Amc Entertainment Inc – ‘10-K’ for 4/3/97 – EX-13

As of:  Monday, 6/30/97   ·   For:  4/3/97   ·   Accession #:  722077-97-15   ·   File #:  1-08747

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        1997 Form 10-K Items                                  48±   242K 
 2: EX-11       Computation of Per Share                               2     11K 
 3: EX-13       Incorpor Anual Report                                 68    339K 
 4: EX-21       Subsidiaries                                           1      5K 
 5: EX-23       Consent                                                1      6K 
 6: EX-27       FDS97                                                  1      8K 

EX-13   —   Incorpor Anual Report

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AMC ENTERTAINMENT INC.          
1997 ANNUAL REPORT            

[PHOTO]           

                                  Where boundaries are erased, vision grows...

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AMC ENTERTAINMENT INC.                                                          

CORPORATE PROFILE                                                               

AMC Entertainment Inc. is an entertainment company principally involved in      
motion picture exhibition in the U.S. through its largest operating subsidiary, 
American Multi-Cinema, Inc. The company is also involved in exhibition in select
international markets.                                                          

As of April 3, 1997, the company owned or operated 228 theatres with 1,957      
screens in 23 states, the District of Columbia, Japan and Portugal.             

*     90 percent of AMC's screens have the #1 or #2 market                      
share in their markets, in terms of box office gross.               

*     73 percent of AMC screens are located in the top 20 U.S.                  
markets.                                                            

*     AMC's average screen count per theatre is 8.6 compared                    
to the industry average of 5.2.                                     

*     Almost 30 percent of AMC's screens are in theatres                        
with 14 or more screens.                                            

AMC common stock trades on the American and Pacific Stock Exchanges under the   
symbol AEN. The preferred stock is traded on the American Stock Exchange under  
the symbol AEN Pr. The company is headquartered in Kansas City, Missouri.       

ABOUT THE COVER                                                                 

[PHOTO]                                                                         

AMC reaches beyond traditional boundaries and standard approaches to broaden    
vision, excite imagination and provide a total entertainment experience.        

TABLE OF CONTENTS                                                               

Financial and Operating Highlights            1                                 
Questions and Answers                         4                                 
Beyond Boundaries                             6                                 
Innovation                                    8                                 
Expansion                                    14                                 
AMC Theatre Locations                        18                                 
Financial Information                        20                                 
Investor Information                         64                                 
Corporate Officers and Directors             65                                 

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FINANCIAL AND OPERATING HIGHLIGHTS                                              

                                                        [Enlarge/Download Table]


(In thousands, except number            April 3,          March 28,         March 30,         March 31,          April 1,
   of theatres and screens)             1997<F1>          1996<F1>          1995<F1>          1994<F1>           1993<F1>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
Total revenues                          $749,597          $655,972          $563,344          $586,300          $403,775 
EBITDA<F2>                              $112,948          $112,555          $ 88,942          $ 98,784          $ 57,345 
Earnings before income taxes<F3>        $ 31,895          $ 46,671          $ 24,978          $ 27,412          $ 13,146 
Number of patrons<F4>                    122,252           114,506           103,148           107,710            99,957 
Number of theatres operated<F4>              228               226               232               236               243 
Number of screens operated<F4>             1,957             1,719             1,630             1,603             1,617 
Screens per theatre<F4>                      8.6               7.6               7.0               6.8               6.7 


Total Revenues              EBITDA<F2>                  Earnings                                                         
in millions                 in millions                 Before Income Taxes<F3>                                          
     in millions                                                                                                         
                                                                                                                         
[GRAPH]                     [GRAPH]                     [GRAPH]                                                          

<FN>                                                                                                                     
<F1> Fiscal year ending April 3, 1997 consists of 53 weeks. All other fiscal                                             
     years have 52 weeks.                                                                                                
<F2> Represents operating income plus depreciation and amortization plus                                                 
     estimated loss on future disposition of assets.                                                                     
<F3> Before extraordinary item.                                                                                          
<F4> Includes managed and owned theatres.                                                                                

AMC ENTERTAINMENT INC.                                              
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FROM THE CHAIRMAN                                                               

To Our Shareholders                                                             

The company achieved                                                            
the highest revenues and                                                        
cash flow in its history                                                        
while opening a record                                                          
314 screens in 17 loca-                                                         
tions, including two                                                            
international theatres.                                                         

Fiscal 1997 proved to be a significant year for AMC. The company achieved the   
highest revenues and cash flow in its history while opening a record 314        
screens in 17 locations, including two international theatres. Thanks to the    
strength of our new megaplexes, we are now firmly positioned as a leading       
exhibitor in the United States with a growing international presence.           

Financial Highlights                                                            

 Total revenues increased 14.3 percent to a record $749.6 million from
$656.0 million last year. Earnings before interest, taxes, depreciation and     
amortization (EBITDA) increased to a record $112.9 million.                     

On a per share basis, earnings before extraordinary item, after     
deducting preferred dividends, were $0.74 in fiscal 1997, compared to $1.21 in  
fiscal 1996. After extraordinary item and preferred dividends, net earnings     
per share were $0.74, compared to net earnings of $0.06 per share last year.    

Our earnings this fiscal year were impacted by three factors. First,      
during the first nine months of the fiscal year, product from the company's     
key suppliers failed to deliver the box office results achieved in the prior    
year. Second, the company experienced expected start-up costs associated with   
the opening of 314 new AMC screens, including 268 megaplex screens. Third,      
general and administrative expenses increased, as anticipated, partially due    
to the company's strategic growth initiative in the United States and           
internationally. Looking ahead, we are encouraged by the potential of           
fiscal 1998, both in terms of the number of new AMC megaplexes coming on line   
and favorable product forecasts from our key film suppliers.                    

Industry Highlights                                                             

The continued success of the AMC megaplex concept has inspired an         
industry-wide movement to build larger theatres. Additionally, the supply of    
film product remains strong in response to the increasing worldwide demand for  
filmed entertainment. The recent success of the re-release of the Star Wars     
Trilogy underscores the importance of the theatrical window in creating a       
film's value and the brand awareness necessary for its success in ancillary     
markets.                                                                        

Growth Plan                                                                     

Our growth plan -- to build megaplexes in major U.S. markets and select   
international markets -- is on target. The success of the AMC megaplexes that we
have opened validates our                                                       

AMC ENTERTAINMENT INC.                                                          
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SHAREHOLDERS' REPORT                                                        

direction and strategy. As we continue to increase the number of megaplexes in  
our circuit, we increase our ability to deliver the finest moviegoing           
experience possible and attract more customers in more markets worldwide.       

Included in our fiscal 1997 theatre openings was the record-breaking AMC  
Ontario Mills 30 in Ontario, California, the largest theatre in the world in    
terms of screen count. In addition, we opened two international theatres, the   
AMC Canal City 13 in Fukuoka, Japan, and the AMC Arrabida                       
20 in Porto, Portugal. Both of these theatres are the largest and among the     
most luxurious theatres in their countries.                                     

The Strength Of Our People                                                      

This year we further strengthened our executive management team by        
expanding the leadership roles of Peter C. Brown and Philip M. Singleton.       
Peter Brown was elevated to president of AMC Entertainment Inc. In addition to  
his duties as AMCE president, Peter will continue to act as chief financial     
officer of the company and all subsidiaries. Phil Singleton was promoted to     
president of American Multi-Cinema, Inc., the theatrical exhibition arm and     
largest operating subsidiary. Both Peter and Phil will continue to report       
directly to me.                                                                 

The strength of any company rests in the talent and dedication of its     
people. Our growth would not be possible without the support of the entire AMC  
family, which now numbers more than 10,000 associates worldwide. I am           
confident in the strong leadership and immense talent of our worldwide team.    
Together, we create the finest moviegoing experience available anywhere in the  
world.                                                                          

AMC is well-positioned for continued growth and success. Our constant     
focus on the customer inspires us to challenge traditional approaches and to    
develop new industry standards. Where boundaries are erased, vision grows. We   
remain committed to changing the way the world sees movies(TM).                 

Stanley H. Durwood                                                              
Chairman of the Board and                                                       
Chief Executive Officer                                                         

[PHOTO]                                                                         

Stanley H. Durwood                                                              

Our constant focus                                                              
on the customer inspires                                                        
us to challenge                                                                 
traditional approaches                                                          
and to develop new                                                              
industry standards.                                                             

AMC ENTERTAINMENT INC.                                              
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FINANCIAL AND OPERATING                                                         

Q+A                                                                             

   PETER C. BROWN       President and Chief Financial Officer,
        AMC Entertainment Inc.

   PHILIP M. SINGLETON  President and Chief Operating Officer,
             American Multi-Cinema, Inc.

QUESTION:   WHAT DISTINGUISHES AMC FROM COMPETING THEATRE CIRCUITS?             

Brown:      Since 1991, we have executed a series of financial                  
       transactions that have led us to become one of the most solidly
        capitalized companies in our industry. This sound financial base
        allows us to continue to invest confidently in what we feel will
    drive our valuation in the future, the AMC megaplex theatre.

Singleton:  Innovation is fundamental to the AMC culture and has  always been   
          our mainstay competitive advantage. For more than three decades we
     have sustained that advantage by constantly responding to the
         customer and continually developing new concepts that enhance the
AMC moviegoing experience.                              

QUESTION:   WHAT INDICATORS DO YOU HAVE THAT AMC'S GROWTH PLAN IS ON            
TRACK?                                                  

Singleton:  Our latest innovation, the AMC megaplex, has become the industry    
benchmark. Other circuits are following our lead. Most  
       importantly, our customers have overwhelmingly embraced our new
 concept, and our new megaplexes are performing very well.
          Virtually every megaplex that we have opened has become one of the
  industry's most successful in terms of attendance and film
revenue.                                                

Brown:      We look at several key measures to evaluate the success of our      
         megaplexes, the four most significant of which are attendance per
         screen, total revenues per patron, theatre-level cash flow before
           rent margin, and return on assets. Our megaplexes have demonstrated
superior results in every one of these key measures.    

AMC ENTERTAINMENT INC.                                                          
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QUESTIONS AND ANSWERS                                             

QUESTION:   COULD YOU COMMENT ON THE RESULTS OF AMC'S GROWTH PLAN?              

Brown:      This year we achieved our goal of adding 314 screens in 17          
    locations, including two international theatres in Japan and
     Portugal. Additionally, at the end of the fiscal year, we had
          another 558 screens in 25 locations under construction, indicating
that we are well on our way toward our fiscal 1998 goal.

QUESTION:   WHAT IMPACT IS AMC'S EXPANSION HAVING ON THE FILM                   
INDUSTRY?                                               

Singleton:  As we open more high-performance megaplexes, the more attractive    
   AMC becomes to film studios. Our goal is to have the screen
     capacity or "shelf space" to play all available film product.
     Studios need a strong theatrical opening of their films in an
      often-crowded marketplace to create the value or word-of-mouth
demand for their film product. Consequently, studios are
          increasingly attracted to our growing portfolio of AMC megaplexes.

QUESTION:   WHAT ARE SOME OF YOUR CRITERIA FOR SELECTING FUTURE                 
MEGAPLEX LOCATIONS?                                     

Singleton:  We look for quality sites in densely populated urban markets.       
       These sites should be sufficiently large to allow us to build a
    theatre with 20 to 30 screens, which would enable us to play
 nearly all available film product. We prefer to build our
          megaplexes in an atmosphere of entertainment-oriented retail where
          our customers can benefit from the synergy of shopping, dining and
other leisure activities.                               

QUESTION:   IS AMC CONCERNED ABOUT A POTENTIAL FOR OVERSCREENING?               

Brown:      AMC's growth strategy emphasizes quality over quantity. We believe  
          that this type of approach will govern development activity. As we
       add new megaplexes, we are taking older-generation theatres off
line, resulting in a smaller aggregate theatre count.   

QUESTION:   HOW DOES AMC PLAN TO INCREASE ATTENDANCE?                           

Singleton:  New AMC megaplexes generate higher attendance and revenues per      
       screen than many of our traditional multiplexes. We are growing
  attendance by changing our circuit portfolio to a megaplex
      profile, as well as by providing an outstanding AMC moviegoing
experience for our patrons.                             

QUESTION:   WHAT MEASURES WERE TAKEN THIS YEAR TO INCREASE THE                  
COMPANY'S VALUE?                                        

Brown:      We continued to invest in our next-generation theatre, the AMC      
     megaplex, both in the United States and internationally. This
          investment should enhance our position in the industry, increasing
our market share and long-term value.                   

[PHOTO]                                                                         

Peter C. Brown (L)                                                              
Philip M. Singleton (R)                                                         

AMC ENTERTAINMENT INC.                                              
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INNOVATION                                                                      

BEYOND                                                                          
BOUNDARIES                                                                  

AMC ENTERTAINMENT INC.                                                          
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EXPANSION                               

AMC is changing the way the world sees movies(TM) by reaching                   
beyond traditional boundaries and standard approaches to                        
create not only a superior moviegoing experience, but a                         
total entertainment experience.                                                 

Where boundaries are erased, vision grows...                              

AMC ENTERTAINMENT INC.                                                    
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INNOVATION                                                                      

OUR MEGAPLEX THEATRES                                                           
ARE SETTING THE INDUSTRY                                                        
STANDARD FOR INNOVATION                                                         

[PHOTO]                                                                         

The AMC Ontario Mills 30 theatre, the world's largest theatre by screen count.  

Even before you arrive at an AMC megaplex, the AMC entertainment experience     
begins. Music fills the parking lot, and at many locations, sidewalk            
entertainment, such as clowns and jugglers, delights patrons of all ages. If    
you have not taken advantage of AMC's TeleTicket(TM) sales system, an abundance 
of cashier stations expedites ticket purchases. Inside the theatre, personal    
touches are everywhere. From efficiently designed concession areas with         
delicious movie fare, to flowers and lotion in the ladies' room, AMC's          
commitment to customer enjoyment and comfort sets the tone. Inside the          
auditoriums, stadium seating guarantees that all seats are the "best in the     
house" by providing an unobstructed view of the screen. AMC's exclusive         
LoveSeat(TM)-style seating -- plush, cushioned, high-backed seats with          
double-wide, retractable cupholder armrests -- turns comfortable into cozy.     
AMC totally immerses you in movie magic with its exclusive High Impact Theatre  
System(TM) with wall-to-wall compound-curved Torus(TM) screens that offer       
maximum brilliance and clarity. Sony Dynamic Digital Sound(TM) surrounds you    
with an extraordinary audio environment. So sit back, settle in and enjoy the   
ultimate AMC entertainment experience.                                          

AMC ENTERTAINMENT INC.                                                          
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INNOVATION                                                                

Innovation, the foundation of the AMC culture, has enabled AMC to maintain its  
competitive advantage for more than five decades. Today, AMC is clearly         
positioned at the forefront of the industry with its newest innovation, the     
megaplex.                                                                       

The record-breaking opening of the AMC Grand 24 in Dallas, Texas, in May    
1995 launched the successful beginning of the AMC megaplex era. Now, 366        
megaplex screens later, the company is rapidly becoming a circuit of            
megaplexes, theatres with 14 or more screens with predominately stadium-style   
seating, providing the finest moviegoing experience available.                  

  As of the end of the fiscal year, almost 30 percent of AMC's screens were in
theatres with 14 or more screens. AMC's average screen count per theatre was    
8.6 compared to the industry average of 5.2 screens.<F*>                        

   The AMC megaplex has become the customers' theatre of choice, as demonstrated
by outstanding attendance levels and increased revenues. New AMC megaplexes     
are consistently among the top one percent of the highest-grossing theatres in  
the industry.                                                                   

[FN]                                                                            
<F*>Source: National Association of Theatre Owners                              

"When we go to the movies, we expect the best seat in the house. I enjoy AMC's  
LoveSeat(TM)-style seating because I can relax comfortably and watch the film   
without distraction."                                                           

John Justice                                                                    
Customer                                                                        
AMC West Oaks 14                                                                
Orlando, Florida                                                                

[PHOTO]                                                                         

AMC's exclusive LoveSeat(TM)                                                    
stadium-style seats are plush and                                               
high-backed with double-wide,                                                   
cushioned and retractable                                                       
cupholder armrests that lift so                                                 
moviegoers can "cozy up."                                                       

AMC Milestones                                                                  

1963                                                                            
Builds world's first                                                            
multi-screen theatre                                                            
in a mall.                                                                      

1966                                                                            
Introduces automated                                                            
projection booths.                                                              

1969                                                                            
Opens world's first                                                             
six-screen theatre in                                                           
Omaha, Nebraska.                                                                

1979                                                                            
Establishes industry's                                                          
first management                                                                
training academy.                                                               

1981                                                                            
Introduces cupholder                                                            
armrests.                                                                       

1982                                                                            
Begins installation of                                                          
computerized box offices.                                                       

AMC ENTERTAINMENT INC.                                            
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INNOVATION                                                                      

"AMC's megaplexes are                                                           
growing the moviegoing                                                          
audience. With their many                                                       
amenities, such as stadium                                                      
seating, these theatres                                                         
showcase our films in the                                                       
best possible environment,                                                      
resulting in higher atten-                                                      
dance and grosses."                                                             

Jeff Blake                                                                      
President                                                                       
Sony Distribution                                                               

[PHOTO]                                                                         

The foyer of the AMC Arrabida                                                   
20 in Porto, Portugal, features a                                               
dramatic starlit scene.                                                         

AMC's stadium-style seating                                                     
ensures that every moviegoer has                                                
an unobstructed view of the screen.                                             

[PHOTO]                                                                         

For the fiscal year, on an annual attendance-per-screen basis, AMC megaplexes   
performed 96 percent higher than the industry average<F*> and 38 percent higher 
than traditional AMC multiplexes (theatres generally without stadium-style      
seating and having less than 14 screens). AMC megaplexes also generated 10      
percent more revenue per patron than AMC multiplexes. Their margins, as         
measured by operating-cash-flow-before-rent, were 12.5 percent higher than      
traditional AMC multiplexes, further demonstrating their operational            
efficiency.                                                                     

Along with ticket sales, concession revenues are an important source of income  
for AMC. For the fiscal year, concession sales increased 14.5 percent over the  
prior year, and AMC megaplexes generated 13.5 percent more concession revenue   
per patron than traditional AMC multiplexes.                                    

[FN]                                                                            
<F*>Source: National Association of Theatre Owners                              

AMC ENTERTAINMENT INC.                                                          
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INNOVATION                                            

AMC theatres continue to offer customers a broad selection of quality           
brand-name products. In addition to traditional movie fare, AMC continues to    
introduce new menu items such as frozen carbonated beverages, bottled water     
and fruit drinks, bulk candy and special variety packs for children.            

This year, AMC introduced an innovative concession design at many of its new    
megaplexes. The pass-through concession design increases efficiency and         
customer convenience by separating preparation and delivery, ensuring faster    
transaction times and service, and providing for maximum freshness.             

AMC enhances the overall moviegoing experience through a number of value-added  
national and local marketing programs. These programs have increased            
attendance, strengthened brand loyalty and increased revenues. Many of these    
AMC marketing programs have been recognized for their ingenuity and             
excellence. In fact, for the third consecutive year, AMC was honored with the   
industry's most coveted marketing and customer service awards at                
the 1997 National Association of Theatre Owners (NATO) ShoWest(R) convention    
held in Las Vegas. AMC theatre managers were recognized with The Hollywood      
Reporter T.E.A.M. (Theatre Excellence and Marketing) award, the NATO customer   
service award and the Eastman Kodak(R) marketing award.                         

