Edgar Filing: AMC ENTERTAINMENT HOLDINGS, INC.

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TABLE OF CONTENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
OR
o		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 001-33892

AMC ENTERTAINMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		26-0303916 (I.R.S. Employer Identification No.)
One AMC Way 11500 Ash Street, Leawood, KS (Address of principal executive offices)		66211 (Zip Code)

Registrant's telephone number, including area code: (913) 213-2000

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of each class of common stock		Number of shares outstanding as of April 15, 2016

Class A common stock Class B common stock		21,613,532 75,826,927

AMC ENTERTAINMENT HOLDINGS, INC.

INDEX



PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income (Loss)	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
	Signatures	55

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended

	March 31, 2016			March 31, 2015
	(unaudited)
Revenues
Admissions	$	482,574		$	418,694
Food and beverage		244,152			200,524
Other theatre		39,291			33,906

Total revenues		766,017			653,124

Operating costs and expenses
Film exhibition costs		262,354			223,088
Food and beverage costs		33,965			28,508
Operating expense		202,313			187,258
Rent		124,584			117,921
General and administrative:
Merger, acquisition and transaction costs		4,604			1,578
Other		18,516			4,941
Depreciation and amortization		60,430			57,777

Operating costs and expenses		706,766			621,071

Operating income		59,251			32,053
Other expense (income):
Other expense		26			—
Interest expense:
Corporate borrowings		24,867			26,079
Capital and financing lease obligations		2,195			2,373
Equity in earnings of non-consolidated entities		(4,264	)		(1,324	)
Investment income		(9,954	)		(5,143	)

Total other expense		12,870			21,985

Earnings before income taxes		46,381			10,068
Income tax provision		18,090			3,930

Net earnings	$	28,291		$	6,138



Earnings per share:
Basic	$	0.29		$	0.06



Diluted	$	0.29		$	0.06



Average shares outstanding:
Basic		98,200			97,919
Diluted		98,207			97,919
Dividends declared per basic and diluted common share	$	0.20		$	0.20

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Three Months Ended

	March 31, 2016			March 31, 2015
	(unaudited)
Net earnings	$	28,291		$	6,138
Unrealized foreign currency translation adjustment, net of tax		(71	)		976
Pension and other benefit adjustments:
Net loss arising during the period, net of tax		—			(45	)
Prior service credit arising during the period, net of tax		—			746
Amortization of net (gain) loss reclassified into general and administrative: other, net of tax		4			(1,699	)
Amortization of prior service credit reclassified into general and administrative: other, net of tax		—			(1,762	)
Curtailment gain reclassified into general and administrative: other, net of tax		—			(7,239	)
Settlement gain reclassified into general and administrative: other, net of tax		—			(175	)
Marketable securities:
Unrealized net holding gain arising during the period, net of tax		339			825
Realized net gain reclassified into investment income, net of tax		(1,783	)		(4	)
Equity method investees' cash flow hedge:
Unrealized net holding loss arising during the period, net of tax		(468	)		(361	)
Realized net loss reclassified into equity in earnings of non-consolidated entities, net of tax		97			122

Other comprehensive loss		(1,882	)		(8,616	)

Total comprehensive income (loss)	$	26,409		$	(2,478	)

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	March 31, 2016			December 31, 2015

	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	107,927		$	211,250
Receivables, net		85,048			105,509
Other current assets		93,698			97,608

Total current assets		286,673			414,367
Property, net		1,409,634			1,401,928
Intangible assets, net		235,508			237,376
Goodwill		2,410,580			2,406,691
Deferred tax asset		105,609			126,198
Other long-term assets		483,067			501,757

Total assets	$	4,931,071		$	5,088,317



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	240,807		$	313,025
Accrued expenses and other liabilities		141,037			158,664
Deferred revenues and income		183,072			221,679
Current maturities of corporate borrowings and capital and financing lease obligations		18,991			18,786

Total current liabilities		583,907			712,154
Corporate borrowings		1,851,160			1,902,598
Capital and financing lease obligations		90,992			93,273
Exhibitor services agreement		373,010			377,599
Other long-term liabilities		484,668			462,626

Total liabilities		3,383,737			3,548,250

Commitments and contingencies
Class A common stock (temporary equity) ($.01 par value, 140,014 shares issued and 103,245 shares outstanding as of March 31, 2016; 167,211 shares issued and 130,442 shares outstanding as of December 31, 2015)		1,080			1,364

Stockholders' equity:
Class A common stock ($.01 par value, 524,173,073 shares authorized; 21,510,287 shares issued and outstanding as of March 31, 2016; 21,445,090 shares issued and outstanding as of December 31, 2015)		215			214
Class B common stock ($.01 par value, 75,826,927 shares authorized; 75,826,927 shares issued and outstanding as of March 31, 2016 and December 31, 2015)		758			758
Additional paid-in capital		1,184,121			1,183,218
Treasury stock (36,769 shares as of March 31, 2016 and December 31, 2015, at cost)		(680	)		(680	)
Accumulated other comprehensive income		922			2,804
Accumulated earnings		360,918			352,389

Total stockholders' equity		1,546,254			1,538,703

Total liabilities and stockholders' equity	$	4,931,071		$	5,088,317

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended

	March 31, 2016			March 31, 2015
	(unaudited)
Cash flows from operating activities:
Net earnings	$	28,291		$	6,138
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		60,430			57,777
Amortization of discount (premium) on corporate borrowings		59			(1,566	)
Deferred income taxes		16,235			3,525
Theatre and other closure expense		1,508			1,127
Gain on dispositions		(3,008	)		—
Stock-based compensation		1,087			5,739
Equity in earnings and losses from non-consolidated entities, net of distributions		6,199			7,810
Landlord contributions		20,309			10,991
Deferred rent		(7,087	)		(5,519	)
Net periodic benefit cost (credit)		199			(17,917	)
Change in assets and liabilities, excluding acquisitions:
Receivables		43,987			52,943
Other assets		(1,690	)		(2,277	)
Accounts payable		(81,480	)		(58,998	)
Accrued expenses and other liabilities		(63,227	)		(34,492	)
Other, net		1,059			(3,718	)

Net cash provided by operating activities		22,871			21,563

Cash flows from investing activities:
Capital expenditures		(57,657	)		(69,590	)
Acquisition of Starplex Cinemas, net of cash acquired		400			—
Investments in non-consolidated entities, net		(9	)		(152	)
Proceeds from disposition of long-term assets		5,390			—
Other, net		251			(1,636	)

Net cash used in investing activities		(51,625	)		(71,378	)

Cash flows from financing activities:
Cash used to pay dividends		(19,803	)		(19,821	)
Deferred financing costs		(501	)		—
Payments under revolving credit facility		(50,000	)		—
Principal payments under capital and financing lease obligations		(2,076	)		(1,886	)
Principal payments under Term Loan		(2,202	)		(1,938	)

