424B3 1 a07-23938_1424b3.htm 424B3

Filed pursuant to Rule 424(b)(3)
Registration File No. 333-133940

PROSPECTUS SUPPLEMENT
(To Prospectus dated July 3, 2007)

GRAPHIC

AMC Entertainment Inc.

$325,000,000 11% Series B Senior Subordinated Notes due 2016
$250,000,000 8
5¤8% Series B Senior Notes due 2012
$300,000,000 8% Series B Senior Subordinated Notes due 2014


This is supplement No. 2 to AMC Entertainment Inc.’s market-making prospectus dated July 3, 2007. The prospectus is a combined prospectus under Rule 429 of the Securities Act of 1933, as amended (the “Act”), that relates to each of the several series of notes issued by AMC Entertainment Inc. and the related guarantees thereof (the “Securities”) that previously have been registered with the Commission. Each series of Securities has been registered under the Act on registration statements bearing the following File Nos.: 333-122376, 333-113911 and 333-133574.


Recent Developments

We have attached to this prospectus supplement the unaudited pro forma condensed consolidated financial information of AMC Entertainment Inc. for the quarterly period ended June 28, 2007 and the annual period ended March 29, 2007. The attached information updates and supplements, and should be read together with, AMC Entertainment Inc.’s prospectus dated July 3, 2007, as supplemented from time to time.


See “Risk Factors” beginning on page 27 of the prospectus for a discussion of certain risks you should consider before making an investment decision in the notes.


Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


We prepared this prospectus for use by Credit Suisse Securities (USA) LLC and J.P. Morgan Securities Inc. in connection with offers and sales related to market making transactions in the notes. Credit Suisse Securities (USA) LLC and J.P. Morgan Securities Inc. may act as principals or agents in these transactions. These sales will be made at prices related to prevailing market prices at the time of sale. We will not receive any of the proceeds of these sales. The closing of the offerings of the notes referred to in the prospectus, which constituted delivery of the notes by us, occurred on November 15, 2004, in the case of the 2014 Notes, August 18, 2004, in the case of the Fixed Rate Notes and January 26, 2006, in the case of the 2016 Notes.


The date of this prospectus supplement is September 14, 2007.




UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

We derived the following unaudited pro forma condensed consolidated financial information by applying pro forma adjustments attributable to the NCM Transactions to AMC Entertainment’s historical consolidated financial statements included in this prospectus. The unaudited pro forma condensed consolidated statement of operations data for the 13 weeks ended June 28, 2007 and for the 52 weeks ended March 29, 2007 give effect to the Merger Transactions, the NCM Transactions, the Yelmo disposition and the holdco merger as if they had each occurred on March 31, 2006. We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information.

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

The unaudited pro forma condensed consolidated financial information should be read in conjunction with the information contained in “Selected Historical Financial and Operating Data,” “Loews’ Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “AMCE’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the unaudited pro forma condensed consolidated financial statements and the consolidated financial statements and accompanying notes for each of AMC Entertainment and Loews appearing elsewhere in this prospectus.

2




AMC ENTERTAINMENT INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

THIRTEEN WEEKS ENDED JUNE 28, 2007

(dollars in thousands)

 

 

Thirteen weeks ended June 28, 2007

 

 

 

AMCE

 

 

 

 

 

 

 

Thirteen Weeks

 

 

 

 

 

 

 

Ended

 

holdco

 

AMCE

 

 

 

June 28,

 

merger

 

Pro Forma

 

 

 

2007

 

Pro Forma

 

for holdco

 

 

 

Historical

 

Adjustments

 

merger

 

Admissions

 

 

$

416,874

 

 

 

$

 

 

$

416,874

 

Concessions

 

 

184,227

 

 

 

 

 

184,227

 

Other

 

 

21,391

 

 

 

 

 

21,391

 

Total revenues

 

 

622,492

 

 

 

 

 

622,492

 

Cost of operations

 

 

400,559

 

 

 

 

 

400,559

 

Rent

 

 

112,708

 

 

 

 

 

112,708

 

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

Merger, acquisition and transaction costs

 

 

1,984

 

 

 

 

 

1,984

 

Management fee

 

 

1,250

 

 

 

 

 

1,250

 

Other

 

 

13,088

 

 

 

 

 

13,088

 

Preopening expense

 

 

2,085

 

 

 

 

 

2,085

 

Theatre and other closure expense

 

 

(14,828

)

 

 

 

 

(14,828

)

Depreciation and amortization

 

 

63,689

 

 

 

 

 

63,689

 

Total costs and expenses

 

 

580,535

 

 

 

 

 

580,535

 

Other income

 

 

(3,397

)

 

 

 

 

(3,397

)

Interest expense

 

 

37,777

 

 

 

 

 

37,777

 

