AMC 電影院 (AMC) 2003 Q1 法說會逐字稿

Good morning. My name is Judy and I

will be your conference facilitator today. At

this time, I would like to welcome everyone to the

AMC Entertainment, Incorporated fiscal year 2003

first-quarter conference call hosted by Peter

Brown, chairman and chief executive officer of AMC

Entertainment, Incorporated.

Any forward-looking statements contained in this

call 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, among

others, the company's ability to enter into

various financing programs, the performance of

films licensed by the company, competition,

construction delays, the ability to open or close

theaters and screens as currently planned,

political, social, and economic conditions,

demographic changes, increases in demand for real

estate, changes in real estate, zoning and tax

laws, and unforeseen changes in operating

requirements.

All lines have been placed on mute to prevent any

background noise.

After the speakers' remarks, there will be a

question and answer period. Analysts who would

like to ask a question during this time should

press star, then the number 1 on your telephone

keypad, and questions will be taken in the order

they are received. To withdraw your question,

press the pound key.

Thank you. Mr. Brown, you may begin your

conference.

Okay. Thank you very much, Judy.

Good morning, everyone, and welcome to the fiscal

2003 first-quarter earnings conference call for

AMC Entertainment, Inc.

As Judy said, I'm Peter Brown, chairman and chief

executive officer of AMC. Joining me on the phone

today are Craig Ramsey, our CFO, Phil Singleton,

our COO and Dick Walsh, chairman of our film

group.

Now, Craig and I will be doing the formal part of

the presentation today, and Phil and Dick will be

joining us for Q and A, so on that note, let's begin.

As was noted in the press release that went out

this morning, our revenues and adjusted EBITDA

were both fiscal first-quarter records. Now, the

strength of the box office, our industry-leading

portfolio of theaters and the continued successful

execution of our strategic plan all combined to

produce this quarter's outstanding record results.

Now, as we look at those results and we compare

them to last year, because we completed two

acquisitions essentially at the end of our fiscal

2002, the acquisition of Gulf States and General

Cinema, we think that the most accurate way to

look at the company's performance on a

year-over-year basis is to treat last year as if

the two acquisitions had been completed at the

beginning of that fiscal year.

In other words, we compare fiscal 2003 to fiscal

2002 on a pro forma basis.

At $462 million, our revenues were 19% higher than

pro forma revenues of 389 million in the same

period last year. Our adjusted EBITDA in the

quarter of $62 million represented a 58% increase

over pro forma adjusted EBITDA of $41 million in

last year's first fiscal quarter.

This marks the seventh consecutive quarter of

year-over-year increases in both revenues and

adjusted EBITDA. Our adjusted EBITDA margin

continued to improve on both a year-over-year and

sequential basis as well, and in addition to our

adjusted EBITDA, we pay close attention to a

measure that we call after-tax cash flow or ATCF,

for short.

Now, ATCF is the bottom-line cash that our

business earns. It's derived by taking our net

earnings and adding back non-cash charges such as

depreciation and amortization. We then deduct

from ATCF our net capital expenditures to get our

measure of free cash flow.

Our ATCF for the quarter was $40 million, which

represented a 127% increase over last year. Our

net capex in the quarter was $20 million. So we

generated, in essence, $20 million of free cash

flow in the quarter.

Now, the free cash flow that we're generating is

enabling us to continue to reduce our leverage,

and at the end of the quarter, our leverage ratio,

as measured by net debt to last 12 months adjusted

EBITDA was 2.3 times, down from 2.7 times what it

was at the end of the March quarter.

Our liquidity position improved since the March

quarter as well. At the end of June, our total

availability, which is defined as our cash on hand

together with the funds that we can borrow on our

revolving credit facility, stood at over

600 million, up over $30 million from where we

were at the end of the March quarter.

Lastly, in terms of the quarter's highlights, the

acquisitions I - the acquisitions I mentioned a

few moments ago, Gulf States and General Cinema,

have now been fully integrated and are

contributing nicely to our cash flow picture, as

we'll now take a look at.

The General Cinema acquisition was closed on the

first day of our current fiscal year, and the Gulf

States transaction was completed at the end of our

last fiscal year.

Now, to refresh everyone's memory, General Cinema

added 621 screens at 66 locations, and Gulf States

added 68 screens at 5 locations to our circuit

portfolio.

Now, we pro forma'd the GC acquisition to

contribute who million dollars of adjusted EBITDA

in fiscal '03 and the Gulf States acquisition to

contribute 8 million. As you can see on this

slide, in the first fiscal quarter, GC contributed

$12 million of EBITDA which represents 30% of what

we had pro forma'd for the entire year, and Gulf

States contributed 3 million, which is 47% of what

we pro forma'd for the full year.

