AMC Entertainment Inc.

106 W. 14th Street
Kansas City, Missouri 64105
U.S.A.
(816) 221-4000
Fax: (816) 421-5744

Public Company
Incorporated: 1968
Employees: 8,000
Sales: $587 million
Stock Exchanges: American
SICs: 7832 Motion Picture Theaters Except Drive-in; 7833
Drive-In Motion Picture Theaters

AMC Entertainment Inc., through its American Multi-Cinema, Inc. subsidiary, is one of the largest motion picture exhibitors in the United States in terms of number of theater screens operated. In 1994, AMC was running 236 theaters with 1,603 screens in 22 states. An industry leader in the development and operation of multi-screen cinemas, AMC was generating annual ticket sales of nearly $400 million going into the mid-1990s.

AMC was incorporated by Stanley H. Durwood in 1968, but the business was actually started by Durwood’s father in 1920. The elder Durwood had previously been a struggling actor working for a traveling tent show. In 1920, he bailed out of his acting career and leased a movie theater in downtown Kansas City. Also in 1920, Durwood’s wife gave birth to Stanley, who would grow the start-up business into a small theater empire before the end of the century. During the 1920s and 1930s, Durwood was successful enough to open a few more theaters in the Kansas City area. He was also did well enough to help send Stanley to Harvard during the early 1940s.

Stanley Durwood graduated from Harvard in 1943 with a Bachelor of Arts degree. He joined the U.S. Air Force after college and served during World War II, eventually attaining the rank of lieutenant. After the war, Stanley returned to Kansas City and joined the family business—Durwood Theaters. During the 1950s, Stanley, along with his father and younger brother and sister, slowly expanded the business into a chain of ten local movie houses and drive-in theaters. It was during this period that Stanley contrived an ingenious idea for a new kind of cinema—a single complex with multiple theater screens. Although he was never able to realize his vision while his father was in control of the operation, he kept the idea alive in his mind.

Stanley’s father died in 1960, and Stanley and his siblings continued to run the business, with Stanley in charge of operations. By the time Stanley took control of the business, the theater industry was rapidly evolving into a regional, and even national, industry. Because they owned only ten theaters, the Durwoods were under pressure from larger operators with more and bigger complexes. The market reach of such operations was often much greater, so they were usually able to lasso the choice releases, leaving the Durwoods to choose from the less popular motion pictures.

“I had to beg and plead for an Abbott and Costello picture,” Durwood recalled in the March 25, 1994 Kansas City Business Journal. When Durwood finally got the comedy from the movie distributors, he hated it, but it was a big-name film, and his theaters were packed. Durwood noted, “I thought, what a crummy picture. Now if I could get two crummy pictures in here, I could double my gross and the rent would be the same.” Seeking to boost attendance without increasing operating costs, Durwood believed that his multi-screen concept could be the solution.

In 1963, Durwood realized his vision when he built the first multiscreen theater. The concept was unheard of at the time and seemed extravagant; critics wondered why anyone would need two different screens. But the multiscreen theater, located in a suburban shopping mall, was a success. Durwood quickly began to reconfigure some of his existing facilities into multiple screen, or “multiplex,” cinemas. In 1965, Durwood bought out his brother’s and sister’s ownership interests. Then, in 1968, he incorporated the business as American Multi-Cinema Inc. (the name was shortened in 1983 to AMC). At the time of incorporation, AMC consisted of a local chain of 12 theaters with a total of 22 screens. AMC boosted that figure in 1969 when it opened its first six-screen theater.

The 1970s were generally good to the movie theater industry. As Hollywood continued to churn out strings of blockbusters, the U.S. economy surged in the waning years of the post-World War II population and economic boom. Although total annual U.S. movie attendance remained at about one billion, many theater owners were able to boost profits through ticket price increases, concessions, and reduced operating expenses. AMC took advantage of industry gains during the 1970s, but was also able to consistently strengthen its competitive position in relation to its peers. It achieved those market share gains mostly through construction of new multi-screen cinemas, many of which were adjoined to, or located near, shopping malls.

Despite AMC’s success, many of the company’s competitors sat on the sidelines during the popularization of multiplex theaters, failing to recognize the long-term nature of the trend. A few competitors, particularly General Cinemas, also built some multi-screen theaters. But Durwood led the charge. During the 1970s and early 1980s, in fact, AMC’s theaters were built with an average of more than five screens per theater. In contrast, the industry average was about half that amount. The AMC chain included more than 500 screens in theaters scattered mostly around the Midwest by 1981. And AMC’s most rampant period of growth was yet to come.

The success of AMC’s multi-screen concept was rooted in Durwood’s penchant for efficiency. One prominent studio executive even referred to Durwood as the “father of modern theater exhibition” and the “inventor of professional theater management.” Despite its novelty, the multiplex philosophy was relatively straightforward. By putting several screens under one roof, AMC was effectively combining several separate theater facilities. The chief benefit was that the theaters were able to share infrastructure and employees, thus spreading costs over a higher revenue base. For example, by staggering starting times of the movies, one (or a few) employees could staff the box office, while twice as many workers would be needed at two separate theaters. Likewise, only one or two concession stands were needed, parking area requirements were minimized, and costs related to air-conditioning, the lobby, and other infrastructure elements were significantly reduced.