Net cash used in financing activities		(74,582	)		(23,645	)
Effect of exchange rate changes on cash and equivalents		13			58

Net decrease in cash and equivalents		(103,323	)		(73,402	)
Cash and equivalents at beginning of period		211,250			218,206

Cash and equivalents at end of period	$	107,927		$	144,804



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amounts capitalized of $46 and $37)	$	22,526		$	20,289
Income taxes, net		806			505
Schedule of non-cash operating and investing activities:
Investment in NCM (See Note 3—Investments)	$	—		$	6,812
Receivable from sale of RealD Inc. shares (See Note 3—Investments)		13,451			—

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

AMC Entertainment Holdings, Inc. ("Holdings"), through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. and its subsidiaries, (collectively with Holdings, unless the context otherwise requires, the "Company" or "AMC"), is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres primarily located in the United States. Holdings is an indirect subsidiary of Dalian Wanda Group Co., Ltd. ("Wanda"), a Chinese private conglomerate.

On March 31, 2016, AMC Entertainment Inc. ("AMCE") merged with and into Holdings, its direct parent company. In connection with the merger, Holdings assumed all of the obligations of AMCE pursuant to the indentures to the 5.875% Senior Subordinated Notes due 2022, the 5.75% Senior Subordinated Notes due 2025 and the Credit Agreement, dated as of April 30, 2013 (as subsequently amended).

As of March 31, 2016, Wanda owned approximately 77.82% of Holdings' outstanding common stock and 91.32% of the combined voting power of Holdings' outstanding common stock and has the power to control Holdings' affairs and policies, including with respect to the election of directors (and, through the election of directors, the appointment of management), entering into mergers, sales of substantially all of the Company's assets and other extraordinary transactions.

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to: (1) Impairments, (2) Film exhibition costs, (3) Income and operating taxes, (4) Theatre and other closure expense, and (5) Gift card and exchange ticket income. Actual results could differ from those estimates.

Principles of Consolidation: The accompanying unaudited consolidated financial statements include the accounts of Holdings and all subsidiaries, as discussed above, and should be read in conjunction with the Company's Annual Report on Form 10-K for the twelve months ended December 31, 2015. The accompanying consolidated balance sheet as of December 31, 2015, which was derived from audited financial statements, and the unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company's financial position and results of operations. All significant intercompany balances and transactions have been eliminated in consolidation. There are no noncontrolling (minority) interests in the Company's consolidated subsidiaries; consequently, all of its stockholders' equity, net earnings and total comprehensive income for the periods presented are attributable to controlling interests. Due to the seasonal nature of the Company's business, results for the three months ended March 31, 2016 are not necessarily indicative

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)

of the results to be expected for the twelve months ending December 31, 2016. The Company manages its business under one reportable segment called Theatrical Exhibition.

Change in Accounting Principle: The Company adopted the provisions of Accounting Standards Update ("ASU") No. 2015-03 and 2015-15, Interest-Imputation of Interest (Subtopic 835-30) as of the beginning of 2016 on a retrospective basis. As a result of the adoption of ASU No. 2015-03 and ASU No. 2015-15, the Company reclassified $21,768,000 of debt issuance costs for its term loan and senior subordinated notes from other long-term assets to corporate borrowings in the Consolidated Balance Sheet as of December 31, 2015. The Company continues to defer and present its debt issuance costs related to its line-of-credit arrangement as an asset regardless of whether there are any outstanding borrowings on the line-of-credit arrangement as provided in ASU No. 2015-15.

NOTE 2—ACQUISITION

In December 2015, the Company completed the acquisition of SMH Theatres, Inc. ("Starplex Cinemas") for cash. The purchase price for Starplex Cinemas was $172,243,000, net of cash acquired, and was subject to working capital and other purchase price adjustments as described in the stock purchase agreement. Starplex Cinemas operates 33 theatres with 346 screens in small and mid-size markets in 12 states, which further complements the Company's large market portfolio. The Company expects to realize synergies and cost savings related to this acquisition as a result of purchasing and procurement economies of scale and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies.

The acquisition is being treated as a purchase in accordance with Accounting Standards Codification, ("ASC") 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including bid prices from potential buyers and a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes as an appraisal of both tangible and intangible assets and liabilities is finalized, working capital and other purchase price adjustments are completed and additional information

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 2—ACQUISITION (Continued)

regarding the tax bases of assets and liabilities becomes available. The following is a summary of a preliminary allocation of the purchase price:

(In thousands)	Total

Cash	$	2,519
Receivables		1,829
Other current assets		4,629
Property(1)		52,357
Intangible assets(2)		21,480
Goodwill(3)		120,780
Other long-term assets		290
Accounts payable		(4,211	)
Accrued expenses and other liabilities		(5,052	)
Deferred revenues and income		(2,467	)
Deferred tax liability		(16,172	)
Other long-term liabilities(4)		(1,220	)

Total estimated purchase price	$	174,762

(1): Amounts recorded for property include land, buildings, leasehold improvements, furniture, fixtures and equipment.
(2): Amounts recorded for intangible assets includes favorable leases, a non-compete agreement and trade name.
(3): Amounts recorded for goodwill are generally not expected to be deductible for tax purposes.
(4): Amounts recorded for other long-term liabilities consist of an unfavorable lease.

The fair value measurement of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair market values were determined using a variety of information, including estimated future cash flows, appraisals, and market comparables.

During the three months ended March 31, 2016, the Company incurred integration and acquisition-related costs for Starplex Cinemas of approximately $1,218,000, which were included in general and administrative expense: merger, acquisition and transaction costs in the Consolidated Statements of Operations. The Company's operating results for the three months ended March 31, 2015 were not materially impacted by this acquisition.

In connection with the acquisition of Starplex Cinemas, the Company classified two Starplex Cinemas theatres with 22 screens as held for sale as of December 31, 2015, that were divested in January 2016 as required by the Antitrust Division of the United States Department of Justice. Assets

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 2—ACQUISITION (Continued)

held for sale of approximately $5,390,000 were classified as other current assets in the Company's Consolidated Balance Sheets at December 31, 2015.

As of March 31, 2016, the Company recorded amounts due from Starplex of $211,000 that relate to preliminary working capital adjustments and reduced the total estimated purchase price.

