UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
(Fee Required)
For the fiscal year ended March 31, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Fee Required)
For the transition period from _______________ to _______________________
Commission File Number 01-12429
AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1304369
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
106 West 14th Street
Kansas City, Missouri 64105-1977
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 221-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, 66 2/3 par value American Stock Exchange, Inc.
Pacific Stock Exchange, Inc.
$1.75 Cumulative Convertible Preferred Stock,
66 2/3 par value American Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
11.875% Senior Notes due August, 2000
12.625% Senior Subordinated Notes due August, 2002
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (ii) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates as of May 16, 1994 computed by reference to the closing price
for such stock on the American Stock Exchange on such date, was
$26,054,410.
Title of Each Class of Common Stock Outstanding at May 16, 1994
Common Stock, 66 2/3 par value 5,295,130
Class B Stock, 66 2/3 par value 11,157,000
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
1993 FORM 10-K ANNUAL REPORT
PART I
PAGE NUMBER
Item 1. Business 3 - 12
Item 2. Properties 12
Item 3. Legal Proceedings 12 - 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
PART II
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters 15
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16 - 21
Item 8. Financial Statements and Supplementary Data 21
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 22
PART III
Item 10. Directors and Executive Officers of the
Registrant 23 - 25
Item 11. Executive Compensation 25 - 32
Item 12. Security Ownership of Certain Beneficial Owners
and Management 32 - 34
Item 13. Certain Relationships and Related Transactions 34 - 35
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. 35 - 36
Signatures 37
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Development of Business
AMC Entertainment Inc. ("AMCE"), through American Multi-Cinema, Inc.
("AMC") and its subsidiaries (collectively with AMCE, unless the context
otherwise requires, the "Company"), is one of the largest motion picture
exhibitors in the United States in terms of the number of theatre screens
operated.
AMCE's predecessor was founded in Kansas City, Missouri in 1920 by the
father of Mr. Stanley H. Durwood, the current Chairman of the Board and Chief
Executive Officer of AMCE. Mr. Stanley H. Durwood's son, Mr. Edward D.
Durwood, is AMCE's President and Vice Chairman of the Board. Approximately 84%
of AMCE's outstanding voting securities are owned by Durwood, Inc. ("DI"), all
of whose stock is beneficially owned by Mr. Stanley H. Durwood and his
children.
AMCE is a Delaware corporation with its principal executive offices
located at 106 West 14th Street, Kansas City, Missouri 64105. Its telephone
number at such address is (816) 221-4000.
(b) Financial Information about Industry Segments
The Registrant operates exclusively in the motion picture exhibition
industry.
(c) Narrative Description of Business
Recent Developments
On May 28, 1993, Cinema Enterprises II, Inc. ("CENI II"), a wholly-owned
subsidiary of American Multi-Cinema, Inc. ("AMC"), acquired a fifty percent
partnership interest in Exhibition Enterprises Partnership ("EEP") from TPI
Entertainment, Inc. Together with the fifty percent partnership interest
already owned by Cinema Enterprises, Inc. ("CENI"), EEP became wholly-owned by
subsidiaries of AMC.
AMC financed the EEP acquisition with cash on hand and $30 million
borrowed under its credit facility. In connection with the EEP acquisition,
CENI, CENI II and EEP became guarantors under the credit facility and also with
respect to the Company's $100 million principal amount 11-7/8% Senior Notes due
2000 and $100 million principal amount 12-5/8% Senior Subordinated Notes due
2002.
On March 31, 1994, CENI and CENI II was merged into AMC, and EEP ceased
to exist by operation of law. AMC now directly owns all of EEP assets and
operations.
General
The Company is one of the largest motion picture exhibitors in the United
States based on the number of theatre screens operated. Since 1968, when the
Company operated 12 theatres with 22 screens, the Company has expanded its
operations to include 236 theatres with 1,603 screens located in 22 states and
the District of Columbia. Nearly one-half of the screens operated by the
Company are located in Florida, California, Pennsylvania and Texas and
approximately 70% of the Company's screens are located in areas among the 20
largest Areas of Dominant Influence (television market areas as defined by
Arbitron Company).
The Company's revenues are generated primarily from box office admissions
and theatre concession sales, which accounted for 66% and 30%, respectively,
of fiscal 1994 revenues. The balance of the Company's revenues are generated
primarily by on-screen advertising programs and video games located in theatre
lobbies. The Company believes that attendance, revenue and cash flow per screen
at its theatres are among the highest in the industry due to its attractive,
strategically located, multi-screen theatres and innovative marketing programs.
The Company is an industry leader in the development and operation of
multi-screen theatres, primarily in large metropolitan markets. This strategy
of establishing multi-screen theatre complexes enhances attendance and
concession sales by enabling the Company to exhibit concurrently a variety of
motion pictures attractive to different segments of the movie-going public. It
also allows the Company to match a particular motion picture's attendance
patterns to the appropriate auditorium size, thereby extending the run of a
motion picture and maximizing profit. In addition, multi-screen theatre
complexes realize economies of scale by serving more patrons from common
support facilities, thereby enabling the Company to spread costs over a higher
revenue base. During the fiscal year ended March 31, 1994, theatres with ten
or more screens had per patron theatre operating income of $1.35 compared to
$1.15 at theatres with less than ten screens (excluding "dollar houses"). At
March 31, 1994, approximately 29% of the Company's screens were in theatre
complexes with ten or more screens and approximately 87% were located in
theatre complexes with six or more screens. The average number of screens per
theatre operated by the Company is 6.8, which is the highest of the five
largest theatre chains in North America and higher than the industry average
of 4.5, based on the most recent data reported in the National Association of
Theatre Owners 1993-1994 Encyclopedia of Exhibition.
The Company continually upgrades its theatre circuit by opening new
theatres, refurbishing and adding new screens to existing theatres and
selectively closing unprofitable theatres. Since March 1989, 40 of the
Company's theatres with 332 screens, representing 21% of its screens, have been
opened and approximately $45 million has been spent to modernize and remodel
its theatres. The Company believes that this strategy of maintaining modern
multi-screen theatre complexes enhances its ability to license commercially
popular motion pictures.
The Company continually introduces new programs and amenities at its
theatres. The following are examples of developments that are being implemented
in the Company's theatre circuit. MovieWatcherr is a frequent moviegoer program
that rewards loyal customers for patronizing AMC theatres nationwide.
Teleticketing allows customers to order tickets in advance by telephone and
purchase them with credit cards. AMC's proprietary High Impact Theatre System
provides a clearer picture and more dynamic sound throughout the auditorium.
Computerized box offices maintain attendance records by title and show time,
allowing the Company to make informed staffing, marketing and motion picture
exhibition decisions.
Motion picture theatres are the primary initial distribution channel for
new motion picture releases and the Company believes that the theatrical
success of a motion picture is the critical factor in establishing the value
of the motion picture in the cable television, videocassette or other ancillary
markets. According to Motion Picture Associates of America, Inc. ("MPAA"), the
total dollars spent on all types of motion picture entertainment in the United
States, including box office admissions, increased from $17.5 billion in 1987
to $26.0 billion in 1992. From 1980 to 1992, domestic box office admissions
have increased from $2.7 billion to $4.9 billion, primarily due to an increase
in average ticket prices throughout this period.
Annual domestic theatre attendance has averaged approximately one billion
persons since the early 1960's. In 1993, annual domestic attendance was 1,244
million. This stability in attendance has occurred despite substantial growth
in the cable television and videocassette sales and rental businesses. The
Company believes that motion picture theatre attendance has remained stable
because alternative motion picture delivery systems do not provide an
experience comparable to attending a movie in a theatre and variances in
year-to-year attendance are primarily related to the overall popularity and
supply of motion pictures.
Growth Strategy
The Company intends to expand its domestic theatre circuit by developing
new theatres, increasing the number of screens at existing theatres and
possibly by acquiring existing theatres or circuits from competitors. In
addition, the Company will continue to explore international theatre
development in specific markets.
The Company believes that numerous opportunities for new theatre openings
exist throughout the United States, both in areas of population growth and in
areas of stable population which, in the Company's judgment, are inadequately
served. These markets are attractive either due to a lack of screens relative
to the area's population or because the existing theatres are not
representative of today's standard multiplex facility design. The Company
believes that the best operating economies are achieved, and the optimal
experience for the movie-going patron is provided, by large theatre facilities
of typically 50,000 to 100,000 square feet containing at least 12 screens. A
theatre facility of this size attracts patrons from larger geographic areas and
competes effectively against smaller, less efficient movie theatre complexes
that may already exist in a given market. Although a market may have a
sufficient absolute number of screens based on current population, their
scattered configuration and out-dated design may result in the market being,
in the Company's judgment, inadequately served. Another advantage of the large
multiplex facility is that it provides the Company additional opportunities for
prime locations because it can replace a department store as anchor tenant in
a substantial shopping center development. The Company intends to develop these
state-of-the-art theatres at locations based on retail concentration, access
to surface transportation and specific demographic statistics and trends.
Traditionally, the Company has leased its theatres from real estate
developers. The Company assists the developer in facility design and provides
the developer with a long-term lease to facilitate financing of the project.
In recent years, certain real estate developers have limited new property
development, primarily due to their financial condition and the availability
of financing. Although the Company believes that most of its new domestic
theatres will continue to be developed through lease arrangements, it will
consider developing and owning a theatre location if it is unable to identify
a developer for a specific new project. In addition to facilitating the
development of attractive theatres, ownership of theatre locations will allow
the Company to obtain the specific sites it desires and maintain greater
control over the development of the projects.
The Company is currently reviewing over 70 potential domestic theatre
locations, and has begun negotiations on 30 sites representing approximately
400 screens. Presently, the Company anticipates that approximately 300 new
screens will be opened or under construction by the end of fiscal 1995,
including approximately 70 screens at 12 existing theatres. However, there can
be no assurance that the Company will finalize negotiations on any of these
sites. If a theatre is operated under a conventional lease arrangement, the
Company typically owns the furniture, fixtures and equipment. The cost per
screen to the Company of a leased theatre is approximately $150,000, or
$3,600,000 for a 24-screen modern multiplex theatre. If the Company decides to
own a theatre in fee, the estimated cost for a 24-screen modern multiplex
theatre will be $550,000 to $750,000 per screen, or approximately $13,300,000
to $18,000,000 per theatre facility, depending upon land values.
In connection with the development of new theatres and screens, the
Company may participate in the development of "entertainment centers," which
would be destination entertainment complexes anchored by a large multiplex
theatre and containing related leisure time facilities such as casual dining
facilities, sports bars, game rooms, virtual reality centers and other similar
facilities. The Company anticipates that ultimately it would retain a minority
interest in any such center and would participate in the initial development
and ownership of the center primarily to obtain favorable theatre lease or
acquisition terms.
The United States motion picture exhibition industry is currently
consolidating, with the top ten exhibitors now accounting for approximately 50%
of total screens. However, there remain over 350 participants in the industry
and the Company believes that the trend towards consolidation will afford the
Company the opportunity to acquire both specific theatres or entire theatre
circuits. The Company will consider such acquisitions in order to complement
an existing presence within a market or to enter a new market.
The Company also believes that a significant growth opportunity exists for
the development of multiplex theatres in foreign markets. Many urban areas in
Canada, Mexico, Europe and Asia are substantially underscreened, both in terms
of the absolute number of screens and in the adoption of the multiple screen
theatre format. In addition, the production and distribution of feature films
and the demand for American motion pictures is increasing in many foreign
countries. The Company intends to utilize its experience in the development of
multiplex theatres, as well as its existing relationships with the domestic
motion picture production industry, to enter selected foreign markets. The
Company has opened offices in Toronto, Mexico City, Paris and Hong Kong and is
actively seeking local real estate partners or developers to participate in the
development of these international markets, either through traditional lease
structures, outright fee ownership or the development of entertainment centers.
Theatre Development
The following table sets forth information concerning additions and
dispositions of domestic theatres and screens during, and the number of
domestic theatres operated by the Company at the end of the last five fiscal
years.
<TABLE>
<CAPTION>
Changes in Theatres Operated Total
During Period Theatres Operated
Additions Dispositions
Number of Number of Number of Number of Number of Number of
<S> <C> <C> <C> <C> <C> <C>
Period Ended Theatres Screens Theatres Screens Theatres Screens
March 29, 1990 4 36 17 81 276 1,645
March 28, 1991 4 47 19 70 261 1,622
April 2, 1992 7 73 15 78 253 1,617
April 1, 1993 6 72 16 72 243 1,617
March 31, 1994 2 15 9 29 236 1,603
Total 23 243 76 330
</TABLE>
The Company adds and disposes of theatres based on industry conditions and
its business strategy. Since the beginning of fiscal 1990, the Company has
constructed 21 new theatres having 186 screens, added 50 screens to existing
theatres, closed 53 theatres with 196 screens and sold 23 theatres with 134
screens.
The following table provides greater detail with respect to the Company's
owned and managed theatre circuit as of March 31, 1994.
Total Total Screens per Theatre
State Screens Theatres 1-5 6-9 10 +
Florida 298 40 6 26 8
California 245 34 6 19 9
Texas 166 22 4 14 4
Pennsylvania 126 24 14 9 1
Michigan 117 20 10 6 4
Missouri 87 12 1 8 3
Arizona 80 12 3 6 3
Colorado 69 10 2 6 2
Virginia 63 9 3 4 2
Ohio 56 8 2 5 1
New Jersey 52 9 4 4 1
Maryland 48 6 0 4 2
Georgia 42 5 0 4 1
Oklahoma 22 3 0 3 0
New York 22 3 0 3 0
Illinois 20 3 0 3 0
Louisiana 20 3 0 3 0
Washington 20 3 0 3 0
Kansas 18 3 0 3 0
Massachusetts 10 2 1 1 0
District of Columbia 9 1 0 1 0
Nebraska 8 2 1 1 0
Delaware 5 2 2 0 0
Total 1,603 236 59 136 41
Theatre Operations
The Company uses a decentralized structure to operate its business on a
day-to-day basis. Each location is viewed as a discrete profit center and a
portion of theatre level management's compensation is linked to the operating
results of each unit. All theatre level personnel complete formal training
programs to maximize both customer service and the efficiency of the Company's
operations. Theatre management additionally attends a four to six-week training
academy focusing on operations management, administration, marketing and
supervisory management during their first 12 to 24 months with the Company.
Four division offices, each headed by a Vice President, supervise theatre
operations and personnel within their respective regions. The division Vice
Presidents are also responsible within their markets for real estate activity,
marketing, facilities (design and maintenance) and profit center auditing. The
division offices are located in Los Angeles, California; Kansas City, Missouri;
Clearwater, Florida; and Voorhees, New Jersey.
Policy development, strategic planning, finance and accounting are
centralized at the corporate office. Additionally, the corporate office acts
as a service bureau to both the division offices and theatres regarding
management information systems, benefits, administration and operations
services. Film licensing activity primarily occurs in Los Angeles utilizing a
structure that facilitates interaction between theatre managers, division
managers and motion picture buyers.
The Company has improved the profitability of certain of its older
theatres by converting them to "dollar houses," which display second-run movies
and charge lower admission prices (ranging from $1.00 to $2.00). The Company
operated 25 such theatres with 134 screens at March 31, 1994 (8.4% of the
Company's total screens).
The Company primarily relies upon advertisements and movie schedules
published in newspapers to inform its patrons of motion picture titles and show
times. Radio, television and full page newspaper advertisements are used on a
regular basis to promote new releases and special events. These expenses
generally are paid for by the distributors; however, the Company occasionally
shares the expense of such advertisements. The Company pays for "stack"
advertisements which display information on motion pictures at the Company's
theatres within a geographic area. The Company also exhibits "Now Playing" and
"Coming Soon" spots to promote motion pictures currently playing on the
Company's screens or motion pictures not yet released.
Film Licensing
The Company licenses motion pictures from distributors on a film-by-film
and theatre-by-theatre basis. The Company obtains these licenses either by
negotiating directly with, or by submitting bids to, distributors. Negotiations
with distributors are based on several factors, including theatre location,
competition, season and motion picture content. Rental fees paid by the Company
under a negotiated license generally are adjusted subsequent to the exhibition
of a motion picture in a process known as "settlement." Factors taken into
account in the settlement process include the commercial success of a motion
picture relative to original expectations and an exhibitor's commitment to the
motion picture. When motion pictures are licensed through a bidding process,
the bids for new releases are made, at the discretion of the distributor,
subject to the requirements of state law, either on a previewed basis or a
non-previewed ("blind-bid") basis. In most cases, the Company licenses its
motion pictures on a previewed basis.
Licenses entered into in either a negotiated or bidding process typically
specify rental fees based on the higher of a gross receipts formula or a
theatre admissions revenue sharing formula. Under a gross receipts formula, the
distributor receives a specified percentage of box office receipts, with the
percentages declining over the term of the run. First-run motion picture rental
usually begins at 70% of box office admissions and gradually declines to as low
as 30% over a period of four to seven weeks. Second-run motion picture rental
typically begins at 35% of box office admissions and often declines to 30%
after the first week. Under a theatre admissions revenue sharing formula
(commonly known as a "90/10" clause), the distributor receives a specified
percentage (i.e., 90%) of the excess of box office receipts over a negotiated
allowance for theatre expenses.
The Company may pay non-refundable guarantees of film rentals or make
advance payments of film rentals, or both, in order to obtain a license in a
negotiated or bid process, subject, in some cases, to a per capita minimum
license fee. Because of the settlement process, negotiated licenses typically
are more favorable to theatre operators with respect to the percentage of
revenue paid to license a motion picture. In the past two years, bidding has
been used less frequently.
The Company's film buyers evaluate the prospects for upcoming motion
pictures prior to the time that distributors solicit bids. Criteria considered
for each motion picture include cast, director, plot, performance of similar
motion pictures, estimated motion picture rental costs and expected MPAA
rating. Successful licensing depends greatly upon knowledge of the tastes of
the residents in markets served by each theatre and insight into the trends in
those tastes, as well as the availability of commercially popular motion
pictures.
The Company licenses film through division level film buyers located in
Los Angeles, California and Voorhees, New Jersey. Division level licensing
enables the Company to capitalize on local trends and to take into account
actions of local competitors in its bidding and licensing strategies. The
Company at no time licenses any one motion picture for all its theatre
complexes, which minimizes its risk with respect to any single motion picture.
A decentralized film licensing strategy is an important ingredient in the
Company's formula for penetration of local markets. In essence, the Company's
business is dependent upon the availability of marketable motion pictures.
There are seven distributors which provide a substantial portion of quality
first-run motion pictures to the exhibition industry. They consist of Buena
Vista Pictures (Disney), Warner Bros. Distribution, Columbia Pictures, Tri-Star
Pictures, Twentieth Century Fox, Universal Film Exchanges, Inc. and Paramount
Pictures. There are numerous smaller distributors and no single distributor
dominates the market. Poor relationships with distributors, poor performance
of motion pictures or disruption in the production of motion pictures by the
major studios and/or independent producers may have an adverse effect upon the
business of the Company. In fiscal 1994, no single distributor accounted for
more than 8% of the motion pictures licensed by the Company or more than 20%
of the Company's box office admissions. From fiscal year to fiscal year the
Company's revenues attributable to individual distributors may vary
significantly depending upon the commercial success of such distributor's
motion pictures in any given year.
The Company predominantly licenses "first-run" motion pictures. During the
period January 1, 1982 to December 31, 1993, the number of new first-run motion
pictures released each year by distributors in the United States has ranged
from a low of 361 to a high of 487. In 1993, domestic distributors released 469
new first-run motion pictures. If a motion picture has substantial potential
following its first run, the Company may license it for a "sub-run." Although
average daily sub-run attendance is often less than average daily first-run
attendance, sub-run film rentals are also generally less than first-run film
rentals. Sub-runs enable the Company to exhibit a variety of motion pictures
during periods in which there are few new film releases.
Concessions
Concession sales are the second largest source of revenue for the Company
after box office admissions. Concession items include popcorn, soft drinks,
candy and other items. The Company's strategy emphasizes prominent and
appealing concession counters designed for rapid service and efficiency. The
Company is continuing its efforts to increase concession sales through
optimizing product mix, introducing new products and intensive staff training.
Competition
The Company's theatres are subject to varying degrees of competition in
the geographic areas in which they operate. Competition is often intense with
respect to licensing motion pictures, attracting patrons and finding new
theatre sites. Theatres operated by national and regional circuits and by
smaller independent exhibitors compete aggressively with the Company's
theatres. The Company believes that the principal competitive factors with
respect to film licensing include licensing terms (including guarantees),
seating capacity and location of an exhibitor's theatres, the quality of
projection and sound equipment at the theatres, and the exhibitor's ability and
willingness to promote the motion pictures. The competition for patrons is
dependent upon factors such as the availability of popular motion pictures, the
location of theatres, the comfort and quality of theatres and ticket prices.
There are over 350 participants in the domestic motion picture exhibition
industry. Industry participants vary substantially in size, from small
independent operators of a single theatre with a single screen to large
national chains of multi-screen theatres affiliated with entertainment
conglomerates. At the end of calendar 1992, the ten largest motion picture
exhibition companies operated approximately one-half of the total number of
screens.
The Company's theatres face competition from a number of motion picture
exhibition delivery systems, such as pay television, pay per view and home
video systems. While the future impact of such delivery systems on the motion
picture exhibition industry is difficult to determine precisely, there can be
no assurance that such delivery systems will not have an adverse impact on
attendance at the Company's theatres. The Company's theatres also face
competition from other forms of entertainment competing for the public's
leisure time and disposable income.
Regulatory Environment
The distribution of motion pictures is in large part regulated by federal
and state antitrust laws and has been the subject of numerous antitrust cases.
The consent decrees resulting from one of those cases, to which the Company was
not a party, have a material impact on the Company. Those consent decrees bind
certain major motion picture distributors and require the motion pictures of
such distributors to be offered and licensed to exhibitors, including the
Company, on a film-by-film and theatre-by-theatre basis. Consequently, the
Company cannot assure itself of a supply of motion pictures by entering into
long-term arrangements with major distributors, but must compete for its
licenses on a film-by-film and theatre-by-theatre basis.
Bids for new motion picture releases are made, at the discretion of the
distributor, subject to state law requirements, either on a previewed basis or
blind-bid basis. Certain states have enacted laws regulating the practice of
blind-bidding. Management believes that it may be able to make better business
decisions with respect to film licensing if it is able to preview motion
pictures prior to bidding for them, and accordingly believes that it may be
less able to capitalize on its expertise in those states which do not regulate
blind-bidding.
Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. The Company is implementing modifications
to its theatre design which will satisfy the ADA's requirements. The Company
presently estimates that the cost of such compliance over the next fiscal year
will be approximately $2 million.
Employees
As of March 31, 1994, the Company had approximately 1,630 full-time and
6,417 part-time employees. Approximately 12% of the part-time employees were
minors whose wages do not exceed minimum wage.
