NOTE 11—INCOME TAXES

The Income tax provision reflected in the Consolidated Statements of Operations consists of the following components during the period August 31, 2012 through December 31, 2012, the period March 30, 2012 through August 30, 2012, and the fiscal years ended March 29, 2012 and March 31, 2011:

(In thousands)	From Inception August 31, 2012 through December 27, 2012		March 30, 2012 through August 30, 2012		52 Weeks Ended March 29, 2012		52 Weeks Ended March 31, 2011

	(Successor)		(Predecessor)		(Predecessor)		(Predecessor)
Current:
Federal	$	—	$	—	$	—	$	—
Foreign		—		—		—		—
State		480		3,700		2,015		1,950

Total current		480		3,700		2,015		1,950

Deferred:
Federal		3,020		—		—		—
Foreign		—		—		—		—
State		—		—		—		—

Total deferred		3,020		—		—		—

Total provision (benefit)		3,500		3,700		2,015		1,950
Tax provision from discontinued operations		—		1,200		—		—

Total provision (benefit) from continuing operations	$	3,500	$	2,500	$	2,015	$	1,950

AMCE has recorded no alternative minimum taxes as the consolidated tax group for which AMCE is a member expects no alternative minimum tax liability, and pursuant to the tax sharing arrangement in place, AMCE has no liability.

Pre-tax income (losses) consisted of the following:

(In thousands)	From Inception August 31, 2012 through December 31, 2012			March 30, 2012 through August 30, 2012		52 Weeks Ended March 29, 2012			52 Weeks Ended March 31, 2011

	(Successor)			(Predecessor)		(Predecessor)			(Predecessor)
Domestic	$	(39,294	)	$	98,093	$	(78,677	)	$	(121,243	)
Foreign		124			7		(1,296	)		340

Total	$	(39,170	)	$	98,100	$	(79,973	)	$	(120,903	)

The difference between the effective tax rate on earnings (loss) from continuing operations before income taxes and the U.S. federal income tax statutory rate is as follows:

(In thousands)	From Inception August 31, 2012 through December 31, 2012			March 30, 2012 through August 30, 2012			52 Weeks Ended March 29, 2012			52 Weeks Ended March 31, 2011

	(Successor)			(Predecessor)			(Predecessor)			(Predecessor)
Income tax expense (benefit) at the federal statutory rate	$	(13,470	)	$	21,600		$	(26,730	)	$	(41,250	)
Effect of:
State income taxes		(1,930	)		2,500			2,015			1,950
Change in ASC 740 (formerly FIN 48) reserve		—			—			(5,400	)		(300	)
Permanent items		20			100			825			—
Valuation allowance		18,880			(21,700	)		31,305			41,550

Income tax expense (benefit)	$	3,500		$	2,500		$	2,015		$	1,950

Effective income tax rate		(9.1	)%		4.0	%		(2.6	)%		(1.7	)%

The significant components of deferred income tax assets and liabilities as of December 31, 2012 and March 29, 2012 are as follows:

	December 31, 2012						March 29, 2012

	Deferred Income Tax						Deferred Income Tax
(In thousands)	Assets			Liabilities			Assets			Liabilities
Tangible assets	$	—		$	(125,641	)	$	76,855		$	—
Accrued reserves		35,359			—			34,684			—
Intangible assets		—			(76,430	)		—			(26,884	)
Receivables		—			(1,632	)		1,949			—
Investments		—			(231,524	)		—			(136,704	)
Capital loss carryforwards		2,077			—			—			—
Pension postretirement and deferred compensation		28,001			—			34,276			—
Corporate borrowings		50,558			—			—			(106	)
Deferred revenue		136,350			—			144,444			—
Lease liabilities		86,417			—			92,385			—
Capital and financing lease obligations		40,102			—			22,759			—
Alternative minimum tax and other credit carryovers		15,083			—			15,056			—
Charitable contributions		1,051			—			1,757			—
Net operating loss carryforward		241,216			—			225,195			—

Total	$	636,214		$	(435,227	)	$	649,360		$	(163,694	)
Less: Valuation allowance		(248,420	)		—			(413,666	)		—

Total deferred income taxes(1)	$	387,794		$	(435,227	)	$	235,694		$	(163,694	)

(1): See Note 8—Supplemental Balance Sheet Information for additional disclosures about net current deferred tax assets and net non-current deferred tax liabilities.

