UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-8747
AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1304369
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 West 14th Street
Kansas City, Missouri 64105-1977
(Address of principal executive offices) (Zip Code)
(816) 221-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No ________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of Shares
Title of Each Class of Common Stock Outstanding as of October 2, 1997
Common Stock, 66 2/3 cents par value 13,388,184
Class B Stock, 66 2/3 cents par value 5,015,657
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
INDEX
Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 21
PAGE
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Thirteen Twenty-six
Weeks Ended Weeks Ended
October 2,September 26, October 2,September 26,
1997 1996 1997 1996
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Admissions $144,719 $133,826 $270,717 $240,111
Concessions 66,355 61,940 125,427 111,771
Other 8,554 6,670 17,907 12,481
------- ------- ------- -------
Total revenues 219,628 202,436 414,051 364,363
Expenses
Film exhibition costs 80,838 74,130 151,980 130,269
Concession costs 9,851 9,555 19,907 18,080
Other 79,819 71,908 158,252 140,065
------- ------- ------- -------
Total cost of
operations 170,508 155,593 330,139 288,414
General and administrative 12,097 11,647 26,852 24,672
Depreciation and
amortization 16,522 12,740 32,889 24,414
Impairment of long-lived
assets 46,998 - 46,998 -
------- ------- ------- -------
Total expenses 246,125 179,980 436,878 337,500
------- ------- ------- -------
Operating income (loss) (26,497) 22,456 (22,827) 26,863
Other expense (income)
Interest expense
Corporate borrowings 7,062 2,278 12,961 4,613
Capital lease obligations 2,343 2,574 4,689 5,148
Investment income (509) (139) (681) (321)
Loss (gain) on disposition
of assets (1,318) 49 (2,496) 31
------- ------- ------- -------
Earnings (loss) before
income taxes (34,075) 17,694 (37,300) 17,392
Income tax provision (13,714) 7,125 (15,100) 7,000
------- ------- ------- -------
Net earnings (loss) $ (20,361)$ 10,569 $ (22,200) $ 10,392
======= ======= ======== =======
Preferred dividends 1,283 1,454 2,651 3,000
------- ------- ------- -------
Net earnings (loss)
for common shares $ (21,644) $9,115 $ (24,851) $7,392
======= ======= ======== =======
Earnings (loss) per share:
Primary $ (1.18) $.51 $ (1.37) $.42
======= ======= ======== =======
Fully diluted $ (1.18) $.44 $ (1.37) $.42
======= ======= ======== =======
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
October 2, April 3,
1997 1997
-------- --------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and equivalents $ 25,563 $ 24,715
Receivables, net of allowance for
doubtful accounts of
$777 as of October 2, 1997 and
$704 as of April 3, 1997 83,416 42,188
Other current assets 17,894 16,769
Total current assets 126,873 83,672
Property, net 647,270 543,058
Intangible assets, net 23,761 28,679
Other long-term assets 87,144 62,804
------- -------
Total assets $885,048 $718,213
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $105,113 $ 88,367
Accrued expenses and other liabilities 48,793 42,459
Current maturities of corporate borrowings
and capital lease obligations 3,778 3,441
------- -------
Total current liabilities 157,684 134,267
Corporate borrowings 479,464 315,046
Capital lease obligations 52,490 55,237
Other long-term liabilities 50,987 43,651
------- -------
Total liabilities 740,625 548,201
Stockholders' equity:
$1.75 Cumulative Convertible
Preferred Stock, 66 2/3 cents par value;
2,919,100 shares issued and outstanding
as of October 2, 1997 and 3,303,600
shares issued and outstanding as of
April 3, 1997 (aggregate liquidation
preference of $72,977 as of October 2, 1997
and $82,590 as of April 3, 1997) 1,946 2,202
Common Stock, 66 2/3 cents par value; 13,408,684
shares issued as of
October 2, 1997 and 6,604,469 shares issued
as of April 3, 1997 8,939 4,403
Convertible Class B Stock, 66 2/3 cents par value;
5,015,657 shares issued and
outstanding as of October 2, 1997 and
11,157,000 shares issued
and outstanding as of April 3, 1997 3,344 7,438
Additional paid-in capital 107,595 107,781
Foreign currency translation adjustment (2,764) (2,048)
Retained earnings 25,732 50,605
------- -------
144,792 170,381
Less - Common Stock in treasury, at cost,
20,500 shares as of October 2, 1997 and
April 3, 1997 369 369
Total stockholders' equity 144,423 170,012
------- -------
Total liabilities and stockholders' equity $885,048 $718,213
======= =======
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twenty-six
Weeks Ended
10/02/97 09/26/96
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings (loss) $ (22,200) $ 10,392
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Impairment of long-lived assets 46,998 -
Depreciation and amortization 32,889 24,414
Deferred income taxes (19,270) -
Loss (gain) on sale of long-term assets (2,496) 31
Change in assets and liabilities:
Receivables (1,964) 374
Other current assets (1,125) 581
Accounts payable 8,700 (7,269)
Accrued expenses and other liabilities 10,991 3,965
Other, net (352) 527
-------- -------
Total adjustments 74,371 22,623
-------- -------
Net cash provided by operating activities 52,171 33,015
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (173,811) (92,082)
Net change in refundable construction advances (39,162) (2,966)
Proceeds from disposition of long-term assets 3,446 180
Other, net (9,634) (6,546)
-------- -------
Net cash used in investing activities (219,161) (101,414)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility 165,000 67,000
Principal payments under capital lease
obligations and other (1,741) (1,208)
Cash overdrafts 8,046 3,602
Proceeds from exercise of stock options - 141
Dividends paid on preferred stock (2,673) (3,085)
Deferred financing costs and other (682) -
-------- -------
Net cash provided by financing activities 167,950 66,450
-------- -------
Effect of exchange rate changes on
cash and equivalents (112) 291
-------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 848 (1,658)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 24,715 10,795
-------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 25,563 $9,137
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Twenty-six
Weeks Ended
10/02/97 09/26/96
(Unaudited)
Cash paid during the period for:
<S> <C> <C>
Interest (net of amounts capitalized
of $3,572 and $999) $ 20,226 $ 10,620
Income taxes paid (refunded) 6,384 (1,617)
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 2, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
AMC Entertainment Inc. ("AMCE") is a holding company which, through its
direct and indirect subsidiaries, including 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 throughout the United States and in Japan and Portugal. The
Company is also involved in the business of providing on-screen advertising and
other services to AMC and other theatre circuits through a wholly-owned
subsidiary, National Cinema Network, Inc. ("NCN").