Activity of goodwill is presented below:

(In thousands)	Total

Balance as of December 31, 2015	$	2,406,691
Adjustments to acquisition of Starplex Cinemas		3,889

Balance as of March 31, 2016	$	2,410,580

NOTE 3—INVESTMENTS

Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control, and are recorded in the Consolidated Balance Sheets in other long-term assets. Investments in non-consolidated affiliates as of March 31, 2016, include a 17.40% interest in National CineMedia, LLC ("NCM" or "NCM LLC"), a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"), a 15.45% interest in Digital Cinema Distribution Coalition, LLC ("DCDC"), a 50% interest in Open Road Releasing, LLC, operator of Open Road Films, LLC ("Open Road Films"), a 32% interest in AC JV, LLC ("AC JV"), owner of Fathom Events, and a 50% interest in two U.S. motion picture theatres and one IMAX screen. Indebtedness held by equity method investees is non-recourse to the Company.

RealD Inc. Common Stock. The Company sold all of its 1,222,780 shares in RealD Inc. during the three months ended March 31, 2016 and recognized a gain on sale of $3,008,000. The Company has recorded a $13,451,000 receivable included in receivables, net related to the sale of its RealD Inc. shares as of March 31, 2016 and received the proceeds from the sale on April 9, 2016.

Equity in Earnings (Losses) of Non-Consolidated Entities

Aggregated condensed financial information of the Company's significant non-consolidated equity method investments for the three months ended March 31, 2016 and the three months ended March 31, 2015 is shown below:

	Three Months Ended

(In thousands)	March 31, 2016		March 31, 2015
Revenues	$	116,844	$	117,641
Operating costs and expenses		105,842		138,897

Net earnings (loss)	$	11,002	$	(21,256	)

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 3—INVESTMENTS (Continued)

The components of the Company's recorded equity in earnings (losses) of non-consolidated entities are as follows:

	Three Months Ended

(In thousands)	March 31, 2016			March 31, 2015
National CineMedia, LLC	$	(2,117	)	$	(6,639	)
Digital Cinema Implementation Partners, LLC		5,764			5,429
Open Road Releasing, LLC		—			1,286
AC JV, LLC		259			1,038
Other		358			210

The Company's recorded equity in earnings	$	4,264		$	1,324

NCM Transactions. As of March 31, 2016, the Company owns 23,862,988 common membership units, or a 17.40% interest, in NCM and 200,000 common shares of NCM, Inc. The estimated fair market value of the common units in NCM and the common stock investment in NCM, Inc. was approximately $365,998,000, based on the publically quoted price per share of NCM, Inc. on March 31, 2016 of $15.21 per share.

The Company recorded the following transactions with NCM:

(In thousands)	March 31, 2016		December 31, 2015

Due from NCM for on-screen advertising revenue	$	2,299	$	2,406
Due to NCM for Exhibitor Services Agreement		791		1,226
Promissory note payable to NCM		5,555		5,555

	Three Months Ended

(In thousands)	March 31, 2016		March 31, 2015
Other theatre revenues:
Net NCM screen advertising revenues	$	10,539	$	8,648
Operating expense:
NCM beverage advertising expense		1,509		2,514

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 3—INVESTMENTS (Continued)

The Company recorded the following changes in the carrying amount of its investment in NCM and equity in losses of NCM during the three months ended March 31, 2016:

(In thousands)	Investment in NCM(1)			Exhibitor Services Agreement(2)			Other Comprehensive (Income)			Cash Received		Equity in Losses		Advertising (Revenue)

Ending balance December 31, 2015	$	327,471		$	(377,599	)	$	(4,014	)
Receipt of excess cash distributions		(10,170	)		—			—		$	10,170	$	—	$	—
Reclassify book value of NCM, Inc. shares		408			—			—			—		—		—
Amortization of deferred revenue		—			4,589			—			—		—		(4,589	)
Equity in losses and loss from amortization of basis difference(3)(4)		(2,117	)		—			—			—		2,117		—

For the period ended or balance as of March 31, 2016	$	315,592		$	(373,010	)	$	(4,014	)	$	10,170	$	2,117	$	(4,589	)

(1): The following table represents AMC's investment in common membership units including units received under the Common Unit Adjustment Agreement dated as of February 13, 2007:

	Common Membership Units

	Tranche 1		Tranche 2(a)
Beginning balance at December 31, 2012		17,323,782		—
Additional units received in March 2013		—		1,728,988
Additional units received in March 2014		—		141,731
Additional units received in March 2015		—		469,163
Additional units received in December 2015		—		4,399,324
Units exchange for NCM, Inc. shares in December 2015		—		(200,000	)

Ending balance at March 31, 2016		17,323,782		6,539,206

(a): The additional units received in March 2013, March 2014, March 2015, and December 2015 were measured at fair value (Level 1) using NCM, Inc.'s stock price of $15.22, $15.08, $14.52 and $15.75, respectively.

(2): Represents the unamortized portion of the Exhibitor Services Agreement ("ESA") with NCM. Such amounts are being amortized to other theatre revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues).

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 3—INVESTMENTS (Continued)

(3): Represents percentage ownership of NCM's losses on both Tranche 1 and Tranche 2 Investments.
(4): Certain differences between the Company's carrying value and the Company's share of NCM's membership equity have been identified and are amortized to equity in earnings over the respective lives of the assets and liabilities.

During the three months ended March 31, 2016 and March 31, 2015, the Company received payments of $7,218,000 and $5,352,000, respectively, related to the NCM tax receivable agreement. The receipts are recorded in investment income, net of related amortization for the NCM tax receivable agreement intangible asset.

DCIP Transactions. The Company will make capital contributions to DCIP for projector and installation costs in excess of an agreed upon cap ($68,000 per system for digital conversions and $39,000 for new build locations as of March 31, 2016). The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years.

The Company recorded the following transactions with DCIP:

(In thousands)	March 31, 2016		December 31, 2015

Due from DCIP for equipment and warranty purchases	$	1,654	$	1,460
Deferred rent liability for digital projectors		8,648		8,725

	Three Months Ended

(In thousands)	March 31, 2016			March 31, 2015
Operating expense:
Digital equipment rental expense	$	1,241		$	1,294
Warranty reimbursements from DCIP		(2,013	)		(1,925	)

Open Road Films Transactions. During the three months ended March 31, 2016, the Company continued to suspend equity method accounting for its investment in Open Road Films as the negative investment in Open Road Films had reached the Company's capital commitment of $10,000,000. On April 1, 2016, the Company funded $3,000,000 of the capital commitment. The Company's share of cumulative losses from Open Road Films in excess of the Company's capital commitment was $27,560,000 as of March 31, 2016 and $14,422,000 as of December 31, 2015.