A corollary benefit of multi-cinema theaters, which Durwood especially recognized when he began building complexes with more than two or three screens, was increased market reach. By offering different types of movies, one facility could simultaneously appeal to several segments of the movie-going population. In addition, AMC could maximize profits on selected features by extending the run of movies that turned out to be very popular. Finally, multiple screens complemented other AMC technical and marketing innovations during the 1970s and 1980s. For example, AMC was credited with introducing automated projection systems. In the 1990s, AMC became the first theater to offer frequent movie-goer incentives through its MovieWatcher promotional.

AMC’s most rampant growth spurt occurred during the 1980s. Although annual movie attendance throughout the decade remained near the one billion mark, the theater industry in general succeeded in steadily boosting ticket prices faster than inflation, thus increasing margins. More importantly, AMC continued to parlay its multi-screen concept into a competitive advantage and was able to significantly boost its share of box office receipts. During 1982 and 1983, AMC increased its total number of screens by more than 200, to about 700. Still eager to speed up expansion, the 63-year-old Durwood took his company public in 1983. Until that year, the company had been 100 percent owned by Durwood and his family. He reluctantly sold about 12 percent of AMC’s stock in 1983 in a bid to raise expansion capital.

Figures released during 1983 showed that AMC had earned $10 million on revenues of $200 million, and that the company had increased its profits at an average rate of 22 percent since 1978. Encouraged by healthy returns, Durwood earmarked $70 million for new construction, including at least 200 new screens by 1985. By the end of 1984, AMC had boosted the number past the 800 mark, making it the third largest theater company in North America behind General Cinema and United Artists. By 1985, AMC was operating more than 900 screens, and, by 1986, AMC’s total number of theater complexes had bolted past 200 with more than 1,100 screens in the United States. Furthermore, Durwood stepped up expansion in western Europe, Australia, and Singapore. By 1990, he planned to be operating 2,500 screens in the United States and 1,500 more overseas.

AMC’s strategy represented a slight departure from, or perhaps an amplification of, the growth tactics it had utilized in the past. Instead of building complexes with five or six screens, most of its new facilities during the early and mid-1980s housed eight to 12 screens. Furthermore, Durwood was targeting smaller cities in sunbelt states, especially Florida, Texas, and California. However, to achieve the stellar growth, Durwood was forced to take on a massive load of debt. By 1986, long-term debt had risen to $157 million, making up more than half of the previous year’s revenues. By the end of 1988, moreover, AMC’s debt had reached a hefty $380 million. Durwood and his executives remained undeterred. “We are purposely leveraged,” Durwood maintained in the September 22, 1986 Forbes. He hoped to pay the debt off in the long term from strong profit gains.

The success of AMC’s multi-screen theaters did not go unobserved by industry leaders during the 1980s, as evidenced by industry statistics. Although the number of new theater complexes effectively stagnated and box office attendance declined slightly, the number of movie screens in the United States steadily surged from about 15 million in 1982 to about 20 million in 1986, and then to nearly 23 million by the early 1990s. AMC’s major competitors had finally discovered the benefits of a large-scale multi-screen strategy. Still, AMC lead the industry in multiplexing. By the early 1990s, its complexes were sporting more than 6.5 screens on average, while the industry average had jumped to only 4.5.

As the U.S. theater industry expanded unchecked during the mid-and late 1980s, some critics feared that the market was becoming increasingly overbuilt as theater demand was declining. AMC’s holdings, alone, had reached 1,500 screens by 1988, and a lot more construction was on the design boards. Furthermore, several of its competitors were hurriedly adding more screens to their existing complexes in what became a trend to ‘add value’ to their theaters. In AMC’s case, critics also cited a lack of a market presence in key metropolitan areas like New York, Chicago, and Boston. Moreover, some observers felt that AMC, unlike other theater industry leaders, had made a mistake by not diversifying into movie-related industries during the 1980s.

The criticism about AMC’s lack of diversification was prompted by the fact that the theater industry had felt increasing pressure from an onslaught of other movie medium since the 1970s. Indeed, home videos and cable television, particularly, had been vying for consumer entertainment dollars. In response, AMC’s competitors had diversified out of the theater business. United Artists, the industry leader, had invested heavily in cable television and telecommunications. Similarly, General Cinemas had become active in soft-drink and retail industries. However, to AMC’s delight, the movie industry continued to raise ticket and concession prices throughout the 1980s. AMC boosted both its ticket and concession revenues during 1988 and 1989 to bring its gross sales to more than $456 million during 1989. Part of that growth was attributable to specific blockbuster releases that buoyed earnings during the period.

Despite record sales during the late 1980s, AMC was having financial trouble that intensified during the early 1990s. Notwithstanding a history of extremely sound management of its theaters—Durwood himself was known for always flying coach class, buying his suits off the rack, and driving an economical Honda Civic—AMC had let is operating costs escalate during its rapid expansion. Furthermore, the company’s cash flow was being devoured by a crushing debt load. AMC lost money every year between 1988 and 1992, with the exception of one year in which it gleaned $567,000 in earnings from its operations. To combat slumping profits, AMC reigned in its growth efforts beginning in the late 1980s and concentrated on whipping existing operations into shape. The company added a string of new theaters in 1988, bringing its total number of screens to nearly 1,700. But then it stopped expanding and started slashing costs.