Prior to fiscal 1998, NCN was consolidated with the Company as of a fiscal
period end that was one month earlier than the Company' fiscal period end.
Beginning in fiscal year 1998, this one-month reporting lag was eliminated and
NCN year to date results include activity for seven months.
The accompanying unaudited consolidated financial statements have been
prepared in response to the requirements of Form 10-Q and should be read in
conjunction with the Company's annual report on Form 10-K for the year (53
weeks) ended April 3, 1997. In the opinion of management, these interim
financial statements reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position and results of operations. Due to the seasonal nature of the Company's
business, results for the thirteen and twenty-six weeks ended October 2, 1997
are not necessarily indicative of the results to be expected for the fiscal year
(52 weeks) ending April 2, 1998.
The year-end consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles.
Certain amounts have been reclassified from prior period consolidated
financial statements to conform with the current year presentation.
NOTE 2 - EARNINGS PER SHARE
Primary earnings per share is computed by dividing net earnings less
preferred dividends by the sum of the weighted average number of common shares
outstanding and outstanding stock options, when their effect is dilutive. The
average shares used in the computations were 18,382,000 and 18,194,000 for the
thirteen and twenty-six weeks ended October 2, 1997, respectively, and
17,943,000 and 17,534,000 for the thirteen and twenty-six weeks ended September
26, 1996, respectively. On a fully diluted basis, net earnings and shares
outstanding are adjusted to assume conversion of the $1.75 Cumulative
Convertible Preferred Stock, if dilutive. The average shares used in the
computations were 18,382,000 and 18,194,000 for the thirteen and twenty-six
weeks ended October 2, 1997, respectively, and 23,866,000 and 17,726,000 for the
thirteen and twenty-six weeks ended September 26, 1996, respectively.
NOTE 3 - MERGER WITH PARENT
Effective August 15, 1997, the Company completed a merger with its majority
stockholder, Durwood, Inc. ("DI"), with the Company remaining as the surviving
entity (the "Merger"). In connection with the Merger, 2,641,951 shares of the
Company's Common Stock and 11,157,000 shares of the Company's Class B Stock
owned by DI were canceled and the Company issued 8,783,289 shares of its Common
Stock and 5,015,657 shares of its Class B Stock to the DI stockholders. The
Merger was accounted for as a corporate reorganization and the recorded balances
for consolidated assets, liabilities, total stockholders' equity and results of
operations were not affected.
In connection with the Merger, the DI stockholders granted a proxy to the
Company to vote their shares of the Company's Common Stock for each candidate
for the Company's Board of Directors in the same proportion as the aggregate
votes cast in such elections by all other holders of the Company's Common Stock
not affiliated with the Company, its directors and officers. The proxy will
remain in effect for a period of three years commencing on the date of the
Merger.
NOTE 4 - IMPAIRMENT OF LONG-LIVED ASSETS
The summer of 1997 was the first summer film season, generally the highest
grossing period for the film industry, that a significant number of megaplexes
of the Company and its competitors were operating (the first megaplex, Grand 24,
was opened by the Company in May 1995). During this period, the financial
results of certain multiplexes of the Company were significantly less than
anticipated at the beginning of fiscal 1998 due primarily to competition from
the newer megaplex theatres. As a result, the Company initiated a review of its
portfolio of theatres to identify those theatres which are not expected to
provide an adequate financial return in the future. The Company anticipates
that many of its multiplexes may be disposed of in the intermediate term but
continues to evaluate its future plans for such theatres.
As a result of this review, the Company evaluated its theatre assets and
related intangibles for impairment in accordance with the provisions of
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of.
The expected future cash flows of certain theatres, undiscounted and without
interest charges, were less than the carrying value of the theatre assets. As a
result, the Company recognized a non-cash impairment loss of $46,998,000
($27,728,000 after tax, or $1.51 per share) on 59 multiplex theatres with 412
screens in 14 states (primarily California, Texas, Missouri, Arizona and
Florida) including a loss of $523,000 associated with 10 theatres that were
included in impairment losses recognized in previous periods. The impairment
loss represents the amount by which the carrying value of the multiplex assets,
including intangibles, exceeded the estimated fair value of those assets. The
estimated fair value of assets was determined as either the expected selling
price less selling costs or the present value of estimated expected future cash
flows.
The reduced carrying amount of the impaired assets will result in reduced
depreciation and amortization in future periods. For fiscal 1998, such charge
is expected to be reduced by approximately $10,500,000, which includes a
$3,500,000 reduction in depreciation and amortization for the thirteen weeks
ended October 2, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The forward-looking statements included in this section, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
the forward-looking statements included herein as a result of a number of
factors, including but not limited to the Company's ability to enter into
various financing programs, competition from other companies, changes in
economic climate, increase in demand for real estate, demographic changes,
changes in real estate, zoning and tax laws, the ability to open new theatres
and screens as currently planned, the performance of films licensed by the
Company and other risks and uncertainties.