Now, as a frame of reference, looking back over

the last 18 years, AMC's June quarter EBITDA

contribution as a percentage of the full fiscal

year has averaged 20%. So you can see that these

acquisitions are contributing nicely, and our

ability to get them integrated quickly has been

key in being able to maximize their EBITDA

contribution.

AMC continues to differentiate itself in the

theatrical exhibition industry by the quality of

its assets. Now, though our size is large, in

fact with 3,505 screens at 250 theaters, we are

the second largest theater company in the world,

our focus has always been on quality, not

quantity.

Now, when you look at quality, one of the best

indicators is very simply whose theaters are doing

the most business in the marketplace at the unit

level. Week in, week out, box office revenues for

all North American theaters are tracked by a data

service called EDI, which is a division of A.C.

Nielson. We and everyone in our industry are able

to see, through EDI, the level of business at just

about every theater in the market is doing.

Again, as measured by the box office revenues that

those theaters produce.

Now, as we do with the AMC circuit, we watch the

EDI data on an LTM basis and we generate a list of

top 50 theaters in the market. As you can see

from this slide, AMC dominates this list, with

fully 50% of the top 50 theaters in North America

at the end of June. We have more top 10 theaters

than the next five circuits combined.

Now, another key measure of asset quality is

screens per theater. At 14.2 screens per theater,

AMC leads all of its industry peers. Now, this is

an important statistic because as we enter the

digital age of movie-going and theaters becomingly

become more diversified in their delivery of

content - for example, the broadcasting of

concerts - the ability to have shelf space -

that is to say, screens at the unit level - to be

able to do this while accommodating the demand for

the core feature film product will be an absolute

competitive advantage.

One of the keys to AMC's success over the past

several years has been our ability to continually

upgrade the quality of our theater circuit by

disposing of older, obsolete theaters, while at

the same time bringing on newer, higher-performing

theaters.

Since the end of fiscal 1995, and through the June

quarter, we've disposed of almost a thousand

screens while adding to our portfolio a little

over 2100 screens.

We expect this simultaneous addition and

disposition activity to continue in our current

fiscal year, as we add a little over a hundred

screens while disposing of almost a similar

amount, 91 screens, as shown in the red part of

the bar chart on this slide.

Now, the net effect that this will have on our

overall portfolio will be to increase the screen

per theater count to 14.7, thus continuing the

improvement of the quality of our circuit.

Now, we have some very exciting new theaters that

we'll be bringing on-line later this year, and I

look forward to updating everyone in future calls

about how these theaters are doing as we get them

open.

With the overall quality of theaters in our

portfolio, we're in the fortunate position of not

having to spend large amounts of capex dollars to

keep our circuit moderate and industry-leading.

As a result of this, our free cash flow position

is solidly positive and growing, as this slide

shows.

We're free cash flow positive in fiscal '02, and

on a pro forma LTM basis at the end of the June

quarter, our free cash flow was over $50 million

as you can see on this slide.

Free cash flow will allow us to lower our leverage

without sacrificing EBITDA growth, due to the fact

that our asset base is of such high quality. Now,

this isn't to say that we won't continue to add

new units or consider attractive acquisition

opportunities. The key on both of these fronts

will be, as it always has been for us, quality.

We will not get into an undisciplined size focus

scan. We will be continued to guide by the

principle that has served us so well over the past

few years and that principle simply being that

bigger isn't better, better is better.

So on that note, I'll turn the program over to

Craig Ramsey, our CFO, who will finish up the

formal part of the presentation today with a more

detailed look at the industry backdrop during the

quarter, and of course our numbers.

Thank you, Peter. Before

discussing AMC's financial results for the first

quarter ended June 27th, let's first take a look

at some industry statistics for that quarter that

will serve as a good backdrop.

As we track the box office, admissions revenues

during the quarter were up 25% from 1.9 billion in

the first quarter of last year to 2.4 billion this

year.

Attendance accounted for 20% of this 25% increase,

as it increased from 339 million last year to

407 million in the quarter for the current year.

Industry-wide average ticket prices increased from

$5.60 last year to about $5.86 this year, which

accounted for the balance of the box office

increase, or about 5%.

We always look at the top grossing film,

performance of film grossing over $100 million.

It was up in comparison to the same quarter last

year and as you can see on the slide, we had seven

films released during the quarter that are

expected to exceed the $100 million mark at the

box office, and in total, contributed about

1,341,000,000 during the quarter. That compares

to 7 films during the same quarter last year that

contributed 1,166,000,000. Now, while the -

while the over 100 million films did produce more

box office compared to last year, the real

strength of the quarter in the box office during

the quarter came from the performance of films

under the $100 million mark. There were 37

wide-release pictures during the first quarter of

this year, compared to 32 last year, so the box

office enjoyed a very full release schedule.