"AMC's culture encourages                                                       
innovative customer service                                                     
ideas that will continually                                                     
improve the AMC experience.                                                     
We're trained to focus on                                                       
our customers, anticipate                                                       
their needs and provide them                                                    
with the finest entertainment                                                   
experience possible."                                                           

John Greiner                                                                    
Managing Director,                                                              
AMC Burbank 28                                                                  
Burbank, California                                                             
Winner of the 1997 ShoWest(R)                                                   
Customer Service Award                                                          

[PHOTO]                                                                         

The AMC pass-through concession                                                 
design separates preparation and                                                
delivery, ensuring  faster transaction                                          
times and service, and providing for                                            
maximum freshness.                                                              

AMC Milestones cont.                                                            

1985                                                                            
Opens its first overseas                                                        
theatre in England.                                                             

1987                                                                            
Opens world's first                                                             
14-screen theatre in                                                            
Century City, California.                                                       

1989                                                                            
Develops proprietary High                                                       
Impact Theatre System                                                           
(HITS(TM)) for maximum                                                          
sound reproduction.                                                             

1990                                                                            
Establishes MovieWatcher(R)                                                     
program, the first wide-scale                                                   
program to reward frequent                                                      
moviegoers.                                                                     

1990                                                                            
Pioneers an ATM-style                                                           
ticketing system, allowing                                                      
customers to use                                                                
credit cards.                                                                   

1991                                                                            
Introduces unique                                                               
"Silence is Golden(R)"                                                          
program, encouraging                                                            
patron courtesy.                                                                

AMC ENTERTAINMENT INC.                                            
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INNOVATION                                                                      

[PHOTO]                                                                         

A conceptual drawing of the                                                     
innovative AMC Maihama Station                                                  
16 in the world-class urban resort                                              
district of Maihama, Japan, next to                                             
Tokyo Disneyland(R) theme park.                                                 

The company's premier marketing program, the AMC MovieWatcher(R) club,    
rewards frequent moviegoing and continues to be the only one of its kind in the 
industry. This year, the club achieved a significant membership milestone of    
one million avid AMC moviegoers. The MovieWatcher(R) club enhances              
AMC brand loyalty and provides AMC with an extensive lifestyle and demographic  
database for research, analysis and direct marketing programs.                  

AMC continued to enhance national marketing programs by developing        
high-profile, third-party affiliations to cross-promote and drive incremental   
attendance. These affiliations include The Coca-Cola Company, Planet Hollywood  
International, Inc., Burger King Corporation and The Walt Disney World(R)       
Resort, as well as all major film studios. AMC also has established numerous    
major league sports tie-ins, including promotions with the National Football    
League(R) organization and the Super Bowl(R) game.                              

AMC ENTERTAINMENT INC.                                                          
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INNOVATION                                

AMC continually strives to be a responsible corporate citizen and a good  
neighbor in the communities it serves. AMC's "Read for the Stars(R)" program    
encourages children to read during the summer. This year, AMC worked with the   
U.S. Department of Education's "Read Write Now" program to promote tutorial     
reading programs during the summer.                                             

New AMC theatres open with a series of special fundraising events and     
benefits, usually tied in with film premieres that demonstrate a long-term      
commitment to serving the community. Nonprofit organizations such as Big        
Brothers/Big Sisters, as well as Variety Club and numerous other charities,     
have been the beneficiaries of such events.                                     

AMC is already at work on the next evolution of moviegoing. Programmable  
lobbies offering interactive experiences, trams to and from parking lots,       
improved comfort amenities and newer and faster ways to serve customers are     
already in design for AMC's next generation of world-class theatres.            

[PHOTO]                                                                         

AMC's 42nd Street 25 theatre in                                                 
New York City's renowned Times                                                  
Square will offer spectacular views                                             
and film imaging innovations.                                                   

AMC Milestones cont.                                                            

1991                                                                            
Introduces TeleTicket(TM)                                                       
system, allowing patrons                                                        
to purchase tickets in                                                          
advance by telephone.                                                           

1992                                                                            
Installs the largest Torus(TM)                                                  
compound-curved screen                                                          
in North America.                                                               

1994                                                                            
Announces plans to install                                                      
Sony Dynamic Digital                                                            
Sound(TM) (SDDS(TM)) in                                                         
all AMC auditoriums.                                                            

1995                                                                            
Opens the AMC Grand 24                                                          
in Dallas, Texas, launching                                                     
the era of the AMC megaplex.                                                    

1996                                                                            
Begins exporting its                                                            
new-generation theatre                                                          
concept to the Pacific Rim.                                                     

1996                                                                            
Opens world's largest                                                           
theatre by screen count,                                                        
the AMC Ontario Mills 30                                                        
in Ontario, California.                                                         

AMC ENTERTAINMENT INC.                                            
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EXPANSION                                                                       

OUR EXPANSION BRINGS        
MORE MOVIES TO MORE       
PEOPLE WORLDWIDE        

Since its opening in December 1996, the AMC Arrabida 20 in Porto, Portugal, is  
that country's highest-grossing theatre.                                        

AMC's growth plan is on target. As of April 3, 1997, AMC had 1,957 screens in   
228 theatres around the world. Of the 314 new screens the company added last    
year, 308 were in new locations and 6 were the expansion of an existing         
theatre. The company has another 558 screens in construction and expects to     
open approximately 700 screens by the end of fiscal 1998. As planned, AMC is    
replacing some older existing theatres with new-generation megaplexes.          

AMC's focus is on quality rather than quantity. The company continues to  
target sites in densely populated urban markets that can support a 20- to       
30-screen theatre, which will dominate its market and generate higher returns.  

AMC ENTERTAINMENT INC.                                                          
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EXPANSION                                 

The company also targets locations near entertainment-oriented retail.    
Whether the theatre is the centerpiece of a mega-mall, such as the AMC Ontario  
Mills 30, or a free-standing theatre like the AMC Pleasure Island 10 (expanding 
to a 24-screen complex in fiscal 1998) at The Walt Disney World(R) Resort and   
adjacent to the Pleasure Island attraction, the combination of the AMC          
entertainment experience with shopping, dining and other leisure activities     
creates an extended entertainment event.                                        

  Among AMC's fiscal 1997 highlights was the opening of the largest theatre in
the world, the AMC Ontario Mills 30, near Los Angeles, which set a record for   
the highest opening weekend film gross in the history of the company. The AMC   
Norwalk 20, also in Los Angeles, opened last May and is consistently among      
the industry's top 10 highest-grossing theatres. Another new megaplex, the AMC  
Ahwatukee 24 in Phoenix, is the highest-grossing theatre in Arizona and among   
the top one percent of the industry's highest-grossing theatres. The AMC        
Lennox 24 in Columbus, Ohio, was among the top 10 theatres in the industry for  
each of the Star Wars Trilogy films.                                            

AMC's fiscal 1998 domestic expansion plans include the AMC Studio 30 in   
Houston, the largest of six 30-screen theatres that AMC plans to open during    
the year. Earlier this year, AMC announced that the company had signed a lease  
for a 25-screen theatre, the AMC 42nd Street 25, located in New York City's     
renowned Times Square.                                                          

"As one of the key                                                              
anchors of many of our                                                          
Mills developments, AMC                                                         
generates a huge attendance                                                     
base, which has helped                                                          
attract other entertain-                                                        
ment-related businesses.                                                        
AMC, like the Mills                                                             
Corporation, is a quality,                                                      
customer-oriented organi-                                                       
zation. They have top-notch                                                     
people who know how to                                                          
build and operate the kind                                                      
of theatres that keep                                                           
customers coming back                                                           
again and again."                                                               

Laurence Siegel                                                                 
Chairman and                                                                    
Chief Executive Officer                                                         
The Mills Corporation                                                           
Shopping Center Developer                                                       

[PHOTO]                                                                         

The AMC Ahwatukee 24 in                                                         
Phoenix is the highest-grossing                                                 
theatre in Arizona.                                                             

Fiscal 1997 Openings                                                            

AMC Canal City 13                                                               
Fukuoka, Japan                                                                  
April 20                                                                        

AMC Carolina Pavilion 22                                                        
Charlotte                                                                       
May 10                                                                          

AMC Norwalk 20                                                                  
Los Angeles                                                                     
May 10                                                                          

AMC Merchants Crossing 16                                                       
Fort Myers                                                                      
May 17                                                                          

AMC Deerbrook 24                                                                
Houston                                                                         
May 24                                                                          

AMC Palace 9                                                                    
Fort Worth                                                                      
May 24                                                                          

AMC Arrowhead 14                                                                
Phoenix                                                                         
August 2                                                                        

AMC Celebration 2                                                               
Orlando                                                                         
October 25                                                                      

AMC Tallahassee 20                                                              
Tallahassee                                                                     
November 15                                                                     

AMC Ahwatukee 24                                                                
Phoenix                                                                         
December 13                                                                     

AMC North DeKalb 16                                                             
Atlanta                                                                         
December 13                                                                     

AMC Ontario Mills 30                                                            
Los Angeles                                                                     
December 13                                                                     

AMC Lennox 24                                                                   
Columbus                                                                        
December 18                                                                     

AMC Arrabida 20                                                                 
Porto, Portugal                                                                 
December 20                                                                     

AMC Marina Pacifica 12                                                          
(6-screen expansion)                                                            
Long Beach                                                                      
January 10                                                                      

AMC West Oaks 14                                                                
Orlando                                                                         
March 21                                                                        

AMC Indian River 24                                                             
Vero Beach                                                                      
March 28                                                                        

AMC West Olive 16                                                               
St. Louis                                                                       
April 3                                                                         

AMC ENTERTAINMENT INC.                                            
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EXPANSION                                                                       

Scheduled Fiscal 1998                                                           
Openings                                                                        

First Quarter                                                                   

AMC Fullerton 20                                                                
(10-screen expansion)                                                           
Los Angeles                                                                     

AMC Huebner Oaks 24                                                             
San Antonio                                                                     

AMC Puente Hills 20                                                             
Los Angeles                                                                     

AMC Studio 30                                                                   
Houston                                                                         

Second Quarter                                                                  

AMC BarryWoods 24                                                               
Kansas City                                                                     

AMC Mercado 20                                                                  
San Jose                                                                        

AMC Oak View 24                                                                 
Omaha                                                                           

AMC Orange Park 24                                                              
Jacksonville                                                                    

AMC Pleasure Island 24                                                          
(14-screen expansion)                                                           
Orlando                                                                         

AMC Rolling Hills 20                                                            
(14-screen expansion)                                                           
Los Angeles                                                                     

AMC Saratoga 14                                                                 
San Jose                                                                        

Third Quarter                                                                   

AMC Arizona Center 24                                                           
Phoenix                                                                         

AMC Covina 30                                                                   
Los Angeles                                                                     

[PHOTO]                                                                         

   The AMC Canal City 13 in Fukuoka, Japan, has captured more than 50 percent of
the market since its opening in April 1996.                                     

In April 1996, AMC began exporting its new-generation theatre concept with
the opening of the AMC Canal City 13 theatre in Fukuoka, Japan. Since its       
opening, the theatre has captured more than 50 percent of the market. Overall   
moviegoing in Fukuoka has increased approximately 30 percent since the theatre  
opened.                                                                         

 In December, the company opened the AMC Arrabida 20 in Porto, Portugal. The
theatre is already the highest-grossing theatre in that country.                

AMC's global expansion plans include the Pacific Rim, western Europe and  
Canada. In addition to sites in Japan, Hong Kong, Spain and Portugal, the       
company also is monitoring sites in South Korea, China, Taiwan, Italy, France,  
Germany and the United Kingdom. These countries are greatly underscreened yet   
are active consumers of filmed entertainment. The continued increase in         
international box-office revenues combined with the AMC megaplex concept        
creates a tremendous growth opportunity in the international marketplace.       

AMC ENTERTAINMENT INC.                                                          
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EXPANSION                                   

   Construction for the AMC Festival Walk 11 in Hong Kong will begin this summer
with completion scheduled for spring 1998. The theatre, part of the renowned    
Festival Walk development, will have direct access to rail and subway           
transportation systems, making it easily accessible from as far away as         
mainland China.                                                                 

AMC will soon begin construction of the AMC Maihama Station 16 in the     
world-class urban resort district of Maihama, Japan and next to Tokyo           
Disneyland(R) theme park. The theatre is scheduled for completion in fall 1998  
and will be the largest in Japan in terms of screen count and square footage.   

  The company also announced plans to build three 24-screen theatres in Spain,
which include two in Barcelona and one in the city of Palma on the island of    
Mallorca. The AMC Terrassa 24, north of Barcelona, will be AMC's next           
international theatre, scheduled to open in early 1998.                         

The appeal of AMC's entertainment experience is universal. With each new  
megaplex opening, AMC is further establishing itself as the world's preeminent  
motion picture exhibitor and is changing the way the world sees movies(TM).     

"As a teenager I remember                                                       
going to the AMC                                                                
Northtown Mall 6 theatre                                                        
in Dallas. That was 25 years                                                    
ago, but I remember it being                                                    
the newest and best thing                                                       
going. Today, I go to the                                                       
AMC Deerbrook 24 in                                                             
Houston and take my own                                                         
family. AMC continues to                                                        
offer the best moviegoing                                                       
experience available."                                                          

Mary Lou Sinclair                                                               
Customer                                                                        
AMC Deerbrook 24                                                                
Houston, Texas                                                                  

AMC has more than a third                                                       
of the screens in the Houston                                                   
market, including the AMC                                                       
Deerbrook 24 theatre.                                                           

[PHOTO]                                                                         

Scheduled Fiscal 1998                                                           
Openings                                                                        

Third Quarter cont.                                                             

AMC First Colony 24                                                             
Houston                                                                         

AMC Grapevine 30                                                                
Dallas                                                                          

AMC Gulf Pointe 30                                                              
Houston                                                                         

AMC Highlands Ranch 24                                                          
Denver                                                                          

AMC Midlands 30                                                                 
Chicago                                                                         

AMC Olathe 30                                                                   
Kansas City                                                                     

AMC Southlake Pavilion 24                                                       
Atlanta                                                                         

AMC Southroads 20                                                               
Tulsa                                                                           

AMC Town Center 20                                                              
Kansas City                                                                     

AMC Westminster                                                                 
Promenade 24                                                                    
Denver                                                                          

Fourth Quarter                                                                  

AMC Aventura 24                                                                 
Miami                                                                           

AMC Cantera 30                                                                  
Chicago                                                                         

AMC Esplanade 14                                                                
Phoenix                                                                         

AMC Hampton                                                                     
Town Center 24                                                                  
Norfolk                                                                         

AMC Livonia 20                                                                  
Detroit                                                                         

AMC Mesquite 30                                                                 
Dallas                                                                          

AMC ENTERTAINMENT INC.                                            
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AMC THEATRE LOCATIONS<FDAG>                                                     

Arizona                                                                         
Phoenix                                                                         
Ahwatukee 24                                                                    
Arizona Center 24<F*>                                                           
Arrowhead 14                                                                    
Bell Plaza 8                                                                    
Esplanade 14<F*>                                                                
Fiesta Village 6                                                                
Gateway Village 10                                                              
Laguna Village 10                                                               
Lakes 6                                                                         
Metro Village 6                                                                 
Sunvalley Plaza 10                                                              
Three Fountains 4                                                               
Town & Country 6                                                                
Tucson                                                                          
El Con 6                                                                        
Valencia 4                                                                      
California                                                                      
Bakersfield                                                                     
Stockdale 6                                                                     
Los Angeles                                                                     
Alondra 6                                                                       
Burbank 14                                                                      
Century City 14                                                                 
Chino Town Square 10                                                            
Commercenter 6                                                                  
Covina 30<F*>                                                                   
Fine Arts 1                                                                     
Fullerton 10 (20<F**>)                                                          
Hermosa Beach 6                                                                 
Main Place 6                                                                    
Marina Pacifica 12                                                              
Media Center 6                                                                  
Media Center 8                                                                  
Montebello 10                                                                   
Old Pasadena 8                                                                  
Pine Square 16                                                                  
Promenade 16                                                                    
Puente East 4                                                                   
Puente Hills 20<F*>                                                             
Puente Plaza 10                                                                 
Rolling Hills 6 (20<F**>)                                                       
Santa Monica 7                                                                  
Victor Valley 10                                                                
Norwalk 20                                                                      
Ontario Mills 30                                                                
San Diego                                                                       
La Jolla 12                                                                     
Mission Valley 20                                                               
Santee Village 8                                                                
Wiegand Plaza 8                                                                 
San Francisco                                                                   
Kabuki 8                                                                        
Vallejo Plaza 6                                                                 
San Jose                                                                        
Mercado 20<F*>                                                                  
Milpitas 10                                                                     
Oakridge 6                                                                      
Saratoga 14<F*>                                                                 
Sunnyvale 6                                                                     
Town & Country 1                                                                

Colorado                                                                        
Colorado Springs                                                                
Tiffany Square 6                                                                
Denver                                                                          
Buckingham 6                                                                    
Colorado Plaza 6                                                                
Highlands Ranch 24<F*>                                                          
Seven Hills 10                                                                  
Southbridge Plaza 8                                                             
Tiffany Plaza 6                                                                 
Tivoli 12                                                                       
Westminster 5                                                                   
Westminster 6                                                                   
Westminster Promenade 24<F*>                                                    
Delaware                                                                        
Philadelphia Area                                                               
Cinema Center 3                                                                 
Concord 2                                                                       
District of Columbia                                                            
Washington, D.C.                                                                
Courthouse Plaza 8                                                              
Potomac Mills 15                                                                
Skyline Center 12                                                               
Union Station 9                                                                 
Florida                                                                         
Gainesville                                                                     
Oaks 6                                                                          
Oaks West 4                                                                     
Jacksonville                                                                    
Orange Park 24<F*>                                                              
Regency 6                                                                       
Regency Mall 8                                                                  
Miami                                                                           
Aventura 24<F*>                                                                 
Cocowalk 16                                                                     
Coral Ridge 10                                                                  
Fashion Island 16                                                               
Kendall Town & Country 10                                                       
Mall of the Americas 14                                                         
Ocean Walk 10                                                                   
Omni 4                                                                          
Omni 6                                                                          
Ridge Plaza 8                                                                   
Sheridan 12                                                                     
South Dade 8                                                                    
Orlando/Daytona                                                                 
Celebration 2                                                                   
Fashion Village 8                                                               
Interstate 6                                                                    
Lakes Square 12                                                                 
Merritt 6                                                                       
Merritt Square 7/12                                                             
Pleasure Island 10 (24<F**>)                                                    
Volusia Square 8                                                                
West Oaks 14                                                                    
Fort Myers                                                                      
Merchants Crossing 16                                                           
Tallahassee                                                                     
Tallahassee 20                                                                  
Tampa/St. Petersburg                                                            
Clearwater 5                                                                    
Countryside 6                                                                   
Crossroads Center 8                                                             