Operating Results
Set forth in the table below is a summary of revenues, cost of operations,
general and administrative, and depreciation and amortization expenses
attributable to the Company's domestic and international theatrical exhibition
operations and the Company's on-screen advertising business.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-
six Weeks Ended
<S> <C> <C> <C> <C> <C> <C>
10/02/97 09/26/96 % Change 10/02/97 09/26/96 % Change
-------- -------- -------- -------- -------- --------
(In thousands, except
percentages)
REVENUES
Domestic
Admissions $138,603 $130,477 6.2% $259,915 $235,566 10.3%
Concessions 65,050 61,440 5.9 123,136 111,124 10.8
Other 3,693 2,842 29.9 7,127 5,703 25.0
-------- ------- ------ ------- ------- ------
207,346 194,759 6.5 390,178 352,393 10.7
International
Admissions 6,116 3,349 82.6 10,802 4,545 *
Concessions 1,305 500 * 2,291 647 *
Other 10 2 * _ 18 2 *
-------- -------- -------- -------- -------- --------
7,431 3,851 93.0 13,111 5,194 *
On-screen advertising
and other 4,851 3,826 26.8 10,762 6,776 58.8
-------- -------- -------- -------- -------- --------
Total revenues $219,628 $202,436 8.5% $414,051 $364,363 13.6%
======= ======= ======= ======= ======= ======
COST OF OPERATIONS
Domestic
Film exhibition costs $ 77,397 $ 71,950 7.6% $146,057 $127,515 14.5%
Concession costs 9,423 9,448 (0.3) 19,065 17,929 6.3
Rent 21,674 18,247 18.8 42,654 35,813 19.1
Other 51,282 47,700 7.5 101,407 94,127 7.7
-------- -------- -------- -------- -------- --------
159,776 147,345 8.4 309,183 275,384 12.3
International
Film exhibition costs 3,441 2,180 57.8 5,923 2,754 *
Concession costs 428 107 * 842 151 *
Rent 1,498 1,385 8.2 2,972 2,046 45.3
Other 1,467 1,380 6.3 2,932 2,236 31.1
-------- ------- ------ ------- ------- ------
6,834 5,052 35.3 12,669 7,187 76.3
On-screen advertising and other 3,898 3,196 22.0 8,287 5,843 41.8
-------- -------- -------- -------- -------- --------
Total cost of operations $170,508 $155,593 9.6% $330,139 $288,414 14.5%
======= ======= ======= ======= ======= ======
*Percentage change in excess of 100%.
Thirteen Weeks Ended Twenty-
six Weeks Ended
<S> <C> <C> <C> <C> <C> <C>
10/02/97 09/26/96 % Change 10/02/97 09/26/96 % Change
-------- -------- -------- -------- -------- --------
(In thousands, except
percentages)
GENERAL AND ADMINISTRATIVE
Corporate and Domestic $9,534 $9,079 5.0% $ 21,160 $ 19,565 8.2%
International 1,666 1,448 15.1 3,144 2,938 7.0
On-screen advertising and other 897 1,120 (19.9) 2,548 2,169 17.5
-------- -------- -------- -------- -------- --------
Total general and
administrative $ 12,097 $ 11,647 3.9% $ 26,852 $ 24,672 8.8%
======= ======= ======= ======= ======= ======
DEPRECIATION AND AMORTIZATION
Corporate and Domestic $ 15,258 $ 12,072 26.4% $ 30,404 $ 23,174 31.2%
International 671 241 * 1,287 410 *
On-screen advertising
and other 593 427 38.9 1,198 830 44.3
-------- ------- ------ ------- ------- ------
Total depreciation and
amortization $ 16,522 $ 12,740 29.7% $ 32,889 $ 24,414 34.7%
======== ======== ======= ======== ========= =======
* Percentage change in excess of 100%
</TABLE>
<PAGE>
Thirteen Weeks Ended October 2, 1997 and September 26, 1996
Revenues. Total revenues increased 8.5%, or $17,192,000, during the thirteen
weeks ended October 2, 1997 compared to the thirteen weeks ended September 26,
1996.
Total domestic revenues increased 6.5%, or $12,587,000, from the prior year.
Admissions revenues increased 6.2%, or $8,126,000, due to a 5.7% increase in
average ticket prices, which contributed $7,430,000 of the increase, and a 0.5%
increase in attendance, which contributed $696,000 of the increase. The
increase in average ticket prices was due to price increases and the growing
number of megaplexes in the Company's circuit, which yield higher average ticket
prices than multiplexes. The increase in attendance was due to the Company's
megaplexes (theatres having at least 14 screens with predominately stadium-style
seating) offset by a decrease in attendance at the Company's multiplexes.
Attendance at megaplexes increased during the quarter as a result of the
addition of 15 new megaplexes with 304 screens since September 26, 1996 which
was offset by a 3.8% decrease in attendance at comparable megaplexes (theatres
opened before the second quarter of the prior fiscal year) due to poorer than
expected film product. Attendance at multiplexes (theatres generally without
stadium-style seating and having less than 14 screens) decreased due to a 12.7%
decrease in attendance at comparable multiplexes and the closure or sale of 24
theatres with 120 screens since the second quarter of fiscal 1997. The decline
in attendance at comparable multiplexes was due primarily to competition from
new megaplexes operated by the Company and other competing circuits, a trend
which the Company anticipates will continue. Attendance also was impacted by
the overall poorer than expected performance of film product. Concessions
revenues increased by 5.9%, or $3,610,000, due to a 5.3% increase in average
concessions per patron, which contributed $3,282,000 of the increase, and the
increase in total attendance, which contributed $328,000 of the increase. The
increase in average concessions per patron was attributable to the increasing
number of megaplexes in the Company's circuit, where concession spending per
patron is higher than multiplexes.
Total international revenues increased $3,580,000 from the prior year.
Admissions revenues increased $2,767,000 due to an increase in attendance, which
contributed $7,285,000 of the increase, offset by a decrease in average ticket
prices which reduced revenues by $4,518,000. Attendance increased as a result
of a 56.6% increase in comparable attendance at the Canal City 13 in Japan and
the opening of the Company's second international theatre, the Arrabida 20 in
Portugal, during the third quarter of fiscal 1997. Concessions revenues
increased by $805,000 due to the increase in total attendance, which contributed
$1,088,000 of the increase, offset by a decrease in average concessions per
patron, which reduced revenues by $283,000. The decrease in average ticket
prices and concessions per patron was due to the lower ticket and concessions
prices at the theatre in Portugal compared to the theatre in Japan.
On-screen advertising and other revenues increased $1,025,000 due to an increase
in the number of screens served, a result of its expansion program.
Cost of Operations. Total cost of operations increased 9.6%, or $14,915,000,
during the thirteen weeks ended October 2, 1997 compared to the thirteen weeks
ended September 26, 1996.