Okay. Let's look at AMC's first quarter, and I'd

like you to note that in the press release and in

our slide presentation, we are comparing current

quarter results with prior-year actual and also

with pro forma, which, as Peter said, treats the

recent acquisitions of General Cinema and Gulf

States as if they had occurred at the beginning of

the year.

Now, the majority of my comments will relate to

the comparison with pro forma results last year,

since I believe that's the most relevant basis for

comparison.

On a pro forma basis, total revenues increased

73 million over the same quarter last year,

increasing from 389 million to 462 million. This

record-breaking performance was driven primarily

by increases in attendance, which were up 16% from

45.7 million last year to 52.8 million during the

current quarter.

Increases in average ticket prices of

approximately 4% contributed to the balance of the

total revenue increase.

Adjusted EBITDA increased 21 million, or 50% over

pro forma results for the same quarter last year,

to a record-setting 62 million. The momentum of

the box office and our ability to leverage the

strong revenue performance, combined to produce

these results that exceeded analysts'

expectations.

Now, while not on the slide, it is important to

note that we continue to produce increasing

adjusted EBITDA margins which were up 280 - or

268 basis points or 10.6 last year to 13.3% during

the current period. And the last three data

points on the slide relate to our free cash flow

results, and as you can see, the improvements that

have been made at this point.

We define our free cash flow as net loss plus

depreciation, amortization, and any other non-cash

items, and believe that it presents the best

picture of our operating performance from a cash

generation perspective. APC was - ATCF was up

127% compared to pro forma last year. Net capex,

while up over prior-year pro forma and actual

amounts, is in line with our expectations, and it

is indicative of our reduced level of new build

activity.

Our free cash flow results, as we said earlier,

show substantial increases over last year.

Now, since the pro forma impacts of General Cinema

and Gulf States make it a little difficult to

gauge the full-year performance potential of our

circuit, we have presented a pro forma LTM

information. I think Peter's introductory

comments concerning the quarter apply equally as

well to this LTM period. That is, record revenues

and adjusted EBITDA, continued margin improvement,

and after-tax cash flow up, and also free cash

flow positive results.

I'd want you to note that the adjusted EBITDA

performance of 226 million is above the upper end

of the guidance range we provided on our last

conference call, and we'll discuss revised

guidance here in just a few minutes.

As we drill down to the key drivers and analytics

related to the first quarter, we see that all are

positive and confirm the strength of the

first-quarter results. Screen additions include

those that were added in the General Cinema

acquisition, as we discussed a minute ago. We had

one new built theater with 18 screens that came

on-line during the quarter.

The increase in attendance per screen reflects the

real growth in attendance that took place during

the quarter. While we don't show it, you would -

you'll be able to calculate on the press release

that our film exhibition costs did increase from

53.8% on a pro forma basis last year in the first

quarter to 56.5%, and this reflects the terms

really on the two largest pictures during the

quarter, "Spiderman" and "star wars." This

percentage for the quarter is, however, lower than

the 58.3% that we experienced in the first quarter

of our fiscal 2000 year, which is when we had the

last "Star Wars" picture on screen.

Now, we have discussed before that we focus both

on percentages and on absolute dollars of

contribution, and in this case, we look at the

annualized amount of admission revenues that we

retain after paying our film costs. We refer to

it as film retention per screen.

And even with the higher percentages paid for

film - for films during the quarter, our

retention per screen increased by 12% on a pro

forma basis.

As noted on the slide, G and A expense includes two

one time items. First is a special compensation

item related to the forgiveness of loans to the

company's CEO and COO. Now, these loans were put

in place in AMC's second quarter of fiscal 1999,

and their purpose was to enable the executives to

purchase shares as part of a secondary offering

that the company was undertaking at that point in

time.

The forgiveness action was taken in this quarter

to recognize the extraordinary performance of the

company and its senior executives over the past

two years.

As most of you know, AMC was the only public

theater company to successfully preserve value for

its shareholders and all of its constituents in

a - in the capital structure during a period of

unprecedented industry distress which saw all of

AMC's public company peers file for bankruptcy.

As well as most of our major peer competitors who

were not public.

The company has performed and is continuing to

perform well, as evidenced by this quarter's

record results.

This exemplary performance has been recognized by

this onetime special award.

Now, this charge is in G and A expense but because of

its onetime special nature, it is excluded in our

definition of adjusted EBITDA.