Horizon Park 4                                                                  
Merchants Walk 10                                                               
Old Hyde Park 7                                                                 
Regency 20                                                                      
Sarasota 6                                                                      
Sarasota Exp 7/12                                                               
Seminole 8                                                                      
Tri-City Plaza 8                                                                
Twin Bays 4                                                                     
Tyrone Square 6                                                                 
Varsity 6                                                                       
West Palm Beach                                                                 
Cross County 8                                                                  
Indian River 24                                                                 
Mizner Park 8                                                                   
Georgia                                                                         
Atlanta                                                                         
Buckhead Backlot 6<F*>                                                          
Cobb Place 8                                                                    
Colonial 18                                                                     
Galleria 8                                                                      
Mansell 14                                                                      
North DeKalb 16                                                                 
Northlake Festival 8                                                            
Phipps Plaza 14                                                                 
Southlake Pavilion 24<F*>                                                       
Illinois                                                                        
Chicago                                                                         
Cantera 30<F*>                                                                  
Midlands 30<F*>                                                                 
Kansas                                                                          
Kansas City                                                                     
Oak Park 6                                                                      
Olathe 30<F*>                                                                   
Town Center 20<F*>                                                              
Louisiana                                                                       
New Orleans                                                                     
Galleria 8                                                                      
Shreveport                                                                      
Bossier 6                                                                       
St. Vincents 6                                                                  
Maryland                                                                        
Washington, D.C. Area                                                           
Academy 6                                                                       
Academy 8                                                                       
Carrollton 6                                                                    
City Place 10                                                                   
Country Club Mall 6                                                             
Rivertowne 12                                                                   
Massachusetts                                                                   
Springfield                                                                     
Hampshire 6                                                                     
Mountain Farms 4                                                                
Michigan                                                                        
Detroit                                                                         
Abbey 8                                                                         
Americana West 6                                                                
Bel-Air Center 10                                                               
Eastland 2                                                                      
Eastland Mall 5                                                                 
Hampton 4                                                                       
Laurel Park 10                                                                  
Livonia 20<F*>                                                                  
Maple 3                                                                         
Old Orchard 3                                                                   
Southfield City 12                                                              
Southland 4                                                                     
Sterling Center 10                                                              
Towne 4                                                                         
Wonderland 6                                                                    
Woods Complex 6                                                                 
Lansing                                                                         
Elmwood Plaza 8                                                                 
Meridian 1/4                                                                    
Meridian 5/8                                                                    
Meridian Mall 6                                                                 
Missouri                                                                        
Kansas City                                                                     
Bannister Square 6                                                              
BarryWoods 24<F*>                                                               
Crown Center 6                                                                  
Independence 20                                                                 
Metro North Plaza 6                                                             
Summit 4                                                                        
Ward Parkway 22                                                                 
St. Louis                                                                       
Crestwood Plaza 10                                                              
Esquire 7                                                                       
Galleria 6                                                                      
Northwest Square 10                                                             
Regency 8                                                                       
Village 6                                                                       
West Olive 16                                                                   
Nebraska                                                                        
Omaha                                                                           
Oak View 24<F*>                                                                 
Westroads 2                                                                     
Westroads 6                                                                     
New Jersey                                                                      
Metro New York                                                                  
Headquarters Plaza 10                                                           
Rockaway 6                                                                      
Rockaway 7/12                                                                   
Philadelphia Area                                                               
Deptford 8                                                                      
Marlton 8                                                                       
Millside 4                                                                      
Quakerbridge 4                                                                  
Vineland 4                                                                      
New York                                                                        
Buffalo                                                                         
Como 8                                                                          
Maple Ridge 8                                                                   
North Carolina                                                                  
Charlotte                                                                       
Carolina Pavilion 22                                                            
Ohio                                                                            
Columbus                                                                        
Dublin Village 18                                                               
Eastland Centre 8                                                               
Eastland Plaza 6                                                                
Lennox 24                                                                       
Westerville 6                                                                   
Oklahoma                                                                        
Oklahoma City                                                                   
Memorial Square 8                                                               
Northwest 8                                                                     
Robinson Crossing 6                                                             

AMC ENTERTAINMENT INC.                                                          
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AMC theatre locations<FDAG>                                               

Tulsa                                                                           
Southroads 20<F*>                                                               
Pennsylvania                                                                    
Harrisburg                                                                      
Colonial Commons 9                                                              
Hampden Center 8                                                                
Wonderland 4                                                                    
Philadelphia                                                                    
25th Street 4                                                                   
309 Cinema 9                                                                    
Andorra 8                                                                       
Anthony Wayne 2                                                                 
Granite Run Mall 8                                                              
Marple 10                                                                       
Olde City 2                                                                     
Orleans 8                                                                       
Painters Crossing 9                                                             
Quakertown 6                                                                    
Tilghman Square 8                                                               
Woodhaven 10                                                                    
Texas                                                                           
Dallas/Fort Worth                                                               
Central Park 7                                                                  
Forum 6                                                                         
Glen Lakes 8                                                                    
Grand 24                                                                        
Grapevine 30<F*>                                                                
Green Oaks 8                                                                    
Highland Park 4                                                                 
Hulen 10                                                                        
Irving 8                                                                        
Mesquite 30<F*>                                                                 
Palace 9                                                                        
Prestonwood 5                                                                   
Sundance 11                                                                     
Towne Crossing 8                                                                
Houston                                                                         
Almeda Square 5                                                                 
Commerce Park 8                                                                 
Deerbrook 8                                                                     
Deerbrook 24                                                                    
Festival 6                                                                      
First Colony 24<F*>                                                             
Greens Crossing 6                                                               
Gulf Pointe 30<F*>                                                              
Meyer Park 16                                                                   
Northoaks 6                                                                     
Studio 30<F*>                                                                   
Town & Country 10                                                               
Westchase 5                                                                     
Willowbrook 10                                                                  
San Antonio                                                                     
Huebner Oaks 24<F*>                                                             
Rivercenter 9                                                                   
Virginia                                                                        
Norfolk/Portsmouth/                                                             
Newport News                                                                    
Circle 4                                                                        
Coliseum 4                                                                      
Hampton Town Center 24<F*>                                                      
Lynnhaven 8                                                                     
Newmarket 4                                                                     
Patrick Henry 7                                                                 
Washington                                                                      
Seattle/Tacoma                                                                  
Center Plaza 6                                                                  
Narrows Plaza 8                                                                 
Seatac 6                                                                        
Japan                                                                           
Fukuoka                                                                         
Canal City 13                                                                   
Portugal                                                                        
Porto                                                                           
Arrabida 20                                                                     

[FN]                                                                            
<FDAG> As of 5/1/97                                                             
<F*> FY 1998 Opening                                                        
<F**> FY 1998 Expansion                                                       

AMC MARKETS SERVED                                        

UNITED STATES                       

JAPAN              PORTUGAL                                                     

AMC ENTERTAINMENT INC.                                            
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SELECTED FINANCIAL DATA                                                         

                                                        [Enlarge/Download Table]

                                                          April 3,     March 28,    March 30,      March 31,    April 1,    
(Dollars in thousands, except per share data)           1997<F1><F2>  1996<F1><F2> 1995<F1><F2>  1994<F1><F2>   1993<F2>    
------------------------------------------------------------------------------------------------------------------------    
                                                                                                                            
Statement of Operations Data:                                                                                               
   Total revenues                                        $ 749,597      $655,972     $563,344     $ 586,300     $403,775    
   Total cost of operations                                580,002       491,358      432,763       446,957      308,848    
   General and administrative                               56,647        52,059       41,639        40,559       37,582    
   Depreciation and amortization                            59,803        43,886       37,913        38,048       28,175    
   Estimated loss on future disposition of assets                -             -            -             -        2,500    
                                                         ---------------------------------------------------------------    
   Operating income                                         53,145        68,669       51,029        60,736       26,670    
   Interest expense                                         22,022        28,828       35,908        36,375       31,401    
   Investment income                                           856         7,052       10,013         1,156        8,239    
   Minority interest                                             -             -            -         1,599            -    
   Gain (loss) on disposition of assets                        (84)         (222)        (156)          296        9,638    
                                                         ---------------------------------------------------------------    
   Earnings before income taxes                                                                                             
      and extraordinary item                                31,895        46,671       24,978        27,412       13,146    
   Income tax provision                                     12,900        19,300       (9,000)       12,100        5,400    
                                                         ---------------------------------------------------------------    
   Earnings before extraordinary item                       18,995        27,371       33,978        15,312        7,746    
   Extraordinary item                                            -       (19,350)           -             -       (6,483)   
                                                         ---------------------------------------------------------------    
   Net earnings                                          $  18,995      $  8,021     $ 33,978     $  15,312     $  1,263    
                                                         ===============================================================    
   Preferred dividends                                       5,907         7,000        7,000           538          256    
                                                         ---------------------------------------------------------------    
   Net earnings for common shares                        $  13,088      $  1,021     $ 26,978     $  14,774     $  1,007    
                                                         ===============================================================    
   Earnings per share before extraordinary item:                                                                            
     Primary                                             $     .74      $   1.21     $   1.63     $     .89     $    .46    
     Fully diluted                                       $     .73      $   1.20     $   1.45     $     .89     $    .46    
   Earnings per share:                                                                                                      
     Primary                                             $     .74      $    .06<F4> $   1.63     $     .89     $    .06<F3>
     Fully diluted                                       $     .73      $    .06<F4> $   1.45     $     .89     $    .06<F3>
   Common dividends per share                            $       -      $      -     $      -     $       -     $   1.14    
   Weighted average number of shares outstanding:                                                                           
     Primary                                                17,726        16,795       16,593        16,521       16,217    
     Fully diluted                                          17,940        17,031       23,509        16,550       16,217    
Balance Sheet Data:                                                                                                         
   Cash, equivalents and investments                     $  24,715      $ 10,795     $140,377     $ 151,469     $ 50,106    
   Total assets                                            718,213       483,458      522,154       501,276      374,102    
   Total debt (including capital lease obligations)        373,724       188,172      267,504       268,188      255,302    
   Stockholders' equity                                    170,012       158,918      157,388       130,404       18,171    
Other Financial Data:                                                                                                       
   EBITDA<F5>                                            $ 112,948      $112,555     $ 88,942     $  98,784     $ 57,345    
   Cash flows provided by operating activities             134,074        96,847       44,366        63,680       29,062    
   Cash flows provided by (used in) investing activities  (283,917)      (66,848)       3,664      (111,505)       4,594    
   Cash flows provided by (used in) financing activities   163,982       (90,437)      (9,116)       56,147      (21,022)   
   Capital expenditures                                    253,380       120,796       56,403        10,651        8,786    

<FN>                                                                                                                        
<F1> Fiscal 1997, 1996, 1995 and 1994 include the effects from the acquisition                                              

     of Exhibition Enterprises Partnership on May 28, 1993.                                                                 
<F2> Fiscal 1997 consists of 53 weeks. All other fiscal years have 52 weeks.                                                
<F3> Fiscal 1993 includes a $6,483 extraordinary loss equal to $.40 per common                                              
     share.                                                                                                                 
<F4> Fiscal 1996 includes a $19,350 extraordinary loss equal to $1.15 per                                                   
     common share.                                                                                                          
<F5> Represents operating income plus depreciation and amortization plus                                                    
     estimated loss on future disposition of assets. EBITDA is a financial                                                  
     measure commonly used in the Company's industry and should not be                                                      
     construed as an alternative to operating income (as determined in                                                      
     accordance with GAAP). EBITDA as determined by the Company, may not be                                                 
     comparable to EBITDA as reported by other companies. In addition, EBITDA                                               
     is not intended to represent cash flow and does not represent the measure                                              
     of cash available for discretionary uses. EBITDA is a non-GAAP measure,                                                
     but has been used by lenders and stockholders as additional information                                                
     for estimating the Company's value and evaluating its ability to service                                               
     debt.                                                                                                                  

AMC ENTERTAINMENT INC.                                                          
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   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OPERATING RESULTS                                                               

As a result of the commencement of international operations during fiscal       
1997, the Company is disaggregating its domestic and international exhibition   
operations and the Company's on-screen advertising and other business in order  
to provide more information as to the Company's revenues, cost of operations,   
depreciation and amortization, and general and administrative expenses as set   
forth in the table below for the fifty-three and fifty-two week periods ended   
April 3, 1997 and March 28, 1996.                                               

                                                        [Enlarge/Download Table]

                                                                  53 Weeks Ended     52 Weeks Ended                 
                                                                  --------------------------------------------------
                                                                      April 3,          March 28,                   
(Dollars in thousands)                                                  1997              1996              % Change
--------------------------------------------------------------------------------------------------------------------
                                                                                                                    
Revenues                                                                                                            
   Domestic                                                                                                         
     Admissions                                                       $479,629          $431,361              11.2% 
     Concessions                                                       222,945           196,645              13.4  
     Other                                                              15,763            15,096               4.4  
                                                                      ----------------------------------------------
                                                                       718,337           643,102              11.7  
   International                                                                                                    
     Admissions                                                         13,322                 -                 -  
     Concessions                                                         2,222                 -                 -  
     Other                                                                  49                 -                 -  
                                                                      ----------------------------------------------
                                                                        15,593                 -                 -  
   On-screen advertising and other                                      15,667            12,870              21.7  
                                                                      ----------------------------------------------
     Total revenues                                                   $749,597          $655,972              14.3% 
                                                                      ==============================================
Cost of Operations                                                                                                  
   Domestic                                                                                                         
     Film rentals                                                     $239,480          $215,099              11.3% 
     Concession costs                                                   36,045            30,417              18.5  
     Rent                                                               75,116            64,813              15.9  
     Other                                                             198,555           172,087              15.4  
                                                                      ----------------------------------------------
                                                                       549,196           482,416              13.8  
   International                                                                                                    
     Film rentals                                                        7,719                 -                 -  
     Concession costs                                                      703                 -                 -  
     Rent                                                                4,945                 -                 -  
     Other                                                               5,377                 -                 -  
                                                                      ----------------------------------------------
                                                                        18,744                 -                 -  
   On-screen advertising and other                                      12,062             8,942              34.9  
                                                                      ----------------------------------------------
     Total cost of operations                                         $580,002          $491,358              18.0% 
                                                                      ==============================================

AMC ENTERTAINMENT INC.                                                  
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   

                                                        [Enlarge/Download Table]

                                                                  53 Weeks Ended    52 Weeks Ended                
                                                                  ------------------------------------------------
                                                                      April 3,         March 28,                  
(Dollars in thousands)                                                  1997             1996             % Change
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
General and Administrative                                                                                        
   Domestic and corporate                                              $45,558          $44,200              3.1% 
   International                                                         6,864            4,550             50.9  
   On-screen advertising and other                                       4,225            3,309             27.7  
                                                                       -------------------------------------------
     Total general and administrative                                  $56,647          $52,059              8.8% 
                                                                       ===========================================
Depreciation and Amortization                                                                                     
   Domestic and corporate                                              $56,623          $42,550             33.1% 
   International                                                         1,436                -                -  
   On-screen advertising and other                                       1,744            1,336             30.5  
                                                                       -------------------------------------------
     Total depreciation and amortization                               $59,803          $43,886             36.3% 
                                                                       ===========================================

YEARS (53/52 WEEKS) ENDED APRIL 3, 1997 AND MARCH 28, 1996                      

Revenues. Total revenues increased 14.3%, or $93,625,000, during the year (53   
weeks) ended April 3, 1997 compared to the year (52 weeks) ended March 28, 1996.

Total domestic revenues increased 11.7%, or $75,235,000, from the prior year.   
Admissions revenues increased 11.2%, or $48,268,000, due to a 6.4% increase in  
attendance, which contributed $27,658,000 of the increase, and a 4.7% increase  
in average ticket prices, which contributed $20,610,000 of the increase. The    
increase in attendance was due primarily to the Company's megaplex theatres     
(theatres having at least 14 screens with predominately stadium-style seating). 
Attendance at megaplex theatres increased during the year as a result of the    
addition of 12 new megaplex theatres with 248 screens and from the operation for
a full fiscal year of the Company's remaining five domestic megaplex theatres   
with 98 screens that were opened in fiscal 1996. The increase in attendance from
megaplex theatres was partially offset by a decrease in attendance at multiplex 
theatres (theatres generally without stadium-style seating and having less than 
14 screens) and the closure or sale of 15 theatres with 76 screens. Attendance  
at multiplex theatres decreased as a result of competitive factors. Also, during
the first nine months of the fiscal year, attendance at all theatres was        
impacted by film product from the Company's key suppliers which did not deliver 
the results achieved in the prior fiscal year. The increase in average ticket   
prices is due to price increases and the growing number of megaplexes in the    
Company's circuit, which yield higher average ticket prices than multiplexes.   
Concessions revenues at domestic theatres increased by 13.4%, or $26,300,000,   
due to a 6.9% increase in average concessions per patron, which contributed     
$13,692,000 of the increase, and the increase in total attendance, which        
contributed $12,608,000 of the increase. The increase in average concessions    
per                                                                             

AMC ENTERTAINMENT INC.                                                          
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patron is attributable to the introduction of new concessions products and the  
increasing number of megaplexes in the Company's circuit, where concession      
spending per patron is higher than multiplex theatres.                          

Total international revenues were the result of admissions and concessions      
revenues from the Company's two international theatres, the Canal City 13       
located in Fukuoka, Japan and the Arrabida 20 located in Porto, Portugal,       
which opened during the first and third quarters of fiscal 1997, respectively.  
Admissions and concessions revenues accounted for 85% and 14% of total          
international revenues, respectively. The Company's initial attendance at the   
Canal City 13 was negatively impacted by film distributors in Japan who         
restricted the Company's ability to obtain film product until approximately     
two weeks after its competitors had received it. This delay in releasing films  
to the Company has generally been eliminated.                                   

On-screen advertising and other revenues increased 21.7%, or $2,797,000, due    
primarily to an increase in the number of screens served by the Company's       
on-screen advertising business, a result of its expansion program.              

Cost of Operations. Total cost of operations increased 18.0%, or $88,644,000,   
during the year (53 weeks) ended April 3, 1997 compared to the year (52 weeks)  
ended March 28, 1996.                                                           

Total domestic cost of operations increased 13.8%, or $66,780,000, from the     
prior year. Film rentals expense increased 11.3%, or $24,381,000, due to higher 
admissions revenues. As a percentage of admissions revenues, film rentals       
expense was 49.9% in each year. The 18.5%, or $5,628,000, increase in concession
costs is attributable to the increase in concessions revenues. As a percentage  
of concessions revenues, concession costs increased from 15.5% to 16.2% due     
primarily to increases in raw popcorn costs and the lower margins on new        
concessions products. Rent expense increased 15.9%, or $10,303,000, due to the  
higher number of screens in operation. Other cost of operations increased 15.4%,
or $26,468,000, from the prior year due to the higher number of screens in      
operation, $1,825,000 of advertising expenses associated with the opening of new
theatres and higher expenses associated with the Company's theatre management   
development program.                                                            

Total international cost of operations were the result of expenses associated   
with the Company's new theatres in Japan and Portugal. As a percentage of       
admissions revenues, film rentals expense was 57.9% primarily because film      
rentals in Japan are generally higher than those domestically. Concession       
costs were 31.6% of concessions revenues due to the high procurement costs of   
concessions products sourced from the United States. As a percentage of total   
revenues, rent expense was 31.7% as a result of low attendance and admissions   
revenues and the higher real estate costs in Japan.                             