Equity in earnings of non-consolidated entities

 

 

(2,253

)

 

 

 

 

(2,253

)

Investment income

 

 

(19,257

)

 

 

2,864

 (7)

 

(16,393

)

Total other expense

 

 

12,870

 

 

 

2,864

 

 

15,734

 

Earnings from continuing operations before income taxes

 

 

29,087

 

 

 

(2,864

)

 

26,223

 

Income tax provision

 

 

7,000

 

 

 

 (8)

 

7,000

 

Earnings from continuing operations

 

 

$

22,087

 

 

 

$

(2,864

)

 

$

19,223

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

3




AMC ENTERTAINMENT INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED MARCH 29, 2007
(dollars in thousands)

 

 

Fifty-two weeks ended

 

 

 

March 29, 2007

 

 

 

AMCE

 

 

 

 

 

 

 

 

 

AMCE

 

 

 

Fifty-two Weeks

 

 

 

 

 

 

 

Yelmo

 

Pro Forma

 

 

 

Ended

 

AMCE/

 

 

 

AMCE

 

& holdco

 

For Yelmo

 

 

 

March 29,

 

LCE Merger

 

NCM

 

Pro Forma

 

merger

 

& holdco

 

 

 

2007

 

Pro Forma

 

Pro Forma

 

for LCE

 

Pro Forma

 

merger

 

 

 

Historical

 

Adjustments

 

Adjustments

 

& NCM Transactions

 

Adjustments

 

Transactions

 

Admissions

 

 

$

1,659,939

 

 

 

(10,792

)(1)

 

 

$

 

 

 

$

1,649,147

 

 

 

$

 

 

 

$

1,649,147

 

 

Concessions

 

 

686,318

 

 

 

(3,509

)(1)

 

 

 

 

 

682,809

 

 

 

 

 

 

682,809

 

 

Other

 

 

115,314

 

 

 

(767

)(1)

 

 

(23,029

)(2)

 

 

91,518

 

 

 

 

 

 

91,518

 

 

Total revenues

 

 

2,461,571

 

 

 

(15,068

)

 

 

(23,029

)

 

 

2,423,474

 

 

 

 

 

 

2,423,474

 

 

Cost of operations

 

 

1,554,591

 

 

 

(9,929

)(1)

 

 

13,520

 (3)

 

 

1,558,182

 

 

 

 

 

 

1,558,182

 

 

Rent

 

 

445,924

 

 

 

(3,499

)(1)

 

 

 

 

 

442,425

 

 

 

 

 

 

442,425

 

 

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger, acquisition and transaction costs

 

 

9,996

 

 

 

 

 

 

 

 

 

9,996

 

 

 

 

 

 

9,996

 

 

Management fee

 

 

5,000

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

5,000

 

 

Other

 

 

55,875

 

 

 

 

 

 

 

 

 

55,875

 

 

 

 

 

 

 

55,875

 

 

Preopening expense

 

 

6,569

 

 

 

 

 

 

 

 

 

6,569

 

 

 

 

 

 

6,569

 

 

Theatre and other closure expense

 

 

9,011

 

 

 

 

 

 

 

 

 

9,011

 

 

 

 

 

 

9,011

 

 

Depreciation and amortization

 

 

256,472

 

 

 

 

 

 

 

 

 

256,472

 

 

 

 

 

 

256,472

 

 

Impairment of long-lived assets

 

 

10,686

 

 

 

 

 

 

 

 

 

10,686

 

 

 

 

 

 

10,686

 

 

Disposition of assets and other (gains)/losses

 

 

(11,183

)

 

 

 

 

 

 

 

 

(11,183

)

 

 

 

 

 

(11,183

)

 

Total costs and expenses

 

 

2,342,941

 

 

 

(13,428

)

 

 

13,520

 

 

 

2,343,033

 

 

 

 

 

 

2,343,033

 

 

Other income

 

 

(10,267

)

 

 

 

 

 

 

 

 

(10,267

)

 

 

 

 

 

(10,267

)

 

Interest expense

 

 

206,652

 

 

 

 

 

 

(19,674

)(4)

 

 

151,956

 

 

 

 

 

 

151,956

 

 

 

 

 

 

 

 

 

 

 

 

 

884

 (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,311

)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,331

)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,009

)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,745

 (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of non-consolidated entities

 

 

(233,704

)

 

 

 

 

 

238,810

 (5)

 

 

5,106

 

 

 

783

 (6)

 

 

5,889

 

 

Investment income

 

 

(17,982

)

 

 

 

 

 

 

 

 

(17,982

)

 

 

14,035

 (7)

 

 

(3,947

)

 

Total other expense

 

 

(55,301

)

 

 

 

 

 

184,114

 

 

 

128,813

 

 