Total domestic cost of operations increased 8.4%, or $12,431,000, from the prior
year. Film exhibition costs increased 7.6%, or $5,447,000, due to higher
attendance, which contributed $4,280,000 of the increase, and an increase in the
percentage of admissions paid to film distributors, which caused an increase of
$1,167,000. As a percentage of admissions revenues, film exhibition costs
increased to 55.8% in the current year as compared with 55.1% in the prior year.
The 0.3%, or $25,000, decrease in concession costs is primarily attributable to
a decrease in concession costs as a percentage of revenues. As a percentage of
concessions revenues, concession costs decreased from 15.4% to 14.5% due to an
increase in advertising and promotional allowances received by the Company and
improved procurement terms with a major vendor. Rent expense increased 18.8%,
or $3,427,000, due to the higher number of screens in operation and the growing
number of megaplexes in the Company's circuit, which generally require higher
rent per screen than multiplexes. Other cost of operations increased 7.5%, or
$3,582,000. As a percentage of total revenues, other cost of operations
increased from 24.5% in the prior year to 24.7% in the current year.
Total international cost of operations increased 35.3%, or $1,782,000, from the
prior year. Film exhibition costs increased 57.8%, or $1,261,000, due to higher
attendance, which contributed $1,801,000 of the increase, offset by a decrease
in the percentage of admissions paid to film distributors, which caused a
decrease of $540,000. The $321,000 increase in concession costs was primarily
attributable to the increase in concessions revenues. Rent expense increased
$113,000 and other cost of operations increased $87,000 from the prior year due
primarily to the opening of the Arrabida 20 during the third quarter of fiscal
1997.
On-screen advertising and other cost of operations increased $702,000 as a
result of the higher number of screens served.
General and Administrative. General and administrative expenses increased 3.9%,
or $450,000, during the thirteen weeks ended October 2, 1997. As a percentage
of total revenues, general and administrative expenses decreased from 5.8% in
the prior year to 5.5% in the current year.
Depreciation and Amortization. Depreciation and amortization increased 29.7%,
or $3,782,000, during the thirteen weeks ended October 2, 1997. This increase
was caused by an increase in employed theatre assets resulting from the
Company's expansion plan which was partially offset by reduced depreciation and
amortization of approximately $3,500,000 as a result of the reduced carrying
amount of impaired multiplex assets.
Impairment of Long-lived Assets. During the thirteen weeks ended October 2,
1997, the Company recognized a non-cash impairment loss of $46,998,000
($27,728,000 after tax, or $1.51 per share) on 59 multiplex theatres with 412
screens in 14 states (primarily California, Texas, Missouri, Arizona and
Florida) including a loss of $523,000 associated with 10 theatres that were
included in impairment losses recognized in previous periods. The expected
future cash flows of these theatres, undiscounted and without interest charges,
were less than the carrying value of the theatre assets.
The summer of 1997 was the first summer film season, generally the highest
grossing period for the film industry, that a significant number of megaplexes
of the Company and its competitors were operating (the first megaplex, Grand 24,
was opened by the Company in May 1995). During this period, the financial
results of certain multiplexes of the Company were significantly less than
anticipated at the beginning of fiscal 1998 due primarily to competition from
the newer megaplex theatres. As a result, the Company initiated a review of its
portfolio of theatres to identify those theatres which are not expected to
provide an adequate financial return in the future. The Company anticipates
that many of its multiplexes may be disposed of in the intermediate term but
continues to evaluate its future plans for such theatres.
Interest Expense. Interest expense increased 93.8%, or $4,553,000, during the
thirteen weeks ended October 2, 1997 compared to the prior year. The increase
in interest expense resulted primarily from an increase in average outstanding
borrowings related to the Company's expansion plan.
Gain on Disposition of Assets. Gain on disposition of assets increased
$1,367,000 during the thirteen weeks ended October 2, 1997 from the sale of one
of the Company's multiplexes during the current period.
Income Tax Provision. The provision for income taxes decreased $20,839,000 to a
benefit of $13,714,000 during the thirteen weeks ended October 2, 1997 from an
expense of $7,125,000 in the prior year. The effective tax rate was 40.2%
during the thirteen weeks ended October 2, 1997 compared to 40.3% in the prior
year.
Net Earnings. Net earnings decreased $30,930,000 during the thirteen weeks
ended October 2, 1997 to a loss of $20,361,000 from earnings of $10,569,000 in
the prior year. Net loss per common share, after deducting preferred dividends,
was $1.18 compared to earnings of $.51 in the prior year.
Twenty-six Weeks Ended October 2, 1997 and September 26, 1996
Revenues. Total revenues increased 13.6%, or $49,688,000, during the twenty-six
weeks ended October 2, 1997 compared to the twenty-six weeks ended September 26,
1996.
Total domestic revenues increased 10.7%, or $37,785,000, from the prior year.
Admissions revenues increased 10.3%, or $24,349,000, due to a 5.4% increase in
average ticket prices, which contributed $13,274,000 of the increase, and a 4.7%
increase in attendance, which contributed $11,075,000 of the increase. The
increase in average ticket prices was due to price increases and the growing
number of megaplexes in the Company's circuit, which yield higher average ticket
prices than multiplexes. The increase in attendance was due primarily to the
Company's megaplexes. Attendance at megaplexes increased as a result of the
addition of 15 new megaplexes with 304 screens since September 26, 1996 which
was offset by a 0.8% decrease in attendance at comparable megaplexes (theatres
opened before the first quarter of the prior fiscal year) due to poorer than
expected film product. The overall increase in attendance from megaplexes was
partially offset by a 9.3% decrease in attendance at comparable multiplexes and
the closure or sale of 24 theatres with 120 screens since the second quarter of
fiscal 1997. The decline in attendance at comparable multiplexes was due
primarily to competition from new megaplexes operated by the Company and other
competing circuits, a trend which the Company anticipates will continue.
Attendance also was impacted by the overall poorer than expected performance of
film product. Concessions revenues increased by 10.8%, or $12,012,000, due to a
5.8% increase in average concessions per patron, which contributed $6,788,000 of
the increase, and the increase in total attendance, which contributed $5,224,000
of the increase. The increase in average concessions per patron was
attributable to the increasing number of megaplexes in the Company's circuit,
where concession spending per patron is higher than multiplexes.