AMC ENTERTAINMENT INC.                                                  
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      
OPERATIONS                                                                      

On-screen advertising and other cost of operations increased 34.9%, or          
$3,120,000, as a result of the higher number of screens served and related      
start-up expenses.                                                              

General and Administrative. General and administrative expenses increased       
8.8%, or $4,588,000, during the year (53 weeks) ended April 3, 1997.            

Domestic and corporate general and administrative expenses increased 3.1%, or   
$1,358,000, primarily due to increases in costs associated with the Company's   
development of theatres and increased pension and retirement expenses of        
$1,992,000. These increases were partially offset by a decrease of $3,500,000   
in the current year's bonus expense and severance payments of $967,000 for two  
former executive officers made during the prior year.                           

International general and administrative expenses increased 50.9%, or           
$2,314,000, due primarily to increases in costs associated with the Company's   
development of new theatres and other expenses to support the Company's         
international operations and expansion plan.                                    

General and administrative expenses associated with on-screen advertising and   
other increased 27.7%, or $916,000, due primarily to an increase in payroll     
and related costs to support the expansion program at the Company's on-screen   
advertising business.                                                           

Depreciation and Amortization. Depreciation and amortization increased 36.3%,   
or $15,917,000, during the year (53 weeks) ended April 3, 1997. This increase   
was caused by an increase in employed theatre assets resulting from the         
Company's expansion plan and an impairment loss of $7,231,000 due to expected   
declines in future cash flows of certain theatres.                              

Operating income. Operating income decreased 22.6%, or $15,524,000, during the  
year (53 weeks) ended April 3, 1997. The decrease in operating income is        
attributable to the attendance and revenue decline at multiplex theatres and    
an increase in domestic and corporate general and administrative expenses of    
$1,358,000, the effects of which were partially offset by an increase in        
attendance and revenues at megaplex theatres. Additionally, operating income    
was reduced by operating losses of $4,587,000 from the Company's international  
theatres in Japan and Portugal, an increase in international general and        
administrative expenses of $2,314,000 and an increase in operating losses of    
$1,647,000 from the Company's on-screen advertising business.                   

Interest Expense. Interest expense decreased 23.6%, or $6,806,000, during the   
year (53 weeks) ended April 3, 1997 compared to the prior year. The decrease    
in interest expense resulted from lower rates under the Company's               

AMC ENTERTAINMENT INC.                                                          
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$425 million credit facility (the "Credit Facility"), which was partially       
offset by an increase in average outstanding borrowings related to the Company's
expansion plan.                                                                 

Investment Income. Investment income decreased 87.9%, or $6,196,000, during     
the year (53 weeks) ended April 3, 1997 due to a decrease in outstanding cash   
and investments compared to the prior year. Cash and investments decreased as   
a result of the Company's redemption of substantially all of its 11 7/8%        
Senior Notes due 2000 ("Senior Notes") and 12 5/8% Senior Subordinated Notes    
due 2002 ("12 5/8% Senior Subordinated Notes") on December 28, 1995.            

Earnings Before Income Taxes and Extraordinary Item. Earnings before income     
taxes and extraordinary item decreased by 31.7%, or $14,776,000, during the     
year (53 weeks) ended April 3, 1997 due primarily to the $15,524,000 decrease   
in operating income.                                                            

Net Earnings. Net earnings before extraordinary item decreased $8,376,000       
during the year (53 weeks) ended April 3, 1997 to $18,995,000 from $27,371,000  
in the prior year. Net earnings for the period were $18,995,000 compared to     
$8,021,000 in the prior year, which included an extraordinary item (a loss of   
$19,350,000 in connection with the early extinguishment of debt). Net earnings  
before extraordinary item per common share, after deducting preferred           
dividends, was $.74 compared to $1.21 for the prior year. Net earnings per      
common share, after deducting preferred dividends, was $.74 compared to $.06    
for the prior year.                                                             

                                                        [Enlarge/Download Table]

                                                      52 Weeks Ended                            52 Weeks Ended        
                                              ------------------------------------------------------------------------
                                              March 28,           % of Total            March 30,           % of Total
(Dollars in thousands)                          1996               Revenues               1995               Revenues 
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
Revenues                                                                                                              
   Admissions                                 $431,361                66%               $371,145                66%   
   Concessions                                 196,645                30                 169,120                30    
   Other                                        27,966                 4                  23,079                 4    
                                              ------------------------------------------------------------------------
     Total                                    $655,972               100%               $563,344               100%   
                                              ========================================================================
Cost of Operations                                                                                                    
   Film rentals                               $215,099                33%               $182,669                33%   
   Concession costs                             30,417                 5                  24,383                 4    
   Rent                                         64,813                10                  60,076                11    
   Other                                       181,029                27                 165,635                29    
                                              ------------------------------------------------------------------------
     Total                                    $491,358                75%               $432,763                77%   
                                              ========================================================================

AMC ENTERTAINMENT INC.                                            
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONTITION AND RESULTS OF OPERATIONS                                   

YEARS (52 WEEKS) ENDED MARCH 28, 1996 AND MARCH 30, 1995                        

Revenues. Total revenues for the year (52 weeks) ended March 28, 1996           
increased 16.4%, or $92,628,000, to $655,972,000 compared to $563,344,000 for   
the year (52 weeks) ended March 30, 1995. Admissions revenues increased 16.2%,  
or $60,216,000, due to a 11.1% increase in attendance, which contributed        
$41,151,000 of the increase, and a 4.4% increase in average ticket prices,      
which contributed $19,065,000 of the increase. The increase in attendance       
resulted from the popularity of films licensed during fiscal 1996 and the net   
addition of 89 screens since fiscal 1995 at new and higher performing           
locations. Attendance during the prior year was impacted by a dispute with a    
major distributor over film licensing terms, which resulted in the Company's    
licensing that distributor's films for a smaller number of its theatres than    
it otherwise would have. In fiscal 1996, the Company licensed that              
distributor's films for what it considers to be a more acceptable number of     
the Company's theatres. Concessions revenues increased by 16.3%, or             
$27,525,000, due to the increase in total attendance, which caused an increase  
of $18,752,000, and a 6.9% increase in average concessions per patron, which    
contributed $8,773,000 of the increase.                                         

Cost of Operations. Total cost of operations increased 13.5%, or $58,595,000,   
in fiscal 1996 to $491,358,000 from $432,763,000 in fiscal 1995. As a           
percentage of total revenues, cost of operations was 75% and 77% in fiscal      
1996 and 1995, respectively. Film rentals expense increased 17.8%, or           
$32,430,000, in fiscal 1996 due to higher attendance levels, which contributed  
$29,637,000 of the increase, and an increase in the percentage of admissions    
paid to film distributors, which caused an increase of $2,793,000. Concessions  
costs, rent and other costs of operations increased 10.5%, or $26,165,000,      
from the prior year due to increases in payroll of $6,641,000, concession       
costs of $6,034,000, rent of $4,737,000 and other theatre operating expenses    
associated with the increase in admissions and concessions revenues and from    
the higher number of screens in operation.                                      

General and Administrative. General and administrative expenses increased       
25.0%, or $10,420,000, to $52,059,000 in fiscal 1996 from $41,639,000 in        
fiscal 1995. The increase in general and administrative expenses is primarily   
attributable to payroll and other costs associated with the Company's           
development of theatres in the United States and certain international          
markets, additional bonus expenses of $3,074,000 related to improved            
profitability of the Company and severance payments of $967,000 for two former  
executive officers. As a percentage of total revenues, general and              
administrative expenses increased to 7.9% in fiscal 1996 from 7.4% in fiscal    
1995.                                                                           

Depreciation and Amortization. Depreciation and amortization increased 15.8%,   
or $5,973,000, to $43,886,000 in fiscal 1996 from $37,913,000 in fiscal 1995.   
This increase resulted primarily from the reduction, effective December 30,     
1994, in the estimated lives of lease rights and location premiums on certain   
smaller theatres to                                                             

AMC ENTERTAINMENT INC.                                                          
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correspond to the base terms of the theatre leases, an increase in employed     
theatre assets and the recognition of an impairment loss of $1,799,000 in       
connection with the adoption 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.                                                       

Interest Expense. Interest expense decreased 19.7%, or $7,080,000, to           
$28,828,000 in fiscal 1996 from $35,908,000 in fiscal 1995. The decrease in     
interest expense resulted from lower interest rates under the Company's Credit  
Facility as compared to the rates under the Senior Notes and 12 5/8% Senior     
Subordinated Notes.                                                             

Investment Income. Investment income decreased 29.6%, or $2,961,000, to         
$7,052,000 in fiscal 1996 from $10,013,000 in fiscal 1995 due primarily to a net
gain of $1,407,000 recorded in fiscal 1995 from the sales of stock of TPI       
Enterprises, Inc. and AmeriHealth, Inc. and a decrease of $1,513,000 in interest
income in fiscal 1996.                                                          

Earnings Before Income Taxes and Extraordinary Item. Earnings before income     
taxes and extraordinary item increased 86.8%, or $21,693,000, to $46,671,000    
in fiscal 1996 from $24,978,000 in fiscal 1995. The Company recorded a          
$19,350,000 extraordinary loss, net of income tax benefit of $13,400,000,       
related to extinguishment of debt in fiscal 1996.                               

Net Earnings. For the year (52 weeks) ended March 28, 1996, the Company recorded
net earnings of $8,021,000, a $25,957,000 decrease from net earnings of         
$33,978,000 for the year (52 weeks) ended March 30, 1995. Net earnings per      
common share, after deducting $7,000,000 of preferred dividends, was $.06 in    
fiscal 1996 compared to $1.63 in fiscal 1995. The decrease in net earnings was  
impacted by an extraordinary loss of $19,350,000 incurred as a result of the    
Company's repurchase of Senior Notes and 12 5/8% Senior Subordinated Notes in   
fiscal 1996. Also, in fiscal 1996 the Company had a tax expense of $19,300,000, 
as opposed to a tax benefit of $9,000,000 in fiscal 1995. The fiscal 1995 tax   
benefit resulted from a $19,792,000 reduction in the deferred tax valuation     
allowance established under Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Earnings per share before extraordinary item, after
deduction of preferred dividends, was $1.21 in fiscal 1996 compared to $1.63 in 
fiscal 1995.                                                                    

LIQUIDITY AND CAPITAL RESOURCES                                                 

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        

AMC ENTERTAINMENT INC.                                                      
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   

economic climate, increase in demand for real estate, demographic changes,      
changes in real estate, zoning and tax laws, the performance of films licensed  
by the Company and other risks and uncertainties.                               

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 admission revenues. The Company is only         
occasionally required to make advance payments or non-refundable guarantees of  
film rentals. Film distributors generally release films which they anticipate   
will be the most successful during the summer and holiday seasons. Consequently,
the Company typically generates higher revenues during such periods. Cash flows 
from operating activities, as reflected in the Consolidated Statements of Cash  
Flows, was $134,074,000, $96,847,000 and $44,366,000 in fiscal years 1997, 1996 
and 1995, respectively. During fiscal 1997, the Company had capital expenditures
of $253,380,000 primarily for the development of new theatres and the addition  
of screens at existing locations. The Company has continued its expansion plan  
by opening 14 leased theatres with 244 screens, two owned theatres with 46      
screens and one theatre with 24 screens leased pursuant to a ground lease.      
Included in these openings is the Company's first theatre in Japan, the Canal   
City 13 in Fukuoka, which opened in April 1996, and the Company's first theatre 
in Portugal, the Arrabida 20 in Porto, which opened in late December 1996. In   
addition, the Company closed or sold 14 leased theatres with 72 screens and one 
owned theatre with four screens, resulting in a circuit total of 1,957 screens  
in 228 theatres as of April 3, 1997.                                            

The Company has plans to open approximately 700 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 $425    
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 April 3, 1997, the Company had
under construction 15 new leased theatre locations totaling 362 screens, four   
new owned theatres with 104 screens, two theatres with 48 screens leased        
pursuant to a ground lease and additions to four existing theatres for 44 new   
screens. All of these theatres and screens will be located in the United States.

On December 28, 1995, the Company completed the redemption of substantially     
all of its Senior Notes and 12 5/8% Senior Subordinated Notes. The Company      
redeemed $99,383,000 of the Senior Notes at a total price of                    

AMC ENTERTAINMENT INC.                                                          
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$1,117.90 per $1,000 principal amount and $95,096,000 of the 12 5/8% Senior     
Subordinated Notes at a total price of $1,144.95 per $1,000 principal amount.   
The Company utilized cash and investments along with borrowings of              
$130,000,000 on a credit facility to redeem the Senior Notes and the 12 5/8%    
Senior Subordinated Notes.                                                      

As a part of the refinancing plan, the Company entered into the Credit          
Facility, which was subsequently 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 April 3, 1997, the Company had outstanding borrowings of            
$110,000,000 under the Credit Facility at an average interest rate of 6.4% per  
annum.                                                                          

Covenants of the Credit Facility, as amended and restated, impose limitations   
on the incurrence of additional indebtedness, creation of liens, change of      
control, transactions with affiliates, mergers, investments, guaranties, asset  
sales, business activities and pledges. The Company is required to maintain     
(i) a maximum net indebtedness to consolidated EBITDA ratio, as defined in the  
Credit Facility (generally, the ratio of the principal amount of outstanding    
indebtedness (less cash and equivalents) to earnings before interest, taxes,    
depreciation, amortization and other noncash charges), of 5.25 to 1 during the  
first four years of the Credit Facility, a ratio of 4.75 to 1 during the fifth  
year, a ratio of 4.25 to 1 in the sixth year and a ratio of 4.0 to 1            
thereafter, and a (ii) minimum cash flow coverage ratio, as defined in the      
Credit Facility (generally, the ratio of consolidated EBITDA for the most       
recent four quarters to the sum of (A) consolidated interest expense for such   
period, (B) amounts paid as dividends, for the optional repurchase or           
redemption of subordinated debt or capital stock, or with respect to the        
principal amount of capital lease obligations during such period, plus (C) the  
current portion of debt with an original maturity exceeding one year), of 1.40  
to 1. If the Company prepays, defeases or repurchases more than $10 million of  
the Notes (as defined below) or any other subordinated debt incurred after      
April 10, 1997, it is required to maintain a maximum net senior indebtedness    
to EBITDA ratio, as defined in the Credit Facility, of 4.5 to 1 during the      
first four years of the Credit Facility and 4.0 to 1 thereafter. As of April    
3, 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.                                

AMC ENTERTAINMENT INC.                                                      
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   

On March 19, 1997, the Company sold $200 million aggregate principal amount of  
9 1/2% Senior Subordinated Notes due 2009 (the "Notes"). Net proceeds from the  
issuance of the Notes (approximately $193.8 million) were used to reduce        
borrowings under the Credit Facility. Amounts repaid under the Credit Facility  
will again be available for borrowing thereunder, and the Company intends to    
utilize this increased availability to continue with its current expansion      
program.                                                                        

The Notes bear interest at the rate of 9 1/2% per annum, payable in March and   
September. The Notes are redeemable at the option of the Company, in whole or   
in part, at any time on or after March 15, 2002 at 104.75% of the principal     
amount thereof, declining ratably to 100% of the principal amount thereof on    
or after March 15, 2006, plus in each case interest accrued to the redemption   
date. Upon a change of control (as defined in the Note Indenture), each holder  
of the Notes will have the right to require the Company to repurchase such      
holder's Notes at a price equal to 101% of the principal amount thereof plus    
accrued and unpaid interest to the date of repurchase. The Notes are            
subordinated to all existing and future senior indebtedness (as defined in the  
Note Indenture) of the Company.                                                 

The Company has agreed to use its best efforts to (i) file and cause to become  
effective by August 16, 1997, a registration statement relating to a            
registered offer to exchange the Notes (the "Exchange Offer") for notes of      
AMCE with terms identical in all material respects to the Notes and (ii) cause  
the Exchange Offer to be consummated by September 15, 1997. If the Exchange     
Offer registration statement is not declared effective by August 16, 1997, the  
Company has agreed that in lieu thereof it will use its best efforts to cause   
to become effective by September 15, 1997 a shelf registration statement with   
respect to the Notes. In the event that either (a) the Exchange Offer           
registration statement is not filed on or prior to June 17, 1997, (b) the       
Exchange Offer registration statement is not declared effective on or prior to  
August 16, 1997 or (c) the Exchange Offer is not consummated or a shelf         
registration statement, with respect to the Notes, is not declared effective    
on or prior to September 15, 1997, the interest rate borne by the Notes will    
increase by 0.50% per annum following June 17, 1997 in the case of clause (a)   
above, following August 16, 1997 in the case of clause (b) above and following  
September 15, 1997 in the case of clause (c) above. The aggregate amount of     
such increase will in no event exceed 1.00% per annum. Upon (x) the filing of   
the Exchange Offer registration statement after June 17, 1997, (y) the          
effectiveness of the Exchange Offer registration statement after August 16,     
1997 or (z) the consummation of the Exchange Offer or the effectiveness of a    
shelf registration statement, as the case may be, after September 15, 1997,     
the interest rate borne by the Notes from the date of filing, effectiveness or  
consummation, as the case may be, will be reduced to 9 1/2%. The Exchange       
Offer registration statement was filed on June 13, 1997.                        

AMC ENTERTAINMENT INC.                                                          
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The Note Indenture contains certain covenants that, among other things,         
restrict the ability of the Company and its subsidiaries to: incur additional   
indebtedness; pay dividends or make distributions in respect of their capital   
stock; purchase or redeem capital stock; enter into transactions with           
stockholders or certain affiliates; or consolidate, merge or sell all or        
substantially all of the Company's assets, other than in certain transactions   
between the Company and one or more of its wholly-owned subsidiaries and other  
than a proposed merger between the Company and its majority stockholder,        
Durwood, Inc. (see discussion below). All of these limitations are subject to   
a number of important qualifications. The Note Indenture does not impose any    
limitation on the incurrence by the Company and its subsidiaries of             
liabilities that are not considered "Indebtedness" under the Note Indenture,    
such as those that would be incurred under certain sale/leaseback               
transactions; nor does the Note Indenture impose any limitation on the amount   
of liabilities incurred by subsidiaries, if any, that might be designated as    
Unrestricted Subsidiaries (as defined therein). Furthermore, there are no       
restrictions on the ability of the Company and its subsidiaries to make         
advances to, or invest in, other entities (including unaffiliated entities)     
and no restrictions on the ability of the Company's subsidiaries to enter into  
agreements restricting their ability to pay dividends or otherwise transfer     
funds to the Company. If the Notes attain "investment grade status" (as         
defined in the Note Indenture), the covenants in the Note Indenture limiting    
the Company's ability to incur indebtedness, pay dividends, acquire stock or    
engage in transactions with affiliates will cease to apply.                     

The Company believes that cash generated from operations, existing cash and     
equivalents, amounts received from sale/leaseback or other comparable           
financing programs which the Company is currently pursuing and the unused       
commitment amount under its Credit Facility will be sufficient to fund          
operations and planned capital expenditures through the end of fiscal 1998.     