Of its 276 theaters, AMC closed 40 of the least profitable, reducing its total number of screens to about 1,600 by 1994. It also cut its work force by about 1,000. As it scrambled to meet its debt obligations, industry revenues picked up. Although AMC’s sales wavered barely above the $400 million mark, its operating costs declined and the company posted a $1.3 million net profit in 1993. Although the company was more than $300 million in debt, analysts were optimistic, and it appeared as though Durwood’s long-term strategy might pay off after all.

Having overseen a period of great expansion, Stanley Durwood and his son, Edward D. Durwood, chief executive and president, respectively, remained in charge of AMC going in the early 1990s but installed a new operations team in 1992. They appointed Philip M. Singleton as chief operating officer. A former Marine Corp. captain and fighter pilot, Singleton had been with AMC since 1974. He was joined by Peter C. Brown, who was appointed chief financial officer and had been with AMC since 1979. The Durwoods were looking to their new management team for help in pursuing a different business strategy for the remainder of the decade. That stratagem essentially consisted of renewed expansion efforts combined with a greater emphasis on operating efficiency.

In the mid-1990s, founder Stanley Durwood had no intention of slowing AMC Entertainment’s pace. In fact, the 74-year-old chief executive was laying new plans for the mid- and late 1990s to begin building a string of vast complexes with as many as 25 screens under the same roof. Management’s optimism was fueled by a surge in sales during 1994 (fiscal year ended March 31) to a record $587 million, about $15 million of which was retained as earnings—the record year was partly the result of blockbuster hits including “Jurassic Park” and “The Firm.” While critics continued to comment on AMC’s lack of diversification into other movie medium, such as cable television, the Durwoods, who still owned more than 80 percent of the company, remained committed to the concept that had helped them build one of the largest theater companies in the world—multiscreen cinemas. “How many times are we [the theater industry] going to be worried about television,” Durwood quipped in the September 10, 1984 Forbes.

Principal Subsidiaries

American Multi-Cinema, Inc.

Further Reading

Bacha, Sarah Mills, “Movie Theater with 24 Screens Part of Project,” Columbus Dispatch, August 10, 1994, p. G1.

Block, A. B., “What Makes Stanley Borrow? Stan Durwood’s AMC Entertainment is Loaded with Debt and Costly Leases. So Why Does the Stock Sell for 27 Times Earnings?,” Forbes, September 22, 1986.

Butcher, Lola, “AMC Needs to Recapitalize to Pay $23 Million Debt,” Kansas City Business Journal, June 26, 1992, p. 8.

Butcher, Lola, “AMC’s New Management Team Cuts Costs, Prepare for Growth,” Kansas City Business Journal, December 11, 1992, p. 4.

Cardenas, Gina, “Movie Theater Economics,” New Miami, September 1993, p. 18.

Carroll, John, “AMC Slows Its Expansion; Cuts Affect Architectural Firm,” Kansas City Business Journal, October 19, 1987, p. 3.

Ginsberg, Steve, “Picture This: An AMC Multiplex Theater at 1000 Van Noss,” San Francisco Business Times, August 12, 1994, p. 1.

Gold, Howard, “Screen Gem?,” Forbes, September 10, 1984, p. 194.

Harris, Kathryn, “AMC Theater Empire Playing Real-Life Drama,” Los Angeles Times, March 27, 1988, Sec. 4, p. 1.

Henderson, Barry, “AMC Bets on Theater Allure Over Couch,” Kansas City Business Journal, March 25, 1994, p. 3.

Kaberline, Brian, “Ta Da! AMC May Show First Profit in 5 Years,” Kansas City Business Journal, March 29, 1991, p. 1.

—Dave Mote

AMC Entertainment Inc.

106 West 14th Street
Kansas City, Missouri 64105
U.S.A.
Telephone: (816) 221-4000
Fax: (816) 480-4617
Web site: http://www.amctheatres.com

Public Company
Incorporated: 1968
Employees: 8,000
Sales: $1.02 billion (1999)
Stock Exchanges: American
Ticker Symbol: AEN
NAIC: 512131 Motion Picture Theaters (Except Drive-In); 512132 Drive-in Motion Picture Theaters

AMC Entertainment Inc., through its American Multi-Cinema, Inc. subsidiary, is the largest theatrical exhibition company in the world in terms of revenues and one of the largest motion picture exhibitors in the United States in terms of number of theater screens operated. In 1999, AMC was running 200 theaters with 2,800 screens in 23 states. An industry leader in the development and operation of multi-screen cinemas, AMC generated annual ticket sales of nearly $1,030 million in 2000.

Kansas City Beginnings

AMC was incorporated by Stanley H. Durwood (formerly Dubinsky) in 1968, but the business was actually started by Durwood’s father in 1920. The elder Durwood had previously been a struggling actor working for a traveling tent show. In 1920, he bailed out of his acting career and leased a movie theater in downtown Kansas City. Also in 1920, Durwood’s wife gave birth to Stanley, who would grow the start-up business into a small theater empire before the end of the century. During the 1920s and 1930s, Durwood was successful enough to open a few more theaters in the Kansas City area. He was also did well enough to help send Stanley to Harvard during the early 1940s.