Total international revenues increased $7,917,000 from the prior year.
Admissions revenues increased $6,257,000 due to an increase in attendance, which
contributed $15,427,000 of the increase, offset by a decrease in average ticket
prices which reduced revenues by $9,170,000. Attendance increased as a result
of the opening of the Company's second international theatre, the Arrabida 20 in
Portugal, during the third quarter of fiscal 1997 and improved attendance at the
Canal City 13 in Japan. Concessions revenues increased by $1,644,000 due to the
increase in total attendance, which contributed $2,196,000 of the increase,
offset by a decrease in average concessions per patron, which reduced revenues
by $552,000. The decrease in average ticket prices and concessions per patron
was due to the lower ticket and concessions prices at the theatre in Portugal
compared to the theatre in Japan.
On-screen advertising and other revenues increased $3,986,000 due to an increase
in the number of screens served, a result of its expansion program, and a change
in the number of periods included in the results of operations of the Company's
on-screen advertising business.
Cost of Operations. Total cost of operations increased 14.5%, or $41,725,000,
during the twenty-six weeks ended October 2, 1997 compared to the twenty-six
weeks ended September 26, 1996.
Total domestic cost of operations increased 12.3%, or $33,799,000, from the
prior year. Film exhibition costs increased 14.5%, or $18,542,000, due to
higher attendance, which contributed $12,593,000 of the increase, and an
increase in the percentage of admissions paid to film distributors, which caused
an increase of $5,949,000. As a percentage of admissions revenues, film
exhibition costs increased to 56.2% in the current year as compared with 54.1%
in the prior year. This increase occurred primarily during the first quarter of
the year and was due to a change in attendance patterns and the popularity of
films released during the period which had higher film exhibition terms.
Attendance was more concentrated in the early weeks for the films released
during the first quarter of the year, which typically results in higher film
exhibition costs. The 6.3%, or $1,136,000, increase in concession costs is
attributable to the increase in concessions revenues. As a percentage of
concessions revenues, concession costs decreased from 16.1% to 15.5% due to an
increase in advertising and promotional allowances received by the Company and
improved procurement terms with a major vendor. Rent expense increased 19.1%,
or $6,841,000, due to the higher number of screens in operation and the growing
number of megaplexes in the Company's circuit, which generally require higher
rent per screen than multiplexes. Other cost of operations increased 7.7%, or
$7,280,000. As a percentage of total revenues, other cost of operations
decreased from 26.7% in the prior year to 26.0% in the current year, primarily
as a result of more effective staffing at the Company's theatres.
Total international cost of operations increased 76.3%, or $5,482,000, from the
prior year. Film exhibition costs increased $3,169,000 due to higher attendance
which contributed $3,791,000 of the increase, offset by a decrease in the
percentage of admissions paid to film distributors, which caused a decrease of
$622,000. The $691,000 increase in concession costs was primarily attributable
to the increase in concessions revenues. Rent expense increased $926,000 and
other cost of operations increased $696,000 from the prior year due to the
opening of the Arrabida 20 during the third quarter of fiscal 1997.
On-screen advertising and other cost of operations increased $2,444,000 as a
result of the higher number of screens served and a change in the number of
periods included in the results of operations of the Company's on-screen
advertising business.
General and Administrative. General and administrative expenses increased 8.8%,
or $2,180,000, during the twenty-six weeks ended October 2, 1997. As a
percentage of total revenues, general and administrative expenses decreased from
6.8% in the prior year to 6.5% in the current year.
Depreciation and Amortization. Depreciation and amortization increased 34.7%,
or $8,475,000, during the twenty-six weeks ended October 2, 1997. This increase
was caused by an increase in employed theatre assets resulting from the
Company's expansion plan which was partially offset by reduced depreciation and
amortization of approximately $3,500,000 as a result of the reduced carrying
amount of the impaired multiplex assets.
Impairment of Long-lived Assets. During the twenty-six weeks ended October 2,
1997, the Company recognized a non-cash impairment loss of $46,998,000
($27,728,000 after tax, or $1.52 per share). See discussion of Impairment of
Long-lived assets for the thirteen weeks ended October 2, 1997.
Interest Expense. Interest expense increased 80.8%, or $7,889,000, during the
twenty-six weeks ended October 2, 1997 compared to the prior year. The increase
in interest expense resulted primarily from an increase in average outstanding
borrowings related to the Company's expansion plan.
Gain on Disposition of Assets. Gain on disposition of assets increased
$2,527,000 during the twenty-six weeks ended October 2, 1997 from the sale of
two of the Company's multiplexes during the current year.
Income Tax Provision. The provision for income taxes decreased $22,100,000 to a
benefit of $15,100,000 during the current year from an expense of $7,000,000 in
the prior year. The effective tax rate was 40.5% during the current year
compared to 40.2% in the prior year.
Net Earnings. Net earnings decreased $32,592,000 during the twenty-six weeks
ended October 2, 1997 to a loss of $22,200,000 from earnings of $10,392,000 in
the prior year. Net loss per common share, after deducting preferred
dividends, was $1.37 compared to earnings of $.42 in the prior year.
Liquidity and Capital Resources
The Company's revenues are collected in cash, principally through box office
admissions and theatre concessions sales. The Company has an operating "float"
which partially finances its operations and which generally permits the Company
to maintain a smaller amount of working capital capacity. This float exists
because admissions revenues are received in cash, while exhibition costs
(primarily film rentals) are ordinarily paid to distributors from 30 to 45 days
following receipt of box office admissions revenues. The Company is only
occasionally required to make advance payments or non-refundable guaranties of
film rentals. Film distributors generally release during the summer and holiday
seasons the films which they anticipate will be the most successful.
Consequently, the Company typically generates higher revenues during such
periods. Cash flows from operating activities, as reflected in the Consolidated
Statements of Cash Flows, were $52,171,000 and $33,015,000 for the twenty-six
weeks ended October 2, 1997 and September 26, 1996, respectively.
