1999, the Company recorded a restructuring charge of $12,000,000 ($7,200,000 net of income tax benefit or $.31 per share) related to the consolidation of its three U.S. divisional operations offices into its corporate headquarters and a decision to discontinue direct involvement with pre-development activities associated with certain retail/entertainment projects conducted through its wholly- owned subsidiary, Centertainment, Inc. Included in this total are severance and other employee related costs of $5,300,000, lease termination costs of $700,000 and the write-down of property of $6,000,000. The severance and other employee related costs result from a workforce reduction of 128 employees primarily at the Company's divisional offices and at its corporate headquarters. Lease termination costs were incurred in connection with the closure of the three divisional operations offices prior to their lease expiration dates. The write down of property was related to capitalized pre-development costs for certain retail/entertainment projects. As of March 30, 2000, $860,000 of these charges were unpaid. The Company had paid substantially all expenses related to these charges as of March 29, 2001. NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it was practicable to estimate that value. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments. The fair value of publicly held corporate borrowings was based upon quoted market prices. For other corporate borrowings, the fair value was based upon rates available to the Company from bank loan agreements or rates based upon the estimated premium over U.S. treasury notes with similar average maturities. The fair values of Employee Notes for Common Stock purchases are based upon the current applicable federal rate prescribed by Section 1274(d) of the Internal Revenue Code. The estimated fair values of the Company's financial instruments are as follows:

2001 2000 -------------------------------------------- Carrying Fair Carrying Fair (In thousands) Amount Value Amount Value ---------------------------------------------------------------------- Financial assets: Cash and equivalents $ 34,075 $ 34,075 $119,305 $119,305 Employee Notes for Common Stock purchases 9,881 10,214 9,362 8,938 Financial liabilities: Cash overdrafts $ 35,157 $ 35,157 $ 28,637 $ 28,637 Corporate borrowings 694,172 598,604 754,105 549,410

NOTE 14 - OPERATING SEGMENTS The Company has identified three reportable segments around differences in products and services and geographical areas. North American and International theatrical exhibition operations are identified as separate segments based on dissimilarities in international markets from North America. NCN and other is identified as a separate segment due to differences in products and services offered. The Company evaluates the performance of its segments and allocates resources based on several factors, of which the primary measure is net loss before cumulative effect of accounting changes plus interest, income taxes, depreciation and amortization and adjusted for restructuring charge, impairment losses, preopening expense, theatre and other closure expense, gain (loss) on disposition of assets and equity in earnings of unconsolidated affiliates ("Adjusted EBITDA"). The Company evaluates Adjusted EBITDA generated by its segments in a number of manners, of which the primary measure is a comparison of segment Adjusted EBITDA to segment property. The Company's segments follow the same accounting policies as discussed in Note 1 to the Consolidated Financial Statements on page 31. Information about the Company's operations by operating segment is as follows:

Revenues (In thousands) 2001 2000 1999 ---------------------------------------------------------------------- North American theatrical exhibition $1,092,504 $1,062,774 $ 951,457 International theatrical exhibition 78,840 60,177 39,817 NCN and other 43,457 43,991 32,182 -------------------------------- Total revenues $1,214,801 $1,166,942 $1,023,456 ========= ============ ============ Adjusted EBITDA (In thousands) 2001 2000 1999 ---------------------------------------------------------------------------- North American theatrical exhibition $ 179,076 $ 167,042 $ 156,302 International theatrical exhibition (6,629) (1,387) 2,333 NCN and other 847 (628) 1,283 Total segment Adjusted EBITDA 173,294 165,027 159,918 General and administrative 32,499 47,407 52,321 ------- ------- -------- Total Adjusted EBITDA $140,795 $ 117,620 $ 107,597 ========= ============ =========== Property (In thousands) 2001 2000 1999 ---------------------------------------------------------------------------- North American theatrical exhibition $1,045,447 $1,018,272 $ 919,185 International theatrical exhibition 86,600 75,153 51,779 NCN and other 13,888 12,812 11,081 Total segment property 1,145,935 1,106,237 982,045 Construction in progress 58,858 78,681 97,688 Corporate 29,536 45,485 39,245 --------- --------- --------- Total property (1) $1,234,329 $1,230,403 $ 1,118,978 ========= ============ ============ Capital expenditures (In thousands) 2001 2000 1999 ------------------------------------------------------------------------------- North American theatrical exhibition $52,685 $ 193,994 $ 144,835 International theatrical exhibition 12,275 22,989 30,560 NCN and other 2,410 1,733 1,884 ------ ------- ------- Total segment capital expenditures 67,370 218,716 177,279 Construction in progress 42,068 44,713 79,351 Corporate 11,443 11,503 4,183 ------- --------- ------- Total capital expenditures $120,881 $ 274,932 $ 260,813 ========= ============ =========== (1) Property is comprised of land, buildings and improvements, leasehold improvements and furniture, fixtures and equipment.

