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As filed with the Securities and Exchange Commission on December 11, 2006

Registration No. 333-          



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


FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


MARQUEE HOLDINGS INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  7832
(Primary Standard Industrial
Classification Code Number)
  43-1304369
(I.R.S. Employer
Identification Number)

c/o AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105-1977
(816) 221-4000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)


Kevin M. Connor, Esq.
Senior Vice President, General Counsel & Secretary
AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105
(816) 221-4000
(Name, address, including zip code, and telephone number, including area code, of agent for service)




Copies of Communications to:
Gregory A. Ezring, Esq.
Monica K. Thurmond, Esq.
O'Melveny & Myers LLP
7 Times Square
New York, New York 10036
(212) 326-2000
  Matthew D. Bloch, Esq.
Erika L. Weinberg, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000

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

        If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.    o                                  

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

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

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

        If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.    o


CALCULATION OF REGISTRATION FEE


Title of Each Class of
Securities to be Registered

  Proposed Maximum
Aggregate
Offering Price(1)(2)

  Amount of
Registration Fee(3)


Common stock, par value $0.01 per share   $750,000,000   $80,250.00

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
(2)
Including shares of common stock which may be purchased by the underwriters to cover over-allotments, if any.
(3)
Paid by wire transfer from AMC Entertainment Inc. on behalf of Marquee Holdings Inc.


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




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

SUBJECT TO COMPLETION, DATED DECEMBER 11, 2006

                        Shares

LOGO

AMC Entertainment Inc.

Common Stock


        This is an initial public offering of shares of common stock of AMC Entertainment Inc. (formerly Marquee Holdings Inc.)

        Our selling stockholders are selling an aggregate of                  shares in this offering. We will not receive any of the proceeds from the sale of the shares of common stock being sold by our selling stockholders.

        Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $            and $            per share. We will apply to list the common stock on the                        under the symbol "        ".

        The underwriters have an option to purchase a maximum of                  additional shares of common stock from the selling stockholders to cover over-allotments of shares. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders pursuant to an exercise of the underwriters' over-allotment option.

        Investing in our common stock involves risks. See "Risk Factors" on page 22.


 
  Price to Public
  Underwriting
Discounts and
Commissions

  Proceeds to the
Selling Stockholders


Per Share            

Total            

        Delivery of the shares of common stock will be made on or about                        , 2007.

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

The date of this prospectus is                        , 2007.


TABLE OF CONTENTS

 
  Page
PROSPECTUS SUMMARY   1
RISK FACTORS   22
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS   33
USE OF PROCEEDS   34
DIVIDEND POLICY   35
CAPITALIZATION   36
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION   37
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA   46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MARQUEE HOLDINGS INC.   52
LCE HOLDINGS' MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   86
BUSINESS   97
MANAGEMENT   109
PRINCIPAL AND SELLING STOCKHOLDERS   119
DESCRIPTION OF CERTAIN INDEBTEDNESS   121
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS   125
DESCRIPTION OF CAPITAL STOCK   129
SHARES ELIGIBLE FOR FUTURE SALE   134
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS   136
UNDERWRITING   140
NOTICE TO CANADIAN RESIDENTS   143
LEGAL MATTERS   145
EXPERTS   145
WHERE YOU CAN FIND MORE INFORMATION   145
INDEX TO FINANCIAL STATEMENTS   F-1

        You should rely only on the information contained in or incorporated by reference in this document. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation

        Until                  , 2007, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.


MARKET AND INDUSTRY INFORMATION

        Information regarding market share, market position and industry data pertaining to our business contained in this prospectus consists of our estimates based on data and reports compiled by industry professional organizations (including the Motion Picture Association of America, the National Association of Theatre Owners ("NATO"), Nielsen Media Research, Dodona Research, Rentrak Corporation ("Rentrak") and Screen Digest), industry analysts and our management's knowledge of our business and markets.

        Although we believe that the sources are reliable, we have not independently verified market industry data provided by third parties or by industry or general publications, and we take no further responsibility for this data. Similarly, while we believe our internal estimates with respect to our industry are reliable, our estimates have not been verified by any independent sources. While we are not aware of any misstatements regarding any industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to changes based on various factors, including those discussed under "Risk Factors."

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PROSPECTUS SUMMARY

        The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and our consolidated financial statements and accompanying notes.

        On January 26, 2006, Marquee Holdings Inc. ("Holdings"), the parent of AMC Entertainment Inc. ("AMC Entertainment"), merged with LCE Holdings, Inc. ("LCE Holdings"), the parent of Loews Cineplex Entertainment Corporation ("Loews"), with Holdings continuing after the merger, and Loews merged with and into AMC Entertainment, with AMC Entertainment continuing after the merger (collectively, the "Mergers"). As used in this prospectus, unless the context otherwise requires, references to "AMC Entertainment" or "AMCE" refer to AMC Entertainment Inc. and its subsidiaries prior to giving effect to the Mergers. Upon completion of this initial public offering, Holdings will change its name to AMC Entertainment Inc. and AMC Entertainment will change its name to            . Except as otherwise indicated or otherwise required by the context, references in this prospectus to "we," "us," the "combined company" or the "company" refer to the combined business of Holdings and its subsidiaries after giving effect to the Mergers.

        As used in this prospectus, the term "pro forma" refers to, in the case of pro forma financial information, such information after giving pro forma effect to the Merger Transactions (as defined below), the NCM Transactions (as described under "Prospectus Summary—Recent Developments") and this offering. The share data set forth in this prospectus reflects a reclassification of Holdings' capital stock as more fully described under "Prospectus Summary—The Reclassification."

        Holdings has a 52-week or 53-week fiscal year ending on the Thursday closest to April 1. Fiscal years 2002, 2004, 2005 and 2006 contained 52 weeks. Fiscal year 2003 contained 53 weeks.

Who We Are

        We are one of the world's leading theatrical exhibition companies based on total revenues. We were founded in 1920 and over the years we have pioneered many of the industry's leading innovations including the megaplex theatre. Additionally, through our acquisition activity we have acquired some of the most respected companies in the theatrical exhibition industry such as General Cinemas and Loews. As of September 28, 2006, we owned, operated or held interests in 411 theatres with a total of 5,635 screens, of which approximately 82% were located in the United States and Canada. We believe that we have one of the most modern theatre circuits among the world's major theatre exhibitors. Our circuit of high-performing theatres is primarily located in large, urban markets where we have a strong market position which allows us to maximize revenues and manage our costs effectively. For the 52 weeks ended March 30, 2006, on a pro forma basis, we had revenues of $2.4 billion, Adjusted EBITDA (as defined on page 12 under "Summary Unaudited Pro Forma Financial and Operating Data") of $367.5 million, a loss from continuing operations of $245.2 million and, on a historical basis, we had net cash provided by operating activities of $25.7 million. For the 52 weeks ended September 28, 2006, on a pro forma basis, we had revenues of $2.4 billion, Adjusted EBITDA of $389.9 million, a loss from continuing operations of $189.7 million and, on a historical basis, we had net cash provided by operating activities of $96.4 million. Net cash provided by operating activities for the 52 weeks ended March 30, 2006 and September 28, 2006 do not include $142.5 million of cash acquired in the Mergers. See "Summary Unaudited Pro Forma Financial and Operating Data."

        In the United States, as of September 28, 2006, we operated 312 theatres with 4,468 screens in 30 states and the District of Columbia. We have a significant presence in most major urban "Designated Market Areas," or "DMAs" (television market areas as defined by Nielsen Media Research). For the 52 weeks ended September 28, 2006, we had the number one or two market share in 21 of the top 25 DMAs in the U.S., including the number one market share in New York City, Chicago, Dallas and

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Boston, among others, and we operated 25 of the top 50 theatres in the U.S. and Canada in terms of box office revenues as measured by Rentrak. As of September 28, 2006, we had an average of 14.5 screens per theatre, which we believe to be the highest among the major U.S. and Canada theatre exhibitors. Our U.S. and Canada theatre circuit represented 91.5% of our revenues for the 52 weeks ended September 28, 2006 on a pro forma basis.

        As of September 28, 2006, our international circuit of 92 theatres and 1,007 screens consisted principally of wholly-owned theatres in Mexico and unconsolidated joint ventures in South America and Spain. In Mexico, we owned and operated 43 theatres and 476 screens primarily located in the Mexico City Metropolitan Area, or MCMA, through Grupo Cinemex, S.A. de C.V. and its subsidiaries (Cinemex). We believe that we have the number one market share in the MCMA with an estimated 49% of MCMA attendance through August of calendar 2006. We also had three wholly-owned theatres and 42 screens in Europe. Our wholly-owned international circuit represented 8.5% of our revenues for the 52 weeks ended September 28, 2006 on a pro forma basis.

        In addition, as of September 28, 2006, we participated in 50% joint ventures in South America (Hoyts General Cinema South America, or HGCSA) and Spain (Yelmo Cineplex, S.L., or Yelmo) which collectively owned 46 theatres and 489 screens. Although we do not consolidate our joint ventures, we have been able to capture value for these assets through divestitures. See "Business."

Our Competitive Strengths

        Key characteristics of our business that we believe make us a particularly effective competitor against other theatrical exhibition companies and position us well for future growth include:

    our leading scale and market position;

    our modern theatre circuit;

    our highly productive theatres;

    our broad major market coverage with prime theatre locations;

    our strong cash flow generation; and

    our proven management team.

        Leading Scale and Market Position.    We are one of the world's leading theatrical exhibition companies based on total revenues, enjoying geographic market diversification and leadership in major markets worldwide. Our merger on January 26, 2006 with Loews combined two leading theatrical exhibition companies, each with a long history of operating in the industry, and increased the number of screens we operated by 47%. As of September 28, 2006, we owned, operated or held interests in a geographically diverse theatre circuit consisting of 411 theatres and 5,635 screens. We believe the size of our operations allows us to achieve economies of scale, which provides us with a competitive advantage in real estate, theatre level operations, purchasing, theatre support and general and administrative activities, and positions us to benefit from positive industry attendance trends and revenue generating opportunities.

        Modern Theatre Circuit.    We are an industry leader in the development and operation of megaplex theatres, typically defined as a theatre having 14 or more screens and offering amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and enhanced seat design. We believe that the megaplex format provides the operator with enhanced revenue opportunities and better asset utilization while creating convenience for patrons by increasing film choice and the number of film starting times. We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through closures and sales. From April 1995 through September 28, 2006,

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AMC Entertainment and Loews built 194 theatres with 3,523 new screens, acquired 431 theatres with 3,007 screens and disposed of 669 theatres with 4,020 screens. Of the total new build screens, 2,933 were added during the 1995 through 2002 period as we led the industry in modernizing our circuit through development of megaplex theatres. As of September 28, 2006, 3,274 or approximately 71% of our screens in the U.S. and Canada were located in megaplex theatres and as a result of the high quality nature of our circuit, the pace of new builds has recently slowed. The average number of screens per theatre in the United States and Canada increased from 11.2 for AMCE at the end of 2001 to 14.5 for the combined company as of September 28, 2006, which was well above the National Association of Theatre Owners average of 6.5 and indicative of the extent to which we have upgraded our theatre circuit.

        Highly Productive Theatres.    Our theatres are generally among the most productive in the markets where they operate. For the 52 weeks ended September 28, 2006, we had the number one market share in New York City, Chicago, Dallas and Boston among others, and we operated 25 of the top 50 theatres in the U.S. and Canada in terms of box office revenue as measured by Rentrak. Our next closest competitor operated ten of the top 50 theatres. In addition, for the 52 weeks ended September 28, 2006, on a pro forma basis, our theatre circuit in the United States and Canada produced box office revenues per screen at rates approximately 25% higher than our closest peer competitor and 42% higher than the industry average, as measured by Rentrak. On average, our theatres do more business and serve more customers, which positions us to benefit from our highly profitable concessions operations and from growth in advertising, arcade, ticketing fees and other ancillary sources of revenue.

        Broad Major Market Coverage in the United States with Prime Theatre Locations.    Our theatres are generally located in large, urban markets, giving us a breadth of market coverage that places us in most major markets in the United States. As of September 28, 2006, we operate in all but two of the Top 25 DMAs. Our theatres are usually located near or within developments that include retail stores, restaurants and other activities that complement the movie-going experience. Traditionally, the population densities, affluence and ethnic and cultural diversity of top DMA's generate higher levels of box office per capita and greater opportunity for a broader array of film genre, all of which we believe position the AMC circuit to benefit from the potential growth in these markets.

        Strong Cash Flow Generation.    As a leading exhibitor, AMC Entertainment generated net cash provided by operating activities of $65.0 million for the six months ended September 28, 2006. In future years, we expect to generate enough cash flow to service debt, maintain existing facilities, invest in our business through an appropriate level of new builds that allows us to maintain the high quality of our theatre circuit and to pay dividends to shareholders.

        Proven Management Team.    Our highly experienced senior management team has an average of 25 years of experience in the theatrical exhibition industry. Management has also successfully integrated a number of acquisitions which have achieved immediate cost-savings and has demonstrated the ability to successfully manage our business through all industry and economic cycles.

Our Strategy

        Our strategic plan has three principal elements:

    maximizing operating efficiencies by focusing on the fundamentals of our business;

    optimizing our theatre portfolio through selective new builds, acquisitions and the disposition of underperforming theatres; and

    enhancing and extending our business and brands and in doing so, growing our core and ancillary revenues.

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        Maximizing Operating Efficiencies.    We believe the fundamentals of our business include maximizing revenues, managing our costs and improving our margins. For example, since fiscal 2001, AMC Entertainment has implemented key initiatives in each of these areas, which have resulted in the following:

    theatre revenues per patron for AMC Entertainment have increased by a 5.1% compound annual growth rate, or CAGR, from fiscal 2001 through the 52 week period ended September 28, 2006, which resulted in a per patron increase of greater than $2.40 over this period; and

    as a result of numerous cost control initiatives, our cost of operations have declined as a percentage of total revenues from 67.4% in fiscal 2001 to 63.8% for the 52 weeks ended September 28, 2006;

As a result, our Segment Adjusted EBITDA(1) margins have increased from 14.5% in fiscal 2001 to 18.2% for the 52 weeks ended September 28, 2006, additionally;


(1)
See Note 11 to our Unaudited Financial Statements and Note 16 to our Audited Financial Statements included in this prospectus for a discussion of Segment Adjusted EBITDA.

general and administrative expenses: other for AMC Entertainment have declined as a percentage of total revenue from 2.7% in fiscal 2001 to 2.3% during the 52 weeks ended September 28, 2006.

        Optimizing Our Theatre Portfolio.    Asset quality is a function of our selective new build, acquisition and theatre disposition strategies.

        As a recognized leader in the development and operation of megaplex theatres and based upon our financial resources, we believe that we will continue to have attractive new build opportunities presented to us by real estate developers and others. We intend to selectively pursue new build opportunities where the characteristics of the location and the overall market meet our strategic and financial return criteria. As of September 28, 2006, we had 9 theatres with 129 screens under construction and scheduled to open in fiscal 2007.

        There are approximately 590 theatrical exhibitors in the United States and Canada, and the top five exhibitors account for approximately 52% of the industry's screens. This statistic is up from 34% in 1999 and is evidence that the theatrical exhibition business in the United States and Canada has been consolidating. AMC Entertainment and Loews each played a key role in this consolidation process from 2002 through 2004, with AMC Entertainment acquiring three domestic theatre operators with a total of 737 screens and Loews acquiring two domestic theatre operators with a total of 185 screens. We intend to continue our disciplined approach of assessing strategic acquisition opportunities as they present themselves.

        We believe that a major factor that further differentiates us from our competitors and has contributed to our overall theatre portfolio quality has been our proactive effort to close or dispose of older, underperforming theatres. Since fiscal 1995, our last fiscal year before the first megaplex theatre opened, we have closed or disposed of 4,020 screens on a combined basis, 1,630 of which were owned by AMC Entertainment at the time of disposal and 2,390 of which were owned by Loews. We have identified 52 multiplex theatres with 418 screens that we may close over the next one to three years due to the expiration of leases or early lease terminations. In order to maintain a modern, high quality theatre circuit, we will continue to evaluate our theatre portfolio and, where appropriate, dispose of theatres through closures, lease terminations, lease buyouts, sales or subleases.

        Enhancing and Extending Our Business and Brands.    We believe there are opportunities to increase our core and ancillary revenues and build brand equity through enhancements of our business, new

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product offerings and strategic marketing initiatives. We have explored numerous ways to grow our ancillary revenues, which are traditionally high growth, high margin prospects. For example:

    We were a founding member and currently own approximately 29% of National CineMedia, LLC, a cinema screen advertising venture representing 12,973 U.S. and Canadian theatre screens (of which 11,077 are equipped with digital projection capabilities) and reaching 530 million movie guests annually;

    We were a founding partner and currently own approximately 27% of MovieTickets.com, an Internet ticketing venture representing over 9,500 screens; we own approximately 9% of Fandango, an on-line movie ticketing company that Loews founded with several other exhibitors and which represents approximately 14,000 screens;

    Our MovieWatcher frequent moviegoer loyalty program has been the largest program in the industry with approximately 1.6 million active members;

    We introduced the AMC Entertainment Card in October 2002, the first stored valued gift card sold circuit wide in the industry. We currently sell the card through several marketing alliances at approximately 50,000 retail outlets throughout the United States and Canada; and

    During 2006, we implemented specific marketing initiatives targeted at increasing attendance. In addition, we have introduced value oriented product combinations and pricing as part of our concession offerings that has increased concession spending per patron and profitability.

The Industry

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

        Theatrical exhibition has demonstrated long-term steady growth. U.S. and Canada box office revenues increased by a 4.5% CAGR over the last 20 years, driven by increases in both ticket prices and attendance. Ticket prices have grown steadily over the past 20 years, growing at a 3% CAGR. In calendar 2005, industry box office revenues were $9.0 billion, a decrease of 5.7% from the prior year and which in our view is principally the result of the popularity of film product. Calendar year box office revenues are up 6% as reported by Rentrak and we estimate that attendance is up 4% through September 28, 2006 over the comparable calendar 2005 period.

        We believe the movie-going experience continues to provide an attractive value for consumers because it is a convenient and affordable option when compared to other forms of out-of-home entertainment. The estimated average ticket price in the United States and Canada was $6.41 in 2005, which is considerably less than other forms of out-of-home entertainment such as concerts and sporting events.

        During the period from 1995, when we first introduced the megaplex theatre, to 1999, U.S. and Canada screen count grew at an 8% CAGR from 27,000 to approximately 36,500. Since then, screen counts have grown at a more moderate pace, resulting in a total screen count of 37,100 at the end of 2005. According to NATO and the Motion Picture Association 2005 MPAA Market Statistics, average screens per theatre have increased from 3.8 in 1995 to 6.5 in 2005, which we believe is indicative of the industry's development of megaplex theatres.

Recent Developments

        National CineMedia.    National CineMedia, LLC ("NCM") is a cinema screen advertising venture representing 12,973 U.S. and Canadian theatre screens (of which 11,077 are equipped with digital

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projection capabilities) and reaching 530 million movie guests annually jointly owned by Holdings, Cinemark, Inc. ("Cinemark") and Regal Entertainment Group ("Regal"). As of September 28, 2006, we had a 29% interest in NCM which we accounted for using the equity method. On October 12, 2006, National CineMedia, Inc. ("NCM, Inc."), a newly formed entity that will serve as the sole manager of NCM, announced that it filed a registration statement with the SEC for an initial public offering, or IPO, of up to $700 million of its common stock. Net proceeds from NCM, Inc.'s IPO will be used to acquire newly issued equity interests from NCM and NCM will distribute the net proceeds to each of us, Cinemark and Regal on a pro rata basis in connection with modifying payment obligations for extended access to our theatres. In connection with the completion of NCM, Inc.'s IPO, NCM also intends to enter into an approximately $725 million term loan facility the net proceeds of which will be used to redeem preferred units to be held by each of us, Cinemark and Regal on a pro rata basis pursuant to a recapitalization of NCM prior to completion of NCM, Inc.'s IPO. We expect to receive proceeds from NCM Inc.'s IPO and the redemption of our preferred units upon completion of such transactions of approximately $425 million to $475 million. We are still evaluating our use of proceeds from these transactions, which may include the repayment of certain of our indebtedness. However, we have not yet determined which of our indebtedness we may repay, and we may decide to use these proceeds for a purpose other than the repayment of our indebtedness.

        In connection with the completion of NCM, Inc.'s IPO, we intend to amend and restate our existing services agreement with NCM whereby in exchange for our pro rata share of the proceeds from NCM, Inc.'s IPO and redemption of our preferred units, we will agree to a modification of NCM's payment obligation under the existing agreement. The modification will extend the term of the agreement to 30 years, provide NCM with a five year right of first refusal for the services beginning one year prior to the end of the term and change the basis upon which we are paid by NCM from a percentage of revenues associated with advertising contracts entered into by NCM to a monthly theatre access fee. The theatre access fee would be composed of a fixed payment per patron and a fixed payment per digital screen, which would increase by 8% every five years starting at the end of fiscal 2011 for payments per patron and by 5% annually starting at the end of fiscal 2007 for payments per digital screen. Additionally, we will enter into the Loews Screen Integration Agreement with NCM pursuant to which we will pay NCM an amount that approximates the EBITDA that NCM would generate if it were able to sell advertising in the Loews theatre chain on an exclusive basis commencing upon the completion of NCM, Inc.'s IPO, and NCM will issue to us common membership units in NCM increasing our expected ownership interest to approximately 33%; such Loews payments will be made quarterly until May 2008. Also, with respect to any on-screen advertising time provided to our beverage concessionaire, we would be required to purchase such time from NCM at a negotiated rate. In addition, after completion of NCM, Inc.'s IPO, we expect to receive mandatory quarterly distributions of excess cash from NCM.

        There can be no guarantee that NCM, Inc. will complete its IPO or debt transactions, which we refer to in this prospectus as the "NCM Transactions," or that we will receive any of the expected proceeds. Our initial public offering is conditioned upon the completion of the NCM Transactions.

The Merger Transactions

        In January 2006, Holdings merged with LCE Holdings, the parent of Loews, with Holdings continuing as the holding company for the merged businesses, and Loews merged with and into AMC Entertainment, with AMC Entertainment continuing after the merger. Operating results of the acquired theatres are included in our consolidated statements of operations from January 26, 2006.

        Concurrently with the closing of the Mergers, we entered into the following financing transactions: (1) our new senior secured credit facility, consisting of a $650.0 million term loan facility and a $200.0 million revolving credit facility; (2) the issuance by AMCE of $325.0 million in aggregate principal amount of 11% senior subordinated notes due 2016; (3) the termination of AMC

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Entertainment's existing senior secured credit facility, under which no amounts were outstanding, and the repayment of all outstanding amounts under Loews' existing senior secured credit facility and the termination of all commitments thereunder; and (4) the completion of the tender offer and consent solicitation for all $315.0 million aggregate principal amount of Loews' 9.0% senior subordinated notes due 2014.

        We refer collectively to the Mergers, the consummation of the financing transactions described above and the divestitures related to the final judgments described in "Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc." as the "Merger Transactions."

The Reclassification

        Prior to consummating this offering, Holdings intends to reclassify each share of its existing Class A common stock, Class N common stock and Class L common stock. Pursuant to the reclassification, each holder of shares of Class A common stock, Class N common stock and Class L common stock will receive             shares of common stock for one share of Class A common stock, Class L common stock or Class N common stock. Upon completion of this offering, Holdings will change its name to AMC Entertainment Inc. The transactions described in this paragraph are referred to in this prospectus as the "Reclassification."

        Currently, investment vehicles controlled by J.P. Morgan Partners, LLC (collectively "JPMP"), Apollo Investment Fund V, L.P. and certain related investment funds (collectively "Apollo"), JPMP's and Apollo's co-investors, affiliates of Bain Capital Partners ("Bain"), The Carlyle Group ("Carlyle"), Spectrum Equity Investors ("Spectrum"), and management hold 100% of our outstanding common stock. JPMP, Apollo, Bain, Carlyle and Spectrum are collectively referred to as the "Sponsors." After giving effect to the sale by our Sponsors of shares of our common stock in this offering, the Sponsors will continue to hold            shares of our common stock, representing approximately            % of our outstanding common stock.

Risk Factors

        The "Risk Factors" section included in this prospectus contains a discussion of factors that you should carefully read and consider before deciding to invest in shares of our common stock.


Corporate Information

        Marquee Holdings Inc. is a Delaware corporation. Our principal executive offices are located at 920 Main Street, Kansas City, Missouri 64105. The telephone number of our principal executive offices is (816) 221-4000. We maintain a website at www.amctheatres.com, on which we will post our key corporate governance documents, including our board committee charters and our code of ethics. We do not incorporate the information on our website into this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus.

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The Offering

Common stock offered by the selling stockholders                     shares

Common stock to be outstanding immediately after this offering

 

                  shares

Over-allotment option

 

The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to                  additional shares from the selling stockholders at the initial public offering price less underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock.

Common stock voting rights

 

Each share of our common stock will entitle its holder to one vote per share.

Dividend Policy

 

Following this offering, payment of dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant. See "Dividend Policy."

Use of proceeds

 

We will not receive any of the proceeds from the sale of shares by the selling stockholders in this offering. The selling stockholders will receive all of the proceeds from the sale of their shares in this offering. Several of the underwriters have affiliates who own our common stock and who are selling stockholders. See "Use of Proceeds" and "Risk Factors — Risks Related to the Offering."

Proposed                  trading symbol

 

 

8


        Unless otherwise stated herein, the information in this prospectus assumes that:

    the Reclassification has been completed;

    the underwriters have not exercised their option to purchase up to            additional shares of common stock from the selling stockholders to cover over-allotments of shares;

    the initial offering price is            per share, the midpoint of the range set forth on the cover page of this prospectus; and

    our amended and restated certificate of incorporation and amended and restated bylaws are in effect, pursuant to which the provisions described under "Description of Capital Stock" will become operative.