During the year (53 weeks) ended April 3, 1997, various holders of the          
Company's $1.75 Cumulative Convertible Preferred Stock (the "Convertible        
Preferred Stock") converted 696,400 shares into 1,200,589 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 14.4%, or $1,007,000, to $5,993,000 for the year (53 weeks) ended     
April 3, 1997 from $7,000,000 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.                                                              

The Convertible Preferred Stock is redeemable in whole or in part, at the       
option of the Company, at a current redemption price of $26 per share,          
declining by $.25 per share on March 15 of each year until March 15, 2001,      

AMC ENTERTAINMENT INC.                                                      
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   

when such price will become fixed at $25. Shares called for redemption may be   
converted by the holders thereof prior to the redemption date.                  

On January 10, 1997, the Company purchased the 20% minority interest in the     
common stock of AMC Philadelphia, Inc., an 80% owned subsidiary, for            
$7,400,000 in cash. The Company utilized borrowings on its Credit Facility to   
finance the purchase. Management does not believe that the acquisition will     
have a significant effect on the Company's results of operations.               

OTHER                                                                           

The Board of Directors has approved an agreement (the "Merger Agreement")       
providing for the merger of the Company and its principal stockholder,          
Durwood, Inc. ("DI"), with the Company remaining as the surviving entity (the   
"Merger"). The Merger has been sought by members of the Durwood family so that  
they may hold their interests in the Company directly instead of indirectly     
through DI and a related entity. In the Merger, stockholders of DI would        
exchange their shares of DI stock for shares of the Company's stock. Although   
the outstanding shares of the Company's Common Stock will increase and the      
outstanding shares of its Class B Stock will decrease if the Merger is          
effected, no aggregate increase in total outstanding shares will occur because  
the shares of the Company owned by DI will be canceled and the shares of the    
Company held by other stockholders would not be exchanged in the Merger. A      
condition to the Merger is that the Merger Agreement receive approval of the    
holders of a majority of the shares of Common Stock other than DI, the Durwood  
family, their spouses and children and officers and directors of the Company.   

DI is primarily a holding company with no significant operations or assets other
than its equity interest in the Company. Management expects that the Merger will
be accounted for as a corporate reorganization and that, accordingly, the       
recorded balances for consolidated assets, liabilities, total stockholders'     
equity and results of operations of the Company would not be affected. If the   
Merger occurs, the Company will be responsible for paying 50% of its costs in   
connection with the Merger; the aggregate merger costs for both the Company and 
DI are estimated to be approximately $2 million.  Management does not believe   
that the transaction will have a significant effect on the Company's financial  
condition, liquidity or capital resources.                                      

The Company is in the process of modifying its computer applications to ensure  
their continuing functionality for the "Year 2000" and beyond. At the present   
time the Company estimates that expenses related to this project will total     
approximately $1.5 million to $2.0 million. These total estimated expenses are  
expected to be incurred during fiscal years 1998 and 1999.                      

AMC ENTERTAINMENT INC.                                                          
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Congress passed legislation to increase the federal minimum hourly wage paid    
to hourly wage employees over a two-year period. This legislation will          
increase the aggregate average hourly wage paid by the Company. The Company     
intends to relieve the cost pressure from the minimum wage increase by          
pursuing better labor and operating efficiencies as well as some price          
adjustments for theatres in certain markets. Such legislation is not expected   
to have a material adverse effect on the Company's results of operations,       
liquidity or financial condition.                                               

IMPACT OF INFLATION                                                             

Historically, the principal impact of inflation and changing prices upon the    
Company has been to increase the costs of the construction of new theatres,     
the purchase of theatre equipment and the utility and labor costs incurred in   
connection with continuing theatre operations. Film rentals expense, the        
largest cost of operations of the Company, is customarily paid as a percentage  
of admissions revenues and hence, while the film rentals expense may increase   
on an absolute basis, the percentage of admissions revenues represented by      
such expense is not directly affected by inflation. Except as set forth above,  
inflation and changing prices have not had a significant impact on the          
Company's total revenues and results of operations.                             

RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS                             

During fiscal 1996, the Financial Accounting Standards Board issued Statement   
of Financial Accounting Standards No. 123, Accounting for Stock-Based           
Compensation. The Statement allows companies to measure compensation cost in    
connection with employee stock compensation plans using a fair value based      
method or to continue to use an intrinsic value based method to account for     
stock options and awards. The Company has chosen to continue using the          
intrinsic value based method while adopting the disclosure-only provisions of   
the pronouncement.                                                              

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. Management has not yet  
determined the impact that this statement will have on the Company.             

AMC ENTERTAINMENT INC.                                                      
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RESPONSIBILITY FOR PREPARATION                                                  
OF FINANCIAL STATEMENTS                                                         

TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC.                                   

The accompanying consolidated financial statements and related notes of AMC     
Entertainment Inc. and subsidiaries were prepared by management in conformity   
with generally accepted accounting principles appropriate in the circumstances. 
In preparing the financial statements, management has made judgments and        
estimates based on currently available information. Management is responsible   
for the information; representations contained elsewhere in this Annual Report  
are consistent with the financial statements.                                   

The Company has a formalized system of internal accounting controls designed    
to provide reasonable assurance that assets are safeguarded and that its        
financial records are reliable. Management monitors the system for compliance   
to measure its effectiveness and recommends possible improvements. In           
addition, as part of their audit of the consolidated financial statements, the  
Company's independent accountants review and test the internal accounting       
controls on a selected basis to establish a basis of reliance in determining    
the nature, extent and timing of audit tests to be applied.                     

The Board of Directors oversees financial reporting and internal accounting     
control through its Audit Committee. This committee meets (jointly and          
separately) with the independent accountants, management and internal auditor   
to monitor the proper discharge of responsibilities relative to internal        
accounting controls and consolidated financial statements.                      

/s/ Peter C. Brown                                                              

Peter C. Brown                                                                  
President and Chief Financial Officer                                           

AMC ENTERTAINMENT INC.                                                          
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   REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF AMC ENTERTAINMENT INC.            
KANSAS CITY, MISSOURI                                                           

We have audited the accompanying consolidated balance sheets of AMC             
Entertainment Inc. and subsidiaries as of April 3, 1997 and March 28, 1996,     
and the related consolidated statements of operations, stockholders' equity     
and cash flows for the year (53 weeks) ended April 3, 1997 and the years (52    
weeks) ended March 28, 1996 and March 30, 1995. These financial statements are  
the responsibility of the Company's management. Our responsibility is to        
express an opinion on these financial statements based on our audits.           

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to        
obtain reasonable assurance about whether the financial statements are free of  
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the consolidated financial position of AMC               
Entertainment Inc. and subsidiaries as of April 3, 1997 and March 28, 1996,     
and the consolidated results of their operations and their cash flows for the   
year (53 weeks) ended April 3, 1997 and the years (52 weeks) ended March 28,    
1996 and March 30, 1995, in conformity with generally accepted accounting       
principles.                                                                     

/s/ Cooper & Lybrand L.L.P.                                                     

Kansas City, Missouri                                                           
May 16, 1997                                                                    

AMC ENTERTAINMENT INC.                                                      
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CONSOLIDATED STATEMENTS OF OPERATIONS                                           

                                                        [Enlarge/Download Table]

                                                                   53 Weeks Ended    52 Weeks Ended    52 Weeks Ended
                                                                   --------------------------------------------------
                                                                       April 3,         March 28,         March 30,  
(In thousands, except per share amount)                                 1997              1996              1995     
---------------------------------------------------------------------------------------------------------------------
                                                                                                                     
Revenues                                                                                                             
   Admissions                                                         $492,951          $431,361          $371,145   
   Concessions                                                         225,167           196,645           169,120   
   Other                                                                31,479            27,966            23,079   
                                                                      -----------------------------------------------
         Total revenues                                                749,597           655,972           563,344   

Expenses                                                                                                             
   Film rentals                                                        247,199           215,099           182,669   
   Concession costs                                                     36,748            30,417            24,383   
   Other                                                               296,055           245,842           225,711   
                                                                      -----------------------------------------------
         Total cost of operations                                      580,002           491,358           432,763   

   General and administrative                                           56,647            52,059            41,639   
   Depreciation and amortization                                        59,803            43,886            37,913   
                                                                      -----------------------------------------------
   Total expenses                                                      696,452           587,303           512,315   
                                                                      -----------------------------------------------
         Operating income                                               53,145            68,669            51,029   

Other expense (income)                                                                                               
   Interest expense                                                                                                  
     Corporate borrowings                                               12,016            18,099            24,502   
     Capital lease obligations                                          10,006            10,729            11,406   
   Investment income                                                      (856)           (7,052)          (10,013)  
   Loss on disposition of assets                                            84               222               156   
                                                                      -----------------------------------------------
Earnings before income taxes and extraordinary item                     31,895            46,671            24,978   
   Income tax provision                                                 12,900            19,300            (9,000)  
                                                                      -----------------------------------------------
Earnings before extraordinary item                                      18,995            27,371            33,978   
   Extraordinary item - Loss on extinguishment of debt                                                               
     (net of income tax benefit of $13,400)                                  -           (19,350)                -   
                                                                      -----------------------------------------------
Net earnings                                                          $ 18,995          $  8,021          $ 33,978   
                                                                      ===============================================
   Preferred dividends                                                   5,907             7,000             7,000   
                                                                      -----------------------------------------------
Net earnings for common shares                                        $ 13,088          $  1,021          $ 26,978   
                                                                      ===============================================
Earnings per share before extraordinary item:                                                                        
   Primary                                                            $    .74          $   1.21          $   1.63   
                                                                      ===============================================
   Fully diluted                                                      $    .73          $   1.20          $   1.45   
                                                                      ===============================================
Earnings per share:                                                                                                  
   Primary                                                            $    .74          $    .06          $   1.63   
                                                                      ===============================================
   Fully diluted                                                      $    .73          $    .06          $   1.45   
                                                                      ===============================================

See Notes to Consolidated Financial Statements.                                                                      

AMC ENTERTAINMENT INC.                                                          
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                                                   CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                                            April 3,          March 28,  
(In thousands, except share amounts)                                                            1997              1996   
-------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
ASSETS                                                                                                                   
Current assets:                                                                                                          
   Cash and equivalents                                                                      $ 24,715           $ 10,795 
   Receivables, net of allowance for doubtful accounts of $704                                                           
    as of April 3, 1997 and $801 as of March 28, 1996                                          42,188             20,503 
   Other current assets                                                                        16,769             15,179 
                                                                                             ----------------------------
     Total current assets                                                                      83,672             46,477 

Property, net                                                                                 543,058            355,485 
Intangible assets, net                                                                         28,679             36,483 
Other long-term assets                                                                         62,804             45,013 
                                                                                             ----------------------------
     Total assets                                                                            $718,213           $483,458 
                                                                                             ============================
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                     
Current liabilities:                                                                                                     
   Accounts payable                                                                          $ 88,367           $ 59,353 
   Accrued expenses and other liabilities                                                      42,459             43,319 
Current maturities of corporate borrowings and capital lease obligations                        3,441              2,904 
                                                                                             ----------------------------
     Total current liabilities                                                                134,267            105,576 

Corporate borrowings                                                                          315,046            126,127 
Capital lease obligations                                                                      55,237             59,141 
Other long-term liabilities                                                                    43,651             33,696 
                                                                                             ----------------------------
     Total liabilities                                                                        548,201            324,540 

Commitments and contingencies                                                                                            

Stockholders' equity:                                                                                                    
$1.75 Cumulative Convertible Preferred Stock, 66 2/3 cents par value; 3,303,600 and                                      
 4,000,000 shares issued and outstanding as of April 3, 1997, and March 28,                                              
 1996, respectively (aggregate liquidation preference of $82,590 and $100,000 as                                         
 of April 3, 1997 and March 28, 1996, respectively)                                             2,202              2,667 

   Common Stock, 66 2/3 cents par value; 6,,604,469 and 5,388,880 shares                                                 
     issued as of April 3, 1997, and March 28, 1996, respectively                               4,403              3,593 

   Convertible Class B Stock, 66 2/3 cents par value; 11,157,000 shares issued and                                       
     outstanding                                                                                7,438              7,438 
   Additional paid-in capital                                                                 107,781            107,986 
   Foreign currency translation adjustment                                                     (2,048)                 - 
   Retained earnings                                                                           50,605             37,603 
                                                                                             ----------------------------
                                                                                              170,381            159,287 
   Less - Common Stock in treasury, at cost, 20,500 shares as of April 3, 1997                                           
     and March 28, 1996                                                                           369                369 
                                                                                             ----------------------------
     Total stockholders' equity                                                               170,012            158,918 
                                                                                             ----------------------------
     Total liabilities and stockholders' equity                                              $718,213           $483,458 
                                                                                             ============================

See Notes to Consolidated Financial Statements.                                                                          

AMC ENTERTAINMENT INC.                                              
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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           

                                                        [Enlarge/Download Table]

                                                                       53 Weeks Ended     52 Weeks Ended    52 Weeks Ended
                                                                       ---------------------------------------------------
                                                                           April 3,          March 28,         March 30,  
(In thousands)                                                               1997              1996              1995     
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          
Increase (Decrease) in Cash and Equivalents                                                                               

Cash flows from operating activities:                                                                                     
   Net earnings                                                            $  18,995         $   8,021        $  33,978   
   Adjustments to reconcile net earnings to                                                                               
    net cash provided by operating activities:                                                                            
      Depreciation and amortization                                           59,803            43,886           37,913   
      Deferred income taxes                                                   (2,476)           (1,328)         (21,285)  
      Gain on sale of available for sale investments                               -                 -           (1,407)  
      Extraordinary item                                                           -            19,350                -   
      Loss on sale of long-term assets                                            84               222              156   
      Change in assets and liabilities:                                                                                   
         Receivables                                                            (609)           (1,537)             807   
         Other current assets                                                  1,578            10,167             (578)  
         Accounts payable                                                     41,486             7,458              341   
         Accrued expenses and other liabilities                               12,441             7,640           (5,763)  
      Other, net                                                               2,772             2,968              204   
                                                                           -----------------------------------------------
            Total adjustments                                                115,079            88,826           10,388   
                                                                           -----------------------------------------------
      Net cash provided by operating activities                              134,074            96,847           44,366   
                                                                           -----------------------------------------------
Cash flows from investing activities:                                                                                     
   Capital expenditures                                                     (253,380)         (120,796)         (56,403)  
   Purchase of real estate investment                                         (7,692)                -                -   
   Acquisition of minority interest                                           (7,400)                -                -   
   Purchases of available for sale investments                                     -          (424,134)        (314,368)  
   Proceeds from maturities of available for sale investments                      -           493,278          364,374   
   Proceeds from sales of available for sale investments                           -                 -           11,689   
   Proceeds from disposition of long-term assets                              15,054             2,243               70   
   Net change in refundable construction advances                            (21,076)          (10,394)            (182)  
   Other, net                                                                 (9,423)           (7,045)          (1,516)  
                                                                           -----------------------------------------------
   Net cash provided by (used in) investing activities                      (283,917)          (66,848)           3,664   
                                                                           -----------------------------------------------
Cash flows from financing activities:                                                                                     
   Net borrowings (repayments) under revolving credit facility               (10,000)          120,000                -   
   Proceeds from issuance of 9 1/2% Senior Subordinated Notes                198,938                 -                -   
   Principal payments under capital lease obligations                         (2,835)           (2,455)          (2,088)  
   Repurchase of 11 7/8% Senior and 12 5/8% Senior Subordinated Notes              -          (220,734)               -   
   Cash overdrafts                                                           (11,673)           22,848                -   
   Other repayments                                                                -              (404)             (34)  
   Proceeds from exercise of stock options                                       140               878              239   
   Dividends paid on preferred stock                                          (5,993)           (7,000)          (7,233)  
   Deferred financing costs and other                                         (4,595)           (3,570)               -   
                                                                           -----------------------------------------------
   Net cash provided by (used in) financing activities                       163,982           (90,437)          (9,116)  
                                                                           -----------------------------------------------
   Effect of exchange rate changes on cash and equivalents                      (219)                -                -   
                                                                           -----------------------------------------------
Net increase (decrease) in cash and equivalents                               13,920           (60,438)          38,914   
Cash and equivalents at beginning of year                                     10,795            71,233           32,319   
                                                                           -----------------------------------------------
Cash and equivalents at end of year                                        $  24,715         $  10,795        $  71,233   
                                                                           ===============================================

AMC ENTERTAINMENT INC.                                                          
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SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:            

During 1995, capital lease obligations of $1,363 were incurred in connection    
with property acquired.                                                         

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                              

                                                        [Enlarge/Download Table]

                                                                       53 Weeks Ended     52 Weeks Ended    52 Weeks Ended
                                                                       ---------------------------------------------------
                                                                           April 3,          March 28,         March 30,  
(In thousands)                                                               1997              1996              1995     
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          
Cash paid during the period for:                                                                                          
   Interest (net of amounts capitalized of $3,344, $3,003 and $870)         $24,188           $34,775           $35,878   
   Income taxes, net                                                          6,285             9,787            14,822   

See Notes to Consolidated Financial Statements.                                                                           

AMC ENTERTAINMENT INC.                                                    
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                 

                                                        [Enlarge/Download Table]

                                                               Preferred Stock                       Common Stock             
(In thousands, except share and per share amounts)        Shares             Amount           Shares             Amount       
------------------------------------------------------------------------------------------------------------------------      
                                                                                                                              
Balance, April 1, 1994                                   4,000,000            $2,667         5,266,830            $3,511      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -            39,550                27      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
                                                         ---------------------------------------------------------------      
Balance, March 30, 1995                                  4,000,000             2,667         5,306,380             3,538      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -            82,500                55      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
Acquisition of Common                                                                                                         
Stock in Treasury                                                -                 -                 -                 -      
                                                         ---------------------------------------------------------------      
Balance, March 28, 1996                                  4,000,000             2,667         5,388,880             3,593      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -            15,000                10      
Preferred Stock conversions                               (696,400)             (465)        1,200,589               800      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
Foreign currency translation adjustment                          -                 -                 -                 -      
                                                         ---------------------------------------------------------------      
Balance, April 3, 1997                                   3,303,600            $2,202         6,604,469            $4,403      
                                                         ===============================================================      

See Notes to Consolidated Financial Statements.                                                                               

AMC ENTERTAINMENT INC.                                                                                                        
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                                                                                             Additional       Foreign Currency
                                                                  Class B Stock               Paid-in           Translation   
                                                          Shares              Amount          Capital           Adjustment    
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              
Balance, April 1, 1994                                  11,157,000            $7,438          $106,951           $     -      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -               212                 -      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
                                                        ----------------------------------------------------------------------
Balance, March 30, 1995                                 11,157,000             7,438           107,163                 -      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -               823                 -      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
Acquisition of Common                                                                                                         
Stock in Treasury                                                -                 -                 -                 -      
                                                        ----------------------------------------------------------------------
Balance, March 28, 1996                                 11,157,000             7,438           107,986                 -      
Net earnings                                                     -                 -                 -                 -      
Exercise of options on Common Stock                              -                 -               130                 -      
Preferred Stock conversions                                      -                 -              (335)                -      
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -      
Foreign currency translation adjustment                          -                 -                 -            (2,048)     
                                                        ----------------------------------------------------------------------
Balance, April 3, 1997                                  11,157,000            $7,438          $107,781           $(2,048)     
                                                        ======================================================================