The Company recorded the following transactions with Open Road Films:

(In thousands)	March 31, 2016		December 31, 2015

Due from Open Road Films	$	2,895	$	2,472
Film rent payable to Open Road Films		641		1,061

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 3—INVESTMENTS (Continued)

	Three Months Ended

(In thousands)	March 31, 2016		March 31, 2015
Film exhibition costs:
Gross film exhibition cost on Open Road Films	$	3,580	$	1,400

AC JV Transactions. The Company recorded the following transactions with AC JV:

(In thousands)		March 31, 2016			December 31, 2015

Due to AC JV for Fathom Events programming		$	384		$	445

	Three Months Ended

(In thousands)	March 31, 2016		March 31, 2015
Film exhibition costs:
Gross exhibition cost on Fathom Events programming	$	1,979	$	2,586

NOTE 4—STOCKHOLDERS' EQUITY

Common Stock Rights and Privileges

The rights of the holders of Holdings' Class A common stock and Holdings' Class B common stock are identical, except with respect to voting and conversion applicable to the Class B common stock. Holders of Holdings' Class A common stock are entitled to one vote per share and holders of Holdings' Class B common stock are entitled to three votes per share. Holders of Class A common stock and Class B common stock will share ratably (based on the number of shares of common stock held) in any dividend declared by its board of directors, subject to any preferential rights of any outstanding preferred stock. The Class A common stock is not convertible into any other shares of Holdings' capital stock. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in Holdings' certificate of incorporation.

Dividends

The following is a summary of dividends and dividend equivalents paid to stockholders during the three months ended March 31, 2016:

	Declaration Date		Record Date			Date Paid			Amount per Share of Common Stock

	February 25, 2016			March 7, 2016			March 21, 2016		$	0.20

On February 25, 2016, the Company's Board of Directors declared a cash dividend of approximately $19,762,000. During the three months ended March 31, 2016, the Company paid

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

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NOTE 4—STOCKHOLDERS' EQUITY (Continued)

dividends and dividend equivalents of $19,803,000, increased additional paid-in capital for recognition of deferred tax assets of $123,000 related to the dividends equivalents paid, decreased additional paid-in capital for reversal of deferred tax assets for the settlement of stock awards by $119,000, decreased additional paid-in capital for 20,805 shares surrendered to pay payroll and income taxes by $472,000, and accrued $124,000 for the remaining unpaid dividends at March 31, 2016. The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $4,323,000, $15,165,000, and $315,000, respectively, during the three months ended March 31, 2016.

Related Party Transaction

As of March 31, 2016, the Company recorded a receivable due from Wanda of $214,000 for reimbursement of general administrative and other expense incurred on behalf of Wanda.

Temporary Equity

Certain members of management have the right to require Holdings to repurchase the Class A common stock held by them under certain limited circumstances pursuant to the terms of a stockholders agreement. Beginning on January 1, 2016 (or upon the termination of a management stockholder's employment by the Company without cause, by the management stockholder for good reason, or due to the management stockholder's death or disability) management stockholders will have the right, in limited circumstances, to require Holdings to purchase shares that are not fully and freely tradeable at a price equal to the price per share paid by such management stockholder with appropriate adjustments for any subsequent events such as dividends, splits, or combinations. The shares of Class A common stock, subject to the stockholder agreement, are classified as temporary equity, apart from permanent equity, as a result of the contingent redemption feature contained in the stockholder agreement. The Company determined the amount reflected in temporary equity for the Class A common stock based on the price paid per share by the management stockholders and Wanda on August 30, 2012, the date Wanda acquired Holdings.

During the three months ended March 31, 2016, a former employee who held 27,197 shares, relinquished his put right, therefore the related share amount of $284,000 was reclassified to additional paid-in capital, a component of stockholders' equity.

Stock-Based Compensation

Holdings adopted a stock-based compensation plan in December of 2013.

The Company recognized stock-based compensation expense of $1,087,000 and $5,739,000 within general and administrative: other during the three months ended March 31, 2016 and March 31, 2015, respectively. The Company's financial statements reflect an increase to additional paid-in capital related to stock-based compensation of $1,087,000 during the three months ended March 31, 2016. As of March 31, 2016, there was approximately $14,791,000 of total estimated unrecognized compensation cost, assuming attainment of the performance targets at 100%, related to stock-based compensation arrangements expected to be recognized during the remainder of calendar 2016 and in calendar 2017 and 2018. The Company expects to recognize compensation cost of $5,179,000 during the reminder of calendar 2016 and $4,806,000 in calendar 2017 and 2018.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 4—STOCKHOLDERS' EQUITY (Continued)

2013 Equity Incentive Plan

The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units, stock awards, and cash performance awards. The maximum number of shares of Holdings' common stock available for delivery pursuant to awards granted under the 2013 Equity Incentive Plan is 9,474,000 shares. At March 31, 2016, the aggregate number of shares of Holdings' common stock remaining available for grant was 7,677,942 shares.

Awards Granted in 2016

During the three months ended March 31, 2016, Holdings' Board of Directors approved awards of stock, restricted stock units ("RSUs"), and performance stock units ("PSUs") to certain of the Company's employees and directors under the 2013 Equity Incentive Plan. The fair value of the stock at the grant dates of January 4, 2016, February 24, 2016 and March 1, 2016 was $23.17, $22.55 and $24.88 per share, respectively, and was based on the closing price of Holdings' stock.

The award agreements generally had the following features:

•: Stock Award: On January 4, 2016, 4 members of Holdings' Board of Directors were granted an award of 4,260 fully vested shares of Class A common stock each, and on February 24, 2016, 1 member of Holdings' Board of Directors was granted an award of 4,302 fully vested shares of Class A common stock, for a total award of 21,342 shares. The Company recognized approximately $492,000 of expense in general and administrative: other expense during the three months ended March 31, 2016, in connection with these share grants.
•: Restricted Stock Unit Awards: On March 1, 2016, RSU awards of 145,739 units were granted to certain members of management. Each RSU represents the right to receive one share of Class A common stock at a future date. The RSUs vest over 3 years with ¹/3 vesting on each of January 2, 2017, 2018 and 2019. The RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs. The grant date fair value was $3,626,000 based on a stock price of $24.88 on March 1, 2016. The Company recognized approximately $121,000 of expense in general and administrative: other expense during the three months ended March 31, 2016, in connection with these awards.

On March 1, 2016, RSU awards of 135,981 units were granted to certain executive officers covered by Section 162(m) of the Internal Revenue Code. The RSUs will be forfeited if Holdings does not achieve a specified cash flow from operating activities target for each of the twelve months ending December 31, 2016, 2017 and 2018. The RSUs vest over 3 years with ¹/3 vesting in each of 2017, 2018 and 2019 if cash flow from operating activities target is met. The vested RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

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NOTE 4—STOCKHOLDERS' EQUITY (Continued)

the holder upon vesting of the RSUs. The grant date fair value was $3,383,000 based on the probable outcome of the performance targets and a stock price of $24.88 on March 1, 2016. The Company recognized expense for these awards of $112,000 in general and administrative: other expense, during the three months ended March 31, 2016, based on current estimates that the performance condition for all years is expected to be achieved.