Stanley Durwood graduated from Harvard in 1943 with a Bachelor of Arts degree. He joined the U.S. Air Force after college and served during World War II, eventually attaining the rank of lieutenant. After the war, Stanley returned to Kansas City and joined the family business—Durwood Theaters. During the 1950s, Stanley, along with his father and younger brother and sister, slowly expanded the business into a chain of ten local movie houses and drive-in theaters. It was during this period that Stanley contrived an ingenious idea for a new kind of cinema—a single complex with multiple theater screens. Although he was never able to realize his vision while his father was in control of the operation, he kept the idea alive in his mind.

Stanley’s father died in 1960, and Stanley and his siblings continued to run the business, with Stanley in charge of operations. By the time Stanley took control of the business, the theater industry was rapidly evolving into a regional, and even national, industry. Because they owned only ten theaters, the Durwoods were under pressure from larger operators with more and bigger complexes. The market reach of such operations was often much greater, so they were usually able to lasso the choice releases, leaving the Durwoods to choose from the less popular motion pictures.

“I had to beg and plead for an Abbott and Costello picture,” Durwood recalled in the March 25, 1994 Kansas City Business Journal. When Durwood finally got the comedy from the movie distributors, he hated it, but it was a big-name film, and his theaters were packed. Durwood noted, “I thought, what a crummy picture. Now if I could get two crummy pictures in here, I could double my gross and the rent would be the same.” Seeking to boost attendance without increasing operating costs, Durwood believed that his multi-screen concept could be the solution.

The Birth of the Multiplex in the 1960s

In 1963, Durwood realized his vision when he built the first multiscreen theater. The concept was unheard of at the time and seemed extravagant; critics wondered why anyone would need two different screens. However, the multiscreen theater, located in a suburban shopping mall, was a success. Durwood quickly began to reconfigure some of his existing facilities into multiple screen, or “multiplex,” cinemas. In 1965, Durwood bought out his brother’s and sister’s ownership interests. Then, in 1968, he incorporated the business as American Multi-Cinema Inc. (the name was shortened in 1983 to AMC). At the time of incorporation, AMC consisted of a local chain of 12 theaters with a total of 22 screens. AMC boosted that figure in 1969 when it opened its first six-screen theater.

AMC took advantage of industry gains during the 1970s, but was also able to consistently strengthen its competitive position in relation to its peers. It achieved those market share gains mostly through construction of new multi-screen cinemas, many of which were adjoined to, or located near, shopping malls.

Despite AMC’s success, many of the company’s competitors sat on the sidelines during the popularization of multiplex theaters, failing to recognize the long-term nature of the trend. A few competitors, particularly General Cinemas, also built some multi-screen theaters. However, Durwood led the charge. The AMC chain included more than 500 screens in theaters scattered mostly around the Midwest by 1981. And AMC’s most rampant period of growth was yet to come.

The success of AMC’s multi-screen concept was rooted in Durwood’s penchant for efficiency. One prominent studio executive even referred to Durwood as the “father of modern theater exhibition” and the “inventor of professional theater management.” Despite its novelty, the multiplex philosophy was relatively straightforward. By putting several screens under one roof, AMC was effectively combining several separate theater facilities. The chief benefit was that the theaters were able to share infrastructure and employees, thus spreading costs over a higher revenue base. For example, by staggering starting times of the movies, one (or a few) employees could staff the box office, while twice as many workers would be needed at two separate theaters. Likewise, only one or two concession stands were needed, parking area requirements were minimized, and costs related to air-conditioning, the lobby, and other infrastructure elements were significantly reduced.

A corollary benefit of multi-cinema theaters, which Durwood especially recognized when he began building complexes with more than two or three screens, was increased market reach. By offering different types of movies, one facility could simultaneously appeal to several segments of the movie-going population. In addition, AMC could maximize profits on selected features by extending the run of movies that turned out to be very popular. Finally, multiple screens complemented other AMC technical and marketing innovations during the 1970s and 1980s. For example, the company was credited with introducing automated projection systems. AMC introduced the industry’s first cupholder armrest in 1981.

Continued Growth in the 1980s

AMC’s biggest growth spurt occurred during the 1980s. Although annual movie attendance throughout the decade remained near the one billion mark, the theater industry in general succeeded in steadily boosting ticket prices faster than inflation, thus increasing margins. More importantly, AMC continued to parlay its multi-screen concept into a competitive advantage and was able to significantly boost its share of box office receipts. During 1982 and 1983, AMC increased its total number of screens by more than 200, to about 700. Still eager to speed up expansion, the 63-year-old Durwood took his company public in 1983. Until that year, the company had been 100 percent owned by Durwood and his family. He reluctantly sold about 12 percent of AMC’s stock in 1983 in a bid to raise expansion capital.

By 1986, AMC’s total number of theater complexes had bolted past 200 with more than 1,100 screens in the United States. Furthermore, Durwood stepped up expansion in western Europe, Australia, and Singapore. By 1990, he planned to be operating 2,500 screens in the United States and 1,500 more overseas.

