-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H1s4qn0V1lzj4AdK9V5pcW4q4DXnBqXjkgrxEBpwYybuoj+aRRwmGEjpx9XFVFtZ MqYPbOWrpPUrPRzF3UglmQ== 0000722077-96-000015.txt : 19960612 0000722077-96-000015.hdr.sgml : 19960612 ACCESSION NUMBER: 0000722077-96-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960328 FILED AS OF DATE: 19960607 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMC ENTERTAINMENT INC CENTRAL INDEX KEY: 0000722077 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 431304369 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12429 FILM NUMBER: 96578090 BUSINESS ADDRESS: STREET 1: 106 W 14TH ST STREET 2: P O BOX 419615 CITY: KANSAS CITY STATE: MO ZIP: 64141-6615 BUSINESS PHONE: 8162214000 10-K 1 FY96 FORM 10-K 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 (Fee Required) For the fiscal year ended March 28, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (no fee required) for the transition period from _________________ to ______________________ Commission File Number 01-12429 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 Kansas City, Missouri 64105-1977 (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. Pacific Stock Exchange, Inc. $1.75 Cumulative Convertible Preferred Stock, 66 2/3 cents par value American Stock Exchange, Inc. 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 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. [ ] The aggregate market value of the registrant's voting stock held by non-affiliates as of May 15, 1996 computed by reference to the closing price for such stock on the American Stock Exchange on such date, was $75,246,596. Number of Shares Title of Each Class of Common Stock Outstanding as of May 15, 1996 Common Stock, 66 2/3 cents par value 5,529,056 Class B Stock, 66 2/3 cents par value 11,157,000 DOCUMENTS INCORPORATED BY REFERENCEPortions of the Annual Stockholders Report for the fiscal year ended March 28, 1996 (the "Report") are incorporated by reference into Parts I and II. AMC ENTERTAINMENT INC. AND SUBSIDIARIES 1996 FORM 10-K ANNUAL REPORT PART I PAGE NUMBER Item 1. Business . . . . . . . . . . . . . . . . . 3 Item 2. Properties . . . . . . . . . . . . . . . . 5 Item 3. Legal Proceedings. . . . . . . . . . . . . 6 Item 4. Submission of Matters to a Vote of Security Holders 7 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. . . . . . . 7 Item 6. Selected Financial Data. . . . . . . . . . 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . 7 Item 8. Financial Statements and Supplementary Data 8 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . 8 PART III Item 10. Directors and Executive Officers of the Registrant 8 Item 11. Executive Compensation and Other Information . . . 11 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . 21 Item 13. Certain Relationships and Related Transactions 25 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . . . . . . . . . . 28 Signatures . . . . . . . . . . . . . . . . 29 PART I ITEM 1. BUSINESS (a) General Development of Business AMC Entertainment Inc. ("AMCE"), through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC") and its subsidiaries (collectively with AMCE, unless the context otherwise requires, the "Company"), is one of the largest motion picture exhibitors in the United States in terms of the number of theatre screens operated. AMCE's predecessor was founded in Kansas City, Missouri in 1920 by the father of Mr. Stanley H. Durwood, the current Chairman of the Board, Chief Executive Officer and President of AMCE and AMC. AMCE was incorporated under the laws of the state of Delaware on June 13, 1983 and maintains its principal executive offices located at 106 West 14th Street, Kansas City, Missouri 64105-1977. Its telephone number at such address is (816) 221-4000. (b) Financial Information about Industry Segments The Registrant operates exclusively in the motion picture exhibition industry. (c) Narrative Description of Business For additional information with respect to the Registrant's business, reference is made to information contained on page 14, under the heading "AMC Theatre Locations", page 18 under the headings "Total Revenues", "Net Earnings (Loss)", "Total Assets" and "EBITDA", Notes 1 and 2 under "Notes to Consolidated Financial Statements" on pages 34 and 36, respectively, page 23 under the heading "Liquidity and Capital Resources", page 6 under the heading "Fiscal 1996 Openings" and page 10 under the heading "Fiscal 1997 Scheduled Openings" of the Report, which information is incorporated herein by reference. General The Company is one of the largest motion picture exhibitors in the United States based on the number of theatre screens operated. Since 1968, when the Company operated 12 theatres with 22 screens, the Company has expanded its operations to include, as of March 28, 1996, 226 theatres with 1,719 screens located in 22 states and the District of Columbia. Nearly 60% of the screens operated by the Company are located in Florida, California, Texas, Pennsylvania and Missouri and approximately 74% of the Company's screens are located in areas considered among the 20 largest Areas of Dominant Influence (television market areas as defined by Arbitron Company). Revenues for the Company are generated primarily from box office admissions and theatre concession sales, which accounted for 66% and 30%, respectively, of fiscal 1996 revenues. The balance of the Company's revenues are generated primarily by on-screen advertising programs and video games located in theatre lobbies. The Company is an industry leader in the development and operation of multi-screen theatres, primarily in large metropolitan markets. Growth Strategy The Company intends to expand its theatre circuit primarily by developing new theatres in domestic and international locations. New theatres will primarily be large "megaplex" theatres with as many as 30 screens. Opportunities for new theatre openings exist throughout the United States, both in areas of population growth and in areas of stable population which, in the Company's judgment, are inadequately served. The Company intends to develop these state-of-the-art theatres at locations based on retail concentration, access to surface transportation and specific demographic statistics and trends. The Company also believes that a significant growth opportunity exists for the development of multiplex theatres in select international markets. Many urban areas in Canada, Europe, Asia and South America are either substantially underscreened or inadequately screened. The Company intends to utilize its experience in the development of multiplex theatres, as well as its existing relationships with the domestic motion picture production industry, to enter certain international markets. Film Licensing The Company predominantly licenses "first run" motion pictures from distributors on a film-by-film and theatre-by-theatre basis. The Company obtains these licenses either by negotiating directly with, or by submitting bids to, distributors. Negotiations with distributors are based on several factors, including theatre location, competition, season and motion picture content. The Company's business is dependent upon the availability of marketable motion pictures. There are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. They include Buena Vista Pictures (Disney), Warner Bros. Distribution, Columbia Pictures, Tri-Star Pictures, Twentieth Century Fox, Universal Film Exchanges, Inc. and Paramount Pictures. There are numerous other distributors and no single distributor dominates the market. 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. In fiscal 1996, no single distributor accounted for more than 10% of the motion pictures licensed by the Company or more than 25% of the Company's box office admissions. From year to year, the Company's revenues attributable to individual distributors may vary significantly depending upon the commercial success of such distributor's motion pictures in any given year. Competition 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 licensing motion pictures, attracting patrons and finding new theatre sites. Theatres operated by national and regional circuits and by smaller independent exhibitors compete aggressively with the Company's theatres. The Company believes that the principal competitive factors with respect to film licensing include licensing terms seating capacity and location and condition of an exhibitor's theatres. The Competition for patrons is dependent upon factors such as the availability of popular motion pictures, the location and number of theatres and screens in a market, the comfort and quality of the theatres and pricing. There are over 400 participants in the domestic motion picture exhibition industry. Industry participants vary substantially in size, from small independent operators to large international chains. As of May 1, 1995, the ten largest motion picture exhibition companies operated approximately 51% of the total number of screens, according to the National Association of Theatre Owners 1995-1996 Encyclopedia of Exhibition. The Company's theatres also face competition from other distribution channels for filmed entertainment, such as pay television, pay per view and home video systems, as well as other forms of entertainment competing for the public's leisure time and disposable income. Seasonality The motion picture industry is seasonal in nature with the highest attendance and revenues occurring during the summer months. The Company generally reports higher revenues and earnings during its second fiscal quarter. Employees As of March 28, 1996, the Company had approximately 1,800 full-time and 7,700 part-time employees. Approximately 8% of the part-time employees were minors whose wages do not exceed minimum wage. Fewer than one percent of the Company's employees, consisting primarily of motion picture projectionists, are represented by the International Alliance of Theatrical Stagehand Employees and Motion Picture Machine Operators. (d) Financial Information about Foreign and Domestic Operations and Export Sales Although the Company's expansion plans include the opening of theatres outside of the United States, its fiscal 1996 operations were exclusively domestic and it had no export sales during fiscal 1996. ITEM 2. PROPERTIES Of the 226 theatres operated by the Company as of March 28, 1996, 13 theatres with 115 screens were owned, 13 theatres with 111 screens were leased pursuant to ground leases, 196 theatres with 1,467 screens were leased pursuant to building leases and 4 theatres with 26 screens were managed. The Company's leases generally have terms from 15 to 25 years with options to extend the lease for up to 20 additional years. The leases typically require escalating minimum annual rentals and additional rentals based on a percentage of the leased theatre's revenue above a base amount. The Company generally pays for property taxes, maintenance, insurance and certain other operating expenses. The Company leases its corporate headquarters which is located in Kansas City, Missouri. Regional theatre and film licensing offices are leased in Los Angeles, California; Clearwater, Florida; and Voorhees, New Jersey. See Note 9 of the Company's "Notes to Consolidated Financial Statements" for information on the Company's lease commitments. ITEM 3. LEGAL PROCEEDINGS The following paragraphs summarize significant litigation and proceedings to which the Company is a party. In Re: AMC Shareholder Derivative Litigation, Chancery Court For New Castle County, Delaware (Civil Action No. 12855). On February 15, 1995, the court ordered the consolidation of two derivative actions filed against four directors of AMCE, Mr. Stanley H. Durwood, Mr. Edward D. Durwood, Mr. Paul E. Vardeman and Mr. Charles J. Egan, Jr., and one of its former directors, Mr. Phillip Ean Cohen. The two cases were originally filed on January 27, 1993, by Mr. Scott C. Wallace and on April 16, 1993, by Mr. James M. Bird, respectively. On December 8, 1994, the court, pursuant to a stipulation by the parties, entered an order approving Mr. Wallace's withdrawal as a derivative plaintiff, granting the motion for intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman M. Werther and Ms. Ellen K. Werther, and authorizing the filing of the intervenors' complaint. The intervenors' complaint includes substantially the same allegations as the Wallace and Bird complaints. The two actions, as consolidated, are referred to below as the "Derivative Action." In the Derivative Action, plaintiffs allege breach of fiduciary duties of care, loyalty and candor, mismanagement, constructive fraud and waste of assets in connection with, among other allegations, the provision of film licensing, accounting and financial services by American Associated Enterprises, a partnership beneficially owned by Mr. Stanley H. Durwood and members of his family, to the Company, certain other transactions with affiliates of the Company, termination payments to a former officer of the Company, certain transactions between the Company and National Cinema Supply Corporation, and a fee paid by a subsidiary of the Company to Mr. Cohen in connection with a transaction between the Company and TPI Entertainment, Inc. The Derivative Action seeks unspecified money damages and equitable relief and costs, including reasonable attorneys' fees. On February 9, 1995, the defendants filed a motion to dismiss the Derivative Action. The motion has been argued and is awaiting the court's decision. Discovery has been stayed pending resolution of the motion to dismiss. The Company is named as a defendant in a number of other lawsuits arising in the normal course of its business. Management does not expect that any actions to which the Company is a party will result in a material loss to the Company. 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 28, 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS With respect to the market for the Company's common stock, market prices, and stock ownership, reference is made to information contained on page 52 of the Report, under the headings "Stock Listing/Symbol," "Quarterly Common Stock Price Range" and "Stock Ownership," which information is incorporated herein by reference. AMCE'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. Except for a $1.14 per share dividend declared in connection with a recapitalization that occurred in August 1992, AMCE has not declared a dividend on shares of Common Stock since fiscal 1989. Any payment of cash dividends on the Common Stock in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, the Company's financial condition and other factors deemed relevant by its Board of Directors. Currently, AMCE does not contemplate declaring or paying any dividends on the Common Stock. ITEM 6. SELECTED FINANCIAL DATA Reference is made to information under the heading "Selected Financial Data" on page 18 of the Report, which information is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 19 through 25 of the Report, which information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated financial statements and notes thereto included on pages 27 through 49 of the Report and "Statements of Operations by Quarter" on page 50 of the Report are incorporated herein by reference. 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 The Directors and Executive Officers of the Company are as follows: Years Associated Name Age(1) Position with Company Stanley H. Durwood 75 Chairman of the Board, Chief Executive 50(2) Officer, President and Director (AMCE and AMC) Philip M. Singleton 49 Executive Vice President, Chief Operating 21 Officer and Director (AMCE and AMC) Peter C. Brown 37 Executive Vice President, Chief Financial 4 Officer and Director (AMCE and AMC) Charles J. Egan, Jr. 63 Director (AMCE and AMC) 9 Paul E. Vardeman 66 Director (AMCE and AMC) 13 Frank Stryjewski(3) 39 Senior Vice President (AMC) 17 Richard T. Walsh 42 Senior Vice President (AMC) 20 Richard J. King 47 Senior Vice President (AMC) 24 Rolando B. Rodriquez 36 Senior Vice President (AMC) 21 Richard L. Obert 56 Senior Vice President - Chief Accounting 7 and Information Officer (AMCE and AMC) Charles P. Stilley 41 President - AMC Realty, Inc. 14 Richard M. Fay 46 President - AMC Film Marketing Less than 1 _______________ (1) As of March 28, 1996. (2) Includes years with the predecessor of the Company. (3) Mr. Frank T. Stryjewski resigned effective April 18, 1996. Mr. Stanley H. Durwood and Mr. Paul E. Vardeman have served as directors since AMCE's formation in 1983. Mr. Charles J. Egan, Jr. has served as a director of AMCE since 1986. Mr. Philip M. Singleton and Mr. Peter C. Brown have served as directors of AMCE since November 1992. All directors are elected annually, and each holds office until his successor has been duly elected and qualified or his earlier resignation or removal. There are no family relationships between any Director and any Executive Officer of the Company. All directors of AMCE also serve as directors of AMC. All current Executive Officers of the Company and its subsidiaries hold such offices at the pleasure of the Board of Directors, subject, in the case of (i) Mr. Stanley H. Durwood, Chairman of the Board, Chief Executive Officer, President and a Director of AMC and AMCE, (ii) Mr. Philip M. Singleton, Executive Vice President, Chief Operating Officer and a Director AMC and AMCE and (iii) Mr. Peter C. Brown, Executive Vice President, Chief Financial Officer and a Director AMC and AMCE, to rights under their respective employment agreements. Mr. Stanley H. Durwood has served as a Director of AMCE from its organization on June 14, 1983 and of AMC since August 2, 1968. Mr. Durwood has served as Chairman of the Board of AMCE and AMC since February 1986, and has served as Chief Executive Officer of AMCE since June 1983 and of AMC since February 20, 1986. Mr. Durwood served as President of AMCE (i) from June 1983 through February 20, 1986, (ii) from May 1988 through June 1989 and (iii) was elected President of AMCE on October 6, 1995. Mr. Durwood served as President of AMC (i) from August 2, 1968 through February 20, 1986, (ii) from May 13, 1988 through November 8, 1990 and (iii) was elected President of AMC on October 6, 1995. Mr. Durwood is a graduate of Harvard University. Mr. Philip M. Singleton has served as a Director of AMCE and AMC since November 12, 1992. Mr. Singleton has served as Executive Vice President of AMCE and AMC since August 3, 1994 and as Chief Operating Officer of AMCE and AMC since November 14, 1991. Mr. Singleton served as Senior Vice President of AMCE and AMC from November 14, 1991 until his appointment as Executive Vice President in August 1994. Prior to November 14, 1991, Mr. Singleton served as Vice President in charge of operations for the Southeast Division of AMC from May 10, 1982. Mr. Singleton holds an undergraduate degree from California State University, Sacramento and an M.B.A. degree from the University of South Florida. Mr. Peter C. Brown has served as a Director of AMCE and AMC since November 12, 1992. Mr. Brown has served as Executive Vice President of AMCE and AMC since August 3, 1994 and as Chief Financial Officer of AMCE and AMC since November 14, 1991. Mr. Brown served as Senior Vice President of AMCE and AMC from November 14, 1991 until his appointment as Executive Vice President in August 1994. Mr. Brown served as Treasurer of AMCE and AMC from September 28, 1992 through September 19, 1994. Prior to November 14, 1991, Mr. Brown served as a consultant to AMCE from October 1990 to October 1991. Mr. Brown is a graduate of the University of Kansas. Mr. Charles J. Egan, Jr. has served as a Director of AMCE and AMC since October 30, 1986. Mr. Egan is Vice President and General Counsel of Hallmark Cards, Incorporated, which is primarily engaged in the business of greeting cards and related social expressions products, Crayola crayons and the production of movies for television. Mr. Egan holds an A.B. degree from Harvard University and an LL.B. degree from Columbia University. Mr. Paul E. Vardeman has served as a Director of AMCE since June 14, 1983 and of AMC since September 28, 1982. Mr. Vardeman has been a partner in the law firm of Polsinelli, White, Vardeman & Shalton, P.C., Kansas City, Missouri, since 1982. Prior thereto, Mr. Vardeman served as a Judge of the Circuit Court of Jackson County, Missouri. Mr. Vardeman holds undergraduate and J.D. degrees from the University of Missouri-Kansas City. Mr. Frank T. Stryjewski served as Senior Vice President in charge of operations for the South Division of AMC from July 1, 1994 until he resigned from AMC effective April 18, 1996. Previously, Mr. Stryjewski served as Vice President in charge of operations for the Southeast Division of AMC from December 9, 1991. Mr. Stryjewski served as Vice President-Operations Resources of AMC from December 1990 to December 1991, and as Vice President-Human Resources of AMC from December 1988 to December 1990. The employment of Mr. Frank Stryjewski ceased effective April 18, 1996. Mr. Richard T. Walsh has served as Senior Vice President in charge of operations for the West Division of AMC since July 1, 1994. Previously, Mr. Walsh served as Vice President in charge of operations for the Central Division of AMC from June 10, 1992, and as Vice President in charge of operations for the Midwest Division of AMC from December 1, 1988. Mr. Richard J. King has served as Senior Vice President in charge of operations for the Northeast Division of AMC since January 4, 1995. Previously, Mr. King served as Vice President in charge of operations for the Northeast Division of AMC from June 10, 1992, and as Vice President in charge of operations for the Southwest Division of AMC from October 30, 1986. Mr. Rolando B. Rodriguez was promoted to Senior Vice President in charge of operations for the South Division of AMC on April 2, 1996. Previously, Mr. Rodriguez served as Vice President and South Division Operations Manager of AMC from July 1, 1994, as Assistant South Division Operations Manager of AMC from February 12, 1993, as South Division's Senior Operations Manager from March 29, 1992 and as South Division's Operations Manager from August 6, 1989. Mr. Richard L. Obert has served as Senior Vice President - Chief Accounting and Information Officer, since November 9, 1995, and prior thereto served as Vice President and Chief Accounting Officer of AMCE and AMC since January 9, 1989. Mr. Charles P. Stilley has served as President of AMC Realty, Inc., a wholly owned subsidiary of AMC, since February 9, 1993, and prior thereto served as Senior Vice President of AMC Realty, Inc. from March 3, 1986. Mr. Richard M. Fay has served as President, AMC Film Marketing, a division of AMC, since September 8, 1995. Previously, Mr. Fay served as Senior Vice President and Assistant General Sales Manager of Sony Pictures since 1994. From 1991 to 1994, Mr. Fay served as Vice President and Head Film Buyer for the eastern division of United Artists Theatre Circuit, Inc. Prior thereto, Mr. Fay served as Vice President and film buyer for Loew's Theatres since 1975. ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION Compensation of Directors Messrs. Charles J. Egan and Paul E. Vardeman receive annual cash compensation of $20,000 each for their services as members of the Boards of Directors of AMCE and AMC and $24,000 each for their services as members of the Audit Committees of AMCE and AMC. The Board has also authorized that Messrs. Egan and Vardeman be paid reasonable compensation for their services as members of a special committee ("Special Committee") appointed to consider a proposed merger of AMCE and Durwood, Inc. and $900 per hour for attending meetings of (i) any board of directors on which he serves, (ii) the Audit Committee after the twelfth meeting during the fiscal year and (iii) any other committee on which he serves. For fiscal 1996, Messrs. Egan and Vardeman each received $30,000 for their services on the Special Committee and $115,100 and $106,100, respectively, for (i) services as members of the Boards of Directors of AMCE and AMC, (ii) attendance at Board of Directors meetings, and (iii) other committee meetings of the Board of Directors of AMCE or its subsidiaries. Executive Compensation and Compensation Plans The following table provides certain summary information concerning compensation paid or accrued by the Company to or on behalf of the Company's Chief Executive Officer and each of the four other most highly compensated Executive Officers of the Company (determined as of the end of the fiscal year and hereafter referred to as the "Named Executive Officers") for the years ended March 28, 1996, March 30, 1995, and March 31, 1994. SUMMARY COMPENSATION TABLE
Long-Term Compensation Awards-Securities ANNUAL COMPENSATION Underlying Fiscal Other Annual Options/ All Other Name and Principal Position Year Salary Bonus Compensation(1) SARs(#) Compensation(2) Stanley H. Durwood 1996 $492,634 $275,000 N/A - $ - Chief Executive Officer 1995 452,088 108,949 N/A 22,500 - 1994 436,800 263,400 N/A - - Philip M. Singleton 1996 285,311 154,000 N/A - 4,686 Chief Operating Officer 1995 273,247 64,149 N/A 4,500 4,663 1994 264,142 153,600 $51,930 150,000 59,564 Peter C. Brown 1996 257,439 137,500 N/A - 4,726 Chief Financial Officer 1995 234,836 55,433 N/A 4,500 4,657 1994 227,016 135,000 N/A 150,000 4,675 Richard T. Walsh 1996 207,204 80,000 N/A 2,250 4,620 Senior Vice President 1995 200,855 35,500 217,112 - 63,464 1994 170,982 66,000 N/A 30,000 3,400 Frank T. Stryjewski (3) 1996 192,209 74,000 N/A 2,250 4,620 Senior Vice President 1995 189,840 43,000 N/A - 4,716 1994 171,098 74,250 N/A 30,000 3,400
(1) N/A denotes not applicable. Fiscal 1995 includes a lump sum payment and gross up of taxes on moving expenses totaling $209,408 of Mr. Richard T. Walsh. Fiscal 1994 includes gross up of taxes of $43,285 on moving expenses of Mr. Philip M. Singleton. For the years presented, excluding Mr. Richard T. Walsh in 1995 and Mr. Philip M. Singleton in 1994, perquisites and other personal benefits did not exceed the lesser of $50,000 or 10% of total annual salary and bonus. (2) For fiscal 1996, All Other Compensation includes the Company's contributions under the Company's 401(K) Plan and the Executive Savings Plan, both of which are defined contribution plans, in the aggregate amount of $4,686 for Mr. Philip M. Singleton, $4,726 for Mr. Peter C. Brown, $4,620 for Mr. Richard T. Walsh and $4,620 for Mr. Frank J. Stryjewski. For fiscal 1995, All Other Compensation includes the Company's contributions to two defined contribution savings plans in the amount of $4,663 for Mr. Philip M. Singleton, $4,657 for Mr. Peter C. Brown, $4,786 for Mr. Richard T. Walsh and $4,716 for Mr. Frank T. Stryjewski. In addition, moving expense for Mr. Richard T. Walsh is included in the amount of $58,678. For fiscal 1994, the totals include the Company's contributions to a defined contribution savings plan in the amount of $4,708 for Mr. Philip M. Singleton, $4,675 for Mr. Peter C. Brown, $3,400 for Mr. Richard T. Walsh and $3,400 for Mr. Frank T. Stryjewski. In addition, moving expense for Mr. Philip M. Singleton is included in the amount of $54,856. (3) Mr. Frank T. Stryjewski resigned effective April 18, 1996. (4) As of March 28, 1996, the Named Executive Officers held performance shares awards under the Company's 1994 Stock Option and Incentive Plan entitling them to receive shares of the Company's Common Stock at the end of a three year period from the date of grant upon satisfaction of performance goals. See "Long Term Incentive Plan". The number of shares issuable to each such person (and the value of such shares as of March 28, 1996) under awards in effect as of March 28, 1996 upon attainment of threshold, target and maximum performance goals is as follows: Threshold -- Stanley H. Durwood - 30,000 shares ($723,750); Philip M. Singleton - 6,000 shares ($144,750); Peter C. Brown - 6,000 shares ($144,750); Richard T. Walsh - 3,000 shares ($72,375); and Frank T. Stryjewski - 3,000 shares ($72,375); Target -- Stanley H. Durwood - 45,000 shares ($1,085,625); Philip M. Singleton - 9,000 shares ($217,125); Peter C. Brown - 9,000 Shares ($217,125); Richard T. Walsh - 4,500 shares ($108,563) and Frank T. Stryjewski - 4,500 shares ($108,563); Maximum -- Stanley H. Durwood - 90,000 shares ($2,171,250); Philip M. Singleton - 18,000 shares ($434,250); Peter C. Brown - 18,000 shares ($434,250); Richard T. Walsh - 9,000 shares ($217,125); and Frank T. Stryjewski - 9,000 shares ($217,125). Mr. Frank T. Stryjewski resigned effective April 18, 1996. The performance shares for Mr. Stryjewski were subsequently canceled. Option Grants The following table provides certain information concerning individual grants of stock options made during the last completed fiscal year under the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan to each of the Named Executive Officers. OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number % of Total Potential Realizable of Options/ Value at Assumed Securities SARs Exercise Annual Rates of Stock Underlying Granted to or Price Appreciation for Options/ SARs Employees Base Option Term Granted in Fiscal Price Expiration Name (#) Year ($sh) Date 5% ($) 10% ($) Stanley H. Durwood - - $ - - - $ - Philip M. Singleton - - - - - - Peter C. Brown - - - - - - Richard T. Walsh 2,250 9.70% 14.50 6/27/05 20,520 51,998 Frank T. Stryjewski(1) 2,250 9.70% 14.50 6/27/05 20,520 51,998
The stock options granted during the fiscal year ended March 28, 1996, are eligible for exercise based upon a vesting schedule. After the first anniversary of the grant date, 50% of the options will be eligible for exercise. After the second anniversary of the grant date, all options are fully vested. Vesting of options will accelerate upon the occurrence of an optionee's death, disability or retirement, or upon termination of employment within one year after the occurrence of certain change in control events. The Compensation Committee of the Board of Directors may permit accelerated exercise of options if certain extraordinary events occur, such as a merger or liquidation of the Company, the sale of substantially all of the assets of the Company, a subsidiary or a division or the change in control of the Company. With the consent of the Board of Director's Compensation Committee, optionees may satisfy tax withholding obligations by electing to have shares otherwise issuable upon exercise of an option withheld. (1) Mr. Frank T. Stryjewski resigned effective April 18, 1996. The options granted to Mr. Stryjewski in fiscal 1996 have expired unexercised. Option Exercises and Holdings The following table provides information with respect to the Named Executive Officers, concerning the exercise of options during the last fiscal year and unexercised options held as of March 28, 1996. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Value of Securities Underlying Unexercised Unexercised Options/ In-The-Money SARs at FY-End (#) Options/SARs at Shares Acquired Exercisable/Unexercisable FY-End($) Name on Exercise Value Realized Shares Price Exercisable/Unexercisable Stanley H. Durwood - - 11,250/11,250 $11.75 $139,219/$139,219 Philip M. Singleton - - 75,000/75,000 9.250 1,115,625/1,115,625 2,250/2,250 11.75 27,844/27,844 Peter C. Brown - - 75,000/75,000 9.250 1,115,625/1,115,625 2,250/2,250 11.75 27,844/27,844 Richard T. Walsh - - 15,000/15,000 9.375 221,250/221,250 0/2,250 14.50 0/21,656 Frank T. Stryjewski(1) - - 15,000/15,000 9.375 221,250/221,250 0/2,250 14.50 0/21,656
(1) Mr. Frank T. Stryjewski resigned effective April 18, 1996. The unexercisable options outstanding at March 28, 1996 have expired unexercised. Long-Term Incentive Plan The following table provides certain information concerning shares ("Performance Shares") issuable under performance stock awards approved by the Compensation Committee of the Board of Directors during the last completed fiscal year for each of the Named Executive Officers. LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Number of Shares, Performance or Units or Other Period Estimated Future Payout under Other Rights until Maturation Non-stock Price-Based Plans (#)(1) Or Payout Threshold (#) Target (#) Maximum (#) Stanley H. Durwood - - - - - Philip M. Singleton - - - - - Peter C. Brown - - - - - Richard T. Walsh 9,000 3 years 3,000 4,500 9,000 Frank T. Stryjewski (2) 9,000 3 years 3,000 4,500 9,000