        In the Reclassification, each holder of shares of Marquee Holdings, Inc. Class A, Class L and Class N common stock will receive            shares of common stock for one share of Class A, Class L or Class N common stock. The number of shares of common stock to be outstanding after completion of this offering is based on         shares of our common stock to be sold in this offering and, except where we state otherwise, the common stock information we present in this prospectus excludes, as of September 28, 2006:

    shares of common stock issuable upon the exercise of outstanding employee options, at September 28, 2006, at a weighted average exercise price of $          per share; and

    shares of common stock we will reserve for future issuance under our equity incentive plan.

9


Summary Unaudited Pro Forma Financial and Operating Data

        The following summary unaudited pro forma financial and operating data sets forth our unaudited pro forma combined balanced sheet as of September 28, 2006 and unaudited pro forma combined statement of operations for the 26 weeks ended September 28, 2006, the 52 weeks ended March 30, 2006 and the 52 weeks ended September 28, 2006. The pro forma financial data has been derived from our unaudited pro forma condensed consolidated financial information and the notes thereto included elsewhere in this prospectus and has been prepared based on Holdings' and LCE Holdings' historical consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma combined balance sheet gives pro forma effect to the NCM Transactions and this offering, as if they had occurred on September 28, 2006. The unaudited pro forma combined statement of operations data gives pro forma effect to the Merger Transactions, the NCM Transactions and this offering, as if each had occurred at April 1, 2005. We have included pro forma financial information for 52 weeks ended September 28, 2006 because we believe that this information provides meaningful financial data about our company's performance after completion of the Merger Transactions in January 2006. In addition, our senior secured credit facility requires us to measure compliance with certain quarterly financial covenants on a trailing twelve month basis. See "—Covenant Compliance." The summary unaudited pro forma financial and operating data is based on certain assumptions and adjustments and does not purport to present what our actual results of operations would have been had the Merger Transactions, the NCM Transactions or this offering and events reflected by them in fact occurred on the dates specified, nor is it necessarily indicative of the results of operations that may be achieved in the future. The summary unaudited pro forma combined financial data should be read in conjunction with "Unaudited Pro Forma Condensed Consolidated Financial Information," the unaudited pro forma condensed consolidated financial statements, the historical consolidated financial statements, including the notes thereto, Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc.," "LCE Holdings' Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial data of Holdings and LCE Holdings presented elsewhere in this prospectus.

10


 
  Pro Forma
 
 
  26 Weeks Ended
September 28, 2006

  52 Weeks Ended
March 30, 2006

  52 Weeks Ended
September 28, 2006

 
 
  (thousands of dollars, except operating and per share data)

 
Statement of Operations Data:                    
Total revenues   $ 1,253,450   $ 2,384,714   $ 2,428,668  
  Cost of operations     810,077     1,568,149     1,575,626  
  Rent     222,063     441,349     445,660  
  General and administrative expense:                    
    Merger and acquisition costs     5,826     18,059     17,901  
    Other     29,680     76,985     66,219  
  Pre-opening expense     3,129     10,635     13,354  
  Theatre and other closure expense     7,710     601     7,331  
  Restructuring charge         3,980     72  
  Depreciation and amortization     129,075     267,538     262,272  
  Impairment of long-lived assets         11,974     11,974  
  Disposition of assets and other (gains)     (8,500 )   (1,300 )   (10,189 )
   
 
 
 
Total costs and expenses     1,199,060     2,397,970     2,390,220  
Other (income)     (6,314 )   (11,712 )   (10,807 )
Interest expense     115,538     228,518     229,176  
Investment expense (income)     (3,609 )   5,127     743  
   
 
 
 
Loss from continuing operations before income taxes     (51,225 )   (235,189 )   (180,664 )
Income tax provision (benefits)     2,200     10,055     9,039  
   
 
 
 
Loss from continuing operations   $ (53,425 ) $ (245,244 ) $ (189,703 )
   
 
 
 
Loss per share from continuing operations (basic and diluted)   $     $     $    
   
 
 
 
Average shares outstanding:                    
  Basic and diluted                    
   
 
 
 
Other Data:                    
  Adjusted EBITDA(1)         $ 367,465   $ 389,936  
                     

11



Balance Sheet Date (at period end):

 

 

 

 

 

 

 

 

 

 
  Cash and equivalents               $ 743,370  
  Corporate borrowings                 2,461,839  
  Other long-term liabilities                 659,390  
  Capital and financing lease obligations                 55,038  
  Stockholders' equity (default)                 1,105,817  
  Total Assets                 4,667,586  

Operating Data (at period end):

 

 

 

 

 

 

 

 

 

 
  Average screens—continuing operations(2)     5,146     5,138     5,155  
  Number of screens operated     5,635     5,829     5,635  
  Number of theatres operated     411     428     411  
  Screens per theatre     13.7     13.6     13.7  
  Attendance (in thousands)—continuing operations(2)     128,009     243,545     248,277  

(1)
Adjusted EBITDA in this prospectus corresponds to "Annualized EBITDA" in our senior secured credit facility. See "—Covenant Compliance" for reconciliation of Adjusted EBITDA to loss from continuing operations. Adjusted EBITDA is not a presentation made in accordance with U.S. GAAP and our use of the term Adjusted EBITDA varies from others in our industry. This measure should not be considered as an alternative to net earnings (loss), operating income or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA is presented giving pro forma effect to the NCM Transactions and this offering and does not purport to present our actual historical covenant compliance calculations. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. For example, Adjusted EBITDA:

includes estimated cost savings and operating synergies related to the Merger Transactions;

does not include one-time transition expenditures that we anticipate we will need to incur to realize cost savings;

does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

does not reflect changes in, or cash requirements for, our working capital needs;

does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debts;

excludes tax payments that represent a reduction in cash available to us;

does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future;

does not reflect management fees that may be paid to the Sponsors in connection with or following the consummation of the Merger Transactions; and

does not reflect the impact of earnings or charges resulting from matters that we and the lenders under our secured senior credit facility may consider not to be indicative of our ongoing operations. In particular, our definition of Adjusted EBITDA allows us to add back certain

12


      non-cash and non-recurring charges that are deducted in calculating net income. However, these are expenses that may recur, vary greatly and are difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes.

(2)
Includes consolidated theatres only.

Covenant Compliance

        Our senior secured credit facility requires us to maintain a net senior secured leverage ratio of no more than 3.25 to 1.0, calculated on a pro forma basis for the trailing four quarters (as determined under our senior secured credit facility) as long as the commitments under our revolving credit facility remain outstanding. Failure to comply with this covenant would result in an event of default under our senior secured credit facility unless waived by our revolving credit lenders, and in any event would likely limit our ability to borrow funds pursuant to our revolving credit facility. In addition, our senior secured credit facility restricts our ability to take certain actions such as incurring additional debt or making certain acquisitions if we are unable to comply with our net senior secured leverage ratio covenant or, in the case of additional debt, maintain an Adjusted EBITDA to consolidated interest expense ratio of at least 2.0 to 1.0 and a senior leverage ratio of no more than 3.25 to 1.0 after giving pro forma effect (as determined under our senior secured credit facility) to the debt incurrence or acquisition, as the case may be. Failure to comply with these covenants would result in limiting our long-term growth prospects by hindering our ability to incur future indebtedness or grow through acquisitions.

        Pro forma Adjusted EBITDA is defined in our senior secured credit facility as loss from continuing operations, as adjusted for the items summarized in the table below. Consolidated interest expense is defined in our senior secured credit facility as interest expense excluding, among other things, the amortization of fees and expenses incurred in connection with the Merger Transactions, as well as the amortization of fees and expenses associated with certain investment and financing transactions and certain payments made in respect of operating leases, as described in the definition of consolidated interest expense, less interest income for the applicable period.

        Adjusted EBITDA is not a measurement of our financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to loss from continuing operations, operating income or any other performance measures derived in accordance with U.S. GAAP. Consolidated interest expense as defined in our senior secured credit facility should not be considered an alternative to U.S. GAAP interest expense. Adjusted EBITDA includes estimated annual cost savings initiatives that we expect to achieve in connection with the Mergers as a result of actions that we have taken during the first six months following completion of the Mergers and which we anticipate we will fully realize over the 18 months following the completion of the Mergers. See "—The Merger Transactions." However, Adjusted EBITDA does not take into account the $29.9 million in one-time transition expenditures that we have incurred or anticipate that we will need to incur during this period in order to realize these cost savings. The adjustments set forth below reflecting estimated cost savings and operating synergies do not qualify as pro forma adjustments under Regulation S-X promulgated under the Securities Act and constitute forward-looking statements within the Private Securities Litigation Reform Act of 1995, as amended. Actual results may differ materially from those reflected due to a

13



number of factors, including without limitation, (i) an inability to consolidate facilities, (ii) an inability to reduce headcount and (iii) an inability to terminate certain contracts.

 
  Pro Forma
 
 
  52 Weeks Ended
March 30, 2006

  52 Weeks Ended
September 28, 2006

 
 
  (thousands of dollars, except operating data)

 
Calculation of Adjusted EBITDA:              
Loss from continuing operations   $ (245,244 ) $ (189,703 )
Income tax provision (benefit)     10,055     9,039  
Investment expense     5,127     743  
Interest expense     228,518     229,176  
Other expense (income)     (1,045 )   1,247  
Disposition of assets and other (gains)/losses     (1,300 )   (10,189 )
Depreciation and amortization     267,538     262,272  
Impairment charge     11,974     11,974  
Restructuring charge     3,980     72  
Theatre and other closure expense     601     7,331  
Pre-opening expense     10,635     13,354  
Stock-based compensation expense     1,319     2,217  
Merger and acquisition costs     18,059     17,901  
   
 
 
Subtotal   $ 310,217   $ 355,434  
   
 
 
Non-cash items and other     249   $ 729  
Deferred rent     (3,894 )   (4,259 )
Gain on sale of investments     221     (183 )
Gain on disposition of assets     365     1,792  
Litigation and insurance recoveries     3,621     10,826  
Income from equity investments     4,932     2,357  
Closed/Disposed theatre contribution     (164 )   (719 )
Opened theatre contribution     6,102     4,143  
Cost savings initiatives:              
Administrative salaries, bonuses, occupancy expenses and other administrative expenses(1)     26,338     11,392  
Newspaper and other advertising expenses(2)     9,492     4,105  
Vendor based contract savings for concession and other costs(3)     5,283     2,285  
Theatre level salaries and bonuses(4)     4,703     2,034  
   
 
 
Adjusted EBITDA(5)   $ 367,465   $ 389,936  
   
 
 
Net senior secured indebtedness(6)         $ 41,753  
Net senior secured leverage ratio(7)           0.11  
Senior indebtedness(8)         $ 1,252,163  
Senior leverage ratio(9)           3.21  
Consolidated interest expense(10)         $ 191,204  
Adjusted EBITDA Ratio(11)           2.04  

(1)
Represents (i) cost savings related to the elimination of duplicative overhead costs, including staffing and other administrative expenses, and (ii) real estate related savings for the closure of duplicative facilities, both of which are substantially complete.

14


(2)
Represents (i) costs associated with duplicative advertising in markets in which AMCE and Loews have overlapping operations, including New York City, Dallas, Seattle, Washington, D.C., Detroit, Cleveland, Orlando and Philadelphia, (ii) the realization of savings from our combined purchasing power for various advertising services and (iii) the elimination of other redundant advertising spending, such as the elimination of duplicative websites. We have eliminated these costs since the completion of the Mergers.

(3)
Represents the difference between AMCE's and Loews' contractual payment rates to certain vendors to our theatres. We have incorporated Loews' operations within AMCE's national corporate contracts for these items since the completion of the Mergers.

(4)
Represents the savings achieved through alignment of theatre pay level and staffing practices and implementing best practices used by each of AMCE and Loews with respect to staffing.

(5)
See footnote (1) on page 12 for more information on Adjusted EBITDA.

(6)
The senior secured credit facility defines net senior secured indebtedness as consolidated secured indebtedness for borrowed money other than any capital lease obligations, net of cash and cash equivalents. Net senior secured indebtedness reflected in the table consists primarily of borrowings under the senior secured credit facility and also includes cash anticipated to be realized from the NCM Transactions.

(7)
The senior secured credit facility defines the net senior secured leverage ratio as the ratio of net senior secured indebtedness to Adjusted EBITDA for the trailing four fiscal quarters on a pro forma basis (as defined in the senior secured credit facility).

(8)
The senior secured credit facility defines senior indebtedness as consolidated indebtedness for borrowed money that is not expressly subordinate or junior indebtedness.

(9)
The senior secured credit facility defines the senior leverage ratio as the ratio of senior indebtedness to Adjusted EBITDA for the trailing four fiscal quarters on a pro forma basis (as defined in the senior secured credit facility).

(10)
The senior secured credit facility defines consolidated interest expense as interest expense excluding, among other things, the amortization of fees and expenses incurred in connection with the Merger Transactions, as well as the amortization of fees and expenses associated with certain investment and financing transactions and certain payments made in respect of operating leases, as described in the definition of consolidated interest expense, less interest income for the applicable period.

(11)
The senior secured credit facility defines the Adjusted EBITDA Ratio as the ratio of Adjusted EBITDA to consolidated interest expense for the trailing four fiscal quarters on a pro forma basis (as defined in the senior secured credit facility).

15


Summary Historical Financial and Operating Data

Marquee Holdings

        The following tables set forth Holdings' historical financial and operating data. The summary historical financial data for the interim periods ended September 28, 2006 and September 29, 2005 and for the fiscal year ended March 30, 2006, the period from July 16, 2004 through March 31, 2005, the period from April 2, 2004 through December 23, 2004 and for the fiscal year ended April 1, 2004 have been derived from Holdings' audited and unaudited consolidated financial statements and related notes for such periods included elsewhere in this prospectus. The historical financial data set forth below is qualified in its entirety by reference to Holdings' consolidated financial statements and the notes thereto included elsewhere in this prospectus.

        We completed a merger on December 23, 2004 in which Holdings acquired AMC Entertainment. Marquee Inc. ("Marquee") was formed on July 16, 2004. On December 23, 2004, pursuant to a merger agreement, Marquee merged with AMC Entertainment (the "Predecessor"). Upon the consummation of the merger between Marquee and AMC Entertainment on December 23, 2004, Marquee merged with and into AMC Entertainment, with AMC Entertainment as the surviving reporting entity (the "Successor"). The merger was treated as a purchase with Marquee being the "accounting acquirer" in accordance with Statement of Financial Accounting Standards No. 141 Business Combinations. As a result, Marquee applied the purchase method of accounting to the separable assets, including goodwill and liabilities of the accounting acquiree, AMC Entertainment, as of December 23, 2004, the merger date. The consolidated financial statements presented herein are those of the accounting acquiror from its inception on July 16, 2004 through September 28, 2006, and those if its Predecessor, AMC Entertainment, for all prior periods through the merger date. Following consummation of the merger, AMC Entertainment became a privately held company, wholly owned by Holdings. Holdings is currently owned by the Sponsors, other co-investors and by certain members of management. The consideration paid in the merger was funded with the proceeds from the issuance of AMC Entertainment's 85/8% senior fixed rate notes due 2012 and senior floating rate notes due 2010, the proceeds from the issuance of Holdings' 12% senior discount notes due 2014, equity contributions by JPMP, Apollo, management and the other co-investors and cash on hand. Concurrently with the consummation of the merger, AMC Entertainment entered into an amendment to its existing revolving credit facility. In this prospectus, we refer to the transactions described in this paragraph and the payment of fees and expenses related thereto as the "Marquee Transactions."

        On July 30, 2004, LCE Holdings completed certain of the Loews Transactions, whereby LCE Holdings, a company formed by Bain, Carlyle and Spectrum, acquired 100% of the capital stock of Loews and, indirectly, Cinemex. For accounting purposes and consistent with its reporting periods, LCE Holdings has used July 31, 2004 as the effective date of the Loews Transactions. As a result, LCE Holdings has reported its operating results and financial position for all periods presented from April 1, 2002 through July 31, 2004 as those of the "Predecessor Company" and for all periods from and after August 1, 2004 as those of the "Successor Company." The Predecessor Company periods and the Successor Company periods have different bases of accounting and are therefore not comparable.

16


        The summary historical financial and operating data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc." and the historical consolidated financial statements, including the notes thereto, of Holdings included in this prospectus.

 
   
   
  Years Ended(1)(3)(7)
 
 
  Twenty-Six Week Periods
 
 
  52 Weeks Ended March 30, 2006(4)
   
  April 2, 2004 through December 23, 2004(7)
   
 
 
  26 Weeks Ended
September 28, 2006

  26 Weeks Ended
September 29, 2005

  From Inception
July 16, 2004 through March 31, 2005(6)(7)

  52 Weeks Ended April 1, 2004
 
 
  (Successor)

  (Successor)

  (Successor)

  (Successor)

  (Predecessor)

  (Predecessor)

 
 
  (in thousands, except per share and operating data)

 
Statement of Operations Data:                                      
Revenues:                                      
  Admissions   $ 862,105   $ 546,820   $ 1,169,226   $ 306,942   $ 872,199   $ 1,171,180  
  Concessions     359,081     217,012     466,679     120,566     337,603     447,244  
  Other revenue     61,555     47,887     94,545     25,392     84,166     104,015  
   
 
 
 
 
 
 
    Total revenues     1,282,741     811,719     1,730,450     452,900     1,293,968     1,722,439  
   
 
 
 
 
 
 
Costs and Expenses:                                      
  Film exhibition costs     449,072     295,262     610,600     157,339     465,086     621,848  
  Concession costs     43,047     23,768     52,584     13,348     39,725     49,212  
  Operating expense     319,629     214,343     462,185     119,070     333,279     454,190  
  Rent     225,482     156,692     341,301     83,904     232,208     298,945  
  General and administrative:                                      
    Merger and acquisition costs     5,826     2,645     12,523     22,286     42,732     5,508  
    Management fee     2,500     1,000     2,000     500          
    Other(8)     29,680     18,199     38,308     14,731     33,908     56,500  
  Pre-opening expense     3,129     736     6,607     39     1,292     3,858  
  Theatre and other closure expense     7,710     980     601     1,267     10,758     4,068  
  Restructuring charge(9)         3,908     3,980     4,926          
  Depreciation and amortization     129,075     75,467     168,821     45,263     90,259     120,867  
  Impairment of long-lived assets             11,974             16,272  
  Disposition of assets and other gains     (8,500 )   (770 )   (997 )   (302 )   (2,715 )   (2,590 )
   
 
 
 
 
 
 
    Total costs and expenses     1,206,650     792,230     1,710,487     462,371     1,246,532     1,628,678  
   
 
 
 
 
 
 
Other expense (income)(5)     (6,314 )   (7,219 )   (11,712 )   (6,778 )       13,947  
Interest expense:                                      
  Corporate borrowings     112,800     60,332     139,042     52,502     66,851     66,963  
  Capital and financing lease obligations     2,738     3,380     5,946     2,047     7,408     10,754  
Investment income     (3,609 )   (480 )   4,393     (3,351 )   (6,476 )   (2,861 )
   
 
 
 
 
 
 
  Earnings (loss) from continuing operations before income taxes     (29,524 )   (36,524 )   (117,706 )   (53,891 )   (20,347 )   4,958  
  Income tax provision (benefit)     2,200     (14,200 )   72,100     (9,200 )   15,000     11,000  
   
 
 
 
 
 
 
  Loss from continuing operations     (31,724 )   (22,324 )   (189,806 )   (44,691 )   (35,347 )   (6,042 )
  Earnings (loss) from discontinued operations, net of income tax benefit(2)         (22,094 )   (22,409 )   301     (531 )   (4,672 )
   
 
 
 
 
 
 
  Net loss   $ (31,724 ) $ (44,418 ) $ (212,215 ) $ (44,390 ) $ (35,878 ) $ (10,714 )
   
 
 
 
 
 
 
  Preferred dividends                     104,300     40,277  
   
 
 
 
 
 
 
  Net loss for shares of common stock   $ (31,724 ) $ (44,418 ) $ (212,215 ) $ (44,390 ) $ (140,178 ) $ (50,991 )
   
 
 
 
 
 
 
Basic and diluted loss per share of common stock:                                      
  Loss from continuing operations   $ (24.74 ) $ (29.02 ) $ (221.19 ) $ (148.76 ) $ (3.77 ) $ (1.26 )
  Earnings (loss) from discontinued operations         (28.71 )   (26.11 )   1.00     (0.02 )   (0.13 )
  Net loss per share   $ (24.74 ) $ (57.73 ) $ (247.30 ) $ (147.76 ) $ (3.79 ) $ (1.39 )
   
 
 
 
 
 
 
  Average shares outstanding:                                      
  Basic and diluted     1,282.25     769.35     858.12     300.41     37,023     36,715  
   
 
 
 
 
 
 
                                       

17


Balance Sheet Data (at period end):                                      
Cash and equivalents   $ 310,978         $ 232,366   $ 72,945         $ 333,248  
Corporate borrowings     2,461,839           2,455,686     1,344,531           686,431  
Other long-term liabilities     423,842           419,474     354,240           182,467  
Capital and financing lease obligations     55,038           68,130     65,470           61,281  
Stockholders' equity (deficit)     1,000,492           1,040,503     722,038           280,604  
Total assets     4,283,213           4,407,351     2,797,511           1,506,534  
Other Data:                                      
Net cash provided by (used in) operating activities(11)   $ 65,653   $ (5,039 ) $ 25,694   $ (45,364 ) $ 145,364   $ 163,939  
Capital expenditures     (64,105 )   (44,437 )   (117,688 )   (18,622 )   (66,155 )   (95,011 )
Proceeds from sale/leasebacks             35,010     50,910         63,911  
Operating Data (at period end):                                      
Screen additions     48     16     137         44     114  
Screen acquisitions             2,117     3,728         48  
Screen dispositions     242     87     150     14     28     142  
Average screens—continuing operations(10)     5,146     3,448     3,767     3,461     3,456     3,415  
Number of screens operated     5,635     3,643     5,829     3,714     3,728     3,712  
Number of theatres operated     411     242     428     247     249     250  
Screens per theatre     13.7     15.1     13.6     15.0     15.0     14.8  
Attendance (in thousands)—continuing operations(10)     128,009     79,655     171,421     45,953     131,026     182,467  

(1)
There were no cash dividends declared on common stock during the last three fiscal years.

(2)
Fiscal 2004 includes losses from discontinued operations related to a theatre in Sweden that was sold during fiscal 2004. Fiscal 2005 and 2004 include losses from discontinued operations related to five theatres in Japan that were sold during fiscal 2006. During the 26 Weeks ended September 29, 2005, the Successor includes a loss from discontinued operations of $22,094 (net of income tax provision of $20,300). During fiscal 2006 the Successor includes a loss from discontinued operations of $22,409 (net of income tax provision of $20,100). During fiscal 2005 the Successor includes earnings from discontinued operations of $301 (net of income tax benefit of $0) and the Predecessor includes a loss from discontinued operations of $531 (net of income tax benefit of $0). Fiscal 2004 includes a $4,672 loss from discontinued operations (net of income tax benefit of $2,600).

(3)
Fiscal 2006, 2005 and 2004 have 52 weeks.

(4)
We acquired Loews Cineplex Entertainment Corporation on January 26, 2006, which significantly increased our size. In the Loews acquisition we acquired 112 theatres with 1,308 screens throughout the United States that we consolidate and 40 theatres with 443 screens in Mexico that we consolidate. Accordingly, results of operations for the Successor period ended March 30, 2006, and September 28, 2006 are not comparable to our results for the prior fiscal years.

(5)
During the 26 weeks ended September 28, 2006, other expense (income) is composed of $7,434 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote and $1,120 of expense related to the remeasurement of liability-classified shares of common stock. During the 26 Weeks ended September 29, 2005, other expense (income) is composed of $6,047 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote and $1,172 of income related to the remeasurement of liability-classified shares of common stock. During fiscal 2006, other expense (income) is composed of $8,699 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote, insurance recoveries of $3,032 for property losses related to Hurricane Katrina, net of disposition losses of $346, $1,968 of business interruption insurance recoveries related to Hurricane Katrina and the write-off of deferred financing cost of $1,097 related to our senior secured credit facility in connection with our issuance of the new senior secured credit facility and $2,438 of fees related to an unused bridge facility in connection with the Mergers and related financing transactions. During fiscal 2005, other expense (income) is composed of $6,745 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote and $33 of gain recognized on the redemption of $1,663 of our 91/2% senior subordinated notes due 2011. During fiscal 2004, other expense (income) is composed of losses recognized on the redemption of $200,000 of our 91/2% senior subordinated notes due 2009 and $83,400 of our 91/2% senior subordinated notes due 2011.

(6)
As a result of the merger with Marquee, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree, AMC Entertainment, as of December 23, 2004. Because of the application of purchase accounting, Successor and Predecessor periods are not prepared on comparable bases of accounting.

(7)
In connection with the merger with Marquee, Marquee was formed on July 16, 2004, and issued debt and held the related proceeds from issuance of debt in escrow until consummation of the merger. The Predecessor consolidated this merger entity in accordance with FIN 46(R). As a result, both the Predecessor and Successor have recorded interest expense of $12,811, interest income of $2,225 and income tax benefit of $4,500 related to Marquee.

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(8)
Includes stock-based compensation of $1,645 and $747 for the 26 Weeks ended September 28, 2006 and September 29, 2005, respectively. Includes stock-based compensation of $1,319 for the 52 week periods ended March 30, 2006 (Successor), and includes stock based compensation of $1,201, $0 and $8,727 during fiscal 2005 Successor, fiscal 2005 Predecessor and fiscal 2004, respectively.

(9)
Restructuring charges related to one-time termination benefits and other costs related to the displacement of approximately 200 associates in connection with an organizational restructuring, which was completed to create a simplified organizational structure, and contribution of assets by NCN to NCM. This organizational restructuring was substantially completed as of March 30, 2006.

(10)
Includes consolidated theatres only.

(11)
Cash flows provided by operating activities for the 52 weeks ended March 30, 2006 do not include $142,512 of cash acquired in the Mergers which is included in cash flows from investing activities.

LCE Holdings, Inc.