Additionally, our after-tax cash flow excludes the

non-cash portion of this charge, which was

approximately $11.4 million, and this is all

detailed in Footnote 2 on the second page of the

financial summary to our press release.

Now, the second noteworthy item in G and A expense is

approximately $2 million of G and A incurred during

the quarter related to the closure of the General

Cinema corporate offices.

As Peter noted earlier, our acquisitions are fully

integrated and contributing to cash flow, and in

this case, the corporate offices have been closed

at this point in time.

Okay. Let's turn now and discuss liquidity and

capital resources. The financing transactions

that we completed last year raised about

$533 million of both debt and equity, and

substantially strengthened our balance sheet as

reflected in the column that's labeled the

March 28th, 2002 pro forma.

The strength of our first-quarter performance

enabled us to increase our liquidity and total

availability. Note the increase in our cash

balance and in our total availability, which

includes amounts that are available to borrow

under our unused revolving credit facility.

We also reduced our net debt from 557 million on a

pro forma basis at the end of our fiscal year to

526 million at the end of the quarter.

Our improved adjusted EBITDA performance also

enabled us to lower our leverage from 2.7 times to

2.3 times. Leverage is further reduced to about

2.1 times if we adjust for C IT capex and treat it

as a cash equivalent.

This last slide, I think, ties together really

everything that we've been here talking about

today, and it shows you the three metrics that we

managed the business on to create value for our

shareholders. Those three being adjusted EBITDA,

net debt, and our total share count.

Now, if we grow our adjusted EBITDA, and at the

same time lower our net debt and manage our share

count so that we're not diluting our equity base

at a rate faster than we are reducing our

leverage, then real fundamental long-term equity

value will be created for our shareholders. It's

really that simple.

As you can see from the slide, and based on the

company's outstanding performance in the first

quarter that we have talked about today, we

believe the fundamental value growth dials are

really lining up in the proper order.

At this point, we are estimating that our adjusted

EBITDA for the current fiscal year should come in

around - in a range of 220 to 230 million. This

is an increase in the range that we gave you

during our last quarterly earnings conference call

in mid-May, and it would represent 7 to 12%

increase - year-over-year increase over the pro

forma adjusted EBITDA that we calculated for

fiscal 2002.

Now, we did file a form 8-K that set forth those

pro forma calculations on a quarter-by-quarter

basis. We filed it on May 30th, for your

reference purposes.

We believe that this new range is a conservative

estimate, particularly since as you saw earlier

our pro forma LTM adjusted EBITDA at the end of

the June quarter stood at $226 million.

Now, equally important as the EBITDA growth in the

equity value creation equation is what is

happening to net debt. Things look to be lining

up pretty well here also. At the end of our last

fiscal year, again on a pro forma basis, our net

debt was 557 million. As we just discussed, due

to the strength of our operating results in the

first quarter, we were able to further de-lever

the company and reduce net debt to 526 million.

With free cash flow that the company is now

generating, we project our net debt balance at the

end of our fiscal 2003 year will be in a range of

460 to 470 million, or down 15 to 17% on a

year-over-year basis.

It is important to note that our reduction of net

debt is not coming at the expense of equity

issuance that would dilute the equity value base.

Here, we watch our total share count to make

certain that is not happening. Now, we are

estimating that our total shares, which consists

of all classes of our common stock, our

convertible preferred on an as-converted basis,

and options assuming the treasury stock method,

and total restricted awards, will be about

76.8 million at the end of our fiscal year. Which

is just up slightly over the fiscal year 2002

number, and that's primarily due to payment in

kind dividends on the convertible preferred stock

that was issued in April of 2001.

So to summarize what this shows - slide is

showing, our adjusted EBITDA is going up. Net

debt is going down. And total share count is

staying relative or basically flat.

That equates to the right direction for each of

these metrics, as we continue to manage to create

value for our shareholders.

So with that, I'd like to turn the program back

over to Judy, who will open the floor for our Q and A

session.

At this time, I would like to remind

the analysts that in order to ask a question,

please press star, then the number 1, on your

telephone keypad.

Your first question comes from Tim Wallace with

Banc of America Securities.

Thank you very much. Can you hear me

okay?

Yeah. Tim, you're breaking up

just a little bit but -

Okay. Yeah, I'm hearing a little

interference there. Can you hear me?

Yeah, we can hear you.

Okay. Good. Just a couple of

questions. It may have been on one of your slides

and I don't have access to the slides right now,

but your average spend per customer, could you

update us on what that is?

Second, could you talk about your plans for

upgrading your - digitally upgrading your plants,

what your expectations are for the year.