During the current fiscal year, the Company has had capital expenditures and net
increases in refundable construction advances of $173,811,000 and $39,162,000,
respectively, primarily for the development of new theatres and the addition of
screens at existing locations. The Company has continued its expansion plan
during the current fiscal year by opening 5 megaplexes with 109 screens and one
multiplex with 6 screens and expanding three existing multiplexes by 37 screens.
Of the 152 screens added during the year, 84 screens will be operated pursuant
to long-term non-cancelable operating leases. In addition, the Company closed
or sold 13 multiplexes with 63 screens resulting in a circuit total of 25
megaplexes with 518 screens and 197 multiplexes with 1,530 screens as of October
2, 1997.
The Company has plans to open a total of approximately 630 screens during fiscal
1998. If these planned screens are opened as scheduled, the Company estimates
that total capital expenditures for fiscal 1998 will aggregate approximately
$370 million. Included in these amounts are assets which the Company may place
into sale/leaseback or other comparable financing programs which will have the
effect of reducing the Company's net cash outlays. As of October 2, 1997, the
Company had under construction 25 megaplexes with 595 screens and 2 multiplexes
with 25 screens.
The Company maintains a $425 million credit facility (the "Credit Facility"),
which was amended and restated as of April 10, 1997. The Credit Facility permits
borrowings at interest rates based on either the bank's base rate or LIBOR and
requires an annual commitment fee based on margin ratios that could result in a
rate of .1875% to .375% on the unused portion of the commitment. The Credit
Facility matures in 2004. The commitment thereunder will reduce by $25 million
on each of December 31, 2002, March 31, 2003, June 30, 2003 and September 30,
2003 and by $50 million on December 31, 2003. As of October 2, 1997, the
Company had outstanding borrowings of $275,000,000 under the Credit Facility at
an average interest rate of 6.4% per annum.
Covenants of the Credit Facility impose limitations on indebtedness, creation of
liens, change of control, transactions with affiliates, mergers, investments,
guaranties, asset sales, dividends, business activities and pledges. As of
October 2, 1997, the Company was in compliance with all financial covenants
relating to the Credit Facility.
Prior to its April 10, 1997 amendment and restatement, the Credit Facility
contained a covenant that generally limited the Company's capital expenditures.
This covenant has been eliminated.
On March 19, 1997, the Company sold $200 million aggregate principal amount of 9
1/2% Senior Subordinated Notes due 2009 (the "Notes"). As required by the Note
Indenture, the Company consummated a registered offer on August 5, 1997 to
exchange the Notes for notes of AMCE with terms identical in all material
respects to the Notes.
The Company has agreed to sell 12 of its owned (or ground leased) megaplexes,
eight of which are currently operating, to Entertainment Properties Trust
("EPT"), a Maryland real estate investment trust, for approximately
$248,800,000. The Company also has granted an option to EPT to purchase two
additional owned megaplexes currently under construction for the cost to the
Company of developing and constructing such properties (estimated at
$61,900,000). In addition, EPT will have a right of first right of refusal and
first offer to purchase and lease back to the Company any megaplex acquired or
developed and owned (or ground-leased) by the Company for a period of five
years.
The theatres that are to be sold will be leased back from EPT pursuant to non-
cancelable operating leases with terms ranging from 13 to 15 years at an
initial lease rate of 10.5% with options to extend for up to an additional 20
years. The transaction, which is expected to close by early December, is
conditioned, among other matters, on completing negotiations of non-price terms
for the sale and leaseback and successful completion by EPT of an offering of
its shares of beneficial interest.
Proceeds from the sales will be used to reduce outstanding indebtedness under
the Credit Facility. To the extent net proceeds are applied to reduce
indebtedness under the Credit Facility, the amount available for borrowing under
the Credit Facility will be increased and the Company intends to utilize this
increased availability to continue its current expansion plan.
The Company believes that cash generated from operations, existing cash and
equivalents, amounts received from the sale/leaseback transactions and the
unused commitment amount under its Credit Facility will be sufficient to fund
operations and planned capital expenditures for the next twelve months.
During the twenty-six weeks ended October 2, 1997, various holders of the
Company's $1.75 Cumulative Convertible Preferred Stock (the "Convertible
Preferred Stock") converted 384,500 shares into 662,877 shares of Common Stock
at a conversion rate of 1.724 shares of Common Stock for each share of
Convertible Preferred Stock. Convertible Preferred Stock dividend payments
decreased 13.4%, or $412,000, to $2,673,000 for the twenty-six weeks ended
October 2, 1997 from $3,085,000 in the prior year as a result of the
conversions. Future conversions will continue to reduce the amount of dividends
paid by the Company and increase the number of shares of Common Stock
outstanding.
Other
On July 24, 1997, the Company announced the formation of a joint venture with
Planet Hollywood International, Inc. to develop, own and operate an integrated
moviegoing, dining and retail concept worldwide. The new complexes, which will
be branded "Planet Movies by AMC", will combine the Company's megaplex theatre
concept with Planet Hollywood-theming, as well as additional dining, retail and
entertainment opportunities.
Recently Issued Financial Accounting Pronouncements
During fiscal 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), Earnings per Share. SFAS
128 eliminates the presentation of primary and fully diluted earnings per share
("EPS") and requires presentation of basic and diluted EPS. The principal
difference between primary and basic EPS is that common stock equivalents are
not included with the weighted average number of shares outstanding used in the
computation of basic EPS. Diluted EPS is computed similarly to fully diluted
EPS. SFAS 128 is effective for periods ending after December 15, 1997,
including interim periods, and requires restatement of all prior-period EPS
data. Early adoption is not permitted. The Company plans to adopt SFAS 128
during the third quarter of fiscal 1998. The impact of adopting SFAS 128 on
primary and fully diluted earnings (loss) per share for the thirteen and twenty-
six weeks ended October 2, 1997 and September 26, 1996 is not expected to be
material.
During fiscal 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive
Income, and Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
Disclosures About Segments of an Enterprise and Related Information. SFAS 130
requires disclosure of comprehensive income and its components in a company's
financial statements and is effective for fiscal years beginning after December
15, 1997. SFAS 131 requires new disclosures of segment information in a
company's financial statements and is effective for fiscal years beginning after
December 15, 1997. The Company is currently evaluating the financial statement
impact of adopting SFAS 130 and SFAS 131.