•: Performance Stock Unit Award: On March 1, 2016, PSU awards were granted to certain members of management and executive officers, with both a three year cumulative free cash flow and net income performance target condition and a service condition, covering a performance period beginning January 1, 2016 and ending on December 31, 2018. The PSUs will vest ratably based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%. If the performance target is met at 100%, the PSU awards granted on March 1, 2016 will be 281,720 units. No PSUs will vest if Holdings does not achieve the three year cumulative free cash flow and net income minimum performance target or the participant's service does not continue through the last day of the performance period. The vested PSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs. Assuming attainment of the performance target at 100%, the Company recognized expense for these awards of approximately $206,000 during the three months ended March 31, 2016 and will recognize $2,060,000 in general and administrative: other expense during the twelve months ending December 31, 2016. The grant date fair value was $7,009,000 based on the probable outcome of the performance conditions and a stock price of $24.88 on March 1, 2016.
•: Performance Stock Unit Transition Award: In recognition of the shift from one year to three year performance periods for annual equity awards on March 1, 2016, PSU transition awards were granted to certain members of management and executive officers, with both a 2016 free cash flow and net income performance target condition and a service condition, covering a performance period beginning January 1, 2016 and ending on December 31, 2016. The PSUs will vest ratably based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%. If the performance target is met at 100%, the transition PSU awards granted on March 1, 2016 will be 54,652 units. No PSUs will vest if Holdings does not achieve the free cash flow or net income minimum performance target or the participant's service does not continue through the last day of the performance period. The vested PSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs. Assuming attainment of the performance target at 100%, the Company recognized $136,000 during the three months ended March 31, 2016 and will recognize expense for these awards of approximately $1,360,000 in general and administrative: other expense during the twelve months ending December 31, 2016. The grant date fair value was

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 4—STOCKHOLDERS' EQUITY (Continued)

$1,360,000 based on the probable outcome of the performance condition and a stock price of $24.88 on March 1, 2016.

The following table represents the nonvested RSU and PSU activity for the three months ended March 31, 2016:

			Weighted Average Grant Date Fair Value

Beginning balance at January 1, 2016	19,226		$	29.59
Granted(1)	618,092			24.88
Vested	(19,226	)		29.59

Nonvested at March 31, 2016	618,092		$	24.88

(1): The number of shares granted under the PSU award, assumes Holdings will attain a performance target at 100%. The PSUs will vest ratably based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%.

NOTE 5—INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate, adjusted for discrete items, if any. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions. The Company recognizes income tax-related interest expense and penalties as income tax expense and general and administrative expense, respectively.

The effective tax rate based on the projected annual taxable income for the year ending December 31, 2016 is 39.0%. The effective tax rate for the three months ended March 31, 2016 and March 31, 2015 was 39.0%. The Company's tax rate for the three months ended March 31, 2016 and March 31, 2015 differs from the statutory tax rate primarily due to state income taxes.

NOTE 6—FAIR VALUE MEASUREMENTS

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts business.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:


Level 1:		Quoted market prices in active markets for identical assets or liabilities.
Level 2:		Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3:		Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements. The following table summarizes the fair value hierarchy of the Company's financial assets carried at fair value on a recurring basis as of March 31, 2016:

			Fair Value Measurements at March 31, 2016 Using

(In thousands)	Total Carrying Value at March 31, 2016(1)		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
*Other long-term assets:*
Money market mutual funds	$	755	$	755	$	—	$	—
Equity securities, available-for-sale:
Mutual fund large U.S. equity		1,856		1,856		—		—
Mutual fund small/mid U.S. equity		2,235		2,235		—		—
Mutual fund international		612		612		—		—
Mutual fund balanced		474		474		—		—
Mutual fund fixed income		1,014		1,014		—		—

Total assets at fair value	$	6,946	$	6,946	$	—	$	—

(1): The investments relate to a non-qualified deferred compensation arrangement on behalf of certain management. The Company has an equivalent liability for this related-party transaction recorded in other long-term liabilities for the deferred compensation obligation.

Valuation Techniques. The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices. See Note 8—Accumulated Other Comprehensive Income (Loss) for the unrealized gain on the equity securities recorded in accumulated other comprehensive income.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

Other Fair Value Measurement Disclosures. The Company is required to disclose the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:

			Fair Value Measurements at March 31, 2016 Using

(In thousands)	Total Carrying Value at March 31, 2016		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Current maturities of corporate borrowings	$	10,195	$	—	$	9,071	$	1,389
Corporate borrowings		1,851,160		—		1,913,867		4,166

Valuation Technique. Quoted market prices and observable market based inputs were used to estimate fair value for Level 2 inputs. The Level 3 fair value measurement represents the transaction price of the corporate borrowings under market conditions.

NOTE 7—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

A rollforward of reserves for theatre and other closure and disposition of assets is as follows:

	Three Months Ended

(In thousands)	March 31, 2016			March 31, 2015
Beginning balance	$	42,973		$	52,835
Theatre and other closure expense		1,508			1,127
Transfer of assets and liabilities		—			59
Foreign currency translation adjustment		255			(1,613	)
Cash payments		(3,303	)		(2,909	)

Ending balance	$	41,433		$	49,499

In the accompanying Consolidated Balance Sheets, as of March 31, 2016, the current portion of the ending balance totaling $7,849,000 is included with accrued expenses and other liabilities and the long-term portion of the ending balance totaling $33,584,000 is included with other long-term liabilities. Theatre and other closure reserves for leases that have not been terminated were recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance.

During the three months ended March 31, 2016 and the three months ended March 31, 2015, the Company recognized theatre and other closure expense of $1,508,000 and $1,127,000, respectively. Theatre and other closure expense included the accretion on previously closed properties with remaining lease obligations.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables present the change in accumulated other comprehensive income (loss) by component:

(In thousands)	Foreign Currency			Pension and Other Benefits			Unrealized Net Gain on Marketable Securities			Unrealized Net Gain from Equity Method Investees' Cash Flow Hedge			Total

Balance, December 31, 2015	$	2,101		$	(3,289	)	$	1,465		$	2,527		$	2,804

Other comprehensive income (loss) before reclassifications		(71	)		4			339			(468	)		(196	)
Amounts reclassified from accumulated other comprehensive income		—			—			(1,783	)		97			(1,686	)

Other comprehensive income (loss)		(71	)		4			(1,444	)		(371	)		(1,882	)

Balance, March 31, 2016	$	2,030		$	(3,285	)	$	21		$	2,156		$	922

(In thousands)	Foreign Currency		Pension and Other Benefits(1)			Unrealized Net Gain on Marketable Securities			Unrealized Net Gain from Equity Method Investees' Cash Flow Hedge			Total