And then if you could talk a little bit about -

advertising came in a bit stronger than I had

anticipated. If you could comment on what's

driving that and what we should expect for the -

for the next couple of years. Thanks.

Okay. Yeah. The average spend

per customer, the concession per head, $2.39 for

the current year, and $2.30 for last year, so it's

up just about 4%.

Ticket -

Did you want the ticket also,

Tim, or -

Yeah.

Okay. The total - let's just

go to the total revenue per head, which was $8.49

for the current quarter versus $8.18 last year.

Again, that's up about 4%.

Okay. Great.

The second question, on digital,

we are in the - in kind of a test roll-out phase

of a digital initiative with our on-screen

advertising company, National Cinema Network,

which would enable us to capture what we think are

some real up side opportunities in the ancillary

revenue area. We've - we've - we have some test

markets where we are fully digitally equipped in

our theaters. It's enabling us to expand the base

of customers, and so we're quite encouraged with

the results to date and expect to continue to roll

out over the next 12 months and look for good up

side potential. So that's where we are currently.

You did say NCN - you noted the NCN line was

improved. We have seen some strengthening in the

advertising market, and actually, NCN's revenues

are up pretty substantially over the same quarter

last year, up about 50%, and with a fairly

substantial improvement in their adjusted EBITDA

performance also.

Okay. Thank you.

You're welcome.

Your next question comes from Jill

crew Dick with Salomon Smith Barney.

Hi. Thanks. Good morning.

What kind of box office expectations are you

building into your current EBITDA forecast for

this year, and any thoughts on the first-half box

office for 2000 - for calendar 2003?

Secondly, I was hoping you could give us a sense

of your - talk a little bit more about the

acquisition outlook. We are seeing some smaller

players picking up properties off the block, given

the strong box office. How do you see acquisition

prices changing in the current market, and what's

your outlook for the balance of the year of how

aggressively you guys are looking at acquisitions?

Thank you.

Thanks, Jill. We'll - I'll take

the second half, and Craig can talk about the

first half the first part of the question.

Really, on the acquisition front, Jill, as you

noted, I think most theatrical - one thing about

when theater properties are normally sold or not

sold is during the peak periods of the seasonality

of the business, which is typically, as you know,

the summertime and/or the holiday season between

Thanksgiving and the new year. So, again, as you

noted, there really is not a lot of activity as is

natural at this - for this - at this time of the

year for folks that are out there with theater

properties.

Our approach - and I alluded to it in my formal

part of the presentation - is, we have a typed

short list of those properties that we would find

attractive, both in terms of our asset quality

metric as well as our market quality metric, and

we are, as I said on prior calls, just constantly,

constantly working those. They are transactions

that you can't necessarily plan on happening

because they involve complex dynamics between

buyers and sellers, but we're constantly working

on them.

But I think that the key point that I'd like to

make in this call, and really in my formal

comments wanted to make loudly and clearly, is

that one thing that we won't do is we won't just

acquire to create size. Our focus is on quality,

quality, quality. Bigger isn't better, better is

better, is the principle that guides us, and with

that in mind, we're going to be very disciplined

about how we approach these. And I think you're

correct in your assessment that with the strong

box office, people would have a sense - a better

sense - or a more higher sense of the values of

these underlying properties, but as we also know,

box office is cyclical and at some future point in

time may not be as strong as it is right now. In

fact, will not be as strong as it is right now.

And that may be a better environment for us.

But we'll do fine in the meantime with what we've

got in our new build portfolio, and again, being

disciplined about our approach.

The first half of the question, Craig will take.

Yeah. Jill, I think that the

first question was what do we - what do we model

in for the box office the rest of the year, and

we've - we really are kind of sticking with the

range that we gave in the first quarter, in the 6

to 8% range, which would - which would imply that

we have a fairly conservative view on the balance

of the year. And the January, February, March -

that fourth quarter for us - is still quite a bit

unknown at this point.

So 6 to 8%, we think, is a conservative position.

What does that imply for the balance

of the year, in terms of box office for the

balance of the calendar year, in terms of box

office?

We believe that we're going to

be very close, if not exceed, the second half of

last year, and that's a very encouraging note

because as you remember, the last two quarters of

our fiscal year last year were very strong and we

feel very confident we're going to be very

comparable to those.

Great. Thank you.

You're welcome, Jill.

Your next question comes from

Lawrence Bernard with Morgan Stanley.

Yes. Good morning. Just a couple of

questions. One, on the expense, special

compensation expense which you mentioned which I

think you've detailed fairly, I'm just trying to

get a sense. You mentioned that was a onetime

charge. Can you comment on what the - what the

original loan - the amounts of those loans?