        The following tables set forth certain of LCE Holdings' historical financial and operating data. The summary historical financial data for the year ended December 31, 2003, the seven months ended July 31, 2004, the five months ended December 31, 2004 and the year ended December 31, 2005 are derived from LCE Holdings' audited combined consolidated financial statements and related notes for such periods included in this prospectus. LCE Holdings' financial statements include the assets, liabilities and results of operations of Cinemex on a combined basis for the period June 19, 2002 (the date Cinemex became an entity under common control) through July 31, 2004 and on a fully consolidated basis beginning August 1, 2004. LCE Holdings has reflected the financial position and results of operations of its former Canadian operations ad discontinued operations for all periods from April 1, 2002 to July 31, 2004, as those operations were sold to affiliates of its former investors.

        On July 30, 2004, LCE Holdings completed certain of the Loews Transactions, whereby LCE Holdings, a company formed by Bain, Carlyle and Spectrum, acquired 100% of the capital stock of Loews and, indirectly, Cinemex. The purchase of Loews and Cinemex was financed with borrowings by Loews under its senior secured credit facility, the issuance of subordinated notes and cash equity investments by Bain, Carlyle and Spectrum. Prior to the closing of the acquisition, Loews sold all of its Canadian and German film exhibiyion operations to its former investors, who indemnified Loews for certain potential liabilities in connection with those sales. In this prospectus, we refer to the transactions described in this paragraph and the payment of fees and expenses related thereto, along with the sale by Loews of its 50% interest in Megabox, Loews' joint venture in South Korea, as the "Loews Transactions." For accounting purposes and consistent with its reporting periods, LCE Holdings has used July 31, 2004 as the effective date of the Loews Transactions. As a result, LCE Holdings has reported its operating results and financial position for all periods presented from April 1, 2002 through July 31, 2004 as those of the "Predecessor Company" and for all periods from and after August 1, 2004 as those of the "Successor Company." The Predecessor Company periods and the Successor Company periods have different bases of accounting and are therefore not comparable.

19



        The summary historical financial and operating data presented below should be reading conjunction with "LCE Holdings' Managements' Discussion and Analysis of Financial Condition and Results of Operations," the combined consolidated financial statements, including the notes thereto, of LCE Holdings, included elsewhere in this prospectus.

 
  Year ended December 31, 2005
  Period August 1, to December 31, 2004
  Period January 1, to July 31, 2004
  Year ended December 31, 2003
 
 
  (Successor)

  (Successor)

  (Predecessor)

  (Predecessor)

 
 
  (thousands of dollars, except operating data)

 
Statement of Operations Data:                          
Total operating revenues   $ 874,716   $ 356,038   $ 567,280   $ 928,238  
Expenses                          
  Theatre operations and other expenses     649,290     264,608     404,674     681,493  
  Cost of concessions     36,648     13,948     23,365     35,460  
  General and administrative     53,771     20,934     43,334     60,099  
  Depreciation and amortization     114,063     45,771     49,623     80,940  
  (Gain)/Loss on sale/disposal of theatres(1)     834     1,430     (3,734 )   (4,508 )
   
 
 
 
 
    Total operating expense     854,606     346,691     517,262     853,484  
Income/(loss) from operations     20,110     9,347     50,018     74,754  
Interest expense, net     80,668     36,005     16,663     35,262  
Loss on early extinguishment of debt         882     6,856      
Equity (income)/loss in long-term investments     (23,134 )   (1,438 )   (933 )   1,485  
   
 
 
 
 
Income/(loss) before income taxes, extraordinary gain, cumulative effect of change in accounting principle and discontinued operations     (37,424 )   (26,102 )   27,432     38,007  
Income tax expense/(benefit)     7,548     (3,244 )   12,886     15,339  
   
 
 
 
 
Income/(loss) before extraordinary gain, cumulative effect of change in accounting principle and discontinued operations     (44,972 )   (22,858 )   14,546     22,668  
Discontinued operations, net of tax(2)             7,417     56,183  
   
 
 
 
 
Net income/(loss)   $ (44,972 ) $ (22,858 ) $ 21,963   $ 78,851  
   
 
 
 
 
Balance Sheet Data (at period end):                          
Cash and equivalents   $ 145,324   $ 71,015         $ 139,425  
Corporate borrowings     1,044,264     1,037,907           429,865  
Other long-term liabilities     104,553     113,290           247,221  
Capital and financing lease obligations     29,351     28,033           22,249  
Stockholders' equity/(deficit)     364,839     405,390           683,384  
Total assets     1,713,140     1,751,958           1,597,319  
Other Data:                          
Net cash provided by (used in) operating activities(3)   $ 67,441   $ 38,097   $ 75,226   $ 88,959  
Capital Expenditures     (67,326 )   (17,205 )   (36,638 )   (40,895 )
Proceeds from sale/leasebacks                  
Operating Data (at period end):                          
Screen additions     67     51     12     59  
Screen acquisitions             12      
Screen dispositions     62     26     50     48  
Average screens—continuing operations(4)     1,806     1,798     1,806     1,834  
Number of screens operated     2,169     2,218     2,193     2,219  
Number of theatres operated     191     201     200     207  
Screens per theatre     11.4     11.0     11.0     10.7  
Attendance (in thousands)—continuing operations(8)     94,953     39,850     65,967     106,797  

(1)
With respect to Loews' (gain)/loss on sale/disposal of theatres costs, see the notes to its combined consolidated financial statements, which are included in this prospectus.

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(2)
The balances reported for discontinued operations for the year ended December 31, 2003 and the seven months ended July 31, 2004 represent the net operating results of Loews' Canadian operations, which management decided to sell during 2004 and was sold to its former investors as part of the Loews transactions.

(3)
Cash provided by/(used in) operating activities includes the payment of restructuring charges and reorganization costs, as follows:

(4)
Includes consolidated theatres only.

 
  Year ended
December 31,
2005

  Period August 1, to December 31,
2004

  Period January 1,
to July 31,
2004

  Year ended December 31,
2003

 
  (Successor)

  (Successor)

  (Predecessor)

  (Predecessor)

Restructuring charges paid during the period   $   $ 17   $ 13   $ 3,065
Reorganization claims paid during the period         352     522     3,210
   
 
 
 
  Total   $   $ 369   $ 535   $ 6,275
   
 
 
 

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RISK FACTORS

        Before you decide to purchase shares of our common stock, you should understand the high degree of risk involved. You should consider carefully the following risks and other information in this prospectus, including our pro forma and historical financial statements and related notes. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our common stock could decline, perhaps significantly.


Risks Related to Our Business

Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations, and may have an adverse effect on the price of our stock.

        We have a significant amount of debt. As of September 28, 2006, on a pro forma basis, we had $1,844 million of outstanding indebtedness. In addition, as of September 28, 2006, on a pro forma basis, $177.5 million has been committed for borrowing as additional senior debt under our senior secured credit facility. As of September 28, 2006, on a pro forma basis, our subsidiaries had approximately $5.0 billion of undiscounted rental payments under operating leases (with initial base terms of between 15 and 20 years).

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

    increase our vulnerability to general adverse economic and industry conditions;

    limit our ability to obtain additional financing in the future for working capital, capital expenditures, dividend payments, acquisitions, general corporate purposes or other purposes;

    require us to dedicate a substantial portion of our cash flow from operations to the payment of lease rentals and principal and interest on our indebtedness, thereby reducing the funds available to us for operations and any future business opportunities;

    limit our planning flexibility for, or ability to react to, changes in our business and the industry; and

    place us at a competitive disadvantage with competitors who may have less indebtedness and other obligations or greater access to financing.

        If we fail to make any required payment under our senior secured credit facility or to comply with any of the financial and operating covenants contained therein, we would be in default. Lenders under our senior secured credit facility could then vote to accelerate the maturity of the indebtedness under the senior secured credit facility and foreclose upon the stock and personal property of our subsidiaries that is pledged to secure the senior secured credit facility. Other creditors might then accelerate other indebtedness. If the lenders under the senior secured credit facility accelerate the maturity of the indebtedness thereunder, we might not have sufficient assets to satisfy our obligations under the senior secured credit facility or our other indebtedness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc.—Liquidity and Capital Resources."

        Our indebtedness under our senior secured credit facility bears interest at rates that fluctuate with changes in certain prevailing interest rates (although, subject to certain conditions, such rates may be fixed for certain periods). If interest rates increase, we may be unable to meet our debt service obligations under our senior secured credit facility and other indebtedness.

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We have had significant financial losses in recent years.

        AMC Entertainment has reported net losses in each of the last nine fiscal years. AMC Entertainment's cumulative net losses for the period were approximately $508.0 million. Our loss from continuing operations on a pro forma basis for the 52 weeks ended March 30, 2006 was $245.2 million, and our loss from continuing operations for the 26 weeks ended September 28, 2006 was $53.4 million. If we continue to experience such losses, we may be unable to meet our payment obligations while attempting to expand our circuit and withstand competitive pressures or adverse economic conditions.

We face significant competition when trying to acquire theatres, and we may not be able to acquire theatres on terms favorable to us.

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

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

        We estimate that, on a pro forma basis, our net capital expenditures aggregated to approximately $151.0 million (net of proceeds from proposed sale/leaseback transactions of approximately $35 million) in fiscal 2006, $64.1 million in the first 26 weeks of fiscal 2007 and will aggregate to approximately $143.0 million for full fiscal 2007. Actual capital expenditures in fiscal 2007 may differ materially from our estimates. We may have to seek additional financing or issue additional securities to fully implement our growth strategy. We cannot be certain that we will be able to obtain new financing on favorable terms, or at all. In addition, covenants under our existing indebtedness limit our ability to incur additional indebtedness, and the performance of any additional theatres may not be sufficient to service the related indebtedness that we are permitted to incur.

The agreements governing our indebtedness contain covenants that may limit our ability to take advantage of certain business opportunities advantageous to us that may arise.

        The agreements governing our indebtedness contain various covenants that limit our ability to, among other things:

    incur or guarantee additional indebtedness;

    pay dividends or make other distributions to our shareholders;

    make restricted payments;

    incur liens;

    engage in transactions with affiliates; and

    enter into business combinations.

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

        Although the indentures for our notes contain a fixed charge coverage test that limits our ability to incur indebtedness, this limitation is subject to a number of significant exceptions and qualifications.

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Moreover, the indentures do not impose any limitation on our incurrence of capital or finance lease obligations or liabilities that are not considered "Indebtedness" under the indentures (such as operating leases), nor do they impose any limitation on the amount of liabilities incurred by subsidiaries, if any, that might be designated as "unrestricted subsidiaries," which are subsidiaries that we designate, which are not subject to the restrictive covenants contained in the indentures governing our notes. Furthermore, there are no restrictions in the indentures on our ability to invest in other entities (including unaffiliated entities) and no restrictions on the ability of our subsidiaries to enter into agreements restricting their ability to pay dividends or otherwise transfer funds to us. Also, although the indentures limit our ability to make restricted payments, these restrictions are subject to significant exceptions and qualifications.

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

        In any acquisition, we expect to benefit from cost savings through, for example, the reduction of overhead and theatre level costs, and from revenue enhancements resulting from the acquisition. However, there can be no assurance that we will be able to generate sufficient cash flow from these acquisitions to service any indebtedness incurred to finance such acquisitions or realize any other anticipated benefits. Nor can there be any assurance that our profitability will be improved by any one or more acquisitions. Any acquisition may involve operating risks, such as:

    the difficulty of assimilating and integrating the acquired operations and personnel into our current business;

    the potential disruption of our ongoing business;

    the diversion of management's attention and other resources;

    the possible inability of management to maintain uniform standards, controls, procedures and policies;

    the risks of entering markets in which we have little or no experience;

    the potential impairment of relationships with employees;

    the possibility that any liabilities we may incur or assume may prove to be more burdensome than anticipated; and

    the possibility that the acquired theatres do not perform as expected.

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

        Our ability to make payments on and refinance our debt and other financial obligations, and to fund our capital expenditures and acquisitions will depend on our ability to generate substantial operating cash flow. This will depend on our future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond our control. In addition, our notes require us to repay or refinance those notes when they come due. If our cash flows were to prove inadequate to meet our debt service, rental and other obligations in the future, we may be required to refinance all or a portion of our existing or future debt, on or before maturity, to sell assets or to obtain additional financing. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facility, sell any such assets or obtain additional financing on commercially reasonable terms or at all.

        The terms of the agreements governing our indebtedness do not prohibit us from incurring additional indebtedness. If we are in compliance with the financial covenants set forth in the senior secured credit facility and our other outstanding debt instruments, we may be able to incur substantial

24



additional indebtedness. If we incur additional indebtedness, the related risks that we face may intensify.

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

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

    local conditions, such as scarcity of space or increase in demand for real estate, demographic changes and changes in zoning and tax laws; and

    competition for site locations from both theatre companies and other businesses.

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

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

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

We may suffer future impairment losses and lease termination charges.

        The opening of large megaplexes by us and certain of our competitors has drawn audiences away from some of our older, multiplex theatres. In addition, demographic changes and competitive pressures have caused some of our theatres to become unprofitable. As a result, we may have to close certain theatres or recognize impairment losses related to the decrease in value of particular theatres. We review long-lived assets, including intangibles, for impairment as part of our annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We recognized non-cash impairment losses in 1996 and in each fiscal year thereafter except for 2005. AMC Entertainment's impairment losses from continuing operations over this period aggregated to $188.1 million. Loews' impairment losses aggregated $4 million in the period since it emerged from bankruptcy in 2002. Beginning fiscal 1999 through March 30, 2006, AMC Entertainment also incurred lease termination charges aggregating $67.9 million. Historically, Loews has not incurred lease termination charges on its theatres that were disposed of or closed. Deterioration in the performance of our theatres could require us to recognize additional impairment losses and close additional theatres, which could have an adverse effect on the trading price of our stock.

Our international and Canadian operations are subject to fluctuating currency values.

        We own, operate or have interests in megaplexes in Canada, Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the United Kingdom. Because the results of operations and the financial position of Cinemex and our other foreign operations, including our foreign joint ventures, are reported in their respective local currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, our financial results are impacted by currency fluctuations between the dollar and those local currencies.

25



During the 52 weeks ended March 30, 2006, revenues from our theatre operations outside the United States accounted for 8% of our total revenues and 8% of our total revenues during the 26 weeks ended September 28, 2006. As a result of our international operations, we have risks from fluctuating currency values. As of September 28, 2006, a 10% fluctuation in the value of the United States dollar against all foreign currencies of countries where we currently operate theatres would either increase or decrease loss before income taxes and accumulated other comprehensive loss by approximately $0.3 million and $44.0 million, respectively. We do not currently hedge against foreign currency exchange rate risk.

Attendance levels at our international theatres depend on the market for local language films, and we sometimes have been unable to obtain the films we want for our theatres in certain foreign markets.

        Consumers in international markets may be less inclined to spend their leisure time attending movies than consumers in the United States and Canada. The fact that a movie produced in the United States and targeted at U.S. audiences is successful in the United States does not necessarily mean that it will be successful internationally. In addition, there is generally a smaller market for local language films, and the overall supply of these films may not be adequate to generate a sufficient attendance level at our international theatres. As a result of such factors, attendance levels at some of our foreign theatres may not be sufficient to permit us to operate them on a positive cash flow basis. In addition, because of existing relationships between distributors and other theatre owners, we sometimes have been unable to obtain the films we want for our theatres in certain foreign markets. As a result of these factors, attendance at some of our international theatres may not be sufficient to permit us to operate them profitably.

Our international theatres are subject to local industry structure and regulatory and trade practices, which may adversely affect our ability to operate at a profit.

        Risks unique to local markets include:

    unexpected changes in tariffs and other trade barriers;

    changes in foreign government regulations;

    inflation;

    price, wage and exchange controls;

    reduced protection for intellectual property rights in some countries;

    licensing requirements;

    potential adverse tax consequences; and

    uncertain political and economic environments.

        Such risks may limit or disrupt motion picture exhibition and markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property by nationalization or appropriation without fair compensation and may adversely affect our ability to expand internationally.

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

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

26



We will not be required to evaluate our internal controls over financial reporting under the standards required by Section 404 of the Sarbanes-Oxley Act of 2002 until our fiscal year ending in March 2008.

        We will not be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until our fiscal year ending in March 2008. Section 404 requires management of a reporting company to annually review, assess and disclose the effectiveness of a company's internal controls over financial reporting and to provide an attestation by an independent registered public accounting firm, which addresses such assessments. We do not expect to be subject to the formal requirements of Section 404 until our fiscal year ending in March 2008. Nevertheless, as a result of our disclosures in the past, we would undertake to notify investors of any changes to our internals controls, including any identification of a material weakness in those internal controls.

We are party to significant litigation.

        We are subject to a number of legal proceedings and claims that arise in the ordinary course of our business. We cannot be assured that we will succeed in defending any claims, that judgments will not be entered against us with respect to any litigation or that reserves we may set aside will be adequate to cover any such judgments. If any of these actions or proceedings against us is successful, we may be subject to significant damages awards. In addition, we are the plaintiff in a number of material lawsuits in which we seek the recovery of substantial payments. We are incurring significant legal fees in prosecuting these lawsuits, and we may not ultimately prevail in such lawsuits or be able to collect on such judgments if we do. In addition, the defense and prosecution of these claims divert the attention of our management and other personnel for significant periods of time. For a description of our legal proceedings, see "Business—Legal Proceedings" of this prospectus.

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

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

Our loss of key management personnel or our inability to hire and retain skilled employees at our theatres could adversely affect our business.

        Our success is dependent in part on the efforts of key members of our management team. The loss of their services could materially adversely affect our business, financial condition, results of operations or prospects. We do not currently maintain key person life insurance on any of our key management. In addition, competition for skilled professionals is intense. The loss of any of these professionals or the inability to recruit these individuals in our markets could adversely affect our ability to operate our business efficiently and profitably and could harm our ability to maintain our desired levels of service.

We may suffer material losses or damages, or be required to make material payments on existing lease and other guaranty obligations, concerning entities, businesses and assets we no longer own as a result of the disposition by Loews of its Canadian and German film exhibition operations prior to the Mergers, and we may not be able to collect on indemnities from the purchaser of our Canadian and German film exhibition operations in order to satisfy these losses, damages or payments.

        We may suffer losses or damages as a result of claims asserted by third parties relating to the Canadian and German entities which Loews no longer owns as a result of dispositions by Loews prior

27



to the Mergers. While we cannot predict at this time what claims third parties may potentially assert against us, or the frequency or magnitude of such claims, such claims may include matters related to Loews' former ownership and operation of the Canadian and German entities and their respective businesses or assets (including matters related to the initial public offering of the Cineplex Galaxy Income Fund in Canada). In addition, Loews has guaranteed certain real property leases for theatres located in Canada and in Germany which Loews no longer owns following the Loews transactions. The Canadian leases are long-term leases and contain options for additional terms which, if exercised, could extend the leases for substantial additional periods.

        Under a purchase agreement for the Canadian transfer, Loews' former investors have indemnified Loews for certain potential liabilities in connection with the sale of its Canadian and German entities, which indemnity is guaranteed by Cineplex Odeon Corporation, or COC, which was Loews' wholly-owned Canadian subsidiary, prior to its sale. It also contains provisions intended to restrict the activities of the purchaser of Canadian operations and COC and to cause the indemnifying party and COC collectively to hold a specified amount of assets. However, there can be no assurance that the assets available to satisfy these obligations will be sufficient. Moreover, the value of the assets required to be so held will be reduced significantly as of December 14, 2006. Accordingly, we may suffer damages or losses, or be required to make payments on outstanding guaranties, for which we may not be made whole under the indemnity. Such damages or losses, or required payments, may have a material adverse effect on our business, assets and results of operations.

        We also often remain secondarily obligated for lease payments in the event the acquiring entity does not perform under its obligations for theaters we are divesting of, including the theatres required to be divested by us by the U.S. Department of Justice and state attorneys general, in conjunction with the Loews merger.

We may not be able to generate additional ancillary revenues.

        We intend to continue to pursue ancillary revenue opportunities such as advertising, promotions and alternative uses of our theatres during non-peak hours. Our ability to achieve our business objectives may depend in part on our success in increasing these revenue streams. Some of our domestic competitors have stated that they intend to make significant capital investments in digital advertising delivery, and the success of this delivery system could make it more difficult for us to compete for advertising revenue. In addition, in March 2005, we contributed our cinema screen advertising business to NCM. As such, although we currently retain three board seats in NCM, we do not control this business, and therefore do not control our revenues attributable to cinema screen advertising. We cannot assure you that we will be able to effectively generate additional ancillary revenue and our inability to do so could have an adverse effect on our business and results of operations. Further, we cannot assure you that, as contemplated by the NCM Transactions, we will be able to amend our existing services agreement with NCM to extend the term and to provide for the payment to us of a monthly theatre access fee and a quarterly distribution of excess cash. See "Prospectus Summary—Recent Developments."


Risks Related to Our Industry

We depend on motion picture production and performance.

        Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to license motion pictures and the performance of such motion pictures in our markets. We mostly license first-run motion pictures, the success of which have increasingly depended on the marketing efforts of the major studios. Poor performance of, or any disruption in the production of (including by reason of a strike) these motion pictures, or a reduction in the marketing efforts of the

28



major studios, could hurt our business and results of operations. In addition, a change in the type and breadth of movies offered by studios may adversely affect the demographic base of moviegoers.

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

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

We are subject, at times, to intense competition.

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

    Attracting patrons.    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. Many of our competitors have sought to increase the number of screens that they operate. Competitors have built or may be planning to build theatres in certain areas where we operate, which could result in excess capacity and increased competition for patrons.

    Licensing motion pictures.    We believe that the principal competitive factors with respect to film licensing include licensing terms, number of seats and screens available for a particular picture, revenue potential and the location and condition of an exhibitor's theatres.

    Low barriers to entry.    We must compete with exhibitors and others in our efforts to locate and acquire attractive sites for our theatres. In areas where real estate is readily available, there are few barriers to entry that prevent a competing exhibitor from opening a theatre near one of our theatres.

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

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

        In recent years, theatrical exhibition companies have emphasized the development of large megaplexes, some of which have as many as 30 screens in a single theatre. The industry-wide strategy of aggressively building megaplexes generated significant competition and rendered many older, multiplex theatres obsolete more rapidly than expected. Many of these theatres are under long-term lease commitments that make closing them financially burdensome, and some companies have elected to continue operating them notwithstanding their lack of profitability. In other instances, because theatres are typically limited use design facilities, or for other reasons, landlords have been willing to

29



make rent concessions to keep them open. In recent years many older theatres that had closed are being reopened by small theatre operators and in some instances by sole proprietors that are able to negotiate significant rent and other concessions from landlords. As a result, there has been growth in the number of screens in the U.S. and Canadian exhibition industry. This has affected and may continue to affect the performance of some of our theatres.

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

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

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

        Our success depends on general political, social and economic conditions and the willingness of consumers to spend money at movie theatres. If going to motion pictures becomes less popular or consumers spend less on concessions, which accounted for 27% of AMC Entertainment's revenues in fiscal 2006, our operations could be adversely affected. In addition, our operations could be adversely affected if consumers' discretionary income falls as a result of an economic downturn. Political events, such as terrorist attacks, could cause people to avoid our theatres or other public places where large crowds are in attendance.

Industry-wide conversion to electronic-based media may increase our costs.

        The industry is in the early stages of conversion from film-based media to electronic-based media. There are a variety of constituencies associated with this anticipated change that may significantly impact industry participants, including content providers, distributors, equipment providers and venue operators. While content providers and distributors have indicated they would bear the costs of this change, there can be no assurance that we will have access to adequate capital to finance the conversion costs associated with this potential change should the conversion process rapidly accelerate or the content providers and distributors elect to not bear the related costs. Furthermore, it is impossible to accurately predict how the roles and allocation of costs between various industry participants will change if the industry changes from physical media to electronic media.


Risks Related to This Offering

Substantial sales of our common stock by the Sponsors could cause the market price for our common stock to decline.

        Upon consummation of this offering, there will be                        shares of our common stock outstanding. All shares of common stock sold in this offering will be freely transferable without restriction or further registration under the Securities act of 1933, as amended (the "Securities Act"). Of the remaining shares of common stock outstanding,                         will be restricted securities within the meaning of Rule 144 under the Securities Act, but will be eligible for resale subject to applicable volume, manner of sale, holding period and other limitations of Rule 144. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of shares of our common stock in the public market, or the perception that those

30



sales will occur, could cause the market price of our common stock to decline. After giving effect to the Reclassification and this offering, the Sponsors will continue to hold                        shares of our common stock, all of which constitute "restricted securities" under the Securities Act. Provided the holders comply with the applicable volume limits and other conditions prescribed in Rule 144 under the Securities Act, all of these restricted securities are currently freely tradable. Additionally, as of                        , 2006, approximately                        shares of our common stock are issuable upon exercise of stock options that vest and are exercisable at various dates through                        , with exercise prices ranging from                  to $            . Of such options, as of                        , 2006, were exercisable. All of such shares subject to options are registered and will be freely tradable when the option is exercised unless such shares are acquired by an affiliate of us, in which case the affiliate may only sell the shares subject to the volume limitations imposed by Rule 144 of the Securities Act.

        We and certain of our shareholders have agreed to a "lock-up," pursuant to which neither we nor they will sell any shares without the prior consent of                        for 180 days after the date of this prospectus, subject to certain exceptions and extension under certain circumstances. Following the expiration of the applicable lock-up period, all these shares of our common stock will be eligible for future sale, subject to the applicable volume, manner of sale, holding period and other limitations of Rule 144. See "Shares Eligible for Future Sale" for a discussion of the shares of common stock that may be sold into the public market in the future.

Our stock price may be volatile and may decline substantially from the initial offering price.

        Immediately prior to this offering, there has been no public market for our common stock, and an active trading market for our common stock may not develop or continue upon completion of the offering. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of the price at which our common stock will trade after the offering.

        The stock market in general has experienced extreme price and volume fluctuations in recent years. These broad market fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. You may be unable to resell your shares at or above the public offering price because of a number of factors, including:

    actual or anticipated quarterly fluctuations in our operating results;

    changes in expectations of future financial performance or changes in estimates of securities analysts;

    changes in the market valuations of other companies;

    announcements relating to actions of other media companies, strategic relationships, acquisitions or industry consolidation;

    terrorist acts or wars; and

    general economic, market and political conditions including those not related to our business.