Fewer than one percent of the Company's employees, consisting primarily
of motion picture projectionists, are represented by the International Alliance
of Theatrical Stagehand Employees and Motion Picture Machine Operators. The
Company's expansion into new markets may increase the number of employees
represented by this union. The Company believes that its relationship with this
union is satisfactory.
As an employer covered by the ADA, the Company must make reasonable
accommodations to the limitations of employees and qualified applicants with
disabilities, provided that such reasonable accommodations do not pose an undue
hardship on the operation of the Company's business. In addition, many of the
Company's employees are covered by various government employment regulations,
including minimum wage, overtime and working condition regulations.
ITEM 2. PROPERTIES
Substantially all of the Company's real properties, including its central
offices, are leased. The majority of the Company's theatres are subject to
lease agreements with original terms generally ranging from 15 to 25 years and,
in most cases, renewal options for up to an additional 20 years. The renewal
options generally provide for increased rent. Property leases provide for
minimum annual rentals and may, under certain conditions, require additional
rental payments based on a percentage of revenues. The majority of the
concession, projection, seating and other equipment required for each of the
Company's theatres is owned.
ITEM 3. LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and proceedings
to which the Company is a party.
Income Tax Litigation. The Company has been in litigation with the Internal
Revenue Service ("IRS") primarily concerning the Company's method, for the
years 1975 and 1978 to 1987, inclusive, of reporting, for income tax purposes,
film rental deductions in the year paid (cash method) rather than in the year
the related film was exhibited (accrual method). These and other issues,
including the determination of various credit and loss carrybacks, and issues
related to certain capital gains, the dividends received deduction, and the
understatement penalty, were the subject of two United States Tax Court cases
(Durwood, Inc. v. Commissioner of Internal Revenue, Docket No. 3706-88 filed
February 23, 1988 and Durwood, Inc. v. Commissioner of Internal Revenue, Docket
No. 3322-91 filed February 22, 1991).
Settlements have been reached with respect to all issues in each of the
tax court cases. Through September 30, 1993, the Company has recorded
provisions totaling approximately $23 million, representing the estimated
federal and state income taxes and interest resulting from the IRS litigation.
Through September 30, 1993, the Company has made payments totaling
approximately $20 million to federal and state tax authorities associated with
the tax court settlements. Management believes that adequate amounts have been
reserved with respect to these income tax matters.
Sales Tax Litigation.
On August 13, 1991, the Florida Department of Revenue assessed the Company
$1,670,000 in taxes, penalties and interest for popcorn sales in theatres that
occurred during the period commencing January 1, 1986 and ending December 31,
1988. Because the regulation relied on by the Department did not become
effective until December 1987, the Department issued a revised assessment to
the Company in the amount of $388,000, which is based on the Company's 1988
popcorn sales in Florida. Because the Company's Florida legal counsel failed
to file a petition to contest the assessment within the required time, the
Department took the position that the Company owed $388,000 in taxes plus
penalties and interest.
The Company and the Department agreed to be bound by the final judicial
resolution of another Florida sales tax case involving substantially the same
issues, which case has been recently decided against the taxpayer. Pursuant
to its agreement with the Department, the Company will pay the $388,000 in
assessed taxes plus interest, but no penalties. The Company will also pursue
all available remedies against its former legal counsel.
Scott C. Wallace, Derivatively on Behalf of Nominal Defendant AMC
Entertainment Inc. v. Stanley H. Durwood, et al., Chancery Court for New Castle
County, Delaware (Civil Action No. 12855). On January 27, 1993, plaintiff filed
a derivative action on behalf of AMCE against four of its directors, Messrs.
Stanley H. Durwood, Edward D. Durwood, Paul E. Vardeman and Charles J. Egan,
Jr. (the "Wallace litigation"). AMCE was named as a nominal defendant. The
lawsuit alleges breach of fiduciary duties of care, loyalty and candor,
mismanagement and waste of assets in connection with the provision of film
licensing, accounting and financial services by American Associated
Enterprises, a partnership beneficially owned by Mr. Stanley H. Durwood and
members of his family, to the Company, certain other transactions with
affiliates of the Company, termination payments to a former officer of the
Company and other transactions. The lawsuit seeks unspecified money damages and
equitable relief and costs, including reasonable attorneys' fees.
James M. Bird, Derivatively on Behalf of Nominal Defendant AMC
Entertainment Inc. v. Stanley H. Durwood, et al., Chancery Court for New Castle
County, Delaware (Civil Action No. 12939). On April 16, 1993, plaintiff filed
a derivative action on behalf of AMCE against four of its directors, Messrs.
Stanley H. Durwood, Edward D. Durwood, Paul E. Vardeman and Charles J. Egan,
Jr., and one of its former directors, Philip E. Cohen (the "Bird litigation").
AMCE was named as a nominal defendant. The lawsuit alleges many of the same
claims that are alleged in the Wallace litigation, as well as claims involving
certain transactions with National Cinema Supply Corporation and a fee paid by
a subsidiary of the Company to Mr. Cohen in connection with a transaction
between the Company and TPI Entertainment, Inc. The lawsuit seeks unspecified
money damages and equitable relief and costs, including reasonable attorneys'
fees.
On August 20, 1993, the defendants filed motions to dismiss both the
Wallace litigation and the Bird litigation. On September 10, 1993, such
defendants filed motions to stay discovery pending the court's resolution of
defendants' motions to dismiss. On November 1, 1993, the court ordered that
discovery be stayed in the Wallace litigation and the Bird litigation pending
resolution of the motions to dismiss, except for discovery concerning the
fitness of Mr. Wallace to serve as a derivative plaintiff.
The Company is named as a defendant in a number of other lawsuits arising
in the normal course of its business. Management does not expect that any
actions to which the Company is a party will result in a material loss to the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
By written consent executed on February 17, 1994, DI, as the holder of the
majority of outstanding shares of the Company's Common Stock and Class B Stock,
approved an amendment and restatement ("Amendment") to the Company's
Certificate of Incorporation. The Amendment was made in connection with an
offering by the Company of shares of its $1.75 Cumulative Convertible Preferred
Stock. The primary purpose of the Amendment was to clarify provisions of the
Company's Certificate of Incorporation relating to liquidation and voting
rights of preferred stock. Pursuant to the Amendment, the rights of holders
of Common Stock and Class B Stock as to voting, including the rights of such
holders to elect members of the Company's Board of Directors, and as to
liquidation, are subject to such rights, powers and preferences as may be
granted to holders of preferred stock when it is authorized by the Board of
Directors. Pursuant to the Amendment, the Certificate of Incorporation was
also amended to provide that only Directors elected by holders of Class B Stock
and Common Stock may fill vacancies on the Board of Directors allocable to
Class B Stock when there are no Class B shares outstanding.<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Registrant's security is traded on the exchanges listed on the cover
page of this Form 10-K. As of May 16, 1994, there were 468 stockholders of AMC
Entertainment Inc. Common Stock. Price range data follows:
PRICE RANGE
1994 1993
HIGH LOW HIGH LOW
First Quarter $ 9.75 $ 7.37 $7.25 $4.37
Second Quarter 13.00 9.25 7.12 4.62
Third Quarter 14.62 12.37 6.50 4.12
Fourth Quarter 13.50 10.62 8.75 5.87
Year $14.62 $ 7.37 $8.75 $4.12
Durwood, Inc. owns all 11,157,000 outstanding shares of AMCE's Class B
Stock (which has no established public trading market) and 2,641,951 shares of
AMCE's Common Stock, representing 49.9% of the 5,295,130 shares of Common
Stock outstanding at May 16, 1994.
AMCE's Certificate of Incorporation provides that holders of Common Stock
and Class B Stock shall receive, pro rata per share, such cash dividends as may
be declared from time to time by the Board of Directors. Except for a $1.14
per share dividend declared in connection with a recapitalization that occurred
in August 1992, AMCE has not declared a dividend on shares of Common Stock
since fiscal 1989. Any payment of cash dividends on the Common Stock in the
future will be at the discretion of the Board of Directors and will depend upon
such factors as earnings levels, capital requirements, the Company's financial
condition, debt restrictions and other factors deemed relevant by its Board of
Directors.
ITEM 6. SELECTED FINANCIAL DATA
See Index to Consolidated Financial Statements.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company's revenues are derived principally from box office admissions
and theatre concession sales. Additional revenues are derived from other
sources such as on-screen advertising and license fees from electronic video
games in theatre lobbies. The Company's principal costs of operations are film
rentals, advertising costs, payroll, costs of concessions, occupancy costs,
such as theatre rentals and utilities, and other expenses such as insurance.
Set forth below is a summary of operating revenues and expenses for the last
three fiscal years.
<TABLE>
<CAPTION>
52 Weeks Ended 52 Weeks Ended 53 Weeks Ended
March 31, % of Total April 1, % of Total April 2, % of Total
1994 Revenues 1993 Revenues 1992 Revenues
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Admissions $389,454 66% $265,766 66% $272,96067%
Concession 176,27430 114,80928 114,207 28
Management fee income 301 - 9,3422 6,502 2
Other 21,424 4 14,548 4 13,295 3
Total $587,453 100% $404,465 100% $406,964 100%
Cost of Operations
Film rentals $197,461 34% $137,613 34% $138,511 34%
Advertising 17,0553 12,786 3 17,123 4
Payroll & related expenses 80,884 14 57,497 14 62,532 15
Occupancy costs 87,611 15 58,878 15 59,438 15
Concession merchandise 26,349 3 17,522 4 18,288 5
Other 39,817 7 26,539 7 30,009 7
Total $449,177 76% $310,835 77% $325,901 80%
</TABLE>
Operating Results
Fiscal year ended March 31, 1994 (fiscal 1994) v. Fiscal year ended April 1,
1993 (fiscal 1993).
Total revenues for the fifty-two weeks ended March 31, 1994 increased
$182,988,000, or 45.2%, from $404,465,000 for the prior fiscal year ended April
1, 1993 to $587,453,000 in the current period. After giving pro forma effect
of the consolidation of EEP for the prior period, total revenues increased
$44,113,000, or 8.1%, from $543,340,000. Revenue increases after the pro forma
effect of EEP for fiscal 1993 included increases in admissions of $23,548,000,
concessions of $17,185,000 and other of $3,380,000. Compared to the prior
period including EEP operations, attendance increased 7,944,000, or 8.1%, the
average ticket price decreased $.05, or 1.3%, and concession revenue per patron
increased $.04, or 2.5%.
Cost of operations increased $138,342,000, or 44.5%, during fiscal 1994
to $449,177,000 from $310,835,000 for the prior year. After giving pro forma
effect to the consolidation of EEP for the prior period, cost of operations
increased $23,165,000, or 5.4%, from $426,012,000 in fiscal 1993. Including
EEP theatres for last year, film rental expense increased $7,325,000 in the
current fiscal year, $12,236,000 due to higher volumes, which increase was
partially offset by a decrease of $4,911,000 resulting from a lower percentage
of admissions paid to distributors. Concession merchandise costs increased
$2,303,000 in the current year, after including EEP operations for the prior
period. This increase is the result of increased attendance producing
$2,597,000 additional expense partially offset by $294,000 due to a decrease
in vendor pricing. Payroll and related expenses increased $4,437,000, or 5.8%,
in the current fiscal year, after including the pro forma effect of EEP in the
prior year. Although this expense has increased in absolute dollars, as a
percentage of admission and concession revenues the expense decreased .3% from
14.6% at April 1, 1993 to 14.3% during the current fiscal year.
Operating income increased $34,066,000, or 128%, in the fiscal year ended
March 31, 1994 to $60,736,000 from $26,670,000 in the prior period. After
giving pro forma effect of the consolidation of EEP in the prior year,
operating income increased $21,420,000, or 54.5%, from $39,316,000 in the
prior fiscal year. The increase is due primarily to increased attendance and
a decrease in "direct operating expenses" (cost of operations excluding film
rentals, theatre rentals, license fees and insurance). On a per patron basis,
direct operating expense, including EEP operations in the prior year,
decreased $.03 from $1.58 at April 1, 1993 to $1.55 during the current period.
General and administrative expenses increased $3,207,000, or 8.8%, during
the fiscal year ended March 31, 1994 from $36,285,000 in the prior year to
$39,492,000 currently. The increase was primarily the result of the provision
for bonuses to corporate, division and film office associates under a
management incentive program, together with an increase of $1,600,000 in
connection with the Company's exploration of international opportunities which
began in September 1992. Other increases include pension expense, legal fees
and miscellaneous taxes.
Interest expense increased $4,974,000 during the current fiscal year ended
March 31, 1994 to $36,375,000 from $31,401,000 in the prior period. Of this
increase, $2,871,000 relates to corporate borrowings and $2,103,000 to
capitalized leases. On a pro forma basis, including EEP operations in the
prior period, total interest expense increased $406,000 in the current period.
Investment income decreased during the current fiscal year $7,083,000 from
$8,239,000 in the prior period to $1,156,000 currently. Fiscal 1993 included
equity in earnings of EEP of $1,743,000. For the current period EEP revenues
and expenses are reflected on a consolidated basis. Interest income decreased
$4,816,000 in the current period primarily due to the elimination of interest
income from EEP.
Minority interest reported in fiscal 1994 in the amount of $1,599,000
represents TPIE's share of the EEP operating loss from April 2, 1993 to May 27,
1993, prior to the Company's acquisition of TPIE's partnership interest in EEP.
Included in the results for fiscal 1993 is a net gain on the disposition of
assets of $9,638,000, primarily from the sale of five theatres with 32 screens
to Carmike Cinemas, Inc.
Due to the debt restructuring in the second quarter of fiscal 1993, the
Company incurred extraordinary charges in the amount of $10,283,000, before
tax. The income tax benefit derived from this change was $3,800,000, resulting
in a net extraordinary item charge of $6,483,000, or $.40 per share.
For the fifty-two weeks ended March 31, 1994, the Company recorded
increased earnings before income taxes and extraordinary items of $14,266,000,
to $27,412,000 versus $13,146,000 in the prior period. After income taxes and
extraordinary items the Company's net earnings increased $14,049,000 to
$15,312,000 compared to $1,263,000 in the prior period. Excluding gains and
losses on disposition of assets the Company recorded earnings prior to income
taxes and extraordinary items of $27,116,000 for the current fiscal year
compared to $6,008,000 in the prior period.
Fiscal year ended April 1, 1993 (fiscal 1993) vs. Fiscal year ended April 2,
1992 (fiscal 1992).
Total revenues of the Company for fiscal 1993 were approximately
$404,465,000, representing a decline from fiscal 1992 of $2,499,000, or 0.6%.
Fiscal 1992 included 53 weeks versus 52 weeks in fiscal 1993. Excluding
revenues produced in the fifty-third week of fiscal 1992, total revenues
increased in the 1993 fiscal year $5,386,000, or 1.3%. Theatre revenues per
screen from owned theatres increased 2.2%, or $7,399, in fiscal 1993 in spite
of a decrease in the average ticket price of $.03. Concession revenue increased
in fiscal 1993 $.03 per patron to $1.59 versus $1.56 in the prior period.
Substantially all of the management fees earned in fiscal 1993 were from
the Company's management agreement with EEP. Management fee income increased
43.7% in fiscal 1993, or $2,840,000, to $9,342,000 from $6,502,000. The
incentive management fee was earned in fiscal 1993, producing $1,830,000 in
additional revenues. In the prior fiscal year, the required level of earnings
was not met to earn the incentive fee. The remainder of the increase in
management fee income was the result of improved revenues at EEP theatre
locations.
Cost of operations decreased $15,066,000, or 4.6%, in fiscal 1993 to
$310,835,000 from $325,901,000 in the prior period. The major areas of
improvement were in advertising expense and payroll related expenses. The
decline in expense is primarily due to a cost cutting effort implemented in the
third quarter of fiscal 1992. Direct operating expense decreased 9.0%, from
$1.99 to $1.81 per patron in fiscal 1993.
General and administrative expenses decreased $1,600,000, or 4.2%, from
$37,885,000 in fiscal 1992 to $36,285,000 in fiscal 1993. This decrease
occurred notwithstanding the fact that the Company assumed the responsibilities
of AMC Entertainment International, Inc., effective September 4, 1992, which
resulted in expenses of approximately $1,582,000 in fiscal 1993. In addition,
during fiscal year 1992, the Company incurred a one-time charge in the amount
of $750,000 relating to the consolidation of two divisions. Excluding the
expenses referred to above, general and administrative expense decreased
$3,932,000, or 10.4%. This improvement is the result of a cost reduction
program which resulted in decreased legal and professional fees of
approximately $1,200,000, decreased research and development costs of $650,000
and miscellaneous other reductions.
Interest expense increased $1,366,000, or 4.5%, in fiscal 1993 from
$30,035,000 in fiscal 1992 to $31,401,000. Interest relating to corporate
borrowings increased $1,795,000, which was offset by a decrease in capital
lease interest of $429,000. The increase in interest expense associated with
corporate borrowings is the result of a recapitalization that was completed in
the second quarter of fiscal 1993 which raised outstanding debt by
approximately $40,000,000. The recapitalization was completed to improve the
Company's future liquidity by increasing the average maturity of its funded
debt from 5.1 years to 9.0 years (as of April 2, 1992).
Investment income decreased $263,000 from $8,502,000 in fiscal 1992 to
$8,239,000 in fiscal 1993. Included in investment income is the Company's
equity in net income of EEP. In fiscal 1993, this amount increased by
$1,339,000 to $1,743,000. Included in fiscal 1992 was a gain of $1,234,000
relating to the sale of stock held for investment.
Included in the results for fiscal 1993 and fiscal 1992 are gains on
disposition of assets in the amount of $9,638,000 and $8,721,000, respectively.
These gains are primarily the result of theatre sales to Carmike Cinemas, Inc.
In fiscal 1993 and fiscal 1992, the Company recorded $2,500,000 and $3,000,000,
respectively, for estimated losses on future disposition of assets.
Earnings before taxes and extraordinary items were $13,146,000 in fiscal
1993 compared to a loss in fiscal 1992 of $4,019,000. After income taxes and
extraordinary items, net earnings were $1,263,000, or $.06 per share, versus
a loss in the previous year of $5,519,000, or $.39 per share. The improvement
in earnings in fiscal 1993 occurred notwithstanding an extraordinary charge
recorded in the second quarter ended October 1, 1992. The extraordinary charge
in the amount of $10,283,000, before tax, was the result of debt restructuring.
The charge consisted of redemption premiums on the then outstanding debentures
and the write-off of deferred charges relating to such debentures and a prior
credit facility. The income tax benefit derived from this charge was
$3,800,000, resulting in a net extraordinary item of $6,483,000, or $.40 per
share.
Liquidity, Capital Structure and Resources
On March 3, 1994, the Company sold to the public 4,000,000 shares of $1.75
Cumulative Convertible Preferred Stock at a purchase price of $25 per share.
The net proceeds to the Company from the sale of the Convertible Preferred were
approximately $95.6 million. The Company intends to use such proceeds (i) to
improve its domestic theatre circuit through the construction of new theatres,
the addition of screens at, or remodeling of, existing theatres and the
acquisition of existing theatres from other circuits, (ii) to finance the
construction or acquisition of theatres in foreign markets (iii) to repurchase
and retire a portion of its debt securities pursuant to open market or
privately negotiated purchases or otherwise and (iv) for general corporate
purposes. Such new theatres and screens may be acquired pursuant to lease
agreements or through acquisition of fee ownership and may be constructed by
the Company on a standalone basis or through partnerships or other arrangements
with third parties. The Company's intention to acquire its debt securities
will depend on many factors, including factors beyond its control such as
prevailing market prices for the debt securities, and may be subject to
limitations in the Indentures and other debt instruments to which it is a
party. The Company has made no determination as to the amount of proceeds that
will be allocated to any of the foregoing purposes. Pending their use for the
purposes set forth above, the Company has invested the net proceeds in
interest-bearing instruments and other short-term securities.
The Company's revenues are collected in cash, principally through box
office admissions and theatre concession sales. Cash flow from operating
activities, as reflected in the Consolidated Statement of Cash Flows, was
$63,578,000, $29,062,000 and $18,441,000 in fiscal years 1994, 1993 and 1992,
respectively. The Company has an operating "float" which partially finances
its operations and which permits the Company to maintain a small 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 30 to 45 days following receipt of box
office admission revenues and the Company is only occasionally required to make
advance payments or non-refundable guarantees of film rentals.
In addition to cash and cash equivalents and short-term investments of
$151,469,000 at March 31, 1994, the Company had available to it at such date
the total commitment amount under its $40,000,000 credit facility. In
connection with the acquisition of EEP on May 28, 1993, the Company borrowed
$30,000,000 under the credit facility, which amount was repaid from cash flow
from operations by July 28, 1993. Except for this borrowing, the Company has
not utilized the credit facility and does not anticipate that it will need to
do so. The Company is presently negotiating certain amendments to the credit
facility which, among other things, will permit the payment of dividends on the
Convertible Preferred. If the Company is unable to negotiate such amendments,
it intends to terminate the credit facility and seek new credit arrangements.
The Company estimates that total capital expenditures will be
approximately $30,000,000 in fiscal 1995 (excluding property under capital
lease obligations). Such expenditures include normal maintenance capital
expenditures of approximately 1.5% of revenues and capital expenditures for
expansion of the theatre circuit. Total property acquisitions, including those
for refurbishment of existing theatres, excluding capital lease obligations,
were $10,651,000 for fiscal 1994.
During fiscal 1994, the Company opened one new theatre with six screens,
commenced managing one new theatre with one screen, expanded an existing
location with eight additional screens and ceased operating nine theatres with
twenty-nine screens.. The Company has signed lease agreements for seven new
theatres with 103 screens and the expansion of 17 screens at existing locations
scheduled to open at various dates through the third quarter of fiscal 1997.
The estimated minimum rental payments that may be required over the life of the
leases (averaging 20 years) for the theatres under construction total
approximately $122,000,000.
The Company continually monitors the performance of its portfolio of
theatres to determine the best strategy given local and industry-wide
conditions. If an individual theatre's operating margins are unsatisfactory,
management may decide, among other options, to convert the theatre to a "dollar
house," to sell the property (or the lease rights thereto) or to close the
theatre. The closure of a theatre may be coordinated with the opening of a new,
modern AMC theatre complex where the operating margins are expected to be
superior to those of the replaced theatre. The decision to sell or close a
theatre may result in a loss when the carrying value of the property exceeds
the sales price or when a theatre is closed with a remaining lease commitment.
The loss is charged to earnings during the period in which the decision
is made.
The Indentures and credit facility contain covenants that, among other
things, restrict the type and amount of debt that the Company may incur and
impose limitations on the creation of liens, a change of control, transactions
with affiliates, mergers and investments. The Company does not anticipate that
these covenants will materially impede the operation of the Company.