Could you give any predictions of what kind of any

future expense might be, if any?

And the second question relates to concession

costs. They're up slightly, 13.5%, as a

percentage of concessions. Just want to see if

you see that going forward - going down on a

future basis, now that you're a bit bigger with

Gulf States and General Cinema.

Okay. On the special

compensation, the loans, again, I'd reiterate

my - the point I made, were made in the second

quarter of 1999. The loan balance was 10-point -

the original loans were about 8.5 million in

total. That - the charge that was taken in this

quarter cleans up all of those loans, so in terms

of going forward, there's no additional cost

associated with any type of loan like that.

There will be no more, is the point.

With regard to your question on concession, if you

were to - if you look at the press release where

we go and present the pro forma, you'd find that

our concession cost is actually down as it relates

to last year same quarter pro forma. The

general - now, this is primarily driven by a

little higher concession cost of the General

Cinema circuit.

Now, we've - we've brought it down a few basis

points, and we expect to continue to do so in the

future as we - as we integrate - continue to

integrate their purchasing programs for concession

items into the AMC contracts.

So the primary impact was related to General

Cinema, and we do expect to be able to manage

those down going forward.

Great. Thank you very much.

Your next question comes from

Christopher Dickson with UBS Warburg.

Thank you very much. As you - talk

a moment, if you would, about the disposals of

some of the screens, and how many of your screens

right now are either running at break-even cash

flow or negative cash flow, and then I'd like to

follow up a little bit on the adjusted EBITDA.

As I see it, if we backed out the onetime charge,

your overall EBITDA is essentially flat year over

year against an extraordinary revenue base. Are

there any other contingent liabilities that may be

floating out there that may affect EBITDA as we go

forward, excluding, of course, the loan, which is

effectively written off.

Okay. I'll try the first

question on dispositions. We have gone through

now and, I guess, updated our internal analysis of

our forward look on screen dispositions, and as

you know, Chris, I think as we've discussed with

you before, we do look out five years, and with

each of our theaters and try to anticipate changes

in the market, and really where those theaters are

going. So when I give you numbers here, we're

talking about a forward look of a number of years,

and we have about 350 screens that we would put in

this category of disposition. And we'd probably

see those rolling off in - you know, 90 to a

hundred screens over the next three years.

And actually, as a group, that - those screens

are performing at or very near break-even.

So, again, I - even with the general -

integration of General Cinema, we do have a

very - a very manageable inventory of screens,

again, because we've been aggressive in the past.

The question on adjusted EBITDA, after the other

charges, there are really no other charges

contemplated at this time. As I made - noted in

the earlier question about the loan cleanup, that

is all of - all of the loan cleanup activity, and

so there really aren't any others out there, if I

understood your question.

Thank you very much.

Your next question comes from Bishop

Sheen with Wachovia Securities.

Good morning, Peter and Craig and

Phil and Dick.

Nice quarter. It's nice to see you guys take

advantage of what clearly has been an up trend,

and I would concur with you, it's hard to imagine

the slope of this curve continuing.

A couple of questions because you've covered so

much.

You've got nearly 200 million of cash, or had it,

at the end of June. Has that cash position

changed dramatically in the last couple of weeks?

Oh, not dramatically. We've

probably had some - some net inflow, but not a

substantial change.

Okay. What are you doing with so

much cash? What do you plan carrying so much cash

around on your balance sheet?

Well, I think it - it provides

us an opportunity to be opportunistic. We

continue to look at some acquisition

opportunities. I think Peter was very pointed

with his remark that we're going to continue to

exercise discipline in terms of what we pay for

any acquisitions.

It provides us to be - an opportunity to be

opportunistic to pay down debt under the right

circumstances or continue to de-lever the company.

All right. But so this is your dry

powder if any expansion opportunities come up, but

the way you were generating free cash flow -

correct me if I'm wrong - that should more than

cover your scheduled debt maturities over the

next - well, over this fiscal year, over the next

four quarters or so, is that correct?

Well, yeah, we would - we would

have not really any debt maturities over the next

year.

Right.

So we would be going into the

market to either buy back or retire sub-debt.

Right. Okay. So that brings me to

the buyback. Do you have - in your new bank

agreement, and I'm - I can't remember in your

bonds if you have any restrictive covenants, given

your current financial status, that would prevent

you from buying in your stock?

Yeah, Bishop, we do. We have

covenant calculations on baskets, et cetera.

Right.