A reconciliation of loss before income taxes to Adjusted EBITDA is as follows:

(In thousands) 2001 2000 1999 --------------------------------------------------------------------------- Loss before income taxes and cumulative effect of accounting changes $(135,826) $ (81,247) $(26,516) Plus: Interest expense 77,000 62,703 38,628 Depreciation and amortization 105,260 95,974 89,221 Impairment of long-lived assets 68,776 5,897 4,935 Restructuring charge - 12,000 - Preopening expense 3,808 6,795 2,265 Theatre and other closure expense 24,169 16,661 2,801 Gain on disposition of assets (664) (944) (2,369) Investment income (1,728) (219) (1,368) -------- ---------- ------------ Total Adjusted EBITDA $ 140,795 $117,620 $107,597 ======== ========== ============

Information about the Company's revenues and assets by geographic area is as follows:

Revenues (In thousands) 2001 2000 1999 --------------------------------------------------------------------- United States $1,110,211 $1,087,765 $ 980,911 Canada 25,750 19,000 2,728 Japan 42,945 31,295 25,174 China (Hong Kong) 9,996 8,723 2,098 Portugal 7,788 8,538 8,855 Spain 14,132 10,161 3,690 France 3,253 1,460 - Sweden 726 - - --------- ------------- ------------ Total revenues $1,214,801 $1,166,942 $1,023,456 ========= ============ ============ Property (In thousands) 2001 2000 1999 --------------------------------------------------------------------- United States $1,081,382 $1,101,533 $1,028,663 Canada 59,326 42,528 30,930 Japan 32,850 32,395 15,587 China (Hong Kong) 11,104 10,993 10,353 Portugal 10,795 11,731 13,019 Spain 25,158 23,652 20,426 France 5,991 6,333 - Taiwan - 1,238 - Sweden 4,773 - - United Kingdom 2,950 - - --------- ------------- ----------- Total property $1,234,329 $1,230,403 $1,118,978 ========= ============ ============

NOTE 15 - RELATED PARTY TRANSACTIONS As a Successor Trustee of the Durwood Voting Trust established under the 1992 Durwood, Inc. Voting Trust Agreement dated December 12, 1992, as amended and restated as of August 12, 1997 (the "Voting Trust"), with shared voting powers over shares held in the Voting Trust, Mr. Raymond F. Beagle, Jr. may be deemed to beneficially own all of the Company's Convertible Class B Stock. Mr. Beagle serves as general counsel to the Company under a retainer agreement which provides for annual payments of $360,000. The agreement provides for severance payments equal to three times the annual retainer upon termination of the agreement by the Company or a change in control approved by Common Stockholders. The agreement also provides for deferred payments from a previously established rabbi trust in a formula amount ($33,239 monthly as of March 29, 2001 which reflects a $75,000 discretionary deferred bonus which has been paid to the rabbi trust during the current fiscal year) for a period of twelve years after termination of services or a change in control. Subsequent to March 29, 2001, the Company approved a $150,000 discretionary deferred bonus which has been paid to the rabbi trust. Lathrop & Gage L.C., a law firm of which Mr. Raymond F. Beagle, Jr. is a member, renders legal services to the Company and its subsidiaries. During fiscal 2001, the Company paid Lathrop & Gage L.C. $3,252,000 for such services. AMC Entertainment Inc. STATEMENTS OF OPERATIONS BY QUARTER

June 29, July 1, Sept 28, Sept 30, Dec. 28, Dec. 30, Mar. 29, Mar. 30, Fiscal Year 2000(1) 1999 2000(1) 1999 2000(1) 1999 2001 2000 2001 2000 (In thousands, except per share amounts)(Unaudited) ------------------------------------------------------------------------------------------------------------------------ Admissions $193,541 $187,882 $220,554 $219,749 $199,165 $183,800 $197,808 $171,652 $811,068 $763,083 Concessions 80,715 83,713 91,472 95,499 82,946 78,420 79,091 72,223 334,224 329,855 Other theatre 9,827 5,089 5,151 6,849 6,177 9,627 4,897 8,448 26,052 30,013 Other 7,161 9,876 14,425 11,588 14,114 13,126 7,757 9,401 43,457 43,991 --------- ---------- ----------- ------------ ----------- ----------- ---------- --------- ---------- --------- Total