______________________ (1) Maximum (2) Mr. Frank T. Stryjewski resigned effective April 18, 1996. The Performance Shares for Mr. Stryjewski were subsequently canceled. The foregoing table shows the number of Performance Shares issuable to a participant at the end of a three year performance period ending April 2, 1998 (the "Performance Period") at Threshold, Target and Maximum levels of performance. A participant's eligibility to receive up to one-half of the maximum number of Performance Shares issuable under an award is based upon changes in the "private market value per share" of the Company's Common Stock ("PMVPS") over the Performance Period. PMVPS is determined on a fully diluted basis (assuming full exercise of all outstanding shares of the Company's Preferred Stock, Class B stock, options and other rights to acquire shares of Common Stock), based on a multiple of theatre EBITDA (theatre EBITDA is Consolidated EBITDA less National Cinema Network, Inc. EBITDA), plus the book value of National Cinema Network, Inc., cash and equivalents and investments and investments in other long-term assets, less corporate borrowings, capitalized lease obligations and the carrying value of minority interests. EBITDA is earnings before interest, taxes, depreciation and amortization. A participant's eligibility to receive up to the remaining one-half of the maximum number of Performance Shares issuable under an award is based upon changes in "total return to stockholders" ("TRS"), which is measured by increases in the market value of an investment in shares of Common Stock of the Company, assuming reinvestment of any dividends received. PMVPS and TRS are referred to individually and collectively herein as "Performance Criterion" and "Performance Criteria," respectively. Such Performance Criteria will be measured against changes in the Standard & Poor's 500 Index ("S&P 500") over the Performance Period. Required achievement levels over the Performance Period for both PMVPS and TRS are as set forth below: Maximum - 2,000 basis points higher than the percentage change in the S&P 500 over the Performance Period; Target - 750 basis points higher than the percentage change in the S&P 500 over the Performance Period; Threshold - No difference between the percentage change in the S&P 500 and the percentage change in the Performance Criterion over the Performance Period. Generally, no shares will be issued with respect to the Company's performance over the Performance Period as measured by a Performance Criterion if such performance does not at least meet the Threshold achievement level over the Performance Period. If the Company's performance as so measured by a Performance Criterion falls between the Threshold and Target achievement levels, the number of Performance Shares issuable under an Award with respect to that Performance Criterion will be determined to the nearest whole number of shares, so that the actual Award will be at the same percentage between the Threshold and Target award levels as the actual achievement level falls between the Threshold and Target achievement levels. Similarly, if the Company's performance falls between Target and Maximum achievement levels, the number of Performance Shares will be determined to the nearest whole number of shares, so that the actual award will be at the same percentage between the Target and Maximum award levels as the actual achievement level falls between the Target and Maximum levels. In no event will the number of Performance Shares issuable under an Award with respect to a Performance Criterion exceed the number of Performance Shares issuable upon attaining the Maximum achievement level over the Performance Period with respect to such Performance Criterion. The right to receive Performance Shares will be accelerated and such Performance Shares issued, based on the achievement levels of the Performance Criteria measured to the date of termination, in the event of a participant's death, disability or retirement, or termination of employment within one year after the occurrence of certain change of control events. The Compensation Committee of the Board of Directors may waive performance goals if certain extraordinary events occur, such as a merger or liquidation of the Company, the sale of substantially all of the assets of the Company, a subsidiary or a division or the change in control of the Company. With the consent of the Compensation Committee, a Grantee may satisfy his tax withholding obligations by electing to have Performance Shares otherwise issuable withheld. Until Performance Shares are issued, participants have no dividend or voting rights with respect to Performance Shares. Defined Benefit Retirement and Supplemental Executive Retirement Plans AMC sponsors a defined benefit retirement plan (the "Retirement Plan") which provides benefits to certain employees of AMC and its subsidiaries based upon years of credited service and the highest consecutive five-year average annual remuneration for each participant. For purposes of calculating benefits, average annual compensation is limited by Section 401(a)(17) of the Internal Revenue Code, and is based upon wages, salaries and other amounts paid to the employee for personal services, excluding certain special compensation. A participant earns a vested right to an accrued benefit upon completion of five years of vesting service. The Company also sponsors a Supplemental Executive Retirement Plan to provide the same level of retirement benefits that would have been provided under the Retirement Plan had the federal tax law not been changed in the Omnibus Budget Reconciliation Act of 1993, which reduced the amount of compensation which can be taken into account in a qualified retirement plan from $235,840 (in 1993), the old limit, to $150,000 (in 1995 and 1996). The following table shows the total estimated annual pension benefits (without regard to minimum benefits) payable to a covered participant under the Company's Retirement Plan and the Supplemental Executive Retirement Plan, assuming retirement in calendar 1996 at age 65 payable in the form of a single life annuity. The benefits are not subject to any deduction for Social Security or other offset amounts. The following table assumes the old limit would have been increased to $250,000 in 1996. Highest Consecutive Five Year Average Annual Compensation Year of Credited Service 15 20 25 30 35 $125,000 $17,716 $23,621 $29,527 $35,432 $41,337 150,000 21,466 28,621 35,777 42,932 50,087 175,000 25,216 33,621 42,027 50,432 58,837 200,000 28,966 38,621 48,277 57,932 67,587 225,000 32,716 43,621 54,527 65,432 76,337 250,000 36,466 48,621 60,777 72,932 85,087 As of March 28, 1996, the years of credited service under the Retirement Plan for each of the Named Executive Officers were: Mr. Philip M. Singleton, 22 years, Mr. Peter C. Brown, 5 years, Mr. Richard T. Walsh 21 years and Mr. Frank T. Stryjewski (1) 17 years. The final amount distributed to Mr. Stanley H. Durwood in fiscal 1995 from the Company's Retirement Plan was $42,067, and was not included in the Summary Compensation Table. In addition, the benefit Mr. Stanley H. Durwood accrued under the Supplemental Executive Retirement Plan was $18,724 in fiscal 1996 and is not included in the Summary Compensation Table. (1) Mr. Frank T. Stryjewski resigned effective April 18, 1996. Employment Contracts, Termination of Employment and Change in Control Arrangements On February 2, 1977, the Board of Directors of AMC authorized the continued payment to Mr. Stanley H. Durwood, in the event of his disability, of 80% of his then current salary and bonuses for a period of up to two years, such salary payment to be reduced, if necessary, so that such payments, together with disability compensation under AMC's group insurance policy, do not exceed 100% of his then current salary and bonus. Mr. Stanley H. Durwood has an employment agreement with the Company dated January 26, 1996 retaining him as Chairman and Chief Executive Officer. It provides for an annual base salary of no less than $500,000 plus payments and awards under the Company's Executive Incentive Program ("EIP"), the Company's 1994 Stock Option and Incentive Plan and other bonus plans in effect for executive officers at a level reflecting his position, plus such other amounts as may be paid under any other compensatory arrangement as determined in the sole discretion of the Compensation Committee. The Compensation Committee has also agreed to use its best efforts to provide Mr. Durwood up to $5,000,000 in life insurance and to pay the premiums thereon and taxes resulting from such payment. Mr. Durwood's employment agreement has a term of three years and is automatically extended one year on its anniversary date, January 26, so that as of such date each year the agreement has a three year term. The employment agreement is terminable without severance upon Mr. Durwood's death or if he engages in intentional misconduct or a knowing violation of law or breaches his duty of loyalty to the Company. The agreement also is terminable (i) by Mr. Durwood, in the event of the Company's breach, and (ii) by the Company, without cause or in the event of Mr. Durwood's death or disability, in each case with severance payments equal to three times the sum of his annual base salary in effect at the time of termination plus the average of annual incentive or discretionary cash bonuses paid during the three fiscal years preceding the year of termination. The Company may elect to pay such severance payments in monthly installments over a period of three years or in a lump sum after discounting such amount to its then present value. The aggregate amount payable under this employment agreement, assuming termination with severance occurred as of March 28, 1996, was approximately $1,923,002. Messrs. Philip M. Singleton and Peter C. Brown each have employment agreements with AMC dated September 26, 1994, providing for annual base salaries of no less than $266,000 and $227,000, respectively, and bonuses resulting from the EIP or other bonus arrangement, if any, as determined from time to time at the sole discretion of the Compensation Committee upon the recommendation of the Chairman of the Board. Each employment agreement has a term of two years. On each September 27, commencing in 1995, one year shall be added to the term of each employment agreement, so that each employment agreement shall always have a two-year term as of each anniversary date. Each employment agreement terminates without severance upon such employee's resignation, death or his disability as defined in his employment agreement, or upon AMC's good faith determination that such employee has been dishonest or has committed a breach of trust respecting AMC. AMC may terminate each employment agreement at any time, with severance payments in an amount equal to twice the annual base salary of such employee on the date of termination. Each employee may terminate his employment agreement upon a change of control of AMC as defined in the employment agreement and receive severance payments in an amount equal to twice his annual base salary on the date of termination. AMC may elect to pay any severance payments in a lump sum after discounting such amount to its then present value, or over a two-year period. The aggregate value of all severance benefits to be paid to such employee shall not exceed 299% of such employee's "base amount" as defined in the Internal Revenue Code for the five-year period immediately preceding the date of termination. The aggregate amount payable under these employment agreements, assuming termination by reason of a change of control and payment in a lump sum as of March 28, 1996, was approximately $993,742. As permitted by the Company's 1994 Stock Option and Incentive Plan, stock options and Performance Share awards granted to participants thereunder provide for acceleration upon the termination of employment within one year after the occurrence of certain changes in control events, whether such termination is voluntary or involuntary, or with or without cause. See "Option Grants" and "Long-Term Incentive Plan." In addition, the Compensation Committee may permit acceleration upon the occurrence of certain extraordinary transactions which may not constitute a change of control. The Company maintains a severance pay plan for full-time salaried nonbargaining employees with at least 90 days of service. For an eligible employee who is subject to the Fair Labor Standards Act ("FLSA") overtime pay requirements (a "nonexempt eligible employee"), the plan provides for severance pay in the case of involuntary termination of employment due to layoff of the greater of two week's basic pay or one week's basic pay multiplied by the employee's full years of service up to no more than twelve week's basic pay. There is no severance pay for a voluntary termination, unless up to two week's pay is authorized in lieu of notice. There is no severance pay for an involuntary termination due to an employee's misconduct. Only two week's severance is paid for an involuntary termination due to substandard performance. For an eligible employee who is exempt from the FLSA overtime pay requirements, severance pay is discretionary (at the Department Head/Supervisor level), but will not be less than the amount that would be paid to a nonexempt eligible employee. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of May 15, 1996, with respect to beneficial owners of five percent or more of any class of the Company's voting securities: Name and Address Number of Shares Percent Title of Class of Beneficial Owner Beneficially Owned of Class Common Stock Durwood, Inc.(1) 2,641,951(2) 47.8%(2) 106 West 14th Street Kansas City, MO 64105 Stanley H. Durwood(1) 2,653,351(2)(3) 47.9%(2) 106 West 14th Street Kansas City, MO 64105 Brian H. Durwood(1) 2,641,951(2) 47.8%(2) 655 N.W. Altishan Place Beaverton, OR 97006 Edward D. Durwood(1) 2,641,951(2) 47.8%(2) 3001 West 68th Street Shawnee Mission, KS 66208 Peter J. Durwood(1) 2,641,951(2) 47.8%(2) 666 West End Avenue New York, NY 10025 Thomas A. Durwood(1) 2,641,951(2) 47.8%(2) P. O. Box 7208 Rancho Santa Fe, CA 92067 Elissa D. Grodin(1) 2,641,951(2) 47.8%(2) 187 Chestnut Hill Road Wilton, CT 06897 Carol D. Journagan(1) 2,641,951(2) 47.8%(2) 1323 Granite Creek Drive Blue Springs, MO 64015 Sandler Capital Mgmt. 285,500(4) 5.2% 767 5th Avenue New York, NY 10153 The Equitable Com- 615,424(5) 10.0%(5) panies Incorporated 787 Seventh Avenue New York, NY 10019 Ryback Management 1,684,865(6) 23.4%(6) Corporation 7711 Carondelet Ave. St. Louis, MO 63105 Class B Stock Durwood, Inc.(1) 11,157,000(2) 100.0% 106 West 14th Street Kansas City, MO 64105 (1) A revocable inter-vivos trust and a revocable voting trust established by Mr. Stanley H. Durwood for the benefit of Mr. Stanley H. Durwood holds approximately 75% of the voting power of the outstanding capital stock of Durwood, Inc. ("DI"). American Associated Enterprises, ("AAE") a Missouri limited partnership of which Mr. Stanley H. Durwood is the limited partner and his six children, Edward D. Durwood, Carol D. Journagan, Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood and Peter J. Durwood, are the general partners, holds approximately 25% of the voting power of DI's outstanding capital stock. Mr. Stanley H. Durwood is the sole director of DI and is Chairman of the Board, Chief Executive Officer, President and Director of AMCE and AMC. Mr. Durwood has sole voting power over the shares of AMCE held by DI but may be deemed to share investment power with respect to such shares with his children. As reported in the Schedule 13-D's filed by Mr. Durwood and DI and by Mr. Durwood's children and AAE, Mr. Durwood and his children have entered into an agreement expressing their intention to pursue certain transactions to dissolve AAE and to cause shares of AMCE held by DI to be distributed to members of the Durwood family through a merger of DI into AMCE. Thereafter, the family intends to sell 3,000,000 shares of Common Stock in a public offering, which will be made only by means of a prospectus. If the proposed transactions are consummated, Mr. Durwood will retain approximately 4.5 million shares (or 100%) of AMCE's Class B Stock and each of his children will retain approximately 1 million shares (aggregating approximately 52%) of AMCE's Common Stock. Based on voting shares outstanding as of May 15, 1996, the shares to be retained by Mr. Durwood will represent approximately 79% of the combined voting power of AMCE's voting stock. However, provisions of the family agreement could result in an adjustment pursuant to which Mr. Durwood would deliver additional shares to his children. The proposed transactions are subject to negotiation of a definitive merger agreement with AMCE and approval of such agreement by the holders of a majority of the shares of Common Stock voting thereon, other than members of the Durwood family. Reference is made to AMCE's report on Form 8-K dated May 6, 1996, for additional information respecting the Durwood family agreement. (2) The shares of Class B Stock owned of record by DI and beneficially owned by members of the Durwood family as indicated in footnote (1) above are convertible into Common Stock on a share for share basis. The number and percentage of shares of Common Stock shown as beneficially owned do not give effect to the conversion option. Were all the shares of Class B Stock converted, there would be 16,686,056 shares of Common Stock outstanding, of which DI would own of record 13,798,951, or 83% of the outstanding shares of Common Stock. (3) The shares of Common Stock shown as beneficially owned by Mr. Stanley H. Durwood also include 150 shares owned by him directly and 11,250 shares subject to presently exercisable stock options. (4) As reported by Sandler Capital Management on Schedule March 7, 1996. (5) This is the number of shares of Common Stock that would be obtained upon conversion of AMCE's $1.75 Cumulative Convertible Preferred Stock reported as owned by The Equitable Companies Incorporated in Amendment No. 1 to Schedule 13G dated February 9, 1996. (6) This is the number of shares of Common Stock that would be obtained upon conversion of AMCE's $1.75 Cumulative Convertible Preferred Stock reported as owned by Ryback Management Corporation in Amendment No. 1 to Schedule 13G dated January 25, 1996. Beneficial Ownership By Directors and Officers The following table sets forth certain information as of May 15, 1996, with respect to beneficial ownership by Directors and Executive Officers of the Company's Common Stock and Class B Common Stock. The amounts set forth below include the vested portion of 429,000 shares of Common Stock subject to options under the Company's 1984 and 1994 Stock Option Plans held by Executive Officers. Unless otherwise indicated, the persons named are believed to have sole voting and investment power over the shares shown as beneficially owned by them. Name and Address Number of Shares Percent Title of Class of Beneficial Owner Beneficially Owned of Class Common Stock Stanley H. Durwood 2,653,351(1)(2) 47.9% Philip M. Singleton 132,750(2) 2.4% Peter C. Brown 114,750(2) 2.0% Richard T. Walsh 23,675(2) * Frank T. Stryjewski(3) 15,150(2) * Paul E. Vardeman 300 * All Directors and Executive Officers as a group (12 persons, including the individuals named above) 2,978,269(2) 50.7% Class B Stock Stanley H. Durwood 11,157,000(1) 100.0% *Less than one percent. (1) See Notes 1 and 2 under "Security Ownership of Certain Beneficial Owners and Management." Mr. Stanley H. Durwood has sole voting power over the shares held by DI but may be deemed to share investment power with respect to such shares with his children. The shares of Common Stock shown as beneficially owned by Mr. Stanley H. Durwood also include 150 shares owned by him directly and 11,250 shares subject to presently exercisable stock options. (2) Includes shares subject to presently exercisable options to purchase Common Stock under the Company's 1984 and 1994 Stock Option Plans, as follows: Mr. Stanley H. Durwood - 11,250 shares; Mr. Philip M. Singleton - 114,750 shares; Mr. Peter C. Brown - 114,750 shares; Mr. Richard T. Walsh - 23,625 shares; Mr. Frank T. Stryjewski - 15,000 shares; and all executive officers as a group - 315,750 shares. (3) Mr. Frank T. Stryjewski resigned from the Company effective April 18, 1996. Compliance with Section 16(a) of the Securities Exchange Act of 1934. Section 16(a) of the Securities Exchange Act of 1934 requires the Company's Executive Officers and Directors, and persons who own more than 10% of the Company's Common Stock and $1.75 Cumulative Convertible Preferred Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC") and the American and Pacific Stock Exchanges. Executive Officers, Directors and greater-than-10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company, or written representations that no Forms 5 were required, the Company believes that during fiscal 1996 its Executive Officers, Directors and greater-than-10% beneficial owners complied with all Section 16(a) filing requirements applicable to them. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain Transactions Since its formation, AMCE and AMC have been members of an affiliated group of companies (the "DI affiliated group") beneficially owned by Mr. Stanley H. Durwood and members of his family. Mr. Stanley H. Durwood is President, Treasurer and the sole Director of DI and Chairman of the Board, Chief Executive Officer, President and a Director of AMCE and AMC. There have been transactions involving AMCE or AMC and the DI affiliated group in prior years. The Company intends to ensure that all transactions with DI or other related parties are fair, reasonable and in the best interests of the Company. In that regard, the Audit Committees of the Boards of Directors of AMCE and AMC review all material proposed transactions between the Company and DI or other related parties to determine that, in their best business judgment, such transactions meet that standard. The Audit Committees consist of Messrs. Vardeman and Egan, neither of whom are officers or employees of AMCE or AMC nor stockholders, directors, officers or employees of DI. Set forth below is a description of significant transactions which have occurred since March 31, 1995 or involve receivables that remain outstanding as of March 28, 1996. Certain corporate departments of AMC perform general and administrative services for DI and its subsidiaries. AMC charged DI and its subsidiaries $116,000 for such services for fiscal 1996. Periodically, AMC and DI reconcile any accounts owed by one company to the other. Charges to the intercompany account have included the allocation of AMC's general and administrative expenses and payments made by AMC on behalf of DI. As of March 28, 1996, DI and its subsidiaries owed AMC $795,000 which was also the largest balance owned by DI and its subsidiaries to AMC during fiscal 1996. The balance was repaid in its entirety shortly after the fiscal year end. Ms. Marjorie D. Grant, a Vice President of AMC and the sister of Mr. Stanley H. Durwood, has an employment agreement with AMCE providing for a base annual salary of no less than $100,000, an automobile and, at the sole discretion of the Chief Executive Officer of the Company, a year-end bonus. Ms. Grant's employment agreement, executed July 1, 1991, terminates on June 30, 1996, or upon her death or disability. The agreement provides that in the event Mr. Stanley H. Durwood fails to control the management of AMCE by reason of its sale, merger, or consolidation, or because of his death or disability, or for any other reason, then AMCE and Ms. Grant would each have the option to terminate the agreement. In such event, AMCE would pay to Ms. Grant in cash a sum equal to the aggregate cash compensation, exclusive of bonus, to the end of the term of her employment under the agreement, after discounting such amount to its then present value using a discount rate equal to the lesser of one-half of the current prime rate of interest or 10% per annum. In November 1991, this agreement was assumed by Durwood, Inc. and was reassumed by AMCE in January 1995. In July 1992, Mr. Jeffery W. Journagan, a son-in-law of Mr. Stanley H. Durwood, was employed by a subsidiary of the Company. Mr. Journagan's current compensation is approximately $80,000. AMC loaned $200,000 in January 1987 to Mr. Donald P. Harris, one of the named Executive Officers in fiscal 1995, in connection with the purchase of his principal residence. The employment of Mr. Harris by the Company or its afiliates ceased effective as of October 1, 1995. Mr. Harris paid AMC $110,249, the remaining amount of the principal and accrued interest on the loan, on October 1, 1995. The largest principal amount outstanding on the note during fiscal 1996 was $200,000. AMC has proposed an employment agreement with Mr. Richard M. Fay which provides for an annual base salary of $275,000 and a $50,000 relocation allowance. Mr. Fay is eligible to participate in the EIP or other bonus arrangement, if any, as determined from time to time in the sole discretion of the Compensation Committee of the Board of Directors of the Company upon the recommendation of the Chief Executive Officer of the Company. The proposed employment agreement has a term of three years, from September 8, 1995 through September 7, 1998. As proposed, the employment agreement will terminate without severance upon Mr. Fay's resignation, death or disability as defined in his proposed employment agreement, or upon AMC's good faith determination that Mr. Fay has been dishonest or has committed a breach of trust respecting AMC. As proposed, AMC may terminate the employment agreement at any time, with severance payments in an amount equal to, at AMC's option, either (i) Mr. Fay's base salary per month in effect at the time of termination, payable over the remaining term of his employment, or (ii) the net present value of the monthly payments described in (i) above, payable within 30 days of the date of termination. As proposed, any severance payable to Mr. Fay shall be reduced by any wages, compensation or income, cash or otherwise, received by Mr. Fay from sources other than AMC during the remaining term of his employment agreement following the date of termination. The Company and Mr. Edward D. Durwood entered into an Agreement and General Release effective October 5, 1995, pursuant to which Mr. Durwood was terminated as President, Vice Chairman of the Board and Director of AMCE and AMC upon the recommendation of the Compensation Committee without cause with the consent of the Company's Board of Directors. The Company paid Mr. Durwood $498,398 in severance. The Agreement and General Release also provides for mutual releases between the Company and Mr. Durwood. AMC and Mr. Donald P. Harris entered into an Agreement and Release effective October 1, 1995, pursuant to which Mr. Harris resigned as President AMC Film Marketing, Inc. AMC paid Mr. Harris $467,850 in severance. Mr. Harris paid AMC $110,249, the remaining amount of the principal and accrued interest on a loan he had previously received from AMC. The Agreement and Release also provides for mutual releases between AMC and Mr. Harris. In November of 1995, AMC purchased the principal residence of Mr. Richard M. Fay, one of the Executive Officers in 1996, for $500,000. The Company is currently marketing the residence and intends to sell it. During fiscal 1996, the Company retained Polsinelli, White, Vardeman & Shalton, P.C., of which Mr. Vardeman, a director of AMCE and AMC, is a partner, as special legal counsel. For a description of certain employment agreements between the Company and Messrs. Stanley H. Durwood, Philip M. Singleton and Peter C. Brown, see "Employment Contracts, Termination of Employment and Change in Control Arrangements." Federal Income Taxes DI and the Company entered into an agreement dated July 1, 1983, pursuant to which, so long as DI and the Company filed a consolidated federal income tax return, the Company paid to DI the amount of tax that would be payable calculated as if the Company filed a separate consolidated federal income tax return for such period and all prior taxable periods, provided, however, that if such return reflected a refund due to the Company, DI was obligated to pay the Company an amount equal to such refund when and if the consolidated group is able to realize the Company's tax benefit in the future. Due to the Company's issuance of the $1.75 Cumulative Convertible Preferred Stock on March 3, 1994, the Company is no longer eligible to file a consolidated federal income tax return with DI. The agreement still applies to all tax years for which DI and the Company previously filed a consolidated federal income tax return. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)(1) Financial Statements The following consolidated financial statements of the Registrant and its consolidated subsidiaries included in the Report are incorporated herein by reference in Item 8: Consolidated Balance Sheets - March 28, 1996 and March 30, 1995 Consolidated Statements of Operations-Fiscal years (52 weeks) ended March 28, 1996, March 30, 1995 and March 31, 1994 Consolidated Statements of Cash Flows - Fiscal years (52 weeks) ended March 28, 1996, March 30, 1995 and March 31, 1994 Consolidated Statements of Stockholders' Equity - Fiscal years (52 weeks) ended March 28, 1996, March 30, 1995 and March 31, 1994 Notes to Consolidated Financial Statements - Fiscal years (52 weeks) ended March 28, 1996, March 30, 1995 and March 31, 1994 (a)(2) Financial Statement Schedules The following consolidated financial statement schedule of the Registrant and its consolidated subsidiaries is filed pursuant to Item 14(d) (this schedule appears immediately following the signature page): Schedule II - Valuation and Qualifying Accounts and Reserves All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (b) Reports on Form 8-K No reports on Form 8-K were filed or required to be filed for the thirteen weeks ended March 28, 1996. (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/ Stanley H. Durwood Stanley H. Durwood, Chairman of the Board 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/ Stanley H. Durwood Chairman of the Board, Chief June 3, 1996 Stanley H. Durwood Executive Officer, President and Director /s/ Paul E. Vardeman Director June 3, 1996 Paul E. Vardeman /s/ Charles J. Egan, Jr. Director June 3, 1996 Charles J. Egan, Jr. /s/ Philip M. Singleton Executive Vice President, Chief June 3, 1996 Philip M. Singleton Operating Officer and Director /s/ Peter C. Brown Executive Vice President, Chief June 3, 1996 Peter C. Brown Financial Officer and Director /s/ Richard L. Obert Senior Vice President - Chief June 3, 1996 Richard L. Obert Accounting and Information Officer REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of AMC Entertainment Inc. Kansas City, Missouri Our report on the consolidated financial statements of AMC Entertainment Inc. and subsidiaries has been incorporated by reference in this Form 10-K from page 27 of the 1996 Annual Report to Shareholders of AMC Entertainment Inc. and subsidiaries. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. /s/ Coopers & Lybrand Kansas City, Missouri May 17, 1996 AMC ENTERTAINMENT INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands)
Additions Balance at Charged to Charged to Balance at Beginning Costs and Other End of Description of Period Expenses Accounts Deductions Period Year ended (52 Weeks) March 28, 1996 Allowance for doubtful accounts $ 1,529 $ 526 $ - $ 1,254 $ 801 Self insurance reserves 12,029 10,458 - 9,852 12,635 Reserve for future dispositions 2,827 - - 720 2,107 Year ended (52 Weeks) March 30, 1995 Allowance for doubtful accounts $ 1,270 $ 744 $ - $ 485 $ 1,529 Self insurance reserves 11,005 11,263 - 10,239 12,029 Reserve for future dispositions 4,711 500 - 2,384 2,827 Valuation allowance for deferred tax assets 19,792 (19,792) - - - Year ended (52 Weeks) March 31, 1994 Allowance for doubtful accounts $ 611 $ 633 $ 492(1) $ 466 $ 1,270 Self insurance reserves 8,163 11,760 - 8,918 11,005 Reserve for future dispositions 3,653 - 2,055(2) 997 4,711 Valuation allowance for deferred tax assets 17,541 2,251 - - 19,792