Balance, December 31, 2014	$	729	$	6,675		$	2,677		$	2,763		$	12,844

Other comprehensive income (loss) before reclassifications		976		701			825			(361	)		2,141
Amounts reclassified from accumulated other comprehensive income		—		(10,875	)		(4	)		122			(10,757	)

Other comprehensive income (loss)		976		(10,174	)		821			(239	)		(8,616	)

Balance, March 31, 2015	$	1,705	$	(3,499	)	$	3,498		$	2,524		$	4,228

(1): See Note 9—Employee Benefit Plans for further information regarding amounts reclassified from accumulated other comprehensive income.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

The tax effects allocated to each component of other comprehensive income (loss) is as follows:

	Three Months Ended

	March 31, 2016									March 31, 2015
(In thousands)	Pre-Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized foreign currency translation adjustment	$	(117	)	$	46		$	(71	)	$	1,600		$	(624	)	$	976
Pension and other benefit adjustments:
Net loss arising during the period		—			—			—			(73	)		28			(45	)
Prior service credit arising during the period		—			—			—			1,223			(477	)		746
Amortization of net (gain) loss reclassified into general and administrative: other		7			(3	)		4			(2,786	)		1,087			(1,699	)
Amortization of prior service credit reclassified into general and administrative: other		—			—			—			(2,888	)		1,126			(1,762	)
Curtailment gain reclassified into general and administrative: other		—			—			—			(11,867	)		4,628			(7,239	)
Settlement gain reclassified into general and administrative: other		—			—			—			(288	)		113			(175	)
Marketable securities:
Unrealized net holding gain arising during the period		555			(216	)		339			1,352			(527	)		825
Realized net gain reclassified into investment expense (income)		(2,923	)		1,140			(1,783	)		(6	)		2			(4	)
Equity method investees' cash flow hedge:
Unrealized net holding loss arising during the period		(768	)		300			(468	)		(592	)		231			(361	)
Realized net loss reclassified into equity in earnings of non-consolidated entities		160			(63	)		97			200			(78	)		122

Other comprehensive income (loss)	$	(3,086	)	$	1,204		$	(1,882	)	$	(14,125	)	$	5,509		$	(8,616	)

NOTE 9—EMPLOYEE BENEFIT PLANS

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who were not covered by a collective bargaining agreement. The Company also offered eligible retirees the opportunity to participate in a health plan. Certain employees were eligible for subsidized postretirement medical benefits. The eligibility for these benefits was based upon a participant's age and service as of January 1, 2009. The Company also sponsors a postretirement deferred compensation plan.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 9—EMPLOYEE BENEFIT PLANS (Continued)

On January 12, 2015, the Compensation Committee and all of the Board of Directors of AMC Entertainment Holdings, Inc. adopted resolutions to terminate the AMC Postretirement Medical Plan with an effective date of March 31, 2015. During the three months ended March 31, 2015, the Company notified eligible associates that their retiree medical coverage under the plan would terminate after March 31, 2015. Payments to eligible associates were approximately $4,300,000 during the three months ended March 31, 2015. The Company recorded net periodic benefit credits including curtailment gains, settlement gains, amortization of unrecognized prior service credits and amortization of actuarial gains recorded in accumulated other comprehensive income related to the termination and settlement of the plan during the three months ended March 31, 2015.

Net periodic benefit cost (credit) recognized for the plans during the three months ended March 31, 2016 and the three months ended March 31, 2015 consists of the following:

	Pension Benefits						Other Benefits

(In thousands)	March 31, 2016			March 31, 2015			March 31, 2016		March 31, 2015
Components of net periodic benefit cost:
Service cost	$	—		$	—		$	—	$	2
Interest cost		1,081			1,069			—		7
Expected return on plan assets		(889	)		(1,166	)		—		—
Amortization of net (gain) loss		7			11			—		(2,797	)
Amortization of prior service credit		—			—			—		(2,888	)
Curtailment gain		—			—			—		(11,867	)
Settlement (gain) loss		—			287			—		(575	)

Net periodic benefit cost (credit)	$	199		$	201		$	—	$	(18,118	)

NOTE 10—COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is a party to various ordinary course claims from vendors (including food and beverage suppliers and film distributors), landlords, competitors, and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Management believes that the ultimate outcome of such matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur. An unfavorable outcome might include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

On May 28, 2015, the Company received a Civil Investigative Demand ("CID") from the Antitrust Division of the United States Department of Justice in connection with an investigation under

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 10—COMMITMENTS AND CONTINGENCIES (Continued)

Sections 1 and 2 of the Sherman Antitrust Act. Beginning in May of 2015, the Company also received CIDs from the Attorneys General for the States of Ohio, Texas, Washington, Florida, New York, Kansas, and from the District of Columbia, regarding similar inquiries under those states' antitrust laws. The CIDs request the production of documents and answers to interrogatories concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures. The Company may receive additional CIDs from antitrust authorities in other jurisdictions in which it operates. The Company does not believe it has violated federal or state antitrust laws and is cooperating with the relevant governmental authorities. However, the Company cannot predict the ultimate scope, duration or outcome of these investigations.

On March 3, 2016, the Company and Carmike Cinemas, Inc. ("Carmike") entered into a definitive merger agreement pursuant to which the Company will acquire all of the outstanding shares of Carmike for $30.00 per share in cash or approximately $757,000,000. The Company has entered into a debt financing commitment letter in connection with the merger agreement which provides senior secured incremental term loans in an aggregate amount of up to $325,000,000 and a senior subordinated bridge loan in an aggregate amount of up to $300,000,000 to fund the acquisition. There can be no assurance that the Company will be successful in completing the debt financing on favorable terms as it involves matters outside of the Company's control. The merger is subject to customary closing conditions, including regulatory approval and approval by Carmike's shareholders.

NOTE 11—NEW ACCOUNTING PRONOUNCEMENTS

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employer Share-Based Payment Accounting which is intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. This standard requires entities to record all of the tax effects related to share-based payments at settlement or expiration through the income statement, removes the requirement to delay recognition of a windfall tax benefit until it reduces current taxes payable, requires all tax-related cash flows resulting from share-based payments to be reported as operating activities on the statement of cash flows, permits entities to withhold an amount up to the employee's maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award and permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. This standard will be effective for fiscal years beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which is intended to improve financial reporting about leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial position, results of operations or cash flows.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 11—NEW ACCOUNTING PRONOUNCEMENTS (Continued)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. generally accepted accounting principles when it becomes effective. On July 9, 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year. The new standard is effective for the Company on January 1, 2018. Companies may elect to adopt this application as of the original effective date for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures and has not yet selected a transition method.

NOTE 12—EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted earnings per share includes the effects of unvested RSU's with a service condition only and unvested contingently issuable RSUs and PSUs that have service and performance conditions, if dilutive.