revenues 291,244 286,560 331,602 333,685 302,402 284,973 289,553 261,724 1,214,801 1,166,942 Film exhibition costs 104,109 109,548 119,902 121,545 106,866 98,693 101,474 87,950 432,351 417,736 Concession costs 12,217 12,691 14,138 14,898 12,077 11,406 8,023 11,731 46,455 50,726 Theatre operating expense 75,809 67,009 76,347 71,123 74,863 70,787 73,754 81,153 300,773 290,072 Rent 55,979 47,877 57,862 48,636 56,826 49,594 58,647 52,655 229,314 198,762 Other 8,825 10,695 12,392 11,794 11,429 11,606 9,964 10,524 42,610 44,619 General and administrative 6,635 13,211 7,350 12,284 8,004 12,873 10,510 9,039 32,499 47,407 Preopening expense1,608 1,273 875 2,024 314 1,914 1,011 1,584 3,808 6,795 Theatre and other closure expense 727 9,646 11,679 2,046 1,421 2,251 10,342 2,718 24,169 16,661 Restructuring charge - - - 12,000 - - - - - 12,000 Depreciation and amortization 26,378 20,657 25,917 23,029 26,465 24,620 26,500 27,668 105,260 95,974 Impairment of long-lived assets - - 3,813 - - - 64,963 5,897 68,776 5,897 (Gain) loss on disposition of assets (1,640) (183) 5 (144) (160) (635) 1,131 18 (664) (944) -------- ---------- ----------- ------------ ----------- ----------- ---------- --------- -------- Total costs and expenses 290,647 292,424 330,280 319,235 298,105 283,109 366,319 290,937 1,285,351 1,185,705 -------- ---------- ----------- ------------ ----------- ----------- ---------- --------- ---------- Operating income (loss) 597 (5,864) 1,322 14,450 4,297 1,864 (76,766) (29,213) (70,550) (18,763) Other income - - 9,996 - - - - - 9,996 - Interest expense 19,430 13,471 18,786 14,401 19,854 16,630 18,930 18,201 77,000 62,703 Investment income (loss) 1,100 486 (495) (386) (407) (311) 1,530 430 1,728 219 -------- ---------- ----------- ------------ ------------ ---------- --------- ---------- --------- Loss before income taxes and cumulative effect of accounting changes(17,733) (18,849) (7,963) (337) (15,964) (15,077) (94,166) (46,984) (135,826) (81,247) Income tax provision(6,600) (7,700) (2,500) (135) (6,000) (6,165) (30,600) (17,900) (45,700) (31,900) -------- ---------- ----------- ------------ -------------------------------------------------------------------- Loss before cumulative effect of accounting changes(11,133)(11,149)(5,463) (202) (9,964) (8,912) (63,566) (29,084) (90,126) (49,347) Cumulative effect of accounting changes (net of income tax benefit of $10,950 and $4,095 in 2001 and 2000, respectively) (15,760) (5,840) - - - - - - (15,760) (5,840) ------ ------------------------------------------------------------------------------------------------------------- Net loss $(26,893)$ (16,989)$ (5,463) $(202) $(9,964) $(8,912) $(63,566) $ (29,084) $ (105,886) $(55,187) ==================================================================================================================== Loss per share before cumulative effect of accounting changes: Basic $ (0.47) $(0.48)$(0.23) $ (0.01) $ (0.42) $ (0.38) $(2.71) $(1.24) $(3.84) $ (2.10) ========================================================================================================================== Diluted $ (0.47) $(0.48)$(0.23) $ (0.01) $ (0.42) $ (0.38) $(2.71) $(1.24) $(3.84) $ (2.10) ========================================================================================================================== Loss per share: Basic $ (1.15) $(0.72)$(0.23) $ (0.01) $ (0.42)$ (0.38) $(2.71) $(1.24) $(4.51) $ (2.35) ========================================================================================================================== Diluted $ (1.15) $(0.72)$(0.23) $ (0.01) $ (0.42)$ (0.38) $(2.71) $(1.24) $(4.51) $ (2.35) ========================================================================================================================== (1)Amounts previously reported in Form 10-Q for fiscal year 2001 have been retroactively restated to reflect the adoption of SAB No. 101, see Note 1. The following schedule reconciles amounts previously reported in Form 10-Q to the revised quarterly amounts in Form 10-K.