(1) Represents a reclassification from accrued expenses and other liabilities. (2) Represents the amounts resulting from capital lease adjustments and a charge from an expected loss relating to a corporate joint venture. EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 2.1. Articles of Merger dated March 31, 1994, between American Multi-Cinema, Inc. and its wholly-owned subsidiaries Cinema Enterprises, Inc. and Cinema Enterprises II, Inc. and related Plan and Agreement of Liquidation and Merger (1) *2.2. Articles of Merger dated March 28, 1996, between AMC Philadelphia, Inc. and its wholly owned subsidiary Concord Cinema, Inc. *2.3. Articles of Merger dated March 28, 1996, between American Multi-Cinema, Inc. and its wholly owned subsidiary Conservco, Inc. *2.4. Articles of Merger dated April 3, 1996, between American Multi-Cinema, Inc. and its wholly owned subsidiary AMC Film Marketing,Inc. 3.1. Certificate of Incorporation of AMC Entertainment Inc.(2) 3.2. Certificate of Designations relating to $1.75 Cumulative Convertible Preferred Stock (3) 3.3. Bylaws of AMC Entertainment Inc. (2) 3.4. Articles of Incorporation, as amended, of American Multi-Cinema, Inc. (4) 3.5. Bylaws of American Multi-Cinema, Inc. (4) 3.6. Certificate of Incorporation, as amended, of AMC Philadelphia, Inc. (4) 3.7. Bylaws of AMC Philadelphia, Inc. (4) 3.8. Certificate of Incorporation, as amended, of AMC Realty, Inc. (4) 3.9. Bylaws of AMC Realty, Inc. (4) 3.10. Certificate of Incorporation, as amended, of AMC Canton Realty, Inc. (4) 3.11. Bylaws of AMC Canton Realty, Inc. (4) 3.12. Certificate of Incorporation, as amended, of Budco Theatres, Inc. (4) 3.13. Bylaws of Budco Theatres, Inc. (4) 4.1.(a) Indenture among AMC Entertainment Inc., as issuer, American Multi-Cinema, Inc., AMC Realty,Inc., Conservco, Inc., AMC Canton Realty, Inc., AMC Philadelphia, Inc., Budco Theatres, Inc. and Concord Cinema, Inc. (collectively "Guarantors") and United States Trust Company of New York, as Trustee, respecting AMC Entertainment Inc.'s 11 7/8% Senior Notes due 2000 (6) 4.1.(b) First Supplemental Indenture dated as of March 31, 1993, pursuant to which AMC Film Marketing, Inc. became a Guarantor (5) 4.1.(c) Fourth Supplemental Indenture dated as of March 31, 1994, pursuant to which American Multi-Cinema, Inc. assumed the obligations of Cinema Enterprises, Inc., Cinema Enterprises II, Inc. and Exhibition Enterprises Partnership under the Senior Note Indenture and related guarantees of such entities (1) 4.1.(d) Fifth Supplemental Indenture dated December 28, 1995, respecting AMC Entertainment Inc.'s 11 7/8% Senior Notes due 2000 (17) 4.1.(e) Fifth Supplemental Indenture dated December 28, 1995, respecting AMC Entertainment Inc.'s 12 5/8% Senior Subordinated Notes due 2002 (17) 4.2.(a) Indenture among AMC Entertainment Inc., as issuer, American Multi-Cinema, Inc., AMC Realty, Inc., Conservco, Inc., AMC Canton Realty, Inc., AMC Philadelphia, Inc., Budco Theatres, Inc. and Concord Cinema, Inc. (collectively "Guarantors") and The Bank of New York, as Trustee, respecting AMC Entertainment Inc.'s 12 5/8% Senior Subordinated Notes due 2002 (6) 4.2.(b) First Supplemental Indenture dated as of March 31, 1993, pursuant to which AMC Film Marketing, Inc. became a Guarantor (5) 4.2.(c) Fourth Supplemental Indenture dated as of March 31, 1994, pursuant to which American Multi-Cinema, Inc. assumed the obligations of Cinema Enterprises, Inc., Cinema Enterprises II, Inc. and Exhibition Enterprises Partnership under the Senior Subordinated Note Indenture and related guarantees of such entities (1) *4.2.(d) Sixth Supplemental Indenture dated March 28, 1996, respecting AMC Entertainment Inc.'s 11 7/8% Senior Notes due 2000 *4.2.(e) Sixth Supplemental Indenture dated March 28, 1996, respecting AMC Entertainment Inc.'s 12 5/8% Senior Subordinated Notes due 2002 4.3. Credit Agreement Dated as of December 27, 1995 Among AMC Entertainment Inc., as the Borrower, The Bank of Nova Scotia, as Administrative Agent, Chemical Bank, as Syndication 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, form of significant subsidiaries guarantee, form of notes, form of pledge agreement and form of subsidiary pledge agreement. (17) 4.4. Significant Subsidiary Guaranty from American Multi-Cinema, Inc., Budco Theatres, Inc., Concord Cinema, Inc., AMC Realty, Inc., Conservco, Inc, AMC Canton Realty, Inc., AMC Philadelphia, Inc., and AMC Film Marketing, Inc to The Bank of Nova Scotia, as Administrative Agent (17) 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 10.1. AMC Entertainment Inc. 1983 Stock Option Plan (7) 10.2. Federal Income Tax Allocation Agreement dated as of July 1, 1983, between Durwood, Inc. and AMC Entertainment Inc. (7) 10.3. AMC Entertainment Inc. 1984 Employee Stock Purchase Plan (8) 10.4. AMC Entertainment Inc. 1984 Employee Stock Option Plan (9) *10.5.(a) AMC Entertainment Inc. 1994 Stock Option and Incentive Plan as amended 10.5.(b) Performance Stock Award Agreement (14) 10.5.(c) Non-Qualified (NON-ISO) Stock Option Agreement (14) 10.6. American Multi-Cinema, Inc. Savings Plan, a defined contribution 401(k) plan, restated January 1, 1989, as amended (4) 10.7.(a) Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. dated January 1, 1989, as amended (4) 10.7.(b) AMC Supplemental Executive Retirement Plan dated January 1, 1994 (14) 10.8. Employment Agreement between American Multi-Cinema, Inc. and Philip M. Singleton (16) 10.9. Employment Agreement between American Multi-Cinema, Inc. and Peter C. Brown (16) 10.10. Disability Compensation Provisions respecting Stanley H. Durood, Executive Medical Expense Reimbursement and Supplemental Accidental Death or Dismemberment Insurance Plan, as restated effective as of February 1, 1991 (4) 10.12. Division Operations Incentive Program (4) 10.13. Management Agreement dated December 30, 1986, between AMC Philadelphia, Inc. and H. Donald Busch ("Busch") (10) 10.14. Stockholders' Agreement dated December 30, 1986, between AMC Philadelphia, Inc. and Busch (10) 10.15. Letter of Agreement dated November 25, 1986, between American Multi-Cinema, Inc. and Busch (10) 10.16. Letter of Agreement dated December 30, 1986, between American Multi-Cinema, Inc. and Busch (10) 10.17. Standstill Agreement entered into as of March 4, 1991, by and among TPI Enterprises, Inc., AMC Entertainment Inc., American Multi-Cinema, Inc., Durwood, Inc., Stanley H. Durwood and Edward D. Durwood (11) 10.18. Stock Sale Agreement dated March 4, 1991, by and between American Multi-Cinema, Inc. and C&C Investment Holdings, L.P. (12) 10.19.(a)Option Agreement dated March 4, 1991, by and between American Multi-Cinema, Inc. and C&C Investment Holdings, L.P. (the "Option Agreement") (12) 10.19.(b)Amendment dated April 25, 1991, to Option Agreement (4) 10.20. Real Estate Contract dated March 30, 1992, among Philip M. Singleton, C. Suzanne Singleton and American Multi-Cinema, Inc. (4) 10.21. Agreement and General Release between Edward D. Durwood and American Multi-Cinema, Inc. (15) 10.22. Agreement and General Release between Donald P. Harris and American Multi-Cinema, Inc. (15) 10.23. Partnership Interest Purchase Agreement dated May 28, 1993, among Exhibition Enterprises Partnership, Cinema Enterprises, Inc., Cinema Enterprises II, Inc., American Multi-Cinema, Inc., TPI Entertainment, Inc. and TPI Enterprises, Inc. (5) 10.24. Mutual Release and Indemnification Agreement dated May 28, 1993, among Exhibition Enterprises Partnership, Cinema Enterprises, Inc., American Multi-Cinema, Inc., TPI Entertainment, Inc. and TPI Enterprises, Inc. (5) 10.25. Assignment and Assumption Agreement between Cinema Enterprises II, Inc. and TPI Entertainment, Inc. (5) 10.26. Confidentiality Agreement dated May 28, 1993, among TPI Entertainment, Inc., TPI Enterprises, Inc., Exhibition Enterprises Partnership, Cinema Enterprises, Inc., Cinema Enterprises II, Inc. and American Multi-Cinema, Inc. (5) 10.27. Termination Agreement dated May 28, 1993, among TPI Entertainment, Inc., TPI Enterprises, Inc. Exhibition Enterprises Partnership, American Multi-Cinema, Inc., Cinema Enterprises, Inc., AMC Entertainment Inc., Durwood, Inc., Stanley H. Durwood and Edward D. Durwood (5) 10.28. Promissory Note dated June 16, 1993, made by Thomas L. Velde and Katherine G. Terwilliger, husband and wife, payable to American Multi-Cinema, Inc. (5) 10.29. Second Mortgage dated June 16, 1993, among Thomas L. Velde, Katherine G. Terwilliger and American Multi-Cinema, Inc. (5) 10.30. Summary of American Multi-Cinema, Inc. Executive Incentive Program (13) 10.31. AMC Non-Qualified Deferred Compensation Plans (2) *10.32. Employment agreement between American Multi-Cinema, Inc. and Stanley H. Durwood *10.33. Real Estate Contract dated November 1, 1995 among Richard M. Fay, Mary B. Fay and American Multi-Cinema, Inc. *11. Computation of Per Share Earnings *13. Incorporated portions of the Annual Stockholders Report for the fiscal year ended March 28, 1996. 16. Letter regarding change in certifying accountant (6) *21. Subsidiaries of AMC Entertainment Inc. *23. Consent of Coopers & Lybrand, L.L.P. to the use of their report of independent accountants incorporated in Part 8 of this annual report ____________________ (1) Incorporated by reference from AMCE's Form 10-K report for fiscal year ended March 31, 1994 (File No. 0-12429) (2) Incorporated by reference from Amendment No. 2 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed February 18, 1994 (3) Incorporated by reference from AMCE's Form 8-K (File No.01-12429) dated April 7, 1994 (4) Incorporated by reference from AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended (5) Incorporated by reference from AMCE's Form 10-K report for fiscal year ended April 1, 1993 (File No. 01-12429) (6) Incorporated by reference from AMCE's Form 10-Q (File No. 01-12429) dated July 2, 1992 (7) Incorporated by reference from AMCE's Form S-1 (File No. 2-84675) filed June 22, 1983 (8) Incorporated by reference from AMCE's Form S-8 (File No. 2-97523) filed July 3, 1984 (9) Incorporated by reference from AMCE's S-8 and S-3 (File No. 2-97522) filed July 3, 1984 (10) Incorporated by reference from AMCE's From 8-K File (No. 0-12429) dated December 30, 1986 (11) Incorporated by reference from AMCE's Form S-8 (File No. 2-92048) filed July 3, 1985 (12) Incorporated by reference from AMCE's Form 8-K (File No. 0-12429) dated March 4, 1991 (13) Incorporated by reference from AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed December 23, 1993 (14) Incorporated by reference from AMCE's Form 10-K (File No. 1-12429) report for fiscal year ended March 30, 1995 (15) Incorporated by reference from AMCE's Form 10-Q (File No. 0-12429) dated October 27, 1995 (16) Incorporated by reference from AMCE's Form 10-Q (File No. 1-08747) dated November 1, 1994 (17) Incorporated by reference from AMCE's Form 10-Q (File No. 0-12429) dated February 2, 1996 * - Filed herewith EXHIBIT 11. AMC ENTERTAINMENT INC. AND SUBSIDIARIES STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS Years (52) weeks Ended March 28, 1996, March 30, 1995 and March 31, 1994 (in thousands, except per share amounts) 1996 1995 1994 PRIMARY EARNINGS PER SHARE: Net earnings before extraordinary item $ 27,371 $ 33,978 $ 15,312 Extraordinary item (19,350) - - Net earnings 8,021 33,978 15,312 Preferred dividends (7,000) (7,000) (538) Net earnings for common shares $1,021 $ 26,978 $ 14,774 Average shares for primary earnings per share: Weighted average number of shares outstanding 16,513 16,456 16,365 Stock options and other dilutive items 282 137 156 Total shares outstanding 16,795 16,593 16,521 Primary earnings per share before extraordinary item $ 1.21 $ 1.63 $ 0.89 Primary earnings per share $ .06 $ 1.63 $ 0.89 FULLY DILUTED EARNINGS PER SHARE: Net earnings before extraordinary item $ 27,371 $ 33,978 $ 15,312 Extraordinary item (19,350) - - Net earnings 8,021 33,978 15,312 Preferred dividends (7,000) n/a (538) Net earnings for common shares $1,021 $ 33,978 $ 14,774 Weighted average number of shares outstanding 16,513 16,456 16,365 Stock options and other dilutive items 518 157 185 Shares issuable upon conversion of preferred stock n/a 6,896 n/a Total shares outstanding 17,031 23,509 16,550 Fully diluted earnings per share before extraordinary item $1.20(1) $1.45(2) $0.89(1) Fully diluted earnings per share $0.06(1) $1.45(2) $0.89(1) (1) Fully diluted earnings per share for 1996 and 1994 excludes conversion of preferred stock. (2) Fully diluted earnings per share for 1995 includes conversion of preferred stock. EXHIBIT 21. AMC ENTERTAINMENT INC. AND ITS SUBSIDIARIES AMC ENTERTAINMENT INC. American Multi-Cinema, Inc. AMC Philadelphia, Inc. (1) Budco Theatres, Inc. AMC Realty, Inc. AMC Canton Realty, Inc. Centertainment, Inc. AMC Entertainment International, Inc. AMC Entertainment International Limited AMC Entertainment EspaNa S.A. Actividades Multi-Cinemas E Espectaculos, LDA AMC De Mexico, S.A., De C.V. AMC Europe S.A. National Cinema Network, Inc. Unless otherwise noted all subsidiaries are wholly-owned. (1)80% owned by American Multi-Cinema, Inc. EXHIBIT 23. CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of AMC Entertainment Inc. Kansas City, Missouri We consent to the incorporation by reference in the registration statement of AMC Entertainment Inc. on Form S-8 (File Nos. 33-58129, 2-92048, 2-97522 and 2-97523) of our report dated May 17, 1996, on our audits of the consolidated financial statements and financial statement schedule of AMC Entertainment Inc. as of March 28, 1996, and March 30, 1995, and for each of the three years (52 weeks) ended March 28, 1996, which report is incorporated by reference in this Annual Report on Form 10-K. /s/ Coopers & Lybrand Kansas City, Missouri June 3, 1996 EX-2 2 MERGERS EXHIBIT 2.2 CERTIFICATE OF OWNERSHIP AND MERGER Pursuant to the provisions of the General Corporation Law of the State of Delaware, the undersigned, AMC Philadelphia, Inc., a Delaware corporation ("AMCP"), and Concord Cinema, Inc., a Delaware corporation, ("Concord"), each certifies as follows: 1. AMCP, pursuant to Section 253 of the General Corporation Law of the State of Delaware, has adopted a Plan and Agreement of Liquidation and Merger (the "Plan"), a copy of which is attached hereto and incorporated herein by this reference, pursuant to which Concord shall be merged into and with AMCP. 2. On March 25, 1996, the Board of Directors of AMCP, by statement of unanimous consent to action, adopted the following resolutions approving the Plan and Agreement of Liquidation and Merger: WHEREAS, it is in the best interests of this corporation to enter into a Plan and Agreement of Liquidation and Merger with Concord Cinema, Inc. ("Concord"), a Delaware corporation, pursuant to which Concord will be merged into and with this corporation; NOW, THEREFORE, BE IT RESOLVED, that the Plan and Agreement of Liquidation and Merger (the "Plan") dated this date between this corporation and Concord, a copy of which is attached hereto and incorporated herein by this reference, be, and it hereby is, adopted and approved in all respects as and for a binding obligation of this corporation; and FURTHER RESOLVED, that the Chairman, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation, and under its corporate seal attested by its Secretary or any Assistant Secretary, to execute, seal, verify, acknowledge and deliver the Plan substantially in the form attached hereto, with such changes therefrom, if any, as the officer executing the same may approve, such approval to be conclusively evidenced by the signature of such officer; and FURTHER RESOLVED, that the Chairman, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation to cause a document entitled "Certificate of Ownership and Merger" to be prepared, executed, acknowledged and filed with the Delaware Secretary of State in accordance with the provisions of the General Corporation Law of the State of Delaware and to take such other action, including the making of one or more filings with the appropriate government agencies or offices of other states in which this corporation or Concord is qualified to transact business, as may be necessary or appropriate to cause the merger to be effective in Delaware and such other states; and FURTHER RESOLVED, that the officers of this corporation be, and they hereby are, authorized and directed, in the name of and on behalf of this corporation and under its corporate seal, to execute and deliver all such further agreements, certificates and other instruments and to take all such further actions as any such officer may consider necessary or appropriate in order to effect the merger of Concord into this corporation in accordance with the terms, conditions and provisions of the Plan and to carry out the purpose and intent of these resolutions. 3. AMCP owns all of the outstanding shares of the sole class of stock of Concord. AMCP shall maintain its ownership of at least 90% of the outstanding shares of each class of stock of Concord until the issuance of a Certificate of Merger by the Delaware Secretary of State. IN WITNESS WHEREOF, this Certificate of Ownership and Merger has been executed on behalf of AMC Philadelphia, Inc. by Peter C. Brown, Executive Vice President of the corporation, and on behalf of Concord Cinema, Inc. by Peter C. Brown, Executive Vice President of the corporation, and the corporate seal of each such corporation has been affixed hereto and attested to by the Secretary of the respective corporation on March 26, 1996. AMC PHILADELPHIA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 26th day of March, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of AMC Philadelphia, Inc., a Delaware corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ Susan Diane Slusher Notary Public in and for said County and State My Commission expires: May 10, 1996 CONCORD CINEMA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 26th day of March, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of Concord Cinema, Inc., a Delaware corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ SUSAN DIANE SLUSHER Notary Public in and for said County and State My Commission expires: /s/ May 10, 1996 PLAN AND AGREEMENT OF LIQUIDATION AND MERGER This Plan and Agreement of Liquidation and Merger (the "Plan") is made on March 26, 1996, by AMC Philadelphia, Inc., a Delaware corporation ("AMCP"), and Concord Cinema, Inc., a Delaware corporation ("Concord"). On the Effective Date (as defined in paragraph 4 below), AMCP shall own all of the shares of the sole class of stock of Concord. It is intended that the merger contemplated by the Plan shall constitute a liquidation of Concord in which no taxable gain or loss is recognized pursuant to Section 332 of the Internal Revenue Code of 1986, as amended. The terms and conditions of the Plan are as follows: 1. Names of Corporations. The names of the corporations proposing to merge are: AMC Philadelphia, Inc. and Concord Cinema, Inc. 2. Merger. On the Effective Date AMCP and Concord shall merge into a single corporation by Concord merging into AMCP. 3. Name of Surviving Corporation. The name of AMC Philadelphia, Inc., which is to be the surviving corporation, shall not be changed as a result of the merger. 4. Effective Date. The merger shall be effected at the close of business on March 28, 1996 (the "Effective Date"). 5. Effect of Merger. (a) On the Effective Date, the separate existence of Concord shall cease, except to the extent that its separate existence may be continued by law. The existence of AMCP shall continue unaffected and unimpaired by the merger, and AMCP shall after the Effective Date have all of the rights, privileges, immunities and powers, and shall be subject to all of the duties and liabilities, of a corporation organized under the General Corporation Law of the State of Delaware. (b) On the Effective Date, AMCP shall have and thereafter possess all the rights, privileges, immunities, powers and franchises, of a public as well as of private nature, of Concord, and all property, real, personal and mixed, and all debts due on whatever account and all other choses in action, and every other interest of or belonging to or due to Concord shall be taken and deemed to be transferred to and vested or remain in AMCP without further act or deed (and the title to any real estate, or any interest therein, vested in the merging corporations shall not revert or be in any way impaired by reason of the merger). (c) Upon the Effective Date and thereafter, AMCP shall be responsible and liable for all the liabilities and obligations of Concord, and any claim existing or action or proceeding pending by or against any of such entities may be prosecuted to judgment as if such merger had not taken place or, in the case of Concord, AMCP may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the merging corporations shall be impaired by the merger. (d) The respective officers of Concord are hereby authorized to execute all deeds, assignments and other documents which may be necessary to effect the full and complete transfer of the properties of such corporations to AMCP. The officers of AMCP are hereby authorized to execute and deliver any and all documents which may be required of it in order for it to assume or otherwise comply with any liability or obligation of Concord. If at any time AMCP shall determine that any further documents are necessary or desirable to vest in it, according to the terms hereof, the title to any property, rights, privileges, immunities, powers or franchises of Concord, then the officers of such entities shall execute and deliver all such documents and do all things necessary to vest in and confirm to AMCP title and possession to all such property, rights, privileges, immunities, powers and franchises, and to otherwise carry out the purposes of this Plan. 6. Cancellation of Shares. (a) The manner and basis of cancelling the shares of stock of the merging corporations shall be as follows: (i) On the Effective Date, each share of the authorized $1.00 par value common stock of AMCP, whether or not issued and outstanding, shall continue to be one share of the $1.00 par value common stock of AMCP. (ii) On the Effective Date, each of the ten (10) shares of the $100.00 par value common stock of Concord which are issued and outstanding (whether or not such shares are in all respects validly issued) and owned of record by AMCP shall be cancelled. 7. Articles of Incorporation; Bylaws; Directors; Officers. The Articles of Incorporation and Bylaws of AMCP shall not be changed by or as a result of the merger. The directors and officers of AMCP prior to the merger shall continue in such offices after the merger. 8. Further Action. Each of the merging corporations shall take all actions and do all things necessary, proper, or advisable under the laws of the State of Delaware to consummate and make effective the merger contemplated herein. IN WITNESS WHEREOF, this Plan and Agreement of Liquidation and Merger has been signed on behalf of AMC Philadelphia, Inc. by Peter C. Brown, its Executive Vice President and on behalf of Concord Cinema, Inc. by Peter C. Brown, its Executive Vice President, and the corporate seal of each corporation has been affixed hereto and attested to by the Secretary of each corporation, respectively, on the date first above written. AMC PHILADELPHIA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary CONCORD CINEMA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary EXHIBIT 2.3 ARTICLES OF MERGER Pursuant to the provisions of The General and Business Corporation Law of Missouri, the undersigned, American Multi-Cinema, Inc., a Missouri corporation ("AMC"), and Conservco, Inc., a Missouri corporation, ("Conservco"), each certifies as follows: 1. AMC, pursuant to Section 351.447 of The General and Business Corporation Law of Missouri, has adopted a Plan and Agreement of Liquidation and Merger (the "Plan"), a copy of which is attached hereto and incorporated herein by this reference, pursuant to which Conservco shall be merged into and with AMC. 2. On March 25, 1996, the Board of Directors of AMC, by statement of unanimous consent to action, adopted the following resolutions approving the Plan and Agreement of Liquidation and Merger: WHEREAS, it is in the best interests of this corporation to enter into a Plan and Agreement of Liquidation and Merger with Conservco, Inc. ("Conservco"), a Missouri corporation, pursuant to which Conservco will be merged into and with this corporation; NOW, THEREFORE, BE IT RESOLVED, that the Plan and Agreement of Liquidation and Merger (the "Plan") dated this date between this corporation and Conservco, a copy of which is attached hereto and incorporated herein by this reference, be, and it hereby is, adopted and approved in all respects as and for a binding obligation of this corporation; and FURTHER RESOLVED, that the Chairman and President, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation, and under its corporate seal attested by its Secretary or any Assistant Secretary, to execute, seal, verify, acknowledge and deliver the Plan substantially in the form attached hereto, with such changes therefrom, if any, as the officer executing the same may approve, such approval to be conclusively evidenced by the signature of such officer; and FURTHER RESOLVED, that the Chairman and President, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation to cause a document entitled "Articles of Merger" to be prepared, executed, acknowledged and filed with the Missouri Secretary of State in accordance with the provisions of The General and Business Corporation Law of Missouri and to take such other action, including the making of one or more filings with the appropriate government agencies or offices of other states in which this corporation or Conservco is qualified to transact business, as may be necessary or appropriate to cause the merger to be effective in Missouri and such other states; and FURTHER RESOLVED, that the officers of this corporation be, and they hereby are, authorized and directed, in the name of and on behalf of this corporation and under its corporate seal, to execute and deliver all such further agreements, certificates and other instruments and to take all such further actions as any such officer may consider necessary or appropriate in order to effect the merger of Conservco into this corporation in accordance with the terms, conditions and provisions of the Plan and to carry out the purpose and intent of these resolutions. 3. AMC owns all of the outstanding shares of the sole class of stock of Conservco. AMC shall maintain its ownership of at least 90% of the outstanding shares of each class of stock of Conservco until the issuance of a Certificate of Merger by the Missouri Secretary of State. IN WITNESS WHEREOF, these Articles of Merger have been executed on behalf of American Multi-Cinema, Inc. by Peter C. Brown, Executive Vice President of the corporation, and on behalf of Conservco, Inc. by Peter C. Brown, Executive Vice President of the corporation, and the corporate seal of each such corporation has been affixed hereto and attested to by the Secretary of the respective corporation on March 26, 1996. AMERICAN MULTI-CINEMA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 26th day of March, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of American Multi-Cinema, Inc., a Missouri corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ Susan Diane Slusher Notary Public in and for said County and State My Commission expires: May 10, 1996 CONSERVCO, INC. By: /s/ PETER C. BROWN Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 26 day of March, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of Conservco, Inc., a Missouri corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ SUSAN DIANE SLUSHER Notary Public in and for said County and State My Commission expires: MAY 10, 1996 PLAN AND AGREEMENT OF LIQUIDATION AND MERGER This Plan and Agreement of Liquidation and Merger (the "Plan") is made on March 25, 1996, by American Multi-Cinema, Inc., a Missouri corporation ("AMC"), and Conservco, Inc., a Missouri corporation ("Conservco"). On the Effective Date (as defined in paragraph 4 below), AMC shall own all of the shares of the sole class of stock of Conservco. It is intended that the merger contemplated by the Plan shall constitute a liquidation of Conservco in which no taxable gain or loss is recognized pursuant to Section 332 of the Internal Revenue Code of 1986, as amended. The terms and conditions of the Plan are as follows: 1. Names of Corporations. The names of the corporations proposing to merge are: American Multi-Cinema, Inc. and Conservco, Inc. 2. Merger. On the Effective Date AMC and Conservco shall merge into a single corporation by Conservco merging into AMC. 3. Name of Surviving Corporation. The name of American Multi-Cinema, Inc., which is to be the surviving corporation, shall not be changed as a result of the merger. 4. Effective Date. The merger shall be effected at the close of business on March 28, 1996 (the "Effective Date"). 5. Effect of Merger. (a) On the Effective Date, the separate existence of Conservco shall cease, except to the extent that its separate existence may be continued by law. The existence of AMC shall continue unaffected and unimpaired by the merger, and AMC shall after the Effective Date have all of the rights, privileges, immunities and powers, and shall be subject to all of the duties and liabilities, of a corporation organized under The General and Business Corporation Law of Missouri. (b) On the Effective Date, AMC shall have and thereafter possess all the rights, privileges, immunities, powers and franchises, of a public as well as of private nature, of Conservco, and all property, real, personal and mixed, and all debts due on whatever account and all other choses in action, and every other interest of or belonging to or due to Conservco shall be taken and deemed to be transferred to and vested or remain in AMC without further act or deed (and the title to any real estate, or any interest therein, vested in the merging corporations shall not revert or be in any way impaired by reason of the merger). (c) Upon the Effective Date and thereafter, AMC shall be responsible and liable for all the liabilities and obligations of Conservco, and any claim existing or action or proceeding pending by or against any of such entities may be prosecuted to judgment as if such merger had not taken place or, in the case of Conservco, AMC may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the merging corporations shall be impaired by the merger. (d) The respective officers of Conservco are hereby authorized to execute all deeds, assignments and other documents which may be necessary to effect the full and complete transfer of the properties of such corporations to AMC. The officers of AMC are hereby authorized to execute and deliver any and all documents which may be required of it in order for it to assume or otherwise comply with any liability or obligation of Conservco. If at any time AMC shall determine that any further documents are necessary or desirable to vest in it, according to the terms hereof, the title to any property, rights, privileges, immunities, powers or franchises of Conservco, then the officers of such entities shall execute and deliver all such documents and do all things necessary to vest in and confirm to AMC title and possession to all such property, rights, privileges, immunities, powers and franchises, and to otherwise carry out the purposes of this Plan. 6. Cancellation of Shares. (a) The manner and basis of cancelling the shares of stock of the merging corporations shall be as follows: (i) On the Effective Date, each share of the authorized $.0625 par value common stock of AMC, whether or not issued and outstanding, shall continue to be one share of the $.0625 par value common stock of AMC. (ii) On the Effective Date, each of the 1,000 shares of the $1.00 par value common stock of Conservco which are issued and outstanding (whether or not such shares are in all respects validly issued) and owned of record by AMC shall be cancelled. 7. Articles of Incorporation; Bylaws; Directors; Officers. The Articles of Incorporation and Bylaws of AMC shall not be changed by or as a result of the merger. The directors and officers of AMC prior to the merger shall continue in such offices after the merger. 8. Further Action. Each of the merging corporations shall take all actions and do all things necessary, proper, or advisable under the laws of the State of Missouri to consummate and make effective the merger contemplated herein. IN WITNESS WHEREOF, this Plan and Agreement of Liquidation and Merger has been signed on behalf of American Multi-Cinema, Inc. by Peter C. Brown, its Executive Vice President and on behalf of Conservco, Inc. by Peter C. Brown, its Executive Vice President, and the corporate seal of each corporation has been affixed hereto and attested to by the Secretary of each corporation, respectively, on the date first above written. AMERICAN MULTI-CINEMA, INC. By: /s/ Perter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary CONSERVCO, INC. By:/s/ Perter C. Brown Peter C. Brown, Executive Vice President (SEAL) EXHIBIT 2.4 ARTICLES OF MERGER Pursuant to the provisions of The General and Business Corporation Law of Missouri, the undersigned, American Multi-Cinema, Inc., a Missouri corporation ("AMC"), and AMC Film Marketing, Inc., a Missouri corporation, ("AMCFM"), each certifies as follows: 1. AMC, pursuant to Section 351.447 of The General and Business Corporation Law of Missouri, has adopted a Plan and Agreement of Liquidation and Merger (the "Plan"), a copy of which is attached hereto and incorporated herein by this reference, pursuant to which AMCFM shall be merged into and with AMC. 2. On November 30, 1995 and reconfirmed on March 28, 1996, the Board of Directors of AMC, by statement of unanimous consent to action, adopted the following resolutions approving the Plan and Agreement of Liquidation and Merger: WHEREAS, it is in the best interests of this corporation to enter into a Plan and Agreement of Liquidation and Merger with AMC Film Marketing, Inc. ("AMCFM"), a Missouri corporation, pursuant to which AMCFM will be merged into and with this corporation; NOW, THEREFORE, BE IT RESOLVED, that the Plan and Agreement of Liquidation and Merger (the "Plan") dated this date between this corporation and AMCFM, a copy of which is attached hereto and incorporated herein by this reference, be, and it hereby is, adopted and approved in all respects as and for a binding obligation of this corporation; and FURTHER RESOLVED, that the Chairman and President, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation, and under its corporate seal attested by its Secretary or any Assistant Secretary, to execute, seal, verify, acknowledge and deliver the Plan substantially in the form attached hereto, with such changes therefrom, if any, as the officer executing the same may approve, such approval to be conclusively evidenced by the signature of such officer; and FURTHER RESOLVED, that the Chairman and President, or any Executive Vice President of this corporation be, and each of such officers hereby is, authorized and directed in the name of and on behalf of this corporation to cause a document entitled "Articles of Merger" to be prepared, executed, acknowledged and filed with the Missouri Secretary of State in accordance with the provisions of The General and Business Corporation Law of Missouri and to take such other action, including the making of one or more filings with the appropriate government agencies or offices of other states in which this corporation or AMCFM is qualified to transact business, as may be necessary or appropriate to cause the merger to be effective in Missouri and such other states; and FURTHER RESOLVED, that the officers of this corporation be, and they hereby are, authorized and directed, in the name of and on behalf of this corporation and under its corporate seal, to execute and deliver all such further agreements, certificates and other instruments and to take all such further actions as any such officer may consider necessary or appropriate in order to effect the merger of AMCFM into this corporation in accordance with the terms, conditions and provisions of the Plan and to carry out the purpose and intent of these resolutions. 3. AMC owns all of the outstanding shares of the sole class of stock of AMCFM. AMC shall maintain its ownership of at least 90% of the outstanding shares of each class of stock of AMCFM until the issuance of a Certificate of Merger by the Missouri Secretary of State. IN WITNESS WHEREOF, these Articles of Merger have been executed on behalf of American Multi-Cinema, Inc. by Peter C. Brown, Executive Vice President of the corporation, and on behalf of AMC Film Marketing, Inc. by Peter C. Brown, Executive Vice President of the corporation, and the corporate seal of each such corporation has been affixed hereto and attested to by the Secretary of the respective corporation on April 2, 1996. AMERICAN MULTI-CINEMA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 2nd day of April, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of American Multi-Cinema, Inc., a Missouri corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ Susan Diane Slusher Notary Public in and for said County and State My Commission expires: May 10, 1996 AMC FILM MARKETING, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) I, the undersigned, a notary public, do hereby certify that on the 2nd day of April, 1996, personally appeared before me Peter C. Brown, who, being by me first duly sworn, declared that he is the Executive Vice President of AMC Film Marketing, Inc., a Missouri corporation, that he signed the foregoing document as Executive Vice President of said corporation, and that the statements contained therein are true. In witness whereof, I have hereunto set my hand and affixed my official seal the day and year last above written. /s/ Susan Diane Slusher Notary Public in and for said County and State My Commission expires: May 10, 1996 PLAN AND AGREEMENT OF LIQUIDATION AND MERGER This Plan and Agreement of Liquidation and Merger (the "Plan") is made on April 2, 1996, by American Multi-Cinema, Inc., a Missouri corporation ("AMC"), and AMC Film Marketing, Inc., a Missouri corporation ("AMCFM"). On the Effective Date (as defined in paragraph 4 below), AMC shall own all of the shares of the sole class of stock of AMCFM. It is intended that the merger contemplated by the Plan shall constitute a liquidation of AMCFM in which no taxable gain or loss is recognized pursuant to Section 332 of the Internal Revenue Code of 1986, as amended. The terms and conditions of the Plan are as follows: 1. Names of Corporations. The names of the corporations proposing to merge are: American Multi-Cinema, Inc. and AMC Film Marketing, Inc. 2. Merger. On the Effective Date AMC and AMCFM shall merge into a single corporation by AMCFM merging into AMC. 3. Name of Surviving Corporation. The name of American Multi-Cinema, Inc., which is to be the surviving corporation, shall not be changed as a result of the merger. 4. Effective Date. The merger shall be effected at the close of business on April 3, 1996 (the "Effective Date"). 