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended

(In thousands)	March 31, 2016		March 31, 2015
Numerator:
Net earnings	$	28,291	$	6,138



Denominator (shares in thousands):
Weighted average shares for basic earnings per common share		98,200		97,919
Common equivalent shares for RSUs and PSUs		7		—

Shares for diluted earnings per common share		98,207		97,919



Basic earnings per common share	$	0.29	$	0.06



Diluted earnings per common share	$	0.29	$	0.06

Vested RSUs and PSU's have dividend rights identical to the Company's Class A and Class B common stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share. Certain unvested RSUs and unvested PSUs are subject to performance conditions and are included in diluted earnings per share, if dilutive, using the treasury stock method based on the number of shares, if any, that would be issuable under the terms of the Company's 2013 Equity Incentive Plan ("Plan") if the end of the reporting period were the end of the contingency period. During the three months ended March 31, 2016, unvested RSUs of 135,981 and unvested PSUs of 100,912 at the minimum performance target, were not included in the computation of diluted earnings

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 12—EARNINGS PER SHARE (Continued)

per share since the shares would not be issuable under the terms of the Plan, if the end of the reporting period were the end of the contingency period.

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10, Financial statements of guarantors and issuers of guaranteed securities registered or being registered. Each of the subsidiary guarantors are 100% owned by AMCEH. The subsidiary guarantees of the Company's Notes due 2022 and the Notes due 2025 are full and unconditional and joint and several and subject to customary release provisions. The Company and its subsidiary guarantors' investments in its consolidated subsidiaries are presented under the equity method of accounting.

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2016:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Revenues
Admissions	$	—		$	481,459		$	1,115		$	—		$	482,574
Food and beverage		—			243,664			488			—			244,152
Other theatre		—			39,107			184			—			39,291

Total revenues		—			764,230			1,787			—			766,017

Operating costs and expenses
Film exhibition costs		—			261,814			540			—			262,354
Food and beverage costs		—			33,871			94			—			33,965
Operating expense		—			201,452			861			—			202,313
Rent		—			124,093			491			—			124,584
General and administrative:
Merger, acquisition and transaction costs		—			4,604			—			—			4,604
Other		—			18,516			—			—			18,516
Depreciation and amortization		—			60,416			14			—			60,430

Operating costs and expenses		—			704,766			2,000			—			706,766

Operating income (loss)		—			59,464			(213	)		—			59,251
Other expense (income)
Equity in net (earnings) loss of subsidiaries		(26,184	)		185			—			25,999			—
Other expense		—			26			—			—			26
Interest expense:
Corporate borrowings		24,840			31,999			—			(31,972	)		24,867
Capital and financing lease obligations		—			2,195			—			—			2,195
Equity in earnings of non-consolidated entities		—			(4,264	)		—			—			(4,264	)
Investment income		(26,947	)		(14,951	)		(28	)		31,972			(9,954	)

Total other expense (income)		(28,291	)		15,190			(28	)		25,999			12,870

Earnings (loss) before income taxes		28,291			44,274			(185	)		(25,999	)		46,381
Income tax provision		—			18,090			—			—			18,090

Net earnings (loss)	$	28,291		$	26,184		$	(185	)	$	(25,999	)	$	28,291

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2015:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Revenues
Admissions	$	—		$	417,689		$	1,005		$	—		$	418,694
Food and beverage		—			200,108			416			—			200,524
Other theatre		—			33,779			127			—			33,906

Total revenues		—			651,576			1,548			—			653,124

Operating costs and expenses
Film exhibition costs		—			222,628			460			—			223,088
Food and beverage costs		—			28,424			84			—			28,508
Operating expense		68			186,352			838			—			187,258
Rent		—			117,484			437			—			117,921
General and administrative:
Merger, acquisition and transaction costs		—			1,578			—			—			1,578
Other		—			4,940			1			—			4,941
Depreciation and amortization		—			57,754			23			—			57,777

Operating costs and expenses		68			619,160			1,843			—			621,071

Operating income (loss)		(68	)		32,416			(295	)		—			32,053
Other expense (income)
Equity in net (earnings) loss of subsidiaries		(3,186	)		295			—			2,891			—
Interest expense:
Corporate borrowings		26,017			34,899			—			(34,837	)		26,079
Capital and financing lease obligations		—			2,373			—			—			2,373
Equity in earnings of non-consolidated entities		—			(1,324	)		—			—			(1,324	)
Investment income		(29,037	)		(10,943	)		—			34,837			(5,143	)

Total other expense (income)		(6,206	)		25,300			—			2,891			21,985

Earnings (loss) before income taxes		6,138			7,116			(295	)		(2,891	)		10,068
Income tax provision		—			3,930			—			—			3,930

Net earnings (loss)	$	6,138		$	3,186		$	(295	)	$	(2,891	)	$	6,138

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2016:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Net earnings (loss)	$	28,291		$	26,184		$	(185	)	$	(25,999	)	$	28,291
Equity in other comprehensive income (loss) of subsidiaries		(1,882	)		226			—			1,656			—
Foreign currency translation adjustment, net of tax		—			(297	)		226			—			(71	)
Pension and other benefit adjustments:
Amortization of net loss reclassified into general and administrative: others, net of tax		—			4			—			—			4
Marketable securities:
Unrealized holding gain arising during the period, net of tax		—			339			—			—			339
Realized net gain reclassified to net investment income, net of tax		—			(1,783	)		—			—			(1,783	)
Equity method investees' cash flow hedge:
Unrealized net holding loss arising during the period, net of tax		—			(468	)		—			—			(468	)
Realized net holding loss reclassified to equity in earnings of non-consolidated entities, net of tax		—			97			—			—			97

Other comprehensive income (loss)		(1,882	)		(1,882	)		226			1,656			(1,882	)

Total comprehensive income	$	26,409		$	24,302		$	41		$	(24,343	)	$	26,409

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2015:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Net earnings (loss)	$	6,138		$	3,186		$	(295	)	$	(2,891	)	$	6,138
Equity in other comprehensive income (loss) of subsidiaries		(8,616	)		536			—			8,080			—
Foreign currency translation adjustment, net of tax		—			440			536			—			976
Pension and other benefit adjustments:
Net loss arising during the period, net of tax		—			(45	)		—			—			(45	)
Prior service credit arising during the period, net of tax		—			746			—			—			746
Amortization of net gain reclassified into general and administrative: other, net of tax		—			(1,699	)		—			—			(1,699	)
Amortization of prior service credit reclassified into general and administrative: other, net of tax		—			(1,762	)		—			—			(1,762	)
Curtailment gain reclassified into general and administrative: other, net of tax		—			(7,239	)		—			—			(7,239	)
Settlement gain reclassified into general and administrative: other, net of tax		—			(175	)		—			—			(175	)
Marketable securities:
Unrealized holding gain arising during the period, net of tax		—			825			—			—			825
Realized net holding gain reclassified to net investment income, net of tax		—			(4	)		—			—			(4	)
Equity method investees' cash flow hedge:
Unrealized holding loss arising during the period, net of tax		—			(361	)		—			—			(361	)
Realized net loss reclassified to equity in earnings of non-consolidated entities, net of tax		—			122			—			—			122