AMC Entertainment Inc. RECONCILIATION OF STATEMENTS OF OPERATIONS BY QUARTER AS REPORTED IN FORM 10-Q TO FORM 10-K

Form 10-Q Form 10-K Form 10-Q Form 10-K Form 10-Q Form 10-K June 29, June 29, Sept 28, Sept 28, Dec 28, December 28, (In thousands, except per SAB 101 SAB 101 SAB 101 share amounts) (Unaudited) 2000 Restatement 2000 2000 Restatement 2000 2000 Restatement 2000 ------------------------------------------------------------------------------------------------------------------------------------ Admissions $193,541 $ - $193,541 $220,554 $ - $220,554 $199,165 $ - $199,165 Concessions 80,715 - 80,715 91,472 - 91,472 82,946 - 82,946 Other theatre 6,722 3,105 9,827 6,813 (1,662) 5,151 9,147 (2,970) 6,177 Other 7,161 - 7,161 14,425 - 14,425 14,114 - 14,114 ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 288,139 3,105 291,244 333,264 (1,662) 331,602 305,372 (2,970) 302,402 Film exhibition costs 104,109 - 104,109 119,902 - 119,902 106,866 - 106,866 Concession costs 12,217 - 12,217 14,138 - 14,138 12,077 - 12,077 Theatre operating expense 75,809 - 75,809 76,347 - 76,347 74,863 - 74,863 Rent 55,979 - 55,979 57,862 - 57,862 56,826 - 56,826 Other 8,825 - 8,825 12,392 - 12,392 11,429 - 11,429 General and administrative 6,635 - 6,635 7,350 - 7,350 8,004 - 8,004 Preopening expense 1,608 - 1,608 875 - 875 314 - 314 Theatre and other closure expense 727 - 727 11,679 - 11,679 1,421 - 1,421 Depreciation and amortization 26,378 - 26,378 25,917 - 25,917 26,465 - 26,465 Impairment of long-lived assets - - - 3,813 - 3,813 - - - (Gain) loss on disposition of assets (1,640) - (1,640) 5 - 5 (160) - (160) -------------------------------------------------------------------------------------------------------------------------------- Total costs and expen ses 290,647 - 290,647 330,280 - 330,280 298,105 - 298,105 -------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) (2,508) 3,105 597 2,984 (1,662) 1,322 7,267 (2,970) 4,297 Other income - - - - 9,996 9,996 - - - Interest expense 19,430 - 19,430 18,786 - 18,786 19,854 - 19,854 Investment income (loss) 1,100 - 1,100 (495) - (495) (407) - (407) -------------------------------------------------------------------------------------------------------------------------------- Loss before income taxes and cumulative effect of an accounting change (20,838) 3,105 (17,733) (16,297) 8,334 (7,963) (12,994) (2,970)(15,964) Income tax provision (7,900) 1,300 (6,600) (5,900) 3,400 (2,500) (4,800) (1,200) (6,000) -------------------------------------------------------------------------------------------------------------------------------- Loss before cumulative effect of an accounting change (12,938) 1,805 (11,133) (10,397) 4,934 (5,463) (8,194) (1,770) (9,964) Cumulative effect of an accounting change (net of income tax benefit of $10,950) - (15,760) (15,760) - - - - - - -------------------------------------------------------------------------------------------------------------------------------- Net loss $(12,938) $(13,955) $(26,893) $(10,397) $4,934 $ (5,463) $(8,194) $(1,770)$ (9,964) ========================================================================================================================== Loss per share before cumulative effect of an accounting change: Basic $ (0.55)$ .08 $ (0.47) $ (0.44) $ .21 $ (0.23) $ (0.35) $ (0.07)$(0.42) ========================================================================================================================== Diluted $ (0.55)$ .08 $ (0.47) $ (0.44) $ .21 $ (0.23) $ (0.35) $ (0.07)$(0.42) ========================================================================================================================== Loss per share: Basic $ (0.55)$ (.60) $ (1.15) $ (0.44) $ .21 $ (0.23) $ (0.35) $ (0.07)$(0.42) ========================================================================================================================== Diluted $ (0.55)$ (.60) $ (1.15) $ (0.44) $ .21 $ (0.23) $ (0.35) $ (0.07)$(0.42) ==========================================================================================================================