Impact of Inflation
Historically, the principal impact of inflation and changing prices upon
the Company has been with respect to the construction of new theatres, the
purchase of theatre equipment and the utility and labor costs incurred in
connection with continuing theatre operations. Film rental fees, which are the
largest operating expense incurred by the Company, are customarily paid as a
percentage of box office admission revenues and hence, while the film rental
fees may increase on an absolute basis, the percentages are not directly
affected by inflation. Except as set forth above, for the three years ended
March 31, 1994 inflation and changing prices have not had a significant impact
on the Company's total revenues and results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Responsibility for Preparation of Financial Statements
The accompanying consolidated financial statements and related notes of
AMC Entertainment Inc. and Subsidiaries were prepared by management in
conformity with generally accepted accounting principles appropriate in the
circumstances. In preparing the financial statements, management has made
judgments and estimates based on currently available information. Management
is responsible for the information; representations contained elsewhere in
this Annual Report are consistent with the financial statements.
The Company has a formalized system of internal accounting controls
designed to provide reasonable assurance that assets are safeguarded and that
its financial records are reliable. Management monitors the system for
compliance to measure its effectiveness and recommends possible improvements.
In addition, as part of their audit of the consolidated financial statements,
the Company's independent auditors review and test the internal accounting
controls on a selective basis to establish a basis of reliance in determining
the nature, extent and timing of audit tests to be applied.
The Board of Directors oversees financial reporting and internal
accounting control through its Audit Committee. This committee meets (jointly
and separately) with the independent auditors, management and internal auditor
to monitor the proper discharge of responsibilities relative to internal
accounting controls and consolidated financial statements.
Financial Statements
See Index to Consolidated Financial Statements.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Change in Registrant's Certifying Accountant
On September 22, 1992, the Board of Directors of AMC Entertainment Inc.,
based upon the recommendation of its Audit Committee, agreed to engage the
accounting firm of Coopers & Lybrand as independent public accountants to audit
Registrant's financial statements for the fiscal year ended April 1, 1993,
subject to approval of AMC Entertainment Inc.'s stockholders. The firm of
Deloitte & Touche, former independent public accountants for the Company, was
dismissed.
For the fiscal year ended April 2, 1992 and for the subsequent quarterly
interim period ended July 2, 1992, there were no disagreements with Deloitte
& Touche on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the former accountants, would have caused
it to make reference to the subject matter of the disagreements in connection
with its report.
Deloitte & Touche's report on the financial statements for the fiscal year
ended, April 2, 1992, contained no adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principles.
The Registrant requested that Deloitte & Touche furnish it with a letter
addressed to the SEC stating whether it agrees with the above statements. A
copy of the letter from Deloitte & Touche has been filed with the SEC.
In connection with the Registrant's fiscal year ended April 2, 1992, and
for the subsequent quarterly interim period ended July 2, 1992, there was no
consultation with Coopers & Lybrand as to the application of accounting
principles or the type of audit opinion that might be rendered on the
Registrant's financial statements.
<PAGE>
PART III
<TABLE>
<CAPTION>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Executive Officers of the Company are as follows:
<S> <C> <C> <C>
Years Associated
Name Age(1) Position with Company
Stanley H. Durwood 73 Chairman of the Board, Chief Executive 48(2)
Officer and Director (AMCE and AMC)
Charles J. Egan, Jr. 61 Director (AMCE and AMC) 7
Paul E. Vardeman 64 Director (AMCE and AMC) 11
Edward D. Durwood 44 President, Vice Chairman of the Board 18
and Director (AMCE and AMC)
Peter C. Brown 35 Senior Vice President, Chief Financial 2
Officer, Treasurer and Director (AMCE and AMC)
Philip M. Singleton 47 Senior Vice President, Chief Operating 19
Officer and Director (AMCE and AMC)
Donald P. Harris 43 President - AMC Film Marketing, Inc. 16
Earl C. Voelker, Jr. 49 Senior Vice President (AMC) 22
Richard J. King 45 Vice President (AMC) 22
Gregory S. Rutkowski 45 Vice President (AMC) 18
Frank T. Stryjewski 37 Vice President (AMC) 15
Richard T. Walsh 40 Vice President (AMC) 18
Richard L. Obert 54 Vice President and Chief Accounting 5
Officer (AMCE and AMC)
(1) As of March 31, 1994
(2) Includes years with the predecessor of the Company.
</TABLE>
Mr. Stanley H. Durwood, Mr. Edward D. Durwood and Mr. Paul E. Vardeman
have served as directors since AMCE's formation in 1983. Mr. Charles J. Egan,
Jr. has served as a director since 1986 and Mr. Philip M. Singleton and Mr.
Peter C. Brown since November 1992.
All directors are elected annually, and each holds office until his
successor has been duly elected and qualified or his earlier resignation or
removal. There are no family relationships between any Director and any
Executive Officer of the Company, except that Mr. Edward D. Durwood is the son
of Mr. Stanley H. Durwood. All directors of AMCE also serve as directors of
AMC.
All current Executive Officers of the Company hold such offices at the
pleasure of the Board of Directors, subject, in the case of Mr. Peter C. Brown,
Senior Vice President, Chief Financial Officer, Treasurer and a Director of
AMCE and AMC, and Mr. Donald P. Harris, President of AMC Film Marketing, Inc.,
a wholly owned subsidiary of AMC, to rights under their respective employment
agreements.
Mr. Stanley H. Durwood has served as a Director of AMCE from its
organization on June 14, 1983 and of AMC since August 2, 1968. In February
1986, he became Chairman of the Board of AMCE and AMC. Mr. Durwood served as
President of AMCE from June 1983 through February 20, 1986 and from May 1988
through June 1989. Mr. Durwood has served as Chief Executive Officer of AMCE
since June 1983 and of AMC since February 20, 1986. He also served as President
of AMC from August 2, 1968 through February 20, 1986 and from May 13, 1988
through November 8, 1990. Mr. Durwood is a graduate of Harvard University.
Mr. Charles J. Egan, Jr. has served as a Director of AMCE and AMC since
October 30, 1986. Mr. Egan is Vice President and General Counsel of Hallmark
Cards, Incorporated, which is primarily engaged in the business of social
expressions and related products (including greeting cards, gifts, party goods,
crayons, etc.) and cable television. Mr. Egan holds an A.B. degree from Harvard
University and an LL.B. degree from Columbia University.
Mr. Paul E. Vardeman has served as a Director of AMCE since June 14, 1983
and of AMC since September 28, 1982. Mr. Vardeman has been a member of the law
firm of Polsinelli, White, Vardeman & Shalton, Kansas City, Missouri, since
1982. Prior thereto, Mr. Vardeman served as a Judge of the Circuit Court of
Jackson County, Missouri. Mr. Vardeman holds undergraduate and J.D. degrees
from the University of Missouri, Kansas City.
Mr. Edward D. Durwood has served as President and Vice Chairman of the
Board of AMCE since June 29, 1989 and of AMC since November 8, 1990. Mr.
Durwood has served as a Director of AMCE since June 14, 1983 and of AMC since
November 26, 1980. Mr. Durwood served as Vice President of AMCE from June 14,
1983 through February 6, 1989, and of AMC from May 5, 1981 through February 6,
1989, at which time Mr. Durwood became Executive Vice President of both
companies. Mr. Durwood holds undergraduate and M.B.A. degrees from the
University of Kansas.
Mr. Peter C. Brown has served as Senior Vice President and Chief Financial
Officer of AMCE and AMC since November 14, 1991 and was elected a Director of
AMCE and AMC on November 12, 1992. Mr. Brown has served as Treasurer of AMCE
and AMC since September 28, 1992. Prior to November 14, 1991, he served as a
consultant to AMCE from October 1990 to October 1991, and as Vice President of
DJS Inverness & Co., an investment banking firm located in New York City, from
November 1987 to October 1990. Mr. Brown is a graduate of the University of
Kansas.
Mr. Philip M. Singleton has served as Senior Vice President and Chief
Operating Officer of AMCE and AMC since November 14, 1991 and was elected a
Director of AMCE and AMC on November 12, 1992. Prior to November 14, 1991, Mr.
Singleton served as Vice President in charge of operations for the Southeast
Division of AMC since May 10, 1982. Mr. Singleton holds an undergraduate degree
from California State University, Sacramento and an M.B.A. degree from the
University of South Florida.
Mr. Donald P. Harris has served as President of AMC Film Marketing, Inc.,
a wholly owned subsidiary of AMC, since April 18, 1989, and prior thereto
served as Vice President of AMC Film Marketing, Inc. from November 26, 1980.
Mr. Earl C. Voelker, Jr. was appointed Senior Vice President in charge of
operations for the Northeast Division of AMC on June 10, 1992. Previously, Mr.
Voelker served as Vice President in charge of operations for the Northeast
Division of AMC since April 30, 1979.
Mr. Richard J. King was appointed Vice President in charge of operations
for the Northeast Division of AMC on June 10, 1992. Previously, Mr. King served
as Vice President in charge of operations for the Southwest Division of AMC
since October 30, 1986, and as Division Operations Manager of AMC since May 7,
1986.
Mr. Gregory S. Rutkowski has served as Vice President in charge of
operations for the West Division of AMC since May 5, 1981.
Mr. Frank T. Stryjewski has served as Vice President in charge of operations
for the Southeast Division of AMC since December 9, 1991. Mr. Stryjewski served
as Vice President - Operations Resources of AMC from December 1990 to December
1991, and as Vice President - Human Resources of AMC from December 1988 to
December 1990. Prior to December 1988, Mr. Stryjewski served as National
Training Director of AMC.
Mr. Richard T. Walsh was appointed Vice President in charge of operations
for the Central Division of AMC on June 10, 1992. Previously, Mr. Walsh served
as Vice President in charge of operations for the Midwest Division of AMC since
December 1, 1988 and prior thereto served as Division Operations Manager of AMC
from November 23, 1987 through December 1, 1988, and Assistant Division
Operations Manager of AMC since 1984.
Mr. Richard L. Obert has served as Vice President and Chief Accounting
Officer of AMCE and AMC since January 9, 1989.
ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation of Directors
Beginning in fiscal 1994, upon the recommendation of the Company's
compensation consultants, the Executive Committee of the Board of Directors of
AMCE approved revised compensation arrangements for Messrs. Egan and Vardeman.
The annual cash compensation to be paid to Messrs. Egan and Vardeman will be
$20,000 each for their services as members of the Boards of Directors of AMCE
and AMC and $24,000 each for their services as members of the Audit Committees
of the Company and AMC. Messrs. Egan and Vardeman will each be paid $900 per
hour for attending meetings of (i) any board of directors of AMCE or its
subsidiaries on which he serves, (ii) the Audit Committee after the twelfth
meeting during the fiscal year and (iii) any other committee on which he
serves.
For fiscal 1994, Messrs. Charles J. Egan, Jr. and Paul E. Vardeman
received compensation of $85,400 and $78,200, respectively, for (i) services
as a member of the Board of Directors of AMCE and AMC, (ii) attendance at Board
of Directors meetings and (iii) other committee meetings of the Board of
Directors of AMCE or its subsidiaries.
Executive Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
Executive Officers of the Company (determined as of the end of the last fiscal
year and hereafter referred to as the "named Executive Officers") for the last
three fiscal years ended March 31, 1994, April 1, 1993 and April 2, 1992.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Fiscal Other Ann(1) Opts/(1)All Other (1)(2)
Name and Principal Position Year Salary Bonus Comp SARs(#) Comp
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood 1994 $436,800 $263,400 N/A - -
Chief Executive Officer 1993 420,004 141,800 N/A - -
1992 420,004 - N/A N/A N/A
Edward D. Durwood 1994 277,338 155,200 N/A 200,000 $ 4,674
President 1993 269,742 122,900 N/A - 6,626
1992 266,357 - N/A N/A N/A
Donald P. Harris 1994 281,326 106,000 N/A 45,000 4,497
President-AMC Film 1993 272,931 66,000 N/A - 5,661
Marketing, Inc. 1992 245,550 20,000 N/A N/A N/A
Philip M. Singleton 1994 264,142 153,600 51,930 150,000 59,564
Chief Operating Officer 1993 244,466 100,000 N/A - 45,249
1992 202,433 - N/A N/A N/A
Peter C. Brown 1994 227,016 135,000 N/A 150,000 4,675
Chief Financial Officer 1993 199,331 107,200 N/A - 13,579
1992 128,471 - N/A N/A N/A
</TABLE>
(1) N/A denotes not applicable. In accordance with the transitional
provisions of the revised rules for executive compensation adopted by the
Securities and Exchange Commission (the "Commission"), amounts of Other Annual
Compensation and All Other Compensation are excluded for fiscal 1992. Fiscal
1994 includes gross up of taxes relating to moving expense in the amount of
$43,285 to Mr. Philip M. Singleton. For fiscal 1994 and 1993, excluding Mr.
Philip M. Singleton, perquisites and other personal benefits did not exceed the
lesser of $50,000 or 10% of total annual salary and bonus.
(2) For fiscal 1994, all other compensation includes the Company's
contributions to a defined contribution savings plan, the 401(k) Plan, in the
amount of $4,674 for Mr. Edward D. Durwood, $4,497 for Mr. Donald P. Harris,
$4,708 for Mr. Philip M. Singleton and $4,675 for Mr. Peter C. Brown. In
addition, moving expense for Mr. Philip M. Singleton is included in the amount
of $54,856. For fiscal 1993, the totals include the Company's contributions
to the 401(k) plan in the amount of $6,626 for Mr. Edward D. Durwood, $5,661
for Mr. Donald P. Harris, $6,414 for Mr. Philip M. Singleton and $5,129 for Mr.
Peter C. Brown. In addition, moving expense is included in fiscal 1993 in the
amount of $38,835 for Mr. Singleton and $6,320 for Mr. Brown and medical
continuation coverage payments to a previous employer for Mr. Brown in the
amount of $2,130.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers and Directors, and persons who own more than 10% of the Company's
Common Stock and $1.75 Cumulative Convertible Preferred to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the American and Pacific Stock Exchanges. Officers, Directors and
greater-than-10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on
a review of the copies of such forms furnished to the Company, or written
representations that no Forms 5 were required, the Company believes that during
fiscal 1994 its Officers, Directors and greater-than-10% beneficial owners
complied with all Section 16(a) filing requirements applicable to them, except
that (i) Donald P. Harris, and Executive Officer of the Company, inadvertently
filed a Form 4 for September 1993 approximately 12 days past the required
filing date; and (ii) Mr. Richard T. Walsh, an Executive Officer of the
Company, was discovered to have attributed to him through his wife's
participation in an investment club composed of approximately 10 members which
purchased 55 shares of $1.75 Cumulative Convertible Preferred on March 4,
1994; the purchase of which was reported in a year end report on Form 5, which
was timely filed.
The following table provides certain information concerning individual
grants of stock options made during the last completed fiscal year to each of
the named Executive Officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT
% OF TOTAL ASSUMED ANNUAL
OPTIONS/SARs RATES OF STOCK
OPTIONS/ GRANTED TO EXERCISE PRICE APPRECIATION
SARs EMPLOYEES IN OR BASE EXPIRATION FOR OPTION TERM
NAME GRANTED FISCAL YEAR PRICE DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood - - - - - -
Edward D. Durwood 200,000 27.6% $9.375 6-24-03 $1,179,180 $2,988,260
Donald P. Harris 45,000 6.2% 9.375 6-24-03 265,316 672,359
Philip M. Singleton 150,000 20.7% 9.250 6-13-03 872,595 2,211,315
Peter C. Brown 150,000 20.7% 9.250 6-13-03 872,595 2,211,315
</TABLE>
The grants of stock options during the current fiscal year are eligible
for exercise based upon a vesting schedule. After the first anniversary of the
grant date, 25% of the shares will be eligible for exercise. Each year
thereafter an additional 25% become available until the fifth year anniversary
when all options are fully vested.
Option Exercises and Holdings. The following table provides information,
with respect to the named Executive Officers, concerning the exercise of
options during the last fiscal year and unexercised options held as of the
fiscal year ended March 31, 1994:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
Number of Value of
Unexercised Options Unexercised
SARs at FY-End (#) In-The-Money
Shares Acquired Exercisable/Unexercisable Options at
Name on Exercise Value Realized Shares Price Fiscal Year End
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood - - - - - -
Edward D. Durwood - - 0/ 200,000 $9.375 $250,000
Donald P. Harris 10,500 32,959 12,000/ 0 4.670 71,460
- - 0/ 45,000 9.375 56,250
Philip M. Singleton 7,500 7,031 0/ 150,000 9.250 206,250
Peter C. Brown - - 0/ 150,000 9.250 206,250
</TABLE>
401(k) Plan. AMC sponsors a defined contribution savings plan (the
"401(k) Plan") whereby employees of AMC or its subsidiaries may (under current
administrative rules) elect to contribute, in whole percentages from 1% to 16%
of compensation, provided no employee's elective contributions shall exceed the
amount permitted under Section 402(g) of the Internal Revenue Code ($8,994 in
1993). A matching contribution is made by AMC at 50% of an employee's elective
contribution of up to 6% of the employee's compensation. AMC may increase the
50% matching contribution to 100%. Employees have full and immediate vesting
rights to their elective contributions and AMC's matching contributions and
related earnings. AMC's contributions to the accounts of the named Executive
Officers are included in the Summary Compensation Table.
Defined Benefit Retirement Plan. AMC sponsors a defined benefit
retirement plan (the "Retirement Plan") which provides benefits to certain
employees of AMC and its subsidiaries based upon years of credited service and
the highest consecutive five-year average annual remuneration. For purposes of
calculating benefits, average annual compensation is limited by Section
401(a)(17) of the Internal Revenue Code, and is based upon wages, salaries and
other amounts paid to the employee for personal services, excluding certain
special compensation. A participant earns a vested right to an accrued benefit
upon completion of five years of vesting service. The Company intends to adopt
a supplemental retirement plan to provide the same level of retirement benefits
that would have been provided under the Retirement Plan had the federal tax law
not been changed in the Omnibus Budget Reconciliation Act of 1993, which
reduced the amount of compensation which can be taken into account in a
qualified retirement plan from $235,840 (in 1993), the old limit, to $150,000
(in 1994).
The following table shows the total estimated annual pension benefits
(without regard to minimum benefits) payable to a covered participant under the
Company's Retirement Plan and a supplemental retirement plan, assuming
retirement in calendar 1994 at age 65 payable in the form of a single life
annuity. The benefits are not subject to any deduction for Social Security or
other offset amounts. The following table assumes the old limit would have
been increased to $242,280 in 1994.
Highest Consecutive
Five Year Average
Annual Compensation Year of Credited Service
15 20 25 30 35
$125,000 $17,850 $23,800 $29,750 $35,700 $41,650
$150,000 $21,600 $28,800 $36,000 $41,400 $50,400
$175,000 $25,350 $33,800 $42,250 $50,700 $59,150
$200,000 $29,100 $38,800 $48,500 $58,200 $65,800
$225,000 $32,850 $43,800 $54,750 $65,700 $76,650
$242,280 $43,542 $47,256 $59,070 $70,884 $82,698
At April 1, 1994, the years of credited service under the Retirement Plan
for each of the named executive officers: Mr. Edward D. Durwood, 18 years, Mr.
Donald P. Harris, 16 years, Mr. Philip M. Singleton, 19 years, and Mr. Peter
C. Brown, 2 years. Since Mr. Stanley H. Durwood is age 73 he is receiving
minimum required distributions under this Plan pursuant to Section 401(a)(9)
of the Internal Revenue Code, even though he is an active employee. The amount
distributed in fiscal 1994 was $43,595 and is not included in the Summary
Compensation Table.
Executive Incentive Program. On November 15, 1993, the Compensation
Committee of the Company's Board of Directors approved the Executive Incentive
Program (the "EIP") for corporate and field executive and senior management,
including executive officers. The EIP will be in effect for the current fiscal
year. Participants must be employed at year-end to be eligible for an award.
Awards are pro-rated per complete quarter of employment.
Maximum awards under the EIP range from 50% of salary for executive
corporate management participants to 30% of salary for senior field management
participants. Awards are based on up to three performance components: division,
company and personal. The division component, which applies to division and
film office participants, is based on each division's performance relative to
a division operating income quota. For purposes of determining this component,
"division operating income" is defined as operating income less general and
administrative expenses and extraordinary expenses ("DOI"). The company
component, which applies to all eligible participants, is based on the
Company's performance relative to an EBITDA (earnings before interest, taxes,
depreciation and amortization) quota. For division level participants, "EBITDA"
is defined as DOI less national film, home office and international general and
administrative expenses plus capitalized lease adjustments. The personal
component of an award is based upon predetermined individual goals and a
supervisor's year-end performance appraisal, and payment is subject to the
recommendation of the supervisor and approval of the Executive Committee. The
Compensation Committee of the Board of Directors approves the annual DOI and
EBITDA quotas and approves the personal component of awards for participants
who are members of the Executive Committee.
The division and company components are scaled, based on the Company's
performance, as follows: if 80% or less of a DOI or EBITDA quota, respectively,
is met, no amount is awarded with respect to a component based on that quota;
if more than 80% (up to 100%) of a quota is met, each 1% increase (above 80%)
in the percentage of the quota that is met will result in a 5% increase in
award for the respective component; and if 100% to 110% of a quota is met, each
1% increase in quota (above 100%) will result in a 10% increase in award for
the respective component. For example, if 100% of a quota is met, 100% of the
related award may be paid, whereas if 110% of a quota is met, 200% of the
related award may be paid. The personal component of an award, which is
contingent on the Company achieving a minimum 80% of the EBITDA quota, can be
up to 15% of an individual's salary (but the aggregate amount of all such
awards may not exceed 10% of the salaries of all participants). The Company's
Executive Committee has discretion to defer payment for up to one year of some
or all of the division and company awards.
Other Executive Benefit Plans. The Executive Medical Reimbursement Plan
covers active employees who are officers of the Company and provides up to
$2,500 a month for the following medical expenses: (i) routine physicals, (ii)
vision care, (iii) well baby care, (iv) hospital room and board charges in
excess of the semi-private room and board rate, (v) expenses in excess of usual
and customary charges, subject to 80% co-insurance, (vi) 50% of mental and
nervous benefits in excess of the basic medical plan's $1,500 calendar year
maximum, to a lifetime maximum of $50,000, (vii) dental reimbursement, subject
to 80% co-insurance and a $3,000 calendar year maximum and (viii) an additional
$2,000 orthodontia lifetime maximum. Supplemental Accidental Death and
Dismemberment coverage in the amount of $250,000 is also provided to active
officers of the Company.
The Executive Savings Plan (the "Savings Plan") covers certain highly
compensated employees (as defined in Section 414(q) of the Internal Revenue
Code) whose elective contributions under the 401(k) Plan have been limited in
order for the 401(k) Plan to satisfy the average deferral percentage
nondiscrimination tests in Section 401(k) of the Internal Revenue Code and/or
whose coverage under the group term life insurance provided by AMC is at the
maximum amount. The Savings Plan provides a three percent increase in pay to
all eligible employees who agree to make a four percent of pay contribution on
a monthly basis to an AMC approved individual universal life insurance policy
which is owned by the employee. The eligible employees can select, within
certain parameters, the portion of their after-tax premiums that is allocated
to life insurance protection versus the investment element of the universal
life insurance policy. Such benefit amounts for the named Executive Officers
are included in the Summary Compensation Table.