                                                                                    Common Stock              Total           
                                                          Retained                  in Treasury            Stockholders'      
                                                          Earnings            Shares           Amount         Equity          
------------------------------------------------------------------------------------------------------------------------      
                                                                                                                              
Balance, April 1, 1994                                    $ 9,837                  -           $    -        $130,404         
Net earnings                                               33,978                  -                -          33,978         
Exercise of options on Common Stock                             -                  -                -             239         
Dividends declared: $1.75 Preferred Stock                  (7,233)                 -                -          (7,233)        
                                                          --------------------------------------------------------------      
Balance, March 30, 1995                                    36,582                  -                -         157,388         
Net earnings                                                8,021                  -                -           8,021         
Exercise of options on Common Stock                             -                  -                -             878         
Dividends declared: $1.75 Preferred Stock                  (7,000)                 -                -          (7,000)        
Acquisition of Common                                                                                                         
Stock in Treasury                                               -             20,500             (369)           (369)        
                                                          --------------------------------------------------------------      
Balance, March 28, 1996                                    37,603             20,500             (369)        158,918         
Net earnings                                               18,995                  -                -          18,995         
Exercise of options on Common Stock                             -                  -                -             140         
Preferred Stock conversions                                     -                  -                -               -         
Dividends declared: $1.75 Preferred Stock                  (5,993)                 -                -          (5,993)        
Foreign currency translation adjustment                         -                  -                -          (2,048)        
                                                          --------------------------------------------------------------      
Balance, April 3, 1997                                    $50,605             20,500           $ (369)       $170,012         
                                                          ==============================================================      


AMC ENTERTAINMENT INC.                                              
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES                        

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.                                       

Approximately 78% of AMCE's outstanding voting securities are owned by          
Durwood, Inc. ("DI"). See Note 12 for further description of AMCE's             
transactions with DI.                                                           

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 amounts reported in the financial statements    
and accompanying notes. Although these estimates are based on management's      
knowledge of current events and actions it may undertake in the future, they    
may ultimately differ from actual results.                                      

Principles of Consolidation: The consolidated financial statements include the  
accounts of AMCE and all subsidiaries. All significant intercompany balances    
and transactions have been eliminated.                                          

Fiscal Year: The Company has a 52/53 week fiscal year ending on the Thursday    
closest to the last day of March. The 1997 fiscal year reflects a 53 week       
period, fiscal years 1996 and 1995 each reflect a 52 week period. Fiscal year   
1998 will reflect a 52 week period.                                             

Revenues and Film Rental Costs: Revenues are recognized when admissions and     
concessions sales are received at the theatres. Film rental costs are           
recognized based on the applicable box office receipts and the terms of the     
film licenses.                                                                  

Cash and Equivalents: Cash and equivalents consists of cash on hand and         
temporary cash investments with original maturities of less than thirty days.   
The Company invests excess cash in deposits with major banks and in temporary   
cash investments. Such investments are made only in instruments issued or       
enhanced by high quality financial institutions (investment grade or better).   
Amounts invested in a single institution are limited to minimize risk. Under    
the Company's cash management system, checks issued but not presented to banks  
frequently result in overdraft balances for accounting purposes and are         
classified within accounts payable in the balance sheet.                        

AMC ENTERTAINMENT INC.                                                          
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The amount of these checks included in accounts payable as of April 3, 1997     
and March 28, 1996 was $11,175,000 and $22,848,000, respectively.               

Investments: For purposes of determining gross realized gains and losses, the   
cost of investment securities sold is determined upon specific identification.  
Proceeds and gross realized gains from the sales in 1995 of equity securities   
classified as other long-term assets as of March 31, 1994 were $11,689,000 and  
$1,407,000, respectively.                                                       

Refundable Construction Advances: Included in receivables as of April 3, 1997   
and March 28, 1996 is $33,193,000 and $12,117,000, respectively, due from       
developers to fund a portion of the construction costs of new theatres that     
are to be operated by the Company pursuant to lease agreements. These amounts   
are repaid by the developers either during construction or shortly after        
completion.                                                                     

Property: Property is recorded at cost. The Company uses the straight-line      
method in computing depreciation and amortization for financial reporting       
purposes and accelerated methods, with respect to certain assets, for income    
tax purposes. The estimated useful lives are generally as follows:              

Buildings and improvements                      20 to 40 years      
Leasehold improvements                           5 to 25 years      
Furniture, fixtures and equipment                3 to 10 years      

Expenditures for additions (including interest during construction), major      
renewals and betterments are capitalized, and expenditures for maintenance and  
repairs are charged to expense as incurred. The cost of assets retired or       
otherwise disposed of and the related accumulated depreciation are eliminated   
from the accounts in the year of disposal. Gains or losses resulting from       
property disposals are credited or charged to operations currently.             

Intangible Assets: Intangible assets are recorded at cost and are comprised of  
lease rights, which are amounts assigned to theatre leases assumed under        
favorable terms, and location premiums on acquired theatres which are being     
amortized on a straight-line basis over the estimated remaining useful life of  
the theatre. Accumulated amortization on intangible assets was approximately    
$41,690,000 and $36,035,000 as of April 3, 1997 and March 28, 1996,             
respectively.                                                                   

Effective December 30, 1994, the Company reduced the estimated lives of lease   
rights and location premiums on certain smaller theatres to correspond to the   
base terms of the theatre leases. This change in accounting estimate was made   
to better match the estimated life of the intangible assets with the life of    
the theatre due to the Company's strategic plans to primarily own and operate   
larger theatres. The effect of this change in estimate was to increase          
amortization expense in 1995 by $1,542,000 and decrease net earnings by         
$876,000, or $.05 per share.                                                    

AMC ENTERTAINMENT INC.                                                    
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   

Other Long-term Assets: Other long-term assets are comprised principally of     
costs incurred in connection with the issuance of debt securities which are     
being amortized over the respective life of the issue; investments in real      
estate; investments in partnerships and corporate joint ventures accounted for  
under the equity method; preopening costs relating to new theatres which are    
being amortized over two years; and long-term deferred income taxes.            

Foreign Currency Translation: The financial statements of subsidiaries outside  
the United States are generally measured using the local currency as the        
functional currency. Assets and liabilities of these subsidiaries are           
translated at the rates of exchange at the balance sheet date. Income and       
expense items are translated at average rates of exchange. The resultant        
translation adjustments are included in foreign currency translation            
adjustment, a separate component of stockholders' equity. Gains and losses      
from foreign currency transactions of these subsidiaries are included in net    
earnings and have not been material.                                            

Income Taxes: Income taxes are calculated in accordance with Statement of       
Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income      
Taxes. The statement requires that deferred income taxes reflect the impact of  
temporary differences between the amount of assets and liabilities for          
financial reporting purposes and such amounts as measured by tax laws and       
regulations.                                                                    

Earnings per Share: Primary earnings per share is computed by dividing net      
earnings for common shares 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 17,726,000 in 1997,  
16,795,000 in 1996 and 16,593,000 in 1995. On a fully diluted basis, both net   
earnings and shares outstanding are adjusted to assume the conversion of $1.75  
Cumulative Convertible Preferred Stock, if dilutive. The average shares used    
in the computations were 17,940,000 in 1997, 17,031,000 in 1996 and 23,509,000  
in 1995.                                                                        

Changes in Accounting Principles: During fiscal 1996, the Financial Accounting  
Standards Board issued Statement of Financial Accounting Standards No. 123,     
Accounting for Stock-Based Compensation. The Statement allows companies to      
measure compensation cost in connection with employee stock compensation plans  
using a fair value based method or to continue to use an intrinsic value based  
method to account for stock options and awards. The Company has chosen to       
continue using the intrinsic value based method while adopting the              
disclosure-only provisions of the pronouncement.                                

AMC ENTERTAINMENT INC.                                                          
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During the fourth quarter of fiscal 1996, the Company adopted Statement of      
Financial Accounting Standards No. 121, Accounting for the Impairment of        
Long-lived Assets and for Long-lived Assets to be Disposed Of ("SFAS 121").     
This Statement establishes accounting standards for the impairment of           
long-lived assets, certain identifiable intangibles and goodwill related to     
those assets to be held and used. In connection with the adoption of this       
Statement, the Company reviewed the assets and related intangibles of its motion
picture theatres for impairment on a disaggregated basis. The expected future   
cash flows of certain theatres, undiscounted and without interest charges, were 
less than the carrying value of the assets. As a result, the Company            
recognized an impairment loss of $1,799,000. The impairment loss represents     
the amount by which the carrying value of the theatre assets, including         
intangibles, exceeded the estimated fair value of those assets. The estimated   
fair value of assets was determined as the present value of estimated expected  
future cash flows. The loss is included in depreciation and amortization in     
the Consolidated Statements of Operations.                                      

During fiscal 1997, the Company continued to review the assets and related      
intangibles of its motion picture theatres for impairment in accordance with    
the provisions of SFAS 121. As a result of expected declines in future cash     
flows of certain theatres, the Company recognized an impairment loss of         
$7,231,000 which is included in depreciation and amortization in the            
Consolidated Statements of Operations.                                          

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. Management has not yet  
determined the impact that this statement will have on the Company.             

Presentation: Certain amounts have been reclassified from prior period          
consolidated financial statements to conform with the current year              
presentation.                                                                   

NOTE 2 - ACQUISITION                                                            

On January 10, 1997, the Company purchased the 20% minority interest in the     
common stock of AMC Philadelphia, Inc., an 80% owned subsidiary, for            
$7,400,000 in cash. The acquisition has been accounted for using the purchase   
method of accounting. The excess of the purchase price over the fair value of   
the assets acquired is                                                          

AMC ENTERTAINMENT INC.                                                    
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

being amortized on a straight-line basis over the estimated useful life of the  
assets acquired.                                                                

NOTE 3 - PROPERTY                                                               

A summary of property is as follows:                                            

                                                        [Enlarge/Download Table]


(In thousands)                                                                     1997              1996   
------------------------------------------------------------------------------------------------------------
                                                                                                            
Property owned:                                                                                             
   Land                                                                           $ 60,090          $ 35,610
   Buildings and improvements                                                      221,396           146,061
   Furniture, fixtures and equipment                                               264,619           205,761
   Leasehold improvements                                                          211,720           146,152
                                                                                  --------------------------
                                                                                   757,825           533,584
   Less-accumulated depreciation and amortization                                  246,476           213,654
                                                                                  --------------------------
                                                                                   511,349           319,930
Property leased under capital leases:                                                                       
   Buildings                                                                        66,074            67,274
   Less-accumulated amortization                                                    34,365            31,719
                                                                                  --------------------------
                                                                                    31,709            35,555
                                                                                  --------------------------
                                                                                  $543,058          $355,485
                                                                                  ==========================

Included in property is $83,558,000 and $35,289,000 of construction in                                      
progress as of April 3, 1997 and March 28, 1996, respectively.                                              

AMC ENTERTAINMENT INC.                                                                                      
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NOTE 4 - OTHER ASSETS AND LIABILITIES                                                                       

Other assets and liabilities consist of the following:                                                      

                                                        [Enlarge/Download Table]

(In thousands):                                                                                             
                                                                                      1997              1996
------------------------------------------------------------------------------------------------------------
                                                                                                            
Other current assets:                                                                                       
   Prepaid rent                                                                    $ 7,366           $ 6,412
   Prepaid income taxes                                                                  -             3,074
   Deferred income taxes                                                             6,376             3,207
   Other                                                                             3,027             2,486
                                                                                   -------------------------
                                                                                   $16,769           $15,179
                                                                                   =========================
Other long-term assets:                                                                                     
   Investments in real estate                                                      $15,329           $ 6,922
   Investments in partnerships and corporate joint ventures                            733             1,121
   Deferred charges, net                                                            12,147             6,203
   Deferred income taxes                                                            23,813            24,506
   Preopening costs                                                                  6,519             2,636
   Other                                                                             4,263             3,625
                                                                                   -------------------------
                                                                                   $62,804           $45,013
                                                                                   =========================
Accrued expenses and other liabilities:                                                                     
   Taxes other than income                                                         $10,030           $ 7,110
   Income taxes                                                                      6,017                 -
   Interest                                                                          1,512               841
   Payroll and vacation                                                              4,982             6,149
   Casualty claims and premiums                                                      4,655             2,034
   Deferred income                                                                   8,911            11,634
   Accrued bonus                                                                     3,974             7,634
   Other                                                                             2,378             7,917
                                                                                   -------------------------
                                                                                   $42,459           $43,319
                                                                                   =========================

AMC ENTERTAINMENT INC.                                              
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

NOTE 5 - CORPORATE BORROWINGS AND CAPITAL LEASE OBLIGATIONS                     

A summary of corporate borrowings and capital lease obligations is as follows:  

                                                        [Enlarge/Download Table]

(In thousands)                                                                      1997              1996  
------------------------------------------------------------------------------------------------------------
                                                                                                            
$425 million revolving Credit Facility due 2004                                   $110,000          $120,000
11 7/8% Senior Notes due 2000                                                          615               614
9 1/2% Senior Subordinated Notes due 2009                                          198,940                 -
12 5/8% Senior Subordinated Notes due 2002                                           4,882             4,878
Capital lease obligations, interest ranging from 7 1/4% to 20%                      58,652            62,022
Other indebtedness                                                                     635               658
                                                                                  --------------------------
Total                                                                              373,724           188,172
Less-current maturities                                                              3,441             2,904
                                                                                  --------------------------
                                                                                  $370,283          $185,268
                                                                                  ==========================

On December 28, 1995, the Company completed the redemption of $99,383,000 of    
its outstanding 11 7/8% Senior Notes due 2000 at a price of $1,117.90 per       
$1,000 principal amount and $95,096,000 of its outstanding 12 5/8% Senior       
Subordinated Notes due 2002 at a price of $1,144.95 per $1,000 principal        
amount. In addition, the terms of the Indentures governing the remaining        
Senior and Senior Subordinated Notes were amended to eliminate certain          
restrictive covenants. Sources of funds for the redemption were cash and        
investments on hand and borrowings on a credit facility. Premiums paid to       
redeem the Senior and Senior Subordinated Notes, together with the write-off    
of unamortized debt issue costs and other costs directly related to the debt    
redemptions, resulted in an extraordinary loss of $19,350,000, net of income    
tax benefit of $13,400,000. The extraordinary loss reduced earnings per share   
by $1.15 for the year (52 weeks) ended March 28, 1996.                          

As a part of the refinancing plan, the Company entered into 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 April 3, 1997, the Company had outstanding borrowings  
of $110,000,000 under the Credit Facility at an average interest rate of 6.4%   
per annum.                                                                      

AMC ENTERTAINMENT INC.                                                          
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Covenants of the Credit Facility impose limitations on the incurrence of        
additional indebtedness, creation of liens, change of control, transactions     
with affiliates, mergers, investments, guaranties, asset sales, business        
activities and pledges. The Company is also required to maintain certain        
financial covenants, as defined in the Credit Facility. As of April 3, 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.                                

Costs related to the establishment of the Credit Facility were capitalized and  
are charged to interest expense over the life of the Credit Facility.           
Unamortized issuance costs of $2,821,000 as of April 3, 1997 are included in    
other long-term assets.                                                         

On March 19, 1997, the Company sold $200 million of Senior Subordinated Notes   
due 2009 (the "Notes"). The Notes bear interest at the rate of 9 1/2% per       
annum, payable in March and September. The Notes are redeemable at the option   
of the Company, in whole or in part, at any time on or after March 15, 2002 at  
104.75% of the principal amount thereof, declining ratably to 100% of the       
principal amount thereof on or after March 15, 2006, plus in each case          
interest accrued to the redemption date. Upon a change of control (as defined   
in the Note Indenture), each holder of the Notes will have the right to         
require the Company to repurchase such holder's Notes at a price equal to 101%  
of the principal amount thereof plus accrued and unpaid interest to the date    
of repurchase. The Notes are subordinated to all existing and future senior     
indebtedness (as defined in the Note Indenture) of the Company.                 

The Note Indenture contains certain covenants that, among other things,         
restrict the ability of the Company and its subsidiaries to incur additional    
indebtedness and pay dividends or make distributions in respect of their        
capital stock. If the Notes attain "investment grade status" (as defined in     
the Note Indenture), the covenants in the Note Indenture limiting the           
Company's ability to incur additional indebtedness and pay dividends will       
cease to apply. As of April 3, 1997, the Company was in compliance with all     
financial covenants relating to the Note Indenture.                             

The Note Indenture also requires the Company to use its best efforts to         
consummate a registered offer to exchange the Notes (the "Exchange Offer") for  
notes of AMCE with terms identical in all material respects to the Notes or     
cause a shelf registration statement with respect to the Notes to become        
effective. In the event that certain filing deadlines as specified in the Note  
Indenture are not met, the interest rate borne by the Notes could increase as   
much as 1.0% per annum. The Company anticipates meeting its filing deadlines.   

AMC ENTERTAINMENT INC.                                                  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

The discount on the Notes is being amortized to interest expense following the  
interest method of amortization. Costs related to the issuance of the Notes     
were capitalized and are charged to interest expense, following the             
interest method, over the life of the securities. Unamortized issuance costs    
of $4,572,000 as of April 3, 1997 are included in other long-term assets.       

Minimum annual payments required under existing capital lease obligations (net  
present value thereof) and maturities of corporate borrowings as of April 3,    
1997, are as follows:                                                           

                                                        [Enlarge/Download Table]

                                                           Capital Lease Obligations                                    
                                                    --------------------------------------                              
                                                     Minimum                         Net                                
                                                      Lease           Less         Present        Corporate             
(In thousands)                                       Payments       Interest        Value         Borrowings      Total 
------------------------------------------------------------------------------------------------------------------------
                                                                                                                        
1998                                                $ 12,795        $ 9,380        $ 3,415       $     26       $  3,441
1999                                                  12,800          8,715          4,085             30          4,115
2000                                                  12,211          8,026          4,185             34          4,219
2001                                                  11,939          7,294          4,645            653          5,298
2002                                                  11,110          6,529          4,581             43          4,624
Thereafter                                            70,161         32,420         37,741        314,286        352,027
                                                    --------------------------------------------------------------------
   Total                                            $131,016        $72,364        $58,652       $315,072       $373,724
                                                    ====================================================================

The Company maintains a letter of credit in the normal course of its business.  
The unused portion of the letter of credit was $2,378,000 as of April 3, 1997.  

NOTE 6 - STOCKHOLDERS' EQUITY                                                   

The authorized Common Stock of AMCE consists of two classes of stock. Except    
for the election of directors, each holder of Common Stock (66 2/3 cents par    
value; 45,000,000 shares authorized) is entitled to one vote per share, and each
holder of Class B Stock (66 2/3 cents par value; 30,000,000 shares authorized)  
is entitled to 10 votes per share. Common stockholders voting as a class are    
presently entitled to elect two of the seven members of AMCE's Board of         
Directors with Class B stockholders electing the remainder.                     

Holders of the Company's stock have no pre-emptive or subscription rights and   
there are no restrictions with respect to transferability. Holders of the       
Common Stock have no conversion rights, but holders of Class B Stock may elect  
to convert at any time on a share-for-share basis into Common Stock.            