A rollforward of the Company's valuation allowance for deferred tax assets is as follows:

(In thousands)	Balance at Beginning of Period								Balance at End of Period

From Inception August 31, 2012 through December 31, 2012
Valuation allowance-deferred income tax assets	$	232,985	18,880		195		(3,640	)	$	248,420
March 30, 2012 through August 30, 2012
Valuation allowance-deferred income tax assets	$	413,666	(21,700	)	(158,981	)	—		$	232,985
Fiscal Year 2012
Valuation allowance-deferred income tax assets	$	329,221	32,560		—		51,885		$	413,666
Fiscal Year 2011
Valuation allowance-deferred income tax assets	$	263,032	42,815		—		23,374		$	329,221

(1): Primarily relates to amounts resulting from our tax sharing arrangement, changes in deferred tax assets and associated valuation allowance that are not related to income statement activity as well as amounts charged to other comprehensive income.

The Company's federal income tax loss carryforward of $671,879,000 will begin to expire in 2017 and will completely expire in 2031 and will be limited annually due to certain change in ownership provisions of the Internal Revenue Code. The Company also has state income tax loss carryforwards of $544,244,000 which may be used over various periods ranging from 1 to 20 years.

During fiscal 2010, management believed it was more likely than not that the Company had the ability to execute a feasible and prudent tax strategy that would provide for the realization of net operating losses by converting certain limited partnership units into common stock. At December 31, 2012, this tax strategy was estimated to preserve net operating losses that expire through 2019.

The Company has recorded a valuation allowance against its remaining net deferred tax asset in U.S. and foreign jurisdictions of $248,420,000 as of December 31, 2012.

A reconciliation of the change in the amount of unrecognized tax benefits was as follows:

(In millions)	From Inception August 31, 2012 through December 31, 2012			March 30, 2012 through August 30, 2012			52 Weeks Ended March 29, 2012			52 Weeks Ended March 31, 2011

Balance at beginning of period	$	22.4		$	22.7		$	28.2		$	28.5
Gross increases—current period tax positions		—			0.6			0.7			0.7
Favorable resolutions with authorities		—			—			(1.0	)		—
Expired attributes		—			—			(5.2	)		(1.0	)
Cash settlements		(0.5	)		(0.9	)		—			—

Balance at end of period	$	21.9		$	22.4		$	22.7		$	28.2

The Company's effective tax rate is not expected to be significantly impacted by the ultimate resolution of the uncertain tax positions because of the retention of a valuation allowance against most of its net operating loss carryforwards.

The Company recognizes income tax-related interest expense and penalties as income tax expense and general and administrative expense, respectively. The liabilities increased for interest and penalties by $110,000 and $115,000, as of December 31, 2012 and March 29, 2012, respectively.

There are currently unrecognized tax benefits which the Company anticipates will be resolved in the next 12 months; however, the Company is unable at this time to estimate what the impact on its unrecognized tax benefits will be.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. An IRS examination of the tax years February 28, 2002 through December 31, 2003 of the former Loews Cineplex Entertainment Corporation and subsidiaries was concluded during fiscal 2007. An IRS examination for the tax years ended March 31, 2005 and March 30, 2006 was completed during 2009. Generally, tax years beginning after March 28, 2002 are still open to examination by various taxing authorities. Additionally, the Company has net operating loss ("NOL") carryforwards for tax years ended October 31, 2000 through March 28, 2002 in the U.S. and various state jurisdictions which have carryforwards of varying lengths of time. These NOLs are subject to adjustment based on the statute of limitations applicable to the return in which they are utilized, not the year in which they are generated. Various state, local and foreign income tax returns are also under examination by taxing authorities. The Company does not believe that the outcome of any examination will have a material impact on its financial statements.