I think what I - I know where

you're going with this question, and I think that

really the simple answer is, we - particularly in

this economic environment, and with a backdrop of

some of the other industries that are out there,

it's a great position in my view to be in, to have

the kind of liquidity we have. And what we will

do, as we have really been doing for the last 10

years, if you go back to '91 when Phil and I got

involved, is we will look at what the most

effective use of those cash resources will be to

create shareholder value, and I expect that that

will run your standard gamut of, you know,

building projects in the sense of investing the

money in the growth of the business, but also

looking at what we need to do with respect to our

capital structure, in terms of our debt

securities, as well as our equity securities.

We just don't have anything today that we're ready

to announce on any of those fronts, but I guess

the summary point I want to make and reiterate is

what we will not do is go out and be undisciplined

with the use of cash [inaudible] either on a new

build front or acquisition front. There is

nothing that can - that can, you know, destroy

value for all of our constituents in our capital

structure. As we have seen in our industry, with

those players that at times were larger than us,

than putting that money to work in the wrong way.

Yeah. Well said. Clearly you seem

balance sheet sensitive which seems to be the

prudent thing to be in this sector and certainly

in these times, and I've known you a long time,

Peter, and I certainly believe you.

The other thing is, is there any capital challenge

coming up that we should be thinking about in

terms of dispositions in terms of chunks of cash

needed to buy out leases, to close up screens? I

know you have an orderly plan for dispositions

over the next few years and you're always looking

at that, but I'm just trying to anticipate any

unanticipated capital challenges that go along

with the - with the rescreening of your asset

base.

No. The simple answer is no.

Okay. All right. One last question.

I notice that you gave us in two different

pieces - if I didn't get the ticket price wrong,

ticket prices went from $5.60 year-ago quarter to

5.86 average price?

Yeah.

And that included the General Cinema?

In other words, is that apples to apples on a pro

forma or is that only the AMC chain?

No, that's pro forma.

Pro forma.

That's pro forma.

Yeah.

Okay. Very good. So it looks like

total - and total spend went from 7.90 to 8.25

also pro forma?

That's correct.

All right. Thank you, gentlemen.

Your next question comes from Andy

VanHouten with Deutsche Banc.

Good morning. Craig, I appreciate

your patience and level of detail on the

compensation charge and I just had a few follow-up

questions on that.

In terms of the loans that were originally given

to the officers, those loans were used a hundred

percent to buy back stock or to buy stock in your

secondary offering, is that correct?

That's right.

Okay. And of course you already

answered whether there were any other loans

outstanding or whether the company would continue

to make loans on a go-forward basis, and you

replied no on that.

My other question is regarding the timing of the

issue. In terms of the thoughts behind the

compensation committee and the board of why did

they choose, for example, this particular quarter

to go ahead with the charge and make the

forgiveness of the loans.

Well, I - I can't necessarily

speak for them, but I can give you my perspective.

You know, this is really recognition of what's

taken place over an extended period of time,

really back to 1999 and forward, and so the

timing, I think, is more related to when the -

you know, the company has emerged from that cycle,

that very difficult time. That - I think that's

the important timing consideration with regard

to - with regard to this forgiveness issue.

Okay. And just so - I'm sorry. One

follow-up question. I'm sorry, Craig. I think in

the Q and A earlier, you had said that the original

loan was 8.5 million, and I wasn't sure sort of

how that corresponded with the - with the

$20 million charge. Is that including accrued

interest or what was sort of the difference

between that?

Yeah, there's additional accrued

interest, and then there's about 8.7 million of

tax - payroll taxes associated with the

forgiveness.

And the other thing I'd want to make - point to

is, you know, there is a - the industry has

gotten more competitive. There's industry -

executive talent, particularly talent that can

demonstrate the ability to manage in difficult

times, comes at a premium, and I think there was

recognition of that also.

So I'd want that to - you know, to be on your

mind also as you think about it.

No, no. Absolutely. I appreciate

your level of detail. Thank you very much.

Okay.

Your next question comes from

Stewart Lindy with Lehman Brothers.

My questions are answered. Thank you

very much.

You're welcome.

Your next question comes from

Matthew Harrigan with Jennco Partners.

Good morning. Two questions. Most

of them were answered but two additional

questions.

One, you said you had 37, you know, wide releases

versus 32, you know, apart from the hundred

million plus pictures during the quarter.

How much of that is a function of the bulge in

production before anticipating a strike and is

there going to be a bit of a pricking of the

bubble as that situation normalizes, you know,

maybe sometimes in 2003, you'd have negative costs

in terms of the number of wide releases?

And then lastly, my usual question on the state of

the international business.

I'll take the film question. I

think you're seeing the final stages of the

ramp-up prior to the strike. I think those

pictures have now come into the marketplace, and

your thought is a good one, what does that mean

going forward, and we're encouraged right now.