The Company has authorized 10,000,000 shares of Preferred Stock (66 2/3 cents   
par value), of which 3,303,600 shares of $1.75 Cumulative Convertible Preferred 
Stock (66 2/3 cents par value) (the "Convertible Preferred Stock") are issued   
and outstanding. Dividends are payable quarterly at an annual rate of $1.75 per 
share.                                                                          

AMC ENTERTAINMENT INC.                                                          
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The Convertible Preferred Stock has preference in liquidation in the amount of  
$25 per share plus accrued and unpaid dividends. The Convertible Preferred      
Stock is convertible at the option of the holder into shares of Common Stock    
at a conversion price of $14.50 per share of Common Stock, subject to change    
in certain events. In lieu of conversion the Company may, at its option, pay    
to the holder cash equal to the then market value of the Common Stock. The      
Company may redeem in whole or in part the Convertible Preferred Stock at a     
redemption price beginning at $26.00 per share, declining ratably to $25.00     
per share after March 15, 2001.                                                 

During 1997, various holders of the Company's Convertible Preferred Stock       
converted 696,400 shares into 1,200,589 shares of Common Stock at a conversion  
rate of 1.724 shares of Common Stock for each share of Convertible Preferred    
Stock.                                                                          

Stock-Based Compensation Plans                                                  
In June 1983, AMCE adopted a stock option plan (the "1983 Plan") for selected   
employees. This plan provided for the grant of rights to purchase shares of     
Common Stock under both incentive and non-incentive stock option agreements.    
The number of shares which could be sold under the plan could not exceed        
750,000 shares. The 1983 Plan provided that the exercise price could not be     
less than the fair market value of the stock at the date of grant and           
unexercised options expired no later than ten years after date of grant.        
Pursuant to the terms of the 1983 Plan, no further options may be granted       
under this plan.                                                                

In September 1984, AMCE adopted a non-qualified stock option plan (the "1984    
Plan"). This plan provided for the grant of rights to purchase shares of        
Common Stock under non-qualified stock option agreements. The number of shares  
which could be sold under the plan could not exceed 750,000 shares. The 1984    
Plan provided that the exercise price would be determined by the Company's      
Stock Option Committee and that the options expired no later than ten years     
after date of grant. Pursuant to the terms of the 1984 Plan, no further         
options may be granted under this plan.                                         

In November 1994, AMCE adopted a stock option and incentive plan (the "1994     
Plan"). This plan provides for three basic types of awards: (i) grants of       
stock options which are either incentive or non-qualified stock options, (ii)   
grants of stock awards, which may be either performance or restricted stock     
awards, and (iii) performance unit awards. The number of shares of Common       
Stock which may be sold or granted under the plan may not exceed 1,000,000      
shares. The 1994 Plan provides that the exercise price for stock options may    
not be less than the fair market value of the stock at the date of grant and    
unexercised options expire no later than ten years after date of grant.         
Options issued under the 1994 Plan vest over two years from the date of         
issuance.                                                                       

AMC ENTERTAINMENT INC.                                                  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

The Company has adopted the disclosure-only provisions of SFAS 123. As          
permitted by SFAS 123, the Company has chosen to continue to account for        
stock-based compensation using the intrinsic value method. Accordingly,         
no compensation expense has been recognized for the Company's stock-based       
compensation plans other than for performance-based stock awards. In 1997 and   
1996, the Company granted to certain individuals stock awards which are         
issuable at the end of a performance period ending April 2, 1998 based on       
certain performance criteria. The number of shares which may be issued at the   
end of the performance period ranges from zero to 216,000. The Company          
recognized compensation expense for performance stock awards of $586,000 and    
$772,000 in 1997 and 1996, respectively. Had compensation expense for the       
Company's plans been determined based on the fair value at the grant dates for  
stock options and awards granted in 1997 and 1996, the Company's net earnings   
and net earnings for common shares would have been different.                   

The pro forma amounts under SFAS 123 are indicated below:                       

                                                        [Enlarge/Download Table]


(In thousands except per share amounts)                                                   1997              1996  
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Net earnings                                                                                                      
     As reported                                                                         $18,995            $8,021
     Pro forma                                                                           $18,664            $8,210
Net earnings per common share                                                                                     
     As reported                                                                         $   .74            $  .06
     Pro forma                                                                           $   .72            $  .07


The following table reflects the weighted average fair value per option         
granted during the year, as well as the significant weighted average            
assumptions used in determining fair value using the Black-Scholes              
option-pricing model:                                                           

                                                        [Enlarge/Download Table]

                                                                                          1997              1996  
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Fair value on grant date                                                                 $11.63            $ 6.96 
Risk-free interest rate                                                                    6.24%             5.64%
Expected life (years)                                                                         5                 5 
Expected volatility                                                                       42.9 %            46.0 %
Expected dividend yield                                                                       -                 - 

AMC ENTERTAINMENT INC.                                                          
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A summary of stock option activity under all plans is as follows:               

                                                        [Enlarge/Download Table]

                                    1997                          1996                             1995             
                        --------------------------------------------------------------------------------------------
                                         Weighted                       Weighted                         Weighted   
                                          Average                        Average                          Average   
                          Number      Exercise Price    Number       Exercise Price      Number       Exercise Price
                        of Shares        Per Share    of Shares         Per Share      of Shares         Per Share  
                        --------------------------------------------------------------------------------------------
                                                                                                                    
Outstanding at                                                                                                      
 beginning of year       487,500          $  9.67      776,500           $  9.57        813,300           $  9.29   
Granted                  103,250          $ 24.80       23,250           $ 14.50         36,500           $ 11.75   
Canceled                 (17,250)         $ 10.04     (229,750)          $  9.46        (33,750)          $  9.38   
Exercised                (15,000)         $ 9.375      (82,500)          $ 10.65        (39,550)          $  6.01   
                        --------------------------------------------------------------------------------------------
Outstanding at                                                                                                      
 end of year             558,500          $ 12.47      487,500           $  9.67        776,500           $  9.57   
                        ============================================================================================
Exercisable at                                                                                                      
 end of year             365,875          $ 10.51      233,250           $  9.45        230,000           $  9.79   
                        ============================================================================================
Available for grant at                                                                                              
 end of year             630,500                       746,500                          817,500                     
                        ============================================================================================

The following table summarizes information about stock options as of April 3,   
1997:                                                                           

                                                        [Enlarge/Download Table]

                                              Outstanding Stock Options                         Exercisable Stock Options   
----------------------------------------------------------------------------------------------------------------------------
                                                  Weighted-Average                                                          
          Range of                 Number             Remaining        Weighted-Average         Number      Weighted-Average
      Exercise Prices            of Shares        Contractual Life      Exercise Price        of Shares      Exercise Price 
                                                                                                                            
$  9.25     to    $  11.75        436,500             6.3 years             $  9.46            335,250           $  9.51    
$ 14.50     to    $  18.50         29,250             8.7 years             $ 15.94              9,375           $ 14.50    
$ 24.50     to    $ 26.375         92,750             9.1 years             $ 25.52             21,250           $ 24.50    
----------------------------------------------------------------------------------------------------------------------------
$  9.25     to    $ 26.375        558,500             6.9 years             $ 12.47            365,875           $ 10.51    
============================================================================================================================

AMC ENTERTAINMENT INC.                                              
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

NOTE 7 - INCOME TAXES                                                           

Income taxes reflected in the Consolidated Statements of Operations for the     
three years ended April 3, 1997 are as follows:                                 

                                                        [Enlarge/Download Table]

(In thousands)                                                       1997              1996               1995     
------------------------------------------------------------------------------------------------------------------ 
                                                                                                                   
Current:                                                                                                           
   Federal                                                           $ 11,418          $  5,134           $  7,738 
   State                                                                3,958             2,094              4,547 
                                                                     --------------------------------------------- 
      Total current                                                    15,376             7,228             12,285 
Deferred:                                                                                                          
   Federal                                                             (2,114)           (1,121)            (1,238)
   State                                                                 (362)             (207)              (255)
   Change in valuation allowance                                            -                 -            (19,792)
                                                                     --------------------------------------------- 
      Total deferred                                                   (2,476)           (1,328)           (21,285)
                                                                     --------------------------------------------- 
Total provision                                                        12,900             5,900             (9,000)
Tax benefit of extraordinary item - extinguishment of debt                  -            13,400                  - 
                                                                     --------------------------------------------- 
Total provision before extraordinary item                            $ 12,900          $ 19,300           $ (9,000)
                                                                     ============================================= 

The effective tax rate on income before extraordinary items was 40.4%, 41.4%,   
and (36.0%) in 1997, 1996 and 1995, respectively. The difference between the    
effective rate and the U.S. federal income tax statutory rate of 35% is         
accounted for as follows:                                                       

                                                        [Enlarge/Download Table]

(In thousands)                                                          1997              1996              1995   
------------------------------------------------------------------------------------------------------------------ 
                                                                                                                   
Tax on earnings before provision for income tax                                                                    
 and extraordinary item at statutory rates                            $ 11,163          $ 16,335          $  8,742 
Add (subtract) tax effect of:                                                                                      
   State income taxes, net of federal tax benefit                        2,258             3,163             2,973 
   Change in valuation allowance                                             -                 -           (19,792)
   Other, net                                                             (521)             (198)             (923)
                                                                      -------------------------------------------- 
   Income tax provision                                               $ 12,900          $ 19,300          $ (9,000)
                                                                      ============================================ 

AMC ENTERTAINMENT INC.                                                          
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The significant components of deferred income tax assets and liabilities as of  
April 3, 1997 and March 28, 1996 are as follows:                                

                                                        [Enlarge/Download Table]

                                                                      1997                                1996            
                                                          ----------------------------------------------------------------
                                                               Deferred Income Tax                 Deferred Income Tax    
(In thousands)                                             Assets          Liabilities         Assets          Liabilities
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          
Accrued reserves and liabilities                          $  9,189           $   179          $  5,323           $   343  
Investments in partnerships                                      -               495                 -               419  
Capital lease obligations                                   11,464                 -            10,852                 -  
Depreciation                                                 5,587                 -             7,842                 -  
Deferred rents                                               6,254                 -             5,266                 -  
Other                                                          550             2,181               683             1,491  
                                                          ----------------------------------------------------------------
      Total                                                 33,044             2,855            29,966             2,253  
Less: Current deferred income taxes                          6,586               210             3,702               495  
                                                          ----------------------------------------------------------------
Total noncurrent deferred income taxes                    $ 26,458           $ 2,645          $ 26,264           $ 1,758  
                                                          ================================================================
Net noncurrent deferred income taxes                      $ 23,813                            $ 24,506                    
                                                          ================================================================

SFAS 109 requires that a valuation allowance be provided against deferred tax   
assets if, based on the weight of available evidence, it is more likely than    
not that some or all of the deferred tax assets will not be realized. Based     
upon positive earnings in recent years and the expectation that taxable income  
will continue for the foreseeable future, management believes it is more        
likely than not that the Company will realize its deferred tax assets and,      
accordingly, no valuation allowance has been provided as of April 3, 1997 and   
March 28, 1996.                                                                 

NOTE 8 - LEASES                                                                 

The majority of the Company's operations are conducted in premises occupied     
under lease agreements with base terms ranging generally from 15 to 25 years,   
with certain leases containing options to extend the leases for up to           
an additional 20 years. The leases provide for fixed rentals and/or rentals     
based on revenues with a guaranteed minimum. The Company also leases certain    
equipment under leases expiring at various dates. The majority of the leases    
provide that the Company will pay all, or substantially all, taxes,             
maintenance, insurance and certain other operating expenses. Assets held under  
capital lease obligations are included in property. Performance under some      
leases has been guaranteed by DI.                                               

AMC ENTERTAINMENT INC.                                                  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

Following is a schedule, by year, of future minimum rental payments required    
under existing operating leases that have initial or remaining non-cancellable  
terms in excess of one year as of April 3, 1997:                                

                                                                [Download Table]

(In thousands)                                                                  
--------------------------------------------------------------------------------
                                                                                
      1998                                                    $   68,551        
      1999                                                        69,070        
      2000                                                        68,406        
      2001                                                        66,388        
      2002                                                        63,748        
      Thereafter                                                 722,341        
                                                              ----------        
        Total minimum payments required                       $1,058,504        
                                                              ==========        

The Company has entered into agreements to lease space for the operation of     
theatres not yet fully constructed. The scheduled completion of construction    
and theatre openings are at various dates during fiscal 1998. The future        
minimum rental payments required under the terms of these leases total          
approximately $429 million.                                                     

In addition, the Company entered into a master lease agreement during fiscal    
1997 for three theatres with an expected cost of approximately $81 million.     
Rental amounts will be based on the final construction costs of the theatres    
and the lessor's cost of funds and will be finalized as the theatres open. The  
initial lease term under the agreement will be three years. The master lease    
agreement provides for a substantial residual value guarantee by the Company    
and includes purchase and renewal options. The Company expects these leases to  
be classified as operating leases.                                              

The Company records rent expense on a straight-line basis over the term of the  
lease. Included in long-term liabilities as of April 3, 1997 and March 28, 1996 
is $16,278,000 and $12,858,000, respectively, of deferred rent representing pro 
rata future minimum rental payments for leases with scheduled rent increases.   

Rent expense is summarized as follows:                                          

                                                        [Enlarge/Download Table]

(In thousands)                                                          1997              1996              1995  
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Minimum rentals                                                       $ 80,670          $ 64,657          $ 59,790
Percentage rentals based on revenues                                     2,008             2,354             1,970
                                                                      --------------------------------------------
                                                                      $ 82,678          $ 67,011          $ 61,760
                                                                      ============================================

AMC ENTERTAINMENT INC.                                                          
------------------------                                                        
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NOTE 9 - EMPLOYEE BENEFIT PLANS                                                 

The Company sponsors a non-contributory defined benefit pension plan covering,  
after a minimum of one year of employment, all employees age 21 or older, who   
have completed 1,000 hours of service in their first twelve months of           
employment or in a calendar year and who are not covered by a collective        
bargaining agreement.                                                           

The plan calls for benefits to be paid to eligible employees at retirement      
based primarily upon years of credited service with the Company (not exceeding  
thirty-five) and the employee's highest five year average compensation.         
Contributions to the plan reflect benefits attributed to employees' services to 
date, as well as services expected to be earned in the future. Plan assets are  
invested in a group annuity contract with an insurance company pursuant to      
which the plan's benefits are paid to retired and terminated employees and the  
beneficiaries of deceased employees.                                            

The following table sets forth the plan's funded status as of December 31,      
1996 and 1995 (plan valuation dates) and the amounts included in the            
Consolidated Balance Sheets as of April 3, 1997 and March 28, 1996:             

                                                        [Enlarge/Download Table]

(In thousands)                                                                   1997               1996     
------------------------------------------------------------------------------------------------------------ 
                                                                                                             
Actuarial present value of accumulated benefit                                                               
 obligation, including vested benefits of $11,139 and $10,041                    $ 11,309           $ 10,205 
                                                                                 =========================== 
Projected benefit obligation for service rendered to date                        $ 18,489           $ 17,051 
Plan assets at fair value                                                         (10,857)            (9,580)
                                                                                 --------------------------- 
Projected benefit obligation in excess of plan assets                               7,632              7,471 
Unrecognized net loss from past experience different from that                                               
 assumed and effects of changes in assumptions                                       (686)            (1,509)
Unrecognized net obligation upon adoption being recognized over 15 years           (1,411)            (1,588)
                                                                                 --------------------------- 
Pension liability                                                                 $ 5,535            $ 4,374 
                                                                                 =========================== 

Net pension expense includes the following components:                          

                                                        [Enlarge/Download Table]

(In thousands)                                                   1997              1996              1995   
----------------------------------------------------------------------------------------------------------- 
                                                                                                            
Service cost                                                    $ 1,191           $   855           $ 1,261 
Interest cost                                                     1,188               966               971 
Actual return on plan assets                                     (1,218)           (1,630)               55 
Net amortization and deferral                                       563             1,096              (190)
                                                                ------------------------------------------- 
Net pension expense                                             $ 1,724           $ 1,287           $ 2,097 
                                                                =========================================== 

The Company also sponsors a non-contributory Supplemental Executive Retirement  
Plan (the "SERP") which provides certain employees additional pension benefits. 
The actuarial present value of accumulated plan benefits related to the SERP    
was $569,000 and $379,000 as of April 3, 1997 and March 28, 1996, respectively, 
which is reflected in the Consolidated Balance Sheets.                          

AMC ENTERTAINMENT INC.                                                  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997, and Years (52 Weeks) Ended March 28, 1996  
and March 30, 1995                                                              

The weighted average discount rate used to measure the plans' projected         
benefit obligations was 7.0% for 1997 and 1996 and 7.75% in 1995. The rate of   
increase in future compensation levels was 6.0% for 1997, 1996 and 1995 and     
the expected long-term rate of return on assets was 8.5% for 1997, 1996 and     
1995. A limited number of employees are covered by collective bargaining        
agreements under which payments are made to a union-administered fund.          

The Company sponsors a voluntary thrift savings plan covering the same          
employees eligible for the pension plan. Since inception of the savings plan,   
the Company has matched 50% of each eligible employee's elective contributions, 
limited to 3% of the employee's salary.                                         

The Company's expense under the thrift savings plan was $1,270,000, $1,032,000  
and $1,015,000 for 1997, 1996 and 1995, respectively.                           

The Company currently offers eligible retirees the opportunity to participate   
in a health plan (medical and dental) and a life insurance plan. Substantially  
all employees may become eligible for these benefits provided that the employee 
must be at least 55 years of age and have 15 years of credited service at       
retirement. The health plan is contributory, with retiree contributions         
adjusted annually; the life insurance plan is noncontributory. The accounting   
for the health plan anticipates future modifications to the cost-sharing        
provisions to provide for retiree premium contributions of approximately 20% of 
total premiums, increases in deductibles and co-insurance at the medical        
inflation rate and coordination with Medicare. Retiree health and life          
insurance plans are not funded. The Company is amortizing the transition        
obligation on the straight-line method over a period of 20 years.               

The following table sets forth the plans' accumulated postretirement benefit    
obligation reconciled with the amounts included in the Consolidated Balance     
Sheets as of April 3, 1997 and March 28, 1996:                                  

                                                        [Enlarge/Download Table]

(In thousands)                                                                     1997              1996   
----------------------------------------------------------------------------------------------------------- 
                                                                                                            
Accumulated postretirement benefit obligation:                                                              
   Retirees                                                                       $   618           $   557 
   Fully eligible active plan participants                                            513               438 
   Other active plan participants                                                   1,777             1,292 
                                                                                  ------------------------- 
Accumulated postretirement benefit obligation                                       2,908             2,287 
Unrecognized net obligation upon adoption being                                                             
 recognized over 20 years                                                            (697)             (747)
Unrecognized gain (loss)                                                             (190)              105 
                                                                                  ------------------------- 
Postretirement benefit liability                                                  $ 2,021           $ 1,645 
                                                                                  ========================= 

AMC ENTERTAINMENT INC.                                                          
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Postretirement expense includes the following components:                       

                                                        [Enlarge/Download Table]

(In thousands)                                                     1997             1996               1995 
------------------------------------------------------------------------------------------------------------
                                                                                                            
Service cost                                                       $ 199            $ 192              $ 188
Interest cost                                                        172              208                202
Net amortization and deferral                                         50               66                 66
                                                                   -----------------------------------------
Postretirement expense                                             $ 421            $ 466              $ 456
                                                                   =========================================

For measurement purposes, the annual rate of increase in the per capita cost    
of covered health care benefits assumed for 1997 was 7.5% for medical and       
4.75% for dental. The rates were assumed to decrease gradually to 5.0% for      
medical and 3.0% for dental at 2020 and remain at that level thereafter. The    
health care cost trend rate assumption has a significant effect on the amounts  
reported. Increasing the assumed health care cost trend rates by one percentage 
point in each year would increase the accumulated postretirement benefit        
obligation as of April 3, 1997 by $862,000 and the aggregate of the service and 
interest cost components of postretirement expense for 1997 by $164,000. The    
weighted-average discount rate used in determining the accumulated              
postretirement benefit obligation was 7.0% for 1997 and 1996 and 7.75% for      
1995.                                                                           

NOTE 10 - CONTINGENCIES                                                         

The Company, in the normal course of business, is party to various legal        
actions. Management believes that the potential exposure, if any, from such     
matters would not have a material adverse effect on the financial condition,    
cash flows or results of operations of the Company.                             