We are controlled by the Sponsors, whose interests may not be aligned with our public stockholders.

        Even after giving effect to this offering, the Sponsors have the power to control our affairs and policies and will control the election of directors, the appointment of management, the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions. The directors elected by the Sponsors will have the authority, subject to the terms of our debt, to issue additional stock, implement stock repurchase programs, declare dividends, pay advisory fees and make other decisions, and they may have an interest in our doing so. The interests of the Sponsors could conflict with our public stockholders' interests in material respects. For example, the Sponsors could cause us to

31



make acquisitions that increase the amount of our indebtedness or sell revenue-generating assets. Furthermore, the Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. The Sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as the Sponsors continue to own a significant amount of the outstanding shares of our common stock, they will continue to be able to strongly influence or effectively control our decisions. See "Certain Relationships and Related Party Transactions — Governance Agreements."

Our amended and restated certificate of incorporation and our amended and restated bylaws, as amended, contain anti-takeover protections, which may discourage or prevent a takeover of our company, even if an acquisition would be beneficial to our stockholders.

        Provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as amended, as well as provisions of the Delaware General Corporation Law, could delay or make it more difficult to remove incumbent directors or for a third party to acquire us, even if a takeover would benefit our stockholders. Our issuance of shares of preferred stock could delay or prevent a change of control of our company. Our board of directors has the authority to cause us to issue, without any further vote or action by the stockholders, up to                        shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.

Our issuance of preferred stock could dilute the voting power of the common stockholders.

        The issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock either by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of our other classes of voting stock.

Our issuance of preferred stock could adversely affect the market value of our common stock.

        The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.

32



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        In addition to historical information, this prospectus contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "forecast," "estimate," "project," "intend," "expect," "should," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc.," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

    national, regional and local economic conditions that may affect the markets in which we operate;

    the levels of expenditures on entertainment in general and movie theatres in particular;

    increased competition within movie exhibition or other competitive entertainment mediums;

    technological changes and innovations, including alternative methods for delivering movies to consumers;

    the popularity of theatre attendance and major motion picture releases;

    shifts in population and other demographics;

    our ability to renew expiring contracts at favorable rates, or to replace them with new contracts that are comparably favorable to us;

    our need for, and ability to obtain, additional funding for acquisitions and operations;

    risks and uncertainties relating to our significant indebtedness following the completion of this offering;

    fluctuations in operating costs;

    capital expenditure requirements;

    changes in interest rates; and

    changes in accounting principles, policies or guidelines.

        This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.

        Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

33



USE OF PROCEEDS

        We will not receive any of the proceeds from the sale of                  shares of common stock offered by the selling stockholders in this offering, including if the underwriters exercise their option to purchase additional shares. In the aggregate, the selling stockholders will receive approximately $        million of the net proceeds of this offering, or approximately $        if the underwriters' option to purchase additional shares is exercised in full, assuming the shares are offered at $        per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus.

34



DIVIDEND POLICY

        Following this offering, payment of dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant. In addition, our senior secured credit facilities and the indentures governing our notes impose restrictions on our ability to pay dividends, and thus our ability to pay dividends on our common stock will depend upon, among other things, our level of indebtedness at the time of the proposed dividend and whether we are in default under any of our debt instruments. See "Description of Certain Indebtedness." Our future dividend policy will also depend on the requirements of any future financing agreements to which we may be a party and other factors considered relevant by our board of directors. The declaration and payment of any future dividends will be at the sole discretion of our board of directors after taking into account various factors, including legal requirements, our subsidiaries ability to make payments to us, our financial condition, operating results, cash flow, available cash and current and anticipated cash needs.

35



CAPITALIZATION

        The following table sets forth the cash and cash equivalents and capitalization of Holdings as of September 28, 2006 (i) on an actual basis and (ii) on a pro forma basis giving effect to the NCM Transactions and this offering. The information in this table should be read in conjunction with "Unaudited Pro Forma Condensed Consolidated Financial Information," "Business," the unaudited pro forma condensed consolidated financial statements and the historical financial statements of Holdings and LCE Holdings and the respective accompanying notes thereto appearing elsewhere in this prospectus.

 
  As of September 28, 2006
 
 
  Actual
  Pro Forma for NCM Transactions
  Pro Forma for
IPO & NCM
Transactions

 
 
  (in thousands)

 
Cash and cash equivalents   $ 310,978   $ 784,294   $ 743,370  
   
 
 
 
Short term debt (current maturities of long-term debt and capital and financing lease obligations)     39,864     39,864     39,864  
Long-term debt:                    
  12% senior discount notes due 2014     217,453     217,453     217,453  
  91/2% senior subordinated notes due 2011     217,688     217,688     217,688  
  97/8% senior subordinated notes due 2012     186,937     186,937     186,937  
  8% senior subordinated notes due 2014     298,709     298,709     298,709  
  11% senior subordinated notes due 2016     325,000     325,000     325,000  
  85/8% senior fixed rate notes due 2012     250,000     250,000     250,000  
  Senior floating rate notes due 2010     205,000     205,000     205,000  
  Senior secured credit facility:                    
    Revolving loan facility(1)              
    Term loan     640,250     640,250     640,250  
  Existing Cinemex term loan facility     82,432     82,432     82,432  
  10% mortgage payable due 2007     2,115     2,115     2,115  
  Capital and financing lease obligations     51,429     51,429     51,429  
   
 
 
 
  Total debt     2,516,877     2,516,877     2,516,877  
   
 
 
 
Stockholders' equity                    
  Common Stock voting ($.01 par value            shares authorized;            shares issued and outstanding as of September 28, 2006)             14  
  Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of September 28, 2006)     4     4      
  Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of September 28, 2006)     4     4      
  Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 5,128.77496 shares issued and outstanding as of September 28, 2006)              
  Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of September 28, 2006)     3     3      
  Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of September 28, 2006)     3     3      
  Additional paid-in capital     1,305,034     1,305,034     1,305,034  
  Accumulated other comprehensive earnings (losses)     (16,227 )   (16,227 )   (16,227 )
  Accumulated deficit     (288,329 )   (142,080 )   (183,004 )
   
 
 
 
  Total stockholders' equity     1,000,492     1,146,741     1,105,817  
   
 
 
 
  Total capitalization   $ 3,517,369   $ 3,663,618   $ 3,622,694  
   
 
 
 

(1)
The aggregate revolving loan commitment under our senior secured credit facility is $200.0 million. As of September 28, 2006, this availability was reduced by approximately $22.5 million of standby letters of credit that were outstanding on September 28, 2006. Covenants under our existing senior indebtedness would further limit our ability to borrow on the commitments under our $200.0 million revolving loan facility.

36



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 Merger Transactions, the NCM Transactions and this offering to Holdings' and LCE Holdings' historical consolidated financial statements included in this prospectus. The unaudited pro forma condensed consolidated statements of operations data for the 26 weeks ended September 28, 2006, the 52 weeks ended March 30, 2006 and the 52 weeks ended September 28, 2006 give effect to the Merger Transactions, the NCM Transactions and this offering as if they had each occurred on April 1, 2005. The unaudited pro forma condensed consolidated balance sheet data gives effect to the NCM Transactions and this offering as if they had occurred on September 28, 2006. We have included pro forma financial information for 52 weeks ended September 28, 2006 because we believe that this information provides meaningful financial data about our company's performance after completion of the Merger Transactions in January 2006. In addition, our senior secured credit facility requires us to measure compliance with certain quarterly financial covenants on a trailing twelve month basis. See "—Covenant Compliance." We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information.

        The pro forma adjustments for the NCM Transactions and this offering are preliminary and based on information obtained to date and are subject to revisions as additional information becomes available. There can be no guarantee that NCM, Inc. will complete its IPO or debt transactions, or that we will receive any of the expected proceeds. Our initial public offering is conditioned upon the completion of the NCM Transactions.

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

        The unaudited pro forma condensed consolidated financial information should be read in conjunction with the information contained in "Selected Historical Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Marquee Holdings Inc.," "LCE Holdings' 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 Holdings and LCE Holdings appearing elsewhere in, or incorporated by reference into, this prospectus.

37



MARQUEE HOLDINGS INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 28, 2006

(dollars in thousands)

 
  As of September 28, 2006
 
 
  Holdings
Historical

  NCM
Pro Forma
Adjustments

  Holdings
Pro Forma
for NCM
Transaction

  Holdings
IPO
Pro Forma
Adjustments

  Holdings
Pro Forma
IPO & NCM
Transactions

 
Assets                                
  Cash and equivalents   $ 310,978   $ 473,316   (1) $ 784,294   $ (40,924 )(8) $ 743,370  
  Current assets     90,921         90,921         90,921  
  Property, net     1,337,343         1,337,343         1,337,343  
  Intangible assets, net     253,400         253,400         253,400  
  Goodwill     2,095,399     (14,800 )(7)   2,080,599         2,080,599  
  Deferred income taxes     20,403         20,403         20,403  
  Equity investment-NCM     33,219     24,500   (2)            
              123,249   (3)                  
              (180,968 )(4)                  
  Other long-term assets     141,550         141,550         141,550  
   
 
 
 
 
 
Total assets   $ 4,283,213   $ 425,297   $ 4,708,510   $ (40,924 ) $ $4,667,586  
   
 
 
 
 
 
Liabilities and Stockholders' Equity                                
  Current liabilities   $ 342,002   $ 43,500   (2)(7) $ 385,502   $   $ 385,502  
  Current maturities     39,864         39,864           39,864  
  Corporate borrowings:                                
    12% Senior Discount Notes due 2014     217,453         217,453           217,453  
    91/2% Senior Subordinated Notes due 2011     217,688         217,688         217,688  
    97/8% Senior Subordinated Notes due 2012     186,937         186,937         186,937  
    8% Senior Subordinated Notes due 2014     298,709         298,709         298,709  
    11% Senior Subordinated Notes due 2016     325,000         325,000         325,000  
    85/8% Senior Fixed Rate Notes due 2012     250,000         250,000         250,000  
    Senior Floating Rate Notes due 2010     205,000         205,000         205,000  
    Senior Secured Term Loan Facility due 2012     640,250         640,250         640,250  
    Grupo Cinemex Term Loan     82,432         82,432         82,432  
    10% Mortgage Payable due 2007     2,115         2,115         2,115  
  Capital and financing lease obligations     51,429         51,429         51,429  
  Other long-term liabilities     423,842     235,548   (5)   659,390         659,390  
   
 
 
 
 
 
Total liabilities     3,282,721     279,048     3,561,769         3,561,769  

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Common Stock     14         14         14  
  Additional paid-in capital     1,305,034         1,305,034         1,305,034  
  Accumulated other comprehensive loss     (16,227 )       (16,227 )       (16,227 )
  Accumulated deficit     (288,329 )   146,249   (6)   (142,080 )   (40,924 )(8)   (183,004 )
   
 
 
 
 
 
Stockholders' equity (deficit)     1,000,492     146,249     1,146,741     (40,924 )   1,105,817  
   
 
 
 
 
 
Total liabilities and Stockholders' Equity   $ 4,283,213   $ 425,297   $ 4,708,510   $ (40,924 ) $ 4,667,586  
   
 
 
 
 
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

38



MARQUEE HOLDINGS INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

TWENTY-SIX WEEKS ENDED SEPTEMBER 28, 2006

(thousands of dollars except for per share data)

 
  Twenty-six weeks ended
September 28, 2006

 
 
  Holdings
Twenty-six Weeks
Ended
September 28,
2006
Historical

  Holdings/LCE
Holdings Merger
Pro Forma
Adjustments

  NCM
Pro Forma
Adjustments

  Holdings
Pro Forma for
LCE Holdings
& NCM
Transactions

  Holdings
IPO
Pro Forma
Adjustments

  Holdings
Pro Forma
For IPO
Transaction

 
Admissions   $ 862,105   $ (10,792 )(10) $   $ 851,313   $   $ 851,313  
Concessions     359,081     (3,509 )(10)       355,572         355,572  
Other     61,555     (767 )(10)   (14,223 )(15)   46,565         46,565  
   
 
 
 
 
 
 
  Total revenues     1,282,741     (15,068 )   (14,223 )   1,253,450         1,253,450  

Cost of operations

 

 

811,748

 

 

(9,846

)(10)

 

8,175

  (15)

 

810,077

 

 


 

 

810,077

 
Rent     225,482     (3,419 )(10)       222,063         222,063  

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  M&A Costs     5,826             5,826         5,826  
  Management fee     2,500             2,500     (2,500 )(16)    
  Other     29,680             29,680         29,680  
Pre-opening expense     3,129             3,129         3,129  
Theatre and other closure expense     7,710             7,710         7,710  
Restructuring charge                          
Depreciation and amortization     129,075             129,075         129,075  
Impairment of long-lived assets                          
Disposition of assets and other (gains)/losses     (8,500 )           (8,500 )       (8,500 )
   
 
 
 
 
 
 

Total costs and expenses

 

 

1,206,650

 

 

(13,265

)

 

8,175

 

 

1,201,560

 

 

(2,500

)

 

1,199,060

 

Other expense

 

 

(6,314

)

 


 

 


 

 

(6,314

)

 


 

 

(6,314

)
Interest expense     115,538             115,538         115,538  

Investment expense (income)

 

 

(3,609

)

 


 

 


 

 

(3,609

)

 


 

 

(3,609

)
   
 
 
 
 
 
 

Total other expense

 

 

105,615

 

 


 

 


 

 

105,615

 

 


 

 

105,615

 
   
 
 
 
 
 
 

Earnings (loss) from continuing operations before income taxes

 

 

(29,524

)

 

(1,803

)

 

(22,398

)

 

(53,725

)

 

2,500

 

 

(51,225

)
Income tax provision (benefit)     2,200             2,200         2,200  
   
 
 
 
 
 
 

Loss from continuing operations

 

$

(31,724

)

$

(1,803

)

$

(22,398

)

$

(55,925

)

$

2,500

 

$

(53,425

)
   
 
 
 
 
 
 

Loss per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 
                                 
 
Weighted Average Shares Outstanding                                      
                                 
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

39


MARQUEE HOLDINGS INC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED MARCH 30, 2006
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)

 
  Fifty-two weeks ended March 30, 2006
 
 
  Holdings
Fifty-two
Weeks
Ended
March 30,
2006
Historical

  LCE Holdings
for the
Three Months
Ended
June 30,
2005
Historical

  LCE Holdings
for the
Three Months
Ended
September 30,
2005
Historical

  LCE Holdings
for the
Three Months
Ended
December 31,
2005
Historical

  LCE Holdings
for the
One Month
Ended
January 25,
2006
Historical

  LCE Holdings
Conforming
Reclassification

  LCE Holdings
for the
Ten Months
Ended
March 30,
2006
Pro Forma

  Holdings/
LCE Holdings
Merger
Pro Forma
Adjustments

  Holdings
Pro Forma
for
LCE Holdings

  NCM
Pro Forma
Adjustments

  Holdings
Pro Forma
for LCE
Holdings &
NCM
Transactions

  Holdings
IPO
Pro Forma
Adjustments

  Holdings
Pro Forma
For IPO
Transaction

 
 
  (Successor)

  (Successor)

  (Successor)

  (Successor)

  (Successor)

   
   
   
   
   
   
   
   
 
Admissions   $ 1,169,226   $ 143,736   $ 148,161   $ 152,849   $ 41,509   $   $ 486,255   $ (35,877 )(10) $ 1,619,604   $   $ 1,619,604   $   $ 1,619,604  
Concessions     466,679     61,467     61,635     64,586     17,046           204,734     (11,889 )(10)   659,524         659,524         659,524  
Other     94,545     10,816     12,293     16,673     2,207           41,989     (2,939 )(10)   133,595     (28,009 )(15)   105,586         105,586  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
  Total revenues     1,730,450     216,019     222,089     234,108     60,762         732,978     (50,705 )   2,412,723     (28,009 )   2,384,714         2,384,714  
Cost of operations     1,125,369     172,588     173,868     175,362     42,942     (105,162 )(9)   459,598     (32,223 )(10)   1,552,744     15,405 (15)   1,568,149         1,568,149  
Rent     341,301                 11,591     98,931 (9)   110,522     (8,664
(1,810
)(10)
)(11)
  441,349         441,349         441,349  
General and administrative:                                                                                
  M&A Costs     12,523                 523     5,013 (9)   5,536         18,059         18,059         18,059  
  Management fee     2,000                 333     2,997 (9)   3,330     (330 )(11)   5,000         5,000     (5,000 )(16)    
  Other     38,308     14,144     13,440     14,105     4,998     (8,010 )(9)   38,677         76,985         76,985         76,985  
Pre-opening expense     6,607                 165     3,863 (9)   4,028         10,635         10,635         10,635  
Theatre and other closure expense     601                                 601         601         601  
Restructuring charge     3,980                                 3,980         3,980         3,980  
Depreciation and amortization     168,821     27,412     29,799     29,947     9,457     2,368 (9)   98,983     (3,957
3,691
)(10)
(11)
  267,538    
    267,538
   
    267,538
 
Impairment of long-lived assets     11,974                                             11,974           11,974           11,974  
Disposition of assets and other (gains)/losses     (997 )   199     960     (325 )   (1,137 )         (303 )       (1,300 )       (1,300 )       (1,300 )
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Total costs and expenses     1,710,487     214,343     218,067     219,089     68,872         720,371     (43,293 )   2,387,565     15,405     2,402,970     (5,000 )   2,397,970  

Other expense

 

 

(11,712

)

 


 

 


 

 


 

 


 

 


 

 


 

 


 

 

(11,712

)

 


 

 

(11,712

)

 


 

 

(11,712

)
Interest expense     144,988     20,692     20,723     21,598     6,316         69,329     70,200
2,187
(54,594
(3,592
(12)
(12)
)(12)
)(12)
  228,518    


    228,518


   


    228,518


 
Investment expense (income)     4,393     543     (2,482 )   (20,115 )   (92 )       (22,146 )   22,880 (13)   5,127         5,127         5,127  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other expense     137,669     21,235     18,241     1,483     6,224         47,183     37,081     221,933         221,933         221,933  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from continuing operations before income taxes     (117,706 )   (19,559 )   (14,219 )   13,536     (14,334 )       (34,576 )   (44,493 )   (196,775 )   (43,414 )   (240,189 )   5,000     (235,189 )
Income tax provision (benefit)     72,100     (629 )   1,645     6,645             7,661     (69,706 )(14)   10,055         10,055         10,055  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations   $ (189,806 ) $ (18,930 ) $ (15,864 ) $ 6,891   $ (14,334 ) $   $ (42,237 ) $ 25,213   $ (206,830 ) $ (43,414 ) $ (250,244 ) $ 5,000   $ (245,244 )
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss per share from continuing operations                                                                           $    
                                                                           
 
Weighted Average Shares Outstanding                                                                                
                                                                           
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

40



MARQUEE HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED SEPTEMBER 28, 2006
(dollars in thousands except for per share amounts)

 
  Fifty-two weeks ended September 28, 2006
 
 
  Holdings
Fifty-two
Weeks Ended
March 30,
2006
Historical

  Holdings
Twenty-six
Weeks Ended
September 28,
2006
Historical

  Holdings
Twenty-six
Weeks Ended
September 29,
2005
Historical

  Holdings
Fifty-two
Weeks Ended
September 28,
2006
Historical

  LCE
Holdings
for the
Three Months
Ended
December 31,
2005
Historical

  LCE
Holdings
for the
One Month
Ended
January 25,
2006
Historical

  LCE
Holdings
Conforming
Reclassification

  LCE
Holdings
for the
Four
Months
Ended
March 30,
2006
Pro Forma

  Holdings/
LCE
Holdings
Merger
Pro Forma
Adjustments

  Holdings
Pro Forma
for LCE
Holdings

  NCM
Pro Forma
Adjustments

  Holdings
Pro Forma
for LCE
Holdings &
NCM
Transactions

  Holdings
IPO
Pro Forma
Adjustments

  Holdings
Pro Forma
For IPO
Transaction

 
Admissions   $ 1,169,226   $ 862,105   $ 546,820   $ 1,484,511   $ 152,849   $ 41,509   $   $ 194,358   $ (28,106) (10) $ 1,650,763   $   $ 1,650,763   $   $ 1,650,763  
Concessions     466,679     359,081     217,012     608,748     64,586     17,046           81,632     (9,293) (10)   681,087         681,087         681,087  
Other     94,545     61,555     47,887     108,213     16,673     2,207           18,880     (2,200) (10)   124,893     (28,075) (15)   96,818         96,818  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Total revenues     1,730,450     1,282,741     811,719     2,201,472     234,108     60,762         294,870     (39,599 )   2,456,743     (28,075 )   2,428,668         2,428,668  

Cost of operations

 

 

1,125,369

 

 

811,748

 

 

533,373

 

 

1,403,744

 

 

175,362

 

 

42,942

 

 

(37,101)

(9)

 

181,203

 

 

(25,087)

(10)

 

1,559,860

 

 

15,766

(15)

 

1,575,626

 

 


 

 

1,575,626

 
Rent     341,301     225,482     156,692     410,091         11,591     32,476 (9)   44,067     (7,782) (10)   445,660         445,660         445,660  
                                                      (716) (11)                    
General and administrative:                                                                                
  M&A Costs     12,523     5,826     2,645     15,704         523     1,674 (9)   2,197         17,901         17,901         17,901  
  Management fee     2,000     2,500     1,000     3,500         333     999 (9)   1,332     168 (11)   5,000         5,000     (5,000) (16)    
  Other     38,308     29,680     18,199     49,789     14,105     4,998     (2,673) (9)   16,430         66,219         66,219         66,219  
Pre-opening expense     6,607     3,129     736     9,000         165     4,189 (9)   4,354         13,354         13,354         13,354  
Theatre and other closure expense     601     7,710     980     7,331                         7,331         7,331         7,331  
Restructuring charge     3,980         3,908     72                         72         72         72  
Depreciation and amortization     168,821     129,075     75,467     222,429     29,947     9,457     436 (9)   39,840     (1,473) (10)   262,272         262,272         262,272  
                                                      1,476 (11)                          
Impairment of long-lived assets     11,974               11,974                                 11,974         11,974         11,974  
Disposition of assets and other (gains)/losses     (997 )   (8,500 )   (770 )   (8,727 )   (325 )   (1,137 )         (1,462 )       (10,189 )       (10,189 )       (10,189 )
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total costs and expenses     1,710,487     1,206,650     792,230     2,124,907     219,089     68,872         287,961     (33,414 )   2,379,454     15,766     2,395,220     (5,000 )   2,390,220  

Other expense

 

 

(11,712

)

 

(6,314

)

 

(7,219

)

 

(10,807

)

 


 

 


 

 


 

 


 

 


 

 

(10,807

)

 


 

 

(10,807

)

 


 

 

(10,807

)
Interest expense     144,988     115,538     63,712     196,814     21,598     6,316         27,914     27,518 (12)   229,176         229,176         229,176  
                                                      842 (12)                        
                                                      (22,494) (12)                        
                                                      (1,418) (12)                        
Investment expense (income)     4,393     (3,609 )   (480 )   1,264     (20,115 )   (92 )       (20,207 )   19,686 (13)   743         743         743  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other expense     137,669     105,615     56,013     187,271     1,483     6,224         7,707     24,134     219,112         219,112         219,112  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from continuing operations before income taxes     (117,706 )   (29,524 )   (36,524 )   (110,706 )   13,536     (14,334 )       (798 )   (30,319 )   (141,823 )   (43,841 )   (185,664 )   5,000     (180,664 )
Income tax provision (benefit)     72,100     2,200     (14,200 )   88,500     6,645             6,645     (86,106) (14)   9,039         9,039         9,039  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations   $ (189,806 ) $ (31,724 ) $ (22,324 ) $ (199,206 ) $ 6,891   $ (14,334 ) $   $ (7,443 ) $ 55,787   $ (150,862 ) $ (43,841 ) $ (194,703 ) $ 5,000   $ (189,703 )
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss per share from continuing operations                                                                             $    
                                                                                 
 
Weighted average shares outstanding                                                                                      
                                                                                 
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

41



MARQUEE HOLDINGS INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL INFORMATION

(1)
Reflects the cash sources and uses of funds in connection with the NCM Transactions as summarized below.

Sources of Funds

  Amount
  Uses of Funds

  Amount
 
 
  (thousands of dollars)

   
  (thousands of dollars)

 
Cash from Existing Service Agreement Modification Payment   $ 228,228   Available cash   $ 473,316  
Cash from redemption of preferred units     245,088            
   
     
 
Total sources   $ 473,316   Total uses   $ 473,316 *
   
     
 

    *
    We are still evaluating our use of proceeds from these transactions, which may include the repayment of certain of our indebtedness. However, we have not yet determined which of our indebtedness we may repay, and we may decide to use these proceeds for a purpose other than the repayment of our indebtedness.

(2)
Reflects the estimated payments due to NCM, Inc. in connection with the Loews Screen Integration agreement and acquisition of additional common units of NCM, Inc.

(3)
Represents the change of interest gain as a result of NCM, Inc.'s acquisition of common units in NCM.

(4)
Represents write down to $0 of the equity investment in NCM upon redemption by NCM of the preferred units.

(5)
Represents the estimated fair value of the ESA modification payment which has been recorded as deferred revenue and will be amortized to advertising revenue over 30 years (the term of the agreement) following the units of revenue method.

(6)
Pro forma adjustments have been made to stockholders' equity as follows in connection with the NCM Transactions:

Change of interest gain on NCM   $ 123,249  
Distributions in excess of equity investment in NCM     56,800  
Tax benefit recognized through goodwill on NCM Transactions     (14,800 )
Estimated current federal and state tax due on NCM Transactions     (19,000 )
   
 
    $ 146,249  
   
 
(7)
We expect that the proceeds we receive from the ESA modification payment along with a portion of the proceeds from redemption of the preferred units will be treated as ordinary taxable income and capital gain. Holdings expects that the majority of the proceeds from redemption of the preferred units will be deferred from taxable income until such time as its equity interest is sold or the NCM term loan facility used to finance the redemption of the preferred units is retired. The following table summarizes the estimated current tax payable expected from the NCM Transactions. Holdings expects that the NCM Transactions will allow it to realize certain tax attributes which have previously been recorded net of a 100% valuation allowance some of which

42


    was established in connection with purchase accounting and recorded as goodwill and some of which were established through charges to income tax expense:

 
  Ordinary
Income Tax

  Capital
Gain Tax

   
Contract Buydown   $ 94,220   $      
Disguised sale           34,840    
Capital Loss Carryforward           (14,800 ) Established through purchase accounting, with full valuation allowance.
LCE Net Operating Loss Carryforwards     (16,700 )       Established through purchase accounting, with full valuation allowance.
Holdings Net Operating Loss Carryforwards     (63,520 )   (20,040 ) Established through charge to income tax provision.
   
