NOTE 2—MERGER

Parent and Wanda, a Chinese private conglomerate, completed a Merger on August 30, 2012 in which Wanda indirectly acquired all of the outstanding capital stock of Parent. Parent merged with Wanda Film Exhibition Co. Ltd., ("Merger Subsidiary"), a wholly-owned indirect subsidiary of Wanda, 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. The appraisal measurements included a combination of income, replacement cost and market approaches and represents managements' best estimate of fair value at August 30, 2012, the acquisition date. Management has finalized its purchase price allocation except for amounts assigned provisionally to certain leasehold improvements and furniture, fixtures and equipment included in Property, net. Management expects to finalize the fair values for these assets upon completing their final value analysis prior to filing Form 10-Q for the period ended March 31, 2013 in May of 2013. Amounts assigned provisionally to these assets may change when this evaluation is completed. Adjustments made since the initial allocation decreased recorded goodwill by approximately $20,000,000. Other current assets increased by approximately $17,000,000 due to changes in deferred tax assets; intangible assets increased by approximately $6,000,000 primarily due to final determinations of fair values assigned to favorable leases and a contract with an equity method investee; Other long-term assets decreased by approximately $106,000,000 primarily due to final determinations of fair values assigned to equity method investments and changes in deferred tax assets; and Other long-term liabilities declined by approximately $100,000,000 due to changes in deferred tax liabilities. The items mentioned above represent the most significant adjustments to the initial allocation of purchase price for the Merger. 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)		1,063,028
Intangible assets, net(2)		246,507
Goodwill(3)		2,172,272
Other long-term assets(4)		342,533
Accounts payable		(134,186	)
Accrued expenses and other liabilities		(138,535	)
Credit card, package 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. See Note 6—Goodwill and Other Intangible Assets for further information.
(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. Amounts recorded for goodwill are not subject to amortization and are not expected to be deductible for tax purposes.
(4): Other long-term assets include equity method investments, real estate and marketable equity securities recorded at fair value. Other long-term assets include net deferred tax assets resulting from temporary differences that arose as a result of the allocation of the Merger consideration and valuation allowance established at the Merger date for those deferred tax assets that management believes are not "more likely than not" of being realized. In determining the valuation allowance, management evaluated the expected future reversal of deferred tax assets and liabilities, and available tax planning strategies that are prudent and feasible.

(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 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 future 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.

The fair value measurement of 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. 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).

During the period of August 31, 2012 through December 31, 2012, the Company incurred Merger-related costs of approximately $2,500,000, which are included in general and administrative expense: merger, acquisition and transaction costs in the Consolidated Statements of Operations.

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 the beginning of fiscal 2012. 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 March 30, 2012 through December 31, 2012			Pro forma 39 Weeks Ended December 29, 2011

	(unaudited)			(unaudited)
Revenues
Admissions	$	1,364,663		$	1,295,469
Concessions		571,869			518,081
Other theatre		72,574			54,436

Total revenues		2,009,106			1,867,986

Operating Costs and Expenses
Film exhibition costs		728,100			694,863
Concession costs		77,871			70,961
Operating expense		529,235			528,404
Rent		331,397			332,210
General and administrative:
Merger, acquisition and transaction costs		3,538			1,179
Management fee		—			—
Other		55,596			36,710
Depreciation and amortization		150,234			150,976

Operating costs and expenses		1,875,971			1,815,303

Operating income		133,135			52,683
Other expense (income)
Other expense		1,009			377
Interest expense
Corporate borrowings		103,429			106,351
Capital and financing lease obligations		4,263			4,480
Equity in earnings of non-consolidated entities		(7,499	)		(56	)
Investment expense		578			17,799

Total other expense		101,780			128,951

Earnings (loss) from continuing operations before income taxes		31,355			(76,268	)
Income tax provision		9,000			2,210

Earnings (loss) from continuing operations		22,355			(78,478	)
Earnings (loss) from discontinued operations		34,465			(2,989	)

Net earnings (loss)	$	56,820		$	(81,467	)

The Merger on August 30, 2012 triggered the payment of an aggregate of $31,462,000 for success fees to financial advisors, bond amendment consent fees, payments for cancellation of stock based compensation and management success bonuses that were contingent on the consummation of the Merger. The Company determined that its accounting policy for any cost triggered by the consummation of the Merger was to recognize the cost when the Merger was consummated. Accordingly, the fees discussed above have not been recorded in the Consolidated Statement of Operations for the Predecessor period since that statement depicts the results of operations just prior to consummation of the transaction. In addition, since the Successor period reflects the effects of push-down accounting, these costs have also not been recorded as an expense in the Successor period. However, the costs were reflected in the purchase accounting adjustments which were applied in arriving at the opening balances of the Successor.

The following is a summary of the contingent costs:

(in thousands)

Financial advisor fees	$	18,129	(a	)
Management transaction bonuses		6,000	(b	)
Bond amendment fees		3,946	(c	)
Unrecognized stock compensation expense		3,177	(d	)
Other contingent transaction costs		210

	$	31,462

(a): These represent non-exclusive arrangements made with multi-parties to provide advice and assistance related to the sale of AMC. Payment terms were contingent upon consummation of a sale. Each agreement was entered into by Predecessor entities when the Company was under previous ownership.
(b): Management bonuses were approved by the Predecessor entities and previous ownership group to help incent key AMCE management team members to use their best efforts to help facilitate the sale of the Company. Payments were contingent on the consummation of a transaction.
(c): Consent fees were paid pursuant to a consent solicitation to amend indentures relating to our outstanding notes and permit the sale of the Company without triggering change of control payments. The payments were only made upon closing the Wanda transaction.
(d): Unrecognized stock compensation for previously existing awards that became payable due to change of control provisions and only upon consummation of a sale transaction.