NOTE 2—MERGER

Parent and Wanda completed a Merger on August 30, 2012 in which Wanda indirectly acquired all of the outstanding capital stock of Parent. Parent merged with Merger Subsidiary, whereby Merger Subsidiary merged with and into Parent with Parent continuing as the surviving corporation and as a wholly-owned indirect subsidiary of Wanda. The merger consideration totaled $701,811,000, with $700,000,000 invested by Wanda and $1,811,000 invested by members of management. Wanda also acquired cash, corporate borrowings and capital and financing lease obligations in connection with the Merger, as described below.

As a result of the Merger and related change of control, the Company applied "push down" accounting, which requires allocation of the Merger consideration to the estimated fair values of the assets and liabilities acquired in the Merger. The allocation of Merger consideration was based on management's judgment after evaluating several factors, including a valuation assessment performed by a third party appraiser. Final appraisal reports were received during the first quarter of calendar 2013. The appraisal measurements included a combination of income, replacement costs and market approaches and represents management's best estimate of fair value at August 30, 2012, the acquisition date. Management finalized its purchase price allocation during the first quarter of calendar 2013. Adjustments made during the first quarter of calendar 2013 increased recorded goodwill by approximately $32,000,000. Property, net and other long-term assets decreased by approximately $28,000,000 and $4,000,000, respectively, due to final determinations of fair values assigned to tangible assets. During the second quarter of calendar 2013, the Company increased reported goodwill by $31,463,000, decreased other current assets by $33,200,000 and decreased other long-term liabilities by $1,737,000 to correct the valuation allowance for deferred taxes recognized when push down accounting was applied at the date of the Merger. See Note 1—Basis of Presentation for additional information regarding the out of period adjustment. The following is a summary of the allocation of the Merger consideration:

(In thousands)	Total

Cash	$	101,641
Receivables, net		29,775
Other current assets		34,840
Property, net(1)		1,034,597
Intangible assets, net(2)		246,507
Goodwill(3)		2,204,223
Other long-term assets(4)		339,013
Accounts payable		(134,186	)
Accrued expenses and other liabilities		(138,535	)
Credit card, packaged tickets, and loyalty program liability(5)		(117,841	)
Corporate borrowings(6)		(2,086,926	)
Capital and financing lease obligations		(60,922	)
Deferred revenues—for exhibitor services agreement(7)		(322,620	)
Other long-term liabilities(8)		(427,755	)

Total Merger consideration	$	701,811

Corporate borrowings		2,086,926
Capital and financing lease obligations		60,922
Less: cash		(101,641	)

Total transaction value	$	2,748,018

(1): Property, net, consists of real estate, leasehold improvements and furniture, fixtures and equipment recorded at fair value.
(2): Intangible assets consist of a trademark and trade names, a non-compete agreement, management contracts, a contract with an equity method investee, and favorable leases.
(3): Goodwill represents the excess of the Merger consideration over the net assets recognized and represents the future expected economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill associated with the Merger is not tax deductible.
(4): Other long-term assets primarily include equity method investments, real estate held for investment and marketable equity securities recorded at fair value.
(5): Represents a liability related to the sales of gift cards, packaged tickets and AMC Stubs™ memberships and rewards outstanding at August 30, 2012, recorded at fair value.
(6): Corporate borrowings include borrowings under the Senior Secured Credit Facility-Term Loan due 2016, the Senior Secured Credit Facility-Term Loan due 2018, the 8.75% Senior Fixed Rate Notes due 2019 and the 9.75% Senior Subordinated Notes due 2020, recorded at fair value.

(7): Deferred revenues for Exhibitor Services Agreement reflect the Company's obligation pursuant to an arrangement with National CineMedia, LLC ("NCM") to provide advertising services on terms favorable to NCM.
(8): Other long-term liabilities consist of certain theatre leases that have been identified as unfavorable, adjustments to reset deferred rent related to escalations of minimum rentals to zero, adjustments for pension and postretirement medical plan liabilities and deferred RealD Inc. lease incentive recorded at fair value. Other long-term liabilities include deferred tax liabilities resulting from indefinite temporary differences that arose primarily from the application of "push down" accounting.

Quoted market prices and observable market based inputs were used to estimate the fair value of corporate borrowings (Level 2) and the Company's investments in NCM and equity securities available for sale including RealD Inc. common stock (Level 1). The fair value measurements of other tangible and intangible assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair market values were determined using a variety of information, including estimated future cash flows, appraisals, market comparables, and quoted market prices.

During the six months ended June 30, 2013, the Company incurred additional Merger-related costs of approximately $1,042,000, which are included in general and administrative expense: merger, acquisition and transaction costs in the Consolidated Statements of Operations.

For further information about other Merger-related costs and change of control transactions for Corporate Borrowings, see Note 2—Merger and Note 9—Corporate Borrowings and Capital and Financing Lease Obligations in the Company's Transition Report on Form 10-K for the transition year ended December 31, 2012.

The unaudited pro forma financial information presented below sets forth the Company's historical statements of operations for the periods indicated and gives effect to the Merger as if "push down" accounting had been applied as of December 30, 2011. Such information is presented for comparative purposes to the Consolidated Statements of Operations only and does not purport to represent what the Company's results of operations would actually have been had these transactions occurred on the date indicated or to project its results of operations for any future period or date.

(In thousands)	Pro forma Thirteen Weeks Ended June 28, 2012			Pro forma Twenty-six Weeks Ended June 28, 2012

	(Predecessor)			(Predecessor)
	(unaudited)
Revenues
Admissions	$	451,582		$	877,408
Concessions		188,550			360,149
Other theatre		25,121			46,321

Total revenues		665,253			1,283,878

Operating Costs and Expenses
Film exhibition costs		242,727			463,918
Concession costs		26,599			49,219
Operating expense		169,908			343,399
Rent		113,022			221,974
General and administrative:
Merger, acquisition and transaction costs		3			1,446
Management fee		—			—
Other		15,008			31,034
Depreciation and amortization		47,447			102,164
Impairment of long-lived assets		—			285

Operating costs and expenses		614,714			1,213,439

Operating income		50,539			70,439
Other expense (income)
Other expense		121			1,146
Interest expense:
Corporate borrowings		34,964			71,749
Capital and financing lease obligations		1,418			2,906
Equity in earnings of non-consolidated entities		(8,367	)		(9,617	)
Investment (income) expense		183			(3,582	)

Total other expense		28,319			62,602

Earnings from continuing operations before income taxes		22,220			7,837
Income tax provision		2,695			3,200

Earnings from continuing operations		19,525			4,637
Loss from discontinued operations, net of income taxes		(2,254	)		(2,874	)

Net earnings	$	17,271		$	1,763