 
   
Federal and state taxes payable   $ 14,000   $    
   
 
   
Other current taxes payable                
  State   $ 5,000         Currently estimated taxes due on transaction.
   
         
Current Payable   $ 19,000          
   
         
(8)
Reflects lump sum payment pursuant to our Management Agreement.

(9)
Reflects reclassifications to conform LCE Holdings' presentation to Holdings' presentation.

(10)
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:

 
  Holdings
 
 
  26 Weeks Ended
September 28, 2006

  52 Weeks Ended March 30, 2006
  52 Weeks Ended
September 28, 2006

 
Revenues   $ (15,068 ) $ (50,705 ) $ (39,599 )
Cost of Operations     (9,846 )   (32,223 )   (25,087 )
Rent     (3,419 )   (8,664 )   (7,782 )
Depreciation and amortization         (3,957 )   (1,473 )

43


(11)
Pro forma adjustments are made to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for Loews purchase accounting to reflect the following:

 
  Holdings
   
   
 
  52 Weeks Ended
March 30, 2006

  52 Weeks Ended
September 28, 2006

  Estimated
Useful Life

  Balance Sheet
Classification

Depreciation and Amortization:                    
FF&E and leasehold improvements   $ (2,042 ) $ (817 ) 5 to 15 years   Property, net
Favorable leases     1,208     483   11 years   Intangibles, net
Advertising contract     4,142     1,657   3 years   Intangibles, net
Loews Trademark     383     153   5 years   Intangibles, net
Goodwill           Indefinite   Indefinite
   
 
       
    $ 3,691   $ 1,476        
   
 
       

Rent:

 

 

 

 

 

 

 

 

 

 
Unfavorable leases   $ (1,810 ) $ (716 )      
Management Fee:                    
Amended and Restated Fee Agreement   $ (330 ) $ 168        
(12)
Reflects change in interest expense for debt issued in connection with the Merger Transactions:

 
  Holdings
 
  52 Weeks Ended
March 30, 2006

  52 Weeks Ended
September 28, 2006

 
  (thousands of dollars)

Interest Expense:            
Debt issued in connection with the Mergers (term loan of new senior secured credit facility and 11% senior subordinated notes due 2016)   $ 70,200   $ 27,518

Amortization Expense:

 

 

 

 

 

 
Term Loan of new senior secured credit facility   $ 1,419   $ 496
New senior subordinated debt     768     346
   
 
    $ 2,187   $ 842
   
 

    Interest rates above used in the computation of pro forma interest expense are subject to change. For the computation of the initial interest rate on the new senior secured term loan facility, we have utilized a one-month LIBOR rate, as of September 27, 2006, of 5.324%. In the event the interest rate on the new senior secured term loan facility notes increases or decreases by 0.125%,

44


    our annual earnings from continuing operations would decrease or increase by $812 thousand accordingly.

 
  LCE Holdings
 
 
  52 Weeks Ended March 30, 2006
  52 Weeks Ended
September 28, 2006

 
 
  (thousands of dollars)

 
Interest Expense:              
Term loan of existing Loews senior secured credit facility   $ (30,896 ) $ (12,729 )
Loews' 9.0% senior subordinated notes due 2014     (23,698 )   (9,765 )
   
 
 
    $ (54,594 ) $ (22,494 )
   
 
 
Amortization Expense:              
Term loan of existing Loews senior secured facility     (2,354 ) $ (929 )
Loews' 9.0% senior subordinated notes due 2014     (1,238 )   (489 )
   
 
 
    $ (3,592 ) $ (1,418 )
   
 
 
(13)
Reflects the removal of Loews' share of the equity earnings of its South Korea joint venture, Megabox, as a result of the sale of its equity investment in that joint venture:

 
  LCE Holdings
 
  52 Weeks Ended March 30, 2006
  52 Weeks Ended
September 28, 2006

 
  (thousands of dollars)

Remove gain on sale from South Korean joint venture (Megabox)   $ 18,761   $ 18,761
Remove equity in earnings from South Korean joint venture (Megabox)   $ 4,119   $ 925
   
 
    $ 22,880   $ 19,686
   
 
(14)
Represents the impact to the income tax provision as a result of establishing a full valuation allowance for the Holdings U.S. tax jurisdiction deferred tax asset in conjunction with the Merger Transactions.

(15)
Represents the change in circuit share payments from NCM pursuant to the ESAs to be entered into in connection with this offering. Under the terms of our prior contract with NCM, the circuit share payments were based on varying percentages of advertising revenue. Under the new ESAs, the theatre access fee payments will be based on a specified dollar amount per attendee and a specified dollar amount per digital screen. The pro forma adjustment was computed on the basis of the historic levels of theatre patronage and numbers of digital screens in the theatres. Includes amortization of deferred revenue. (See Note 5). Our historical advertising revenues were $39.9 million, $48.9 million and $66.2 million during the twenty-six weeks ended September 28, 2006, the fifty-two weeks ended March 30, 2006 and the fifty-two weeks ended September 28, 2006, respectively.


Represents the pro forma effect of the increased cost from the sale of additional theatre advertising inventory to us, in accordance with the new ESAs, in order for AMC to fulfill its 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 arrangements with NCM, but will be made available to NCM under the ESAs. This inventory will be sold to us at a 30 second CPM equivalent for the 90 seconds used, and the pro forma adjustment is computed on the basis of the terms of the ESAs.

(16)
Reflects the termination of the Amended and Restated Fee Agreement. (See Note 8.)

45



SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

Marquee Holdings Inc.

        The following table sets forth certain of Holdings' selected historical financial and operating data. Holdings' selected financial data for the fiscal year ended March 30, 2006, the period from July 16, 2004 through March 31, 2005, the period from April 2, 2004 through December 23, 2004, for the three fiscal years ended April 1, 2004, April 3, 2003 and March 28, 2002, and for the twenty-six week periods ended September 28, 2006 and September 29, 2005 have been derived from the consolidated financial statements for such periods either included elsewhere in this prospectus or not included herein.

        On December 23, 2004, AMC Entertainment completed the Marquee Transactions in which Holdings acquired AMC Entertainment through a merger of AMC Entertainment and Marquee. Marquee was formed on July 16, 2004. On December 23, 2004, pursuant to a merger agreement, Marquee merged with and into AMC Entertainment (the "Predecessor") with AMC Entertainment as the surviving entity (the "Successor"). The merger was treated as a purchase with Marquee being the "accounting acquiror" in accordance with Statement of Financial Accounting Standards No. 141 Business Combinations. As a result, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree, AMC Entertainment, as of December 23, 2004, the closing date of the merger. The consolidated financial statements presented below are those of the accounting acquiror from its inception on July 16, 2004 through December 29, 2005, and those of its Predecessor, AMC Entertainment, for all prior periods through the closing date of the merger.

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

 
   
   
  Years Ended(1)(3)(7)
 
 
  Twenty-Six Week Periods
 
 
   
  From Inception July 16, 2004 through March 31, 2005(4)(8)
  April 2, 2004 through December 23, 2004(4)(8)
   
   
   
 
 
  26 Weeks Ended September 28, 2006
  26 Weeks Ended September 29, 2005
  52 Weeks Ended March 30, 2006(4)(5)
  52 Weeks Ended April 1, 2004(4)
  53 Weeks Ended April 3, 2003(4)
  52 Weeks Ended March 28, 2002
 
 
  (Successor)

  (Successor)

  (Successor)

  (Successor)

  (Predecessor)

  (Predecessor)

  (Predecessor)

  (Predecessor)

 
 
  (in thousands, except per share and operating data)

 
Statement of Operations Data:                                                  
Revenues:                                                  
  Admissions   $ 862,105   $ 546,820   $ 1,169,226   $ 306,942   $ 872,199   $ 1,171,180   $ 1,171,021   $ 853,791  
  Concessions     359,081     217,012     466,679     120,566     337,603     447,244     458,877     348,438  
  Other revenue     61,555     47,887     94,545     25,392     84,166     104,015     103,701     81,334  
   
 
 
 
 
 
 
 
 
    Total revenues     1,282,741     811,719     1,730,450     452,900     1,293,968     1,722,439     1,733,599     1,283,563  
   
 
 
 
 
 
 
 
 
Costs and Expenses:                                                  
  Film exhibition costs     449,072     295,262     610,600     157,339     465,086     621,848     637,606     460,424  
  Concession costs     43,047     23,768     52,584     13,348     39,725     49,212     51,976     39,462  
  Operating expense     319,629     214,343     462,185     119,070     333,279     454,190     480,749     364,487  
  Rent     225,482     156,692     341,301     83,904     232,208     298,945     286,107     220,240  
  General and administrative:                                                  
    Merger and acquisition costs     5,826     2,645     12,523     22,286     42,732     5,508     1,128      
    Management fee     2,500     1,000     2,000     500                  
    Other(9)     29,680     18,199     38,308     14,731     33,908     56,500     66,215     36,335  
  Pre-opening expense     3,129     736     6,607     39     1,292     3,858     3,227     4,363  
  Theatre and other closure expense     7,710     980     601     1,267     10,758     4,068     5,416     2,124  
  Restructuring charge(10)         3,908     3,980     4,926                  
  Depreciation and amortization     129,075     75,467     168,821     45,263     90,259     120,867     123,808     95,725  
  Impairment of long-lived assets             11,974             16,272     14,564      
  Disposition of assets and other gains     (8,500 )   (770 )   (997 )   (302 )   (2,715 )   (2,590 )   (1,385 )   (1,821 )
   
 
 
 
 
 
 
 
 
    Total costs and expenses     1,206,650     792,230     1,710,487     462,371     1,246,532     1,628,678     1,669,411     1,221,339  
   
 
 
 
 
 
 
 
 
                                                   

46


Other expense (income)(6)     (6,314 )   (7,219 )   (11,712 )   (6,778 )       13,947         3,754  
Interest expense:                                                  
  Corporate borrowings     112,800     60,332     139,042     52,502     66,851     66,963     65,585     48,015  
  Capital and financing lease obligations     2,738     3,380     5,946     2,047     7,408     10,754     12,215     12,745  
Investment income     (3,609 )   (480 )   4,393     (3,351 )   (6,476 )   (2,861 )   (3,502 )   (2,073 )
   
 
 
 
 
 
 
 
 
  Earnings (loss) from continuing operations before income taxes     (29,524 )   (36,524 )   (117,706 )   (53,891 )   (20,347 )   4,958     (10,110 )   (217 )
  Income tax provision (benefit)     2,200     (14,200 )   72,100     (9,200 )   15,000     11,000     10,000     2,700  
   
 
 
 
 
 
 
 
 
  Loss from continuing operations     (31,724 )   (22,324 )   (189,806 )   (44,691 )   (35,347 )   (6,042 )   (20,110 )   (2,917 )
  Earnings (loss) from discontinued operations, net of income tax benefit(2)         (22,094 )   (22,409 )   301     (531 )   (4,672 )   (9,436 )   (7,461 )
   
 
 
 
 
 
 
 
 
  Net loss   $ (31,724 ) $ (44,418 ) $ (212,215 ) $ (44,390 ) $ (35,878 ) $ (10,714 ) $ (29,546 ) $ (10,378 )
   
 
 
 
 
 
 
 
 
  Preferred dividends                     104,300     40,277     27,165     29,421  
   
 
 
 
 
 
 
 
 
  Net loss for shares of common stock   $ (31,724 ) $ (44,418 ) $ (212,215 ) $ (44,390 ) $ (140,178 ) $ (50,991 ) $ (56,711 ) $ (39,799 )
   
 
 
 
 
 
 
 
 
Basic and diluted loss per share of common stock:                                                  
  Loss from continuing operations   $ (24.74 ) $ (29.02 ) $ (221.19 ) $ (148.76 ) $ (3.77 ) $ (1.26 ) $ (1.30 ) $ (1.36 )
  Earnings (loss) from discontinued operations         (28.71 )   (26.11 )   1.00     (0.02 )   (0.13 )   (0.26 )   (0.32 )
   
 
 
 
 
 
 
 
 
  Net loss per share   $ (24.74 ) $ (57.73 ) $ (247.30 ) $ (147.76 ) $ (3.79 ) $ (1.39 ) $ (1.56 ) $ (1.68 )
   
 
 
 
 
 
 
 
 
Average shares outstanding:                                                  
  Basic and diluted     1,282.25     769.35     858.12     300.41     37,023     36,715     36,296     23,692  
   
 
 
 
 
 
 
 
 
Balance Sheet Data (at period end):                                            
Cash and equivalents   $ 310,978         $ 232,366   $ 72,945         $ 333,248   $ 244,412   $ 219,432  
Corporate borrowings     2,461,839           2,455,686     1,344,531           686,431     668,661     596,540  
Other long-term liabilities     423,842           419,474     354,240           182,467     177,555     120,770  
Capital and financing lease obligations     55,038           68,130     65,470           61,281     59,101     57,056  
Stockholder's equity (deficit)     1,000,492           1,040,503     722,038           280,604     279,719     255,415  
Total assets     4,283,213           4,407,351     2,797,511           1,506,534     1,480,698     1,276,970  
Other Data:                                                  
Net cash provided by (used in) operating activities(12)   $ 65,653   $ (5,039 ) $ 25,694   $ (45,364 ) $ 145,364   $ 163,939   $ 136,072   $ 97,685  
Capital expenditures     (64,105 )   (44,437 )   (117,688 )   (18,622 )   (66,155 )   (95,011 )   (100,932 )   (82,762 )
Proceeds from sale/leasebacks             35,010     50,910         63,911     43,665     7,486  
Operating Data (at period end):                                            
Screen additions     48     16     137         44     114     95     146  
Screen acquisitions             2,117     3,728         48     809     68  
Screen dispositions     242     87     150     14     28     142     111     86  
Average screens—continuing operations(11)     5,146     3,448     3,767     3,461     3,456     3,415     3,419     2,707  
Number of screens operated     5,635     3,643     5,829     3,714     3,728     3,712     3,692     2,899  
Number of theatres operated     411     242     428     247     249     250     257     181  
Screens per theatre     13.7     15.1     13.6     15.0     15.0     14.8     14.4     16.0  
Attendance (in thousands)—continuing operations(11)     128,009     79,655     171,421     45,953     131,026     182,467     193,194     153,749  

(1)
There were no cash dividends declared on common stock during the last five fiscal years.

47


(2)
Fiscal 2004, 2003, and 2002 include losses from discontinued operations related to a theatre in Sweden that was sold during fiscal 2004. Fiscal 2005, 2004, 2003 and 2002 includes losses from discontinued operations related to five theatres in Japan that were sold during fiscal 2006. During the 26 weeks ended September 29, 2005, the Successor includes a loss from discontinued operations of $22,094 (net of income tax provision of $20,300). During fiscal 2006 the Successor includes a loss from discontinued operations of $22,409 (net of income tax provision of $20,100). During fiscal 2005 the Successor includes earnings from discontinued operations of $301 (net of income tax benefit of $0) and the Predecessor includes a loss from discontinued operations of $531 (net of income tax benefit of $0). Fiscal 2004 includes a $4,672 loss from discontinued operations (net of income tax benefit of $2,600), fiscal 2003 includes a $9,436 loss from discontinued operations including a charge for impairment of long-lived assets of $4,999 (net of income tax benefit of $700), and fiscal 2002 includes a $7,461 loss from discontinued operations including a charge for impairment of long-lived assets of $4,668 (net of income tax benefit of $3,600).

(3)
Fiscal 2003 includes 53 weeks. All other years have 52 weeks.

(4)
We acquired Gulf States Theatres on March 15, 2002 and GC Companies, Inc. on March 29, 2002, which significantly increased our size. In the Gulf States Theatres acquisition, we acquired 5 theatres with 68 screens in the New Orleans area. In the GC Companies acquisition, we acquired 66 theatres with 621 screens throughout the United States. Accordingly, results of operations for the Successor periods ended March 30, 2006 and March 31, 2005 and Predecessor periods ended December 23, 2004, April 1, 2004 and April 3, 2003 are not comparable to our results for fiscal 2002.

(5)
We acquired Loews Cineplex Entertainment Corporation on January 26, 2006, which significantly increased our size. In the Loews acquisition we acquired 112 theatres with 1,308 screens throughout the United States that we consolidate and 40 theatres with 443 screens in Mexico that we consolidate. Accordingly, results of operations for the Successor period ended March 30, 2006 are not comparable to our results for the prior fiscal years.

(6)
During the 26 weeks ended September 28, 2006, other expense (income) is composed of $7,434 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote and $1,120 of expense related to the remeasurement of liability-classified shares of common stock. During the 26 weeks ended September 29, 2005, other expense (income) is composed of $6,047 of income related to the derecognition of stored value (and liabilities where management believes future redemption to be remote and $1,172 of income related to the remeasurement of liability-classified shares of common stock. During fiscal 2006, other expense (income) is composed of $8,699 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote, insurance recoveries of $3,032 for property losses related to Hurricane Katrina, net of disposition losses of $346, $1,968 of business interruption insurance recoveries related to Hurricane Katrina, the write-off of deferred financing cost of $1,097 related to our senior secured credit facility in connection with our issuance of the new senior secured credit facility and $2,438 of fees related to an unused bridge facility in connection with the Mergers and related financing transactions and $1,894 of income related to the remeasurement of liability-classified shares of common stock. During fiscal 2005, other expense (income) is composed of $6,745 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote and $33 of gain recognized on the redemption of $1,663 of our 91/2% senior subordinated notes due 2011. During fiscal 2004, other expense (income) is composed of losses recognized on the redemption of $200,000 of our 91/2% senior subordinated notes due 2009 and $83,400 of our 91/2% senior subordinated notes due 2011. During fiscal 2002, other expense (income) is comprised of transaction expenses incurred in connection with the issuance of Preferred Stock.

(7)
As a result of the merger with Marquee, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree, AMC Entertainment, as of December 23, 2004. Because of the application of purchase accounting, Successor and Predecessor periods are not prepared on comparable bases of accounting.

(8)
In connection with the merger with Marquee, Marquee was formed on July 16, 2004, and issued debt and held the related proceeds from issuance of debt in escrow until consummation of the merger. The Predecessor consolidated this merger entity in accordance with FIN 46(R). As a result, both the Predecessor and Successor have recorded interest expense of $12,811, interest income of $2,225 and income tax benefit of $4,500 related to Marquee.

(9)
Includes stock-based compensation of $1,645 and $747 for the 26 weeks ended September 28, 2006 and September 29, 2005, respectively. Includes stock-based compensation of $1,319 for the 52 week periods ended March 30, 2006 (Successor), and includes stock based compensation of $1,201, $0, $8,727, $2,011 and $442 during fiscal 2005 Successor, fiscal 2005 Predecessor, fiscal 2004, 2003 and 2002, respectively.

(10)
Restructuring charges related to one-time termination benefits and other cost related to the displacement of approximately 200 associates in connection with an organizational restructuring, which was completed to create a simplified organizational structure, and contribution of assets by NCN to NCM. This organizational restructuring was substantially completed as of March 30, 2006.

(11)
Includes consolidated theatres only.

(12)
Cash flows provided by operating activities for the 52 weeks ended March 30, 2006 do not include $142,512 of cash acquired in the Mergers which is included in cash flows from investing activities.

48


LCE Holdings, Inc.

        The following table sets forth LCE Holdings' selected historical and operating data. The selected financial data presented for the year ended February 28, 2002, the one month ended March 31, 2002, the nine months ended December 31, 2002, the year ended December 31, 2003, the seven months ended July 31, 2004, the five months ended December 31, 2004 and the year ended December 31, 2005 are derived from LCE Holdings' audited combined consolidated financial statements included elsewhere in this prospectus or, with respect to the year ended February 28, 2002, included in Loews' Annual Report on Form 10-K for the year ended February 28, 2002, filed with the SEC. LCE Holdings' financial statements include the assets, liabilities and results of operations of Cinemex on a combined basis for the period June 19, 2002 (the date Cinemex became an entity under common control) through July 31, 2004 and on a fully consolidated basis beginning August 1, 2004. LCE Holdings has reflected the financial position and results of its former Canadian operations as discontinued operations for all periods from April 1, 2002 to July 31, 2004, as those operations were sold to affiliates of its former investors.

        During the period from February 15, 2001 through March 21, 2002, LCE Holdings' operated under the protection of Chapter 11 of the U.S. Bankruptcy Code. For accounting purposes, it has accounted for the reorganization as of March 31, 2002. Accordingly, LCE Holdings' historical financial information for all periods through March 31, 2002 reflects the financial results of operations of its Pre-Bankruptcy Predecessor Company (prior to reorganization), and its historical financial information for the period April 1, 2002 through July 31, 2004 reflects that of its Predecessor Company (post-reorganization, pre-Loews Transactions). LCE Holdings' results of operations during the reorganization period were significantly affected by its bankruptcy proceedings and are therefore not comparable in all respects with the results of other periods presented.

        On July 30, 2004, LCE Holdings, a company formed by Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, acquired 100% of the capital stock of Loews and, indirectly, Cinemex. For accounting purposes and consistent with its reporting periods, LCE Holdings has used July 31, 2004 as the effective date of those transactions. Based on this event, Loews has reported its operating results and financial position for all periods presented from April 1, 2002 through July 31, 2004 as those of the Predecessor Company and for all periods from and after August 1, 2004 as those of the Successor Company. The Predecessor Company periods and the Successor Company periods have different bases of accounting and are therefore not comparable.

        The selected financial data presented herein should be read in conjunction with "LCE Holdings' Management's Discussion and Analysis of Financial Condition and Results of Operations," consolidated

49



financial statements, including the notes thereto, and other historical financial information of Loews, including the notes thereto, included elsewhere in this prospectus.

 
   
   
  Predecessor
   
   
 
 
  Successor
  Pre-Bankruptcy
 
 
  Period
January 1,
to July 31,
2004

   
   
 
 
  Year ended
December 31,
2005

  Period August 1, to December 31,
2004

  Year ended
December 31,
2003

  Period April 1, to December 31,
2002(b)

  March 1 to
March 31,
2002

  Year ended
February 28,
2002

 
 
  (thousands of dollars, except operating data)

 
Statement of Operations Data:                                            
Revenues                                            
Box office   $ 580,978   $ 237,545   $ 384,814   $ 628,643   $ 475,505   $ 52,514   $ 600,725  
Concessions     244,625     94,884     156,646     253,406     192,353     20,869     224,289  
Other     49,113     23,609     25,820     46,189     36,657     2,158     31,139  
   
 
 
 
 
 
 
 
  Total operating revenues     874,716     356,038     567,280     928,238     704,515     75,541     856,153  
   
 
 
 
 
 
 
 
Expenses                                            
Theatre operations and other expenses     649,290     264,608     404,674     681,493     517,017     55,187     652,944  
Cost of concessions     36,648     13,948     23,365     35,460     27,574     2,609     35,080  
General and administrative     53,771     20,934     43,334     60,099     55,942     3,906     42,186  
Depreciation and amortization     114,063     45,771     49,623     80,940     50,746     6,010     108,823  
Restructuring charges(1)                         1,445     9,549  
(Gain)/Loss on sale/disposal of theatres(1)     834     1,430     (3,734 )   (4,508 )   733         33,810  
   
 
 
 
 
 
 
 
  Total operating expense     854,606     346,691     517,262     853,484     652,012     69,157     882,392  
   
 
 
 
 
 
 
 
Income/(loss) from operations     20,110     9,347     50,018     74,754     52,503     6,384     (26,239 )
Interest expense, net     80,668     36,005     16,663     35,262     30,613     3,914     60,866  
Loss on early extinguishment of debt         882     6,856                  
Equity (income)/loss in long-term investments(2)     (23,134 )   (1,438 )   (933 )   1,485     (1,499 )   (85 )   1,748  
Reorganization costs(1)                         2,573     96,497  
   
 
 
 
 
 
 
 
Income/(loss) before income taxes, extraordinary gain, cumulative effect of change in accounting principle and discontinued operations     (37,424 )   (26,102 )   27,432     38,007     23,389     (18 )   (185,350 )
Income tax expense/(benefit)     7,548     (3,244 )   12,886     15,339     8,033     199     2,550  
   
 
 
 
 
 
 
 
Income/(loss) before extraordinary gain, cumulative effect of change in accounting principle and discontinued operations     (44,972 )   (22,858 )   14,546     22,668     15,356     (217 )   (187,900 )
Discontinued operations, net of tax(3)             7,417     56,183     10,846          
Extraordinary gain, net of tax(4)                         474,290      
Cumulative effect of change in accounting principle, net of tax(5)                     4,000          
   
 
 
 
 
 
 
 
Net income/(loss)   $ (44,972 ) $ (22,858 ) $ 21,963   $ 78,851   $ 30,202   $ 474,073   $ (187,900 )
   
 
 
 
 
 
 
 
Balance Sheet Data (at period end):                                            
Cash and equivalents   $ 145,324   $ 71,015   $     $ 139,425   $ 95,643   $     $ 61,168  
Corporate borrowings     1,044,264     1,037,907           429,865     610,084           753,882  
Other long-term liabilities(7)     104,553     113,290           247,221     62,392           638,817  
Capital and financing lease obligations     29,351     28,033           22,249     23,126           23,709  
Stockholders' equity/(deficit)     364,839     405,390           683,384     606,341           (15,547 )
Total assets   $ 1,713,140     1,751,958           1,597,319     1,517,374           1,579,719  
Other Data:                                            
Net cash provided by (used in) operating activities(6)     67,441     38,097     75,226     88,959     64,347     (46,747 )   60,631  
Capital Expenditures   $ (67,326 ) $ (17,205 ) $ (36,638 ) $ (40,895 ) $ (31,478 ) $ (1,512 ) $ (55,888 )
Proceeds from sale/leasebacks                              
                                             

50


Operating Data (at period end):                                            
Screen additions     67     51     12     59     118     20     148  
Screen acquisitions             12         349          
Screen dispositions     62     26     50     48     72     11     263  
Average screens—continuing operations(8)     1,806     1,798     1,806     1,834     1,908     1,988     2,081  
Number of screens operated     2,169     2,218     2,193     2,219     2,208     2,457     2,448  
Number of theatres operated     191     201     200     207     211     261     262  
Screens per theatre     11.4     11.0     11.0     10.7     10.5     9.4     9.3  
Attendance (in thousands)—continuing operations(8)     94,953     39,850     65,967     106,797     80,711     8,846     99,251  

(1)
See the notes to Loews' combined consolidated financial statements with respect to its bankruptcy and financial reporting in accordance with Statement of Financial Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code," and its restructuring charges, (gain)/loss on sale/disposal of theatres and reorganization costs, which are included in Loews' Annual Report on Form 10-K for the year ended February 28, 2002, filed with the SEC.