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures. None. PART III Item 10. Directors and Executive Officers of the Registrant. Information concerning the Company's Directors and Executive Officers is incorporated herein by reference to "Nominees for Directors", "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement relating to the 2001 Annual Meeting of Stockholders scheduled to be held on September 13, 2001 (the "Proxy Statement"), which is incorporated by reference into this Form 10-K and is expected to be filed before July 27, 2001. With the exception of this foregoing information and other information specifically incorporated by reference into this Form 10-K, the Proxy Statement is not being filed as a part hereof. Item 11. Executive Compensation. Information concerning executive compensation matters is incorporated herein by reference to "Compensation of Management", "Option Grants", "Option Exercises and Holdings", "Defined Benefit Retirement and Supplemental Executive Retirement Plans", "Compensation of Directors", "Employment Contracts, Termination of Employment and Change in Control Arrangements" and "Compensation Committee Interlocks and Insider Participation" in the Proxy Statement; provided, however, that the "Report of the Compensation Committee on Executive Compensation", and "Stock Performance Graph" are not incorporated by reference herein. ITEM 12. Security Ownership of Beneficial Owners. Information concerning the voting securities beneficially owned by each Director of the Company, by all Executive Officers and Directors of the Company as a group and by each stockholder known by the Company to be the beneficial owner of more than 5% of the outstanding voting securities is incorporated herein by reference to "Security Ownership of Beneficial Owners" and "Beneficial Ownership by Directors and Officers" in the Proxy Statement. ITEM 13. Certain Relationships and Related Transactions. Information concerning relationships and related transactions is incorporated herein by reference to "Certain Relationships and Related Transactions" in the Proxy Statement. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a)(1) The following financial statements are included in Part II, Item 8.: Page ----- Report of Independent Accountants 25 Consolidated Statements of Operations - Fiscal years (52 weeks) ended March 29, 2001, March 30, 2000 and April 1, 1999 26 Consolidated Balance Sheets - March 29, 2001 and March 30, 2000 27 Consolidated Statements of Cash Flows - Fiscal years (52 weeks) ended March 29, 2001, March 30, 2000 and April 1, 1999 28 Consolidated Statements of Stockholders' Equity (Deficit) - Fiscal years (52 weeks) ended March 29, 2001, March 30, 2000 and April 1, 1999 30 Notes to Consolidated Financial Statements - Fiscal years (52 weeks) ended March 29, 2001, March 30, 2000 and April 1, 1999 31 Statements of Operations By Quarter (Unaudited) - Fiscal years (52 weeks) ended March 29, 2001 and March 30, 2000 52 (a)(2)Financial Statement Schedules - All schedules have been omitted because the necessary information is included in the Notes to the Consolidated Financial Statements. (b) Reports on Form 8-K On January 26, 2001, the Company filed a Form 8-K reporting under Item 9. operating results for the third quarter of fiscal 2001 and clarification of its theatre closing plans. On April 20, 2001, the Company filed a Form 8-K reporting under Item 9. the sale of $250 million of Preferred Stock on April 19, 2001. On May 7, 2001, the Company filed a Form 8-K reporting under Item 5. details of the sale of $250 million of Preferred Stock on April 29, 2001. (c) Exhibits A list of exhibits required to be filed as part of this report on Form 10-K is set forth in the Exhibit Index, which immediately precedes such exhibits, and is incorporated herein by reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMC ENTERTAINMENT INC. By: /s/ Peter C. Brown ____________________________ Peter C. Brown, Chairman of the Board Date: June 26, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Peter C. Brown Chairman of the Board, Chief Executive June 26, 2001 ----------------------- Peter C. Brown Officer and President /s/ Charles J. Egan, Jr. Director June 26, 2001 ------------------------ Charles J. Egan, Jr. /s/ W. Thomas Grant, II Director June 26, 2001 ------------------------ W. Thomas Grant, II /s/ Paul E. Vardeman Director June 26, 2001 ------------------------ Paul E. Vardeman /s/ Leon D. Black Director June 26, 2001 ------------------------ Leon D. Black /s/ Marc J. Rowan Director June 26, 2001 ------------------------ Marc J. Rowan /s/ Laurence M. Berg Director June 26, 2001 ------------------------ Laurence M. Berg /s/ Charles S. Paul Director June 26, 2001 ------------------------ Charles S. Paul /s/ Craig R. Ramsey Senior Vice President, Finance, June 26, 2001 ------------------------ Craig R. Ramsey Chief Financial Officer and Chief Accounting Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION -------------- ----------- 2.1 Agreement and Plan of Merger dated as of March 31, 1997 between AMC Entertainment Inc. and Durwood, Inc. (together with Exhibit A, "Pre-Merger Action Plan") (Incorporated by reference from Exhibit 2.1 to the Company's Registration Statement on Form S- 4 (File No. 333-25755) filed April 24, 1997). 