5. Effect of Merger. (a) On the Effective Date, the separate existence of AMCFM shall cease, except to the extent that its separate existence may be continued by law. The existence of AMC shall continue unaffected and unimpaired by the merger, and AMC shall after the Effective Date have all of the rights, privileges, immunities and powers, and shall be subject to all of the duties and liabilities, of a corporation organized under The General and Business Corporation Law of Missouri. (b) On the Effective Date, AMC shall have and thereafter possess all the rights, privileges, immunities, powers and franchises, of a public as well as of private nature, of AMCFM, and all property, real, personal and mixed, and all debts due on whatever account and all other choses in action, and every other interest of or belonging to or due to AMCFM shall be taken and deemed to be transferred to and vested or remain in AMC without further act or deed (and the title to any real estate, or any interest therein, vested in the merging corporations shall not revert or be in any way impaired by reason of the merger). (c) Upon the Effective Date and thereafter, AMC shall be responsible and liable for all the liabilities and obligations of AMCFM, and any claim existing or action or proceeding pending by or against any of such entities may be prosecuted to judgment as if such merger had not taken place or, in the case of AMCFM, AMC may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the merging corporations shall be impaired by the merger. (d) The respective officers of AMCFM are hereby authorized to execute all deeds, assignments and other documents which may be necessary to effect the full and complete transfer of the properties of such corporations to AMC. The officers of AMC are hereby authorized to execute and deliver any and all documents which may be required of it in order for it to assume or otherwise comply with any liability or obligation of AMCFM. If at any time AMC shall determine that any further documents are necessary or desirable to vest in it, according to the terms hereof, the title to any property, rights, privileges, immunities, powers or franchises of AMCFM, then the officers of such entities shall execute and deliver all such documents and do all things necessary to vest in and confirm to AMC title and possession to all such property, rights, privileges, immunities, powers and franchises, and to otherwise carry out the purposes of this Plan. 6. Cancellation of Shares. (a) The manner and basis of cancelling the shares of stock of the merging corporations shall be as follows: (i) On the Effective Date, each share of the authorized $.0625 par value common stock of AMC, whether or not issued and outstanding, shall continue to be one share of the $.0625 par value common stock of AMC. (ii) On the Effective Date, each of the 3,000 shares of the $10.00 par value common stock of AMCFM which are issued and outstanding (whether or not such shares are in all respects validly issued) and owned of record by AMC shall be cancelled. 7. Articles of Incorporation; Bylaws; Directors; Officers. The Articles of Incorporation and Bylaws of AMC shall not be changed by or as a result of the merger. The directors and officers of AMC prior to the merger shall continue in such offices after the merger. 8. Further Action. Each of the merging corporations shall take all actions and do all things necessary, proper, or advisable under the laws of the State of Missouri to consummate and make effective the merger contemplated herein. IN WITNESS WHEREOF, this Plan and Agreement of Liquidation and Merger has been signed on behalf of American Multi-Cinema, Inc. by Peter C. Brown, its Executive Vice President and on behalf of AMC Film Marketing, Inc. by Peter C. Brown, its Executive Vice President, and the corporate seal of each corporation has been affixed hereto and attested to by the Secretary of each corporation, respectively, on the date first above written. AMERICAN MULTI-CINEMA, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary AMC FILM MARKETING, INC. By: /s/ Peter C. Brown Peter C. Brown, Executive Vice President (SEAL) ATTEST: /s/ Nancy L. Gallagher Nancy L. Gallagher, Secretary EX-4.2.(D) 3 01178 NOTE EXHIBIT 4.2(d) AMC ENTERTAINMENT INC. and the Existing Guarantors Named Herein and UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee SIXTH SUPPLEMENTAL INDENTURE Dated as of March 28, 1996 to INDENTURE Dated as of August 1, 1992, As Supplemented by THE FIRST SUPPLEMENTAL INDENTURE Dated as of March 31, 1993, and by THE SECOND SUPPLEMENTAL INDENTURE, Dated as of May 28, 1993 and by THE THIRD SUPPLEMENTAL INDENTURE Dated as of May 28, 1993, and by THE FOURTH SUPPLEMENTAL INDENTURE Dated as of March 31, 1994, and by THE FIFTH SUPPLEMENTAL INDENTURE Dated as of December 28, 1995 ___________________________ $100,000,000 11 7/8% Senior Notes Due 2000 SIXTH SUPPLEMENTAL INDENTURE, dated as of March 28, 1996 (the "Sixth Supplemental Indenture"), among AMC ENTERTAINMENT INC., a Delaware corporation (the"Company") , AMERICAN MULTI-CINEMA, INC., a Missouri corporation ("AMC"), AMC REALTY, INC., a Delaware corporation ("Realty"), AMC CANTON REALTY, INC., a Delaware corporation ("Canton Realty"), AMC PHILADELPHIA, INC., a Delaware corporation ("AMCP"), and BUDCO THEATRES, INC., a Pennsylvania corporation ("Budco") (AMC, Realty, Canton Realty, AMCP and Budco being collectively referred to herein as the "Existing Guarantors" and each as an "Existing Guarantor"), and United States Trust Company of New York, a New York banking corporation, as Trustee (the "Trustee"), to the Indenture, dated as of August 1, 1992, as supplemented by the First Supplemental Indenture, dated as of March 31, 1993, the Second Supplemental Indenture dated May 28, 1993, the Third Supplemental Indenture dated May 28, 1993, the Fourth Supplemental Indenture dated March 31, 1994, and the Fifth Supplemental Indenture dated December 28, 1995 (collectively, the "Indenture"). WHEREAS, AMC and the Existing Guarantors have each heretofore guaranteed (the "Guarantee") the $100,000,000 aggregate principal amount of 11 7/8% Senior Notes due 2000 (the "Securities") of the Company issued pursuant to the Indenture; and WHEREAS, there have been issued and are now outstanding Securities in the aggregate principal amount of $617,000; and WHEREAS, each of AMC Film Marketing, Inc. ("AMCFM") and Conservco, Inc. ("Conservco"), both of which are wholly-owned subsidiaries of AMC, desires to merge into and with AMC, with AMC being the surviving corporation, which mergers will result in the termination by operation of law of the existence of each of AMCFM and Conservco; and WHEREAS, Concord Cinema, Inc. ("Concord"), a wholly-owned subsidiary of AMCP, desires to merge into and with AMCP, with AMCP being the surviving corporation, which merger will result in the termination by operation of law of the existence of Concord; and WHEREAS, pursuant to Section 5.1(b)(ii), such mergers are not permitted unless each of the respective surviving entities assumes the respective non-surviving entity's obligations under the Indenture and the Guarantee of such non-surviving entity; and WHEREAS, AMC desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly assume the obligations of AMCFM and Conservco; and WHEREAS, AMCP desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly assume the obligations of Concord; and WHEREAS, pursuant to Section 5.1(b)(iv), such mergers are not permitted unless each Existing Guarantor reaffirms its obligations under the Indenture; and WHEREAS, each of the Existing Guarantors desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly reaffirm its obligations as a Guarantor under the Indenture and all of the covenants, agreements and undertakings of a Guarantor thereunder, including Article XI thereof; and WHEREAS, the execution and delivery of this Sixth Supplemental Indenture has been authorized by a resolution of the Board of Directors of each of the Company and the Existing Guarantors; and WHEREAS, upon the execution and delivery hereof, all conditions and requirements necessary to make this Sixth Supplemental Indenture a valid, binding and legal instrument in accordance with its terms shall have been performed and fulfilled; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I ASSUMPTION AND REAFFIRMATION OF OBLIGATIONS Section 1.1. Assumption of Obligations of AMCFM and Conservco. AMC hereby assumes all of the obligations of AMCFM and Conservco under the Indenture and under the Guarantee of such entity. Section 1.2. Assumption of Obligations of Concord. AMCP hereby assumes all of the obligations of Concord under the Indenture and under the Guarantee of such entity. Section 1.3. Reaffirmation of Existing Guarantors' Obligations. The Existing Guarantors each hereby confirms the due and punctual performance of its Guarantee and every covenant in the Indenture on the part of each Existing Guarantor to be performed or observed. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Sixth Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Sixth Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as supplemented hereby, the Indenture and the Securities (including the Guarantees thereof) are in all respects ratified and confirmed and all the terms shall remain in full force and effect. SECTION 2.3. GOVERNING LAW. THIS SIXTH SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SIXTH SUPPLEMENTAL INDENTURE. Section 2.4. Successors. All agreements of each of the Existing Guarantors in this Sixth Supplemental Indenture shall bind the successors of each such corporation. Section 2.5. Multiple Counterparts. The parties hereto may sign multiple counterparts of this Sixth Supplemental Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. Section 2.6. Effectiveness. The provisions of this Sixth Supplemental Indenture will take effect immediately upon its execution and delivery by the Trustee in accordance with the provisions of Section 9.6 of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the supplement to the Indenture effected by this Sixth Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby supplemented, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture hereby supplemented. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Existing Guarantors. Except to the extent that they relate to action taken by the Trustee, the Trustee shall not be responsible in any manner whatsoever for or with respect to (i) the validity, efficacy or sufficiency of this Sixth Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company and the Existing Guarantors by corporate action or otherwise, (iii) the due execution hereof by the Company and the Existing Guarantors, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any supplement herein provided for, and the Trustee makes no representation with respect to any such matters. ATTEST: AMC ENTERTAINMENT INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee ____________________________ By: /s/ CYNTHIA CHANEY Name:________________ Title: ASSISTANT VICE PRESIDENT ATTEST: AMERICAN MULTI-CINEMA, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC REALTY, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC PHILADELPHIA, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: BUDCO THEATRES, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC CANTON REALTY, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer EX-4.2.(E) 4 01258 NOTE EXHIBIT 4.2(e) AMC ENTERTAINMENT INC. and the Existing Guarantors Named Herein and THE BANK OF NEW YORK, as Trustee SIXTH SUPPLEMENTAL INDENTURE Dated as of March 28, 1996 to INDENTURE Dated as of August 1, 1992, As Supplemented by THE FIRST SUPPLEMENTAL INDENTURE Dated as of March 31, 1993, and by THE SECOND SUPPLEMENTAL INDENTURE Dated as of May 28, 1993, and by THE THIRD SUPPLEMENTAL INDENTURE Dated as of May 28, 1993, and by THE FOURTH SUPPLEMENTAL INDENTURE Dated as of March 31, 1994, and by THE FIFTH SUPPLEMENTAL INDENTURE Dated as of December 28, 1995 ____________________________ $100,000,000 12 5/8% Senior Subordinated Notes Due 2002 SIXTH SUPPLEMENTAL INDENTURE, dated as of March 28, 1996 (the "Sixth Supplemental Indenture"), among AMC ENTERTAINMENT INC., a Delaware corporation (the "Company") , AMERICAN MULTI-CINEMA, INC., a Missouri corporation ("AMC"), AMC REALTY, INC., a Delaware corporation ("Realty"), AMC CANTON REALTY, INC., a Delaware corporation ("Canton Realty"), AMC PHILADELPHIA, INC., a Delaware corporation ("AMCP"), and BUDCO THEATRES, INC., a Pennsylvania corporation ("Budco") (AMC, Realty, Canton Realty, AMCP and Budco being collectively referred to herein as the "Existing Guarantors" and each as an "Existing Guarantor"), and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee"), to the Indenture, dated as of August 1, 1992, as supplemented by the First Supplemental Indenture, dated as of March 31, 1993, the Second Supplemental Indenture dated May 28, 1993, the Third Supplemental Indenture dated May 28, 1993, the Fourth Supplemental Indenture dated March 31, 1994, and the Fifth Supplemental Indenture dated December 28, 1995 (collectively, the "Indenture"). WHEREAS, AMC and the Existing Guarantors have each heretofore guaranteed (the "Guarantee") the $100,000,000 aggregate principal amount of 12 5/8% Senior Subordinated Notes due 2002 (the "Securities") of the Company issued pursuant to the Indenture; and WHEREAS, there have been issued and are now outstanding Securities in the aggregate principal amount of $4,904,000; and WHEREAS, each of AMC Film Marketing, Inc. ("AMCFM") and Conservco, Inc. ("Conservco"), both of which are wholly-owned subsidiaries of AMC, desires to merge into and with AMC, with AMC being the surviving corporation, which mergers will result in the termination by operation of law of the existence of each of AMCFM and Conservco; and WHEREAS, Concord Cinema, Inc. ("Concord"), a wholly-owned subsidiary of AMCP, desires to merge into and with AMCP, with AMCP being the surviving corporation, which merger will result in the termination by operation of law of the existence of Concord; and WHEREAS, pursuant to Section 5.1(b)(ii), such mergers are not permitted unless each of the respective surviving entities assumes the non-surviving entity's obligations under the Indenture and the Guarantee of such non-surviving entity; and WHEREAS, AMC desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly assume the obligations of each of AMCFM and Conservco; and WHEREAS, AMCP desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly assume the obligations of Concord; and WHEREAS, pursuant to Section 5.1(b)(iv), such mergers are not permitted unless each Existing Guarantor reaffirms its obligations under the Indenture; and WHEREAS, each of the Existing Guarantors desires by this Sixth Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and 9.1 of the Indenture, to expressly reaffirm its obligations as a Guarantor under the Indenture and all of the covenants, agreements and undertakings of a Guarantor thereunder, including Article XI thereof; and WHEREAS, the execution and delivery of this Sixth Supplemental Indenture has been authorized by a resolution of the Board of Directors of each of the Company and the Existing Guarantors; and WHEREAS, upon the execution and delivery hereof, all conditions and requirements necessary to make this Sixth Supplemental Indenture a valid, binding and legal instrument in accordance with its terms shall have been performed and fulfilled; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I ASSUMPTION AND REAFFIRMATION OF OBLIGATIONS Section 1.1. Assumption of Obligations of AMCFM and Conservco. AMC hereby assumes all of the obligations of AMCFM and Conservco under the Indenture and under the Guarantee of such entity. Section 1.2. Assumption of Obligations of Concord. AMCP hereby assumes all of the obligations of Concord under the Indenture and under the Guarantee of such entity. Section 1.3. Reaffirmation of Existing Guarantors' Obligations. The Existing Guarantors each hereby confirms the due and punctual performance of its Guarantee and every covenant in the Indenture on the part of each Existing Guarantor to be performed or observed. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Sixth Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Sixth Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as supplemented hereby, the Indenture and the Securities (including the Guarantees thereof) are in all respects ratified and confirmed and all the terms shall remain in full force and effect. SECTION 2.3. GOVERNING LAW. THIS SIXTH SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SIXTH SUPPLEMENTAL INDENTURE. Section 2.4. Successors. All agreements of each of the Existing Guarantors in this Sixth Supplemental Indenture shall bind the successors of each such corporation. Section 2.5. Multiple Counterparts. The parties hereto may sign multiple counterparts of this Sixth Supplemental Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. Section 2.6. Effectiveness. The provisions of this Sixth Supplemental Indenture will take effect immediately upon its execution and delivery by the Trustee in accordance with the provisions of Section 9.6 of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the supplement to the Indenture effected by this Sixth Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby supplemented, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture hereby supplemented. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Existing Guarantors. Except to the extent that they relate to action taken by the Trustee, the Trustee shall not be responsible in any manner whatsoever for or with respect to (i) the validity, efficacy or sufficiency of this Sixth Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company and the Existing Guarantors by corporate action or otherwise, (iii) the due execution hereof by the Company and the Existing Guarantors, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any supplement herein provided for, and the Trustee makes no representation with respect to any such matters. ATTEST: AMC ENTERTAINMENT INC. /s/ NANCY L. GALLAGHER_ By: /s/ PETER C. BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: THE BANK OF NEW YORK, as Trustee ____________________________ By: /s/ MARY JANE MORRISSEY Name:____________________ Title:____________________ ATTEST: AMERICAN MULTI-CINEMA, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC REALTY, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C BROWN _ Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC PHILADELPHIA, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: BUDCO THEATRES, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C BROWN Peter C. Brown Executive Vice President and Chief Financial Officer ATTEST: AMC CANTON REALTY, INC. /s/ NANCY L. GALLAGHER BY: /s/ PETER C BROWN Peter C. Brown Executive Vice President and Chief Financial Officer EX-10.5.(A) 5 STOCK PLAN EXHIBIT 10.5.(a) Exhibit A to Proxy Statement Set forth below is the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan, as proposed to be amended. Proposed deletions from the Plan as originally adopted are marked through, and proposed additions are underlined. AMC ENTERTAINMENT INC. 1994 STOCK OPTION AND INCENTIVE PLAN 1. PURPOSE The AMC Entertainment Inc. 1994 Stock Option and Incentive Plan is intended to incorporate stock-based and results-oriented awards into the ongoing compensation packages of executives and managers and to thereby increase the alignment of the interests of such persons and stockholders. The Plan is intended to foster in participants a strong incentive to exert maximum effort for the continued success and growth of the Company and its Subsidiaries and the enhancement of stockholders' interests, to aid in retaining individuals who exert such efforts and to assist in attracting the best available individuals in the future. 2. DEFINITIONS When used herein, the following terms shall have the meaning set forth below: 2.1 "AMC" means American Multi-Cinema, Inc., a wholly-owned subsidiary of the Company. 2.2 "Award" means an Option, a Stock Award or a Performance Unit. 2.3 "Board" means the Board of Directors of the Company. 2.4 A "Change of Control Event" shall be deemed to have occurred at the first time that (a) a majority of the Board of Directors of the Company, over a two-year period, is replaced from the directors who constituted the Board of Directors of the Company at the beginning of such period, which replacement shall not have been approved by the Board of Directors of the Company (or replacement directors approved by the Board of Directors of the Company), as constituted at the beginning of such period, or (b) a person or entity or group of persons or entities acting in concert as a partnership or other group (other than the DI affiliates, any Subsidiary, any employee stock purchase plan, stock option plan or other stock incentive plan or program, retirement plan or automatic reinvestment plan or any substantially similar plan of the Company or any Subsidiary or any person holding securities of the Company for or pursuant to the terms of any such employee benefit plan) shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of Directors. 2.5 "Code" means the Internal Revenue Code of 1986 as amended from time to time. 2.6 "Committee" means the Board's Compensation Committee, or such other committee of Directors as may be designated by the Board, authorized to administer this Plan. The Committee shall consist of not fewer than two (2) Directors and shall be constituted so as to permit the Plan to comply with Rule 16b-3 or any successor provision of similar import. 2.7 "Common Stock" means the Company's Common Stock, par value 66 2/3 cents per share. 2.8 "Company" means AMC Entertainment Inc., a corporation organized and existing under the laws of the State of Delaware, or such Company by whatever name it may at the time have. 2.9 "DI Affiliates" means (a) Mr. Stanley H. Durwood, his spouse and any of his lineal descendants and their respective spouses (collectively the Durwood Family ), (b) any controlled affiliate of any member of the Durwood Family and (c) any trust for the benefit of one or more members of the Durwood Family (whether or not any member of the Durwood Family is a trustee of such trust) or one or more charitable organizations. 2.10 "Director" means a member of the Board. 2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. 2.12 "Fair Market Value" means with respect to the Company's Shares the closing sales price of the Shares, as reported on the American Stock Exchange, or, if not so reported, on the NASDAQ/National Market System, or, if not so reported, the closing sales price as reported by any other appropriate reporting system of general circulation, on the date for which the value is to be determined, or if there is no closing sales price on such date, then on the last day for which transactions in Shares were so reported prior to the date on which the value is to be determined. 2.13 "Grantee" means a person to whom an Award is made. 2.14 "Incentive Stock Option" or "ISO" means an Option awarded under the Plan which meets the terms and conditions established by Code Section 422 and applicable regulations thereunder for such an Option. 2.15 "Non-Qualified Stock Option" or "NQSO" means an Option awarded under the Plan which by its terms and conditions is not an ISO. 2.16 "Option" means the right to purchase, at a price, for a term, under conditions, and for cash or other considerations (which may include a note from the Grantee) fixed by the Committee in accordance with such restrictions as the Plan and the Committee impose, a number of Shares specified by the Committee (subject to limitations imposed by this Plan). An Option can be either an ISO or NQSO or a combination thereof. 2.17 "Plan" means the Company's 1994 Stock Option and Incentive Plan. 2.18 "Performance Unit" means an Award payable only in cash and valued by reference to designated criteria (other than Shares) established by the Committee. 2.19 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act. 2.20 "Securities Act" means the Securities Act of 1933, as amended from time to time. 2.21 "Shares" means shares of the Company's Common Stock or if by reason of the adjustment provisions hereof any rights under an Award under the Plan pertain to any other security, such other security. 2.22 "Stock Award" means the grant of a right to receive, at a time or times fixed by the Committee in accordance with the Plan and subject to such other limitations and restrictions as the Plan and the Committee impose, the number of Shares specified by the Committee. A Stock Award may be either a "Performance Stock Award", under which the receipt of Shares, subject to provisions of the Plan permitting acceleration, will be conditioned on the attainment by the Company or a Subsidiary or a division during a performance period of performance goals established by the Committee, or a "Restricted Stock Award", under which the receipt of Shares, subject to provisions of the Plan permitting acceleration, is conditioned on the continued employment of the Grantee or such other conditions as the Committee may impose, or both. 2.23 "Subsidiary" means any business, including AMC, whether or not incorporated, in which the Company, at the time an Award is granted or in other cases at the time of reference, owns directly or indirectly not less than 50% of the equity interest. 2.24 "Successor" means the legal representative of the estate of a deceased Grantee or the person or persons who shall acquire the right to exercise an Option, to receive Shares issuable in satisfaction of a Stock Award or to receive other amounts payable under an Award, by bequest or inheritance or by reason of the death of the Grantee or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employment Retirement Income Security Act, or the rules thereunder. 2.25 "Tax Date" means the date on which the amount of tax to be withheld with respect to an Option or Stock Award is determined. 2.26 "Term" means the period during which a particular Option may be exercised or the period during which the conditions and/or restrictions placed on an Award are in effect. 2.27 "Window Period" means a period beginning on the third business day following the date of release of a quarterly or annual summary statement of sales and earnings of the Company and ending on the twelfth business day following such date. 3. ADMINISTRATION OF THE PLAN 3.1 The Plan shall be administered by the Committee. 3.2 The Committee shall have plenary authority, subject to provisions of the Plan, to: (a) determine when and to whom Awards shall be granted; (b) determine the form of each Award, its Term, the number of Shares covered by it, if any, the participation by a Grantee in other plans, and any other terms or conditions of each such Award, including the time and conditions of exercise or vesting; (c) determine whether Awards will be granted singly or in combination or tandem; (d) determine the performance goals, if any, that will be applicable to the Award and eliminate or reduce an Award otherwise payable that is based on performance goals; (e) accelerate the vesting, exercise, or payment of an Award when such action(s) would be in the best interests of the Company; and (f) take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan. The Committee also shall have the authority to grant Awards in replacement of Awards previously granted under the Plan or any other plan of the Company or a Subsidiary. The Committee's actions in making Awards and fixing their size, Term, and other terms and conditions shall be final and conclusive on all persons. 3.3 The Committee shall have the sole responsibility for construing and interpreting the Plan, for establishing (and amending) such rules and regulations as it deems necessary or desirable for the proper administration of the Plan, and for resolving all questions arising under the Plan. Any decision or action taken by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations shall, to the extent permitted by law, be within its absolute discretion, except as otherwise specifically provided herein, and shall be conclusive and binding upon all Grantees, all Successors, and any other person, whether that person is claiming under or through any Grantee or otherwise. 3.4 The Committee may designate one of its members as Chairman. It shall hold its meetings at such times and places as it may determine. All determinations of the Committee shall be made by a majority of its members. Any determination reduced to writing and signed by all members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may make such rules and regulations for the conduct of its business as it shall deem advisable. 3.5 The Committee, in its discretion, may delegate its authority and duties under the Plan to the Chief Executive Officer and/or to other senior officers of the Company under such conditions and/or limitations as the Committee may establish; provided, however, that only the Committee may establish performance goals and select and grant Awards to Grantees who are subject to Section 16 of the Exchange Act. 3.6 Service on the Committee shall constitute service as a Director, so that the members of the Committee shall be entitled to indemnification and reimbursement as Directors pursuant to its Bylaws and to any agreements between the Company and its Directors providing for indemnification. 3.7 The Committee shall regularly inform the Board as to its actions with respect to all Awards under the Plan and the terms and conditions of such Awards in a manner, at such times, and in such form as the Board may reasonably request. 4. ELIGIBILITY Awards may be made under the Plan to employees who are corporate or field executives or senior managers, including executive officers of the Company and its Subsidiaries, and other managers, including field and theatre managers. Officers shall be employees for this purpose, whether or not they also are Directors. A Director who is not an employee shall not be eligible to receive an Award. Awards may be made to eligible employees whether or not they have received prior Awards under the Plan or under any previously adopted plan, and whether or not they are participants in other benefit plans of the Company, AMC or any other Subsidiary. 5. SHARES SUBJECT TO PLAN; LIMITATIONS 5.1 The Company hereby reserves 1,000,000 Shares, for issuance in connection with Awards under the Plan, subject to adjustment under Section 20. During the Plan no Grantee may receive Options to acquire more than 325,000 Shares, Stock Awards entitling the Grantee to receive more than 150,000 Shares or cash awards aggregating more than $2 million under Performance Units. During any 12 month period no Grantee may receive Options to acquire more than 65,000 Shares or cash awards aggregating more than $400,000 under Performance Units. No Grantee may receive a Stock Award or Awards entitling the Grantee to receive free of conditions more than 30,000 Shares with respect to any 12 month period, but determined on an annualized basis so that more than 30,000 Shares may be received at one time free of conditions with respect to a performance period exceeding 12 months in duration. 5.2 Any Shares related to Awards which (a) terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such Shares, or (b) are settled in cash in lieu of Shares, shall be available again for grant under the Plan, provided the Participant received no other benefits of ownership of such Award other than voting rights, if any. Notwithstanding the foregoing, no Shares which are used by a Participant for the full or partial payment to the Company of the purchase price of Shares upon exercise of an Option, or for any withholding taxes due as a result of such exercise, may become available for Awards under the Plan. The Shares available for issuance under the Plan may be authorized and unissued shares or treasury shares. 6. GRANTING OF OPTIONS 6.1 Subject to the terms of the Plan, the Committee may from time to time grant Options to persons eligible under Section 4 above and shall designate such Options as ISOs or NQSOs. 6.2 Pursuant to Code Section 422 and applicable regulations, an Option shall not be deemed to be an ISO to the extent that the aggregate Fair Market Value, as determined on the date or dates of grant, of Shares with respect to which such ISO is exercisable for the first time by any individual during any calendar year (under all stock option incentive plans of the Company or a Subsidiary) exceeds $100,000. ISOs which first become exercisable during a calendar year shall be taken into account in the order granted. Options that exceed the $100,000 limit shall be treated as NQSOs. 6.3 The purchase price of each Share subject to Option shall be fixed by the Committee, provided the purchase price for Shares subject to an Option shall not be less than 100% of the Fair Market Value of the Shares on the date the Option is granted. 6.4 Notwithstanding Section 6.3 above, pursuant to Code Section 422 and applicable regulations, the minimum purchase price of an ISO shall be 110% of the Fair Market Value of the Shares on the date the ISO is granted with respect to Grantees who at the time of Award are deemed to own 10% or more of the voting power of the Company's outstanding Shares. 6.5 Each Option shall expire and all rights to purchase Shares thereunder shall cease on the date fixed by the Committee. 6.6 Notwithstanding Section 6.5 above, pursuant to Code Section 422 and applicable regulations, an ISO shall expire and all rights to purchase Shares thereunder shall cease no later than the fifth anniversary of the date on which the ISO was granted with respect to Grantees who at the time of Award are deemed to own 10% or more of the voting power of the Company, and no later than the tenth anniversary of the date on which the ISO was granted with respect to other Grantees. 6.7 No Option shall become exercisable prior to the expiration of six months after the date of its grant, unless otherwise determined by the Committee or permitted by the Plan, and, subject to the limitations in the Plan, each Option shall be exercisable for the number of Shares fixed by the Committee. 7. STOCK AWARDS 7.1 The Committee may grant eligible employees Stock Awards which shall entitle Grantees to receive Shares in the future for no cash consideration and which may be subject to such terms, conditions and restrictions, if any, as the Committee may deem appropriate, including, without limitation, satisfaction of performance goals, restrictions on transferability and continued employment. 