(2)
Includes the financial results of Loeks-Star Partners for all periods prior to April 2, 2002 under the equity method of accounting based on Loews' 50% interest in the partnership and on a consolidated basis for all periods from April 2, 2002, the date Loeks-Star Partners became an entity under common control. Also includes the financial results of Magic Johnson Theatres for all periods prior to April 1, 2002 under the equity method of accounting based on Loews' 50% interest in the partnership and on a consolidated basis from April 1, 2002, as a result of its adoption of FIN 46(R).

(3)
The balances reported for discontinued operations for the nine months ended December 31, 2002, the year ended December 31, 2003 and the seven months ended July 31, 2004 represent the net operating results of Loews' Canadian operations, which management decided to sell during 2004 and was sold to its former investors as part of the Loews Transactions.

(4)
Represents the extraordinary gain, net of tax, resulting from the extinguishment of liabilities subject to compromise in connection with Loews' reorganization.

(5)
Represents a one-time charge for the nine months ended December 31, 2002 to reflect the adoption of FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51."

(6)
Cash provided by/(used in) operating activities includes the payment of restructuring charges, bankruptcy claims and reorganization costs, as follows (in thousands):

 
  Successor
  Predecessor
  Pre-Bankruptcy
 
  Year ended December 31,
2005

  Period August 1, to December 31,
2004

  Period January 1, to July 31,
2004

  Year ended December 31,
2003

  Period April 1, to December 31,
2002(b)

  March 1 to March 31,
2002

  Year ended February 28,
2002

Restructuring charges paid during the period)   $   $ 17   $ 13   $ 3,065   $ 9,817   $ 32   $ 1,549
Payment of bankruptcy claims                         45,000    
Reorganization claims paid during the period         352     522     3,210     20,278     6,009     21,913
   
 
 
 
 
 
 
  Total   $   $ 369   $ 535   $ 6,275   $ 30,095   $ 51,041   $ 23,462
   
 
 
 
 
 
 
(7)
Includes liabilities subject to compromise of $540,933 as of February 28, 2002.

(8)
Includes consolidated theatres only.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF MARQUEE HOLDINGS INC.

        Holdings ("Successor") is a corporation owned by the Sponsors which completed a merger on December 23, 2004 in which AMCE was acquired by Holdings. Marquee is a company formed on July 16, 2004 and was wholly owned by Holdings. On December 23, 2004, pursuant to a merger agreement, Marquee merged with AMCE (the "Predecessor"). Upon the consummation of the merger between Marquee and AMCE on December 23, 2004, Marquee was renamed as AMCE, which is the legal name of the surviving entity. The merger was treated as a purchase with Marquee being the "accounting acquiror" in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations." As a result, Marquee applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree, AMCE, as of December 23, 2004, the merger date. The consolidated financial statements presented herein and discussed below are those of the accounting acquiror from its inception on July 16, 2004 through March 30, 2006, and those of its Predecessor, AMCE, for all prior periods through the merger date. Holdings has no material assets or operations of its own. The following discussion relates to the audited financial statements of Holdings, included elsewhere in this prospectus. This discussion contains forward-looking statements. Please see "Special Notes Regarding Forward-Looking Statements" for a discussion of the risks, uncertainties and assumptions relating to these statements

Overview

        We are one of the world's leading theatrical exhibition companies. As of September 28, 2006, we owned, operated or had interests in 411 theatres and 5,635 screens with 82%, or 4,628 of our screens in the U.S. and Canada, and 18%, or 1,007 of our screens in Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the United Kingdom.

        Our principal directly owned subsidiaries are AMC Entertainment, Inc., American Multi-Cinema, Inc. ("AMC"), Grupo Cinemex, S.A. de C.V. ("Cinemex") and AMC Entertainment International, Inc. ("AMCEI"). We conduct our U.S. and Canada theatrical exhibition business through AMC and its subsidiaries and AMCEI and its subsidiaries. We are operating theatres outside the United States primarily through Cinemex and AMCEI and its subsidiaries.

        On March 29, 2005, AMC Entertainment, along with Regal Entertainment Group ("Regal"), combined our respective cinema screen advertising businesses into a new joint venture company called National CineMedia, LLC ("NCM"). The new company engages in the marketing and sale of cinema advertising and promotions products; business communications and training services; and the distribution of digital alternative content. We record our share of on-screen advertising revenues generated by our advertising subsidiary, National Cinema Network, Inc. ("NCN") and NCM in other theatre revenues. We contributed fixed assets and exhibitor agreements of our cinema screen advertising subsidiary NCN to NCM. We also included goodwill (recorded in connection with the merger with Marquee) in the cost assigned to our investment in NCM. Additionally, we paid termination benefits related to the displacement of certain NCN associates. In consideration of the NCN contributions described above NCM issued a 37% interest in its Class A units to NCN. Since that date, our interest in NCM has declined to 29% due to the entry of new investors. See "Prospectus Summary—Recent Developments."

        On June 20, 2005, Holdings entered into a merger agreement with LCE Holdings, the parent of Loews, pursuant to which LCE Holdings merged with and into Holdings, with Holdings continuing as the holding company for the merged businesses, and Loews merged with and into AMC Entertainment, with AMC Entertainment continuing after the Mergers. The transactions closed on January 26, 2006.

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Upon completion of the Mergers, JPMP, Apollo, JPMP's and Apollo's co-investors, affiliates of Bain, Carlyle, Spectrum and management held 100% of Holdings' outstanding capital stock.

        In conjunction with the Mergers, we entered into a final judgment with the Antitrust Division of the United States Department of Justice and judgments and consent decrees with various States. These judgments and decrees require us to hold separate and divest ourselves of certain theatres. We sold six of these theatres during the 26 weeks ended September 28, 2006 for an aggregate sales price of $64.2 million, exchanged two of these theatres with another theatrical exhibitor for two theatres from that exhibitor in different markets, retained one of the theatres pursuant to an agreement reached with the California Attorney General and will close one remaining theatre during the third quarter of fiscal 2007.

        In connection with the Mergers, on January 26, 2006, we entered into the following financing transactions:

    the issuance of $325.0 million in aggregate principal amount of 11% senior subordinated notes due 2016 (the "Notes due 2016");

    a new senior secured credit facility with Citicorp North America, Inc., Banco Nacional De Mexico, S.A., Integrante del Grupo Financiero Banamex and the lenders named therein, consisting of a $650.0 million term loan facility and a $200.0 million revolving credit facility (the "New Credit Facility");

    the termination of AMC Entertainment's March 25, 2004 senior secured credit facility, under which no amounts were outstanding;

    the repayment of all outstanding amounts under Loews' existing senior secured credit facility and the termination of all commitments thereunder (the "Loews Facility"); and

    the completion of a tender offer and consent solicitation for all $315.0 million aggregate principal amount of Loews' outstanding 9.0% senior subordinated notes due 2014.

        The proceeds of the financing transactions were used to repay amounts outstanding under the Loews Facility, to fund the tender offer, to pay related fees and expenses, and to pay fees and expenses related to the Mergers.

        In connection with the Mergers, we acquired Loews on January 26, 2006, which significantly increased our size. In the Mergers, we acquired 112 theatres with 1,308 screens in the United States (including in our U.S. and Canada operating segment) and 40 theatres with 443 screens in Mexico (included in our International operating segment) that are included in our consolidated results of operations from January 26, 2006. Accordingly, results of operations for the fifty-two weeks ended March 30, 2006, which include nine weeks of operations of the businesses we acquired, are not comparable to our results for the fifty-two weeks ended March 31, 2005 and the results of operations for the twenty-six weeks ended September 28, 2006, which include twenty-six weeks of operations of the business we acquired, are not comparable to our results for the twenty-six weeks ended September 29, 2005. For additional information about the Mergers, see "Prospectus Summary—The Merger Transactions."

        On June 30, 2005, we sold one of our wholly-owned subsidiaries Japan AMC Theatres Inc., including four of our five theatres in Japan. We sold our remaining Japan theatre on September 1, 2005. The operations and cash flows of the Japan theatres have been eliminated from our ongoing operations as a result of the disposal transactions. We do not have any significant continuing involvement in the operations of the Japan theatres. The results of operations of the Japan theatres have been classified as discontinued operations, and information presented for all periods reflects the new classification. The operations of the Japan theatres were previously reported in our International theatrical exhibition operating segment.

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        We disposed of our only theatre in Hong Kong on January 5, 2006 and entered into a license agreement with the purchaser for continued use of our trademark. These operations did not meet the criteria for reporting as discontinued operations.

        In May 2006, AMCEI and its subsidiary AMC Entertainment International Limited sold its interests in AMC Entertainment España S.A., which owned and operated 4 theatres with 86 screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1 theatre with 20 screens in Portugal. These operations did not meet the criteria for reporting as discontinued operations.

        During the twenty-six weeks ended September 28, 2006, we sold four theatres in Spain with 86 screens, sold one theatre in Portugal with 20 screens, disposed of eight theatres with 100 screens in the U.S. as required by and in connection with the approval of the Mergers discussed below, closed seven theatres with 54 screens in the U.S., closed one managed theatre with six screens in the U.S., opened two new theaters with 33 screens in the U.S., acquired two theatres with 32 screens in the U.S., added six screens to an existing theatre in the U.S., opened one new theatre with nine screens in Mexico, and disposed of one theatre in Argentina with eight screens resulting in a circuit total of 411 theatres and 5,635 screens.

        For financial reporting purposes we have three segments, (1) U.S. and Canada theatrical exhibition (formerly, North American theatrical exhibition), (2) International theatrical exhibition and (3) Other, with the most significant activity in "Other" related to on-screen advertising.

        Our U.S. and Canada and International theatrical exhibition revenues are generated primarily from box office admissions and theatre concession sales. The balance of our revenues are generated from ancillary sources, including on-screen advertising, rental of theatre auditoriums, fees and other revenues generated from the sale of gift certificates and theatre tickets and arcade games located in theatre lobbies.

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

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

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

        During fiscal 2006, films licensed from our ten largest distributors based on revenues accounted for approximately 88% of our U.S. and Canada admissions revenues. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year.

54



        During the period from 1990 to 2005, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high of 535 in 2005, according to Motion Picture Association 2005 MPA Market Statistics.

        We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through closures and sales. We believe our introduction of the megaplex concept in 1995 has led to the current industry replacement cycle, which has accelerated the obsolescence of older, smaller theatres by setting new standards for moviegoers. From 1995 through March 30, 2006, AMC Entertainment and Loews added 191 theatres with 3,475 new screens, acquired 431 theatres with 3,007 screens and disposed of 666 theatres with 4,018 screens. As of September 28, 2006, approximately 71% of our screens in the U.S. and Canada were located in megaplex theatres.

Critical Accounting Estimates

        The accounting estimates identified below are critical to our business operations and the understanding of our results of operations. The impact of, and any associated risks related to, these estimates on our business operations are discussed throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations where such estimates affect our reported and expected financial results. For a detailed discussion on the application of these estimates and other accounting policies, see the notes to Holdings' consolidated financial statements included elsewhere in this prospectus. The methods and judgments we use in applying our accounting estimates have a significant impact on the results we report in our financial statements. Some of our accounting estimates require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our most critical accounting estimates include the assessment of recoverability of long-lived assets, including intangibles, which impacts impairment of long-lived assets when we impair assets or accelerate their depreciation; recoverability of goodwill, which creates the potential for write-offs of goodwill; recognition and measurement of current and deferred income tax assets and liabilities, which impacts our tax provision; recognition and measurement of our remaining lease obligations to landlords on our closed theatres and other vacant space, which impacts theatre and other closure expense; estimation of self-insurance reserves which impacts theatre operating and general and administrative expenses; recognition and measurement of net periodic benefit costs for our pension and other defined benefit programs, which impacts general and administrative expense; estimation of film settlement terms and measurement of film rental fees which impacts film exhibition costs and estimation of the fair value of assets acquired, liabilities assumed and consideration paid for acquisitions, which impacts the measurement of assets acquired (including goodwill) and liabilities assumed in a business combination. Below, we discuss these areas further, as well as the estimates and judgments involved.

        Impairments.    We review long-lived assets, including intangibles and investments in unconsolidated subsidiaries accounted for under the equity method, for impairment as part of our annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We review internal management reports on a quarterly basis as well as monitor current and potential future competition in the markets where we operate for indicators of triggering events or circumstances that indicate impairment of individual theatre assets. We evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential impairment and consider the seasonality of our business when evaluating theatres for impairment. Because Christmas and New Years holiday results comprise a significant portion of our operating cash flow, the actual results from this period, which are available during the fourth quarter of each fiscal year, are an integral part of our impairment analysis. As a result of these analyses, if the sum of the estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount of the asset, an impairment loss is recognized in the amount by which the carrying

55



value of the asset exceeds its estimated fair value. Assets are evaluated for impairment on an individual theatre basis, which we believe is the lowest level for which there are identifiable cash flows. The impairment evaluation is based on the estimated cash flows from continuing use until the expected disposal date or the fair value of furniture, fixtures and equipment. The expected disposal date does not exceed the remaining lease period and is often less than the remaining lease period when we do not expect to operate the theatre to the end of its lease term. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. The fair value of furniture, fixtures and equipment has been determined using similar asset sales and in some instances the assistance of third party valuation studies. The discount rate used in determining the present value of the estimated future cash flows was 20% and was based on management's expected return on assets during fiscal 2006, 2005 and 2004. There is considerable management judgment necessary to determine the future cash flows, fair value and the expected operating period of a theatre, and, accordingly, actual results could vary significantly from such estimates. We have recorded impairments of long-lived assets of $12.0 million, $0 and $16.3 million during fiscal 2006, 2005 and 2004, respectively.

        Goodwill.    Our recorded goodwill was $2,018.3 million and $2,095.4 million as of March 30, 2006 and September 28, 2006, respectively. We evaluate goodwill for impairment annually as of the end of the fourth fiscal quarter and any time an event occurs or circumstances change that reduce the fair value for a reporting unit below its carrying amount. Goodwill is recorded in our U.S. and Canada theatrical exhibition operating segment, in Cinemex and in our Spain and Portugal theatres, which are also our reporting units for purposes of evaluating our recorded goodwill for impairment. If the carrying value of the reporting unit exceeds its fair value we are required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. We determine fair value by using an enterprise valuation methodology determined by applying multiples to cash flow estimates less net indebtedness which we believe is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow estimates and appropriate multiples to be used in determining fair value.

        Income taxes.    In determining income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense as well as operating loss and tax credit carryforwards. We must assess the likelihood that we will be able to recover our deferred tax assets in each domestic and foreign tax jurisdiction in which we operate. If recovery is not more likely than not, we must record a valuation allowance for the deferred tax assets that we estimate are more likely than not unrealizable. Valuation allowances recorded against our net deferred tax assets in U.S. tax jurisdictions during fiscal 2006 increased our provision for income taxes by approximately $116 million. As of September 28, 2006, we had recorded approximately $25.3 million of net deferred tax assets (net of valuation allowances of $441 million) related to the estimated future tax benefits of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carryforwards. The recoverability of these deferred income tax assets is dependent upon our ability to generate future taxable income in the relevant taxing jurisdictions. Projections of future taxable income require considerable management judgment about future attendance levels, revenues and expenses.

        Theatre and Other Closure Expense.    Theatre and other closure expense is primarily related to payments made or expected to be made to landlords to terminate leases on certain of our closed theatres, other vacant space and theatres where development has been discontinued. Theatre and other closure expense is recognized at the time the theatre closes, space becomes vacant or development is

56



discontinued. Expected payments to landlords are based on actual or discounted contractual amounts. We estimate theatre closure expense based on contractual lease terms and our estimates of taxes and utilities. The discount rate we use to estimate theatre and other closure expense is based on estimates of our borrowing costs at the time of closing. Prior to the merger with Marquee our discount rates ranged from 6.6% to 21.0%. As a result of the merger with Marquee, we have remeasured our liability for theatre closure at a rate of 7.55%, our estimated borrowing cost on the date of this merger. We have recorded theatre and other closure expense of $7.7 million and $1.0 million during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. We have recorded theatre and other closure expense of $0.6 million and $1.3 million during the Successor periods ended March 30, 2006 and March 31, 2005 and $10.7 million and $4.1 million during the Predecessor periods ended December 23, 2004 and April 1, 2004, respectively. Accretion expense for Predecessor exit activities initiated after December 31, 2002, and all accretion expense for Successor exit activities is included as a component of theatre and other closure expense.

        Casualty Insurance.    We are self-insured for general liability up to $500,000 per occurrence and carry a $400,000 deductible limit per occurrence for workers compensation claims. We utilize actuarial projections of our estimated ultimate losses that we will be responsible for paying and as a result there is considerable judgment necessary to determine our casualty insurance reserves. The actuarial method that we use includes an allowance for adverse developments on known claims and an allowance for claims which have been incurred but which have not been reported. As of September 28, 2006 and March 30, 2006, we had recorded casualty insurance reserves of $24.6 million and $26.4 million, respectively. We have recorded expense related to general liability and workers compensation claims of $10.9 million and $2.1 million during the Successor periods ended March 30, 2006 and March 31, 2005, respectively, and $8.3 million and $10.6 million during the Predecessor periods ended December 23, 2004 and April 1, 2004, respectively.

        Pension and Postretirement Assumptions.    Pension and postretirement benefit obligations and the related effects on operations are calculated using actuarial models. Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense and/or liability measurement. We evaluate these critical assumptions at least annually. Other assumptions involve demographic factors such as retirement, expected increases in compensation, mortality and turnover. These assumptions are evaluated periodically and are updated to reflect our experience. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

        The discount rate enables us to state expected future cash flows at a present value on the measurement date. We have little latitude in selecting this rate, as it is required to represent the market rate for high-quality fixed income investments. A lower discount rate increases the present value of benefit obligations and increases pension and postretirement expense. For our principal pension plans, a 50 basis point decrease in the discount rate would increase pension expense by approximately $630,000. For our postretirement plans, a 50 basis point decrease in the discount rate would increase postretirement expense by approximately $41,000. We maintained our discount rate at 53/4% for the AMC Entertainment plans and 51/2% for the Loews plans for fiscal 2007. We have recorded expenses for our pension and postretirement plans of $3.2 million and $2.0 million during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. We have recorded expenses for our pension and postretirement plans of $4.7 million and $1.8 million during the Successor periods ended March 30, 2006 and March 31, 2005, respectively, and $5.3 million and $6.0 million during the Predecessor periods ended December 23, 2004 and April 1, 2004, respectively. We expect that our total pension and postretirement expense will increase by approximately $2.5 million from fiscal 2006 to fiscal 2007, $0.9 million of which results from the acquisition of the LCE plan. Our unrecognized net actuarial gain for pension and postretirement plans was $5.5 million as of March 30, 2006. In connection with a recent reorganization, there was a reduction in certain pension and

57



postretirement plan participants, which resulted in curtailment gains in fiscal 2006 for accounting purposes of $2.3 million.

        To determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets obtained from our investment portfolio manager. A 50 basis point decrease in the expected return on assets of our qualified defined benefit pension plan would increase pension expense on our principal plans by approximately $223,000 per year. Note 11 to Holdings' consolidated financial statements included elsewhere in this prospectus includes disclosures of our pension plan and postretirement plan assumptions and information about our pension plan assets.

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

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

        We accrue film exhibition costs based on the applicable box office receipts and estimates of the final settlement pursuant to the film licenses entered into with our distributors. Generally, less than one third of our quarterly film exhibition cost is estimated at period-end. The length of time until these costs are known with certainty depends on the ultimate duration of the film play, but is typically "settled" within two to three months of a particular film's opening release. Upon settlement with our film distributors, film cost expense and the related film cost payable are adjusted to the final film settlement. Such adjustments have been historically insignificant. However, actual film costs and film costs payable could differ materially from those estimates. For fiscal years 2006, 2005 and 2004 there were no significant changes in our film cost estimation and settlement procedures.

        As of September 28, 2006, March 30, 2006 and March 31, 2005, we had recorded film payables of $41.8 million, $66 million and $53 million, respectively. We have recorded film exhibition costs of $611 million and $157 million during the Successor periods ended March 30, 2006 and March 31, 2005 and $465 million and $622 million during the Predecessor periods ended December 23, 2004 and April 1, 2004, respectively.

        Acquisitions.    We account for our acquisitions of theatrical exhibition businesses using the purchase method. The purchase method requires that we estimate the fair value of the individual assets and liabilities acquired as well as various forms of consideration given including cash, common stock, senior subordinated notes and bankruptcy related claims. We have obtained independent third party valuation studies for certain of the assets and liabilities acquired to assist us in determining fair value. The estimation of the fair value of the assets and liabilities acquired including deferred tax assets and liabilities related to such amounts and consideration given involves a number of judgments and estimates that could differ materially from the actual amounts.

        We completed the Mergers on January 26, 2006. The acquisition was treated as a purchase in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations for an estimated purchase price of $537,171,000. Consideration was provided through a stock issuance by Holdings. The consolidated financials include only the results of Loews operations from the date of the Mergers.

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        We completed the merger with Marquee on December 23, 2004. The merger was treated as a purchase with Marquee being the "accounting acquirer" in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. As a result, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree and Predecessor, AMC Entertainment, as of December 23, 2004, the merger date. The consolidated financial statements presented herein are those of the accounting acquirer from its inception on July 16, 2004 through March 30, 2006, and those of its Predecessor, AMC Entertainment, for all periods presented through the merger date.

        We also consummated acquisitions in fiscal 2004 as discussed in Note 2 to Holdings' consolidated financial statements included elsewhere in this prospectus. During fiscal 2004 we acquired the assets of Megastar for a cash purchase price of $15 million.

Operating Results

        As a result of the December 23, 2004 merger with Marquee described above, our Predecessor does not have financial results for the fourteen week period ended March 31, 2005. In order to present Management's Discussion and Analysis in a way that offers investors a meaningful period to period comparison, we have combined the prior year Predecessor theatrical exhibition and Other operation information (38 weeks) with prior year Successor operating information (14 weeks), on an unaudited combined basis. The combined data consist of Predecessor information for the 38 weeks ended December 23, 2004 and Successor information for the 14 weeks ended March 31, 2005. The combined information for the 52 week period ended March 31, 2005 is not consistent with GAAP, does not purport to represent what our consolidated results of operations would have been if the Successor had actually began theatrical exhibition operations on April 1, 2004, nor have we made any attempt to either include or exclude expenses or income that would have resulted had the Mergers or merger with Marquee actually occurred on April 1, 2004.

        Set forth in the table below is the summary of revenues, costs and expenses attributable to our U.S. and Canada and International theatrical exhibition operations and Other businesses. Reference is made to Note 16 to the Notes to Holdings' Consolidated Financial Statements for additional information about our operations by operating segment.

        Fiscal years 2006, 2005 and 2004 include 52 weeks.