2.2 Stock Agreement among AMC Entertainment Inc. and Stanley H. Durwood, his children: Carol D. Journagan, Edward D. Durwood, Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood and Peter J. Durwood (the "Durwood Children"), The Thomas A. and Barbara F. Durwood Family Investment Partnership (the "TBD Partnership") and Delta Properties, Inc. (Incorporated by reference from Exhibit 99.3 to Amendment No. 2 to Schedule 13D of Stanley H. Durwood filed September 30, 1997). 2.3 Registration Agreement among AMC Entertainment Inc. and the Durwood Children and Delta Properties, Inc. (Incorporated by reference from Exhibit 99.2 to Amendment No. 2 to Schedule 13D of Stanley H. Durwood filed September 30, 1997). 2.4(a) Indemnification Agreement dated as of March 31, 1997 among AMC Entertainment Inc., the Durwood Family Stockholders and Delta Properties, Inc., together with Exhibit B thereto (Escrow Agreement) (Incorporated by reference from Exhibit 2.4(a) to the Company's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997). 2.4(b) Durwood Family Settlement Agreement (Incorporated by reference from Exhibit 99.1 to Schedule 13D of Durwood, Inc. and Stanley H. Durwood filed May 7, 1996). 2.4(c) First Amendment to Durwood Family Settlement Agreement (Incorporated by reference from Exhibit 2.4(c) to the Company's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997). 2.4(d) Second Amendment to Durwood Family Settlement Agreement dated as of August 15, 1997, among Stanley H. Durwood, the Durwood Children and the TBD Partnership (Incorporated by reference from Exhibit 99.7 to Amendment No. 2 to Schedule 13D of Stanley H. Durwood filed September 30, 1997). *3.1 Amended and Restated Certificate of Incorporation of AMC Entertainment Inc. (as amended on December 2, 1997) *3.2 Bylaws of AMC Entertainment Inc. 4.1(a) Amended and Restated Credit Agreement dated as of April 10, 1997, among AMC Entertainment Inc., as the Borrower, The Bank of Nova Scotia, as Administrative Agent, and Bank of America National Trust and Savings Association, as Documentation Agent, and Various Financial Institutions, as Lenders, together with the following exhibits thereto: significant subsidiary guarantee, form of notes, form of pledge agreement and form of subsidiary pledge agreement (Incorporated by reference from Exhibit 4.3 to the Company's Registration Statement on Form S-4 (File No. 333- 25755) filed April 24, 1997). 4.1(b) Second Amendment, dated January 16, 1998, to Amended and Restated Credit Agreement dated as of April 10, 1997 (Incorporated by Reference from Exhibit 4.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended January 1, 1998). 4.1(c) Third Amendment, dated March 15, 1999, to Amended and Restated Credit Agreement dated as of April 10, 1997 (Incorporated by reference from Exhibit 4 to the Company's Form 8-K (File No. 1-8747) dated March 25, 1999). 4.1(d) Fourth Amendment, dated March 29, 2000, to Amended and Restated Credit Agreement dated as of April 10, 1997. (Incorporated by reference from Exhibit 4.1(d) to the Company's Form 10-K (File No. 1- 8747) for the year ended March 30, 2000). 4.1(e) Fifth Amendment, dated April 10, 2001, to Amended and Restated Credit Agreement dated as of April 10, 1997. (Incorporated by reference from Exhibit 4.1(e) to the Company's Form 8-K (File No. 1-8747) dated May 7, 2001). 4.2(a) Indenture dated March 19, 1997, respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2009 (Incorporated by reference from Exhibit 4.1 to the Company's Form 8-K (File No. 1-8747) dated March 19, 1997). 4.2(b) First Supplemental Indenture respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2009 (Incorporated by reference from Exhibit 4.4(b) to Amendment No. 2. to the Company's Registration Statement on Form S-4 (File No.333-29155) filed August 4, 1997). 4.2(c)Agreement of Resignation, Appointment and Acceptance, dated August 30, 2000, among the Company, The Bank of New York and HSBC Bank USA respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2009. (Incorporated by reference from Exhibit 4.2(c) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 28, 2000). 4.3 Indenture, dated January 27, 1999, respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2011. (Incorporated by reference from Exhibit 4.3 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended December 31, 1998). 4.3(a) Agreement of Resignation, Appointment and Acceptance, dated August 30, 2000, among the Company, The Bank of New York and HSBC Bank USA respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2011. (Incorporated by reference from Exhibit 4.3(a) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 28, 2000). 4.4 Registration Rights Agreement, dated January 27, 1999, respecting AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2011 (Incorporated by reference from Exhibit 4.4 to the Company's Form 10-Q (File No. 1- 8747) for the quarter ended December 31, 1998). 