NOTE 11 - FUTURE DISPOSITION OF ASSETS                                          

The Company has provided reserves for estimated losses from discontinuing the   
operation of fast food restaurants, for theatres which have been or are         
expected to be closed and for other future dispositions of assets.              

In conjunction with the opening of certain new theatres in fiscal 1986 through  
1988, the Company expanded its food services by leasing additional space        
adjacent to those theatres to operate specialty fast food restaurants. The      
Company discontinued operating the restaurants due to unprofitability. The      
Company continues to sub-lease or to convert to other uses the space leased     
for these restaurants. The Company is obligated under long-term lease           
commitments with remaining terms of up to eleven years. As of April 3, 1997,    
the base rents aggregate approximately $779,000 annually, and $7,150,000 over   
the remaining term of the leases. As of April 3, 1997, the Company has          
subleased approximately 55% of the space with remaining terms ranging from 2    
months to 68 months. Non-cancellable subleases currently aggregate              
approximately $496,000 annually, and $4,216,000 over the remaining term of the  
subleases.                                                                      

AMC ENTERTAINMENT INC.                                                  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996   
and March 30, 1995                                                              

NOTE 12 - TRANSACTIONS WITH DURWOOD, INC.                                       

The Company and DI maintain intercompany accounts. Charges to the intercompany  
accounts include the allocation of AMC general and administrative expense of    
$116,000 in 1996 and 1995 and payments made by AMC on behalf of DI. There were  
no general and administrative allocations in 1997. DI and non-AMCE subsidiaries 
owed the Company $181,000 and $795,000 as of April 3, 1997 and March 28, 1996,  
respectively.                                                                   

The Board of Directors has approved an agreement providing for the Merger of    
the Company and DI, with the Company remaining as the surviving entity. The     
Merger has been sought by members of the Durwood family so that they may hold   
their interests in the Company directly instead of indirectly through DI and a  
related entity. In the Merger, stockholders of DI would exchange their shares   
of DI stock for shares of the Company's stock. Although the outstanding shares  
of the Company's Common Stock will increase and the outstanding shares of its   
Class B Stock will decrease if the Merger is effected, no aggregate increase    
in total outstanding shares will occur because the shares of the Company owned  
by DI will be canceled and the shares of the Company held by other stockholders 
would not be exchanged in the Merger. A condition to the Merger is that the     
Merger Agreement receive approval of the holders of a majority of the shares of 
Common Stock other than DI, the Durwood family, their spouses and children and  
officers and directors of the Company.                                          

DI is primarily a holding company with no significant operations or assets      
other than its equity interest in the Company. Management expects that the      
Merger will be accounted for as a corporate reorganization and that,            
accordingly, the recorded balances for consolidated assets, liabilities, total  
stockholders' equity and results of operations of the Company would not be      
affected. If the Merger occurs, the Company will be responsible for paying 50%  
of the costs in connection with the Merger; the aggregate merger costs for both 
the company and DI are estimated to be approximately $2 million. Management     
does not believe that the transaction will have a significant effect on the     
Company's financial condition, liquidity or capital resources.                  

AMC ENTERTAINMENT INC.                                                          
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NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS                                   

The following methods and assumptions were used to estimate the fair value of   
each class of financial instruments for which it was practicable to estimate    
that value.                                                                     

The carrying value of cash and equivalents and investments in debt securities   
approximates fair value because of the short duration of those instruments.     
The fair value of publicly held corporate borrowings was based upon quoted      
market prices. For other corporate borrowings, the fair value was based upon    
rates available to the Company from bank loan agreements or rates based upon    
the estimated premium over U.S. treasury notes with similar                     
average maturities.                                                             

The estimated fair values of the Company's financial instruments are as         
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                               1997                               1996            
                                                    --------------------------------------------------------------
                                                    Carrying            Fair           Carrying             Fair  
(In thousands)                                       Amount             Value           Amount              Value 
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Financial assets:                                                                                                 
   Cash and equivalents                             $ 24,715          $ 24,715         $ 10,795           $ 10,795
Financial liabilities:                                                                                            
   Cash overdrafts                                  $ 11,175          $ 11,175         $ 22,848           $ 22,848
   Corporate borrowings                              315,072           315,804          126,150            126,992

AMC ENTERTAINMENT INC.                                              
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                                                        [Enlarge/Download Table]
STATEMENTS OF OPERATIONS BY QUARTER                                                                                           


                                                          June 27,          June 29,         Sept. 26,         Sept. 28,      
(In thousands, except per share amounts) (Unaudited)        1996              1995              1996              1995        
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              
Total revenues                                           $ 161,927         $ 153,409         $ 202,436         $ 184,482      
Total cost of operations                                   132,821           118,738           155,593           135,497      
General and administrative                                  13,025            11,085            11,647            14,497      
Depreciation and amortization                               11,674             9,972            12,740            10,471      
                                                         ---------------------------------------------------------------------
Operating income                                             4,407            13,614            22,456            24,017      
Interest expense                                             4,909             8,309             4,852             8,318      
Investment income                                              182             2,226               139             2,440      
Gain (loss) on disposition of assets                            18               (15)              (49)             (123)     
                                                         ---------------------------------------------------------------------
Earnings (loss) before income taxes                                                                                           
 and extraordinary item                                       (302)            7,516            17,694            18,016      
Income tax provision                                          (125)            3,100             7,125             7,400      
                                                         ---------------------------------------------------------------------
Earnings (loss) before extraordinary item                     (177)            4,416            10,569            10,616      
Extraordinary item                                                                                                            
 - Loss on extinguishment of debt                                                                                             
 (net of income tax benefit of $13,400)                          -                 -                 -                 -      
                                                         ---------------------------------------------------------------------
Net earnings (loss)                                      $    (177)        $   4,416         $  10,569         $  10,616      
                                                         =====================================================================
Preferred dividends                                          1,546             1,750             1,454             1,750      
                                                         ---------------------------------------------------------------------
Net earnings (loss)                                                                                                           
 for common shares                                       $  (1,723)        $   2,666         $   9,115         $   8,866      
                                                         =====================================================================
Earnings (loss) per share before                                                                                              
 extraordinary item:                                                                                                          
Primary                                                  $    (.10)        $     .16         $     .51         $     .53      
                                                         =====================================================================
Fully diluted                                            $    (.10)        $     .16         $     .44         $     .45      
                                                         =====================================================================
Earnings (loss) per share:                                                                                                    
Primary                                                  $    (.10)        $     .16         $     .51         $     .53      
                                                         =====================================================================
Fully diluted                                            $    (.10)        $     .16         $     .44         $     .45      
                                                         =====================================================================

<FN>                                                                                                                          
<F1> During the fourth quarter of 1996, the Company adopted Statement of                                                      
     Financial Accounting Standards No. 121 ("SFAS 121"), Accounting for the                                                  
     Impairment of Long-lived Assets and for Long-lived Assets to be Disposed                                                 
     Of. As a result, the Company recognized an impairment loss under SFAS 121                                                
     of $1,799.                                                                                                               
<F2> During the fourth quarter of 1997, the Company recognized an impairment                                                  
     loss under SFAS 121 of $7,231.                                                                                           
<F3> Fiscal year 1997 consists of 53 weeks and the fiscal quarter ended April                                                 
     3, 1997 consists of 14 weeks.                                                                                            

AMC ENTERTAINMENT INC.                                                                                                        
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                                                                      Dec. 26,          Dec. 28,          April 3,            
                                                                        1996              1995            1997<F3>            
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              
Total revenues                                                       $ 163,192         $ 154,970         $ 222,042            
Total cost of operations                                               130,464           118,252           161,124            
General and administrative                                              13,910            11,437            18,065            
Depreciation and amortization                                           13,129            10,399            22,260<F2>        
                                                                     ---------------------------------------------------------
Operating income                                                         5,689            14,882            20,593            
Interest expense                                                         5,275             7,883             6,986            
Investment income                                                          343             1,958               192            
Gain (loss) on disposition of assets                                       (53)              159                 -            
                                                                     ---------------------------------------------------------
Earnings (loss) before income taxes                                                                                           
 and extraordinary item                                                    704             9,116            13,799            
Income tax provision                                                       285             3,800             5,615            
                                                                     ---------------------------------------------------------
Earnings (loss) before extraordinary item                                  419             5,316             8,184            
Extraordinary item                                                                                                            
 - Loss on extinguishment of debt                                                                                             
 (net of income tax benefit of $13,400)                                      -           (19,350)                -            
                                                                     ---------------------------------------------------------
Net earnings (loss)                                                  $     419         $ (14,034)        $   8,184            
                                                                     =========================================================
Preferred dividends                                                      1,454             1,750             1,453            
                                                                     ---------------------------------------------------------
Net earnings (loss)                                                                                                           
 for common shares                                                   $  (1,035)        $ (15,784)        $   6,731            
                                                                     =========================================================
Earnings (loss) per share before                                                                                              
 extraordinary item:                                                                                                          
Primary                                                              $    (.06)        $     .21         $     .38            
                                                                     =========================================================
Fully diluted                                                        $    (.06)        $     .21         $     .34            
                                                                     =========================================================
Earnings (loss) per share:                                                                                                    
Primary                                                              $    (.06)        $    (.93)        $     .38            
                                                                     =========================================================
Fully diluted                                                        $    (.06)        $    (.93)        $     .34            
                                                                     =========================================================

    AMC ENTERTAINMENT INC.                                                                                                    
  ------------------------                                                                                                    
                        63                                                                                                    

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                                                                     March 28,                 Fiscal Year                    
                                                                       1996             1997<F3>            1996              
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              
Total revenues                                                       $ 163,111         $ 749,597         $ 655,972            
Total cost of operations                                               118,871           580,002           491,358            
General and administrative                                              15,040            56,647            52,059            
Depreciation and amortization                                           13,044<F1>        59,803            43,886            
                                                                     ---------------------------------------------------------
Operating income                                                        16,156            53,145            68,669            
Interest expense                                                         4,318            22,022            28,828            
Investment income                                                          428               856             7,052            
Gain (loss) on disposition of assets                                      (243)              (84)             (222)           
                                                                     ---------------------------------------------------------
Earnings (loss) before income taxes                                                                                           
 and extraordinary item                                                 12,023            31,895            46,671            
Income tax provision                                                     5,000            12,900            19,300            
                                                                     ---------------------------------------------------------
Earnings (loss) before extraordinary item                                7,023            18,995            27,371            
Extraordinary item                                                                                                            
 - Loss on extinguishment of debt                                                                                             
 (net of income tax benefit of $13,400)                                      -                 -           (19,350)           
                                                                     ---------------------------------------------------------
Net earnings (loss)                                                  $   7,023         $  18,995         $   8,021            
                                                                     =========================================================
Preferred dividends                                                      1,750             5,907             7,000            
                                                                     ---------------------------------------------------------
Net earnings (loss)                                                                                                           
 for common shares                                                   $   5,273         $  13,088         $   1,021            
                                                                     =========================================================
Earnings (loss) per share before                                                                                              
 extraordinary item:                                                                                                          
Primary                                                              $     .31         $     .74         $    1.21            
                                                                     =========================================================
Fully diluted                                                        $     .29         $     .73         $    1.20            
                                                                     =========================================================
Earnings (loss) per share:                                                                                                    
Primary                                                              $     .31         $     .74         $     .06            
                                                                     =========================================================
Fully diluted                                                        $     .29         $     .73         $     .06            
                                                                     =========================================================

AMC ENTERTAINMENT INC.                                              
------------------------                                                
63                            

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INVESTOR INFORMATION                                                            

Stock Listing/Symbol                                                            
AMC Entertainment Inc. Common Stock is traded on the American and Pacific       
Stock Exchanges under the symbol AEN. The Preferred Stock is traded on the      
American Stock Exchange under the symbol AEN Pr. There is no established        
public trading market for Convertible Class B Stock.                            

                                                                [Download Table]
Quarterly Common Stock Price Range                                              

                                Fiscal 1997                   Fiscal 1996       
                          ------------------------------------------------------
                            High           Low            High           Low    
                          ------------------------------------------------------
                                                                                
First Quarter             $ 33.87        $ 23.12        $ 14.50        $ 11.00  
Second Quarter              27.87          15.87          18.12          13.50  
Third Quarter               19.50          13.75          23.50          17.62  
Fourth Quarter              20.25          13.87          24.12          19.25  
Year                      $ 33.87        $ 13.75        $ 24.12        $ 11.00  

(As reported on the American Stock Exchange)                                    

Stock Ownership                                                                 
At the end of fiscal 1997, the Company had 6,583,969 common shares of Common    
Stock outstanding, 42.9% of which were beneficially owned by company            
management. There were 470 shareholders of record on May 19, 1997. At the end   
of fiscal 1997, the Company had 11,157,000 shares of Convertible Class B        
outstanding, 100% of which were beneficially owned by Company management.       
There was one shareholder of record on May 19, 1997.                            

SEC Form 1O-K                                                                   
A copy of the report to the Securities and Exchange Commission on Form 10-K     
may be obtained without charge upon written request to the Finance Department   
at AMC headquarters.                                                            

Annual Meeting                                                                  
The annual meeting of stockholders will be held on Thursday, November 13,       
1997, at 11a.m. cst. Location will be announced at a later date.                

Quarterly Calendar                                                              
The Company has a 52/53 week fiscal year ending on the Thursday closest to the  
last day of March. Fiscal 1998 quarter-end dates will be July 3, October 2,     
January 1 and April 2. Fiscal 1998 will be a 52 week year. Quarterly results    
usually are announced approximately four weeks after the close of the quarter.  

Registrar and Transfer Agent                                                    
UMB Bank, n.a., Securities Transfer Division                                    
928 Grand Avenue, 13th Floor, P.O. Box 410064                                   
Kansas City, Missouri 64141-6226                                                

Corporate Offices                                                               
AMC Entertainment Inc., 106 West 14th Street                                    
P.O. Box 419615, Kansas City, Missouri 64141-6615                               
(816) 221-4000                                                                  

Independent Public Accountants                                                  
Coopers & Lybrand L.L.P., Kansas City, Missouri                                 

Additional Information                                                          
For additional information on AMC Entertainment Inc.,                           
please contact:                                                                 

Craig R. Ramsey, Vice President, Finance                                        
AMC Entertainment Inc.,106 West 14th Street                                     
P.O. Box 419615, Kansas City, Missouri 64141-6615                               
(816) 221-4000                                                                  

AMC ENTERTAINMENT INC.                                                          
------------------------                                                        
64                                                                              

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CORPORATE OFFICERS AND DIRECTORS      

Corporate Officers                                                              

AMC Entertainment Inc.                                                          

Stanley H. Durwood                                                          
Chairman of the Board and Chief Executive Officer                           

Peter C. Brown                                                              
President and Chief Financial Officer                                       

Richard L. Obert                                                            
Senior Vice President and Chief Accounting                                  
and Information Officer                                                     

James V. Beynon                                                             
Vice President and Treasurer                                                

Craig R. Ramsey                                                             
Vice President, Finance                                                     

Nancy L. Gallagher                                                          
Vice President and Corporate Secretary                                      

American Multi-Cinema, Inc.                                                     

Philip M. Singleton                                                         
President and Chief Operating Officer                                       

John D. McDonald                                                            
Senior Vice President, Corporate Operations                                 

Richard J. King                                                             
Senior Vice President, Northeast Operations                                 

Rolando B. Rodriguez                                                        
Senior Vice President, South Operations                                     

Richard T. Walsh                                                            
Senior Vice President, West Operations                                      

AMC Entertainment International, Inc.                                           

Gary S. Thyer                                                               
Vice President, International Operations                                    

Mark A. McDonald                                                            
Senior Vice President, Asia Operations                                      

Bruno B. Frydman                                                            
President, AMC Europe S.A.                                                  

Centertainment, Inc.                                                            

Charles P. Stilley                                                          
President                                                                   

Sam J. Giordano                                                             
Executive Vice President, Design and Construction                           

Nicholas A. Bashkiroff                                                      
Vice President, Development                                                 

AMC Film Marketing                                                              

Richard M. Fay                                                              
President                                                                   

National Cinema Network, Inc.                                                   

Robert E. Martin                                                            
President                                                                   

Board of Directors                                                              

Stanley H. Durwood                                                          
Chairman of the Board and Chief Executive Officer                           
AMC Entertainment Inc.                                                      

Peter C. Brown                                                              
President and Chief Financial Officer                                       
AMC Entertainment Inc.                                                      

Philip M. Singleton                                                         
President and Chief Operating Officer                                       
American Multi-Cinema, Inc.                                                 

Charles J. Egan, Jr.                                                        
Vice President                                                              
Hallmark Cards, Incorporated                                                

William T. Grant, II                                                        
Chairman, President and Chief Executive Officer                             
LabOne, Inc.                                                                

John P. Mascotte                                                            
President and Chief Executive Officer                                       
Blue Cross and Blue Shield of Kansas City, Inc.                             

Paul E. Vardeman                                                            
Shareholder and Director                                                    
Polsinelli, White, Vardeman and Shalton, P.C.                               

AMC ENTERTAINMENT INC.                                              
------------------------                                                
65                            

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		3/15/06		32		51
		12/31/03		31		50
		9/30/03		31		50
		6/30/03		31		50
		3/31/03		31		50
		12/31/02		31		50
		3/15/02		32		51
		3/15/01		33		53
		4/2/98		54					10-K,  8-K
		12/15/97		35		47
		11/13/97		67					PRE 14A,  S-11/A
		9/15/97		32
		8/16/97		32
Filed on:		6/30/97
		6/17/97		32					S-4/A
		6/13/97		32					S-4
		5/19/97		67
		5/16/97		37
		4/10/97		31		51
For Period End:		4/3/97		2		64
		3/19/97		32		51			8-K
		1/10/97		34		47
		12/31/96		59
		3/28/96		23		62			10-K
		12/31/95		59
		12/28/95		27		50			10-Q,  10-Q/A
		3/30/95		28		62			10-K
		12/30/94		28		45
		4/1/94		43
		3/31/94		45					10-K
		5/28/93		22
									List all Filings