AMC’s strategy represented a slight departure from, or perhaps an amplification of, the growth tactics it had utilized in the past. Instead of building complexes with five or six screens, most of its new facilities during the early and mid-1980s housed eight to 12 screens. Furthermore, Durwood was targeting smaller cities in sunbelt states, especially Florida, Texas, and California. However, to achieve the stellar growth, Durwood was forced to take on a massive load of debt. He hoped to pay the debt off in the long term from strong profit gains.

As the U.S. theater industry expanded unchecked during the mid- and late 1980s, some critics feared that the market was becoming increasingly overbuilt as theater demand was declining. AMC’s holdings, alone, had reached 1,500 screens by 1988, and a lot more construction was on the design boards. Furthermore, several of its competitors were hurriedly adding more screens to their existing complexes in what became a trend to “add value” to their theaters. In AMC’s case, critics also cited a lack of a market presence in key metropolitan areas like New York, Chicago, and Boston. Moreover, some observers felt that AMC, unlike other theater industry leaders, had made a mistake by not diversifying into movie-related industries during the 1980s.

Company Perspectives:

Since opening our doors in 1920, AMC Entertainment Inc. has been dedicated to delivering the most entertaining movie-going experience in the world. Along the way, AMC Theatres has changed the way people watch movies by transforming the experience into an adventure. With stadium-style seating, state-of-the-art sound systems, and what is known today as the megaplex…. Maintaining our values as a positive presence in your community and our mission of delivering the highest quality movie-going experience, AMC Theatres remains focused on being a source of enjoyment and leadership.

The criticism about AMC’s lack of diversification was prompted by the fact that the theater industry had felt increasing pressure from an onslaught of other channels for movie viewing since the 1970s. Indeed, home videos and cable television, particularly, had been vying for consumer entertainment dollars. In response, AMC’s competitors had diversified out of the theater business. United Artists, the industry leader, had invested heavily in cable television and telecommunications. Similarly, General Cinemas had become active in soft-drink and retail industries. However, to AMC’s delight, the movie industry continued to raise ticket and concession prices throughout the 1980s. AMC boosted both its ticket and concession revenues during 1988 and 1989 to bring its gross sales to more than $456 million during 1989. Part of that growth was attributable to specific blockbuster releases that buoyed earnings during the period.

Despite record sales during the late 1980s, AMC was having financial trouble that intensified during the early 1990s. Not-withstanding a history of extremely sound management of its theaters—Durwood himself was known for always flying coach class, buying his suits off the rack, and driving an economical Honda Civic—AMC had let is operating costs escalate during its rapid expansion. Furthermore, the company’s cash flow was being devoured by a crushing debt load. AMC lost money every year between 1988 and 1992, with the exception of one year in which it gleaned $567,000 in earnings from its operations. To combat slumping profits, AMC reined in its growth efforts beginning in the late 1980s and concentrated on whipping existing operations into shape. The company added a string of new theaters in 1988, bringing its total number of screens to nearly 1,700, but then stopped expanding and started slashing costs.

Of its 276 theaters, AMC closed 40 of the least profitable, reducing its total number of screens to about 1,600 by 1994. It also cut its work force by about 1,000. As it scrambled to meet its debt obligations, industry revenues picked up. Although AMC’s sales wavered barely above the $400 million mark, its operating costs declined and the company posted a $1.3 million net profit in 1993. Although the company was more than $300 million in debt, analysts were optimistic, and it appeared as though Durwood’s long-term strategy might pay off after all.

Having overseen a period of great expansion, Stanley Durwood’s son Edward left the presidency of AMC in 1995, and Philip M. Singleton, chief operating officer, moved into the post. A former Marine Corp captain and fighter pilot, Singleton had been with AMC since 1974. He was joined by Peter C. Brown, who was appointed chief financial officer.

The Birth of the Megaplex in the 1990s

In the mid-1990s, founder Stanley Durwood was laying new plans to begin building a string of vast complexes with as many as 24 screens under the same roof. This concept was realized in Dallas in 1995 and quickly duplicated in other major markets. As with the multiplex, megaplexes consolidated operations costs and broadened its reach across more market sectors. Moreover, such tremendous spaces also permitted other revenue-generating efforts to flourish, such as restaurants, videogame parlors, and CD and book sales. Despite the million dollar pricetag for the construction of every megaplex, AMC was generally able to recoup its losses, although at the turn of the century the company did curtail its ambitions slightly, building more 20-plexes than 30-plexes. The comforts ushered in by megaplexes made any venues constructed before the 1990s seem old-fashioned.

Durwood died in 1999 of esophageal cancer, and Brown took over as chief executive officer and president. Meanwhile, AMC was busy going international, with a 13-plex in Fukuoka, Japan, and a 20-plex in Portugal, among other locations in Canada, England, and Spain. A joint venture with the Planet Hollywood theme restaurants, Planet Movie, was also planned, but stalled amidst the restaurant company’s ongoing financial troubles. More promising, AMC and Hollywood.com, Inc., a web site for movies and entertainment, joined forces to sell movie tickets over MovieTickets.com in 2000.

Principal Subsidiaries

American Multi-Cinema, Inc.

Principal Competitors

Loews Cineplex Entertainment Corporation; Carmike Cinemas, Inc.; Regal Cinemas, Inc.

Key Dates:

1920:

The company’s first theater is leased.