 
  26 Weeks
Ended
September 28,
2006

  26 Weeks
Ended
September 28,
2005

  52 Weeks
Ended
March 30,
2006

  14 Weeks
Ended
March 31,
2005

  38 Weeks Ended
December 23,
2004

  Combined 52
Weeks Ended
March 31,
2005

  52 Weeks Ended
April 1,
2004

 
 
  (Successor)

  (Successor)

  (Successor)

  (Successor)

  (Predecessor)

  (Predecessor)

  (Predecessor)

 
Revenues                                            
U.S. and Canada theatrical exhibition                                            
  Admissions   $ 807,429   $ 524,640   $ 1,110,464   $ 292,514   $ 836,254   $ 1,128,768   $ 1,125,922  
  Concessions     325,749     209,715     443,580     115,997     326,086     442,083     434,024  
  Other theatre     49,811     35,995     76,485     14,052     43,306     57,358     49,241  
   
 
 
 
 
 
 
 
      1,182,989     770,350     1,630,529     422,563     1,205,646     1,628,209     1,609,187  
   
 
 
 
 
 
 
 
International theatrical exhibition                                            
  Admissions     54,676     22,180     58,762     14,428     35,945     50,373     45,258  
  Concessions     33,332     7,297     23,099     4,569     11,517     16,086     13,220  
  Other theatre     11,708     1,339     5,153     873     2,049     2,922     2,320  
   
 
 
 
 
 
 
 
      99,716     30,816     87,014     19,870     49,511     69,381     60,798  
Other     36     10,553     12,907     10,467     38,811     49,278     52,454  
   
 
 
 
 
 
 
 
  Total revenues   $ 1,282,741   $ 811,719   $ 1,730,450   $ 452,900   $ 1,293,968   $ 1,746,868   $ 1,722,439  
   
 
 
 
 
 
 
 
                                             

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Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
U.S. and Canada theatrical exhibition                                            
  Film exhibition costs   $ 425,027   $ 284,588   $ 583,626   $ 150,557   $ 447,412   $ 597,969   $ 599,746  
  Concession costs     35,054     22,438     47,922     12,575     37,161     49,736     46,191  
  Theatre operating expense     294,300     193,399     421,665     103,578     286,706     390,284     389,665  
  Rent     210,564     146,020     317,181     77,804     214,927     292,731     277,584  
  Pre-opening expense     2,190     736     5,768     39     1,292     1,331     2,921  
  Theatre and other closure expense     7,690     931     1,313     988     10,758     11,746     3,570  
   
 
 
 
 
 
 
 
        974,825     648,112     1,377,475     345,541     998,256     1,343,797     1,319,677  
   
 
 
 
 
 
 
 
International theatrical exhibition                                            
  Film exhibition costs     24,045     10,674     26,974     6,782     17,674     24,456     22,102  
  Concession costs     7,993     1,330     4,662     773     2,564     3,337     3,021  
  Theatre operating expense     24,383     9,762     25,551     5,031     15,133     20,164     17,678  
  Rent     14,918     10,672     24,120     6,100     17,281     23,381     21,361  
  Pre-opening expense     939         839                 937  
  Theatre and other closure expense     20     49     (712 )                
   
 
 
 
 
 
 
 
      72,298     32,487     81,434     18,686     52,652     71,338     65,099  
   
 
 
 
 
 
 
 
Other     946     11,182     14,969     10,461     31,440     41,901     46,847  
Theatre and other closure expense (included in Other)                 279         279     498  
General and administrative expense:                                            
  Merger and Acquisition Costs     5,826     2,645     12,523     22,286     42,732     65,018     5,508  
  Management Fee     2,500     1,000     2,000     500         500      
  Other     29,680     18,199     38,308     14,731     33,908     48,639     56,500  
Restructuring Charge         3,908     3,980     4,926         4,926      
Depreciation and amortization     129,075     75,467     168,821     45,263     90,259     135,522     120,867  
Impairment of long-lived assets             11,974                 16,272  
Disposition of assets and other gains     (8,500 )   (770 )   (997 )   (302 )   (2,715 )   (3,017 )   (2,590 )
   
 
 
 
 
 
 
 
  Total costs and expenses   $ 1,206,650   $ 792,230   $ 1,710,487   $ 462,371   $ 1,246,532   $ 1,708,903   $ 1,628,678  
   
 
 
 
 
 
 
 

Twenty-six weeks Ended September 28, 2006 and September 29, 2005

        Revenues.    Total revenues increased 58.0%, or $471,022,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. This increase included approximately $385,142,000 of additional admission and concessions revenues resulting from the Mergers.

        U.S. and Canada theatrical exhibition revenues increased 53.6%, or $412,639,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Admissions revenues increased 53.9%, or $282,789,000, during the twenty-six weeks ended

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September 28, 2006 compared to the twenty-six weeks ended September 29, 2005, due to a 45.8% increase in total attendance, including the increased attendance and admissions revenues of $224,695,000 due to the Mergers, and a 5.6% increase in average ticket prices. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2006) increased 6.2% during the twenty-six weeks ended September 28, 2006 over the comparable period last year, primarily due to a 2.8% increase in attendance at comparable theatres. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and the discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Based upon available industry sources, box office revenues of our comparable theatres (including comparable theatres acquired in the Mergers) performed in line with overall performance of industry comparable theatres in the markets where we operate. Concessions revenues increased 55.3%, or $116,034,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in attendance and a 6.5% increase in average concessions per patron related primarily to price increases. Concession revenues increased by $85,470,000 due to the Mergers. Other theatre revenues increased 38.4%, or $13,816,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Included in other theatre revenues are our share of on-screen advertising revenues generated by NCN and NCM. The increase in other theatre revenues was primarily due to increases in on-screen advertising revenues as a result of the Mergers.

        International theatrical exhibition revenues increased $68,900,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Admissions revenues increased by $45,190,000 due to the theatres acquired in Mexico in the Mergers, partially offset by a decline in admissions revenues of $13,741,000 due to the theatres we sold in Spain and Portugal. Overall, admissions revenues increased $32,496,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to an increase of 359.5% in total attendance, partially offset by a 46.3% decrease in average ticket price due primarily to the lower average ticket prices from the theatres acquired in Mexico. Concessions revenues increased $29,787,000 due to the theatres acquired in Mexico in the Mergers, partially offset by a decline in concessions revenues of $4,263,000 due to the theatres we sold in Spain and Portugal. Overall, concession revenues increased $26,035,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in attendance, partially offset by a 0.6% decrease in concessions per patron. International revenues were positively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

        Revenues from Other decreased 99.7%, or $10,517,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the contribution of NCN's net assets to NCM on March 29, 2005 and the related run-off of customer contracts. The revenues of NCN during fiscal 2006 and 2007 are comprised of customer contracts entered into prior to March 29, 2005. Our share of advertising revenues generated by NCM are included in U.S. and Canada Other theatre revenues.

        Costs and expenses.    Total costs and expenses increased 52.3%, or $414,420,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. The effect of the Mergers was an increase in total costs and expenses of approximately $345,893,000.

        U.S. and Canada theatrical exhibition costs and expenses increased 50.4%, or $326,713,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Film exhibition costs increased 49.3%, or $140,439,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in admissions revenues, offset by a decrease in the percentage of admissions paid to film distributors. As a

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percentage of admissions revenues, film exhibition costs were 52.6% in the current period as compared with 54.2% in the prior period due to more favorable film rental terms primarily from theatres acquired in the Mergers. Concession costs increased 56.2%, or $12,616,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in concessions revenues and an increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.8% in the current period compared with 10.7% in the prior period. As a percentage of revenues, theatre operating expense was 24.9% in the current period as compared to 25.1% in the prior period. Rent expense increased 44.2%, or $64,544,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 primarily due to the Mergers, which increased rent expense by $50,409,000. During the twenty-six weeks ended September 28, 2006, we recognized $7,690,000 of theatre and other closure expense due primarily to the closure of three theatres with 22 screens and to accretion of the closure liability related to theatres closed during prior periods. During the twenty-six weeks ended September 29, 2005, we recognized $931,000 of theatre and other closure expense related primarily to accretion of the closure liability related to theatres closed during prior periods.

        International theatrical exhibition costs and expenses increased $39,811,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Film exhibition costs increased $13,371,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in admissions revenues, partially offset by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 44.0% in the current period as compared with 48.1% in the prior period due to the effect of more favorable film rental terms in Mexico. Concession costs increased $6,663,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the increase in concession revenues and an increase in concession costs as a percentage of revenue from 18.2% in the prior period to 24.0% in the current period. This increase in concession costs as a percentage of revenues was due to the effect of higher concession costs as of percentage of concession revenues in Mexico caused by a higher number of concession products offered for sale with lower margins. As a percentage of revenues, theatre operating expense was 24.5% in the current period compared to 31.7% in the prior period. Theatre operating expense as a percentage of revenues in Mexico were 22.8% in the current period. Rent expense increased 39.8%, or $4,246,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005, primarily as a result of the Mergers. We continually monitor the performance of our international theatres, and factors such as changing consumer preferences for filmed entertainment in international markets and our ability to sublease vacant retail space could negatively impact operating results and result in future closures, sales, dispositions and theatre closure charges prior to expiration of underlying lease agreements. International theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

        Costs and expenses from Other decreased 91.5%, or $10,236,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005 due to the contribution of net assets by NCN to NCM and run-off of customer contracts.

    General and Administrative Expense:

        Merger and acquisition costs.    Mergers and acquisition costs increased $3,081,000 from $2,645,000 to $5,826,000 during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. Current year costs are primarily comprised of professional and consulting, repairs and maintenance to update certain of the Loews theaters and salaries costs related to the Mergers and other potential divestiture activities.

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        Management fees.    Management fees increased $1,500,000 during the twenty-six weeks ended September 28, 2006. For fiscal 2007, management fees of $1,250,000 will be paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 63.1%, or $11,481,000, during the twenty-six weeks ended September 28, 2006 compared to the twenty-six weeks ended September 29, 2005. We incurred expense at Cinemex of $5,118,000, incentive-based compensation increased $2,283,000 due to improvements in operating results and we experienced increases in other salaries of $1,151,000 primarily related to the Merger.

        Restructuring Charges.    Restructuring charges were $0 during the twenty-six weeks ended September 28, 2006 as compared to $3,908,000 during the twenty-six weeks ended September 29, 2005. The prior period expenses are primarily related to one-time termination benefits and other costs related to the displacement of approximately 200 associates related to an organizational restructuring, which was completed to create a simplified organizational structure and contribution of assets by NCN to NCM.

        Depreciation and Amortization.    Depreciation and amortization increased 71.0%, or $53,608,000, compared to the prior period, due primarily to increased asset values associated with fair value adjustments recorded as a result of the Mergers. See Note 2—Acquisitions for discussion of the cumulative adjustment recorded during the thirteen weeks ended September 28, 2006.

        Disposition of Assets and Other Gains.    Disposition of assets and other gains were $8,500,000 in the current period compared to $770,000 in the prior period. The current and prior periods include $7,880,000 and $675,000, respectively, of settlements received related to fireproofing claims at various theatres (see Note 13—Commitments and Contingencies to Consolidated Financial Statements). The current period includes a gain on disposition of the Spain and Portugal theatres and the U.S. dispositions of theatres as required by and in connection with the Mergers of $620,000.

        Other Income.    Other income includes $7,434,000 and $6,047,000 of income related to the derecognition of stored value card liabilities where we believe future redemption to be remote, during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. Other income includes $1,120,000 of expense and $1,172,000 of income related to the remeasurement of liability-classified shares of common stock during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively.

        Interest Expense.    Interest expense increased 81.3%, or $51,826,000, primarily due to increased borrowings.

        On January 26, 2006, AMCE issued $325,000,000 of the Notes due 2016 and entered into the New Credit Facility for $850,000,000, of which $646,750,000 is currently outstanding as a variable rate term note. We also incurred interest expense related to debt held by Cinemex of $6,311,000 during fiscal 2007.

        Investment Income.    Investment income was $3,609,000 for the twenty-six weeks ended September 28, 2006 compared to income of $480,000 for the twenty-six weeks ended September 29, 2005. Interest income increased $5,329,000 from the prior period due primarily to larger amounts of cash and equivalents available for investment. Equity in losses of non-consolidated entities were $2,455,000 in the current period compared to losses of $659,000 in the prior period. Current year equity in losses related to our investments in NCM and Yelmo Cineplex, S.L. were $2,532,000 and $311,000, respectively.

        Income Tax Provision (Benefit).    The provision for income taxes from continuing operations was $2,200,000 for the twenty-six weeks ended September 28, 2006 compared to a benefit of $14,200,000 for

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the twenty-six weeks ended September 29, 2005. See Note 9—Income Taxes to the Consolidated Financial Statements.

        Loss From Discontinued Operations, Net.    On June 30, 2005 we sold Japan AMC Theatres, Inc., including four theatres in Japan with 63 screens. The results of operations of these theatres are classified as discontinued operations. Additionally, on September 1, 2005 we sold the remaining Japan theatre with 16 screens and classified its operations as discontinued operations. The information presented for all fiscal 2006 reflects the new classification. See Note 3-Discontinued Operations to the Consolidated Financial Statements for the components of the loss from discontinued operations.

        Net Loss.    Net loss was $31,724,000 and $44,418,000 for the twenty-six weeks ended September 28, 2006 and the twenty-six weeks ended September 29, 2005, respectively.

For the Year Ended March 30, 2006 and Combined Year Ended March 31, 2005

        Revenues.    Total revenues decreased 0.9%, or $16,418,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. This decrease was mitigated by approximately $118,840,000 of additional admission and concessions revenues resulting from the Mergers.

        U.S. and Canada theatrical exhibition revenues increased 0.1%, or $2,320,000 during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. Admissions revenues decreased 1.6% or $18,304,000 during the year ended March 30, 2006 compared to the combined year ended March 31, 2005, due to a 5.4% decrease in total attendance, partially offset by a 4.0% increase in average ticket prices and the increased attendance and admissions revenues ($70,846,000) due to the Mergers. Attendance at comparable theatres (theatres opened on or before April 2, 2004 and operated throughout the last two fiscal years) was down 11.8%. Industry-wide box office declined 4%, with attendance estimated to be down nearly 7% in the aggregate (down 10.0% for comparable screens), offset by average ticket price increases estimated to be up 3%. The year over year performance of our U.S. and Canada comparable screens versus industry-wide comparable screens was impacted primarily by competition from new build openings. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and the discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Concessions revenues increased 0.3%, or $1,497,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to a 6.0% increase in average concessions per patron related to price increases and an increase in units sold per patron, partially offset by the decrease in attendance. Concession revenues increased by $27,276,000 due to the Mergers. Other theatre revenues increased 33.3% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. Included in other theatre revenues are our share of on-screen advertising revenues generated by NCN and NCM. The increase in other theatre revenues was primarily due to increases in on-screen advertising revenues.

        International theatrical exhibition revenues increased 25.4%, or $17,633,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. Admissions revenues increased 16.7%, or $8,389,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to a 39.1% increase in total attendance and a 6.3% decrease in attendance at comparable theatres, partially offset by a 16.2% decrease in average ticket price caused by the lower average ticket prices from the theatres acquired in Mexico. The decline in attendance at comparable theatres was offset by the increased attendance from the Mergers. Admissions revenues increased by $12,791,000 due to the Mergers. Concession revenues increased 43.6%, or $7,013,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the increase in attendance and a 3.2% increase in concessions per patron. Concession revenues increased by $7,942,000 due to the Mergers. International revenues were negatively impacted by a stronger U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

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        Revenues from Other decreased 73.8% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the contribution of NCN's net assets to NCM on March 29, 2005. The revenues of NCN during fiscal 2006 are related to run-off of customer contracts entered into prior to March 29, 2005. Our share of advertising revenues generated by NCM are included in U.S. and Canada other theatre revenues.

        Costs and expenses.    Total costs and expenses increased 0.1%, or $1,584,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. The effect of the Mergers was an increase in total costs and expenses of approximately $110,401,000.

        U.S. and Canada theatrical exhibition costs and expenses increased 2.5% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. Film exhibition costs decreased 2.4% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the decrease in admissions revenues, offset by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 52.6% in the current period as compared with 53.0% in the combined prior period due to more favorable film rental terms primarily from the Mergers. Concession costs decreased 3.6% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the decrease in concessions costs as a percentage of concession revenues, partially offset by the increase in concessions revenues. As a percentage of concessions revenues concession costs were 10.8% in the current period compared with 11.3% in the combined prior period. As a percentage of revenues, theatre operating expense was 25.9% in the current period as compared to 24.0% in the combined prior period. Rent expense increased 8.4% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 primarily due to the Mergers which increased rent expense by $18,415,000. During the year ended March 30, 2006, we recognized $601,000 of theatre and other closure expense due primarily to accretion of the closure liability related to theatres closed during prior periods. During the combined year ended March 31, 2005, we recognized $11,746,000 of theatre and other closure expense related primarily to the closure of three theatres with 22 screens.

        International theatrical exhibition costs and expenses increased 14.2% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. Film exhibition costs increased 10.3% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the increase in admissions revenues, partially offset by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 45.9% in the current period as compared with 48.6% in the combined prior period due to the effect of more favorable film rental terms in Mexico as a result of the Mergers. Concession costs increased 39.7% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the increase in concession revenues, partially offset by a decrease in concession costs as a percentage of revenue from 20.8% in the combined prior period to 20.2% in the current period as a percentage of revenues, theatre operating expense was 29.4% in the current period compared to 29.1% in the combined prior period. Rent expense increased 3.2% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 primarily as a result of the Mergers. We continually monitor the performance of our international theatres, and factors such as our ability to obtain film product, changing consumer preferences for filmed entertainment in international markets and our ability to sublease vacant retail space which could negatively impact operating results and result in future closures, sales, dispositions and theatre closure charges prior to expiration of underlying lease agreements. International theatrical exhibition costs and expenses were positively impacted by a stronger U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

        Costs and expenses from Other decreased 64.3% during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 due to the contribution of net assets by NCN to NCM.

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    General and Administrative:

        Merger and acquisition costs.    Merger and acquisition costs decreased $52,495,000 from $65,018,000 to $12,523,000 during the year ended March 30, 2006 compared to the combined year ended March 31, 2005. The prior year costs were higher primarily due to the costs associated with our merger with Marquee consummated during the third quarter of fiscal 2005. Current year costs are primarily comprised of costs related to the Mergers and other potential acquisition and divestiture activities.

        Management fees.    Management fees increased $1,500,000 during the current period. For fiscal 2007, management fees of $1,250,000 will be paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense decreased 21.2%, or $10,331,000, during the year ended March 30, 2006 compared to the combined year ended March 31, 2005 primarily due to a $4,648,000 decrease in incentive-based compensation, due to our decline in operating results and a $6,102,000 decrease in salaries and benefits as a result of our organizational restructuring activities.

        Restructuring Charge.    Restructuring charges were $3,980,000 during the year ended March 30, 2006 as compared to $4,926,000 during the combined year ended March 31, 2005. These expenses are primarily related to one-time termination benefits and other costs related to the displacement of approximately 200 associates related to an organizational restructuring, which was completed to create a simplified organizational structure and contribution of assets by NCN to NCM. Our organizational restructuring is complete.

        Depreciation and Amortization.    Depreciation and amortization increased 24.6%, or $33,299,000, compared to the combined prior period, due primarily to increased asset values associated with fair value adjustments recorded as a result of the merger with Marquee and the Mergers.

        Impairment of Long-Lived Assets.    During fiscal 2006 we recognized a non-cash impairment loss of $11,974,000 on four theatres with 66 screens (in Ohio, Illinois, New York and New Jersey). The entire charge was taken against property. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. We continually evaluate the future plans for certain of our theatres, which may include selling theatres or closing theatres and terminating the leases. No impairment loss was recorded in fiscal 2005.

        Disposition of Assets and Other Gains.    Disposition of assets and other gains were $997,000 in the current period compared to $3,017,000 in the combined prior period. The current and combined prior periods include $935,000 and $2,610,000, respectively, of settlements received related to fireproofing claims at various theatres (see Note 12—Commitments and Contingencies to Consolidated Financial Statements). The current period also includes miscellaneous disposal gains of $62,000. The combined prior period also included miscellaneous gains of $407,000.

        Other Income.    Other income includes $8,699,000 of income related to the derecognition of stored value card liabilities where we believe future redemption to be remote, insurance recoveries of $3,032,000 for property losses related to Hurricane Katrina, net of disposition losses of $346,000, $1,968,000 of business interruption insurance recoveries related to Hurricane Katrina and $1,894,000 of income related to the remeasurement of liability-classified shares of common stock, partially offset by financing costs incurred with the write off of our deferred financing charges of $3,535,000. Other income, for the prior year on a combined basis, primarily included $6,745,000 of income related to the derecognition of stored value card liabilities.

        Interest Expense.    Interest expense was $144,988,000, $54,549,000 and $74,259,000 for the Successor period ended March 30, 2006, the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Interest expense for the Successor period

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ended March 30, 2006 compared to the combined year ended March 31, 2005 has increased by $36,126,000 after adjustment for $19,946,000 of interest expense recorded in the prior year Successor and Predecessor periods. The interest on the 85/8% senior fixed rate notes due 2012 (the "Fixed Notes due 2012") and the senior floating notes due 2010 (the "Floating Notes due 2010") was required to be consolidated into the Predecessor period ended December 23, 2004 as well as the Successor period ended March 31, 2005 pursuant to FIN 46R. See Note 1—The Company and Significant Accounting Policies for additional information about FIN 46R. Interest expense increased $17,593,000 compared to the combined year ended March 31, 2005 related to the Fixed Notes due 2012 and the Floating Notes due 2010. The increase in interest was also due to an increase in interest related to the 12% senior discount notes due 2014 (the "Discount Notes") due which increased by $10,068,000 compared to the combined year ended March 31, 2005.

        On January 26, 2006, AMCE issued $325,000,000 of the Notes due 2016 and entered into the New Credit Facility for $850,000,000, of which $650,000,000 is currently outstanding as a variable rate term note. Interest on these notes was $6,528,000 and $7,985,000, respectively during fiscal 2006. We also incurred interest expense related to debt held by Cinemex of $2,110,000 during fiscal 2006.

        On August 18, 2004, Marquee issued $250,000,000 of the Fixed Notes due 2012 and $205,000,000 of the Floating Notes due 2010, the interest rate of which is currently 9.00% per annum. AMCE assumed Marquee's obligations under the Fixed Notes due 2012 and the Floating Notes due 2010 in the merger with Marquee. On August 18, 2004, Holdings issued $304,000,000 aggregate principal amount at maturity of Discount Notes for gross proceeds of $169,917,760. Interest expense associated with the Discount Notes is only included in the Consolidated Statement of Operations of the Predecessor through December 23, 2004.

        Investment Loss (Income).    Investment loss was $4,393,000 for the Successor period ended March 30, 2006 compared to income of $3,351,000 and $6,476,000 for the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Equity in losses of non-consolidated entities were $7,807,000 in the Successor period ended March 30, 2006 compared to income of $293,000 in the prior year. Current year equity in losses related to our investment in NCM were $5,476,000. Interest income for the Successor period ended March 30, 2006 was $3,193,000. Prior year periods interest income was higher primarily due to the escrow funds and increased cash available for investment during the period. The interest on these funds was required to be included in the Predecessor period ended December 23, 2004 pursuant to FIN 46R. See Note 1—Basis of Presentation in the Consolidated Financial Statements for additional information about FIN 46R.

        Income Tax Provision (Benefit).    The provision for income taxes from continuing operations was $72,100,000 for the Successor period ended March 30, 2006 compared to a benefit of $9,200,000 for the Successor period ended March 31, 2005 and a provision of $15,000,000 for the Predecessor period ended December 23, 2004. The provision for the Successor period ended March 30, 2006 included a charge for a full valuation allowance on all U.S. tax jurisdiction net deferred tax assets with the exception of those U.S. net deferred tax assets acquired in connection with the Mergers. The Successor period ended March 31, 2005 included $20,000,000 in costs associated with the merger with Marquee which were treated as non-deductible and the Predecessor period ended December 23, 2004 included $41,032,000 of costs associated with the merger with Marquee which were treated as non-deductible. See Note 9 to the Consolidated Financial Statements.

        Loss From Discontinued Operations, Net.    On June 30, 2005 we sold Japan AMC Theatres, Inc., including four theatres in Japan with 63 screens. The results of operations of these theatres have been classified as discontinued operations. Additionally, on September 1, 2005 we sold the remaining Japan theatre with 16 screens and have classified its operations as discontinued operations. The information presented for all periods reflects the new classification. See Note 3 to the Consolidated Financial Statements for the components of the loss from discontinued operations.

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        Loss for Shares of Common Stock.    Loss for shares of common stock was $212,215,000, $44,390,000 and $140,178,000 for the Successor period ended March 30, 2006, the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Preferred Stock dividends of 1,023 shares of Preferred Stock valued at $2,362,000 for the period from April 1, 2004 to April 19, 2004, cash dividends of $9,349,000 for the period from April 19, 2004 through September 30, 2004, special Preferred Stock dividends and 33,408 shares of Preferred Stock valued at $91,113,000 and accretion of $1,476,000 were recorded during the Predecessor period ended December 23, 2004. In connection with the merger with Marquee, each outstanding share of Preferred Stock converted into the right to receive $2,727.27 in cash.

Combined Year Ended March 31, 2005 and Year Ended April 1, 2004

        Revenues.    Total revenues increased 1.4%, or $24,429,000, on a combined basis, during the year ended March 31, 2005 compared to the year ended April 1, 2004.

        U.S. and Canada theatrical exhibition revenues increased 1.2%, on a combined basis, from the prior year. Admissions revenues increased 0.3%, on a combined basis, due to a 3.8% increase in average ticket price partially offset by a 3.4% decrease in attendance. The increase in average ticket prices was primarily due to our practice of periodically reviewing ticket prices and the discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Attendance decreased primarily due to a 5.8% decrease in attendance at comparable theatres (theatres opened on or before April 4, 2003) related to overall popularity and mix of film product and a decrease in attendance due to theatre closures, partially offset by an increase in attendance at new theatres. We closed 6 theatres with 42 screens and opened three theatres with 44 screens since fiscal 2004. Concessions revenues increased 1.9%, on a combined basis, due to a 5.4% increase in average concessions per patron related to price increases partially offset by the decrease in attendance.

        International theatrical exhibition revenues increased 14.1%, on a combined basis. Admissions revenues increased 11.3%, on a combined basis, due to a 6.4% increase in average ticket price due primarily to the weaker U.S. dollar and a 4.6% increase in attendance, primarily at new theatres. Attendance at comparable theatres was approximately the same. Concession revenues, on a combined basis, increased 21.7% due to a 16.3% increase in concessions per patron and the increase in total attendance. Concessions per patron increased primarily due to the weaker U.S. dollar.

        Revenues from NCN and other decreased 6.1%, on a combined basis, from the prior year due to a decrease in advertising revenues resulting from a reduction in screens served by NCN. This decline resulted from an initiative to improve profitability by eliminating marginally profitable contracts with certain theatre circuits.

        Costs and expenses.    Total costs and expenses increased 4.9%, on a combined basis, or $80,225,000, during the year ended March 31, 2005 compared to the year ended April 1, 2004.

        U.S. and Canada theatrical exhibition costs and expenses increased 1.8%, on a combined basis, from the prior year. Film exhibition costs decreased 0.3%, on a combined basis, due to a decrease in the percentage of admissions paid to film distributors partially offset by the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 53.0% in the current year as compared with 53.3% in the prior year. Concession costs increased 7.7%, on a combined basis, due to the increase in concession costs as a percentage of concessions revenues and the increase in concession revenues. As a percentage of concessions revenues, concession costs were 11.3%, on a combined basis, in the current year compared with 10.6% in the prior year. As a percentage of revenues, theatre operating expense was 24.0% in the current year, on a combined basis, as compared to 24.2% in the prior year. Rent expense increased 5.5%, on a combined basis, due primarily to the opening of theatres and screens since April 1, 2004 and the sale and lease back of the real estate assets

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associated with three theatres for proceeds of $63,911,000 on March 30, 2004. During fiscal 2005, on a combined basis, we recognized $11,746,000 of theatre and other closure expense related primarily to accruals for future minimum rentals on three theatres with 22 screens closed during the current period. During fiscal 2004, we incurred $3,570,000 of theatre and other closure expense related primarily to a payment to a landlord to terminate a lease on a theatre closed during the current period and due to accruals for future minimum rentals on three theatres with 20 screens closed during the year. Theatres closed prior to their lease expiration may require payments to the landlords to terminate the leases, which we estimate could approximate $250,000, in the aggregate, over the next three years.