 

14,818

 

 

 

143,631

 

 

Earnings from continuing operations before income taxes

 

 

173,931

 

 

 

(1,640

)

 

 

(220,663

)

 

 

(48,372

)

 

 

(14,818

)

 

 

(63,190

)

 

Income tax provision

 

 

42,300

 

 

 

 (8)

 

 

(24,800

)(8)

 

 

17,500

 

 

 

300

 (8)

 

 

17,200

 

 

Earnings from continuing operations

 

 

$

131,631

 

 

 

$

(1,640

)

 

 

$

(195,863

)

 

 

$

(65,872

)

 

 

$

(14,518

)

 

 

$

(80,390

)

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Information

 

4




AMC ENTERTAINMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(in thousands)

(1)   Exclusion of revenues and expenses and disposition of assets and liabilities for theatres disposed of in connection with the approval of the Mergers by the U.S. Department of Justice:

 

 

AMCE

 

AMCE

 

 

 

13 Weeks Ended

 

52 Weeks Ended

 

 

 

June 28, 2007

 

March, 29, 2007

 

Revenues

 

 

$

 

 

 

$

(15,068

)

 

Cost of Operations

 

 

 

 

 

(9,929

)

 

Rent

 

 

 

 

 

(3,499

)

 

 

(2)          On February 13, 2007, NCM, Inc., a newly formed entity that now serves as the sole manager of NCM, closed its IPO. In connection with the NCM, Inc. IPO, we received our proportionate share of 33.7% distributions from NCM related to newly issued common membership units in connection with modifying our payment obligations for extended access to our theatres pursuant to the exhibitor services agreement with NCM. NCM also used borrowings from its senior credit facility to redeem our preferred units held in NCM.

Represents the change in circuit share payments from NCM pursuant to the exhibitor services agreements entered into in connection with the completion of the NCM, Inc. IPO. Under the terms of the prior contracts between NCM and its founding members, the circuit share payments were based on varying percentages of advertising revenue (65% to 68%). Under the modified exhibitor services agreements, the theatre access fee payments will initially be based on $0.07 per attendee and $800 per year per digital screen. The pro forma adjustment was computed on the basis of the pro forma levels of our attendance prior to entering into the new exhibitor services agreement (126.0 million for the 52 weeks ended March 29, 2007) and average numbers of our digital screens (2,663 for the 52 weeks ended March 29, 2007).

The following table identified the components of the adjustments to revenues:

 

 

AMCE

 

AMCE

 

 

 

13 Weeks Ended

 

52 Weeks Ended

 

 

 

June 28, 2007

 

March 29, 2007

 

Revenues under old ESA

 

 

$

 

 

 

$

(35,384

)

 

Revenues under new ESA

 

 

 

 

 

10,636

 

 

Deferred revenue amortization*

 

 

 

 

 

1,719

 

 

Total

 

 

$

 

 

 

$

(23,029

)

 

 

*                    Deferred revenue is amortized under the units of revenue method. Under the units of revenue method, amortization for a period is calculated by computing a ratio of the proceeds received from the ESA modification payment to the total expected decrease in revenues due to entry into the new ESA over the 30 year term of the agreement and then applying that ratio to the current period’s

5




expected decrease in revenues due to entry into the new ESA. The following table illustrates how the amount of deferred revenue amortization was computed and determined (thousands of dollars):

 

 

All Members 

 

AMCE %

 

52 weeks
AMCE

 

Proceeds from ESA Payment

 

 

$

686,330

 

 

 

33.7

%

 

$

231,308

 

Total expected decrease in revenues 30 years

 

 

4,537,330

 

 

 

 

 

 

 

 

Ratio

 

 

15

%

 

 

 

 

 

 

 

Expected decrease in revenues 1st year

 

 

$

38,889

 

 

 

 

 

 

 

 

Deferred revenue amortization

 

 

$

5,882

 

 

 

33.7

%

 

$

1,983

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Amounts recorded during fiscal 2007

 

 

 

 

 

 

 

 

 

(264

)

 

 

 

 

 

 

 

 

 

 

$

1,719

 

 

 

 

Projected Amounts

 

Calendar

 

 

 

30 years

 

2007

 

New ESA Network Rental Fees

 

 

 

 

 

 

 

NCM Projected Attendance

 

 

 

 

 

574,100

 

Rate per attendee

 

 

 

 

 

$

0.07

 

Attendance based revenue

 

 

 

 

 

$

40,187

 

Number of digital screens

 

 

 

 

 

12,380

 

Rate per digital screen

 

 

 

 

 

$

800

 

Screen based revenue

 

 

 

 

 

$

9,904

 

Total revenue New ESA

 

 

$

3,186,320

 

 

$

50,091

 

Old ESA Network Rental Fees

 