4.5 In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, certain instruments respecting long- term debt of the Registrant have been omitted but will be furnished to the Commission upon request. 4.6 Certificate of Designations of Series A Convertible Preferred Stock and Series B Exchangeable Preferred Stock of AMC Entertainment Inc. (Incorporated by reference from Exhibit 4.6 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001). 4.7 Investment Agreement entered into April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo Management V, L.P. (Incorporated by reference from Exhibit 4.7 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001). 4.8 Standstill Agreement by and among AMC Entertainment Inc., and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Mangement IV, L.P. and Apollo Management V, L.P., dated as of April 19, 2001. (Incorporated by reference from Exhibit 4.8 to the Company's Form 8-K (File No. 1- 8747) filed on April 20, 2001). 4.9 Registration Rights Agreement dated April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P. (Incorporated by reference from Exhibit 4.9 to the Company's Form 8-K (File No. 1- 8747) filed on April 20, 2001). 9 Durwood Voting Trust (Amended and Restated 1992 Durwood, Inc. voting Trust Agreement dated August 12, 1998). (Incorporated by reference from exhibit 99.2 to the Company's Schedule 13D (File No. 5-34911) filed July 22, 1999. 10.1 AMC Entertainment Inc. 1983 Stock Option Plan (Incorporated by reference from Exhibit 10.1 to AMCE's Form S-1 (File No. 2-84675) filed June 22, 1983). 10.2 AMC Entertainment Inc. 1984 Employee Stock Purchase Plan (Incorporated by reference from Exhibit 28.1 to AMCE's Form S-8 (File No. 2-97523) filed July 3, 1984). 10.3 (a) AMC Entertainment Inc. 1984 Employee Stock Option Plan (Incorporated by reference from Exhibit 28.1 to AMCE's Form S-8 and Form S-3 (File No. 2-97522) filed July 3, 1984). 10.3 (b) AMC Entertainment Inc. 1994 Stock Option and Incentive Plan, as amended (Incorporated by reference from Exhibit 10.5 to AMCE's Form 10-Q (File No. 1- 8747) for the quarter ended December 31, 1998). 10.3 (c) Form of Non-Qualified (NON-ISO) Stock Option Agreement (Incorporated by reference from Exhibit 10.2 to AMCE's Form 10-Q (File No. 0-12429) for the quarter ended December 26, 1996). 10.3 (d) AMC Entertainment Inc. 1999 Stock Option and Incentive Plan, as amended. (Incorporated by reference from Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 333-92615) filed December 13, 1999). 10.3 (e) AMC Entertainment Inc. 1999 Stock Option Plan for Outside Directors (Incorporated by reference from Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 333-92617) filed December 13, 1999. 10.4 American Multi-Cinema, Inc. Savings Plan, a defined contribution 401(k) plan, restated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.6 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended). 10.5 (a) Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. dated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.7 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended). 10.5(b) AMC Supplemental Executive Retirement Plan dated January 1,1994 (Incorporated by reference from Exhibit 10.7(b) to AMCE's Form 10-K (File No. 0-12429) for the fiscal year ended March 30, 1995). 10.6 Employment Agreement between American Multi-Cinema, Inc. and Philip M. Singleton (Incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended December 31, 1998). 10.7 Employment Agreement between American Multi-Cinema, Inc. and Peter C. Brown (Incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No.1-8747) for the quarter ended December 31, 1998). 10.8 Disability Compensation Provisions respecting Stanley H. Durwood (Incorporated by reference from Exhibit 10.12 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended). 10.9 Executive Medical Expense Reimbursement and Supplemental Accidental Death or Dismemberment Insurance Plan, as restated effective as of February 1, 1991 (Incorporated by reference from Exhibit 10.13 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended). 10.10 Division Operations Incentive Program (Incorporated by reference from Exhibit 10.15 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended). 10.11 Summary of American Multi-Cinema, Inc. Executive Incentive Program (Incorporated by reference from Exhibit 10.36 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed December 23, 1993). 10.12 AMC Non-Qualified Deferred Compensation Plans (Incorporated by reference from Exhibit 10.37 to Amendment No. 2 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed February 18, 1994). 