7.2 Subject to provisions of the Plan permitting acceleration, the receipt of Shares under Stock Awards granted to persons subject to Section 16 of the Exchange Act will be conditioned on the attainment by the Company or a Subsidiary or a division during a performance period of performance goals established by the Committee based on criterion described in Section 9. 7.3 At the time of grant of a Stock Award, the Grantee shall receive written evidence of the Award in such form as may be approved by the Committee but shall not be entitled to issuance or delivery of a stock certificate evidencing the Shares covered by the Award until the Committee certifies that performance goals have been met and the lapse of any restrictions that may have been imposed pursuant to the Award. Upon the attainment of such goals and the lapse of any restrictions, a certificate or certificates representing the number of Shares covered by the Award, free and clear of all restrictions, shall be issued and registered in the name of, and delivered to, the Grantee. 7.4 Unless otherwise determined by the Committee or provided in the Plan, no Shares may be issued under Restricted Stock Awards unless the Grantee remains employed by the Company or a Subsidiary for one year after the date of the Award. 8. PERFORMANCE UNITS 8.1 The Committee may grant Awards in the form of Performance Units. 8.2 Amounts payable under a Performance Unit may be payable at a specified date or dates or upon attaining performance conditions. Subject to provisions of the Plan permitting acceleration, a Performance Unit granted to persons subject to Section 16 of the Exchange Act will be conditioned on the attainment by the Company or a Subsidiary or a division during a performance period of performance goals established by the Committee based on criteria described in Section 9. 9. PERFORMANCE GOALS Performance Stock and Performance Unit Awards made to persons subject to Section 16 of the Exchange Act shall be based on performance goals established by the Committee prior to not later than 90 days after the start of a performance period of 12 months duration or longer with respect to which such an Award is made. After the start of a performance period The Committee may not increase the compensation payable under an Award that is otherwise due upon attainment of a performance goal. The Committee shall certify that the performance goals have been achieved before payment of any such Award. Performance goals established by the Committee shall be based upon, as the Committee deems appropriate, one or more of the following business criteria: (i) Company or Subsidiary EBITDA (earnings before interest, taxes, depreciation and amortization); (ii) Company or Subsidiary earnings or earnings per Share; (iii) public market prices of Shares; (iv) division operating income, or "DOI" (operating income less general and administrative expenses and extraordinary expenses); (v) division level EBITDA (DOI less national film, home office and international general and administrative expenses plus capitalized lease adjustments; (vi) private market value of Shares on a fully-diluted basis (assuming full exercise of all outstanding shares of preferred stock, Class B stock, options and other rights to acquire Shares), based on a constant multiple of theatre level EBITDA (Company EBITDA less National Cinema Network, Inc. EBITDA), plus the book value of National Cinema Network, Inc., cash, cash equivalents and investments and investments in other long-term assets, less corporate borrowings, capitalized lease obligations and the carrying value of minority interests in other long-term liabilities; (vii) return to stockholders, measured by increases in the market value of an investment in Shares, assuming reinvestment of dividends received; and (viii) return on assets within a participant's span of responsibility; and the Committee may, in its discretion, determine whether an Award will be paid under any one or more of such business criteria. In setting performance goals, such criteria may be measured against one or more of the following: (i) the prior year or years' performance of the Company, a Subsidiary, or a division or other operations-based unit or span of a participant's responsibility; (ii) the performance of a broad-based group of stock such as, but not limited to, the Standard and Poor's 500 Index with risk profiles similar to the Company's and; (iii) the performance of a peer group of two or more companies. Such performance goals may be (but need not be) different for each performance period. The Committee may set different (or the same) goals for different Grantees and for different Awards, and performance goals may include standards for minimum attainment, target attainment, and maximum attainment. In all cases, however, performance goals shall include a minimum performance standard below which no part of the relevant Award will be earned. 10. NON-TRANSFERABILITY OF RIGHTS No Award, no rights under any Award, and no payment under the Plan shall be assignable or transferable otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employment Retirement Income Security Act, or the rules thereunder, and the rights and the benefits of any such Award may be exercised during the lifetime of the Grantee only by his or her guardian or legal representative or Successor. 11. DEATH, DISABILITY, RETIREMENT AND OTHER TERMINATION OF EMPLOYMENT 11.1 Subject to the terms of the Plan, the Committee may make such provisions concerning exercise or lapse of Awards upon the Grantee's death, disability, retirement, or other termination of employment as it shall in its discretion determine, provided that: (a) except as provided in paragraph (b) below, no provision shall permit an ISO to be exercised after the date three months following the Grantee's termination of employment, (b) no provision shall permit an Option to be exercised after the date which is twelve months following a Grantee's death or disability, (c) no provision shall permit a NQSO to be exercised after the date which is three years following the Grantee's retirement from the Company or a Subsidiary, (d) except as provided in paragraphs (b) and (c) above, no provision shall permit a NQSO to be exercised after the date which is six months following a Grantee's termination of employment, (e) except as provided in paragraph (f) below or as permitted by Sections 12 or 20, all Stock Awards and Performance Units shall be canceled and forfeited if a Grantee's employment is terminated, and (f) in the event of Grantee's death, disability or retirement, the Grantee (or his Successor) shall be entitled immediately to be issued a certificate or certificates for all of the Shares represented by his Stock Award(s) and to be paid amounts due under Performance Unit awards, free and clear of all performance goal requirements and restrictions, based in each case on the extent to which performance goals have been achieved, measured through the date of termination. For purposes of this Section 11, the term "disability" shall mean "long term disability", as defined in the AMC Long Term Disability Plan, or any comparable plan of the Company or AMC, or, if there is no such plan, the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than twelve months as determined by the Committee based on the opinion of a qualified physician (or other medical certificate) and other evidence acceptable to the Committee, and the term "retirement" shall mean "normal retirement" or, with the approval of the Committee, "early retirement" pursuant to the applicable terms of the AMC Defined Benefit Retirement Plan or any comparable plan of the Company or a Subsidiary covering a Grantee. 11.2 Unless the Committee determines otherwise, Options which pursuant to their terms are exercisable following termination of a Grantee's employment: (a) may be exercised only to the extent exercisable upon the date such employment terminates, if such termination is other than by reason of the Grantee's death, disability or retirement, and (b) shall be accelerated if not yet vested and shall be exercisable in full, free and clear of all restrictions, if such termination is by reason of the Grantee's death, disability or retirement. 11.3 Transfers of employment between the Company and a Subsidiary, or between Subsidiaries, shall not constitute termination of employment for purposes of any Award. The Committee may specify in the terms and conditions of an Award whether any authorized leave of absence or absence for military or governmental service or for any other reason shall constitute a termination of employment for purposes of the Award and the Plan. 12. PROVISIONS RELATING TO CHANGE IN CONTROL The Committee may provide, at the time of an Award or thereafter, that if a Change of Control Event occurs or if termination results from such Change of Control Event, (a) any restrictions on Stock Awards shall lapse immediately and (b) outstanding Options shall become exercisable immediately. The Committee may also waive, at the time of an Award or thereafter, the satisfaction of performance goals with respect to Performance Stock Awards and Performance Units upon the occurrence of a Change in Control Event or upon termination resulting from a Change in Control Event, and authorize the issuance of Shares represented by Stock Awards or the payment of amounts under Performance Unit Awards, based in each case on the extent to which performance goals have been achieved, measured through the date a Change in Control Event or termination resulting therefrom occurs. 13. WRITING EVIDENCING AWARDS Each Award granted under the Plan shall be evidenced by a writing which may, but need not, be in the form of an agreement to be signed by the Grantee. The writing shall set forth the nature and size of the Award, its Term, the other terms and conditions thereof, other than those set forth in the Plan, and such other information as the Committee directs. Acceptance of, or receipt of the benefits of, an Award by the Grantee shall be conclusively presumed to be assent to the terms and conditions set forth therein, whether or not the writing is in the form of an agreement to be signed by the Grantee. 14. EXERCISE OF RIGHTS UNDER AWARDS 14.1 A person entitled to exercise an Option may do so by delivery of a written notice to that effect specifying the number of Shares with respect to which the Option is being exercised and any other information the Committee may prescribe. 14.2 The notice of exercise shall be accompanied by payment in full of the purchase price for any Shares to be purchased, with such payment being made in cash, certified or bank cashier's check or money order or in Shares having a Fair Market Value equivalent to the purchase price of such Shares to be purchased, or a combination thereof. If approved by the Committee, payment of the purchase price of an Option may also be made by Note, provided that unless the Shares issued are treasury shares at least the par value of the Shares issued shall be paid in cash or equivalent or Shares as provided above. The Committee shall establish appropriate methods for accepting Shares and may impose such conditions as it deems appropriate on the use of such Shares to exercise an Option. 14.3 Upon exercise of an Option, or after grant of a Stock Award but before a distribution of Shares in satisfaction thereof, the Grantee may request in writing that the Shares to be issued in satisfaction of the Award be issued in the name of the Grantee and another person as joint tenants with right of survivorship or as tenants in common. 14.4 All notices or requests to the Company provided for herein shall be delivered to the Secretary of the Company. 15. EFFECTIVE DATE AND DURATION OF THE PLAN AND DATE OF AWARD 15.1 The Plan shall become effective on November 10, 1994, provided any Awards granted hereunder shall be subject to approval of any governmental body having jurisdiction over the Company with respect to this Plan within the time limits applicable to any such governmental approvals. 15.2 The Plan shall remain in effect until all Awards have been exercised or satisfied in accordance herewith, but no Awards may be granted under the Plan after the date of the first stockholders' meeting held in 1999 or December 31, 1999, whichever first occurs. The terms of any Award may be amended at any time prior to the end of its Term in accordance with and subject to the limitations of the Plan. 15.3 The date of an Award shall be the date on which the Committee's determination to grant the same is final, or such later date as shall be specified by the Committee in connection with its determination. 16. AMENDMENTS TO AWARDS The Committee may at any time unilaterally amend or terminate and cash out any unexercised or unpaid Award, whether earned or unearned, including, but not by way of limitation, Awards earned but not yet paid, and/or substitute another Award of the same or different type, to the extent it deems appropriate; provided, however, that any amendment to (but not termination of) an outstanding Award which, in the opinion of the Committee, is materially adverse to the Grantee, or any amendment or termination which, in the opinion of the Committee, may subject the Grantee to liability under Section 16 of the Exchange Act, shall require the Grantee's consent. It shall be conclusively presumed that any adjustment for changes in capitalization as provided for herein are not adverse to a Grantee. 17. STOCKHOLDER STATUS No person shall have any rights as a stockholder by virtue of the grant of an Award under the Plan, except with respect to Shares actually issued to that person. 18. POSTPONEMENT OR NON-EXERCISE The Company shall not be required to issue any certificate or certificates for Shares upon the exercise of an Option or upon the vesting of a Stock Award granted under the Plan prior to (a) the obtaining of any approval from any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable, (b) the taking of any action in order to comply with restrictions or regulations incident to the maintenance of a public market for its Shares, and (c) the completion of any registration or other qualification of such Shares under any state or Federal law or rulings or regulations of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable. The Company shall not be obligated by virtue of any terms and conditions of any Award or any provisions of the Plan to recognize the exercise of an Option or to sell or issue shares in violation of the Securities Act or the law of any government having jurisdiction thereof. Any postponement or delay by the Company in recognizing the exercise of any Option or in issuing any Shares under a Stock Award or otherwise hereunder shall not extend the Term of an Option nor shorten the Term of any restriction attached to any Stock Award and neither the Company nor its directors or officers shall have any obligation or liability to the Grantee of an Award, to a Successor or to any other person with respect to any Shares as to which the Option shall lapse because of such postponement or as to which issuance under a Stock Award was delayed. 19. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN The Board may terminate, suspend or modify the Plan at any time and in any manner, provided, however, that without stockholder approval the Board will not adopt an amendment that requires stockholder approval under Rule 16b-3. No termination or suspension of the Plan shall adversely affect any right acquired by any Grantee or any Successor under an Award granted before the date of such termination or suspension except to the extent permitted in Section 16. 20. ADJUSTMENTS FOR CORPORATE CHANGES 20.1 In the event of a recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, rights offering, reorganization or liquidation, or any other change in the corporate structure or shares of the Company, the Committee may (a) make such equitable adjustments, designed to protect against dilution or enlargement, as it may deem appropriate in the number and kind of Shares authorized by the Plan and, with respect to outstanding Awards, in the number and kind of Shares covered thereby and in the Option price, and (b) make such arrangements, which shall be binding upon the holders of unexpired Options and outstanding Stock Awards, for the substitution of new Options or Stock Awards for any unexpired Options or Stock Awards then outstanding under the Plan or for the assumption of any such unexpired Options and outstanding Stock Awards. 20.2 In the event that the Company agrees (a) to sell or otherwise dispose of all or substantially all of the Company's assets, or (b) to be wholly or partially liquidated, or (c) to participate in a merger, consolidation or reorganization, or (d) to sell or otherwise dispose of substantially all the assets of, or a majority interest in, a Subsidiary or division, then the Committee may determine that any and all Options granted under the Plan, in situations involving an event described in clauses (a) through (c), and any and all Options granted to employees of the affected Subsidiary or division, in situations described in clause (d), shall be immediately exercisable in full, and any and all Shares issuable pursuant to Stock Awards or cash payable under Performance Units made under the Plan, in situations involving an event described in clauses (a) through (c), and any and all Shares issuable pursuant to Stock Awards or cash payable under Performance Units granted to employees of the affected Subsidiary or division, in situations described in clause (d), shall be immediately issuable or paid in full, as the case may be, based in each case on the extent to which performance goals have been achieved to the date of the event described in clause (a), (b), (c) or (d) above. The Committee may also determine that any Options not exercised, and any Stock Awards or Performance Units with respect to which any restrictions shall not have lapsed or conditions shall not have been satisfied, prior to any such event, or within such period of time thereafter (not to exceed 120 days) as the Committee shall determine, shall terminate. 20.3 The grant of any Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets or the business, assets or stock of a Subsidiary. 21. NON-UNIFORM DETERMINATION The Committee's determination under the Plan including, without limitation, determination of the persons to receive Awards, the form, amount and type of Awards, the terms and provisions of Awards and the written material evidencing such Awards, any amendments to the terms and provisions of any Awards, and the granting or rejecting of applications for delivery of Shares need not be uniform and may be made selectively among otherwise eligible employees whether or not such employees are similarly situated. 22. TAXES 22.1 The Company may pay, withhold or require a Grantee to remit to it amounts sufficient to satisfy the Company's federal, state, local or other tax withholding obligations attributable to any Awards after giving notice to the person entitled to receive such amount, and the Company may defer making payment of any Award if any such tax, charge or assessment may be pending until indemnified to its satisfaction. 22.2 Subject to the consent of the Committee, in connection with (a) the exercise of a Non-Qualified Stock Option or (b) satisfaction of conditions and/or lapse of restrictions on a Stock Award, a Grantee may make an irrevocable election to tender back to the Company Shares received pursuant to (a) or (b), having a Fair Market Value sufficient to satisfy all or part of the Company's total federal, state, local and other tax withholding obligations associated with the transaction. Any such election shall be irrevocable and, except with respect to elections incident to death, retirement, disability or termination of employment, must be made by a Grantee prior to the Tax Date, by delivering written notice to the Secretary of the Company together with such information and documents as the Committee may prescribe. The Committee may disapprove of any election, may suspend or terminate the right to make elections, or may provide with respect to any Award under this Plan that the right to make elections shall not apply to such Award. 22.3 If a Grantee is an officer of the Company and is subject to the provisions of Section 16 of the Exchange Act, then an election to have Shares withheld and any exercise of such right are subject to the following additional restrictions: (a) no exercise shall be made within six months of the grant of the Award, unless made incident to death, retirement, disability or termination of employment; and (b) both the election and exercise must be made during a Window Period, unless made incident to death, retirement, disability or termination of employment, or the election must be made six months prior to the Tax Date. 22.4 If, pursuant to the provisions of the Code, the Tax Date of an Award is deferred and a Grantee elects to have Shares withheld, the full number of Option Shares or Stock Award Shares may be issued but the Grantee shall enter into an agreement unconditionally obligating him or her to tender back to the Company the proper number of Shares on the Tax Date. 23. NONCOMPETITION AND FORFEITURE PROVISION If the Committee so determines, an Award may specify that a Grantee shall forfeit all unexercised, unearned, and/or unpaid Awards, including, but not limited to, Awards earned but not yet paid if, in the opinion of the Committee, the Grantee, at any time during the period of Grantee's employment and for one (1) year thereafter, without the written consent of the Committee, engages directly or indirectly in any manner or capacity as principal, agent, partner, officer, director, employee, or otherwise, in any business or activity competitive with the business conducted by the Company, in the geographic area in which the Company does business, or in any manner which is inimical to the best interests of the Company. 24. TENURE Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any participant the right to continue in the employment of the Company or any Subsidiary or affect any right which the Company or Subsidiary has to terminate the employment of such participant. An employee terminated for cause, as determined by the Company, shall forfeit all of his rights under the Plan, except as to Options already exercised and Stock Awards on which restrictions have already lapsed. 25. APPLICATION OF PROCEEDS The proceeds received by the Company from the sale of its Shares under the Plan shall be used for general corporate purposes of the Company and its Subsidiaries. 26. OTHER ACTIONS Nothing in the Plan shall be construed to limit the authority of the Company to exercise its corporate rights and powers, including, by way of illustration and not by way of limitation, the right to grant options or pay bonuses for proper corporate purposes otherwise than under the Plan to any employee or any other person, firm, corporation, association or other entity, or to grant options to, or assume options of, any person in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of all or any part of the business and assets of any person, firm, corporation, association or other entity. 27. GENDER AND NUMBER Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular. 28. REQUIREMENTS OF LAW, GOVERNING LAW The granting of Awards and the issuance of Shares shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Missouri. 29. EFFECT ON OTHER PLANS Participation in this Plan shall not affect an employee's eligibility to participate in any other benefit or incentive plan of the Company or a Subsidiary. Any Awards made pursuant hereto shall not be used in determining the benefits provided under any other plan of the Company or a Subsidiary unless specifically provided therein. EX-10.32 6 SHD AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement is entered into as of January 26, 1996 by and between AMC ENTERTAINMENT INC., a Delaware corporation, and its wholly owned subsidiary, AMERICAN MULTI-CINEMA, INC., a Missouri corporation (collectively, the "Company"), and STANLEY H. DURWOOD (the "Employee"). WHEREAS, Employee has demonstrated continued vision, innovation, knowledge and experience in the development of the motion picture exhibition industry, which has contributed to the growth and financial stability of the Company and has caused the Company to become a leader in the motion picture exhibition industry; and WHEREAS, the Company desires to provide certain assurances to Employee in consideration of his willingness to continue to exercise those capabilities, and the Company does not intend to employ any employee in a position superior to Employee's current title, status, duties, functions, power or otherwise without Employee's written consent, or to effectuate a change in the nature of Employee's duties, services, terms or conditions of employment without Employee's written consent; and WHEREAS, the Company desires to enter into an Employment Agreement with Employee wherein he will continue to be employed as Chief Executive Officer of the Company and serve as President and Chairman of the Board. In consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows: 1. Duties of Employee: Certain Covenants of the Company. (a) Employee shall be employed as Chief Executive Officer of the Company and, subject to the exercise by the Board of Directors of its fiduciary duties and powers under the Company's bylaws, will serve as its President and Chairman of the Board. Employee shall devote his full time and attention to the business of the Company and its affiliates, as reasonably directed from time to time by the Board of Directors of the Company. (b) Company shall not, without Employee's written consent, (i) require Employee to perform duties or services other than those comparable in scope, span, term and dignity to those he is presently performing; (ii) diminish or reduce the scope or span of Employee's authority or responsibilities heretofore exercised as Chief Executive Officer of the Company; (iii) change the location of Employee's office or of the Company's principal executive offices to a place which is more than 50 miles from the location of such office at the date of execution of this Agreement, or change the location of Employee's office from the location of the Company's principal executive offices; or (iv) reduce the base salary paid to Employee by Company in any fiscal year below the highest amount determined by the Compensation Committee in accordance with Section 3 hereof, or reduce any Employee Benefits (as defined below) provided to Employee below amounts generally provided to all other executives of the Company. 2. Term. The term of Employee's employment with the Company pursuant to this Agreement shall be from January 26, 1996 through January 26, 1999, subject, however, to termination of Employee's employment pursuant to Section 4 hereafter. On each January 26 hereafter, commencing in 1997, one year shall be added to the term of Employee's employment with the Company under this Agreement, so that as of each January 26 the term of Employer's employment hereunder shall be three years. 3. Compensation. (a) Employee shall receive (i) an annual base salary as determined from time to time by the Compensation Committee of the Board of Directors pursuant to paragraph 3(b) below, but not less than Five Hundred Thousand Dollars ($500,000) per annum, payable bi-weekly during the term of this Agreement, plus (ii) payments and awards under the Company's Executive Incentive Program, 1994 Stock Option and Incentive Plan and any other bonus or incentive plan in effect for executive officers from time to time, at a level reflecting his position as Chief Executive Officer, as provided in paragraph 3(b) below, plus (iii) such other awards or amounts as may be made or paid under any other compensatory arrangement, stock option plan or employee benefit plan of the Company (other than those provided for in the last sentence of this paragraph 3(a)), if any, as determined from time to time in the sole discretion of the Compensation Committee of the Board of Directors of the Company. All or a portion of any earned bonus may be deferred for a reasonable period of time determined by the Compensation Committee of the Board of Directors of the Company. Employee shall also receive his appropriate share of all benefits ("Employee Benefits") existing from time to time that inure to the benefit of all other executives of the Company, as determined in the sole discretion of the Board of Directors of the Company, such as group insurance, pension plans, thrift plans, stock purchase plans and the like. (b) Not less frequently than annually, and no later than April 30 of each year commencing in 1997, the Compensation Committee of the Board of Directors will review Employee's compensation package referred to in clauses 3(a)(i) and (ii) above and make such increase in Employee's annual base salary, annual incentive cash bonus, stock incentives and other incentives, if any, as may be required to provide Employee with compensation that is comparable to that afforded chief executive officers of comparable companies (which may include companies in different industries) and not below a level which is consistent with the Company's compensation policy for the Chief Executive Officer as it exists on the date of this agreement. Each such increase shall be effective as of the first day of the fiscal year in which such April 30 occurs. (c) The Company shall use its best efforts to provide Employee at the Company's expense with a life insurance policy on his life in an amount up to $5,000,000 and pay the premiums thereon, and shall pay Employee annually, in addition to the other compensation provided for in this Section 3, an amount equal to the incremental income tax incurred by Employee as a result of the payment of such premiums, inclusive of the additional income taxes owed by Employee upon the Company's payment of such obligation. 4. Termination; Severance. (a) Termination Without Severance. The employment of Employee with the Company may be terminated without severance (i) upon Employee's resignation or voluntary departure from the Company (except under the circumstances described in paragraph 4(b) below); or (ii) if, during the term of this Agreement, Employee engages in intentional misconduct or a knowing violation of law or breaches his duty of loyalty to the Company. (b) Termination With Severance. (i) The employment of Employee with the Company may be terminated with severance (A) upon the Employee's death, in which event the severance compensation payment shall be paid to Employee's estate; (B) upon the Employee's disability which renders him unable to perform his usual and customary duties for a period of 180 consecutive days; (C) without cause, by the Board of Directors of the Company; or (D) by the Employee if the Company violates any of its covenants herein, including those in Section 1. (ii) Upon any termination of Employee's employment pursuant to this paragraph 4(b), the Company shall elect and pay to Employee one of the two alternative severance compensation payments described in clause (A) or (B) below.: (A) Installment Payments. An amount equal to three times the sum of annual base salary of Employee in effect at the time of termination plus the average of all annual incentive or discretionary cash bonuses paid to Employee with respect to the three fiscal years preceding the year in which such termination occurred, payable in advance at the beginning of each month in equal monthly installments over the three years immediately following the date of termination; OR (B) Lump-sum Payment. Within 30 days of the date of termination, Employee shall receive an amount equal to the net present value of the payments described in paragraph 4(b)(ii)(A) above. The discount of such payments to their net present value shall utilize a discount rate equal to the prime rate of interest published in The Wall Street Journal on the date of termination (such prime rate currently defined in The Wall Street Journal as the base rate on corporate loans posted by at least 75% of the nation's 30 largest banks) or if such rate is not available, then the prime rate of interest of Boatmen's Bank of Kansas City in effect on the date of termination (hereinafter the "Prime Rate"). The Company shall have the right to elect either the severance compensation described in clause (A) or (B) above, at its sole discretion. 5. Confidentiality. Employee acknowledges that he knows and in the future will know information relating to the Company and its affiliated companies and their respective operations that is confiden- tial or a trade secret. Such information includes information, whether obtained in writing, in conversation or otherwise, concerning corporate strategy, intent and plans, business operations, financing, pricing, costs, budgets, equipment, potential locations of new screens, the status, scope and terms of pending negotiations and transactions, the terms of existing or proposed leases, contracts and obligations, and corporate and financial reports. Such confidential or trade secret information does not, however, include information in the public domain unless Employee has, without authority, made it public. Employee agrees: (i) not to disclose such information to anyone except in confidence and as is necessary to the performance of duties for the Company; (ii) to keep such information confidential; (iii) to take appropriate precautions to maintain the confidentiality of such information; and (iv) not to use such information for personal benefit or the benefit of any competitor of the Company or any other person. Upon termination of his employment with the Company, Employee shall return all materials in his possession or under his control which were prepared by or relate to the Company or its affiliates. 6. Survival. Upon termination of Employee's employment with the Company, the respective rights and obligations of the Company and Employee under Sections 1, 2 and 3 hereof shall cease. However, the Company's and Employee's obligations under Sections 4 and 5 hereof shall survive the termination of Employee's employment with the Company. 7. Assumption. The Company shall obtain the express written assumption of this Agreement by any successor of the Company or any assignee of all or substantially all of the Company's assets at or prior to such succession or assignment. Such assumption shall not relieve the Company of any liability under this Agreement. 8. Miscellaneous Provisions. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement shall be governed by the laws of the State of Missouri. This Agreement represents the entire agreement of the parties hereto with respect to the subject matter hereof and shall not be amended except by a written agreement signed by all the parties hereto. This Agreement supersedes any prior oral or written agreements or understandings between the Company, or any affiliate of the Company, and Employee concerning Employee's relationship and employment with the Company or any affiliate of the Company. This Agreement shall not be assignable by the Company without prior written consent of the Employee. IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year first above written. "COMPANY" AMC ENTERTAINMENT INC. By:/s/ Peter C. Brown By: /s/ Philip M. Singleton Peter C. Brown, Philip M. Singleton, Executive Vice President Executive Vice President and Chief Financial Officer and Chief Operating Officer AMERICAN MULTI-CINEMA, INC. By:/s/ Peter C. Brown By: /s/ Philip M. Singleton Peter C. Brown, Philip M. Singleton, Executive Vice President Executive Vice President and Chief Financial Officer and Chief Operating Officer "EMPLOYEE" /s/ Stanley H. Durwood Stanley H. Durwood EX-10.33 7 FAY AGREEMENT EXHIBIT 10.33 REAL ESTATE CONTRACT THIS REAL ESTATE CONTRACT (the "Contract") is made and entered into this 1st day of November, 1995, by and among RICHARD FAY and MARY FAY, husband and wife (the "Sellers"), and AMERICAN MULTI-CINEMA INC., a Missouri corporation (the "Buyer"). WITNESSETH: Sellers hereby sell and agree to convey to Buyer and Buyer hereby purchases the real estate legally described in Exhibit A attached hereto and incorporated herein by this reference, together with all improvements thereon, including, if any, central air conditioning, gas heater, attic fan, lighting, heating and plumbing equipment and fixtures, linoleum, venetian blinds, storm windows and doors, screens, curtains, curtain and drapery rods, keys, all wall-to-wall carpeting, garbage disposal, dishwasher, dehumidifier, and electric garage door opener in Westchester County, State of New York, commonly referred to as 44 Dusk Drive, New Rochelle, New York (the "Premises"). Subject, however, to the conditions stated herein and subject to any recorded restrictions, easements, reservations, party wall agreements, community contracts and existing zoning laws such as are permitted under the terms hereof. 1. Purchase Price. The purchase price is $500,000 which Buyer agrees to pay as follows: 1.1 On the Closing Date (as hereinafter defined), Buyer shall deliver by wire transfer to Merrill Lynch Credit Corporation ("Merrill Lynch") a portion of the purchase price in the amount of $176,813.50, in full and complete satisfaction and payment of the existing mortgage encumbering the Premises. The wire transfer instructions for Merrill Lynch are as follows: 1.2 Customer Wire Account Account #: 2181409385 Barnette Bank of Jacksonville 100 Laura St. Jacksonville, FL ABA#: 063000047 Client Name: Richard & Mary Fay Account #: 5003610 1.3 On the Closing Date Buyer shall deliver by wire transfer to, or for the account of, Sellers the remainder of the purchase price, as adjusted by any prorations required hereby. The wire transfer instructions for Sellers are as follows: 1.4 Routing # 021000089 Account # 25092087 Richard M. Fay Mary B. Fay Citibank 1010 Morris Park Avenue Bronx, New York 10462 2. Taxes. Sellers shall pay all installments of taxes and special assessments on the Premises for the calendar years prior to 1995. All taxes and assessments on the Premises for 1995 shall be prorated between Buyer and Sellers as of the date of closing. If the amount of such taxes cannot be ascertained, proration shall be computed on the amount of the annual installment of assessments and taxes for 1994. 3. Title Insurance. Buyer, at its sole expense, shall obtain an ALTA Owner's Residential Title Insurance Policy, issued by a title insurance company authorized to insure titles in the state of New York (the "Title Company") in the amount of the purchase price, insuring a mer- chantable fee simple title vested in Buyer as of the date of recording the deed as provided herein, subject only to those conditions and exceptions permitted hereunder. 4. Title Insurance Commitment. Buyer shall obtain a commitment (the "Commitment") issued by the Title Company showing the status of the title to the Premises and the Title Company's commitment to insure Buyer's title as herein required. Buyer shall prior to the Closing Date, advise Sellers of any objections to the state of title as shown in the Commitment which result in title being unmarketable. Sellers shall have until closing to make such corrections in the title required by Buyer in such manner as shall be required by the Title Company to delete the particular exception(s) in the final policy. In the event such defects in title are not corrected prior to closing, this Contract shall be null and void at Buyer's option unless Buyer shall advise Seller of Buyer's election to accept title subject to such defects. 5. Closing. The closing of this transaction shall take place at the offices of the Title Company on November 3, 1995 the ("Closing Date"), or at such other date and place as may be agreed upon by Seller and Buyer. On the Closing Date, Sellers shall deliver to Buyer a general warranty deed, properly executed, conveying the Premises free and clear of all liens and encumbrances except as herein permitted. On the Closing Date Buyer shall deliver an amount equal to the purchase price in accordance with the instructions set forth in Section 1 above. At closing, the general warranty deed, and all other closing documents shall be placed in escrow with the Title Company, and the Title Company as escrow agent shall then inspect the public records in Westchester County, New York, to ascertain if: (a) title to the Premises remains unchanged since the date of the Commitment; and (b) any required corrections of title have been made. If the inspection shows that title is satisfactory according to the terms hereof, the Title Company shall record the documents. The policy of title insurance shall be delivered to Buyer as soon as issued in the usual course of business. All prorations required hereunder shall be computed as of the Closing Date. Buyer shall pay the premium for the title policy and for recording the general warranty deed. All other recording costs and escrow fees shall be paid by Buyer. 6. Possession. Sellers shall deliver possession of the Premises to Buyer upon closing. 7. Condition of Premises. Except as provided herein, Buyer agrees that it has inspected the Premises and are thoroughly familiar and satis- fied with its present condition. Sellers have not made and do not now make any warranties or representations about the past, present or future condition of the Premises or any other matter affecting or relating to the Premises. 8. Insurance. Sellers hereby agree to maintain fire and other casualty insurance on the Premises until the Closing Date. If, before the Closing Date, any of the improvements on the Premises are destroyed or substantially damaged by casualty Buyer shall have the option of enforcing this Contract and receiving the proceeds or an assignment of the proceeds of such insurance or canceling this Contract by written notice to Sellers. If this Contract is cancelled, all deposits and payments made hereunder shall immediately be returned to the Buyer. 9. Utilities. The parties agree that all utilities to the Premises shall be read on the Closing Date and transferred to Buyer's name. Sellers shall be responsible for all utilities which accrue prior to Buyer taking possession of the Premises. 10. Real Estate Broker's Commissions. Sellers hereby represent that there are no real estate broker's commissions due on this sale. 11. Entire Agreement. This Contract contains the entire agreement between Sellers and Buyer and supersedes all prior oral or written agreements between the parties respecting the Premises. The parties agree that there are no terms, conditions, promises, understandings, statements or representations, express or implied, concerning the sale contemplated hereby, except as stated herein. 12. Contract Binding Upon Heirs, Etc. The provisions of this Contract shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, legal representatives, successors and assigns. The terms of this Contract shall survive the closing of this transaction. 13. Captions. The paragraph captions in this Contract have been inserted for convenience of reference only and shall in no way modify or restrict any provision hereof, or be used to construe any of such provisions. 14. Notices. All written notices required or permitted hereunder shall be effective upon receipt and shall be hand delivered or mailed by Certified Mail-Return Receipt Requested to the parties at the following addresses, provided that either party may change the designated address by written notice to the other party: Sellers: Richard Fay Mary Fay 44 Dusk Drive New Rochelle, New York 10804 Buyer: American Multi-Cinema Inc. 106 West 14th Street P. O. Box 419615 Kansas City, Missouri 64141-6615 Attn: Jeff Schnabel With a copy to: Larry B. Huebner Gage & Tucker L.C. P. O. Box 418200 Kansas City, Missouri 64141 15. Counterparts. This Contract may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Delivery of a facsimile copy of this Contract executed by a party hereto shall have the same force and effect as delivery of an original counterpart hereof executed by such party. IN WITNESS WHEREOF, the parties have executed this Real Estate Contract the day and year first above written. BUYER AMERICAN MULTI-CINEMA INC., a Missouri corporation By: /s/ Stanley H. Durwood ATTEST: Name: Title: __________________________ Name:_____________________ Title:______________________ SELLERS /s/ Richard Fay Richard Fay /s/ Mary Fay Mary Fay EX-13 8 ANNUAL REPORT (Inside Front Cover) AMC Entertainment, Inc. Corporate Profile AMC Entertainment Inc., through its wholly owned subsidiary American Multi-Cinema Inc. (AMC), is one of the largest motion picture exhibition circuits in the world. Over 110 million people watched a movie in an AMC-operated theatre during fiscal 1996. Following are some of the characteristics that distinguish AMC from its competitors. Nearly 75% of AMC screens are located in the top 20 U.S. markets. AMC's average screen count per theatre at 7.6 is higher than the industry average of 4.9. Almost 39% of AMC's screens are in theatres with 10 or more screens and 90% of its screens are in theatres with six or more screens. AMC's innovative theatre technology ranges from computerized box offices to High Impact Theatre Systems with brighter pictures and clearer sound. AMC is the industry leader in value-added services such as MovieWatcher , the first nationwide frequent movie-goer program. As of March 28, 1996, the company owned or operated 226 theatres with 1,719 screens in 22 states and the District of Columbia. AMC common stock trades on the American and Pacific Stock Exchanges under the symbol AEN. The preferred stock is traded on the American Stock Exchange under the symbol AEN Pr. The company is headquartered in Kansas City, Missouri. Cover Photo AMC Entertainment Inc. is changing the way the world sees movies. Table of Contents Financial and Operating Highlights 1 Report to Shareholders 2 Operating Report 4 Financial Report 5 The Era of the AMC Megaplex 6 AMC Theatre Locations 14 Selected Financial Data 18 Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Responsibility for Preparation of Financial Statements 26 Report of Independent Accountants 27 Consolidated Financial Statements 28 Notes to Consolidated Financial Statements 34 tatements of Operations by Quarter 50 Investor Information 52 Executive Officers and Directors 53 (Page 1) Financial and Operating Highlights (In thousands, except number of theatres and screens) March 28 March 30, March 31, April 1, April 2, 1996 (1) 1995 (1) 1994 (1) 1993 (1) 1992 (1) Domestic operated theatres: Total revenues $657,872 $564,664 $ 587,453 $404,465 $406,964 EBITDA (2) $112,555 $88,942 $ 98,784 $ 57,345 $ 43,178 Number of patrons 114,506 103,148 107,710 99,957 98,417 Number of theatres 226 232 236 243 253 Number of screens 1,719 1,630 1,603 1,617 1,617 Screens per theatre 7.6 7.0 6.8 6.7 6.4 (1) Fiscal year April 2, 1992 consists of 53 weeks. All other fiscal years have 52 weeks. (2) Represents operating income plus depreciation and amortization plus estimated loss on future disposition of assets. GRAPH Report to Shareholders (Callout): In fiscal 1996 AMC achieved the highest revenues and cash flows in its history. I am pleased to report excellent results for fiscal 1996. The company achieved the highest revenues and cash flows in its history. Our new generation of theatres or "megaplexes" opened to rave reviews and extraordinary operating results, totally redefining the moviegoing experience. The company also completed a major debt refinancing, positioning AMC as one of the most financially sound companies in the industry. Additionally, we made a significant stride on the international front with the completion of construction of our first theatre in Asia. Financial Results Total revenues increased 16.5% to a record $657.9 million from $564.7 million last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 26.5% to $112.6 million compared to $88.9 million for last year. EBITDA was also 13.9% higher than fiscal 1994's record $98.8 million. Earnings before income taxes and extraordinary item increased 86.8% to $46.7 million from $25.0 million in fiscal 1995. Earnings before extra-ordinary item declined 19.4% to $27.4 million from $34.0 million last year due primarily to a $19.8 million tax benefit recorded last year. After deducting for an extraordinary loss of $19.4 million related to a debt refinancing, net earnings were $8.0 million in fiscal 1996 com-pared to net earnings of $34.0 million last year. On a per share basis, earn-ings before extraordinary item, after deducting preferred dividends, were $1.21 in fiscal 1996 compared to $1.63 per share in fiscal 1995. After extraordinary item and preferred dividends, net earnings per share were $.06 compared to net earnings of $1.63 per share last year. Debt Refinancing During the third quarter we com-pleted a major debt refinancing transaction which involved retiring substantially all of our outstanding public debt securities as well as arranging a new $425 million revolving credit facility. Completion of the refinancing transaction represents another significant financial milestone for the company. It lowered our interest costs and increased our available credit which we will use to continue the implementation of our highly successful megaplex strategy. Strategic Growth Initiative AMC once again changed the way people see movies when it opened the first and largest megaplex in the United States, the AMC Grand 24 in Dallas, Texas. During fiscal 1996 we opened four additional mega-plexes and expanded two other theatres to megaplex status. All have achieved excellent operating results and continue to rank among the most successful theatres in the industry. The outstanding results of the megaplex concept in the United States have reinforced our com-mitment to building large theatres in strategic U.S. and select inter-national markets. The under-screened worldwide market as well as the growing global interest in filmed entertainment present a tremendous international growth opportunity for AMC. Our international expansion plans also progressed significantly in fiscal 1996. The AMC Canal City 13 in Fukuoka, Japan opened early in fiscal 1997. With more screens than any other theatre in Japan, the Canal City 13 represents AMC's first theatre in Asia. Construction also began this year on the com-pany's next international theatre, the AMC Arrabida 20 in Porto, Portugal, which is scheduled to open in the fall of 1996. Plans to build our second Pacific Rim theatre, the AMC Festival Walk 11 in Hong Kong, were announced this year as well. In total AMC added 150 new and expansion screens in over a dozen locations throughout the United States in fiscal 1996 and began con-struction on over 200 additional domestic and inter-national screens. This year's report updates our growth strategy and includes a detailed discussion of our expansion schedule. It also highlights our continuing efforts to increase atten-dance and revenues through exclusive AMC innovative marketing and customer service programs. We look forward to continued success in fiscal 1997 and beyond as we move closer to our ultimate goal of becoming the world's premier motion picture exhibition company. AMC is literally changing the way the world sees movies. /s/ Stanley H. Durwood Chairman of the Board, Chief Executive Officer and President May 20, 1996 (Callout): In total AMC added 150 new and expansion screens in over a dozen locations throughout the United States in fiscal 1996 and began construction on over 200 additional domestic and international screens. Operating Report In fiscal 1996 we continued to increase attendance and control expenses which is our simple but effective operating strategy. Our operating plan not only focuses on improving efficiencies but also emphasizes key personnel develop-ment that will enhance our ability to expand the company worldwide. Since the successful implemen-tation of a cost-containment plan four years ago, operating expenses have decreased 14% from $1.71 per patron in fiscal 1992 to $1.47 per patron at the close of the current year. We achieved this performance while continuing to deliver the finest moviegoing experience in the industry. The new generation of AMC megaplexes opened this year is forming the foundation of our future in the era of the AMC megaplex. This year's success validates our commitment to growth and strengthens AMC's leadership position in the motion picture exhibition industry. /s/ Philip M. Singleton Executive Vice President and Chief Operating Officer May 20, 1996 (Callout): The new generation of AMC megaplexes opened this year is forming the foundation of our future in the era of the AMC megaplex. Financial Report With the completion of a major refinancing transaction in fiscal 1996, AMC's financial picture continued to develop positively. The refinanc-ing, which was completed in the third quarter, involved retiring substantially all of our high coupon public debt as well as arranging the largest bank facility in the history of our industry. This $425 million facility, along with the tremendous cash flow that the we generate, gives us the financial capacity to execute our successful megaplex or "big store" expansion strategy. The refinancing represents the third major step in a financial evolu-tion that started in fiscal 1993 with a $200 million recapitalization that solidified AMC's balance sheet. The evolution continued in fiscal 1994 with the issuance of $100 million of convertible preferred stock which created a solid cushion of equity capital for our growth plans. AMC now stands as perhaps the best capitalized company in the motion picture exhibition industry. This position should allow us to execute our strategic plan, and in so doing, continue to increase the value of the company. /s/Peter C. Brown Executive Vice President and Chief Financial Officer May 20, 1996 (Callout): AMC now stands as perhaps the best capitalized company in the motion picture exhibition industry. (Callout): AMC continues to execute its strategy of building megaplex theatres in strategic U.S. and select international markets. These new generation theatres offer patrons a new and invigorating moviegoing experience while generating superior operating results. Future AMC megaplexes may have as many as 30 screens, occupy as much as 100,000 square feet and contain up to 6,000 seats. An AMC megaplex theatre provides patrons with a broader range of films and a superior viewing environment by incorporating AMC's industry-leading innovations. These innovations include computerized ticketing, stadium-style seating with extra-wide row spacing, plush high back seats with cupholder armrests, Sony Dynamic Digital Sound (SDDS ) and AMC's exclusive High Impact Theatre System (HITS ) which includes Torus compound-curved screens for maximum picture clarity and brilliance. The Era of the AMC Megaplex The introduction of the AMC megaplex theatre is redefining moviegoing and setting new industry standards. The success seen from the megaplexes opened to date confirms that our customers desire a quality, out-of-home enter-tainment experience. AMC's new and innovative entertainment experience will appeal to moviegoers around the world. Fiscal 1996 Openings From the record-breaking premiere of the AMC Grand 24 in Dallas on May 25,1995 to the opening of the AMC Promenade 16 in Los Angeles on March 28, 1996, virtually every new theatre opened has dramatically exceeded expectations. In fiscal 1996 AMC added 150 screens, 114 of which were at new locations and 36 of which were expansions of existing theatres. Consistent with our megaplex strategy, three of the new locations and two of the expanded theatres offer 20 or more screens. The Success of the AMC Megaplex AMC's new megaplex theatres have quickly became the dominant force within their markets. Since opening, the AMC Grand 24 in Dallas has become one of the highest grossing theatre complexes in North America. Also, the AMC Mission Valley 20 in San Diego is consistently among the industry's top five grossing theatre complexes and is often the highest grossing theatre in the United States for individual films. For example, the theatre achieved the highest opening week gross in the U.S. for the film "Jumanji." The AMC Promenade 16 in Los Angeles is another success story. During its first week of operation, the Promenade's admission revenues for each new film ranked among the top five in the country. Finally, the AMC Independence 20 is one of the top two performing theatres in the Kansas City market sharing top billing with AMC's well-established Ward Parkway 22 theatre. New AMC megaplexes should fuel enhanced, company-wide financial performance by generating much higher operating income levels. In fiscal 1996 operating income per patron in AMC theatres with 18 or more screens was 48% higher than those with fewer than 18 screens. Maximizing Attendance and Revenue In addition to our megaplex strategy we remain committed to increasing attendance and revenue at existing theatres. Year after year AMC theatres generate some of the industry's highest attendance and revenues per screen. We believe these results are achieved by our unyielding insistence on providing patrons with the finest and most enjoyable moviegoing experience possible. Recognized industry-wide as the leader in both customer service and marketing, individual AMC theatre managers routinely earn coveted industry awards in both categories. At the recent National Association of Theatre Owners (NATO) ShoWest convention in Las Vegas, AMC theatre managers earned first place awards in customer service. AMC theatre managers also swept the prestigious Hollywood Reporter Theatre Excellence and Marketing (TEAM) honors at the same convention. AMC develops national marketing programs in cooperation with major partners such as the Coca-Cola Company, the Walt Disney Company and major league sports franchises and sporting events including the NFL Super Bowl to drive incremental attendance. National promotions are augmented by local programs such as special early morning shows, midnight shows and children's matinees, which also generate additional attendance. The AMC MovieWatcher is our premier marketing program and the only one of its kind in the industry. This frequent moviegoer club with almost one million of our best customers enrolled as members rewards frequent AMC moviegoing. The AMC MovieWatcher program has strengthened AMC brand loyalty and provides an invaluable database of avid AMC moviegoers-a powerful tool used for research, analysis and direct marketing programs. In addition to revenue from the sale of tickets, concession sales are an important source of revenue at an AMC theatre. We continually review our concession operations to ensure customers a broad selection of the highest quality products as well as quick, courteous service. New methods designed to cut average transaction time in half without eroding service quality are currently in development and are being tested at many of our new megaplexes. The AMC concession menu is constantly evolving to meet the tastes of our ever-changing customer. New items such as frozen carbonated beverages, bulk candy, bottled water and fruit drinks complement AMC's traditional concession menu. Fiscal 1997 Scheduled Openings At the close of this year 200 screens were under construction. The pace of new theatre activity will increase dramatically in fiscal 1997 as new screen growth is expected to more than double fiscal 1996 performance. Fiscal 1997 will also mark the debut of the first AMC 30-screen megaplex located in Ontario, California. The AMC Ontario Mills 30 will be the largest theatre in the United States when it opens in the third quarter. This new 30-plex and other new AMC megaplexes will continue to revolutionize the industry and change the way people see movies. By fiscal year-end, over 300 screens will be open or under construction. International Expansion As international box-office revenues continue to grow at a rapid rate, the international market is becoming a larger component of a film's profit-ability. This fact coupled with a short-age of quality theatres in many coun-tries outside the United States has created a tremendous international growth opportunity. AMC's first location in Asia, the AMC Canal City 13, opened on April 20, 1996 in Fukuoka, Japan. The AMC Canal City 13, part of the 2.5 million square-foot Canal City Hakata Project, is the largest in Japan in terms of number of screens. The theatre complex offers Japanese moviegoers their first opportunity to enjoy the new AMC megaplex entertainment experience. International screens presently under construction include the AMC Arrabida 20 in Porto, in northern Portugal, which is scheduled to open in the fall of 1996. The AMC Arrabida 20 is located in a major entertainment and retail center and is expected to change moviegoing in Portugal's second largest city. We also announced plans to build AMC's second Pacific Rim theatre, the AMC Festival Walk 11 in Hong Kong. The AMC Festival Walk 11 will be Hong Kong's largest theatre in terms of screen count and will be located in an innovative, entertain-ment--oriented center which is expected to draw customers from as far away as southern China. AMC has long been recognized as a leader in the exhibition industry. The company is considered the forerunner of nearly every major innovation in the industry. This leadership and vision continues as we move toward the millennium-changing the way people see movies-and toward our objective of becoming the world's premier motion picture exhibition company. AMC theatre locations (* Openings expected in fiscal 1997) (** Expanding to 12 screens) Arizona Phoenix Bell Plaza 8 Fiesta Village 6 Gateway Village 10 Laguna Village 10 Lakes 6 Metro Village 6 Sunvalley Plaza 10 Three Fountains 4 Town & Country 6 * Arrowhead 14 * Ahwatukee 24 Tucson El Con 6 Valencia 4 California Bakersfield Stockdale 6 Los Angeles Alondra 6 Burbank 14 Century City 14 Chino Town Square 10 Commercenter 6 Fine Arts 1 Fullerton 10 Hermosa Beach 6 Main Place 6 Marina Pacifica 6 ** Media Center 8 Media Center 6 Montebello 10 Old Pasadena 8 Orange Mall 6 Pine Square 16 Promenade 16 Puente East 4 Puente Plaza 10 Puente West 6 Rolling Hills 6 Santa Monica 7 Victor Valley 10 * Norwalk 20 * Ontario Mills 30 San Diego La Jolla 12 Santee Village 8 Wiegand Plaza 8 Mission Valley 20 San Francisco Kabuki 8 Serramonte 6 Vallejo Plaza 6 San Jose Milpitas 10 Oakridge 6 Saratoga 6 Sunnyvale 6 Town & Country 1 * Mission College 20 Colorado Colorado Springs Tiffany Square 6 Denver Buckingham 4 Buckingham 6 Colorado Plaza 6 Seven Hills 10 Southbridge Plaza 8 Tiffany Plaza 6 Tivoli 12 Westminster 5 Westminster 6 Delaware Philadelphia Cinema Center 3 Concord 2 District of Columbia Washington, D.C. Union Station 9 Florida Gainesville Oaks 6 Oaks West 4 Jacksonville Orange Park 5 Regency 6 Regency Mall 8 Miami Cocowalk 16 Coral Ridge 10 Fashion Island 16 Kendall Town & Country 10 Mall of the Americas 14 Ocean Walk 10 Omni 4 Omni 6 Ridge Plaza 8 Sheridan 12 South Dade 8 Orlando/Daytona Daytona 6 Fashion Village 8 Interstate 6 Lake Square 12 Merritt 6 Merritt Square 7/12 Pleasure Island 10 Volusia Square 8 Ft. Myers * Merchant Crossing 16 Tallahassee * Tallahassee 20 Tampa/ St. Petersburg Clearwater 5 Countryside 6 Crossroads Center 8 Horizon Park 4 Merchants Walk 10 Old Hyde Park 7 Regency 20 Sarasota 6 Sarasota Exp 7/12 Seminole 8 Tri-City Plaza 8 Twin Bays 4 Tyrone Square 6 Varsity 6 West Palm Beach Cross County 8 Mizner Park 8 Georgia Atlanta Cobb Place 8 Colonial 18 Galleria 8 Mansell 14 Northlake Festival 8 Phipps Plaza 14 * Market Square 16 Illinois Carbondale University Place 8 Chicago Barrington Square 6 Ogden 6 Kansas Kansas City Indian Springs 6 Oak Park 6 Oak Park 7/12 Louisiana New Orleans Galleria 8 Shreveport Bossier 6 St. Vincents 6 Maryland Washington, D.C. Academy 6 Academy 8 Carrollton 6 City Place 10 Country Club Mall 6 Rivertowne 12 Massachusetts Springfield Hampshire 6 Mountain Farms 4 Michigan Detroit Abbey 8 Americana West 6 Bel-Air Centre 10 Eastland 2 Eastland Mall 5 Hampton 4 Laurel Park 10 Maple 3 Old Orchard 3 Southfield City 12 Southland 4 Sterling Center 10 Towne 4 Wonderland 6 Woods Complex 6 Lansing Elmwood Plaza 8 Meridian 1/4 Meridian 5/8 Meridian Mall 6 Missouri Kansas City Bannister Square 6 Crown Center 6 Independence 20 Metro North 6 Metro North Plaza 7/12 Summit 4 Ward Parkway 22 St. Louis Crestwood Plaza 10 Esquire 7 Galleria 6 Northwest Square 10 Regency 8 Village 6 Nebraska Omaha Westroads 2 Westroads 3/8 New Jersey Metro New York Headquarters Plaza 10 Rockaway 6 Rockaway 7/12 Philadelphia Deptford 8 Marlton 8 Millside 4 Quakerbridge 4 Vineland 4 New York Buffalo Como 8 Maple Ridge 8 North Carolina Charlotte * Carolina Pavilion 22 Ohio Columbus Dublin Village 18 Eastland Centre 8 Eastland Plaza 6 Westerville 6 * Lennox 24 Oklahoma Oklahoma City Memorial Square 8 Northwest 8 Robinson Crossing 6 Pennsylvania Harrisburg Colonial Commons 9 Eden 2 Hampden Center 8 Wonderland 4 York 4 Philadelphia Andorra 8 Anthony Wayne 2 Barn 5 Granite Run Mall 8 Marple 10 Olde City 2 Orleans 8 Painters Crossing 9 Plaza 2 Quakertown 6 309 Cinema 9 Tilghman Square 8 25th Street 4 Woodhaven 10 Texas Dallas/Fort Worth Central Park 7 Forum 6 Glen Lakes 8 Grand 24 Green Oaks 8 Highland Park 4 Hulen 10 Irving 8 Prestonwood 5 Sundance 11 Towne Crossing 8 * Palace 9 Houston Almeda Square 5 Commerce Park 8 Deerbrook 8 Festival 6 Greens Crossing 6 Meyer Park 16 Northoaks 6 Town & Country 10 Westchase 5 Willowbrook 10 * Deerbrook 24 * Majestic 30 San Antonio Rivercenter 9 Virginia Norfolk/Portsmouth/Newport News Circle 4 Coliseum 4 Lynnhaven 8 Newmarket 4 Patrick Henry 7 Washington, D.C. Courthouse Plaza 8 Potomac Mills 15 Skyline Center 12 Washington Seattle/Tacoma Center Plaza 6 Narrows Plaza 8 Seatac 6 Japan Fukuoka Canal City Hakata 13 (opened April 20, 1996) Portugal Porto Arrabida 20* (opening Fall 1996) Table of Contents Selected Financial Data 18 Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Responsibility for Preparation of Financial Statements 26 Report of Independent Accountants 27 Consolidated Financial Statements 28 Notes to Consolidated Financial Statements 34 Statements of Operations by Quarter 50 Investor Information 52 Executive Officers and Directors 53 Selected Financial Data (Dollars in thousands, except per share data)
March 28, March 30, March 31, April 1, April 2, 1996(1) 1995(1) 1994(1) 1993 1992(3) Statement of Operations Data: Total revenues $657,872 $564,664 $587,453 $404,465 $406,964 Total cost of operations 496,567 435,915 449,177 310,835 325,901 Depreciation and amortization 43,886 37,913 38,048 28,175 31,385 General and administrative expenses 48,750 39,807 39,492 36,285 37,885 Estimated loss on future disposition of assets - - - 2,500 3,000 Operating income 68,669 51,029 60,736 26,670 8,793 Interest expense 28,828 35,908 36,375 31,401 30,035 Investment income 7,052 10,013 1,156 8,239 8,502 Minority interest - - 1,599 - - Gain (loss) on disposition of assets (222) (156) 296 9,638 8,721 Earnings (loss) before income taxes and extraordinary item 46,671 24,978 27,412 13,146 (4,019) Income tax provision 19,300 (9,000) 12,100 5,400 1,500 Earnings (loss) before extraordinary item 27,371 33,978 15,312 7,746 (5,519) Extraordinary item (19,350) - - (6,483) - Net earnings (loss) $8,021 $33,978 $15,312 $1,263 $(5,519) Preferred dividends 7,000 7,000 538 256 700 Net earnings (loss) for common shares $1,021 $26,978 $14,774 $1,007 $(6,219) Earnings (loss) per share $.06(4) $1.63 $.89 $.06(2) $(.39) Common dividends per share $- $- $- $1.14 $- Weighted average number of shares outstanding 16,795 16,593 16,521 16,217 16,088 Balance Sheet Data: Cash, equivalents and investments $10,795 $140,377 $151,469 $50,106 $36,823 Total debt (including capitalized lease obligations) 188,172 267,504 268,188 255,302 240,231 Stockholders' equity 158,918 157,388 130,404 18,171 39,869 Total assets 483,458 522,154 501,276 374,102 377,699 Other Financial Data: EBITDA(5) $112,555 $88,942 $98,784 $57,345 $43,178 Capital expenditures 120,796 56,403 10,651 8,786 21,045
(1) Fiscal 1996, 1995 and 1994 include the effects from the acquisition of Exhibition Enterprises Partnership on May 28, 1993. (2) Fiscal 1993 includes a $6,483 extraordinary loss equal to $.40 per common share. (3) Fiscal 1992 includes 53 weeks. All other years have 52 weeks. (4) Fiscal 1996 includes a $19,350 extraordinary loss equal to $1.15 per common share. (5) Represents operating income plus depreciation and amortization plus estimated loss on future disposition of assets. 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), an indicator of operating performance, an alternative to cash flows from operating activities (as determined in accordance with GAAP) or a measure of liquidity. Management's Discussion And Analysis of Financial Condition and Results of Operations General The Company's revenues are derived principally from box office admissions and concession sales. Additional revenues are derived from other sources such as on-screen advertising and license fees from video games in theatre lobbies. The Company's principal costs of operations are film rentals, con-cession merchandise and other expenses such as advertising, payroll, occupancy costs and insurance. Set forth below is a summary of operating revenues and expenses for the last three fiscal years.