 

 

 

 

 

 

NCM Projected Advertising Revenue

 

 

 

 

 

$

296,600

 

Revenue share %

 

 

 

 

 

30

%

Total revenue Old ESA

 

 

$

7,723,650

 

 

$

88,980

 

Total decrease in revenue (New minus Old)

 

 

$

(4,537,330

)

 

$

(38,889

)

 

(3)          Represents the pro forma effect of the incremental cost to us from the purchase of additional theatre advertising inventory, in accordance with the exhibitor services agreements entered into in connection with the completion of the NCM, Inc. IPO in order for us to fulfill our beverage concessionaire agreement on-screen advertising commitments. Inventory used to fulfill advertising commitments under our beverage concessionaire agreements had been retained by us under our prior contractual agreements with NCM, and will be made available to NCM under the exhibitor services agreement. This inventory will be sold to us at a 30 second CPM equivalent, as set forth in the exhibitor services agreements, for the 90 seconds used, and the pro forma adjustment is computed by multiplying our historical attendance by such CPM equivalent. The following table discloses the significant assumptions used to calculate and determine the amount of this pro forma adjustment (thousands of dollars):

 

 

ACME

 

ACME

 

 

 

13 Weeks Ended
June 28, 2007

 

52 Weeks Ended
March 29, 2007

 

Cost per thousand attendees for a 30 second interval

 

 

$

 

 

 

$

26

 

 

Number of 30 second intervals (90 seconds)

 

 

 

 

 

3

 

 

Historical attendance prior to new exhibitor services agreement

 

 

 

 

 

173,333

 

 

 

 

 

$

 

 

 

$

13,520

 

 

 

6




(4)          We used the proceeds from the NCM Transactions, together with cash on hand, to redeem our 91¤2% senior subordinated notes due 2011, our senior floating rate notes due 2010 and our 97¤8% senior subordinated notes due 2012 during March 2007.

Reflects change in interest expense for redemption of Notes due 2011. Notes due 2012 and Notes due 2010:

 

 

AMCE

 

AMCE

 

 

 

13 Weeks Ended 
June 28, 2007

 

52 Weeks Ended 
March 29, 2007

 

Cash interest expense on $212.8 million aggregate principal amount of 91¤2% Notes due 2011

 

 

$

 

 

 

$

(19,674

)

 

Amortization of premium on Notes due 2011 (level yield to maturity from December 23, 2004, 8.9%)

 

 

 

 

 

884

 

 

Cash interest expense on $205.0 million aggregate principal amount of floating rate Notes due 2010 (Rates ranging from 7.0% to 9.5%)

 

 

 

 

 

(19,311

)

 

Deferred charge amortization on floating rate Notes due 2010
($7.4 million straight-line over 6 years)

 

 

 

 

 

(1,331

)

 

Cash interest expense on $175.0 million aggregate principal amount of 97¤8% Notes due 2012

 

 

 

 

 

(17,009

)

 

Amortization of premium on Notes due 2012 (level yield to maturity from December 23, 2004, 8.3%)

 

 

 

 

 

1,745

 

 

 

There were no deferred charges written off in connection with the redemption of the Notes due 2011 and the Notes due 2012 as the amounts were recorded at fair value on December 23, 2004 in connection with the merger of AMC Entertainment Inc. and Marquee Inc. The pro forma adjustments reflect the historical amounts recorded by us for each period.

(5)          The adjustment represents the elimination of the one-time non-recurring equity in earnings related to the NCM Transaction.

(6)          We have removed losses related to our investment in Yelmo sold in December 2006.

(7)          The adjustment represents the elimination of interest income earned on $275 million of cash used related to the holdco merger.

(8)          Represents the income tax effect related to the pro forma adjustments:

 

 

AMCE

 

 

 

13 Weeks Ended

 

52 Weeks Ended

 

 

 

June 28, 2007

 

March 29, 2007

 

Historical Income Tax Provision

 

 

$

7,000

 

 

 

$

42,300

 

 

Decrease in Deferred Income Taxes(a)

 

 

 

 

 

(19,200

)

 

Decrease in Current Federal and State Taxes(b)

 

 

 

 

 

(5,900

)

 

Pro Forma Income Tax Provision(c)

 

 

$

7,000

 

 

 

$

17,200

 

 


(a)           The decrease in deferred taxes is primarily due to the removal of taxes related to the gain on the NCM Transactions. The NCM gain allowed us to utilize previously unrecognized deferred tax assets, which had the effect of lowering the effective tax rate applicable to the gain.

(b)          The decrease is current federal and state taxes is due to a reduction in federal alternative minimum tax and state income taxes as a result of the removal of the gain on the NCM Transactions.

(c)           The remaining provision relates to state and foreign income taxes.

7