PART II.
ITEM 1. LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and proceedings
to which the Company is a party.
In Re: AMC Shareholder Derivative Litigation, Chancery Court For New
Castle County, Delaware (Civil Action No. 12855). On February 15, 1995, the
court ordered the consolidation of two derivative actions filed against four
directors of the Company, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E.
Vardeman and Charles J. Egan, Jr. and one of its former directors, Mr. Phillip
Ean Cohen. The two cases were originally filed on January 27, 1993, by Mr.
Scott C. Wallace and on April 16, 1993, by Mr. James M. Bird, respectively. On
December 8, 1994, the court, pursuant to a stipulation by the parties, entered
an order approving Mr. Wallace's withdrawal as a derivative plaintiff, granting
the motion for intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman
M. Werther and Ms. Ellen K. Werther, and authorizing the filing of the
intervenors' complaint. The intervenors' complaint included substantially the
same allegations as the Wallace and Bird complaints. The two actions, as
consolidated, are referred to below as the "Derivative Action."
In the Derivative Action, plaintiffs alleged breach of fiduciary duties of
care, loyalty and candor, mismanagement, constructive fraud and waste of assets
in connection with, among other allegations, the provision of film licensing,
accounting and financial services by American Associated Enterprises ("AAE"), 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, certain
transactions between the Company and 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 Derivative
Action seeks unspecified money damages and equitable relief and costs, including
reasonable attorney's fees.
On October 10, 1996, counsel for the parties in the Derivative Action
entered into a Stipulation and Agreement of Compromise and Settlement (the
"Settlement Agreement") providing for, among other things (i) the dissolution of
AAE, the merger of Durwood, Inc. ("DI") into the Company and the sale, within 12
months thereafter, of 3,000,000 shares of Company Common Stock by Mr. Stanley H.
Durwood and his children (the "Durwood Family Stockholders") in a public
underwritten secondary offering (the Secondary Offering") (which will only be
made by means of a prospectus), (ii) the payment by certain of the defendants of
an aggregate of approximately $1.3 million to persons who were holders of
Company Common Stock on January 2, 1996 (other than the defendants, DI or the
Durwood Family Stockholders), (iii) the nomination, for three annual meetings,
of two additional outside directors (initially, Messrs. William T. Grant, II and
John P. Mascotte (collectively with their replacements, if any, the "New
Independent Directors")) to serve on the Company's Board of Directors, which
persons, to be nominated, must be serving on the board of another public company
or be a member of senior management of a publicly held company or a privately
held company with $50 million in annual revenues, (iv) that Messrs. Stanley H.
Durwood and Edward D. Durwood will cause the other Durwood Family Stockholders
to vote their shares with respect to the election and reelection of the New
Independent Directors in the same proportion as votes cast by all stockholders
not affiliated with the Company, its directors and officers, (v) that the New
Independent Directors will have the ability to approve or disapprove (a) any
proposed transaction between the Company and any of the Durwood Family
Stockholders, except with respect to compensation issues relating to Mr. Stanley
H. Durwood or any other Durwood Family Stockholder who is an officer of the
Company, which are to be governed by existing Company Board procedures, and (b)
the hiring and compensation of any person related to Mr. Stanley H. Durwood who
is not an officer of the Company, and (vi) that the New Independent Directors,
together with either Mr. Egan or Mr. Vardeman, are to have the ability to
approve or disapprove all other related-party transactions with all officers,
directors and ten percent stockholders of the Company. The Settlement
Agreement also provides for the discharge and release of all claims against the
defendants, the Durwood Family Stockholders and the Company relating to such
transactions, the proposed settlement, the Merger, the Secondary Offering and
indemnification of defendants for their expenses, except claims for fraud,
misrepresentation or omissions in connection with the Secondary Offering and
claims relating to the implementation of the settlement.
The Settlement Agreement provides that the Company will pay the cost of
providing notice of the settlement to its stockholders and for the fees of the
settlement administrator who will be responsible for distributing the settlement
amount to eligible stockholders.
The Settlement Agreement was approved by the Court of Chancery on October
16, 1997. Absent an appeal from the Court of Chancery, the settlement will
become final on or about November 17, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held a Special Meeting of Stockholders on August 15, 1997.
(c) At the meeting, the stockholders were asked to approve and adopt an
Agreement and Plan of Merger and Reorganization dated as of March 31, 1997
by and between the Company and its principal stockholder, DI, pursuant to
which DI will be merged into the Company with the Company remaining as the
surviving entity.
The Company's stockholders approved the Merger. The total votes cast
concerning the proposal above were as follows: 116,864,388 voted "for",
39,457 voted "against", 10,678 "abstained" and there were 1,792,505 "broker
non-votes". Of the Company's outstanding shares of Common Stock entitled
to vote on the Merger Agreement that were held by persons other than the
Durwood Family Stockholders and directors and officers of the Company and
that were voted in favor of the Merger Agreement, 2,633,927 shares were
voted in favor of the Merger Agreement and 39,457 shares were voted against
the Merger Agreement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
2.1. Agreement and Plan of Merger dated as of March 31, 1997 between
AMC Entertainment Inc. and Durwood, Inc. (Incorporated by
reference from Exhibit 2.1 to AMCE's Registration Statement on
Form S-4 (File No. 333-25755) filed April 24, 1997).
2.2. Stock Agreement among AMC Entertainment Inc. and Stanley H.
Durwood, his children: Carol D. Journagan, Edward D. Durwood,
Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood and Peter
J. Durwood (the "Durwood Children"), The Thomas A. and Barbara F.
Durwood Family Investment Partnership (the "TBD Partnership") and
Delta Properties, Inc. (Incorporated by reference from Exhibit
99.3 to Amendment No. 2 to Schedule 13D of Stanley H. Durwood
filed September 30, 1997).
2.3. Registration Agreement among AMC Entertainment Inc. and the
Durwood Children and Delta Properties, Inc. (Incorporated by
reference from Exhibit 99.2 to Amendment No. 2 to Schedule 13D of
Stanley H. Durwood filed September 30, 1997).