Nonqualified Deferred Compensation Plan. Effective January 1, 1994, the
Company adopted the "AMC Nonqualified Deferred Compensation Plan" "(the
"Deferred Compensation Plan"), an unfunded deferred compensation arrangement
designed to permit eligible employees of the Company and certain affiliates to
offset the adverse impact of a change in the federal tax law made by the
Omnibus Budget Reconciliation Act of 1993 (the "Act"), which reduced the amount
of compensation which can be taken into account in a qualified retirement plan
from $235,840 (in 1993) to $150,000 (in 1994).
Under the Deferred Compensation Plan, participants in the Company's 401(k)
Plan who are making the maximum deferral thereunder and whose estimated annual
compensation will exceed $100,000 in 1994 may elect, in advance and irrevocable
for each year, to reduce their compensation and to defer under the Deferred
Compensation Plan such additional portion of their annual compensation as they
may determine. Such participants whose annual compensation in 1994 exceeds
$150,000 will have elective Deferred Compensation Plan deferrals of up to 4%
of their compensation in excess of $150,000 matched by the Company at a rate
of 50%, but only to the extent affected by the change in the law. For example,
an employee who will earn $180,000 in 1994 and who elects to defer 4% of his
compensation would have a match equal to the lesser of (a) 2% of the difference
between the $150,000 limit set forth in Section 401(a)(17) of the Internal
Revenue Code of 1986 (the "Code") and $180,000 and (b) 50% of the difference
between the maximum permissive elective deferral under Section 402(g) of the
Code ($9,240 in 1994) and the amount of his elective deferrals under the 401(k)
Plan for the year. The old limit, the new limit and the Deferred Compensation
Plan's minimum eligibility criteria (compensation over $100,000 to make
deferrals and over $150,000 to be credited with a match) are subject to
periodic cost-of-living adjustments. The company's maximum obligation under
the Deferred Compensation Plan for any one participant for 1994 is $1,620
(which would probably have been incurred by the Company had the federal tax law
not been changed by the Act).
Elective deferrals and matching credits, if any, will be credited to a
deferral account maintained by or at the direction of the Company and held in
an irrevocable trust (commonly referred to as a rabbi trust). The assets in
the rabbi trust, however, remain subject to the claims of the Company's
creditors in the event of insolvency of the Company or any of its affiliates.
Unless the Company or any of its affiliates become insolvent, upon the earlier
of a participant's normal retirement age (65) or other termination of
employment, the participant will receive the amounts credited to his deferral
account, adjusted for earnings and losses, in a lump sum or in installments
over ten years, as elected by the participant prior to making the deferrals.
Both the participant's deferrals and the match, if applicable, are fully vested
at all times.
Other Compensation Plans. On February 2, 1977, the Board of Directors of
AMC authorized the continued payment to Mr. Stanley H. Durwood, in the event
of his disability, of 80% of his then current salary and bonuses for a period
of up to two years, such salary payment to be reduced, if necessary, so that
such payments, together with disability compensation under AMC's group
insurance policy, do not exceed 100% of his then current salary and bonus.
Messrs. Peter C. Brown and Donald P. Harris each have employment
agreements with the Company providing for base annual salaries of no less than
$180,000 and $220,000, respectively, an automobile, and bonuses at the sole
discretion of the Chief Executive Officer of the Company. Messrs. Brown and
Harris have current base salaries of $227,700 and $270,010, respectively. The
Company may terminate Mr. Brown's employment agreement at any time upon at
least 270 days prior notice. Mr. Harris' employment agreement terminates on
July 31, 1994, upon his death, upon his disability as defined in his employment
agreement, or upon the Company's good faith determination that cause for
termination as described in his employment agreement exists. In the event Mr.
Stanley H. Durwood ceases to control the management of the Company for any
reason, then the Company and each of the foregoing named employees has the
option to terminate his employment agreement. In such event, the Company shall
pay $135,000 in cash to Mr. Brown, and an amount in cash to Mr. Harris equal
to the aggregate cash compensation, exclusive of bonus, to the end of the term
of his employment under his employment agreement, after discounting such amount
to its then present value using a discount rate equal to the lesser of one-half
of the then announced prime rate of interest or 10% per annum. The aggregate
amount payable under these agreements, assuming termination by reason of a
change in control at March 31, 1994, was $224,420.
The Company maintains a severance pay plan for full-time salaried
nonbargaining employees with at least 90 days of service. For an eligible
employee who is subject to the Fair Labor Standards Act ("FLSA") overtime pay
requirements (a "nonexempt eligible employee"), the plan provides for severance
pay in the case of involuntary termination of employment due to layoff of the
greater of two week's basic pay or one week's basic pay multiplied by the
employee's full years of service up to no more than twelve week's basic pay.
There is no severance pay for a voluntary termination, unless up to two week's
pay is authorized in lieu of notice. There is no severance pay for an
involuntary termination due to an employee's misconduct. Only two week's
severance is paid for an involuntary termination due to substandard
performance. For an eligible employee who is exempt from the FSLA overtime pay
requirements, severance pay is discretionary (at the Department Head/Supervisor
level), but will not be less than the amount that would be paid to a nonexempt
eligible employee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1994
with respect to beneficial owners of 5% or more of any class of the Company's
capital stock:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
Title of Class of Beneficial Owner Beneficially Owned of Class
<S> <C> <C> <C>
Common Stock Durwood, Inc. (1)
106 West 14th Street
Kansas City, Missouri 64105 2,641,951(2) 50.2%(2)
Wells Fargo Institutional(3)
Trust Company, N.A.
45 Fremont Street, 17th Floor
San Francisco, California 94105 268,947(3) 5.1%(4)
David L. Babson & Company, Inc. (4)
One Memorial Drive
Cambridge, Massachusetts 02142 417,500(5) 7.9%(6)
Class B Stock(7) Durwood, Inc. (1)
106 West 14th Street
Kansas City, Missouri 64105 11,157,000(2) 100.0%(2)
</TABLE>
(1) A revocable inter-vivos trust established by Mr. Stanley H. Durwood for
the benefit of Mr. Stanley H. Durwood holds approximately 75% of the voting
power of the outstanding capital stock of DI. American Associated Enterprises,
a Missouri limited partnership of which Mr. Stanley H. Durwood is the limited
partner and his children are the general partners (on whose behalf Mr. Edward
D. Durwood has voting authority), holds approximately 25% of the voting power
of DI's outstanding capital stock. Mr. Stanley H. Durwood is Chairman of the
Board, Chief Executive Officer and a Director of AMCE and AMC, and Mr. Edward
D. Durwood is President, Vice Chairman of the Board and a Director of AMCE and
AMC.
(2) Class B Stock is convertible into Common Stock on a share-for-share basis.
The stated percentage has been computed without giving effect to the conversion
option. Were all shares of Class B Stock converted there would be 16,423,830
shares of Common Stock outstanding, of which DI would hold 13,798,951 shares,
or 84% of the outstanding Common Stock.
(3) As reported by Wells Fargo Institutional Trust Company, N.A. on Schedule
13G dated February 2, 1994.
(4) Because the number of outstanding shares of Common Stock has increased
since the date of the information in such Schedule 13G, the number of shares
of Common Stock disclose therein constitutes 5.1% of the outstanding shares of
Common Stock as of March 31, 1994.
(5) As reported by David L. Babson & Company, Inc. on Schedule 13G dated
January 25, 1994.
(6) Because the number of outstanding shares of Common Stock has increased
since the date of the information in such Schedule 13G, the number of shares
of Common Stock disclosed therein constitutes 7.9% of the outstanding shares
of Common Stock as of March 31, 1994.
(7) In the election of Directors, holders of Class B Stock are entitled to
elect four of the Company's six Directors. On other matters, holders of Class
B Stock vote as a class with holders of Common Stock, with each share of Class
B Stock being entitled to ten votes per share.
Beneficial Ownership By Directors and Officers
The following table sets forth certain information as of March 31, 1994
with respect to beneficial ownership by Directors and Executive Officers of the
Company's Common Stock and Class B Common Stock. The amounts set forth below
include 695,000 shares of Common Stock subject to options under the Company's
1984 Stock Option Plan held by executive officers which are not exercisable
until June 1994.
Number of Shares Percent
Title of Class Name of Beneficial Owner Beneficially Owned of Class
Common Stock Stanley H. Durwood 2,642,101 (1) 50.2
Edward D. Durwood 200,000 (2) 3.8
Paul E. Vardeman 300 *
Donald P. Harris 59,808 (2) 1.1
Philip M. Singleton 170,000 (2) 3.2
Peter C. Brown 150,000 (2) 2.8
All Directors and
Executive Officers as
a group (13 persons,
including the individuals
named above) 3,396,689 64.5
Class B Stock Stanley H. Durwood 11,157,000 (1) 100.0
___________________
*Less than one percent.
(1)See Notes 1 and 2 under the previous table. Mr. Stanley H. Durwood also
directly owns 150 shares of AMCE's Common Stock.
(2)Includes shares subject to options to purchase Common Stock under the
Company's 1984 Stock Option Plan, as follows: Edward D. Durwood - 200,000
shares; Philip M. Singleton - 150,000 shares; Peter C. Brown - 150,000 shares;
Donald P. Harris - 57,000 shares; and all executive officers as a group -
707,000 shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions
Since its formation, AMCE and AMC have been members of an affiliated group
of companies (the "DI affiliated group") beneficially owned by Mr. Stanley H.
Durwood and members of his family. Mr. Stanley H. Durwood is President,
Treasurer and a Director of DI and Chairman of the Board, Chief Executive
Officer and a Director of AMCE and AMC. There have been a number of
transactions involving AMCE or AMC and the DI affiliated group in prior years.
The Company intends to ensure that all transactions with DI or other related
parties are fair, reasonable and in the best interest of the Company. In that
regard, the Audit Committee of the Boards of Directors of AMCE and AMC review
all material proposed transactions between the Company and DI or other related
parties to determine that, in its best business judgment, such transactions
meet that standard. The Audit Committees consist of Messrs. Vardeman and Egan,
neither of whom are officers or employees of AMCE or AMC nor stockholders,
directors, officers or employees of DI. Set forth below is a description of
significant transactions which have occurred since April 2, 1993, or involve
receivables that remain outstanding at March 31, 1994. There may in the future
be other transactions between AMCE or AMC and such DI affiliated group members
and individuals.
Certain corporate departments of AMC perform general and administrative
services for DI and its subsidiaries. AMC charged DI and its subsidiaries
$196,000 for such services for fiscal 1994.
Periodically, AMC and DI reconcile any accounts owed by one company to the
other. Charges to the intercompany account have included the allocation of
AMC's general and administrative expenses and payments made by AMC on behalf
of DI. In fiscal 1994, the largest balance owed by DI and its subsidiaries to
AMC was $1,423,000. Of this amount, $843,000 consisted of AMC payments to DI
under the federal income tax sharing agreement between DI and AMC which was
terminated on March 3, 1994. As of March 31, 1994, DI and its subsidiaries
owed AMC $85,000.
In July 1992, Mr. Jeffrey W. Journagan, a son-in-law of Mr. Stanley H.
Durwood, was hired by the Company. Mr. Journagan's current annual salary is
approximately $68,640.
In January 1987, AMC loaned $200,000 to Mr. Donald P. Harris,
President-AMC Film Marketing, Inc. This loan was evidenced by a promissory
note bearing interest at the rate of 6% per annum, provides for the payment of
all principal at maturity and was secured by a second Deed of Trust on Mr.
Harris' residence in Los Angeles County, California. The loan was made to Mr.
Harris in connection with the purchase of his principal residence. Principal
on the note was due on January 1, 1992, but the note has been extended to
January 16, 1997. In connection with the extension, the interest rate on the
note was increased to 7.5%.
DI and the Company entered into an agreement dated July 1, 1983 pursuant
to which, so long as DI and the Company file a consolidated federal income tax
return, the Company will pay to DI the amount of tax that would be payable
calculated as if the Company filed a separate consolidated federal income tax
return for such period and all prior taxable periods, provided, however, that
if such return would have reflected a refund due to the Company, DI will pay
the Company an amount equal to such refund when and if the consolidated group
is able to realize the Company's tax benefit in the future.
The issuance of the Convertible Preferred has caused DI and the Company
to cease to be eligible to file consolidated federal income tax returns on the
date on which the Convertible Preferred was issued. This event accelerated the
payment of approximately $6.5 million of federal income tax on intercompany
gains which have been deferred for income tax purposes. The agreement still
applies to all tax years for which DI and the Company filed a consolidated
federal income tax return.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) See Index to Consolidated Financial Statements and Schedules.
(b) Reports on Form 8-K
None
(c) Exhibits
A list of exhibits required to be filed as part of this report on Form
10-K is set forth in the Exhibit Index, which immediately precedes such
exhibits, and is incorporated herein by reference.<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11.
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
3/31/94 4/1/93 4/2/92
<S> <C> <C> <C>
Net earnings (loss) before extraordinary items $ 15,312 $ 7,746 $ (5,519)
Preferred dividends (538) (256) (700)
Net earnings (loss) applicable to common stock
before extraordinary items for primary and
fully diluted earnings per share $ 14,774 $ 7,490 $ (6,219)
Net earnings (loss) $ 15,312 $ 1,263 $ (5,519)
Preferred dividends (538) (256) (700)
Net earnings (loss) applicable to common
stock for primary and fully diluted earnings
per share $ 14,774 $ 1,007 $ (6,219)
Average shares for primary earnings per share:
Weighted average number of shares outstanding 16,365 16,207 16,088
Stock options outstanding whose effect is
dilutive 156 10 -
Total shares outstanding 16,521 16,217 16,088
Average shares for fully diluted earnings per share:
Weighted average number of shares outstanding 16,365 16,207 16,088
Stock options outstanding whose effect is
dilutive 185 10 -
Total shares outstanding 16,550 16,217 16,088
Primary earnings (loss) per share before
extraordinary items $ .89 $ .46 $ (.39)
Primary earnings (loss) per share $ .89 $ .06 $ (.39)
Fully diluted earnings (loss) per share
before extraordinary items $ .89 $ .46 $ (.39)
Fully diluted earnings (loss) per share $ .89 $ .06 $ (.39)
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AMC ENTERTAINMENT INC.
By: /s/ Stanley H. Durwood
Stanley H. Durwood, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Stanley H. Durwood Chairman of the Board, Chief May 27, 1994
Stanley H. Durwood Executive Officer and Director
/s/Edward D. Durwood President, Vice Chairman of the May 27, 1994
Edward D. Durwood Board and Director
/s/Paul E. Vardeman Director May 27, 1994
Paul E. Vardeman
/s/Charles J. Egan Jr. Director May 27, 1994
Charles J. Egan, Jr.
/s/ Peter C. Brown Senior Vice President, Chief May 27, 1994
Peter C. Brown Financial Officer, Treasurer
and Director
/s/ Philip M. Singleton Senior Vice President, Chief May 27, 1994
Philip M. Singleton Operating Officer and Director
/s/ Richard L. Obert Vice President and May 27, 1994
Richard L. Obert Chief Accounting Officer
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Years (52 Weeks) Ended March 31, 1994, (52 Weeks) Ended
April 1, 1993 and (53 Weeks) Ended April 2, 1992
Page
INDEPENDENT AUDITORS' REPORTS F-2 - F-5
CONSOLIDATED STATEMENTS OF OPERATIONS F-6
CONSOLIDATED BALANCE SHEETS F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS F-8 - F-9
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-11 - F-28
STATEMENTS OF OPERATIONS BY QUARTER (UNAUDITED) F-29
SELECTED FINANCIAL DATA (UNAUDITED) F-30
SCHEDULE I - Marketable securities - other investments F-31
SCHEDULE II - Amounts receivable from related parties and
underwriters, promoters, and employees other
than related parties F-32
SCHEDULE V - Property, plant and equipment F-33
SCHEDULE VI - Accumulated depreciation and amortization of
property, plant and equipment F-34
SCHEDULE VIII - Valuation and qualifying accounts and reserves F-35
SCHEDULE IX - Supplementary short-term borrowings information F-36
SCHEDULE X - Supplementary income statement information F-36
NOTE: All other schedules have been omitted because they are not required or
because the required information is shown in the financial statements or notes
thereto.
Separate consolidated financial statements of American Multi-Cinema, Inc.
have not been included because they are substantially the same as the
consolidated financial statements of AMC Entertainment Inc. included herein.<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of AMC Entertainment Inc.
Kansas City, Missouri
We have audited the consolidated balance sheets of AMC Entertainment Inc. and
subsidiaries as of March 31, 1994 and April 1, 1993, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years (52 weeks) then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the financial statements of Exhibition Enterprises Partnership, a joint venture
partnership, which was recorded using the equity method of accounting. The
investment in and advances to this partnership represent 11 percent of
consolidated assets as of April 1, 1993 and the equity in its earnings
represent 23 percent of consolidated earnings before extraordinary items for
the year (52 weeks) ended April 1, 1993. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to the amounts included for Exhibition Enterprises Partnership,
is based solely on the report of the other auditors. The consolidated
statements of operations, stockholders' equity and cash flows of AMC
Entertainment Inc. and subsidiaries for the year (53 weeks) ended April 2, 1992
were audited by other auditors whose report, dated May 21, 1992 (June 21, 1993
as to Note 2 in the 1993 financial statements: not included herein), expressed
an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of the other
auditors provides a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of AMC Entertainment Inc. and
subsidiaries as of March 31, 1994 and April 1, 1993, and the results of their
operations and their cash flows for the years (52 weeks) then ended, in
conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements effective April 3, 1992, the
Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109.
(Signature)
Kansas City, Missouri
May 23, 1994<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of AMC Entertainment Inc.
Kansas City, Missouri
Our report on the consolidated financial statements of AMC Entertainment Inc.
and subsidiaries is included on page F-2 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedules as of March 31, 1994 and April 1, 1993 and the
years (52 weeks) then ended listed in the index on page F-1 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
(Signature)
Kansas City, Missouri
May 23, 1994
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of AMC Entertainment Inc.
Kansas City, Missouri
We have audited the consolidated statements of operations, stockholder's equity
and cash flows of AMC Entertainment Inc. and subsidiaries for the year (53
weeks) ended April 2, 1992 and have issued our report thereon dated May 21,
1992 (June 21, 1993 as to Note 2 in the 1993 financial statements: not
included herein); such financial statements and report are included elsewhere
in this Form 10-K. Our audit also included the financial statement schedules
of AMC Entertainment Inc. and subsidiaries, listed in Item 14. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
(Signature)
Kansas City, Missouri
May 21, 1992
(June 21, 1993 as to Note 2 in the 1993 financial statements: not included
herein)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Numbers
2-92048, 2-97522 and 2-97523 of AMC Entertainment Inc. on Form S-8 of our
report dated May 21, 1992 (June 21, 1993 as to Note 2 in the 1993 financial
statements: not included herein), appearing in this Annual Report on Form 10-K
of AMC Entertainment Inc. for the year ended March 31, 1994.
(Signature)
Kansas City, Missouri
May 25, 1994<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of AMC Entertainment Inc.
Kansas City, Missouri
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of AMC Entertainment Inc. and subsidiaries
for the year (53 weeks) ended April 2, 1992. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of AMC Entertainment Inc. and subsidiaries
operations and their cash flows for the year (53 weeks) ended April 2, 1992 in
conformity with generally accepted accounting principles.
(Signature)
Kansas City, Missouri
May 21, 1992
(June 21, 1993 as to Note 2 in the 1993 financial statements: not included
herein)<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
3/31/94 4/1/93 4/2/92
<S> <C> <C> <C>
Revenues
Admissions $389,454 $265,766 $272,960
Concessions 176,274 114,809 114,207
Management fee income 301 9,342 6,502
Other 21,424 14,548 13,295
Total revenues 587,453 404,465 406,964
Expenses
Film rentals 197,461 137,613 138,511
Advertising 17,055 12,786 17,123
Payroll and related expenses 80,884 57,497 62,532
Occupancy costs 87,611 58,878 59,438
Concession merchandise 26,349 17,522 18,288
Other 39,817 26,539 30,009
Total cost of operations 449,177 310,835 325,901
Depreciation and amortization 38,048 28,175 31,385
General and administrative expenses 39,492 36,285 37,885
Estimated loss on future disposition of assets - 2,500 3,000
Total expenses 526,717 377,795 398,171
Operating income 60,736 26,670 8,793
Other expense (income)
Interest expense
Corporate borrowings 25,699 22,828 21,033
Capitalized leases 10,676 8,573 9,002
Investment income (1,156) (8,239) (8,502)
Minority interest (1,599) - -
Gain on disposition of assets (296) (9,638) (8,721)
Earnings (loss) before income taxes and
extraordinary item 27,412 13,146 (4,019)
Income tax provision 12,100 5,400 1,500
Earnings (loss) before extraordinary item 15,312 7,746 (5,519)
Extraordinary item
Loss on extinguishment of debt
(net of income tax benefit of $3,800) - (6,483) -
Net earnings (loss) $ 15,312 $ 1,263 $ (5,519)
Preferred dividends $ 538 $ 256 $ 700
Net earnings (loss) for common shares $ 14,774 $ 1,007 $ (6,219)
Earnings (loss) per share before
extraordinary item $ .89 $ .46 $ (.39)
Earnings (loss) per share $ .89 $ .06 $ (.39)
Weighted average number of shares outstanding 16,521 16,217 16,088
/TABLE
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except narrative)
ASSETS
<S> <C> <C>
3/31/94 4/1/93
Current assets:
Cash and equivalents $ 32,319 $ 23,997
Investments 119,150 26,109
Receivables, net of allowance for doubtful accounts
of $1,270,000 at March 31, 1994 and $611,000 at April 1, 1993 9,197 8,704
Other current assets 11,575 7,562
Total current assets 172,241 66,372
Investment in and advances to partnership - 40,187
Property, net 252,861 223,981
Intangible assets, net 49,403 17,577
Other long-term assets 26,771 25,985
Total assets $501,276 $374,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Film rentals payable $ 18,368 $ 12,090
Accrued expenses and other liabilities 48,053 35,871
Estimated IRS settlement 3,146 4,796
Other accounts payable 10,338 3,976
Current maturities of borrowings and capital
lease obligations 2,168 2,618
Total current liabilities 82,073 59,351
Corporate borrowings 200,115 200,633
Capital lease obligations 65,905 52,051
Other long-term liabilities 22,779 16,904
Total liabilities 370,872 328,939
Deferred gain on sale of assets - 26,992
Commitments and contingencies
Stockholders' equity
Cumulative Convertible Preferred stock;
4,000,000 shares issued
and outstanding (aggregate liquidation
preference of $100,000,000) 2,667 -
Common stock; 5,266,830 and 4,539,380
shares issued and
outstanding at March 31, 1994 and
April 1, 1993, respectively 3,511 3,026
Class B stock; 11,157,000 shares issued
and outstanding 7,438 7,820
Additional paid-in capital 106,951 12,800
Retained earnings (accumulated deficit) 9,837 (5,475)
Total stockholders' equity 130,404 18,171
Total liabilities and stockholders' equity $501,276 $374,102
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 3/31/94 4/1/93 4/2/92
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 15,312 $ 1,263 $ (5,519)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization - property 29,074 23,869 25,829
- other long-term assets 7,075 4,306 5,556
- deferred gain - - (1,407)
Gain on sale of other long-term assets (296) (9,638) (7,314)
Change in assets and liabilities net of effects from acquisitions:
Receivables (2,843) (897) 4,065
Other current assets (1,925) 694 (1,969)
Film rentals, net 89 (1,843) (6,555)
Accrued expenses, other liabilities
and other accounts payable 18,640 8,131 3,996
Estimated IRS settlement (1,650) - -
Other, net 204 3,177 1,759
Total adjustments 48,368 27,799 23,960
Net cash provided by operating activities 63,680 29,062 18,441
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions (10,651) (8,786) (21,045)
Investments in short term instruments, net (93,041) (649) (2,085)
Purchase of partnership interest, net of cash acquired (8,486) - (2,423)
Proceeds from sale of TPI Enterprises, Inc. common stock - - 5,385
Proceeds from disposition of property 1,270 14,768 11,623
Other, net (597) (739) (622)
Net cash provided by (used in) investing activities (111,505) 4,594 (9,167)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit agreements 30,000 3,000 25,000
Repayments under line of credit agreements (30,000) (57,000) (41,000)
Principal payments under capital leases (1,700) (885) (1,653)
Repayment of acquired subsidiary indebtedness (37,000) - -
Proceeds from issuance of debt securities - 198,654 -
Repurchase of debentures - (125,000) -
Other repayments (1,720) (6,400) (2,574)
Proceeds from issuance of common stock 1,321 845 -
Redemption of preferred stock - (5,000) -
Proceeds from issuance of preferred stock 95,600 - -
Dividends paid on preferred stock - (2,531) -
Dividends paid on common stock - (18,550) -
Deferred financing costs (354) (8,155) (493)
Net cash provided by (used in) financing activities 56,147 (21,022) (20,720)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 8,322 12,634 (11,446)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 23,997 11,363 22,809
CASH AND EQUIVALENTS AT END OF YEAR $ 32,319 $ 23,997 $ 11,363
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except narrative)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
3/31/94 4/1/93 4/2/92
<S> <C> <C> <C>
Capital lease obligations incurred in connection with
property acquired $ 5,219 $ 3,931 $ -
Borrowings incurred in connection with property acquired - 35 475
</TABLE>
In connection with the April 19, 1991 capital contribution to Exhibition
Enterprises Partnership ("EEP"), the Company exchanged 3.8 million common
shares of TPI Enterprises, Inc. ("TPI") for a 50% ownership interest in the
partnership. The TPI shares had a book carrying value of $22,364,000 and a
fair market value of $24,225,000.