        International theatrical exhibition costs and expenses increased 9.6%, on a combined basis. Film exhibition costs increased 10.7%, on a combined basis, due to the increase in admissions revenues partially offset by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 48.6%, on a combined basis, in the current period as compared with 48.8% in the prior period. Concession costs increased 10.5%, on a combined basis, due to the increase in concession revenues partially offset by a decrease in concession costs as a percentage of concession revenues. As a percentage of concessions revenues, concession costs were 20.7%, on a combined basis, in the current year compared with 22.9% in the prior year. Theatre operating expense increased 14.1%, on a combined basis, primarily at new theatres, and rent expense increased 9.5%, on a combined basis, primarily at new theatres. We continually monitor the performance of our international theatres, and factors such as our ability to obtain film product, changing consumer preferences for filmed entertainment in international markets and our ability to sublease vacant retail space could negatively impact operating results and result in future closures, sales, dispositions and theatre closure charges prior to expiration of underlying lease agreements. International theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

        Costs and expenses from NCN and other decreased 10.9%, on a combined basis, due primarily to the reduction in overhead costs associated with the integration of NCN's administrative functions into our home office location and decreased revenues.

    General and Administrative:

        Merger and acquisition.    Merger and acquisition costs increased $59,510,000 during the current year, on a combined basis. The current period reflects costs associated with the merger with Marquee of $63,057,000 and $1,943,000 for other strategic initiatives. Prior period costs were primarily for professional and consulting expenses directly related to a possible business combination with Loews Cineplex Entertainment Corporation that did not occur.

        Management fee.    Management fee costs increased $500,000 during the current year, on a combined basis. Management fees of $250,000 are paid quarterly, in advance, to two primary shareholders in exchange for consulting and other services.

        Other.    Other general and administrative expense decreased 13.9%, on a combined basis. Stock-based compensation decreased $7,526,000, during the current year, on a combined basis, compared to the prior year. The current combined period reflects that certain of the performance measures for fiscal 2005 have not been met and related discretionary awards under the 2003 Long-Term Incentive Plan ("LTIP") will not be made. Accordingly, we recorded no expense or accrual for fiscal 2005 performance grants under the LTIP. The prior period reflects expense from the plan approval date, September 18, 2003 through April 1, 2004. Current year stock-based compensation expense of $1,201,000 relates to options issued by our parent, Holdings, for certain members of our management. See Note 8 to the Consolidated Financial Statements included herein.

        Restructuring Charge.    Restructuring charges were $4,926,000 during the current year. These expenses are related to one-time termination benefits and other costs related to the displacement of

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approximately 200 associates related to an organizational restructuring, which was completed to create a simplified organizational structure, and a contribution of assets by NCN to NCM.

        Depreciation and Amortization.    Depreciation and amortization increased 12.1%, on a combined basis, or $14,655,000, due primarily to an increase in asset basis of approximately $130,000,000 resulting from the application of fair value accounting in connection with the merger with Marquee and increases in depreciation resulting from new theatres.

        Impairment of Long-Lived Assets.    No impairment loss was recorded in fiscal 2005. During fiscal 2004, we recognized a non-cash impairment loss of $16,272,000 on 10 theatres with 176 screens. We recognized an impairment loss of $9,866,000 on seven U.S. theatres with 114 screens (in Texas, Maryland, California, Illinois, Wisconsin and Minnesota), $3,525,000 on one theatre in the United Kingdom with 12 screens and $2,881,000 on two Canadian theatres with 50 screens. Our impairment loss included $16,209,000 related to property and $63,000 related to intangible assets. Included in these losses is an impairment of $3,482,000 on 3 theatres with 70 screens that were included in impairment losses recognized in previous periods. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. We continually evaluate the future plans for certain of our theatres, which may include selling theatres or closing theatres and terminating the leases. We have identified 30 multiplex theatres with 261 screens that we may close over the next one to three years due to expiration of leases or early lease terminations. Prior to and including fiscal 2004, $10,763,000 of impairment charges have been taken on these theatre assets and the economic lives of these theatre assets have been revised to reflect management's best estimate of the economic lives of the theatre assets for purposes of recording depreciation.

        Disposition of Assets and Other Gains.    Disposition of assets and other gains increased from a gain of $2,590,000 during the prior year to a gain of $3,017,000 during the current year, on a combined basis. The combined current period includes settlement gains of $2,610,000 related to various fireproofing claims at two theatres and a $111,000 settlement that was received from a construction contractor related to one Canadian theatre. The combined current period also includes a gain of $334,000 related to a sale of NCN equipment. The prior period includes a $1,298,000 gain on the disposition of three theatres and two parcels of real estate held for sale, settlements of $925,000 received related to various fireproofing claims at two theatres and $367,000 related to a settlement with a construction contractor at one theatre.

        Other Income and Expense.    During the current year, on a combined basis, we recognized $6,745,000 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote. In the prior year, on March 25, 2004, we redeemed $200,000,000 of our 91/2% senior subordinated notes due 2009 (the "Notes due 2009") for $204,750,000. We recognized a loss of $8,590,000 in connection with the redemption, including a call premium of $4,750,000, unamortized issue costs of $3,291,000 and unamortized discount of $549,000. On March 25, 2004, we redeemed $83,406,000 or our 91/2% senior subordinated notes due 2011 (the "Notes due 2011") for $87,367,000. We recognized a loss of $5,357,000 in connection with the redemption including a call premium of $3,961,000, unamortized issue costs of $1,126,000 and unamortized discount of $270,000. The losses are included within other expense in the Consolidated Statements of Operations for the year ended April 1, 2004.

        Interest Expense.    Interest expense was $54,549,000, $74,259,000 and $77,717,000 for the Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004, respectively. The current year increase is primarily due to increased borrowing related to the merger with Marquee. Interest expense of $12,811,000 is included in both the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004 related to our Fixed Notes due 2012 and our Floating Notes due 2010. The interest on these notes was

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required to be included in the Predecessor period ended December 23, 2004 pursuant to FASB Interpretation No. 46R, Consolidation of Variable Interest Entities ("FIN 46R").

        On August 18, 2004, AMCE issued $250,000,000 of our Fixed Notes due 2012 and $205,000,000 of our Floating Notes due 2010, the interest rate of which is currently 7.04% per annum. On August 18, 2004, Holdings issued $304,000,000 aggregate principal amount at maturity of Discount Notes for gross proceeds of $169,917,760. Interest expense associated with the Discount Notes is included in our Consolidated Statements of Operations through December 23, 2004. See Note 1 to Holdings' Consolidated Financial Statements included elsewhere in this prospectus.

        On February 24, 2004, we sold $300,000,000 aggregate principal amount of 8% senior subordinated notes due 2014 (the "Notes due 2014"). We used the net proceeds (approximately $294,000,000) to redeem the Notes due 2009 and a portion of the Notes due 2011. On March 25, 2004, we redeemed $200,000,000 of our Notes due 2009 and $83,406,000 of the Notes due 2011.

        Investment Income.    Investment income was $3,351,000, $6,476,000 and $2,861,000 for the Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the prior year ended April 1, 2004. Investment income for the Predecessor period ended December 23, 2004 compared to the Predecessor period ended April 1, 2004 increased primarily due to the interest income on funds held in escrow related to the merger with Marquee and increased cash available for investment during the current period. Interest income of $2,225,000 is included in both the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004 related to the escrow funds. The interest on these funds was required to be included in the Predecessor period ended December 23, 2004 pursuant to FIN 46R. See Note 1 to Holdings' Consolidated Financial Statements included elsewhere in this prospectus for additional information about the application of FIN 46R to our Consolidated Financial Statements.

        Income Tax Provision.    The benefit for income taxes from continuing operations for the Successor period ended March 31, 2005 was $9,200,000. The Successor period includes $20,000,000 in costs related to the merger with Marquee which are currently being treated as non-deductible. The provision for income taxes from continuing operations for the Predecessor period ended December 23, 2004 was $15,000,000 and includes $41,032,000 in costs related to the merger with Marquee which are currently being treated as non-deductible. The effective tax rate for the Successor period ended March 31, 2005 was 17.2% as compared to the Predecessor effective tax rates of (73.7%) and 221.9% for the periods ended December 23, 2004 and April 1, 2004, respectively. The difference in effective rate from the statutory rate of 35% during the Successor period ended March 31, 2005 and Predecessor period ended December 23, 2004 was primarily due to currently non-deductible costs related to the merger with Marquee and increase in foreign deferred tax assets for which we provided a valuation allowance. The difference in effective rate from the statutory rate of 35% during fiscal 2004 was primarily due to foreign deferred tax assets (primarily in Spain, the United Kingdom and France) for which we provided a $6,681,000 valuation allowance.

        Loss From Discontinued Operations, Net.    On December 4, 2003, we sold one theatre in Sweden with 18 screens and incurred a loss on sale of $5,591,000. During fiscal 2006 we disposed of five theatres in Japan. The results of operations of the Sweden theatre and Japan theatres have been classified as discontinued operations and information presented for all periods reflects the new classification. See Note 3 to the Consolidated Financial Statements included herein for the components of the loss from discontinued operations.

        Loss for Shares of Common Stock.    Loss for shares of common stock for the year was $44,390,000, $140,178,000 and $50,991,000 for the Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004. Preferred stock dividends of 1,023 shares of Preferred Stock valued at $2,362,000 for the period from April 1, 2004 to April 19, 2004, cash dividends of $9,349,000 for the period from April 19, 2004 through

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September 30, 2004, special Preferred Stock dividends and 33,408 shares of Preferred Stock valued at $91,113,000 and accretion of $1,476,000 were recorded during the Predecessor period ended December 23, 2004. Preferred Stock dividends of 19,697 shares of Preferred Stock valued at $40,277,000 were recorded in fiscal 2004.

Liquidity and Capital Resources

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

Holding Company Status

        Holdings is a holding company with no operations of its own and has no ability to service interest or principal on its indebtedness or pay dividends other than through any dividends it may receive from its subsidiaries. Under certain circumstances, AMC Entertainment will be restricted from paying dividends to Holdings by the terms of the indentures relating to its notes and its senior secured credit facility. AMC Entertainment's senior secured credit facility and note indentures contain provisions which limit the amount of dividends and advances which it may pay or make to Holdings. Under the most restrictive of these provisions, set forth in the senior secured credit facility, the amount of loans and dividends which AMC Entertainment could make to Holdings may not exceed $118 million in the aggregate as of March 30, 2006. Under the note indentures, a loan to Holdings would have to be on terms no less favorable to AMC Entertainment than could be obtained in a comparable transaction on an arm's length basis with an unaffiliated third party and be in the best interest of AMC Entertainment. Provided no event of default has occurred or would result, the senior secured credit facility also permits AMC Entertainment to pay cash dividends to Holdings for specified purposes, including indemnification claims, taxes, up to $4 million annually for operating expenses, repurchases of equity awards to satisfy tax withholding obligations, specified management fees, fees and expenses of permitted equity and debt offerings and to pay for the repurchase of stock from employees, directors and consultants under benefit plans up to specified amounts. Depending on the net senior secured leverage ratio, as defined in the senior secured credit facility, AMC Entertainment may also pay Holdings a portion of net cash proceeds from specified assets sales.

Cash Flows from Operating Activities

        Cash flows provided by (used in) operating activities, as reflected in the Consolidated Statements of Cash Flows, were $65,653,000 and $(5,039,000) during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. The increase in operating cash flows during the twenty-six weeks ended September 28, 2006 is primarily due to increases in attendance and improvement in operating results, including amounts related to the Mergers. We had a working capital surplus and (deficit) as of September 28, 2006 and March 30, 2006 of $20,033,000 and $(115,995,000), respectively. We received fireproofing checks totaling $7,880,000 during the twenty-six weeks ended September 28, 2006. Subsequent to September 28, 2006 we received additional fireproofing checks totaling $5,250,000. We have the ability to borrow against our credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and had approximately $151,000,000 and $90,000,000 available on our credit facility to meet these obligations for the periods ended September 28, 2006 and March 30, 2006, respectively.

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        During the twenty-six weeks ended September 28, 2006, we sold four theatres in Spain with 86 screens, sold one theatre in Portugal with 20 screens, disposed of 8 theatres with 100 screens in the U.S. as required by and in connection with the approval of the Mergers, closed 7 theatres with 54 screens in the U.S., closed one managed theatre with 6 screens in the U.S., opened 2 new theatres with 33 screens in the U.S., acquired 2 theatres with 32 screens in the U.S., added 6 screens to an existing theatre in the U.S., opened one new theatre with 9 screens in Mexico and disposed of one theatre in Argentina with 8 screens resulting in a circuit total of 411 theatres and 5,635 screens.

        Cash flows provided by (used in) operating activities, as reflected in the Consolidated Statements of Cash Flows, were $25,694,000, $(45,364,000), $145,364,000 and $163,939,000 for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004, respectively. The decrease in cash provided by operating activities for the Successor period ended March 30, 2006 compared with the combined period for the prior year is primarily due to declines in attendance and the timing of payments for accrued expenses and other liabilities. The cash used in operating activities for the Successor period ended March 31, 2005 was primarily due to payments of $37,061,000 in transaction costs related to the merger with Marquee. The decrease in operating cash flows for the Predecessor period ended December 23, 2004 compared to the Predecessor period ended April 1, 2004 was also primarily due to transaction costs related to the merger with Marquee of which $23,971,000 were paid during the Predecessor period ended December 23, 2004. We had a working capital deficit as of March 30, 2006 of $115,995,000 versus a deficit as of March 31, 2005 of $134,330,000. We have the ability to borrow against our credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and had approximately $90,000,000 and $163,000,000 available on our credit facility to meet these obligations for the periods ended March 30, 2006 and March 31, 2005, respectively.

Cash Flows from Investing Activities

        Cash provided by (used in) investing activities, as reflected in the Consolidated Statements of Cash Flows were $27,339,000 and $(538,000), during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. As of September 28, 2006, we had construction in progress of $28,257,000. We had 8 U.S. theatres with a total of 117 screens and one Mexico theatre with 12 screens under construction on September 28, 2006 that we expect to open in fiscal 2007. Cash outflows from investing activities include capital expenditures of $64,105,000 and $44,437,000 during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively. We expect that our gross capital expenditures in fiscal 2007 will be approximately $143,000,000.

        Cash flows provided by (used in) investing activities, as reflected in the Consolidated Statements of Cash Flows, were $107,538,000, $(1,260,301,000), $(692,395,000) and $(69,378,000) for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004, respectively. Cash flows for the Successor period ended March 30, 2006 include cash acquired from the Mergers of $142,512,000, proceeds from the sale leaseback of two theatres of $35,010,000 and proceeds from the sale of the Japan theatres of $53,456,000, partially offset by capital expenditures of $117,668,000. The cash acquired from the Mergers represented the cash held by Loews at the date of the Mergers. The Mergers were non-cash, funded by the issuance of our common stock. Cash outflows for investing activities include a payment to common and preferred stockholders net of cash acquired of $1,268,564,000 related to the merger with Marquee for the Successor period ended March 31, 2005 and an increase of $627,338,000 in restricted cash related to investment of the proceeds from the Senior Notes issued in order to finance the merger with Marquee during the Predecessor period ended December 23, 2004 and capital expenditures of $18,622,000, $66,155,000 and $95,011,000 during the Successor period ended March 31, 2005, Predecessor periods ended December 23, 2004 and April 1, 2004, respectively. As of March 30, 2006, we had construction in progress of $34,796,000. We had 8

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U.S. theatres with a total of 117 screens and two Mexico theatres with a total of 21 screens under construction as of March 30, 2006 that we expect to open in fiscal 2007. We expect that our gross capital expenditures in fiscal 2007 will be approximately $140,000,000.

        On December 23, 2004 AMC Entertainment completed the merger with Marquee. Pursuant to the terms of the merger agreement, each issued and outstanding share of AMC Entertainment's common stock and Class B stock was converted into the right to receive $19.50 in cash and each issued and outstanding share of AMC Entertainment's preferred stock was converted into the right to receive $2,727.27 in cash. The total amount of consideration paid in the merger with Marquee was $1,665,200,000. Holdings used the net proceeds from the sale of our notes (as described below), together with our existing cash balances and the proceeds from the equity contribution from Holdings (consisting of equity contributed by the Marquee Sponsors, the co-investors and certain members of management and the net proceeds of an offering of Holdings' notes), to finance the merger with Marquee.

        In connection with our acquisition of Gulf States Theatres on March 15, 2002, we entered into leases of the real estate assets associated with the five theatres with Entertainment Properties Trust for a term of 20 years with an initial annual base rent of $7,200,000. Of the $45,000,000 purchase price, $5,800,000 was paid to Entertainment Properties Trust for specified non-real estate assets which Entertainment Properties Trust acquired from Gulf States Theatres and resold to us at cost. We have paid $300,000 annually since the date of acquisition in connection with consulting and non-competition agreements related to the acquisition. Our last payment is due in March 2007.

        On March 29, 2002, we acquired GC Companies pursuant to a stock purchase agreement and a plan of reorganization that was confirmed by the bankruptcy court on March 18, 2002. Our purchase price of $168,931,000 (net of $6.5 million from the sale of GC Companies' portfolio of venture capital investments on the effective date) included anticipated cash payments of $68,472,000, the issuance of $72,880,000 aggregate principal amount of the Notes due 2011 with a fair value of $71,787,000 and the issuance of 2,578,581 shares of AMC Entertainment common stock with an aggregate fair value of $35,172,000 based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan). We used available cash for the cash payments under the plan of reorganization.

        The final purchase price for GC Companies was not determinable until all creditor claims disputed by the GC Companies post-confirmation unsecured creditors committee were consensually resolved or determined by the bankruptcy court. The GC Companies bankruptcy case was closed on May 26, 2004. Through March 31, 2005, we had issued $72,880,000 aggregate principal amount of our Notes due 2011 and 2,430,433 shares of AMC Entertainment common stock and paid approximately $66,118,000 in cash to creditors of GC Companies.

        On December 19, 2003, we acquired certain of the operations and related assets of MegaStar Cinemas, L.L.C. for an estimated cash purchase price of $15,037,000. In connection with the acquisition, we assumed leases on three theatres with 48 screens in Minneapolis and Atlanta. All three of the theatres feature stadium seating and have been built since 2000.

        On June 30, 2005, we sold one of our wholly-owned subsidiaries, Japan AMC Theatres, Inc., including four of our five theatres in Japan for $44,861,000 and, on September 1, 2005, sold our remaining Japan theatre for a sales price of $8,595,000.

        In May 2006, AMCEI and its subsidiary AMC Entertainment International Limited sold its interests in AMC Entertainment España S.A., which owned and operated 4 theatres with 86 screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1 theatre with 20 screens in Portugal for a net sales price of approximately $35,446,000.

        During the twenty-six weeks ended September 28, 2006, we sold six theatres with 68 screens, exchanged two theatres with 32 screens, and closed one theatre with eight screens in the U.S. as required by and in connection with the approval of the Mergers for an aggregate sales price of $64,193,000.

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        On October 12, 2006, NCM, Inc., a newly formed entity that will serve as the sole manager of NCM, announced that it filed a registration statement with the SEC for an initial public offering, (the "NCM IPO"), of up to $700 million of its common stock. Net proceeds from the NCM IPO will be used to acquire newly issued equity interests from NCM and NCM will distribute the net proceeds to each of us, Cinemark and Regal on a pro rata basis in connection with modifying payment obligations for extended access to our theatres. In connection with the completion of the NCM IPO, NCM also intends to enter into an approximately $725 million term loan facility the net proceeds of which will be used to redeem preferred units to be held by each of us, Cinemark and Regal on a pro rata basis pursuant to a recapitalization of NCM prior to completion of the NCM IPO. AMC expects to receive proceeds from the NCM IPO and the redemption of its preferred units upon completion of such transactions of approximately $425 million to $475 million. We are still evaluating our use of our proceeds from these transactions, which may include the repayment of certain of our indebtedness. However, we have not yet determined which of our indebtedness we may repay, and we may decide to use these proceeds for a purpose other than the repayment of our indebtedness.

        In connection with the completion of the NCM IPO, AMC intends to amend and restate its existing services agreement with NCM whereby in exchange for our pro rata share of the proceeds from the NCM IPO and redemption of its preferred units, AMC will agree to a modification of NCM's payment obligation under the existing agreement. The modification will extend the term of the agreement to 30 years, provide NCM with a five year right of first refusal for the services beginning one year prior to the end of the term and change the basis upon which AMC is paid by NCM from a percentage of revenues associated with advertising contracts entered into by NCM to a monthly theatre access fee. The theatre access fee would be composed of a fixed payment per patron and a fixed payment per digital screen, which would increase by 8% every five years starting at the end of fiscal 2011 for payments per patron and by 5% annually starting at the end of fiscal 2007 for payments per digital screen. Additionally, AMC will enter into the Loews Screen Integration Agreement with NCM pursuant to which AMC will pay NCM an amount that approximates the EBITDA that NCM would generate if it were able to sell advertising in the Loews theatre chain on an exclusive basis commencing upon the completion of the NCM IPO, and NCM will issue to AMC common membership units in NCM increasing its expected ownership interest to approximately 33%; such Loews payments will be made quarterly until May 2008. Also, with respect to any on-screen advertising time provided to our beverage concessionaire, AMC would be required to purchase such time from NCM at a negotiated rate. In addition, after completion of the NCM IPO, AMC expects to receive mandatory quarterly distributions of excess cash from NCM. There can be no guarantee that NCM, Inc. will complete the NCM IPO or debt transactions or that we will receive any of the expected proceeds.

        We fund the costs of constructing new theatres through existing cash balances, cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases. During fiscal 2006, we sold and leased back two theatres with 32 screens.

        During fiscal 1998, we sold the real estate assets associated with 13 theatres to Entertainment Properties Trust ("EPT") for an aggregate purchase price of $283,800,000 (the "Sale and Lease Back Transaction"). We leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with terms ranging from 13 to 15 years at an initial lease rate of 10.5% with options to extend for up to an additional 20 years. The leases are triple net leases that require us to pay substantially all expenses associated with the operation of the theatres, such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments. During fiscal 2000, we sold the building and improvements associated with one of our theatres to EPT for proceeds of $17,600,000 under terms similar to the above Sale and Leaseback Transaction. During fiscal

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2002, we sold the land at this theatre to EPT for proceeds of $7,486,000 under terms similar to the above Sale and Leaseback Transaction and at an initial lease rate of 10.75%. During fiscal 2003, we sold the real estate assets associated with 2 theatres to EPT for proceeds of $43,665,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms of 20 years at an initial lease rate of 11% with options to extend for up to an additional 15 years. On March 30, 2004, we sold the real estate assets associated with 3 theatres to EPT for proceeds of $63,911,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms of 20 years at an initial lease rate of 9.5% with options to extend for up to 15 additional years. On March 31, 2005, we sold the real estate assets associated with one theatre and adjoining retail space to EPT for proceeds of $50,910,000 and then leased the real estate assets associated with the theatre pursuant to a non-cancelable operating lease with terms of 20 years at an initial lease rate of 9.24% with options to extend for up to 14 additional years. On March 30, 2006, we sold the real estate assets associated with two theatres to EPT for proceeds of $35,010,000 and then leased the real estate assets associated with the theatres pursuant to a non-cancelable operating lease with terms of approximately 15 and 17 years at an initial lease rate of 9.25% with options to extend each for up to 15 additional years

        Historically, we have either paid for or leased the equipment used in a theatre. We may purchase leased equipment from lessors if prevailing market conditions are favorable. During the Successor period ended March 31, 2005 we purchased certain leased furniture, fixtures and equipment at two theatres for $25,292,000. During fiscal 2004 we purchased certain leased furniture, fixtures and equipment at five Canadian theatres for $15,812,000.

Cash Flows from Financing Activities

        Cash flows provided by (used in) financing activities, as reflected in the Consolidated Statement of Cash Flows, were $(11,267,000) and $6,455,000 during the twenty-six weeks ended September 28, 2006 and September 29, 2005, respectively.

        Cash flows provided by (used in) financing activities, as reflected in the Consolidated Statements of Cash Flows, were $21,434,000, $1,376,763,000, $611,034,000 and $(5,274,000) for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004, respectively. Cash flows from financing activities for the Successor period ended March 30, 2006 primarily include proceeds of $325,000,000 from the issuance of the Notes due 2016 and $650,000,000 from the Term Loan B which were used to repurchase $939,363,000 of debt, as well as $24,895,000 paid for financing costs which will be deferred and amortized over the life of the debt. On September 29, 2005 we received $6,661,000 additional construction allowance from our landlord Entertainment Properties Trust related to three of our Canada theatres which allowed for sale leaseback accounting at these locations and reduced our financing lease obligations by approximately $31,292,000, reduced the net book value of building assets related to these locations by approximately $15,839,000 and resulted in a deferred gain of $22,114,000. The deferred gain is amortized as a reduction of rent expense over the remaining terms of the leases. Cash flows from financing activities for the Successor period ended March 31, 2005 include proceeds from Holdings' issuance of common stock of $769,350,000, proceeds of $169,918,000 related to the Holdings' issuance of the Discount Notes and proceeds of $455,000,000 related to the issuance of Fixed Notes due 2012 and the Floating Notes due 2010. Cash flows from financing activities for the Predecessor period ended December 23, 2004, include proceeds related to the issuance of notes of $624,918,000 to finalize the merger with Marquee, which includes gross proceeds of $169,918,000 from the Discount Notes.

        Concurrently with the closing of the Mergers, we entered into the following financing transactions: (1) our new senior secured credit facility, consisting of a $650.0 million term loan facility and a $200.0 million revolving credit facility; (2) the issuance by AMCE of $325.0 million in aggregate

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