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended March 28,% of Total March 30, % of Total March 31,% of Total (Dollars in thousands) 1996 Revenues 1995 Revenues 1994 Revenues Revenues Admissions $431,361 66% $371,145 66% $389,454 66% Concessions 196,645 30 169,120 30 176,274 30 Other 29,866 4 24,399 4 21,725 4 Total $657,872 100% $564,664 100% $587,453 100% Cost of Operations Film rentals $215,099 33% $182,669 32% $197,461 34% Concession merchandise 32,641 5 26,453 5 26,349 4 Other 248,827 38 226,793 40 225,367 38 Total $496,567 76% $435,915 77% $449,177 76%
Operating Results Years (52 weeks) Ended March 28, 1996, and March 30, 1995 Total revenues for the year (52 weeks) ended March 28, 1996, increased 16.5%, or $93,208,000, to $657,872,000 compared to $564,664,000 for the year (52 weeks) ended March 30, 1995. Admissions revenues increased by 16.2% due to a 11.1% increase in attendance and a 4.4% increase in average ticket prices. The increase in attendance resulted from the popularity of films released during the period and the net addition of 89 screens since fiscal 1995 at new and higher performing locations. Attendance during the prior year was impacted by a dispute with a major distributor over film terms, which resulted in the Company licensing a smaller number of runs per film from that distributor. During the current year, the Company licensed what it considers to be a more acceptable number of runs per film from that distributor. Concessions revenues and average concessions per patron increased by 16.3% and 4.2%, respectively, during the current year. The increase in concession revenue was primarily attributable to the attendance increase. Total cost of operations increased 13.9%, or $60,652,000, during 1996 to $496,567,000 from $435,915,000 for 1995. As a percentage of total revenues, cost of operations was 76% and 77% in fiscal year 1996 and 1995, respectively. Film rentals expense increased 17.8% in the current period due to higher attendance levels and a .7% increase in the percentage of admissions paid to film distributors. Concession and other costs of operations increased 11.1% from the prior year due to increases in payroll, concession merchandise and other theatre operating expenses associated with the increase in admissions and concessions revenues and from the higher number of screens in operation. Depreciation and amortization increased 15.8% from $37,913,000 to $43,886,000 for 1996. This increase resulted primarily from the reduction, effective December 30, 1994, in the estimated lives of lease rights and location premiums on certain smaller theatres to correspond to the base terms of the theatre leases, an increase in employed theatre assets and the recognition of an impairment loss of $1,799,000 in connection with the adoption of Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of (See Note 1 of the Company's "Notes to Consolidated Financial Statements.") General and administrative expenses increased 22.5%, or $8,943,000, from $39,807,000 for 1995 to $48,750,000 for the current year. The increase in general and administrative expenses is primarily attributable to payroll and other costs associated with the Company's development of theatres in the United States and certain international markets, additional bonus expenses related to improved profitability of the Company and severance payments for two former executive officers. As a percentage of total revenues, general and administrative expenses increased from 7.0% to 7.4%. Interest expense decreased 19.7%, or $7,080,000, to $28,828,000 for 1996 from $35,908,000 in the prior year. The decrease in interest expense resulted from higher amounts of capitalized interest from increased construction activities and lower interest rates under the Company's New Credit Facility. (See Note 6 of the Company's "Notes to Consolidated Financial Statements.") Investment income decreased 29.6%, or $2,961,000, during 1996 due primarily to a net gain of $1,407,000 recorded in the prior year from the sales of stock of TPI Enterprises, Inc. and AmeriHealth, Inc. and a decrease of $1,513,000 in interest income during the current year. Earnings before income taxes and extraordinary item increased 86.8%, or $21,693,000, from $24,978,000 for 1995 to $46,671,000 for the current year. The Company recorded a $19,350,000 extraordinary loss, net of income tax benefit of $13,400,000, related to extinguishment of debt during the current year. (See Note 6 of the Company's "Notes to Consolidated Financial Statements.") For the year (52 weeks) ended March 28, 1996, the Company recorded net earnings of $8,021,000, a $25,957,000 decrease from net earnings of $33,978,000 for the year (52 weeks) ended March 30, 1995. Net earnings per common share, after deducting $7,000,000 of preferred dividends, was $.06 compared to $1.63 for the same period in the prior year. The decrease in net earnings was impacted by an extraordinary loss of $19,350,000 incurred as a result of the Company's repurchase of Senior and Senior Subordinated Notes during 1996. Also, in 1995 the Company had a tax benefit of $9,000,000, as opposed to a tax expense of $19,300,000 in 1996. The 1995 tax benefit resulted from a $19,792,000 reduction in the deferred tax valuation allowance established under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Earnings per share before extraordinary item, after deduction of preferred dividends, was $1.21 compared to $1.63 for the previous year. Years (52 weeks) Ended March 30, 1995, and March 31, 1994 Total revenues for the year (52 weeks) ended March 30, 1995, decreased 3.9%, or $22,789,000, to $564,664,000 compared to $587,453,000 for the year (52 weeks) ended March 31, 1994. Admissions revenues decreased by 4.7% due to a 4.4% decrease in attendance and a .3% decrease in average ticket prices. Attendance during the year was impacted by a dispute with a major distributor over film terms, which resulted in the Company licensing a smaller number of runs per film from that distributor. Concessions revenues decreased by 4.1% during the current year. The decrease in concession revenue was primarily attributable to the attendance decrease. Total cost of operations decreased 3.0%, or $13,262,000, during 1995 to $435,915,000 from $449,177,000 for 1994. As a percentage of total revenues, cost of operations was 77% and 76% in fiscal year 1995 and 1994, respectively. Film rentals expense decreased 7.5% in the current year due to lower attendance levels and a 1.5% decrease in the percentage of admissions paid to film distributors. Concession and other costs of operations increased .6% from the prior year. Depreciation and amortization decreased .4% from $38,048,000 to $37,913,000 for 1995. Effective December 30, 1994, the Company reduced the estimated lives of lease rights and location premiums on certain smaller theatres to correspond to the base terms of the theatre leases. The effect of this change in accounting estimate was to increase amortization expense in 1995 by $1,542,000. General and administrative expenses increased .8%, or $315,000, from $39,492,000 for 1994 to $39,807,000 for the current year. The increase was primarily the result of the additional professional and consulting and travel and entertainment expenses and the costs related to the restructuring of division offices, offset by decreases in legal fees and bonuses under incentive programs. As a percentage of total revenues, general and administrative expenses increased from 6.7% to 7.0%. Interest expense decreased $467,000, or 1.3%, to $35,908,000 for 1995 from $36,375,000 in the prior year. The decrease in interest expense resulted primarily from borrowings on the $40 million Credit Facility during the first half of fiscal 1994. The Credit Facility was not utilized in 1995. Investment income increased $8,857,000 during 1995. This increase was the result of additional interest income of $5,835,000 and an increase in other investment income of $3,022,000. The increase in interest income was due to additional cash and investments as a result of the March 3, 1994, sale of preferred stock. The increase in other investment income was primarily due to the gains on sales of stock of TPI Enterprises, Inc. and AmeriHealth, Inc. Income from minority interest in the amount of $1,599,000 was recorded in the first quarter of fiscal 1994 relating to TPI Entertainment, Inc.'s ("TPIE") share of the Exhibition Enterprises Partnership ("EEP") operating loss from April 2, 1993, through May 27, 1993, prior to the Company's acquisition of TPIE's partnership interest in EEP. In 1995, the Company reported earnings prior to taxes of $24,978,000, a decrease of $2,434,000 compared to $27,412,000 in 1994. The provision for income taxes in 1995 reflects a benefit of $9,000,000 which is a decrease of $21,100,000 from the tax expense of $12,100,000 in 1994. This decrease in the income tax provision resulted primarily from a $19,792,000 reduction in the deferred tax asset valuation allowance established under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Based on the Company's positive earnings in recent years and the expectation of continued earnings, management believes that the uncertainties that led to the establishment of the valuation allowance have been removed with respect to the realization of deferred tax assets. Accordingly, the valuation allowance was eliminated. For the year (52 weeks) ended March 30, 1995, the Company recorded net earnings of $33,978,000, a $18,666,000 increase from net earnings of $15,312,000 for the year (52 weeks) ended March 31, 1994. Net earnings for common shares in 1995, after deducting $7,000,000 for preferred dividends, were $26,978,000, or $1.63 per share, compared to net earnings for common shares of $14,774,000, or $.89 per share, in 1994 after deducting $538,000 for preferred dividends. Liquidity and Capital Resources The Company's revenues are principally collected in cash through box office admissions and theatre concession sales. Cash flow from operating activities, as reflected in the Consolidated Statements of Cash Flows, was $86,453,000, $44,184,000 and $63,680,000 in fiscal 1996, 1995 and 1994, respectively. The Company has an operating "float" which finances its operations and which permits the Company to maintain a small 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 admission revenues. The Company is only occasionally required to make advance payments or non-refundable guarantees of film rentals. On December 28, 1995, the Company completed the redemption of substantially all of its Senior and Senior Subordinated Notes and entered into a new loan agreement (the "Refinancing Plan"). The Company redeemed $99,383,000 of its 117_8% Senior Notes Due 2000 at a price of $1,117.90 per $1,000 principal amount and $95,096,000 of its outstanding 125_8% Senior Subordinated Notes Due 2002 at a price of $1,144.95 per $1,000 principal amount. The Company utilized cash and investments along with borrowings of $130,000,000 under a new loan agreement to redeem the Senior and Senior Subordinated Notes. The Refinancing Plan was intended to improve the Company's financial and operating flexibility, reduce its net interest expense, extend the average life of its indebtedness and increase its available credit. As a part of the Refinancing Plan, the Company entered into a new loan agreement with several banks to provide a revolving credit facility of up to $425,000,000 (the "Credit Facility"). The Credit Facility matures in 2002, 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, as defined in the loan agreement, that could result in a rate of .25% or .375% on the unused portion of the commitment. As of March 28, 1996, the Company had outstanding borrowings of $120,000,000 under the Credit Facility at an average rate of 5.8%. The Credit Facility contains covenants that generally limit the Company's capital expenditures, as defined in the loan agreement, to $150,000,000 per year plus amounts for unused capital expenditures from the prior year of approximately $34,000,000 and amounts received for assets placed in sale and leaseback and other comparable funding arrangements. The Company is pursuing various financing arrangements to allow it to continue with its increased rate of capital expenditures and comply with the terms of the loan agreement. The Company anticipates that its capital expenditures in 1997 will comply with the limits in the loan agreement. Additionally, other covenants impose limitations on the incurrence of additional indebtedness, creation of liens, a change of control, transactions with affiliates, mergers, investments, guaranties and asset sales. The Company is required to maintain a maximum net indebtedness to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio, as defined in the loan agreement, of 4.50 to 1 during the first four years of the Credit Facility and a ratio of 4.0 to 1 thereafter, and a minimum cash flow coverage ratio, as defined in the loan agreement, of 1.40 to 1. The Company does not anticipate that any such covenants will materially impede its operations. As of March 28, 1996, the Company was in compliance with all financial covenants relating to the Credit Facility. The terms of the Indentures governing the remaining Senior and Senior Subordinated Notes were amended to eliminate certain restrictive covenants. In 1996, the Company had capital expenditures of $120,796,000, primarily for the development of new theatres and the addition of screens at existing locations. The Company anticipates that total capital expenditures in 1997 will be approximately $240,000,000. The Company believes that cash generated from operations, existing cash and cash equivalents and the unused commitment amount under its Credit Facility will be sufficient to fund operating results and planned capital expenditures for the next twelve months. During the current fiscal year, the Company opened two owned theatres with 40 screens, opened one ground lease theatre with 20 screens, opened four leased theatres with 54 screens and added 36 screens at existing leased theatres. In addition, the Company closed one owned theatre with two screens and closed 12 leased theatres with 59 screens resulting in a circuit total of 1,719 screens in 226 theatres as of March 28, 1996. Impact of Inflation Historically, the principal impact of inflation and changing prices upon the Company has been with respect to the construction of new theatres, the purchase of theatre equipment and the utility and labor costs incurred in connection with continuing theatre operations. Film rental fees, which are the largest operating expense incurred by the Company, are customarily paid as a percentage of box office admission revenues and hence, while the film rental fees may increase on an absolute basis, the percentages are not directly affected by inflation. Except as set forth above, for the three years ended March 28, 1996, inflation and changing prices have not had a significant impact on the Company's total revenues and results of operations. Recently Issued Financial Accounting Pronouncements During 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which was adopted early by the Company during the fourth quarter of 1996. As a result, the Company recognized an impairment loss of $1,799,000. (See Note 1 of the Company's "Notes to Consolidated Financial Statements.") During 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. The Statement allows companies to measure compensation cost in connection with employee stock compensation plans using a fair value based method or to continue to use an intrinsic value based method to account for stock options and awards. The Company currently plans to continue using the intrinsic value based method. Responsibility for Preparation of Financial Statements 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 generally accepted accounting principles 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 Board of Directors oversees financial reporting and internal accounting control through its Audit Committee. This committee meets (jointly and separately) with the independent accountants, management and internal auditor to monitor the proper discharge of responsibilities relative to internal accounting controls and consolidated financial statements. /s/ Peter C. Brown Peter C. Brown Executive Vice President and Chief Financial Officer Report of Independent Accountants To the Board of Directors and Stockholders of AMC Entertainment Inc. Kansas City, Missouri We have audited the accompanying consolidated balance sheets of AMC Entertainment Inc. and subsidiaries as of March 28, 1996, and March 30, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years (52 weeks) in the period ended March 28, 1996. 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 in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AMC Entertainment Inc. and subsidiaries as of March 28, 1996, and March 30, 1995, and the consolidated results of their operations and their cash flows for each of the three years (52 weeks) in the period ended March 28, 1996, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Kansas City, Missouri May 17, 1996 Consolidated Statements of Operations (In thousands, except per share amounts) 52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 28, March 30, March 31, 1996 1995 1994 Revenues Admissions $431,361 $371,145 $389,454 Concessions 196,645 169,120 176,274 Other 29,866 24,399 21,725 Total revenues 657,872 564,664 587,453 Expenses Film rentals 215,099 182,669 197,461 Concession merchandise 32,641 26,453 26,349 Other 248,827 226,793 225,367 Total cost of operations 496,567 435,915 449,177 Depreciation and amortization 43,886 37,913 38,048 General and administrative expenses 48,750 39,807 39,492 Total expenses 589,203 513,635 526,717 Operating income 68,669 51,029 60,736 Other expense (income) Interest expense Corporate borrowings 18,099 24,502 25,699 Capitalized lease 10,729 11,406 10,676 Investment income (7,052) (10,013) (1,156) Minority interest - - (1,599) (Gain) loss on disposition of assets 222 156 (296) Earnings before income taxes and extraordinary item 46,671 24,978 27,412 Income tax provision 19,300 (9,000) 12,100 Earnings before extraordinary item 27,371 33,978 15,312 Extraordinary item - Loss on extinguishment of debt (net of income tax benefit of $13,400) (19,350) - - Net earnings $8,021 $33,978 $15,312 Preferred dividends 7,000 7,000 538 Net earnings for common shares $1,021 $26,978 $14,774 Earnings per share before extraordinary item: Primary $1.21 $1.63 $.89 Fully diluted $1.20 $1.45 $.89 Earnings per share: Primary $0.06 $1.63 $.89 Fully diluted $0.06 $1.45 $.89 See Notes to Consolidated Financial Statements. Consolidated Balance Sheets (In thousands, except share amounts) March 28, March 30, 1996 1995 Assets Current assets: Cash and equivalents $10,795 $71,233 Investments - 69,144 Receivables, net of allowance for doubtful accounts of $801 as of March 28, 1996, and $1,529 as of March 30, 1995 20,503 8,572 Other current assets 15,179 12,069 Total current assets 46,477 161,018 Property, net 355,485 279,904 Intangible assets, net 36,483 42,926 Other long-term assets 45,013 38,306 Total assets $483,458 $522,154 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $64,353 $29,047 Accrued expenses and other liabilities 38,319 33,794 Current maturities of corporate borrowings and capital lease obligations 2,904 2,516 Total current liabilities 105,576 65,357 Corporate borrowings 126,127 200,183 Capital lease obligations 59,141 64,805 Other long-term liabilities 33,696 34,421 Total liabilities 324,540 364,766 Commitments and contingencies Stockholders' equity Cumulative Convertible Preferred Stock; 4,000,000 shares issued and outstanding (aggregate liquidation preference of $100,000) 2,667 2,667 Common Stock; 5,388,880 and 5,306,380 shares issued as of March 28, 1996, and March 30, 1995, respectively 3,593 3,538 Convertible Class B Stock; 11,157,000 shares issued and outstanding 7,438 7,438 Additional paid-in capital 107,986 107,163 Retained earnings 37,603 36,582 159,287 157,388 Less - Common Stock in treasury, at cost, 20,500 shares as of March 28, 1996 369 - Total stockholders' equity 158,918 157,388 Total liabilities and stockholders' equity $483,458 $522,154 See Notes to Consolidated Financial Statements. Consolidated Statements of Cash Flows (In thousands) 52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 28, March 30, March 31, 1996 1995 1994 Increase (Decrease) in Cash and Equivalents Cash flows from operating activities: Net earnings $8,021 $33,978 $15,312 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization - property 34,508 29,647 29,074 - other long-term assets 9,378 8,266 7,075 Deferred income taxes (1,328) (21,285) (4,023) Gain on sale of available for sale investments - (1,407) - Extraordinary item 19,350 - - Minority interest - - 1,599 Gain (loss) on sale of long-term assets 222 156 (296) Change in assets and liabilities, net of effects from acquisition: Receivables (11,931) 625 (2,843) Other current assets 10,167 (578) 412 Accounts payable 7,458 341 5,187 Accrued expenses and other liabilities 7,640 (5,763) 11,892 Other, net 2,968 204 291 Total adjustments 78,432 10,206 48,368 Net cash provided by operating activities 86,453 44,184 63,680 Cash flows from investing activities: Capital expenditures (120,796) (56,403) (10,651) Purchases of available for sale investments (424,134) (314,368) - Proceeds from maturities of available for sale investments 493,278 364,374 - Proceeds from sales of available for sale investments - 11,689 - Net purchase of short-term investments - - (93,041) Purchase of partnership interest, net of cash acquired - - (8,486) Proceeds from disposition of long-term assets 2,243 70 1,270 Other, net (7,045) (1,516) (597) Net cash provided by (used in) investing activities (56,454) 3,846 (111,505) Cash flows from financing activities: Net borrowings under revolving credit facility 120,000 - - Principal payments under capital lease obligations (2,455) (2,088) (1,700) Repayment of acquired subsidiary indebtedness - - (37,000) Repurchase of Senior and Senior Subordinated Notes (220,734) - - Cash overdrafts 22,848 - - Other repayments (404) (34) (1,720) Proceeds from exercise of stock options 878 239 1,321 Proceeds from issuance of preferred stock - - 95,600 Dividends paid on preferred stock (7,000) (7,233) - Deferred financing costs and other (3,570) - (354) Net cash provided by (used in) financing activities (90,437) (9,116) 56,147 Net increase (decrease) in cash and equivalents (60,438) 38,914 8,322 Cash and equivalents at beginning of year 71,233 32,319 23,997 Cash and equivalents at end of year $10,795 $71,233 $32,319 52 Weeks 52 Weeks52 Weeks Ended Ended Ended March 28,March 30,March 31, 1996 1995 1994 Supplemental Schedule of Noncash Investing and Financing Activities: During 1995 and 1994, capital lease obligations of $1,363 and $5,219, respectively were incurred in connection with property acquired. On May 28, 1993, a subsidiary of American Multi-Cinema, Inc. ("AMC"), acquired a fifty percent partnership interest in Exhibition Enterprises Partnership ("EEP") from TPI Entertainment, Inc. Together with the fifty percent partnership interest already owned by AMC, EEP became a wholly-owned subsidiary. Cash and equivalents held by EEP as of May 28, 1993, totaled $9,014. Liabilities assumed from the May 28, 1993, transaction follow: Fair value of assets acquired (including cash and equivalents) $70,170 Cash paid (17,500) Liabilities assumed $52,670 Supplemental Disclosures of Cash Flow Information: 52 Weeks 52 Weeks 52 Weeks Ended Ended Ended March 28, March 30, March 31, 1996 1995 1994 Cash paid during the period for: Interest (net of amounts capitalized of $3,003, $870 and $49) $34,775 $35,878 $35,742 Income taxes, net 9,787 14,822 13,659 See Notes to Consolidated Financial Statements. Consolidated Statements of Stockholders' Equity (In thousands, except share amounts)
Additional Retained Common Stock Total Preferred Stock Common Stock Class B Stock Paid-in Earnings in Treasury Stockhold Shares Amount Shares Amount Shares Amount Capital(Deficit)Shares Amount Equity Balance, April 2, 1993 - - 4,539,380 $3,026 11,730,000 $7,820 $12,800 $(5,475) - $- $18,171 Net earnings - - - - - - - 15,312 - - 15,312 Exercise of options on Common Stock - - 154,450 103 - - 1,218 - - - 1,321 Net proceeds from sale of Preferred Stock 4,000,000 2,667 - - - - 92,933 - - - 95,600 Conversion of Class B Stock - - 573,000 382 (573,000) (382) - - - - - Balance, March 31, 1994 4,000,000 2,667 5,266,830 3,511 11,157,000 7,438 106,951 9,837 - - 130,404 Net earnings - - - - - - - 33,978 - - 33,978 Exercise of options on Common Stock - - 39,550 27 - - 212 - - - 239 Dividends declared: $1.75 Preferred Stock - - - - - - - (7,233) - - (7,233) Balance, March 30, 1995 4,000,000 2,667 5,306,380 3,538 11,157,000 7,438 107,163 36,582 - - 157,388 Net earnings - - - - - - - 8,021 - - 8,021 Exercise of options on Common Stock - - 82,500 55 - - 823 - - - 878 Dividends declared: $1.75 Preferred Stock - - - - - - - (7,000) - - (7,000) Acquisition of Common Stock in Treasury - - - - - - - - (20,500) (369) (369) Balance, March 28, 1996 4,000,000 $2,667 5,388,880 $3,593 11,157,000 $7,438 $107,986 $37,603 (20,500) $(369) $158,918
See Notes to Consolidated Financial Statements. Notes to Consolidated Financial Statements Years (52 Weeks) Ended March 28, 1996, March 30, 1995, and March 31, 1994 Note 1 - The Company and Significant Accounting Policies AMC Entertainment Inc. ("AMCE"), through American Multi-Cinema, Inc. ("AMC") and its subsidiaries (collectively with AMCE, unless the context otherwise requires, the "Company") is principally involved in the operation of motion picture theatres throughout the United States. Approximately 84% of AMCE's outstanding voting securities are owned by Durwood, Inc. ("DI"). See Note 13 for further description of AMCE's related party transactions. 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 amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Principles of Consolidation: The consolidated financial statements include the accounts of AMCE and all subsidiaries. Minority interest in AMC Philadelphia, Inc., an 80% owned subsidiary, with a book value of $5,000,000 and $3,583,000, as of March 28, 1996, and March 30, 1995, respectively, is recorded as a liability. 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 1996, 1995 and 1994 fiscal years each reflect a 52 week period. Fiscal year 1997 will reflect a 53 week period. Revenues and Film Rental Costs: Revenues are recognized when admissions and concessions sales are received at the theatres. Film rental costs are recognized based on the applicable box office receipts and the terms of the film licenses. Cash and Equivalents: Cash and equivalents consists of cash on hand and temporary cash investments with original maturities of less than thirty days. 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 28, 1996 was $22,848,000. Investments: Effective April 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and Equity Securities. Upon adoption, the Company classified its debt and equity securities as available for sale which did not have a material impact to the consolidated financial statements. In accordance with SFAS 115, prior years financial statements have not been restated to reflect the change in accounting method. As of March 30, 1995, investments in available for sale debt securities are carried at amortized cost which approximates market value due to the short-term nature of the securities. For purposes of determining gross realized gains and losses, the cost of securities sold is determined upon specific identification. Refundable Construction Advances: Included in receivables as of March 28, 1996, and March 30, 1995, is $12,117,000 and $1,723,000, respectively, advanced to developers to fund a portion of the construction costs of new theatres that are to be operated by AMC pursuant to lease agreements. These advances are refunded by the developers either during construction or shortly after completion. 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 generally as follows: Buildings and improvements 20 to 40 years Leasehold improvements 5 to 25 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 are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are credited or charged to operations currently. Intangible Assets: Intangible assets are recorded at cost and are comprised of lease rights, which are amounts assigned to theatre leases assumed under favorable terms, and location premiums on acquired theatres which are being amortized on a straight-line basis over the estimated remaining useful life of the theatre. Effective December 30, 1994, the Company reduced the estimated lives of lease rights and location premiums on certain smaller theatres to correspond to the base terms of the theatre leases. This change in accounting estimate was made to better match the estimated life of the intangible assets with the life of the theatre due to the Company's strategic plans to primarily own and operate larger theatres. The effect of this change in estimate was to increase amortization expense in 1995 by $1,542,000 and decrease net earnings by $876,000, or $.05 per share. Accumulated amortization on intangible assets as of March 28, 1996, and March 30, 1995, was $36,035,000 and $29,960,000, respectively. 