On May 28, 1993, Cinema Enterprises II, Inc. ("CENI II"), a wholly-owned
subsidiary of American Multi-Cinema, Inc. ("AMC"), acquired a fifty percent
partnership interest in Exhibition Enterprises Partnership ("EEP") from TPI
Entertainment, Inc. Together with the fifty percent partnership interest
already owned by Cinema Enterprises, Inc. ("CENI"), EEP became wholly-owned by
subsidiaries of AMC. Cash and equivalents held by EEP at May 28, 1993 totaled
$9,014,000. Liabilities assumed from the May 28, 1993 transaction follow:
Fair value of assets acquired (including cash and equivalents) $70,170
Cash paid (17,500)
Liabilities assumed $ 52,670
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
<S> <C> <C> <C>
3/31/94 4/1/93 4/2/92
Cash paid during the period for:
Interest (net of amounts capitalized) $ 35,742 $ 32,697 $ 29,752
Income taxes 13,659 1,343 635
Income taxes on proposed IRS settlement 1,650 - -
Cash received during the period for:
Interest and dividend income 1,973 7,182 9,078
Income tax refunds 417 133 493
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
Add Retained Total
Preferred Stock Common Stock Class B Stock Paid-in Engs Stockho
Shares Amount Shares Amount Shares Amount Capital (Deficit)Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 28, 1991 5 $1 4,358,380 $2,906 11,730,000 $7,820 $26,599 $8,762 $46,088
Net loss - - - - - - - (5,519) (5,519)
Dividends declared:
14% Preferred stock - - - - - - - (700) (700)
Balance, April 2, 1992 5 1 4,358,380 2,906 11,730,000 7,820 26,599 2,543 39,869
Net earnings - - - - - - - 1,263 1,263
Net proceeds from sale of
Common stock - - 181,000 120 - - 725 - 845
Redemption of Preferred
stock (5) (1) - - - - (4,999) - (5,000)
Dividends declared:
14% Preferred stock - - - - - - - (256) (256)
Common and Class B - - - - - - (9,525) (9,025) (18,550)
Balance, April 1, 1993 - - 4,539,380 3,026 11,730,000 7,820 12,800 (5,475) 18,171
Net earnings - - - - - - - 15,312 15,312
Net proceeds from sale
of Common stock - - 154,450 103 - - 1,218 - 1,321
Net proceeds from sale
of Preferred stock 4,000,000 2,667 - - - - 92,933 - 95,600
Conversion of Class
B stock - - 573,000 382 (573,000) (382) - - -
Balance, March 31, 1994 4,000,000 $2,667 5,266,830 $3,511 11,157,000 $7,438 $106,951 $ 9,837 $130,404
</TABLE>
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS (52 WEEKS) ENDED MARCH 31, 1994
(52 WEEKS) ENDED APRIL 1, 1993 AND (53 WEEKS ) ENDED APRIL 2, 1992
NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
AMC Entertainment Inc. ("AMCE"), through American Multi-Cinema, Inc.
("AMC") and its subsidiaries (collectively with AMCE, unless the context
otherwise requires, the "Company") is principally involved in the operation
of motion picture theatres.
Approximately 84% of AMCE's outstanding voting securities are owned by
Durwood, Inc. ("DI"). See Note 4 for further description of AMCE's related
party transactions.
Principles of Consolidation
The consolidated financial statements include the accounts of AMCE and its
subsidiaries, all of which are wholly owned, except AMC Philadelphia, Inc.
("AMCP"), which is 80% owned. At March 31, 1994 and April 1, 1993, the
minority interest in AMCP amounted to $2,619,000 and $1,771,000, respectively,
and is included in other long-term liabilities. All significant intercompany
balances and transactions have been eliminated.
Fiscal Year
The Company has a 52/53 week fiscal year ending on the Thursday closest
to the last day of March. The current year ended March 31, 1994, included
fifty-two weeks. The year ended April 1, 1993, included fifty-two weeks and
the year ended April 2, 1992, included fifty-three weeks.
Cash and Equivalents
This balance is comprised of cash on hand and temporary cash investments
with original maturities of less than thirty days.
Investments
At March 31, 1994 investments are comprised principally of time deposits,
U.S. treasury bills and U.S. treasury notes which mature in less than one year
and are carried at cost which approximates market.
Concentration of Credit Risk
The Company invests excess cash in deposits with major banks and in high
quality short-term liquid money instruments. Such investments are made only
in instruments issued or enhanced by high quality financial institutions
(investment grade or better). Amounts invested in a single institution are
limited to minimize risk.
Refundable Construction Advances
Included in receivables at March 31, 1994 is $1,541,000 ($320,000 at
April 1, 1993) advanced to developers to fund a portion of the construction
costs of new theatres that are to be operated by AMC pursuant to lease
agreements. These advances are refunded by the developers either during or
shortly after completion of construction.
Property
Property is recorded at cost. The Company uses the straight-line method
in computing depreciation and amortization for financial reporting purposes and
accelerated methods, with respect to certain assets, for income tax purposes.
The estimated useful lives are generally as follows:
Buildings and improvements 20 to 40 years
Leasehold improvements 5 to 25 years
Furniture, fixtures and equipment 3 to 10 years
Expenditures for additions (including interest during construction), major
renewals and betterments are capitalized, and expenditures for maintenance and
repairs are charged to expense as incurred. The cost of assets retired or
otherwise disposed of and the related accumulated depreciation are eliminated
from the accounts in the year of disposal. Gains or losses resulting from
property disposals are credited or charged to operations currently.
Intangible Assets
Intangible assets are comprised of lease rights and location premiums
which are amounts assigned to theatre leases assumed under favorable terms
which are being amortized on a straight-line basis over the estimated remaining
useful life of the theatre.
Other Long-Term Assets
Other long-term assets are comprised principally of costs incurred in
connection with the issuance of debt securities which are being amortized over
the respective life of the issue on the effective interest method; investments
in partnerships and corporate joint ventures accounted for under the cost or
equity methods; and deferred preopening and design costs relating to new
theatres which are being amortized over two years.
Income Taxes
The Company, pursuant to a tax sharing agreement, joined with DI in filing
a consolidated federal income tax return through March 3, 1994. Upon issuance
of the Convertible Preferred Stock, DI no longer owns the requisite 80% of the
Company. The Company will file a separate consolidated federal income tax
return after that date. The provisions of the tax sharing agreement will
remain effective for any changes to taxable income for years covered under such
agreement. The Company's provision for income tax expense is computed as if
it filed a separate consolidated return. Included in accrued expenses and
other liabilities at March 31, 1994 is $2,318,000 in current income taxes
payable. At April 1, 1993, other current assets included $563,000 of prepaid
or recoverable federal and state income taxes. Investment tax credits are
accounted for under the flow-through method.
Earnings (Loss) per Share
Primary earnings (loss) per share is computed based upon net earnings
(loss) for the period less any pro rata share of undeclared preferred stock
dividends divided by the weighted average number of common shares outstanding
and outstanding stock options when their effect is dilutive.
Accounting Change
Effective during fiscal 1993, the Company adopted the provisions of the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109 (SFAS 109) - "Accounting for Income Taxes." This statement
changed the accounting for deferred income taxes. The effect of adopting
SFAS 109 was not material. Prior to 1993, the Company accounted for income
taxes in accordance with the Accounting Principles Board Opinion No. 11 (APB
11) - "Accounting for Income Taxes."
Presentation
Certain amounts have been reclassified from prior period consolidated
financial statements to conform with the current year presentation. Such
amounts were not material.
NOTE 2 - STOCKHOLDERS' EQUITY
Common Stock
Holders of the Company's stock have no pre-emptive or subscription rights
and there are no restrictions with respect to transferability. Holders of the
Common stock have no conversion rights, but holders of Class B stock may elect
to convert at any time on a share-for-share basis into Common stock.
The authorized Common stock of AMCE consists of two classes of stock.
Each holder of Common stock (66 2/3 cent par value; 45,000,000 shares
authorized) is entitled to one vote per share, and each holder of Class B stock
(66 2/3 cent par value; 30,000,000 shares authorized) is entitled to 10 votes
per share. Common stockholders voting as a class are entitled to elect 33%
of AMCE's Board of Directors with Class B stockholders electing the remainder.
Cumulative Preferred Stock
The Company has authorized 10,000,000 shares of Preferred Stock (66 2/3
cents par value).
On March 3, 1994, the Company sold to the public 4,000,000 shares of $1.75
Cumulative Convertible Preferred Stock at a purchase price of $25 per share.
Dividends are payable quarterly at an annual rate of $1.75 per share. The
Convertible Preferred has preference in liquidation in the amount of $25 per
share plus accrued and unpaid dividends. The Convertible Preferred is
convertible at the option of the holder into shares of Common stock at a
conversion price of $14.50 per share of Common stock, subject to certain
events. In lieu of conversion the Company may, at its option, pay to the
holder cash equal to the then market value of the Common stock. After March
15, 1997, the Company may redeem in whole or in part the Convertible Preferred
at a redemption price beginning at $26.00 per share, declining ratable to
$25.00 per share after March 15, 2001.
On June 23, 1988, the Company sold to DI twenty-five shares of Cumulative
Preferred Stock 14% Series of 1988, at a purchase price of $1,000,000 per
share. On February 24, 1989, the Company redeemed twenty shares of the
Cumulative Preferred Stock owned by DI in the amount of $20,000,000. On August
12, 1992, the Company redeemed the remaining five shares of Cumulative
Preferred Stock owned by DI in the amount of $7,531,000, including accrued and
unpaid dividends.
Stock Option and Employee Stock Purchase Plans
1983 Plan
In June 1983, AMCE adopted a stock option plan ("1983 Plan") for selected
employees. This plan provides for the grant of rights to purchase shares of
Common stock under both incentive and non-incentive stock option agreements.
The number of shares which may be sold under the plan may not exceed 750,000
shares. The 1983 Plan provides that the exercise price may not be less than
the fair market value of the stock at the date of grant and unexercised
options expire no later than ten years after date of grant.
1984 Plan
In September 1984, AMCE adopted a non-qualified stock option plan ("1984
Plan"). This plan provides for the grant of rights to purchase shares of
Common stock under non-qualified stock option agreements. The number of
shares which may be sold under the plan may not exceed 750,000 shares. The
1984 Plan provides that the exercise price will be determined by the Company's
Stock Option Committee and that the options expire no later than ten years
after date of grant.
Pertinent information covering the two plans follows:
<TABLE>
<CAPTION>
1994 1993
Number Option Price Number Option Price
of Shares Per Share of Shares Per Share
<S> <C> <C> <C> <C>
Outstanding at beginning of year 242,750 $4.67-$11.13 453,750 $4.67-$11.13
Granted 725,000 $9.25-$9.375 -
Cancelled - (30,000) $9.00
Exercised (154,450) $4.67-$9.00 (181,000) $4.67
Outstanding at end of year 813,300 $4.67-$11.13 242,750 $4.67-$11.13
Exercisable at end of year 88,300 $4.67-$11.13 242,750 $4.67-$11.13
Available for grant at end
of year 252,529 977,529
</TABLE>
Expiration dates for outstanding stock options at March 31, 1994 are as
follows:
Option Price
Fiscal year Number of Shares Per Share
1995 28,300 $ 4.67
1996 60,000 11.13
2004 725,000 9.25-9.375
Total options outstanding 813,300
NOTE 3 - INVESTMENT IN AND ADVANCES TO PARTNERSHIP
Prior to May 28, 1993, Exhibition Enterprises Partnership ("EEP" or the
"Partnership") was 50% owned by Cinema Enterprises, Inc. ("CENI"), a
wholly-owned subsidiary of AMC, and 50% owned by TPI Entertainment, Inc.
("TPIE"), a wholly-owned subsidiary of TPI Enterprises, Inc. ("TPI"). On April
19, 1991, the Partnership acquired the ownership interest in 57 movie theatres
(56 theatres previously purchased by TPIE from AMC and 1 theatre constructed
by TPIE), subject to obligations under notes, loans and capital leases. From
inception through April 1, 1993, the Company accounted for its investment in
EEP on the equity method.
At April 1, 1993, investment in and advances to partnership included a 12%
Subordinated Promissory Note due from EEP of $42,364,000 principal amount,
discounted for an effective yield of 14%, plus a note receivable in the amount
of $710,000 from the April 25, 1991 sale of a theatre.
On May 28, 1993, the Company completed the acquisition of TPIE's
partnership interest in EEP for $17,500,000 in cash. The acquisition also
required the repayment of $37,000,000 in EEP bank indebtedness which was funded
by borrowings under a revolving line of credit of $30,000,000 together with
cash on hand. The acquisition was accounted for under the purchase method of
accounting and EEP was consolidated, for financial reporting purposes, as a
wholly-owned subsidiary. The unamortized deferred gain arising from the 1989
and 1990 sales of theatres to TPIE ($26,992,000) was applied as a reduction to
the carrying value of the EEP assets. On a pro forma basis, the effect of the
acquisition on the Company's fiscal 1993 results would have been an increase
in earnings of approximately $116,000. Presented below is selected unaudited
pro forma operating statement data of the Company for the fifty-two weeks ended
March 31, 1994 and the fifty-two weeks ended April 1, 1993, assuming the
acquisition occurred at the beginning of the respective fiscal year (in
thousands):
Pro Forma (Unaudited)
Fifty-two
Fifty-two
Weeks Ended Weeks Ended
3/31/94 4/1/93
Total revenues $587,453 $543,340
Cost of operations 449,131 426,012
Depreciation and amortization 37,722 38,597
General and administrative 39,492 36,915
Estimated loss on future dispositions - 2,500
Operating income 61,108 39,316
Interest expense 36,305 35,969
Investment income 996 325
Gain (loss) on disposition of assets 296 9,590
Income tax provision 11,700 5,400
Earnings before extraordinary item 14,395 7,862
Extraordinary item - (6,483)
Net earnings $ 14,395 $ 1,379
Earnings per share $ .84 $ .07
For fiscal 1994, the Company accounted for its investment in EEP on a
consolidated basis by including EEP's assets and liabilities, as adjusted for
the purchase, in the Consolidated Balance Sheet, and by including EEP's
revenues and expenses in the Consolidated Statement of Operations beginning
April 2, 1993. One-half of the Partnership's net loss for the period April 2,
1993 through May 27, 1993 attributable to TPIE ($1,599,000) has been recorded
as minority interest in the Statements of Operations.
NOTE 4 - TRANSACTIONS WITH RELATED PARTIES
American Associated Enterprises ("Enterprises") is a Missouri limited
partnership formed by Mr. Stanley H. Durwood, Chairman of the Board, Chief
Executive Officer and a Director of the Company, and his children, one of whom
is Mr. Edward D. Durwood, President, Vice Chairman of the Board and a Director
of the Company. Enterprises and the Chief Executive Officer of the Company
own DI. Prior to December 26, 1991, when the agreement was terminated, the
Company engaged Enterprises for the purpose of executing film license
contracts and providing related accounting and financial management services.
The Company paid Enterprises for rentals associated with films exhibited
in the Company's theatres and Enterprises in turn disbursed such funds to film
distributors for such rentals. Enterprises billed the Company approximately
$1,000,000 for services provided in the fiscal year ended April 2, 1992.
The Company and DI maintain intercompany accounts. Charges to the
intercompany accounts include the allocation of AMC general and administrative
expense and payments made by AMC on behalf of DI. At March 31, 1994, DI and
non-AMCE subsidiaries owed the Company approximately $85,000 ($717,000 at April
1, 1993), including, for fiscal 1993, prepaid federal income taxes of $843,000
which were used to partially offset taxes payable to DI under a tax sharing
agreement.
NOTE 5 - BORROWINGS AND CAPITAL LEASE OBLIGATIONS
Recapitalization
As part of a recapitalization plan, on August 12, 1992, AMCE issued $200
million of Debt Securities consisting of $100 million of 11-7/8% Senior Notes,
due August 1, 2000, priced at 99.36 to yield 12%, and $100 million of 12-5/8%
Senior Subordinated Notes, due August 1, 2002, priced at 99.294 to yield
12-3/4%. The net proceeds from the offering of the Debt Securities, together
with cash on hand, were used as follows: (i) to redeem all of the AMCE 13.6%
Debentures at an aggregate price of $52,720,000 (representing 105.44% of the
principal amount thereof), plus accrued and unpaid interest thereon; (ii) to
redeem all of the AMCE 11-7/8% Debentures at an aggregate price of $78,563,000
(representing 104.75% of the principal amount thereof), plus accrued and unpaid
interest thereon; (iii) to repay all of AMC's outstanding indebtedness under
a credit facility ($36,000,000 in aggregate principal amount outstanding on
August 12, 1992); (iv) to redeem all of AMCE's outstanding shares of Cumulative
Preferred Stock 14% Series of 1988 at an aggregate price of approximately
$7,531,000 (representing the liquidation preference value thereof, plus accrued
and unpaid dividends thereon); and (v) to pay a special cash dividend of
approximately $18,550,000 in the aggregate ($1.14 per share) in respect of the
Common Stock and the Class B Stock on a pro rata basis.
The terms of the Indentures respecting the Senior Notes and the Senior
Subordinated Notes issued in the recapitalization restrict the Company's
ability to pay cash dividends by requiring that such dividends and other
"restricted payments" generally not exceed the sum of 25% of cash flow plus net
proceeds of certain capital contributions and sales of capital stock received
after August 12, 1992. The Debt Securities are unsecured and unconditionally
guaranteed by AMC and significant subsidiaries. The Indentures provide
conditions and limitations upon the sale of assets, change in control,
permitted investments, additional indebtedness, and other limitations. After
August 1, 1997, the Company may redeem the Debt Securities at various call
premiums as specified in the Indentures.
The discounts on the Debt Securities are being amortized to interest
expense following the interest method of amortization. Costs related to the
issuance of the Debt Securities were capitalized and are charged to
amortization expense, following the interest method, over the life of the
respective securities. Unamortized issuance costs of $6,796,000 at March 31,
1994 are included in other long-term assets.
Premiums paid to redeem the Debentures together with the write-off of
unamortized debt issue costs and other costs directly related to the debt
redemptions resulted in an extraordinary loss in fiscal 1993 of $6,483,000
($.40 per share), net of income tax benefit of $3,800,000.
Loan Agreement
In connection with the recapitalization, effective August 10, 1992, AMC
entered into a three year loan agreement with two banks to provide a revolving
line of credit of up to $40,000,000 for working capital and other general
corporate purposes (the "Credit Facility"). The Company has the option to
borrow at rates based on either the bank's base rate, CD rates or LIBOR and is
required to pay an annual commitment fee of 3/8 of 1% on the unused amount of
the commitment. At March 31, 1994, AMC had no borrowings on the Credit
Facility but could borrow up to $40,000,000 as provided in the loan agreement.
The Credit Facility includes certain financial covenants. The Company is
required to maintain a maximum net debt to consolidated EBITDA ratio and a
minimum fixed charge coverage ratio. The required net debt to consolidated
EBITDA ratio was 4.00 to 1 for fiscal 1994 and 3.50 to 1 thereafter. The
required fixed charge coverage ratio was 1.35 to 1 for fiscal 1994 and 1.50 to
1 thereafter. In addition, the covenants contained in the Credit Facility
limit the Company's capital expenditures to $25 million per year, of which the
Company may allocate to capital expenditures outside of the United States the
lesser of $10 million or $5 million plus 25% of cash flow (minus 100% of cash
flow, if negative), in each case less the amount of permitted dividends paid
or declared by the Company, as described below. These and other provisions
of the Credit Facility may have the effect of limiting the amount of assets
held by the Company.
The Credit Facility limits the amount of dividends that the Company and
its subsidiary, American Multi-Cinema, Inc., may pay during its term to the
lesser of $10 million or $5 million plus 25% of cash flow (minus 100% of cash
flow if negative) over the term of the Credit Facility, in each case less
capital expenditures outside the United States. In addition, AMC will be
permitted to pay, in any six-month period, dividends in an amount equal to the
aggregate scheduled payments of interest on the Senior Subordinated Notes for
such period, unless payments on such securities would not then be permitted by
the subordination provisions of such securities. The Credit Facility
stipulates that there shall be a period of at least 60 consecutive days during
each twelve month period following the agreement date when there are no loans
outstanding under the Credit Facility. The Company has satisfied this
stipulation for the second anniversary of the loan agreement by not borrowing
funds for 60 consecutive days following August 10, 1993.