1963:

The first multiscreen theater is built.

1968:

AMC is incorporated as American Multi-Cinema Inc.

1981:

AMC introduces the industry’s first cupholder armrest.

1988:

AMC’s holdings reach 1,500 screens.

1995:

The first “megaplex” is built.

1999:

Longtime chairman and CEO Stanley H. Durwood dies.

Further Reading

“AMC’s New Chief Fine-Tunes Theater Chain’s Strategy,” Wall Street Journal, July 23, 1999, p. B6.

Bacha, Sarah Mills, “Movie Theater with 24 Screens Part of Project,” Columbus Dispatch, August 10, 1994, p. Gl.

Block, A. B., “What Makes Stanley Borrow? Stan Durwood’s AMC Entertainment is Loaded with Debt and Costly Leases. So Why Does the Stock Sell for 27 Times Earnings?,” Forbes, September 22, 1986.

Cardenas, Gina, “Movie Theater Economics,” New Miami, September 1993, p. 18.

Gold, Howard, “Screen Gem?,” Forbes, September 10, 1984, p. 194.

Graham, Sandy, “From Multi to Mega,” Colorado Bizz, January 2000, p. 50.

Grove, Christopher, “Durwood Legacy Packs ‘Em In,” Variety, May 16-22, 1999, p. 42.

Harris, Kathryn, “AMC Theater Empire Playing Real-Life Drama,” Los Angeles Times, March 27, 1988, Sec. 4, p. 1.

Henderson, Barry, “AMC Bets on Theater Allure Over Couch,” Kansas City Business Journal, March 25, 1994, p. 3.

—Dave Mote

—updated by Mark Swartz

AMC Entertainment Inc.

founded: 1920 as durwood theatres variant name: amc theatres

Contact Information:

headquarters: 106 west 14th street
kansas city, mo 64121-9615 phone: (816)221-4000 fax: (816)480-4625 toll free: (877)amc-4450 email: investorrelations@amctheatres.com url: http://www.amctheatres.com

OVERVIEW

AMC Entertainment Inc., the owner and developer of movie theatres and real estate, is one of the major forces and leaders in the theatrical exhibition industry. The company is also involved in selling and producing on-screen advertising for theatres. The organization made its greatest impact when it introduced the concept of the "megaplex" theatre in 1995. A megaplex is defined as a facility with 14 or more screens. Some AMC theatres have up to 24 screens.

At the end of fiscal year 2001, AMC operated 177 theatres with 2,836 screens in 21 states and the District of Columbia, Canada, France, Hong Kong, Japan, Portugal, Spain, and Sweden.

COMPANY FINANCES

For the fiscal year 2001, AMC had revenues of $1.3 billion. AMC's primary revenues are generated from box office admissions and concessions sales. For the fiscal year 2001, admissions accounted for 67 percent of its revenues, while concession sales accounted for 28 percent. The rest of AMC's revenues are generated by advertising, video games located in theatre lobbies, and the rental of theatre auditoriums. At the end of 2001, AMC had $596.5 million of debt, $57.7 million in capital and financing lease obligations, and $153.7 million in cash and equivalents.

ANALYSTS' OPINIONS

In the last part of the twentieth century and the early part of the twenty-first century, movie theatre companies experienced considerable financial pressure due to over-building and heavy debts. The biggest problem was too many screens, which created a situation where screen growth outpaced attendance. Since 1995, screen growth grew at an annual rate of 7.8 percent, while attendance grew only 3.8 percent. The situation created too much competition. Screen reduction appeared to be the only answer. AMC competitors like Loews Cineplex experienced significant financial trouble. The situation caused financial analysts to predict that AMC Entertainment could benefit from the financial troubles of other companies. However, AMC Entertainment was not unmarked by the situation. In 2001, it announced that it would be closing 300 of its older theatres due to increasing competition from other megaplexes.

HISTORY

AMC's beginnings go back to 1920 and a man named Edward Durwood. At the time, Durwood and his brothers were operating tent shows in the Midwest. Seeking a more settled lifestyle, Durwood acquired the lease to a motion-picture theatre in Kansas City, Missouri. Edward's son, Stanley H. Durwood, eventually came into the business and constantly brought new ideas into the company. He would help AMC Entertainment become the third-largest movie theatre company in the country.

A Harvard graduate, Stanley Durwood joined the company when it comprised a small chain of moviehouses and drive-in theatres after World War II. When he became president of Durwood Theatres in 1960 (as AMC was called back then), he started developing the concept of the multiple-screen theatre, which would become AMC's trademark. In 1963, using pre-existing theatre space, he developed the first-ever multiplex, which was a two-screen theatre with 700 seats, located in a Kansas City shopping center. In 1966, he introduced the first-ever four-plex and, three years later, he introduced the six-plex. At the time, the company had expanded beyond Kansas City and into Arizona, California, Nebraska, and Texas. Now owning 68 screens, the company was incorporated as American Multi-Cinema, Inc.

FAST FACTS: About AMC Entertainment Inc.

Ownership: A charitable trust created after the death of former CEO Stanley Durwood owns 17 percent of AMC Entertainment but controls 66 percent of the voting power.