Right now, we're tracking approximately 48 titles

to open in our October-through-December period.

That is 7 more than opened last year, 41. And

then as we look forward - and it gets a little

murky, but already we see 39 titles slotted for

the January-to-March period, and that equals what

was out there one year ago.

So we see no dropoff in production, and in fact,

there's a frenzy of activity for next year to lock

up dates of some of the Big 10 pull pictures, and

for example May 2nd is already gone, "X-Men" will

be sitting there. May 16th, "Matrix Revisited."

June 20th, "The Hulk." July 2nd, "Terminator."

The other matrix will be back at Thanksgiving and

two pictures have already staked out Christmas

again, "Lord Of The Rings" and "Harry Potter." So

if anything, this activity continues to improve on

a very progressive basis.

And then on the international side?

Yeah. Matt, this is Peter. I -

you asked that question and I typically give you

the same answer.

Sorry.

No. That's fine. Which is, you

know, we continue to monitor our opportunities

with our international assets. Craig can fill us

in on - actually what we have on a year-over-year

basis on an LTM basis, we have the numbers. For

our international units, all total, they have

improved, but I guess I'll make a continued

strategic comment before I turn it over to him on

the numbers. And that is that, you know, we -

it's an interesting marketplace right now for

international assets, and I think as I've said on

prior calls, it's probably more of a, you know,

buyer's market than it is a seller's market right

now, because I think that those companies that are

in the business of international theatrical

exhibition, if they all had their druthers, would

probably not be in the business, and some of the

big assets that are out there are - are parts of

large media and entertainment conglomerates which,

of course, in some cases are not doing so well, in

terms of their performance.

So it's really more of a - I think everybody

continuing to try to look to figure out what the

best opportunity for everybody internationally is.

Craig, on the numbers?

Yeah. On the numbers, Pete

noted that there's improvement. About a - a

little over a $2 million improvement in the EBITDA

contribution from our international circuit during

the quarter.

Were you actually cash flow EBITDA

positive?

No, it's still negative.

Okay. Congratulations on the

quarter.

Thanks, Matt.

Again, I would like to remind the

analysts if you would like to ask a question at

this time, please press star and then the number 1

on your telephone keypad.

Your next question comes from John Maxwell with

BNP Paribus.

The only remaining question I have is

net capital spending for the year, is that still

in the 75, 80 million range for this current

fiscal year?

That would be gross. Actually,

the - the total gross number is about 88 million.

We are still planning to do a sale/leaseback

transaction that would generate proceeds of about

44, which would give us net of 44.

Okay. Great. Thank you very much.

Your next question comes from Steven

Rogerio with UBS Warburg.

Two questions. One as it relates to

box office. You gave us a feel of that before,

when a question was asked. Could you just repeat

what you expect for box office growth in the

remainder of this year?

And also, what you are planning on doing for

ticket price increases?

Well, I think the box office the

second half of the year is going to be very

comparable to last year, so it will either be

equal to or slightly up. For the industry.

And for ticket prices?

For ticket prices - this is

Phil Singleton. We'll seasonally take a look at

all of our markets, as we always do, at the

beginning of the holiday quarter and probably

selectively push up the needle a little bit.

Probably more so in the box office than the

concession area. And then we'll have a few key

locations that should come on-line the last half

of the year, too, that will be much higher ticket

prices. One in Chicago and one in the

San Francisco area.

Okay. And last question as it

relates to the compensation charge, how deep did

that go within the organization? How many people

participated?

Well, as I said, there were two.

Thank you.

Your next question is a follow-up

from Bishop Sheen with Wachovia Securities.

Peter, on the sale/leaseback,

anticipated for sometime Q3, sometime Q4 -

Actually probably in the next

quarter.

In the next quarter. And would it

be - would the usual REIT - the REIT that you

have a close association with, or to a different

party?

No, it would be with

entertainment properties. We did - we did look

outside for rates, and the rate's very

competitive, and so it will be with entertainment

properties.

With entertainment properties?

Yes.

Okay. All right. Thank you.

You're welcome, Bishop.

There are no further questions at

this time.

Okay. Great. I'd like to thank

everyone for joining us this morning. I know it's

an interesting morning in the capital markets.

I'll just close by simply saying we hope y'all

have a great rest of the summer. Keep cool. Take

in a movie or two. And we look forward to

visiting with you again after the September

quarter.

Thank you for participating in

today's AMC Entertainment, Incorporated conference

call. This call will be available for replay

beginning at 1:00 p.m. eastern time today through

11:59 p.m. eastern time on Monday, August 5th,

through the website www.AMCtheaters.com. You may

disconnect at this time.