Dividend Restrictions
As discussed above, the amount of cash dividends payable by the Company
is limited by covenants to the Indentures governing the Senior Notes, Senior
Subordinated Notes and covenants to the Credit Facility. As of March 31,
1994, according to the most restrictive terms of the covenants, the Company
could pay a cash dividend of approximately $10,000,000.<PAGE>
<TABLE>
<CAPTION>
Summary of Borrowings
The Company is obligated under bonds, notes and other indebtedness as follows
(in thousands):
Totals
Due in
Rates of Maturity Fiscal March 31, April 1,
Interest Dates 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Senior Debt
Senior notes 11.875% August, 2000 $ - $ 99,449 $ 99,394
Revolving credit agreement Various August, 1995 - - -
Equipment installment 12.3% to 12.58% Serially 34 1,340 2,478
notes to 2009
Capital lease obligations 7.25% Serially 2,134 68,039 53,343
to 20% to 2025
Other indebtedness Various Various - - 768
Total senior debt 2,168 168,828 155,983
Subordinated Debt
Senior subordinated notes 12.625% August, 2002 - 99,360 99,319
Total subordinated debt - 99,360 99,319
Total borrowings $2,168 $268,188 $255,302
</TABLE>
Minimum annual payments required under existing capital lease obligations,
net present value thereof and maturities of total indebtedness at March 31,
1994 are as follows (in thousands):
<TABLE>
<CAPTION>
Capital Lease Obligations
Minimum Net
Lease Less Present Other
Payments Interest Value Debt Total
<S> <C> <C> <C> <C> <C>
1995 $ 13,290 $ 11,156 $ 2,134 $ 34 $ 2,168
1996 13,298 10,755 2,543 39 2,582
1997 13,298 10,269 3,029 44 3,073
1998 13,410 9,673 3,737 50 3,787
1999 13,415 8,942 4,473 57 4,530
Thereafter 106,627 54,504 52,123 199,925 252,048
Total $173,338 $105,299 $ 68,039 $200,149 $268,188
</TABLE>
NOTE 6 - INCOME TAXES
The Company records deferred income taxes using enacted tax laws and rates
for the years in which the taxes are expected to be paid. In fiscal 1993, the
Company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes". Prior to 1993, the Company accounted for income
taxes under Accounting Principles Board Opinion No. 11 (APB 11), "Accounting
for Income Taxes." The effect of adopting SFAS 109 was not material.<PAGE>
Income taxes reflected in the consolidated statements of operations for
the three years ended March 31, 1994 are as follows (in thousands):
1994 1993 1992
(Liability Method) Deferred
Method)
Current:
Federal $ 13,977 $ 2,077 $ 900
State 2,146 600 600
Total current 16,123 2,677 1,500
Deferred:
Federal (5,203) (3,838) -
State (1,071) (814) -
Change in valuation allowance 2,251 3,575 -
Total deferred (4,023) (1,077) -
Total provision 12,100 1,600 1,500
Tax benefit of extinguishment of debt - 3,800 -
Total provision before
extraordinary items $ 12,100 $ 5,400 $ 1,500
The effective tax rate on income before extraordinary items was 44% in
1994, 41% in 1993 and 37% in 1992. The difference between the effective rate
and the U.S. federal income tax statutory rate of 35% in 1994 and 34% in 1993
and 1992 are accounted for as follows (in thousands):
1994(1) 1993(1) 1992
Tax on earnings (loss) before
provision for income
tax and extraordinary items at
statutory rates $ 9,590 $ 4,470 $ (1,366)
Add (subtract) tax effect of:
Federal benefit not available(2) N/A N/A 1,366
Installment sale - 463 637
State income tax, net of federal
benefit 699 600 600
Change in valuation allowance (3) 2,251 (225) N/A
Other, net (440) 92 263
Income tax expense before
extraordinary items $ 12,100 $ 5,400 $ 1,500
(1) As calculated under SFAS 109.
(2)The N/A denotes items which do not apply to SFAS 109.
(3) The N/A denotes items which do not apply to APB11.
Deferred income taxes for 1994 and 1993 reflect the impact of "temporary
differences" between the amount of assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws and regulations.
These "temporary differences" are determined in accordance with SFAS 109 and
are more inclusive in nature than "timing differences" as determined under APB
11. Deferred income taxes for 1992 have not been restated. The significant
components of deferred income tax assets and liabilities at March 31, 1994 and
April 1, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
Deferred Income Tax Deferred Income Tax
Assets Liabilities Assets Liabilities
<S> <C> <C> <C> <C>
Accrued reserves and liabilities $ 3,443 $ - $ 4,000 $ 1,471
Investments in partnerships - 268 12,136 -
Capital lease obligations 7,527 - 6,711 -
Deferred gains on installment sales - 41 10,797 7,689
Depreciation 11,903 - - 12,136
Deferred rents 3,312 - 2,946 -
Tax credits carryforward 1,371 - 2,601 -
Net operating loss carryforward - - 3,037 -
Other 740 114 1,145 478
Total 28,296 423 43,373 21,774
Less: Valuation allowance 22,773 - 20,522 -
Net 5,523 423 22,851 21,774
Less: Current deferred income taxes 3,414 - 1,077 -
Total noncurrent deferred income taxes $ 2,109 $ 423 $ 21,774 $ 21,774
Net noncurrent deferred income taxes $ 1,686 $ -
</TABLE>
SFAS 109 requires a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. The Company believes
that uncertainty exists with respect to the future realization of tax credit
carryforwards and certain future income tax deductions. Therefore, the Company
established a valuation allowance relating to such items of $22,773,000,
$20,522,000 and $16,947,000 as of March 31, 1994, April 1, 1993 and April 3,
1992, respectively.
As of March 31, 1994, the Company has jobs tax credit carryforwards of
$548,000 which expire beginning in 2000, and alternative minimum tax credit
carryforwards of $823,000, which carryforward indefinitely.
The Company settled litigation with the Internal Revenue Service ("IRS")
primarily concerning the Company's method, for the years 1978 through 1987, of
reporting for income tax purposes, film rentals and deductions in the year paid
(cash method) rather than in the year the related film was exhibited (accrual
method). In July 1990, the Company made a prepayment to the IRS in the amount
of $18,155,000. Included in the Consolidated Balance Sheet at March 31, 1994
is $3,146,000 in estimated state and federal taxes and interest payable related
to the above settlement. (See Note 11.)
NOTE 7 - PROPERTY
A summary of property follows (in thousands):
March 31, April 1,
1994 1993
Property owned:
Land $ 20,239 $ 20,239
Buildings and improvements 86,177 83,028
Furniture, fixtures and equipment 160,944 129,297
Leasehold improvements 116,496 92,118
383,856 324,682
Less-accumulated depreciation and amortization 174,229 137,266
209,627 187,416
Property leased under capitalized leases:
Buildings 68,162 56,569
Less-accumulated amortization 24,928 20,004
43,234 36,565
Net property $252,861 $223,981
NOTE 8 - OTHER ASSETS AND LIABILITIES
Other assets and liabilities consist of the following (in thousands):
March 31, April 1,
1994 1993
Other current assets:
Prepaid rent $ 5,811 $ 4,277
Prepaid income taxes - 563
Deferred income taxes 3,414 1,077
Other 2,350 1,645
$ 11,575 $ 7,562
Other long-term assets:
Investments, at cost $ 14,283 $ 14,420
Investments in partnerships and corporate
joint ventures 839 1,676
Deferred charges, net 7,630 8,228
Deferred income taxes 1,686 -
Other 2,333 1,661
$ 26,771 $ 25,985
Accrued expenses and other liabilities:
Taxes other than income $ 14,283 $ 3,832
Interest 3,961 4,756
Payroll and vacation 11,016 6,445
Casualty claims and premiums 1,593 2,408
Reserve for future disposition 4,711 3,653
Current income taxes payable 2,318 -
Deferred income 10,268 8,413
Other 8,492 6,364
$ 48,053 $ 35,871
NOTE 9 - LEASES
Description of Leasing Agreements
The majority of the Company's operations are conducted in premises
occupied under lease agreements with base terms ranging generally from 15 to
25 years, with certain leases containing options to extend the leases for up
to an additional 20 years. The leases provide for fixed rentals and/or
rentals based on revenues with a guaranteed minimum. The Company also leases
certain equipment under leases expiring at various dates. The majority of the
leases provide that the Company will pay all, or substantially all, the taxes,
maintenance, insurance and certain other operating expenses. Assets held
under capital leases are included in property. Performance under some leases
has been guaranteed by DI.
Operating Leases
The Company has entered into agreements to lease space for the operation
of theatres not yet fully constructed. Of the total number of anticipated
openings, leases for seven new theatres with 103 screens and seventeen
screens at an existing location have been finalized. Construction is
scheduled for completion, and theatres for opening, at various dates through
the third quarter of fiscal 1997. The estimated minimum rental payments that
may be required under the terms of these leases total approximately $122
million.
Following is a schedule, by year, of future minimum rental payments
required under these leases and existing operating leases that have initial
or remaining non-cancellable terms in excess of one year at March 31, 1994 (in
thousands):
Fiscal year ended:
1995 $ 47,982
1996 51,145
1997 50,188
1998 48,858
1999 48,028
Thereafter 458,713
Total minimum payments required $704,914
The Company records rent expense on a straight-line basis over the term
of the lease. Included in long-term liabilities at March 31, 1994 and April
1, 1993 is $9,153,000 and $7,382,000 respectively, of deferred rent
representing pro rata future minimum rental payments for leases with scheduled
rent increases.
Rent expense is summarized as follows for the years ended (in thousands):
March 31, April 1, April 2,
1994 1993 1992
Minimum rentals $ 56,813 $ 37,466 $ 36,749
Percentage rentals based on revenues 1,968 1,722 1,518
Equipment rentals 692 778 927
$ 59,473 $ 39,966 $ 39,194
Rent expense for fiscal 1994 includes $18,744,000 from EEP theatres.
NOTE 10 - EMPLOYEE BENEFIT PLANS
Defined Benefit Plan
The Company sponsors a non-contributory defined benefit pension plan
covering, after a minimum of one year of employment, all employees age 21 or
older, who have completed 1,000 hours of service in their first twelve months
of employment or in a calendar year and who are not covered by a collective
bargaining agreement.
The plan calls for benefits to be paid to eligible employees at retirement
based primarily upon years of credited service with the Company (not exceeding
thirty-five) and the employee's highest five year average compensation.
Contributions to the plan reflect benefits attributed to employees' services
to date, as well as services expected to be earned in the future. Plan assets
are invested in a group annuity contract with an insurance company pursuant
to which the plan's benefits are paid to retired and terminated employees and
the beneficiaries of deceased employees.
The following table sets forth the plan's funded status as of December 31,
1993 and 1992 (Plan valuation dates) and the amounts included in the
consolidated balance sheets as of March 31, 1994 and April 1, 1993 (in
thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1994 April 1, 1993
Actuarial present value of accumulated benefit
obligation, including vested benefits of $9,788 and $7,191 $ 10,290 $ 7,631
Projected benefit obligation for service rendered to date $ 16,937 $ 13,173
Less: Plan assets at fair value 7,544 6,388
Projected benefit obligation in excess of plan assets 9,393 6,785
Less: Unrecognized net loss from past experience
different from that assumed and effects of
changes in assumptions 4,862 2,662
Less: Unrecognized net obligation upon adoption
being recognized over 15 years, net of
amortization 1,940 2,709
Less: Plan contributions from measurement date to
end of fiscal year 185 201
Less: Adjustment required to recognize
minimum liability (155) -
Pension liability included in consolidated balance sheet $ 2,561 $ 1,213
</TABLE>
Net pension expense includes the following components for the years ended
(in thousands):
<TABLE>
<CAPTION>
March 31, April 1, April 2,
1994 1993 1992
<S> <C> <C> <C>
Service cost benefits earned
during the per$ 1,157 $ 936 $ 761
Interest cost on the projected
benefit obligation 852 714 586
Actual return on plan assets (864) (471) (942)
Net amortization and deferral 698 203 810
Net pension expense $ 1,843 $ 1,382 $ 1,215
</TABLE>
The weighted average discount rates used to measure the projected benefit
obligation were 5.75%, 6.5% and 7.0% for the years ended December 31, 1993,
1992 and 1991, respectively. The rate of increase in future compensation
levels was 6.50% for the three years and the expected long-term rate of return
on assets was 8.5% for December 31, 1993 and December 31, 1991 and 8.0% for
December 31, 1992. The Company uses the straight-line method of amortization
for prior service cost and unrecognized gains and losses over the average
remaining service period of 15 years.
A limited number of employees are covered by collective bargaining
agreements under which payments are made to a union-administered fund.
401(k) Plan
The Company sponsors a voluntary thrift savings plan ("401(k) Plan")
covering the same employees eligible for the pension plan. Since inception
of the savings plan, the Company has matched 50% of each eligible employee's
elective contributions, limited to 3% of the employee's salary.
The Company's share of expense under the thrift savings plan was $907,000
for the year ended March 31, 1994 ($777,000 and $868,000 for the fiscal years
ended April 1, 1993 and April 2, 1992, respectively).
Other Retirement Benefits
The Company currently offers eligible retirees the opportunity to
participate in a health plan (medical and dental) and a life insurance plan.
Substantially all employees may become eligible for these benefits provided
that the employee must be at least 55 years of age and have 15 years of
credited service at retirement. The health plan is contributory, with retiree
contributions adjusted annually; the life insurance plan is noncontributory.
The accounting for the health plan anticipates future modifications to the
cost-sharing provisions to provide for retiree premium contributions of
approximately 20% of total premiums, increases in deductibles and co-insurance
at the medical inflation rate and coordination with Medicare.
Retiree health and life insurance plans are not funded. The Company is
amortizing the transition obligation on the straight-line method over a period
of 20 years.
The following table sets forth the plans' accumulated postretirement
benefit obligation reconciled with the amount included in the consolidated
balance sheets as of March 31, 1994 and April 1, 1993 (in thousands):
March 31, April 1,
1994 1993
Accumulated postretirement benefit obligation:
Retirees $ 869 $ 297
Fully eligible active plan participants 339 183
Other active plan participants 1,243 810
Accumulated postretirement benefit obligation 2,451 1,290
Unrecognized transition obligation (847) (897)
Unrecognized gain/(loss) (824) 3
Accrued postretirement benefit cost in the
balance sheet $ 780 $ 396
Postretirement expense includes the following components for the years ended
(in thousands):
March 31, April 1, April 2,
1994 1993 1992
Service cost $ 175 $ 138 $ 128
Interest cost on accumulated
postretirement benefit
obligation 169 91 85
Amortization of transition
obligation over 20 years 94 49 50
Postretirement expense $ 438 $ 278 $ 263
For measurement purposes, the annual rate of increase in the per capita
cost of covered health care benefits assumed for fiscal 1994 was 9.5% for
medical and 6.5% for dental. The rates were assumed to decrease gradually to
5% for medical and 3% for dental at 2020 and remain at that level thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of March 31, 1994 by $667,000 and the aggregate of the
service and interest cost components of postretirement expense for the year
(52 weeks) then ended by $137,000. The weighted-average discount rate used
in determining the accumulated postretirement benefit obligation was 7.25% for
fiscal 1994, 8.5% for fiscal 1993 and 1992.
NOTE 11 - CONTINGENCIES
The Company, in the normal course of business, is party to various legal
actions. Management believes that the potential exposure, if any, from such
matters would not have a material adverse effect on the financial condition or
results of operations of the Company. The following paragraphs summarize
significant litigation and proceedings to which the Company is a party.
Income Tax Litigation. The Company has been in litigation with the
Internal Revenue Service ("IRS") primarily concerning the Company's method, for
the years 1975 and 1978 to 1987, inclusive, of reporting, for income tax
purposes, film rentals and deductions in the year paid (cash method) rather
than in the year the related film was exhibited (accrual method). These and
other issues were the subject of two United States Tax Court cases (Durwood,
Inc. v. Commissioner of Internal Revenue, Docket No. 3706-88 filed February
23, 1988 and Durwood, Inc. v. Commissioner of Internal Revenue, Docket No.
3322-91 filed February 22, 1991). Through March 31, 1994, the Company has
recorded provisions totaling $22,951,000 representing the estimated additional
federal and state income taxes and interest resulting from the IRS litigation.
In July 1990, the Company made a prepayment to the IRS of $18,155,000.
Settlements have been reached with respect to all issues in each of the
Tax Court cases. On or about November 5, 1991, the Company and the
Commissioner of Internal Revenue entered into a closing agreement of final
determination providing for the resolution of film rent and interest income
issues with respect to the taxable years December 31, 1980 through March 31,
1988. The agreement resulted in a liability which approximates the amount
previously accrued by the Company and affects the net operating loss
carryforwards into future years.
On September 2, 1992, the Company and the Commissioner of Internal Revenue
filed with the United States Tax Court a Second Supplemental Stipulation of
Partial Settlement in Durwood, Inc. v. Commissioner of Internal Revenue, Docket
No. 3322-91, which Stipulation resolved all remaining issues, including issues
relating to certain capital gains, the dividends received deduction, and the
understatement penalty. Management believes that adequate amounts have been
reserved with respect to these income tax matters.
Sales Tax Litigation. On August 13, 1991, the Florida Department of
Revenue assessed the Company $1,670,000 in taxes, penalties and interest for
popcorn sales in theatres that occurred during the period commencing January
1, 1986 and ending December 31, 1988. Because the regulation relied on by the
Department did not become effective until December 1987, the Department issued
a revised assessment to the Company in the amount of $388,000, which is based
on the Company's 1988 popcorn sales in Florida. Because the Company's Florida
legal counsel failed to file a petition to contest the assessment within the
required time, the Department took the position that the Company owed $388,000
in taxes plus penalties and interest.
The Company and the Department agreed to be bound by the final judicial
resolution of another Florida sales tax case involving substantially the same
issues, which case has been recently decided against the taxpayer. Pursuant
to its agreement with the Department, the Company will pay the $388,000 in
assessed taxes plus interest, but no penalties. The Company will also pursue
all available remedies against its former legal counsel.
.
NOTE 12 - FUTURE DISPOSITION OF ASSETS
The Company has provided reserves for expected losses arising from the
discontinuation of the operation of fast food restaurants, for theatres which
have been or are anticipated to be closed and for other future dispositions
of assets.
In conjunction with the opening of certain new theatres in fiscal 1986
through 1988, the Company expanded its food services by leasing additional
space adjacent to those theatres and used such space to operate specialty fast
food restaurants. The Company discontinued operating the restaurants due to
unprofitability. The Company continues to sub-lease or to convert to other
uses the space leased for these restaurants. The Company is obligated under
long-term lease commitments with remaining terms of up to eighteen years. At
March 31, 1994 the base rent aggregates approximately $984,000 annually, and
$12,887,000 over the remaining term of the leases. As of March 31, 1994, the
Company has subleased approximately 91% of the space with remaining terms
ranging from three months to 201 months. Non-cancellable subleases currently
aggregate approximately $984,000 annually, and $6,270,000 over the remaining
term of the subleases.
As of March 31, 1994, the Company remains obligated under lease
commitments for four closed theatres and for office space at three locations
with remaining terms of up to five years. The current leasing costs of these
closed locations approximates $529,000 annually, and $1,370,000 over the
remaining term of the leases. Non-cancellable subleases currently aggregate
approximately $92,000 annually, and $242,000 over the remaining term of the
subleases. The Company has been in negotiation with certain landlords and
believes the ultimate cost of settling the leases will be less than the full
amount of the lease obligations.
NOTE 13 - DISPOSITION OF ASSETS
Gain on disposition of assets for the years ended March 31, 1994, April
1, 1993 and April 2, 1992 are as follows (in thousands):
March 31, April 1, April 2,
1994 1993 1992
Sale of theatres to
Carmike Cinemas, Inc. $ - $ 9,903 $ 8,169
Amortization of
deferred gain - - 1,407
Other asset dispositions 296 (265) (855)
$ 296 $ 9,638 $ 8,721
Disposition of Theatres
On February 24, 1989, the Company sold 55 theatres with 375 screens and
on May 17, 1990, the Company sold one theatre with 8 screens to TPIE. The
gain, aggregating approximately $70,352,000, was deferred from income. Prior
to the Company's acquisition of a partnership interest in the theatres sold to
TPIE, the deferred gain was being amortized on the straight-line method over
an average life of approximately 11 years. The unamortized deferred gain from
the 1989 sale of theatres to TPIE has been applied as a reduction to the EEP
assets acquired on May 28, 1993. (See Note 3.)
On May 16, 1991, the Company sold eight theatres with 45 screens to
Carmike Cinemas, Inc. for $9,416,000 with a recognized gain of $8,169,000.
On May 21, 1992, the Company sold five theatres with 32 screens to Carmike
Cinemas, Inc. for $12,132,000 with a recognized gain of $9,903,000.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
The carrying value of cash and equivalents approximates fair value because
of the short maturity of those instruments. Investments in U.S. government
obligations and corporate bonds were valued based on quoted market prices. The
fair value of the investment in TPI Enterprises, Inc. is based on the lower of
the quoted market price of this common stock investment or the exercise price
specified in a purchase option agreement. The fair value of the subordinated
promissory note receivable from EEP in fiscal 1993, was determined by reference
to the estimated premium paid for the AMCE Senior Subordinated Notes over U.S.
treasury notes with similar average maturities. For other notes receivable,
the fair value was based upon a premium over bank prime lending rates. The
fair value of stock investments and publicly held corporate borrowings was
based upon quoted market prices. For other corporate borrowings, the fair
value was based upon rates available to the Company from bank loan agreements
or rates based upon the estimated premium over U.S. treasury notes with similar
average maturities.