Ticker Symbol: AEN

Officers: Peter Brown, Chmn., Pres., and CEO, 62, 2000 base salary $970,000; Richard Fay, Pres., AMC Film Marketing, 51, 2000 base salary $430,000; Philip Singleton, EVP, Pres., and COO, 2000 base salary $651,000

Employees: 14,320

Principal Subsidiary Companies: AMC Entertainment Inc. (AMCE) is a holding company with principal subsidiaries that include American Multi-Cinema, Inc. (AMC); AMC Theatres of Canada (a division of AMC Entertainment International, Inc.); AMC Entertainment International, Inc.; National Cinema Network, Inc.; and AMC Realty, Inc. The company's North American theatrical exhibition business is conducted through AMC and AMC Theatres of Canada. The company develops theatres outside North America through AMC Entertainment International, Inc. and its subsidiaries. The company engages in advertising services through National Cinema Network, Inc. (NCN).

Chief Competitors: AMC's main competitors are other major theatre chains including Regal Cinemas, Inc.; Loews Cineplex Entertainment Corp.; Cinemark USA, Inc.; United Artists Theatre Company; Carmike Cinemas; National Amusements, Inc.; Edwards Theatres Circuit, Inc.; GC Companies, Inc.; and Hoyts Cinemas Corporation. However, significant competition comes from other forms of so-called "out of home" entertainment including concerts, amusement parks, and sports events. In recent years, the industry has been facing increasing competition from the home entertainment market, including cable and satellite television, pay-per-view, and home video technology (videotape and DVD).

AMC established another milestone in 1987, when it opened the Century City multiplex in west Los Angeles. The site included the features that would become AMC signatures: large screens, free parking, and large, comfortable seats equipped with cup holders in the arm-rests. Similar multiplex centers soon followed in its wake, in places like the Universal Citywalk in Pasadena, California, and the Third Street Promenade in Santa Monica, California.

In May 1995, AMC opened its first megaplex. Located in Dallas, Texas, it was called the AMC Grand 24 and, as its name implied, it housed 24 screens. Megaplexes like the Grand were characterized not just for their number of screens—they came to be known for the comfort they provided, as they were a vast improvement over multiplex theatres, which were small, cramped, and often dirty. Also, multiplexes tended to be low-key as far as design was concerned. AMC adorned its megaplexes with a colorful array of neon lights and elaborate decorative touches. Most importantly, the viewing experience was vastly improved, as sound quality and picture quality were significantly upgraded via new technology. Not only were the floor designs larger, but so were the screens; reportedly, each screen cost as much as $1 million.

Customer comfort was also a major concern when AMC enlarged the scope of the movie theatre. The small, cramped seats of the multiplex were replaced with large chairs that featured retractable armrests and cupholders. These chairs were arranged in a tiered "stadium seating" structure that ensured that no one's view of the screen would be obstructed. This tiered seating arrangement was once common in the large "movie palaces" of the 1920s and 1930s.

In 1996, AMC opened the largest megaplex in the United States at the 200-store Ontario Mills Mall in Ontario, California. It boasted 30 screens and 5,700 seats. This theatre helped advanced the concept of the location-based entertainment complex, or the LBE, as it is known in the industry. The concept of LBE is designed to turn the megaplex into the attractive center of what is essentially a mall-sized entertainment theme park. In the Ontario mall, the AMC megaplex is surrounded by a huge acarde, an IMAX theatre, Dreamworks, Sega, and indoor attractions like a zoo and rides.

It didn't take long for AMC's advancements to translate into financial success. By 1997, eight of North America's 20 top-grossing theatres bore the AMC trademark. Today, more than 60 percent of AMC Theatres are megaplexes that house at least 14 different movie screens.

STRATEGY

AMC's corporate strategy involves achieving continued success by focusing on business fundamentals, which includes maximizing revenues and managing overhead costs and capital expenditures. This aim is reflected in its strategic plan, which includes three stated elements: maximizing the performance of its existing operations by focusing on the fundamentals of its business; growing and improving its theatre portfolio through strategic acquisitions, selective new builds, and the continued disposition of older, underperforming theatres; and enhancing and extending its business and brands.

The most fundamental element of AMC's strategy is customer comfort and pleasure. From its very beginning, AMC has made designing the most pleasurable movie-going experience the main focus of its strategy. This simple strategy would seem to be a given for any organization intent on succeeding in the industry. However, inspired by the vision of its founder, Edward Dur-wood, AMC implements specific elements and innovations to achieve its aims. The company is always on the lookout for new opportunities that will enable it to enhance the movie-going experience.

INFLUENCES

AMC has been at the forefront of improving the public's night at the movies. Other companies have followed its lead, as AMC has initiated nearly every industry improvement, including theatre design, cupholder armrests, computerized box offices, automated projection booths, state-of-the-art presentations, and stadium-style seating. AMC also created the MovieWatcher club, the first frequent moviegoer reward program, which now has more than 2 million members. Essentially, AMC helped revolutionize the movie-going experience and the theatrical exhibition industry. In doing so, it became one of the most successful companies in the history of the industry.

Perhaps AMC's most influential innovation came in 1995, when it introduced the industry to the megaplex concept. With the construction and design of The Grand 24 in Dallas, it set an industry standard. Other theatres are upgrading their facilities to include stadium-style seating, and they endeavor to provide the top-of-the-line amenities that have become one of the hallmarks of AMC's style.