10.13 Real Estate Contract dated November 1, 1995 among Richard M. Fay, Mary B. Fay and American Multi-Cinema, Inc. (Incorporated by reference from Exhibit 10.33 to AMCE's Form 10-K (File No. 0-12429) for the fiscal year ended March 28, 1996). 10.14 American Multi-Cinema, Inc. Retirement Enhancement Plan (Incorporated by reference from Exhibit 10.26 to AMCE's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997). 10.15 Employment Agreement between American Multi-Cinema, Inc. and Richard M. Fay (Incorporated by reference from Exhibit 10.3 to AMCE's Form 10-Q (File No. 1-8747) for the quarter ended December 31, 1998). 10.16 American Multi-Cinema, Inc. Executive Savings Plan (Incorporated by reference from Exhibit 10.28 to AMCE's Registration Statement on Form S-4 (File No. 333- 25755) filed April 24, 1997). 10.17 Limited Partnership Agreement of Planet Movies Company, L.P. dated October 17, 1997. (Incorporated by reference from Exhibit 10.25 to the Company's Form 10-K (file No. 1-8747) for the fiscal year ended April 2, 1998). 10.18 Agreement of Sale and Purchase dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.1 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997). 10.19 Option Agreement dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.2 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997). 10.20 Right to Purchase Agreement dated November 21, 1997, between AMC Entertainment Inc., as Grantor, and Entertainment Properties Trust as Offeree (Incorporated by reference from Exhibit 10.3 of the Company's Current Report on Form 8-K (File No. 1- 8747) filed December 9, 1997.) 10.21 Lease dated November 21, 1997 between Entertainment Properties Trust, as Landlord, and American Multi- Cinema, Inc., as Tenant (Incorporated by reference from Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997). (Similar leases have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30, Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24 and Palm Promenade 24. 10.22 Guaranty of Lease dated November 21, 1997 between AMC Entertainment, Inc., as Guarantor, and Entertainment Properties Trust, as Owner (Incorporated by reference from Exhibit 10.5 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997, (Similar guaranties have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30, Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24 and Palm Promenade 24. 10.23 Promissory Note dated August 11, 1998, made by Peter C. Brown, payable to AMC Entertainment Inc. (Incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 1, 1998). 10.24 Promissory Note dated September 4, 1998, made by Philip M. Singleton, payable to AMC Entertainment Inc. (Incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 1, 1998). 10.25 Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Richard T. Walsh dated October 1, 1999. (Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30, 2000). 10.26 Form of Non-Qualified (Non-ISO) Stock Option Agreement used in November 13, 1998 option grants to Mr. Stanley H. Durwood, Mr. Peter C. Brown and Mr. Philip M. Singleton (Incorporated by reference from Exhibit 10.6 to the Company's Form 10-Q (File No. 1- 8747) for the quarter ended December 31, 1998). 10.27 Retainer agreement with Raymond F. Beagle, Jr. (Incorporated by reference from the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 30, 1999. 10.28 Non-Qualified (Non-ISO) Stock Option Agreement used in June 18, 1999 option grants to Mr. Richard M. Fay and Mr. Richard T. Walsh. (Incorporated by reference from exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended July 1, 1999. 10.29 Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and John D. McDonald dated February 1, 1999. (Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30, 2000). 10.30 Form of Option Agreement under 1999 Stock Option Plan for Outside Directors used in December 3, 1999 option grants to Mr. Chares J. Egan, Jr., Mr. W. Thomas Grant, II, Mr. Charles S. Paul and Mr. Paul E. Vardeman. (Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30, 2000). 10.31 Non-Qualified (Non-ISO) Stock Option Agreement used in June 18, 1999 option grant to Mr. John D. McDonald. (Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30, 2000). *10.32 Form of Non-Qualified (Non-ISO) Stock Option Agreement used in April 17, 2001 grants to Mr. Peter C. Brown, Mr. Philip M. Singleton, Mr. Richard M. Fay, Mr. Richard T. Walsh and Mr. John D. McDonald. *10.33 Form of Restricted Stock Award Agreement used in April 17, 2001 awards to Mr. Peter C. Brown, Mr. Philip M. Singleton, Mr. Richard M. Fay, Mr. Richard T. Walsh and Mr. John D. McDonald. *21. Subsidiaries of AMC Entertainment Inc. *23. Consent of PricewaterhouseCoopers LLP to the use of their report of independent accountants included in Part II, Item 8. of this annual report. _______ -------------- * Filed herewith