Other comprehensive income (loss)		(8,616	)		(8,616	)		536			8,080			(8,616	)

Total comprehensive income (loss)	$	(2,478	)	$	(5,430	)	$	241		$	5,189		$	(2,478	)

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

As of March 31, 2016:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non-Guarantors		Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Assets
Current assets:
Cash and equivalents	$	1,944		$	63,510		$	42,473	$	—		$	107,927
Receivables, net		—			84,813			235		—			85,048
Other current assets		—			92,396			1,302		—			93,698

Total current assets		1,944			240,719			44,010		—			286,673
Investment in equity of subsidiaries		1,646,593			33,857			—		(1,680,450	)		—
Property, net		—			1,409,404			230		—			1,409,634
Intangible assets, net		—			235,508			—		—			235,508
Intercompany advances		1,757,647			(1,764,109	)		6,462		—			—
Goodwill		(2,143	)		2,412,723			—		—			2,410,580
Deferred tax asset		299			105,310			—		—			105,609
Other long-term assets		9,202			473,852			13		—			483,067

Total assets	$	3,413,542		$	3,147,264		$	50,715	$	(1,680,450	)	$	4,931,071



Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—		$	240,420		$	387	$	—		$	240,807
Accrued expenses and other liabilities		10,408			130,481			148		—			141,037
Deferred revenues and income		—			183,072			—		—			183,072
Current maturities of corporate borrowings and capital and financing lease obligations		8,806			10,185			—		—			18,991

Total current liabilities		19,214			564,158			535		—			583,907
Corporate borrowings		1,846,994			4,166			—		—			1,851,160
Capital and financing lease obligations		—			90,992			—		—			90,992
Exhibitor services agreement		—			373,010			—		—			373,010
Other long-term liabilities		—			468,345			16,323		—			484,668

Total liabilities		1,866,208			1,500,671			16,858		—			3,383,737
Temporary equity		1,080			—			—		—			1,080
Stockholders' equity		1,546,254			1,646,593			33,857		(1,680,450	)		1,546,254

Total liabilities and stockholders' equity	$	3,413,542		$	3,147,264		$	50,715	$	(1,680,450	)	$	4,931,071

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

As of December 31, 2015:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments			Consolidated AMC Entertainment Holdings, Inc.

Assets
Current assets:
Cash and equivalents	$	1,944		$	167,023		$	42,283		$	—		$	211,250
Receivables, net		(21	)		105,477			53			—			105,509
Other current assets		—			96,302			1,306			—			97,608

Total current assets		1,923			368,802			43,642			—			414,367
Investment in equity of subsidiaries		1,638,903			31,609			—			(1,670,512	)		—
Property, net		—			1,401,686			242			—			1,401,928
Intangible assets, net		—			237,376			—			—			237,376
Intercompany advances		1,805,829			(1,811,112	)		5,283			—			—
Goodwill		(2,143	)		2,408,834			—			—			2,406,691
Deferred income tax asset		295			125,903			—			—			126,198
Other long-term assets		9,686			492,057			14			—			501,757

Total assets	$	3,454,493		$	3,255,155		$	49,181		$	(1,670,512	)	$	5,088,317



Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—		$	312,591		$	434		$	—		$	313,025
Accrued expenses and other liabilities		7,188			151,619			(143	)		—			158,664
Deferred revenues and income		—			221,679			—			—			221,679
Current maturities of corporate borrowings and capital and financing lease obligations		8,806			9,980			—			—			18,786

Total current liabilities		15,994			695,869			291			—			712,154
Corporate borrowings		1,898,432			4,166			—			—			1,902,598
Capital and financing lease obligations		—			93,273			—			—			93,273
Exhibitor services agreement		—			377,599			—			—			377,599
Other long-term liabilities		—			445,345			17,281			—			462,626

Total liabilities		1,914,426			1,616,252			17,572			—			3,548,250
Temporary equity		1,364			—			—			—			1,364
Stockholders' equity		1,538,703			1,638,903			31,609			(1,670,512	)		1,538,703

Total liabilities and stockholders' equity	$	3,454,493		$	3,255,155		$	49,181		$	(1,670,512	)	$	5,088,317

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2016:

(In thousands)	AMCEH			Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments		Consolidated AMC Entertainment Holdings, Inc.

Cash flows from operating activities:
Net cash provided by operating activities	$	7,092		$	15,164		$	615		$	—	$	22,871

Cash flows from investing activities:
Capital expenditures		—			(57,650	)		(7	)		—		(57,657	)
Acquisition of Starplex, net of cash acquired		—			400			—			—		400
Investments in non-consolidated entities, net		—			(9	)		—			—		(9	)
Proceeds from disposition of long-term assets		—			5,390			—			—		5,390
Other, net		—			251			—			—		251

Net cash used in investing activities		—			(51,618	)		(7	)		—		(51,625	)

Cash flows from financing activities:
Cash used to pay dividends		(19,803	)		—			—			—		(19,803	)
Deferred financing fees		(501	)		—			—			—		(501	)
Payments under revolving credit facility		(50,000	)		—			—			—		(50,000	)
Principal payments under capital and financing lease obligations		—			(2,076	)		—			—		(2,076	)
Principle payments under Term Loan		(2,202	)		—			—			—		(2,202	)
Change in intercompany advances		65,414			(64,235	)		(1,179	)		—		—

Net cash used in financing activities		(7,092	)		(66,311	)		(1,179	)		—		(74,582	)

Effect of exchange rate changes on cash and equivalents		—			(748	)		761			—		13

Net decrease in cash and equivalents					(103,513	)		190			—		(103,323	)
Cash and equivalents at beginning of period		1,944			167,023			42,283			—		211,250

Cash and equivalents at end of period	$	1,944		$	63,510		$	42,473		$	—	$	107,927

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2016

(Unaudited)

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

Three months ended March 31, 2015:

(In thousands)	AMCEH		Subsidiary Guarantors			Subsidiary Non-Guarantors			Consolidating Adjustments		Consolidated AMC Entertainment Holdings, Inc.

Cash flows from operating activities:
Net cash provided by operating activities	$	11,443	$	7,991		$	2,129		$	—	$	21,563

Cash flows from investing activities:
Capital expenditures		—		(69,582	)		(8	)		—		(69,590	)
Investments in non-consolidated entities, net		—		(152	)		—			—		(152	)
Other, net		—		(1,636	)		—			—		(1,636	)