The estimated fair values of the Company's financial instruments follows
(in thousands):
March 31, 1994 April 1, 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial assets:
Cash and equivalents $ 32,319 $ 32,319 $ 23,997 $ 23,997
Investments 119,150 119,150 26,109 26,225
Investment in TPI
Enterprises, Inc. 8,682 8,851 8,682 8,851
Subordinated note receivable - - 39,879 42,837
Other notes receivable 459 469 726 746
Stock investments 1,600 1,850 1,600 3,701
Financial liabilities:
Corporate borrowings $200,149 $228,619 $201,959 $218,391
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS BY QUARTER
(in thousands, except per share amounts)
(UNAUDITED)
Fiscal Year
07/01/93 07/02/92 09/30/93 10/01/92 12/30/93 12/31/92 03/31/94 04/01/93 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $140,619 $99,888 $174,750 $100,750 $132,589 $105,492 $139,495 $ 98,335 $587,453 $404,465
Total cost of
operations 110,142 77,980 131,749 78,701 103,497 78,669 103,789 75,485 449,177 310,835
Depreciation and
amortization 9,824 7,191 9,598 6,981 9,729 6,914 8,897 7,089 38,048 28,175
General and
administrative
expenses 8,315 8,717 10,134 9,393 9,508 7,978 11,535 10,197 39,492 36,285
Estimated loss
on future
disposition
of assets - - - - - 2,500 - - - 2,500
Operating income 12,338 6,000 23,269 5,675 9,855 9,431 15,274 5,564 60,736 26,670
Interest expense 9,486 6,871 9,029 7,668 9,101 8,622 8,759 8,240 36,375 31,401
Investment income 596 1,814 438 1,956 619 2,715 (497) 1,754 1,156 8,239
Minority interest 1,599 - - - - - - - 1,599 -
Gain (loss) on
disposition of
assets (57) 9,851 (21) (141) (1) (70) 375 (2) 296 9,638
Earnings (loss)
before income
taxes and
extraordinary item 4,990 10,794 14,657 (178) 1,372 3,454 6,393 (924) 27,412 13,146
Income tax provision 1,900 1,350 6,000 3,250 600 400 3,600 400 12,100 5,400
Earnings (loss) before
extraordinary item 3,090 9,444 8,657 (3,428) 772 3,054 2,793 (1,324) 15,312 7,746
Extraordinary item - - - (6,483) - - - - - (6,483)
Net earnings (loss) $3,090 $9,444 $8,657 $(9,911) $ 772 $ 3,054 $ 2,793 $ (1,324) $ 15,312 $ 1,263
Less: Preferred
dividends - 175 - 81 - - 538 - 538 256
Net earnings
(loss) for common $ 3,090 $ 9,269 $ 8,657$ (9,992) $ 772 $ 3,054 $ 2,255 $ (1,324) $ 14,774 $ (1,007)
Earnings (loss)
per share before
extraordinary item $ .19 $ 0.57$ .52$ (0.22)$ .05$ 0.19$ .14$ (0.08)$ .89$ 0.46
Earnings (loss)
per share $ .19 $ 0.57$ .52$ (0.62)$ .05$ 0.19$ .14$ (0.08)$ .89$ 0.06
66
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(dollars in thousands, except per share data)
(unaudited)
<S> <C> <C> <C> <C> <C>
03/31/94 04/01/93 04/02/92 03/28/91 03/29/90
Statement of Operations Data:
Total revenues $587,453 $404,465 $406,964 $446,351 $416,994
Total cost of operations 449,177 310,835 325,901 358,770 335,829
Depreciation and
amortization 38,048 28,175 31,385 32,572 31,532
General and administrative
expenses 39,492 36,285 37,885 34,532 30,406
Estimated loss on future
disposition of assets - 2,500 3,000 2,100 1,600
Operating income 60,736 26,670 8,793 18,377 17,627
Interest expense 36,375 31,401 30,035 35,940 34,171
Interest expense
-IRS settlement - - - - 14,331
Investment income 1,156 8,239 8,502 13,441 8,159
Minority interest 1,599 - - - -
Gain on disposition
of assets 296 9,638 8,721 6,649 14,628
Earnings (loss) before
income taxes and
extraordinary item 27,412 13,146 (4,019) 2,527 (8,088)
Income tax provision 12,100 5,400 1,500 1,960 9,050
Earnings (loss) before
extraordinary items 15,312 7,746 (5,519) 567 (17,138)
Extraordinary items - (6,483) - 500 -
Net earnings (loss) $ 15,312 $ 1,263$ (5,519) $ 1,067 $(17,138)
Less: Preferred dividends 538 256 700 700 700
Net earnings (loss) for
common shares $ 14,774 $ 1,007 $ (6,219) $ 367 $(17,838)
Earnings (loss) per share $ .89 $ 0.06$ (0.39)$ 0.02$ (1.11)
Common dividends per share$ - $ 1.14$ -$ -$ -
Weighted average number of
shares outstanding 16,521 16,217 16,088 16,129 16,001
Balance Sheet Data:
Cash, equivalents and
investments $151,469 $ 50,106 $ 36,823 $ 46,554 $ 41,911
Total debt (including
capitalized lease
obligations) 268,188 255,302 240,231 263,160 258,373
Stockholders' equity 130,404 18,171 39,869 46,088 45,581
Total assets 501,276 374,102 377,699 439,488 457,736
Other Financial Data:
EBITDA $ 98,784 $ 57,345 $ 43,178 $ 53,049 $ 50,759
Property acquisitions
(excluding property under
capitalized lease
obligations) 10,651 $ 8,821 $ 21,520 $ 20,227 $ 18,075
67
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
Amount at which each
portfolio of equity
security issues and
Number of shares or units Market value of each each other security
Name of issuer and principal amounts of issue at balance issue carried in the
title of each issue bonds and notes Cost of each issue sheet date balance sheet
<S> <C> <C> <C> <C>
March 31, 1994
Investments:
Bank of Nova Scotia
time deposits $ 10,000,000 $ 10,000,000 $ 10,000,0001) $ 10,000,000
U. S. Government
obligations 110,000,000 109,150,000 109,150,0001) 109,150,000
Total investments $119,150,000
TPI Enterprises, Inc.
Common Stock 1,475,144 shares $ 8,682,000 $ 8,851,0002) $ 8,682,000
April 1, 1993
TPI Enterprises, Inc.
Common Stock 1,475,144 shares $ 8,682,000 $8,851,0002) $ 8,682,000
</TABLE>
1) Due to the short-term maturities of these instruments, market value
approximates carrying value.
2) The market value is based upon the lower of the quoted market price
($6-7/8 per share at March 31, 1994 and $9-7/8 per share at April 1 , 1993)
as reported by NASDAQ, or the exercise price of $6.00 per share specified in
a purchase option agreement.
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS AND
EMPLOYEES OTHER THAN RELATED PARTIES
Gene Donald P. Thomas L.
Goodman Harris (1) Velde(2) Total
Balance, 3/28/91 $114,900 $200,000 $152,500 $467,400
Additions - 14,500 - 14,500
Balance, 4/2/92 114,900 214,500 152,500 481,900
Additions - 15,625 - 15,625
Amounts collected (61,000) - - (61,000)
Amounts written-off (53,900) - - (53,900)
Balance, 4/1/93 - 230,125 152,500 382,625
Additions - 15,000 7,847 22,847
Amounts collected - (27,000) - (27,000)
Balance, 3/31/94 $ - $218,125 $160,347 $378,472
(1) The Company loaned $200,000 to Mr. Harris in January 1987 in connection
with the purchase of his principal residence. The loan was evidenced by a
promissory note initially bearing interest at the rate of 6% per annum,
provided for the payment of all principal at maturity and was secured by a
second deed of trust on Mr. Harris' residence. Principal and all unpaid
interest on the promissory note was due January 1, 1992. The promissory note
was extended to mature on January 16, 1997, the interest rate was increased to
7.5 percent and the loan continues to be secured by a second deed of trust on
Mr. Harris' residence.
(2) The Company loaned $152,500 to Mr. Velde on June 1, 1987 in connection with
the purchase of his principal residence. The loan is evidenced by a promissory
note bearing interest at the rate of 6 1/2% per annum, provides for the payment
of all principal at maturity and is secured by a second deed of trust on Mr.
Velde's residence. Principal and all unpaid interest on the promissory note
is due June 30, 1996.
69
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(in thousands)
Balance at Balance at
beginning Additions Acquisition Sales and end of
of period at cost of partners(1)retirements Reclass period
<S> <C> <C> <C> <C> <C>
Year ended (52 weeks) March 31, 1994
Land $ 20,239 $ - $- $- $- $20,239
Buildings and improvements 83,028 609 2,540 - - 86,177
Furniture, fixtures and equipment 129,297 4,540 30,413 3,306 - 160,944
Leasehold improvements 92,118 5,502 20,556 1,680 - 116,496
Leased property under capital leases:
Buildings 56,569 5,219 7,435 1,061 - 68,162
$381,251 $ 15,870 $ 60,944 $ 6,047 $ - $452,018
Year ended (52 weeks) April 1, 1993
Land $ 23,180$ -$ - $ 849 $ (2,092) $ 20,239
Buildings and improvements 77,547 1,085 - 1,469 5,865 83,028
Furniture, fixtures and equipment 134,329 4,324 - 9,356 - 129,297
Leasehold improvements 97,636 3,412 - 3,053 (5,877) 92,118
Leased property under capital leases:
Buildings 54,669 3,931 - 2,031 - 56,569
$387,361 $ 12,752 $ - $ 16,758 $ (2,104) $381,251
Year ended (53 weeks) April 2, 1992
Land $ 20,899 $ 2,608 $ - $ 327 $ - $ 23,180
Buildings and improvements 75,083 3,291 - 827 - 77,547
Furniture, fixtures and equipment 138,260 6,158 - 10,192 103 134,329
Leasehold improvements 91,720 9,463 - 3,547 - 97,636
Leased property under capital leases:
Buildings 58,774 - - 4,105 - 54,669
Furniture, fixtures and equipment 1,813 - - 1,710 (103) -
$386,549 $ 21,520 $ - $ 20,708 $ -yy $387,361
</TABLE>
(1)On May 28, 1993, the Company purchased the remaining interest in Exhibition
Enterprises Partnership. See Note 3 to the Consolidated Financial Statements.
70
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(in thousands)
Balance at Balance at
beginning Additions Acquisition Sales and end of
of period at cost of partnership(1) retirements Reclassifications period
<S> <C> <C> <C> <C> <C> <C>
Year ended (52 weeks) March 31, 1994
Buildings and improvements $ 17,308 $3,157 $180 $- $ - $ 20,645
Furniture, fixtures and equipment 84,432 15,214 11,293 2,914 - 108,025
Leasehold improvements 35,526 7,256 3,874 1,097 - 45,559
Leased property under capital leases:
Buildings 20,004 3,447 1,627 150 - 24,928
$157,270 $ 29,074 $ 16,974 $ 4,161 $ - $199,157
Year ended (52 weeks) April 1, 1993
Buildings and improvements $ 14,449 $ 3,042$ - $ 330 $ 147 $ 17,308
Furniture, fixtures and equipment 78,695 12,349 - 6,612 - 84,432
Leasehold improvements 31,377 5,686 - 1,383 (154) 35,526
Leased property under capital leases:
Buildings 18,367 2,792 - 1,155 - 20,004
$142,888 $ 23,869 $ - $ 9,480 $(7) 157,270
Year ended (53 Weeks) April 2, 1992
Buildings and improvements $ 11,854 $ 2,812 $- $ 217 $ - $ 14,449
Furniture, fixtures and equipment 70,814 14,220 - 6,360 21 78,695
Leasehold improvements 26,793 5,699 - 1,115 - 31,377
Leased property under capital leases:
Buildings 17,367 2,890 - 1,890 - 18,367
Furniture, fixtures and equipment 693 208 - 880 (21) -
$127,521 $ 25,829$ - $ 10,462 $ - $142,888
</TABLE>
(1)On May 28, 1993, the Company purchased the remaining interest in Exhibition
Enterprises Partnership. See Note 3 to the Consolidated Financial Statements.
71
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other End of
of Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C>
Year ended (52 Weeks) March 31, 1994
Allowance for doubtful accounts $ 611 $ 633 $ 492 (1) $ 466 $ 1,270
Self insurance reserves 8,163 11,760 - 8,918 11,005
Reserve for future dispositions 3,653 - 2,055 (2) 997 4,711
Year ended (52 Weeks) April 1, 1993
Allowance for doubtful accounts $ 900 $ - $ - $ 289 $ 611
Self insurance reserves 7,526 9,012 - 8,375 8,163
Reserve for future dispositions 3,013 2,500 750 (3) 2,610 3,653
Year ended (53 Weeks) April 2, 1992
Allowance for doubtful accounts $ - $ 900 $ - $ - $ 900
Self insurance reserves 5,138 9,912 - 7,524 7,526
Reserve for future dispositions 1,595 3,000 - 1,582 3,013
</TABLE>
(1) Represents a reclassification from accrued expenses and other liabilities.
(2) Represents the amounts resulting from capital lease adjustments and a
charge from an expected loss relating to a corporate joint venture.
(3) Relates to a one-time charge resulting from the consolidation of two
divisions.
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE IX - SUPPLEMENTARY SHORT-TERM BORROWINGS INFORMATION
(in thousands)
Category of Balance Weighted Maximum amount Average amount Weighted average
short-term at end of average outstanding during outstanding during interest rate
borrowings period interest rate the period the period (1) during the period (2)
<S> <C> <C> <C> <C> <C>
March 31, 1994
Line of credit
with bank - - 30,000 3,462 4.8%
April 1, 1993
Line of credit
with bank - - 54,000 15,398 6.1%
April 2, 1992
Line of credit
with bank 54,000 6.5% 73,000 53,372 7.4%
</TABLE>
(1) Loan balances times number of days outstanding divided by days in the
fiscal year.
(2) Interest expense for the year divided by average loan balance for the
fiscal year.
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
Charged to Costs and Expenses
Year Ended
03/31/94 04/01/93 04/02/92
<S> <C> <C> <C>
Maintenance and repairs $ 10,732 $ 6,943 $ 7,616
Amortization of other assets 7,782 4,306 5,556
Property taxes 11,945 9,131 9,695
Taxes, other than payroll, property and income taxes 2,586 1,127 856
Advertising 17,179 12,858 17,367
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
*2. Articles of Merger dated March 31, 1994 between American
Multi-Cinema, Inc. and its wholly-owned subsidiaries Cinema
Enterprises, Inc. and Cinema Enterprises II, Inc. and related Plan
and Agreement of Liquidation and Merger
3.1. Certificate of Incorporation of AMC Entertainment Inc. (1)
3.2. Certificate of Designations relating to $1.75 Cumulative Convertible
Preferred Stock (2)
3.3. Bylaws of AMC Entertainment Inc. (1)
3.4. Articles of Incorporation, as amended, of American Multi-Cinema,
Inc. (3)
3.5. Bylaws of American Multi-Cinema, Inc. (3)
3.6. Certificate of Incorporation, as amended, of AMC Philadelphia, Inc.
(3)
3.7. Bylaws of AMC Philadelphia, Inc. (3)
3.8. Certificate of Incorporation, as amended, of AMC Realty, Inc. (3)
3.9. Bylaws of AMC Realty, Inc. (3)
3.10. Articles of Incorporation, as amended, of Conservco, Inc. (3)
3.11. Bylaws of Conservco, Inc. (3)
3.12. Certificate of Incorporation, as amended, of AMC Canton Realty, Inc.
(3)
3.13. Bylaws of AMC Canton Realty, Inc. (3)
3.14. Certificate of Incorporation, as amended, of Budco Theatres, Inc.
(3)
3.15. Bylaws of Budco Theatres, Inc. (3)
3.16. Articles of Incorporation of AMC Film Marketing, Inc. (4)
3.17. Bylaws of AMC Film Marketing, Inc. (4)
4.1.(a) Indenture among AMC Entertainment Inc., as issuer, American
Multi-Cinema, Inc., AMC Realty, Inc., Conservco, Inc., AMC Canton
Realty, Inc., AMC Philadelphia, Inc., Budco Theatres, Inc. and
Concord Cinema, Inc. (collectively "Guarantors") and United States
Trust Company of New York, as Trustee, respecting AMC Entertainment
Inc.'s 11 7/8% Senior Notes due 2000.(5)
4.1.(b) First Supplemental Indenture dated as of March 31, 1993 pursuant to
which AMC Film Marketing, Inc. became a Guarantor (4)
*4.1(c) Fourth Supplemental Indenture dated as of March 31, 1994 pursuant
to which American Multi-Cinema, Inc. assumed the obligations of
Cinema Enterprises, Inc., Cinema Enterprises II, Inc. and Exhibition
Enterprises Partnership under the Senior Note Indenture and related
guarantees of such entities.
4.2.(a) Indenture among AMC Entertainment Inc., as issuer, American
Multi-Cinema, Inc., AMC Realty, Inc., Conservco, Inc., AMC Canton
Realty, Inc., AMC Philadelphia, Inc., Budco Theatres, Inc. and
Concord Cinema, Inc. (collectively "Guarantors") and The Bank of New
York, as Trustee, respecting AMC Entertainment Inc.'s 12 5/8% Senior
Subordinated Notes due 2002.(5)
4.2.(b) First Supplemental Indenture dated as of March 31, 1993 pursuant to
which AMC Film Marketing, Inc. became a Guarantor (4)
*4.2.(c) Fourth Supplemental Indenture dated as of March 31, 1994 pursuant
to which American Multi-Cinema, Inc. assumed the obligations of
Cinema Enterprises, Inc., Cinema Enterprises II, Inc. and Exhibition
Enterprises Partnership under the Senior Subordinated Note Indenture
and related quarantees of such entities.
4.3.(a) Loan Agreement dated August 10, 1992 among American Multi-Cinema,
Inc., as the borrower and AMC Entertainment Inc., as the guarantor,
and the Bank of Nova Scotia and Bank of America National Trust and
Savings Association ("New Credit Facility"). (5)
4.3.(b) First Amendment to Loan Agreement dated as of March 31, 1993 (4)
4.3.(c) Second Amendment to Loan Agreement dated as of May 28, 1993 (4)
4.4. Guarantee by AMC Entertainment Inc. of obligations under New Credit
Facility. (5)
4.5.(a) Guarantee by AMC Philadelphia, Inc., AMC Realty Inc., Conservco,
Inc., AMC Canton Realty, Inc., Budco Theatres, Inc., and Concord
Cinema, Inc. of obligations under New Credit Facility. (5)
4.5.(b) Guarantee by AMC Film Marketing, Inc. of obligations under New
Credit Facility (4)
4.6. Subordination Agreement dated August 10, 1992 between AMC
Entertainment Inc. and The Bank of Nova Scotia. (5)
4.7. In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, certain
instruments respecting long term debt of the Registrant have been
omitted but will be furnished to the Commission upon request.
10.1. AMC Entertainment Inc. 1983 Stock Option Plan. (6)
10.2. Federal Income Tax Allocation Agreement dated as of July 1, 1983,
between Durwood, Inc. and AMC Entertainment Inc. (6)
10.3. AMC Entertainment Inc. 1984 Employee Stock Purchase Plan. (7)
10.4. AMC Entertainment Inc. 1984 Employee Stock Option Plan. (8)
10.5. American Multi-Cinema, Inc. Savings Plan, a defined contribution
401(k) plan, restated January 1, 1989, as amended. (3)
10.6. Defined Benefit Retirement Income Plan for Certain Employees of
American Multi-Cinema, Inc. dated January 1, 1989, as amended. (3)
10.7. Employment Agreement dated August 1, 1989, between AMC Entertainment
Inc. and Donald P. Harris. (3)
10.8. Letter Agreement dated November 13, 1991, among AMC Entertainment
Inc., American Multi-Cinema, Inc. and Peter C. Brown. (3)
10.9. Disability Compensation Provisions respecting Stanley H. Durwood.
(3)
10.10. Executive Medical Expense Reimbursement and Supplemental Accidental
Death or Dismemberment Insurance Plan, as restated effective as of
February 1, 1991. (3)
10.11. Film Marketing Incentive Plan applicable to Donald P. Harris (3)
10.12. Division Operations Incentive Program (3)
10.13. Management Agreement dated December 30, 1986, between AMC
Philadelphia, Inc. and H. Donald Busch ("Busch"). (9)
10.14. Stockholders' Agreement dated December 30, 1986, between AMC
Philadelphia, Inc. and Busch. (9)
10.15. Letter of Agreement dated November 25, 1986, between American
Multi-Cinema, Inc. and Busch. (9)
10.16. Letter of Agreement dated December 30, 1986, between American
Multi-Cinema, Inc. and Busch. (9)
10.17. Standstill Agreement entered into as of March 4, 1991, by and among
TPI Enterprises, Inc., AMC Entertainment Inc., American
Multi-Cinema, Inc., Durwood, Inc., Stanley H. Durwood and Edward D.
Durwood. (10)
10.18. Stock Sale Agreement dated March 4, 1991, by and between American
Multi-Cinema, Inc. and C&C Investment Holdings, L.P. (11)
10.19.(a) Option Agreement dated March 4, 1991, by and between American
Multi-Cinema, Inc. and C&C Investment Holdings, L.P. (the "Option
Agreement") (11)
10.19.(b) Amendment dated April 25, 1991, to Option Agreement. (3)
10.20. Real Estate Contract dated March 30, 1992, among Philip M.
Singleton, C. Suzanne Singleton and American Multi-Cinema, Inc. (3)
10.21. Promissory Note Secured by Deed of Trust dated January 16, 1992,
made by Donald P. Harris and Susan H. Harris payable to American
Multi-Cinema, Inc. (5)
10.22. Second Mortgage dated January 16, 1992, among Donald P. Harris,
Susan H. Harris and American Multi-Cinema, Inc. (5)
10.23. AMC Entertainment Inc. 1985 Employee Stock Purchase Plan. (10)
10.24. Partnership Interest Purchase Agreement dated May 28, 1993 among
Exhibition Enterprises Partnership, Cinema Enterprises, Inc., Cinema
Enterprises II, Inc., American Multi-Cinema, Inc., TPI
Entertainment, Inc. and TPI Enterprises, Inc. (4)
10.25. Mutual Release and Indemnification Agreement dated May 28, 1993
among Exhibition Enterprises Partnership, Cinema Enterprises, Inc.,
American Multi-Cinema, Inc., TPI Entertainment, Inc. and TPI
Enterprises, Inc. (4)
10.26. Assignment and Assumption Agreement between Cinema Enterprises II,
Inc. and TPI Entertainment, Inc. (4)
10.27. Confidentiality Agreement dated May 28, 1993 among TPI
Entertainment, Inc., TPI Enterprises, Inc., Exhibition Enterprises
Partnership, Cinema Enterprises, Inc., Cinema Enterprises II, Inc.
and American Multi-Cinema, Inc. (4)
10.28. Termination Agreement dated May 28, 1993 among TPI Entertainment,
Inc., TPI Enterprises, Inc. Exhibition Enterprises Partnership,
American Multi-Cinema, Inc., Cinema Enterprises, Inc., AMC
Entertainment Inc., Durwood, Inc., Stanley H. Durwood and Edward D.
Durwood. (4)
10.29. Promissory Note dated June 16, 1993, made by Thomas L. Velde and
Katherine G. Terwilliger, husband and wife, payable to American
Multi-Cinema, Inc. (4)
10.30. Second Mortgage dated June 16, 1993, among Thomas L. Velde,
Katherine G. Terwilliger and American Multi-Cinema, Inc. (4)
10.31. Summary of American Multi-Cinema, Inc. Executive Incentive Program
(12)
10.32. AMC Non-Qualified Deferred Compensation Plans (1)
*11. Computation of Per Share Earnings.
16. Letter regarding change in certifying accountant. (5)
22. Subsidiaries of AMC Entertainment Inc. (12)
23.1 Consent of Deloitte & Touche to the use of the independent auditor's
report incorporated in Part 8 of this annual report.
23.2. Consent of Coopers & Lybrand to the use of their independent
auditors' report incorporated in Part 8 of this annual report.
__________________________
(1) Incorporated by reference from Amendment No. 2 to AMCE's
Registration Statement on Form S-2 (File No. 33-51693) filed February 18, 1994.