2.4.(a) Indemnification Agreement dated as of March 31, 1997 among AMC
Entertainment Inc., Stanley H. Durwood, the Durwood Children and
Delta Properties, Inc. (Incorporated by reference from Exhibit
2.4.(a) to AMCE's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
2.4.(b) Durwood Family Settlement Agreement dated as of January 22, 1996
among Stanley H. Durwood and the Durwood Children (Incorporated
by reference from Exhibit 99.1 to Schedule 13-D of Durwood, Inc.
and Stanley H. Durwood filed May 7, 1996).
2.4.(c) First Amendment to Durwood Family Settlement Agreement dated as
of March 18, 1997 among Stanley H. Durwood and the Durwood
Children (Incorporated by reference from Exhibit 2.4.(c) to
AMCE's Registration Statement on Form S-4 (File No. 333-25755)
filed April 24, 1997).
2.4.(d) Second Amendment to Durwood Family Settlement Agreement dated as
of August 15, 1997, among Stanley H. Durwood, the Durwood
Children and the TBD Partnership (Incorporated by reference from
Exhibit 99.7 to Amendment No. 2 to Schedule 13D of Stanley H.
Durwood filed September 30, 1997).
3.1. Amended and Restated Certificate of Incorporation of AMC
Entertainment Inc. (Incorporated by reference from Exhibit 3.1 to
Amendment No. 2 to AMCE's Registration Statement on Form S-2
(File No. 33-51693) filed February 18, 1994).
3.2. Certificate of Designations relating to $1.75 Cumulative
Convertible Preferred Stock (Incorporated by reference from
Exhibit 4.1 to AMCE's Form 8-K (File No. 1-8747) dated April 8,
1994).
3.3. Bylaws of AMC Entertainment Inc. (Incorporated by reference from
Exhibit 3.3 to AMCE's Form 10-Q (File No. 0-12429) for the
quarter ended December 26, 1996).
4.1. Amended and Restated Credit Agreement dated as of April 10, 1997,
among AMC Entertainment Inc., as the Borrower, The Bank of Nova
Scotia, as Administrative Agent and Bank of America National
Trust and Savings Association, as Documentation Agent and Various
Financial Institutions, as Lenders, together with the following
exhibits thereto; significant subsidiary guarantee, form of
notes, form of pledge agreement and form of subsidiary pledge
agreement. (Incorporated by reference from Exhibit 4.3 to AMCE's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
4.2. First Supplemental Indenture respecting AMC Entertainment Inc.'s
9 1/2% Senior Subordinated Notes due 2009. (Incorporated by
reference from Exhibit 4.4(b) to Amendment No. 2 to AMCE's
Registration Statement on Form S-4 (File No. 333-29155) filed
August 4, 1997).
*11. Computation of Per Share Earnings.
*27. Financial Data Schedule
_______
* Filed herewith
(b) Reports on Form 8-K
On August 8, 1997, the Company filed a Form 8-K reporting under Item 7
the formation of a joint venture with Planet Hollywood International, Inc.
On August 22, 1997, the Company filed a Form 8-K reporting under Item
7 the approval by the Company's stockholders of the merger of the Company
and its principal stockholder, Durwood, Inc.
SIGNATURES
Pursuant to the requirements 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.
Date: November 12, 1997 /s/ Peter C. Brown
Peter C. Brown
President and Chief
Financial Officer
Date: November 12, 1997 /s/ Richard L. Obert
Richard L. Obert
Senior Vice President-
Chief Accounting and
Information Officer
<TABLE>
<CAPTION>
EXHIBIT 11.
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
Twenty-six
Weeks Ended
<S> <C> <C>
October 2, September 26,
1997 1996
PRIMARY EARNINGS PER SHARE
Net earnings (loss) $ (22,200) $ 10,392
Preferred dividends (2,651) (3,000)
-------- --------
Net earnings (loss) for common shares $ (24,851) $7,392
======== =========
Average shares for primary earnings per share:
Weighted average number of
shares outstanding 18,194 17,261
Stock options whose effect is dilutive n/a (1) 273
--------- ---------
Total shares outstanding 18,194 17,534
======== ========
Primary earnings (loss) per share $ (1.37) $ 0.42
======== =========
FULLY DILUTED EARNINGS PER SHARE
Net earnings (loss) $ (22,200) $ 10,392
Preferred dividends (2,651) (3,000)
-------- --------
Net earnings (loss) for common shares $ (24,851) $7,392
======== =======
Average shares for fully diluted earnings per share:
Weighted average number of shares
outstanding 18,194 17,261
Stock options whose effect is dilutive n/a (1) 465
Shares issuable upon conversion of
preferred stock n/a (1) n/a (1)
-------- --------
Total shares outstanding 18,194 17,726
======== ========
Fully diluted earnings (loss) per share $ (1.37) $ 0.42
========= ==========
(1) Shares from stock options and conversion of preferred stock are excluded
from the primary and fully diluted earnings per share calculation because they
are anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Financial Statements of AMC Entertainment Inc. as of and for the
twenty-six weeks ended October 2, 1997 submitted in response to the requirements
to Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-02-1998
<PERIOD-END> OCT-02-1997
<CASH> 25,563
<SECURITIES> 0
<RECEIVABLES> 84,193
<ALLOWANCES> 777
<INVENTORY> 0
<CURRENT-ASSETS> 126,873
<PP&E> 975,480
<DEPRECIATION> 328,210
<TOTAL-ASSETS> 885,048
<CURRENT-LIABILITIES> 157,684
<BONDS> 531,954
0
1,946
<COMMON> 8,939
<OTHER-SE> 133,538
<TOTAL-LIABILITY-AND-EQUITY> 885,048
<SALES> 125,427
<TOTAL-REVENUES> 414,051
<CGS> 19,907
<TOTAL-COSTS> 330,139
<OTHER-EXPENSES> 79,887
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,650
<INCOME-PRETAX> (37,300)
<INCOME-TAX> (15,100)
<INCOME-CONTINUING> (22,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,200)
<EPS-PRIMARY> (1.37)
<EPS-DILUTED> (1.37)
</TABLE>