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 life of the issue; investments in real estate; investments in partnerships and corporate joint ventures accounted for under the equity method; and long-term deferred income taxes. Income Taxes: Income taxes are calculated in accordance with Statement of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes. The statement requires that deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The Company, pursuant to a tax sharing agreement, joined with DI in filing a consolidated federal income tax return through March 3, 1994. Upon issuance of the Cumulative Convertible Preferred Stock, DI no longer owns the requisite 80% of the Company. The Company has filed a separate consolidated federal income tax return after that date. The provisions of the tax sharing agreement will remain effective for any changes to taxable income for years covered under such agreement. Prior to March 3, 1994, the Company's provision for income tax expense was computed as if it filed a separate consolidated return. Earnings per Share: Primary earnings per share is computed by dividing net earnings for common shares by the sum of the weighted average number of common shares outstanding and outstanding stock options, when their effect is dilutive. The average shares used in the computations were 16,795,000 in 1996, 16,593,000 in 1995 and 16,521,000 in 1994. On a fully diluted basis, both net earnings and shares outstanding are adjusted to assume the conversion of Cumulative Convertible Preferred Stock, if dilutive. The average shares used in the computations were 17,031,000 in 1996, 23,509,000 in 1995 and 16,550,000 in 1994. Changes in Accounting Principles: During the fourth quarter of 1996, the Company adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This Statement establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles and goodwill related to those assets to be held and used. In connection with the adoption of this Statement, the Company reviewed the assets and related intangibles of its motion picture theatres for impairment on a disaggregated basis. The expected future cash flows of certain theatres, undiscounted and without interest charges, were less than the carrying value of the assets. As a result, the Company recognized an impairment loss of $1,799,000. The impairment loss represents the amount by which the carrying value of the theatre assets, including intangibles, exceeded the estimated fair value of those assets. The estimated fair value of assets was determined as the present value of estimated expected future cash flows. The loss is included in depreciation and amortization in the Consolidated Statements of Operations. Presentation: Certain amounts have been reclassified from prior period consolidated financial statements to conform with the current year presentation. Note 2 - Acquisition - -Prior to May 28, 1993, Exhibition Enterprises Partnership ("EEP" or the "Partnership") was a partnership jointly owned by a subsidiary of AMC and TPI Entertainment, Inc. ("TPIE"), a wholly-owned subsidiary of TPI Enterprises, Inc. ("TPI"). On April 19, 1991, the Partnership acquired the ownership interest in 57 movie theatres (56 theatres previously purchased by TPIE from AMC in 1989 and 1990 and 1 theatre constructed by TPIE), subject to obligations under notes, loans and capital leases. From inception through April 1, 1993, the Company accounted for its 50% ownership of EEP on the equity method. On May 28, 1993, a subsidiary of AMC acquired a fifty percent partnership interest in EEP from TPI for $17,500,000 in cash. The acquisition also required the repayment of $37,000,000 in EEP bank indebtedness. The acquisition was accounted for under the purchase method of accounting and EEP was consolidated, for financial reporting purposes, as a wholly-owned subsidiary. Pro forma financial information of the Company for 1994 has been omitted as the effect is immaterial. Note 3 - Investments Investments as of March 30, 1995 consist of U.S. Treasury obligations with contractual maturities within one year. The carrying value of these investments approximates fair value, and therefore, there are no unrealized gains or losses. Proceeds and gross realized gains from the sales in 1995 of equity securities classified as other long-term assets as of March 30, 1995, were $11,689,000 and $1,407,000, respectively. Note 4 - Property A summary of property is as follows (in thousands): 1996 1995 Property owned: Land $ 35,610 $ 30,112 Buildings and improvements 146,061 105,370 Furniture, fixtures and equipment 205,761 173,328 Leasehold improvements 146,152 122,276 533,584 431,086 Less-accumulated depreciation and amortization 213,654 192,204 319,930 238,882 Property leased under capitalized leases: Buildings 67,274 69,723 Less-accumulated amortization 31,719 28,701 35,555 41,022 Net Property $ 355,485 $ 279,904 Included in property is $35,289,000 and $26,104,000 of construction in progress as of March 28, 1996, and March 30, 1995, respectively. Note 5 - Other Assets and Liabilities Other assets and liabilities consist of the following (in thousands): 1996 1995 Other current assets: Prepaid rent $ 6,412 $ 5,974 Prepaid income taxes 3,074 515 Deferred income taxes 3,207 3,330 Other 2,486 2,250 $ 15,179 $ 12,069 Other long-term assets: Investments in real estate $ 6,922 $ 4,277 Investments in partnerships and corporate joint ventures 1,121 1,327 Deferred charges, net 6,203 6,991 Deferred income taxes 24,506 23,055 Other 6,261 2,656 $ 45,013 $ 38,306 Accrued expenses and other liabilities: Taxes other than income $ 7,110 $ 5,860 Interest 841 3,893 Payroll and vacation 6,149 5,794 Casualty claims and premiums 2,034 2,268 Deferred income 11,634 10,070 Accrued bonus 7,634 3,293 Other 2,917 2,616 $ 38,319 $ 33,794 Note 6 - Borrowings and Capital Lease Obligations Debt Securities: On December 28, 1995, the Company completed the redemption of $99,383,000 of its outstanding 117/8% Senior Notes Due 2000 at a price of $1,117.90 per $1,000 principal amount and $95,096,000 of its outstanding 125/8% Senior Subordinated Notes Due 2002 at a price of $1,144.95 per $1,000 principal amount. In addition, the terms of the Indentures governing the remaining Senior and Senior Subordinated Notes were amended to eliminate certain restrictive covenants. Sources of funds for the redemption were cash and investments on hand and borrowings on the Company's new revolving credit facility. Premiums paid to redeem the Senior and Senior Subordinated Notes, together with the write-off of unamortized debt issue costs and other costs directly related to the debt redemptions, resulted in an extraordinary loss of $19,350,000, net of income tax benefit of $13,400,000. The extraordinary loss reduced earnings per share by $1.15 for the year (52 weeks) ended March 28, 1996. The discounts on the remaining Senior and Senior Subordinated Notes are being amortized to interest expense following the interest method of amortization. Costs related to the issuance of the debt securities were capitalized and are charged to expense, following the interest method, over the lives of the respective securities. Unamortized issuance costs of $175,000 and $6,201,000 as of March 28, 1996, and March 30, 1995, respectively, are included in other long-term assets. Line of Credit: In connection with the redemption of Senior Notes and Senior Subordinated Notes, the Company entered into a new loan agreement to provide a revolving credit facility of up to $425 million (the "Credit Facility"). The Credit Facility will mature on December 26, 2002. The commitment thereunder will reduce by $25 million on each of September 30, 2001, December 31, 2001, March 31, 2002 and June 30, 2002, and by $50 million on September 30, 2002. Under the Credit Facility, the Company has the option to borrow at rates based on either the bank's base rate or LIBOR and is required to pay an annual commitment fee based on margin ratios, as defined in the loan agreement, that could result in a rate of .25% or .375% on the unused amount of the commitment. The Credit Facility includes several financial covenants. The Company is required to maintain a maximum net indebtedness to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio, as defined in the loan agreement, of 4.50 to 1 during the first four years of the Credit Facility and a ratio, as defined in the loan agreement, of 4.0 to 1 thereafter, and a minimum cash flow coverage ratio of 1.40 to 1. In addition, the Credit Facility i) generally limits the Company's capital expenditures and investments to $150 million, subject to certain adjustments, per year, ii) generally limits investments in entities which are unrestricted subsidiaries, are not guarantors of the Credit Facility, or are not wholly-owned subsidiaries of the Company, to $100 million in the aggregate, plus the greater of 25% of free cash flow or 50% of consolidated net income (minus 100% of consolidated net income if negative), as defined in the Credit Facility, and iii) imposes limitations on the incurrence of additional indebtedness, creation of liens, a change of control, transactions with affiliates, mergers, investments, guaranties and asset sales. As of March 28, 1996, 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 $3,208,000 as of March 28, 1996 are included in other long-term assets. Summary of Borrowings: The Company is obligated under notes, capital leases and other indebtedness as follows (in thousands):
Rates of Maturity Due in Totals Interest Dates Fiscal 1997 1996 1995 Senior Debt Credit Facility 5.8% December, 2002 $- $120,000 $- Senior notes 11.875% August, 2000 - 614 99,510 Capital lease obligations 7.25% to 20% Serially to 2025 2,881 62,022 67,282 Other indebtedness Various Various 23 658 1,306 Total senior debt 2,904 183,294 168,098 Subordinated Debt Senior subordinated notes 12.625% August, 2002 - 4,878 99,406 Total borrowings $2,904 $188,172 $267,504
Minimum annual payments required under existing capital lease obligations, net present value thereof, and maturities of total indebtedness as of March 28, 1996, are as follows (in thousands):
Capital Lease Obligations Minimum Net Lease Less Present Other Payments Interest Value Indebtedness Total 1997 $ 12,910 $ 10,029 $ 2,881 $ 23 $ 2,904 1998 13,022 9,461 3,561 26 3,587 1999 13,027 8,766 4,261 30 4,291 2000 12,392 8,040 4,352 34 4,386 2001 11,939 7,293 4,646 655 5,301 Thereafter 81,271 38,950 42,321 125,382 167,703 Total $ 144,561 $ 82,539 $ 62,022 $ 126,150 $ 188,172
Letter of Credit: The Company maintains a letter of credit in the normal course of its business. The unused portion of the letter of credit was $2,000,000 as of March 28, 1996. Note 7 - Stockholders' Equity Common Stock: The authorized Common Stock of AMCE consists of two classes of stock. 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. Common stockholders voting as a class are presently 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 and there are no restrictions with respect to transferability. Holders of the 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. Cumulative Convertible Preferred Stock: The Company has authorized 10,000,000 shares of Cumulative Convertible Preferred Stock (66 2/3 cents par value) (the "Convertible Preferred"). Dividends are payable quarterly at an annual rate of $1.75 per share. The Convertible Preferred has preference in liquidation in the amount of $25 per share plus accrued and unpaid dividends. The Convertible Preferred is convertible at the option of the holder into shares of Common Stock at a conversion price of $14.50 per share of Common Stock, subject to change in certain events. In lieu of conversion the Company may, at its option, pay to the holder cash equal to the then market value of the Common Stock. After March 15, 1997, the Company may redeem in whole or in part the Convertible Preferred at a redemption price beginning at $26.00 per share, declining ratably to $25.00 per share after March 15, 2001. Stock Option and Incentive Plans 1983 Plan: In June 1983, AMCE adopted a stock option plan (the "1983 Plan") for selected employees. This plan provided for the grant of rights to purchase shares of Common Stock under both incentive and non-incentive stock option agreements. The number of shares which could be sold under the plan could not exceed 750,000 shares. The 1983 Plan provided that the exercise price could not be less than the fair market value of the stock at the date of grant and unexercised options expired no later than ten years after date of grant. Pursuant to the terms of the 1983 Plan, no further options may be granted under this plan. 1984 Plan: In September 1984, AMCE adopted a non-qualified stock option plan (the "1984 Plan"). This plan provided for the grant of rights to purchase shares of Common stock under non-qualified stock option agreements. The number of shares which could be sold under the plan could not exceed 750,000 shares. The 1984 Plan provided that the exercise price would be determined by the Company's Stock Option Committee and that the options expired no later than ten years after date of grant. Pursuant to the terms of the 1984 Plan, no further options may be granted under this plan. 1994 Plan: In November 1994, AMCE adopted a stock option and incentive plan (the "1994 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 are 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 1,000,000 shares. The 1994 Plan provides that the 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. Pertinent information relating to stock options is as follows:
1996 1995 1994 Number Option Price Number Option Price Number Option Price of Shares Per Share of Shares Per Share of Shares Per Share Outstanding at beginning of year 776,500 $9.25-$11.75 813,300 $4.67-$11.13 242,750 $4.67-$11.13 Granted 23,250 $14.50 36,500 $11.75 725,000 $9.25-$9.375 Cancelled (229,750) $9.375-$14.50 (33,750) $9.375 - Exercised (82,500) $9.375-$11.13 (39,550) $4.67-$9.375 (154,450) $4.67-$9.00 Outstanding at end of year 487,500 $9.25-$14.50 776,500 $9.25-$11.75 813,300 $4.67-$11.13 Exercisable at end of year 233,250 $9.25-$11.75 230,000 $9.25-$11.75 88,300 $4.67-$11.13 Available for grant at end of year 746,500 817,500 252,529
Expiration dates for outstanding stock options as of March 28, 1996, are as follows: Number Option Price Fiscal year of Shares Per Share 2004 435,000 $9.25-$9.375 2005 31,500 11.75 2006 21,000 14.50 Total options outstanding 487,500 Note 8 - Income Taxes Income taxes reflected in the Consolidated Statements of Operations for the three years ended March 28, 1996, are as follows (in thousands): 1996 1995 1994 Current: Federal $5,134 $7,738 $13,977 State 2,094 4,547 2,146 Total current 7,228 12,285 16,123 Deferred: Federal (1,121) (1,238) (5,203) State (207) (255) (1,071) Change in valuation allowance - (19,792) 2,251 Total deferred (1,328) (21,285) (4,023) Total provision 5,900 (9,000) 12,100 Tax benefit of extraordinary item - extinguishment of debt 13,400 - - Total provision before extraordinary item $19,300 $(9,000) $12,100 The effective tax rate on income before extraordinary items was 41.4%, (36.0%) and 44.1% in 1996, 1995 and 1994, respectively. The difference between the effective rate and the U.S. federal income tax statutory rate of 35% in 1996 and 1995 and 34% in 1994 is accounted for as follows (in thousands): 1996 1995 1994 Tax on earnings before provision for income tax and extraordinary items at statutory rates $16,335 $ 8,742 $9,594 Add (subtract) tax effect of: State income taxes, net of federal tax benefit 3,163 2,973 699 Change in valuation allowance - (19,792) 2,251 Other, net (198) (923) (444) Income tax provision before extraordinary item $19,300 $(9,000) $12,100 The significant components of deferred income tax assets and liabilities as of March 28, 1996, and March 30, 1995, are as follows (in thousands): 1996 1995 Deferred Income TaxDeferred Income Tax Assets Liabilities Assets Liabilities Accrued reserves and liabilities $5,323 $343 $5,775 $297 Investments in partnerships - 419 - 456 Capital leases 10,852 - 10,767 - Depreciation 7,842 - 6,797 - Deferred rents 5,266 - 4,287 - Other 683 1,491 240 728 Total 29,966 2,253 27,866 1,481 Less: Current deferred income taxes 3,702 495 3,952 622 Total noncurrent deferred income taxes $26,264 $1,758 $23,914 $859 Net noncurrent deferred income taxes $24,506 $23,055 SFAS 109 requires that a valuation allowance be provided against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Based upon positive earnings in recent years and the expectation that taxable income will continue for the foreseeable future, management believes it is more likely than not that the Company will realize its deferred tax assets and, accordingly, no valuation allowance has been provided as of March 28, 1996 and March 30, 1995. Note 9 - Leases The majority of the Company's operations are conducted in premises occupied under lease agreements with base terms ranging generally from 15 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 Company also leases certain equipment under leases expiring at various dates. 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 leases are included in property. Performance under some leases has been guaranteed by DI. The Company has entered into agreements to lease space for the operation of theatres not yet fully constructed. Of the total number of anticipated openings, leases for 12 new theatres with 200 screens have been finalized. The scheduled completion of construction and theatre openings are at various dates during fiscal 1997. The estimated minimum rental payments that may be required under the terms of these leases total approximately $294 million. Following is a schedule, by year, of future minimum rental payments required under these leases and existing operating leases that have initial or remaining non-cancellable terms in excess of one year as of March 28, 1996 (in thousands): Fiscal year: 1997 $ 62,497 1998 73,549 1999 81,973 2000 81,755 2001 80,143 Thereafter 1,052,254 Total minimum payments required $ 1,432,171 The Company records rent expense on a straight-line basis over the term of the lease. Included in long-term liabilities as of March 28, 1996, and March 30, 1995, is $12,858,000 and $10,537,000, 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): 1996 1995 1994 Minimum rentals $63,099 $58,374 56,813 Percentage rentals based on revenues 2,354 1,970 1,968 Equipment rentals 876 647 692 $66,329 $60,991 $59,473 Note 10 - Employee Benefit Plans Defined 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 a group annuity contract 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 following table sets forth the plan's funded status as of December 31, 1995 and 1994 (plan valuation dates) and the amounts included in the Consolidated Balance Sheets as of March 28, 1996, and March 30, 1995 (in thousands): 1996 1995 Actuarial present value of accumulated benefit obligation, including vested benefits of $10,041 and $7,699 $10,205 $7,856 Projected benefit obligation for service rendered to date $17,051 $12,512 Plan assets at fair value (9,580) (8,291) Projected benefit obligation in excess of plan assets 7,471 4,221 Unrecognized net gain (loss) from past experience different from that assumed and effects of changes in assumptions (1,509) 1,117 Unrecognized net obligation upon adoption being recognized over 15 years (1,588) (1,764) Pension liability included in Consolidated Balance Sheets $4,374 $3,574 Net pension expense includes the following components (in thousands): 1996 1995 1994 Service cost $855 $1,261 $1,157 Interest cost 966 971 852 Actual return on plan assets (1,630) 55 (864) Net amortization and deferral 1,096 (190) 698 Net pension expense $1,287 $2,097 $1,843 The Company also sponsors a non-contributory Supplemental Executive Retirement Plan (the "SERP") which provides certain employees additional pension benefits. The actuarial present value of accumulated plan benefits related to the SERP was $379,000 and $224,000 as of March 28, 1996 and March 30, 1995, respectively, which is reflected in the Consolidated Balance Sheet. The weighted average discount rate used to measure the plans' projected benefit obligations was 7.00%, 7.75% and 5.75% for 1996, 1995 and 1994, respectively. The rate of increase in future compensation levels was 6.0% for 1996 and 1995 and 6.5% for 1994 and the expected long-term rate of return on assets was 8.5% for 1996, 1995 and 1994. A limited number of employees are covered by collective bargaining agreements under which payments are made to a union-administered fund. 401(k) Plan: 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 $1,032,000, $1,015,000 and $907,000 for 1996, 1995, and 1994, respectively. Other Retirement 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. The following table sets forth the plans' accumulated postretirement benefit obligation reconciled with the amounts included in the Consolidated Balance Sheets as of March 28, 1996, and March 30, 1995 (in thousands): 1996 1995 Accumulated postretirement benefit obligation: Retirees $ 557 $ 791 Fully eligible active plan participants 438 332 Other active plan participants 1,292 1,397 Accumulated postretirement benefit obligation 2,287 2,520 Unrecognized net obligation upon adoption being recognized over 20 years (747) (797) Unrecognized loss 105 (521) Postretirement benefit liability included in the Consolidated Balance Sheets $ 1,645 $ 1,202 Postretirement expense includes the following components (in thousands): 1996 1995 1994 Service cost $192 $188 $175 Interest cost 208 202 169 Net amortization and deferral 66 66 94 Postretirement expense $466 $456 $438 For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits assumed for 1996 was 8.5% for medical and 6.0% for dental. The rates were assumed to decrease gradually to 5.0% for medical and 3.0% for dental at 2020 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 28, 1996, by $456,000 and the aggregate of the service and interest cost components of postretirement expense for 1996 by $144,000. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.00%, 7.75% and 7.25% for 1996, 1995 and 1994, respectively. Note 11 - Contingencies The Company, in the normal course of business, is party to various legal actions. Management believes that the potential exposure, if any, from such matters would not have a material adverse effect on the financial condition or results of operations of the Company. Note 12 - Future Disposition of Assets The Company has provided reserves for estimated losses from discontinuing the operation of fast food restaurants, for theatres which have been or are expected to be closed and for other future dispositions of assets. In conjunction with the opening of certain new theatres in fiscal 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. The Company continues to sub-lease or to convert to other uses the space leased for these restaurants. The Company is obligated under long-term lease commitments with remaining terms of up to twelve years. As of March 28, 1996, the base rents aggregate approximately $884,000 annually, and $8,314,000 over the remaining term of the leases. As of March 28, 1996, the Company has subleased approximately 77% of the space with remaining terms ranging from five months to 144 months. Non-cancellable subleases currently aggregate approximately $650,000 annually, and $2,730,000 over the remaining term of the subleases. As of March 28, 1996, the Company remains obligated under lease commitments for two closed theatres and for a closed office with remaining terms of up to five years. The current leasing costs of these closed locations approximates $354,000 annually, and $951,000 over the remaining term of the leases. Non-cancellable subleases currently aggregate approximately $58,000 annually, and $92,000 over the remaining term of the subleases. Note 13 - Transactions with Related Parties The Company and DI maintain intercompany accounts. Charges to the intercompany accounts include the allocation of AMC general and administrative expense and payments made by AMC on behalf of DI. As of March 28, 1996, DI and non-AMCE subsidiaries owed the Company $795,000. As of March 30, 1995, the Company owed DI and Non-AMCE subsidiaries $37,000. Note 14 - 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 and investments in debt securities 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 estimated fair values of the Company's financial instruments are as follows (in thousands): 1996 1995 Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and equivalents $ 10,795 $ 10,795 $71,233 $71,233 Investments - - 69,144 69,144 Financial liabilities: Cash overdrafts $ 22,848 $22,848 $- $ - Corporate borrowings 126,150 126,992 200,222 215,952 Statements of Operations by Quarter (In thousands, except per share amounts) (Unaudited)
June 29, June 30, Sept. 28, Sept. 29, Dec. 28, Dec. 29, March 28, March 30, Fiscal Year 1995 1994 1995 1994 1995 1994 1996 1995 1996 1995 Total revenues $153,810 $128,481 $185,066 $164,591 $155,426 $142,625 $163,570 $128,967 $657,872 $564,664 Total cost of operations 120,001 101,435 136,883 125,839 119,508 108,001 120,175 100,640 496,567 435,915 Depreciation and amortization 9,972 8,360 10,471 9,801 10,399 8,977 13,044(3) 10,775(1) 43,886 37,913 General and administrative expenses 10,223 9,620 13,695 9,983 10,637 9,777 14,195 10,427 48,750 39,807 Operating income 13,614 9,066 24,017 18,968 14,882 15,870 16,156 7,125 68,669 51,029 Interest expense 8,309 8,960 8,318 9,321 7,883 8,931 4,318 8,696 28,828 35,908 Investment income 2,226 2,563 2,440 2,954 1,958 2,064 428 2,432 7,052 10,013 Gain (loss) on disposition of assets (15) 2 (123) (77) 159 (4) (243) (77) (222) (156) Earnings before income taxes and extraordinary item 7,516 2,671 18,016 12,524 9,116 8,999 12,023 784 46,671 24,978 Income tax provision 3,100 1,100 7,400 5,100 3,800 3,600 5,000 (18,800)(2) 19,300 (9,000) Earnings before extraordinary item 4,416 1,571 10,616 7,424 5,316 5,399 7,023 19,584 27,371 33,978 Extraordinary item - Loss on extinguishment of debt (net of income tax benefit of $13,400) - - - - (19,350) - - - (19,350) - Net earnings (loss) $4,416 $1,571 $10,616 $7,424 $(14,034) $5,399 $7,023 $19,584 $8,021 $33,978 Preferred dividends 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 7,000 7,000 Net earnings (loss) for common shares $2,666 $(179) $8,866 $5,674 $(15,784) $3,649 $5,273 $17,834 $1,021 $26,978 Earnings (loss) per share before extraordinary item: Primary $.16 $(.01) $.53 $.34 $.21 $.22 $.31 $1.07 $1.21 $1.63 Fully diluted $.16 $(.01) $.45 $.32 $.21 $.22 $.29 $.83 $1.20 $1.45 Earnings (loss) per share: Primary $.16 $(.01) $.53 $.34 $(.93) $.22 $.31 $1.07 $.06 $1.63 Fully diluted $.16 $(.01) $.45 $.32 $(.93) $.22 $.29 $.83 $.06 $1.45
(1)During the fourth quarter of 1995, the Company reduced the estimated lives of lease rights and location premiums on certain smaller theatres to correspond to the base term of the theatre lease. This change in accounting estimate resulted in an increase in amortization expense of $1,542. (2)During the fourth quarter of 1995, the Company reduced the deferred tax asset valuation allowance established under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Based on the Company's positive earnings in recent years and the expectation of continued earnings, management believes uncertainty was removed with respect to the realization of deferred tax assets. Accordingly, the valuation allowance was reduced. (3)During fourth quarter of 1996, the Company adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. As a result, the Company recognized an impairment loss of $1,799. Investor Information Stock Listing/Symbol amc Entertainment Inc. Common Stock is traded on the American and Pacific Stock Exchanges under the symbol aen. The Preferred Stock is traded on the American Stock Exchange under the symbol aen Pr. Quarterly Common Stock Price Range Fiscal 1996 Fiscal 1995 High Low High Low First Quarter $ 14.50 $ 11.00 $ 12.75 $ 9.75 Second Quarter 18.12 13.50 13.25 11.12 Third Quarter 23.50 17.62 12.37 10.37 Fourth Quarter 24.12 19.25 12.62 9.87 Year $ 24.12 $ 11.00 $ 13.25 $ 9.75 (As reported on the American Stock Exchange) Stock Ownership At the end of fiscal 1996, the Company had 5,368,380 common shares outstanding, 50.7% of which were beneficially owned by company man-agement. There were 458 shareholders of record on May 15, 1996. SEC Form 1O-K A copy of the report to the Securities and Exchange Commission on Form 10-K, may be obtained without charge upon written request to the Finance Department at amc headquarters. Annual Meeting The annual meeting of stockholders will be held on Thursday, November 14, 1996, at 11:00 a.m. cst at the Ward Parkway 22 Theatres, 8600 Ward Parkway, Kansas City, Missouri. Quarterly Calendar The company has a 52/53 week fiscal year ending on the Thursday closest to the last day of March. Fiscal 1997 quarter-end dates will be June 27, September 26, December 27, and April 3. Fiscal 1997 will be a 53 week year. Quarterly results usually are announced approximately four weeks after the close of the quarter. Registrar and Transfer Agent UMB Bank, n.a., Securities Transfer Division, 928 Grand Avenue, 13th Floor, P.O. Box 410064, Kansas City, Missouri 64141-6226 Corporate Offices amc Entertainment Inc., 106 West 14th Street, P.O. Box 419615, Kansas City, Missouri 64141-6615, (816) 221-4000 Independent Public Accountants Coopers & Lybrand L.L.P., Kansas City, Missouri Additional Information For additional information on amc Entertainment Inc., please contact: Peter C. Brown, amc Entertainment Inc., P.O. Box 419615, Kansas City, Missouri 64141-6615 (816) 221-4000 Executive Officers and Directors Executive Officers Stanley H. Durwood Chairman of the Board, Chief Executive Officer and President Philip M. Singleton Executive Vice President and Chief Operating Officer Peter C. Brown Executive Vice President and Chief Financial Officer Richard J. King Senior Vice President (AMC) Rolando B. Rodriquez Senior Vice President (AMC) Richard T. Walsh Senior Vice President (AMC) Richard M. Fay President, amc Film Marketing Charles P. Stilley President, amc Realty, Inc. Richard L. Obert Senior Vice President and Chief Accounting and Information Officer Board of Directors Stanley H. Durwood Chairman of the Board, Chief Executive Officer and President Philip M. Singleton Executive Vice President and Chief Operating Officer Peter C. Brown Executive Vice President and Chief Financial Officer Charles J. Egan, Jr. Vice President General Counsel Hallmark Cards, Incorporated Paul E. Vardeman Partner, Polsinelli, White, Vardeman and Shalton Design and production: Annual Reports, Inc., Franklin, Indiana. Photography: Len Allington EX-27 9 FDS SCHEDULE
5 The schedule contains summary financial information extracted from the Consolidated Financial Statements of AMC Entertainment Inc. as of and for the fifty-two weeks ended March 28, 1996, submitted in response to the requirements to Form 10-K and is qualified in its entirety by reference to such financial statements. YEAR MAR-28-1996 MAR-28-1996 10,795 0 21,304 801 0 46,477 600,858 245,373 483,458 105,576 185,268 0 2,667 11,031 145,220 483,458 196,645 657,872 32,641 496,567 43,886 0 28,828 46,671 19,300 27,371 0 (19,350) 0 8,021 .06 .06
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