(2) Incorporated by reference from AMCE's Form 8-K (File No. 01-12429)
dated April 7, 1994.
(3) Incorporated by reference from AMCE's Form S-1 (File No. 33-48586)
filed June 12, 1992, as amended.
(4) Incorporated by reference from AMCE's Form 10-K report for fiscal
year ended April 1, 1993 (File No. 01-12429).
(5) Incorporated by reference from AMCE's Form 10-Q (File No. 01-12429)
dated July 2, 1992.
(6) Incorporated by reference from AMCE's Form S-1 (File No. 2-84675)
filed June 22, 1983.
(7) Incorporated by reference from AMCE's Form S-8 (File No. 2-97523)
filed July 3, 1984.
(8) Incorporated by reference from AMCE's S-8 and S-3 (File No. 2-97522)
filed July 3, 1984.
(9) Incorporated by reference from AMCE's From 8-K File (No. 0-12429)
dated December 30, 1986.
(10) Incorporated by reference from AMCE's Form S-8 (File No. 2-92048)
filed July 3, 1985.
(11) Incorporated by reference from AMCE's Form 8-K (File No. 0-12429)
dated March 4, 1991.
(12) Incorporated by reference from AMCE's Registration Statement on Form
S-2 (File No. 33-51693) filed December 23, 1993.
* - Filed herewith
<PAGE>
PLAN AND AGREEMENT OF LIQUIDATION AND MERGER
This Plan and Agreement of Liquidation and Merger (the "Plan") is
made on March 29, 1994, by American Multi-Cinema, Inc., a Missouri corporation
("AMC"), Cinema Enterprises, Inc. a Missouri corporation ("CENI") and Cinema
Enterprises II, Inc., a Missouri corporation ("CENI II"). On the Effective
Date (as defined in paragraph 4 below), AMC shall own all of the shares of the
sole class of stock of each of CENI and CENI II. It is intended that the
merger contemplated by the Plan shall constitute a liquidation of each of CENI
and CENI II in which no taxable gain or loss is recognized pursuant to Section
332 of the Internal Revenue Code of 1986, as amended. The terms and conditions
of the Plan are as follows.
1.Names of Corporations. The names of the corporations proposing
to merge are:
American Multi-Cinema, Inc.
Cinema Enterprises, Inc.
and
Cinema Enterprises II, Inc.
2.Merger. On the Effective Date AMC, CENI and CENI II shall merge
into a single corporation by CENI and CENI II merging into AMC.
3.Name of Surviving Corporation. The name of American Multi-Cinema,
Inc., which is to be the surviving corporation, shall not be changed as a
result of the merger.
4.Effective Date. The merger shall be effected at the close of
business on March 31, 1994 (the "Effective Date").
5.Effect of Merger. (a) On the Effective Date, the separate
existence of each of CENI and CENI II shall cease, except to the extent that
its separate existence may be continued by law. Upon the cessation of
existence of CENI and CENI II, AMC will be the sole general partner of
Exhibition Enterprises Partnership, a New York general partnership ("EEP"), of
which each of CENI and CENI II, prior to the effectiveness of the merger, owned
a 50% general partnership interest, and EEP will cease to exist by operation
of law. The existence of AMC shall continue unaffected and unimpaired by the
merger, and AMC shall after the Effective Date have all of the rights,
privileges, immunities and powers, and shall be subject to all of the duties
and liabilities, of a corporation organized under The General and Business
Corporation Law of Missouri.
(b)On the Effective Date, AMC shall have and thereafter possess all
the rights, privileges, immunities, powers and franchises, of a public as well
as of a private nature, of each of CENI, CENI II and EEP, and all property,
real, personal and mixed, and all debts due on whatever account and all other
choses in action, and every other interest of or belonging to or due to any of
CENI, CENI II and EEP shall be taken and deemed to be transferred to and vested
or remain in AMC without further act or deed (and the title to any real estate,
or any interest therein, vested in any of the merging corporations shall not
revert or be in any way impaired by reason of the merger).
(c)Upon the Effective Date and thereafter, AMC shall be responsible
and liable for all the liabilities and obligations of each of CENI, CENI II and
EEP, and any claim existing or action or proceeding pending by or against any
of such entities may be prosecuted to judgment as if such merger
had not taken place or, in the case of CENI, CENI II or EEP, AMC may be
substituted in its place. Neither the rights of creditors nor any liens upon
the property of any of the merging corporations or EEP shall be impaired by the
merger.
(d)The respective officers of CENI, CENI II and EEP and the board
of managers of EEP are hereby authorized to execute all deeds, assignments and
other documents which may be necessary to effect the full and complete transfer
of the properties of such corporations and general partnership to AMC. The
officers of AMC are hereby authorized to execute and deliver any and all
documents which may be required of it in order for it to assume or otherwise
comply with any liability or obligation of CENI, CENI II or EEP. If at any
time AMC shall determine that any further documents are necessary or desirable
to vest in it, according to the terms hereof, the title to any property,
rights, privileges, immunities, powers or franchises of CENI, CENI II or EEP,
then the officers of such entities and the board of managers of EEP shall
execute and deliver all such documents and do all things necessary to vest in
and confirm to AMC title and possession to all such property, rights,
privileges, immunities, powers and franchises, and to otherwise carry out the
purposes of this Plan.
6.Cancellation of Shares. (a) The manner and basis of cancelling
the shares of stock of each of the merging corporations shall be as follows:
(i)On the Effective Date, each share of the authorized 6 1/4 cents
par value common stock of AMC, whether or not issued and outstanding, shall
continue to be one share of the 6 1/4 cents par value common stock of AMC.
(ii)On the Effective Date, each of the 1,000 shares of the $1.00 par
value common stock of CENI which are issued and outstanding (whether or not
such shares are in all respects validly issued) and owned of record by AMC
shall be cancelled.
(iii)On the Effective Date, each of the 1,000 shares of the $1.00
par value common stock of CENI II which are issued and outstanding (whether or
not such shares are in all respects validly issued) and owned of record by AMC
shall be cancelled.
7.Articles of Incorporation; Bylaws; Directors; Officers. The
Articles of Incorporation and Bylaws of AMC shall not be changed by or as a
result of the merger. The directors and officers of AMC prior to the merger
shall continue in such offices after the merger.
8.Further Action. Each of the merging corporations shall take all
actions and do all things necessary, proper, or advisable under the laws of the
State of Missouri to consummate and make effective the merger contemplated
herein.<PAGE>
IN WITNESS WHEREOF, this Plan and Agreement of Liquidation and
Merger has been signed on behalf of American Multi-Cinema, Inc. by Edward D.
Durwood, its President, on behalf of Cinema Enterprises, Inc. by Edward D.
Durwood, its President, and on behalf of Cinema Enterprises II, Inc. by Edward
D. Durwood, its President, and the corporate seal of each corporation has been
affixed hereto and attested to by the Secretary of each corporation,
respectively, on the date first above written.
AMERICAN MULTI-CINEMA, INC.
By:/s/ Edward D. Durwood
Edward D. Durwood, President
(SEAL)
ATTEST:
/s/ Nancy L. Gallagher
Nancy L. Gallagher, Secretary
CINEMA ENTERPRISES, INC.
By:/s/ Edward D. Durwood
Edward D. Durwood, President
(SEAL)
ATTEST:
/s/ Nancy L. Gallagher
Nancy L. Gallagher, Secretary
CINEMA ENTERPRISES II, INC.
By:/s/ Edward D. Durwood
Edward D. Durwood, President
(SEAL)
ATTEST:
/s/ Nancy L. Gallagher
Nancy L. Gallagher, Secretary
<PAGE>
AMC ENTERTAINMENT INC.
and
the Existing Guarantors Named Herein
and
THE BANK OF NEW YORK,
as Trustee
FOURTH SUPPLEMENTAL INDENTURE,
Dated as of March 31, 1994
to
INDENTURE
Dated as of August 1, 1992,
As Supplemented by
THE FIRST SUPPLEMENTAL INDENTURE,
Dated as of March 31, 1993
and by
THE SECOND SUPPLEMENTAL INDENTURE,
Dated as of May 28, 1993
and by
THE THIRD SUPPLEMENTAL INDENTURE,
Dated as of May 28, 1993
$100,000,000
12 5/8% Senior Subordinated Notes Due 2002
FOURTH SUPPLEMENTAL INDENTURE, dated as of March 31, 1994 (the
"Fourth Supplemental Indenture"), among AMC ENTERTAINMENT INC., a Delaware
corporation (the "Company"), AMERICAN MULTI-CINEMA, INC., a Missouri
corporation ("AMC"), AMC REALTY, INC., a Delaware corporation, CONSERVCO, INC.,
a Missouri corporation, AMC CANTON REALTY, INC., a Delaware corporation, AMC
PHILADELPHIA, INC., a Delaware corporation, BUDCO THEATRES, INC., a
Pennsylvania corporation, CONCORD CINEMA, INC., a Delaware corporation, and AMC
FILM MARKETING, INC., a Missouri corporation (collectively, the "Existing
Guarantors" and each an "Existing Guarantor"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee"), to the Indenture, dated
as of August 1, 1992, as supplemented by the First Supplemental Indenture,
dated as of March 31, 1993, the Second Supplemental Indenture dated May 28,
1993, and the Third Supplemental Indenture dated May 28, 1993 (collectively,
the "Indenture"), among the Company, as issuer, the Existing Guarantors, Cinema
Enterprises, Inc., a Missouri corporation ("CENI"), Cinema Enterprises II,
Inc., a Missouri corporation ("CENI II"), Exhibition Enterprises Partnership,
a New York general partnership ("EEP") and the Trustee.
WHEREAS, AMC, the Existing Guarantors, CENI, CENI II and EEP have
each heretofore guaranteed (the "Guarantee") the $100,000,000 aggregate
principal amount of 12 5/8% Senior Subordinated Notes due 2002 (the
"Securities") of the Company, issued pursuant to the Indenture; and
WHEREAS, there have been issued and are now outstanding under the
Indenture Securities in the aggregate principal amount of $100,000,000; and
WHEREAS, CENI and CENI II, each of which is a wholly-owned
subsidiary of AMC and which together comprise all of the partners of EEP,
desire to merge into and with AMC, with AMC being the surviving corporation,
which merger will result in the termination by operation of law of the
existence of each of CENI, CENI II and EEP; and
WHEREAS, pursuant to Section 5.1(b)(ii), such merger is not
permitted unless AMC assumes the obligations of each of CENI, CENI II and EEP
under the Indenture and the Guarantee of each such entity; and
WHEREAS, AMC desires by this Fourth Supplemental Indenture, pursuant
to and as contemplated by Section 5.1 and 9.1 of the Indenture, to expressly
assume the obligations of CENI, CENI II and EEP under the Indenture and the
Guarantee of each such entity; and
WHEREAS, pursuant to Section 5.1(b)(iv), such merger is not
permitted unless each Existing Guarantor reaffirms its obligations under the
Indenture; and
WHEREAS, each of the Existing Guarantors desires by this Fourth
Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and
9.1 of the Indenture, to expressly reaffirm its obligations as a Guarantor
under the Indenture and all of the covenants, agreements and undertakings of
a Guarantor thereunder, including Article XI thereof; and
WHEREAS, the execution and delivery of this Fourth Supplemental
Indenture has been authorized by a resolution of the Board of Directors of each
of the Company and the Existing Guarantors; and
WHEREAS, upon the execution and delivery hereof, all conditions and
requirements necessary to make this Fourth Supplemental Indenture a valid,
binding and legal instrument in accordance with its terms shall have been
performed and fulfilled;
NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the other and for the equal and ratable benefit of
the Holders of the Securities, as follows:
ARTICLE I
ASSUMPTION AND REAFFIRMATION OF OBLIGATIONS
Section 1.1.Assumption of Obligations of CENI, CENI II and EEP. AMC
hereby assumes all of the obligations of each of CENI, CENI II and EEP under
the Indenture and under the Guarantee of each such entity.
Section 1.2.Reaffirmation of Existing Guarantors' Obligations. AMC
and the Existing Guarantors each hereby confirms the due and punctual
performance of its Guarantee and every covenant in the Indenture on the part
of AMC and each Existing Guarantor to be performed or observed.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1.Terms Defined. For all purposes of this Fourth
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Fourth Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.
Section 2.2.Indenture. Except as supplemented hereby, the Indenture
and the Securities (including the Guarantees thereof) are in all respects
ratified and confirmed and all the terms shall remain in full force and effect.
SECTION 2.3. GOVERNING LAW. THIS FOURTH SUPPLEMENTAL INDENTURE
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK,
AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FOURTH
SUPPLEMENTAL INDENTURE.
Section 2.4.Successors. All agreements of AMC and each of the
Existing Guarantors in this Fourth Supplemental Indenture shall bind the
successors of each such corporation.
Section 2.5.Multiple Counterparts. The parties hereto may sign
multiple counterparts of this Fourth Supplemental Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
Section 2.6.Effectiveness. The provisions of this Fourth
Supplemental Indenture will take effect immediately upon its execution and
delivery by the Trustee in accordance with the provisions of Section 9.6 of the
Indenture.
Section 2.7.Trustee Disclaimer. The Trustee accepts the supplement
to the Indenture effected by this Fourth Supplemental Indenture and agrees to
execute the trust created by the Indenture as hereby supplemented, but only
upon the terms and conditions set forth in the Indenture, including the terms
and provisions defining and limiting the liabilities and responsibilities of
the Trustee, which terms and provisions shall in like manner define and limit
its liabilities and responsibilities in the performance of the trust created
by the Indenture hereby supplemented. Without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for
or with respect to any of the recitals or statements contained herein, all of
which recitals or statements are made solely by AMC and the Existing
Guarantors. Except to the extent that they relate to action taken by the
Trustee, the Trustee shall not be responsible in any manner whatsoever for or
with respect to (i) the validity, efficacy or sufficiency of this Fourth
Supplemental Indenture or any of the terms or provisions hereof, (ii) the
proper authorization hereof by the Company, AMC and the Existing Guarantors by
corporate action or otherwise, (iii) the due execution hereof by the Company,
AMC and the Existing Guarantors, or (iv) the consequences (direct or indirect
and whether deliberate or inadvertent) of any supplement herein provided for,
and the Trustee makes no representation with respect to any such matters.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed, all as of the date first written
above.
ATTEST: AMC ENTERTAINMENT INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President,
Chief Financial Officer and Treasurer
ATTEST: THE BANK OF NEW YORK,
as Trustee
/s/ Lucille Firrincieli
By:/s/ Mary Jane Morrissey
Mary Jane Morrissey
Assistant Vice President
ATTEST: AMERICAN MULTI-CINEMA, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President, Chief Financial Officer and Treasurer
ATTEST: AMC REALTY, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: CONSERVCO, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: AMC CANTON REALTY, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: AMC PHILADELPHIA, INC.
/s/ Nancy L. GallagherBy:
Peter C. Brown
Senior Vice President, Chief Financial Officer and Treasurer
ATTEST: BUDCO THEATRES, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President, Chief Financial Officer and Treasurer
ATTEST: CONCORD CINEMA, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President, Chief Financial Officer and Treasurer
ATTEST: AMC FILM MARKETING, INC.
/s/ Nancy L. GallagherBy:
Peter C. Brown
Senior Vice President and Treasurer
<PAGE>
AMC ENTERTAINMENT INC.
and
the Existing Guarantors Named Herein
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
FOURTH SUPPLEMENTAL INDENTURE,
Dated as of March 31, 1994
to
INDENTURE
Dated as of August 1, 1992,
As Supplemented by
THE FIRST SUPPLEMENTAL INDENTURE,
Dated as of March 31, 1993
and by
THE SECOND SUPPLEMENTAL INDENTURE,
Dated as of May 28, 1993
and by
THE THIRD SUPPLEMENTAL INDENTURE,
Dated as of May 28, 1993
$100,000,000
11 7/8% Senior Notes Due 2000
FOURTH SUPPLEMENTAL INDENTURE, dated as of March 31, 1994 (the
"Fourth Supplemental Indenture"), among AMC ENTERTAINMENT INC., a Delaware
corporation (the "Company"), AMERICAN MULTI-CINEMA, INC., a Missouri
corporation ("AMC"), AMC REALTY, INC., a Delaware corporation, CONSERVCO, INC.,
a Missouri corporation, AMC CANTON REALTY, INC., a Delaware corporation, AMC
PHILADELPHIA, INC., a Delaware corporation, BUDCO THEATRES, INC., a
Pennsylvania corporation, CONCORD CINEMA, INC., a Delaware corporation, and AMC
FILM MARKETING, INC., a Missouri corporation (collectively, the "Existing
Guarantors" and each an "Existing Guarantor"), and United States Trust Company
of New York, a New York banking corporation, as Trustee (the "Trustee"), to the
Indenture, dated as of August 1, 1992, as supplemented by the First
Supplemental Indenture, dated as of March 31, 1993, the Second Supplemental
Indenture dated May 28, 1993, and the Third Supplemental Indenture dated May
28, 1993 (collectively, the "Indenture"), among the Company, as issuer, the
Existing Guarantors, Cinema Enterprises, Inc., a Missouri corporation ("CENI"),
Cinema Enterprises II, Inc., a Missouri corporation ("CENI II"), Exhibition
Enterprises Partnership, a New York general partnership ("EEP") and the
Trustee.
WHEREAS, AMC, the Existing Guarantors, CENI, CENI II and EEP have
each heretofore guaranteed (the "Guarantee") the $100,000,000 aggregate
principal amount of 11 7/8% Senior Notes due 2000 (the "Securities") of the
Company, issued pursuant to the Indenture; and
WHEREAS, there have been issued and are now outstanding under the
Indenture Securities in the aggregate principal amount of $100,000,000; and
WHEREAS, CENI and CENI II, each of which is a wholly-owned
subsidiary of AMC and which together comprise all of the partners of EEP,
desire to merge into and with AMC, with AMC being the surviving corporation,
which merger will result in the termination by operation of law of the
existence of each of CENI, CENI II and EEP; and
WHEREAS, pursuant to Section 5.1(b)(ii), such merger is not
permitted unless AMC assumes the obligations of each of CENI, CENI II and EEP
under the Indenture and the Guarantee of each such entity; and
WHEREAS, AMC desires by this Fourth Supplemental Indenture, pursuant
to and as contemplated by Section 5.1 and 9.1 of the Indenture, to expressly
assume the obligations of CENI, CENI II and EEP under the Indenture and the
Guarantee of each such entity; and
WHEREAS, pursuant to Section 5.1(b)(iv), such merger is not
permitted unless each Existing Guarantor reaffirms its obligations under the
Indenture; and
WHEREAS, each of the Existing Guarantors desires by this Fourth
Supplemental Indenture, pursuant to and as contemplated by Sections 5.1 and
9.1 of the Indenture, to expressly reaffirm its obligations as a Guarantor
under the Indenture and all of the covenants, agreements and undertakings of
a Guarantor thereunder, including Article XI thereof; and
WHEREAS, the execution and delivery of this Fourth Supplemental
Indenture has been authorized by a resolution of the Board of Directors of each
of the Company and the Existing Guarantors; and
WHEREAS, upon the execution and delivery hereof, all conditions and
requirements necessary to make this Fourth Supplemental Indenture a valid,
binding and legal instrument in accordance with its terms shall have been
performed and fulfilled;
NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the other and for the equal and ratable benefit of
the Holders of the Securities, as follows:
ARTICLE I
ASSUMPTION AND REAFFIRMATION OF OBLIGATIONS
Section 1.1.Assumption of Obligations of CENI, CENI II and EEP. AMC
hereby assumes all of the obligations of each of CENI, CENI II and EEP under
the Indenture and under the Guarantee of each such entity.
Section 1.2.Reaffirmation of Existing Guarantors' Obligations. AMC
and the Existing Guarantors each hereby confirms the due and punctual
performance of its Guarantee and every covenant in the Indenture on the part
of AMC and each Existing Guarantor to be performed or observed.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1.Terms Defined. For all purposes of this Fourth
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Fourth Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.
Section 2.2.Indenture. Except as supplemented hereby, the Indenture
and the Securities (including the Guarantees thereof) are in all respects
ratified and confirmed and all the terms shall remain in full force and effect.
SECTION 2.3. GOVERNING LAW. THIS FOURTH SUPPLEMENTAL INDENTURE
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK,
AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FOURTH
SUPPLEMENTAL INDENTURE.
Section 2.4.Successors. All agreements of AMC and each of the
Existing Guarantors in this Fourth Supplemental Indenture shall bind the
successors of each such corporation.
Section 2.5.Multiple Counterparts. The parties hereto may sign
multiple counterparts of this Fourth Supplemental Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
Section 2.6.Effectiveness. The provisions of this Fourth
Supplemental Indenture will take effect immediately upon its execution and
delivery by the Trustee in accordance with the provisions of Section 9.6 of the
Indenture.
Section 2.7.Trustee Disclaimer. The Trustee accepts the supplement
to the Indenture effected by this Fourth Supplemental Indenture and agrees to
execute the trust created by the Indenture as hereby supplemented, but only
upon the terms and conditions set forth in the Indenture, including the terms
and provisions defining and limiting the liabilities and responsibilities of
the Trustee, which terms and provisions shall in like manner define and limit
its liabilities and responsibilities in the performance of the trust created
by the Indenture hereby supplemented. Without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for
or with respect to any of the recitals or statements contained herein, all of
which recitals or statements are made solely by AMC and the Existing
Guarantors. Except to the extent that they relate to action taken by the
Trustee, the Trustee shall not be responsible in any manner whatsoever for or
with respect to (i) the validity, efficacy or sufficiency of this Fourth
Supplemental Indenture or any of the terms or provisions hereof, (ii) the
proper authorization hereof by the Company, AMC and the Existing Guarantors by
corporate action or otherwise, (iii) the due execution hereof by the Company,
AMC and the Existing Guarantors, or (iv) the consequences (direct or indirect
and whether deliberate or inadvertent) of any supplement herein provided for,
and the Trustee makes no representation with respect to any such matters.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed, all as of the date first written
above.
ATTEST: AMC ENTERTAINMENT INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President,
Chief Financial Officer and Treasurer
ATTEST: UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
/s/ Christopher J. Grell
By:/s/ James E. Logan
James E. Logan
Vice President
ATTEST: AMERICAN MULTI-CINEMA, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President,
Chief Financial Officer and Treasurer
ATTEST: AMC REALTY, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: CONSERVCO, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: AMC CANTON REALTY, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President and Treasurer
ATTEST: AMC PHILADELPHIA, INC.
/s/ Nancy L. GallagherBy:
Peter C. Brown
Senior Vice President, Chief Financial Officer and Treasurer
ATTEST: BUDCO THEATRES, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President,
Chief Financial Officer and Treasurer
ATTEST: CONCORD CINEMA, INC.
/s/ Nancy L. GallagherBy:/s/ Peter C. Brown
Peter C. Brown
Senior Vice President,
Chief Financial Officer and Treasurer
ATTEST: AMC FILM MARKETING, INC.
/s/ Nancy L. GallagherBy:
Peter C. Brown
Senior Vice President and Treasurer