CURRENT TRENDS

The driving force behind all of the company's innovations has been improving the movie-going experience for the public. AMC desired to change the way the world watches movies, and it succeeded. It continues to seek innovations. In 2000, AMC announced that it would enter into a joint venture to create MovieTickets.com, an Internet ticket seller and source of movie information. The venture includes CBS, Famous Players, Hollywood.com, Marcus Theatres, and National Amusements.

Also, AMC plans to build an entertainment district in downtown Kansas City, Missouri, which will transform a decaying 12-block area into one of the Midwest's most exciting attractions. The $454 million project, to be known as the Power & Light District, will include a 30-screen AMC megaplex, restaurants, live concert and theatre venues, retail shops, and new office buildings and hotels.

Other stated future plans include enhancing and extending its brands and business. Examples of new products and marketing strategies include installation of digital projection technology and streamlining the delivery of in-theatre advertising.

PRODUCTS

Essentially, AMC's primary product is a movie-going experience that is enjoyable and comfortable. AMC says the key characteristics that differentiate them from the competition include its "modern theatre circuit," in which it seeks to continually upgrade the quality of its theatre circuit by adding new screens through new theatres and the acquisition and expansion of older theatres. From April 1995 through March 2001, it opened 90 new theatres with 1,902 screens and added 86 screens to existing theatres, acquired 4 theatres with 29 screens and closed or disposed of 146 theatres with 879 screens.

Another key characteristic is its megaplex theatre format, defined as a theatre with 14 or more screens. A component of the format is the provision of amenities that enhance the moviegoing experience, including stadium seating that provides unobstructed viewing, enhanced seat design, and state-of-the art technology. It also includes increasing of film choice and film starting times to accommodate the tastes and convenience of the public. In this fashion, AMC feels it has raised the standards expected by moviegoers.

For its movies, AMC predominantly licenses first-run motion pictures from distributors. It licenses the entertainment on a film-by-film and theatre-by-theatre basis. When obtaining licenses, AMC considers several factors, including theatre location, competition, season of the year, and motion picture content.

AMC's theatres also provide appealing concession counters that provide quick service. Items include popcorn, soft drinks, candy, hot dogs, and other food products. One popular item is the "combo-meal," which offers a pre-selection of concession products. The company offers different varieties of concession item at different theatres based on preferences of geographic regions. AMC has developed the idea of strategic placement of concession stands to heighten their visibility and to reduce long lines.

CHRONOLOGY: Key Dates for AMC Entertainment Inc.

1920:

Company is founded by Edward Durwood in Kansas City, Missouri

1960:

Stanley Durwood becomes president of Durwood Theatres and starts developing the concept of the multiple-screen theatre

1963:

Durwood Theatres introduces the first multiplex theatre, in Kansas City

1966:

Durwood Theatres introduces the first four-plex theatre

1969:

Company expands into Arizona and California and incorporates as American Multi-Cinema Inc.

1987:

AMC opens the Century City multiplex in west Los Angeles

1995:

AMC opens its first megaplex, in Dallas, Texas

1996:

AMC opens the largest megaplex in the United States, at the Ontario Mills Mall in Ontario, California

2000:

AMC announces a joint venture to create MovieTickets.com

AMC also applies strategic placement when selecting theatre locations. It endeavors to place its theatres in large urban and suburban markets, and in areas that include retail stores, restaurants and other activities that complement the movie-going experience. Approximately 74 percent of its U.S. screens are located in areas that are among the 25 largest "designated market areas."

CORPORATE CITIZENSHIP

AMC provides resources and opportunities for customers, employees, and surrounding communities. On a national level, AMC helps raise money for non-profit organizations through events like special grand openings and in-theatre fund-raisers and through a children's reading program called "Read for the Stars." It also helps raise awareness and money for many local and regional non-profit organizations.

GLOBAL PRESENCE

Besides its U.S. locations, AMC has theatres in Canada, France, Hong Kong, Japan, Portugal, Spain, and Sweden. The international circuit currently includes a total of 128 screens in 7 theatres. AMC has implemented an international expansion program and plans on providing more theatres in overseas locations.

NEW YORK'S MOVIE MECCA

AMC Entertainment, the pioneer of the megaplex, helped take the concept to a new level. In 1999, AMC opened its Empire 25 in Manhattan. When the Loews Cineplex opened across the street with 13 theatres, it created the largest concentration of movie screens in New York City, with 38 screens and 8,100 seats.

EMPLOYMENT

AMC offers a professional management training program. This program combines classroom style training with hands-on training in all aspects of theatre operations. For its employees, AMC provides a comprehensive benefits package that includes health, dental, vision, life insurance, and disability coverage. It also provides flexible spending accounts, a pension plan, a 401 (k) retirement plan, incentive programs, paid vacations, educational assistance programs, and complimentary passes. Jobs within the organization include theatre manager and staff positions including concessionist, usher, cashier, and projectionist.

SOURCES OF INFORMATION

Bibliography

hoover's online. "amc entertainment," 2002. available at http://www.hoovers.com.

industry channel. "industry environment." us business reporter, 5 march 2001. available at http://www.activemedia-guide.com/entertainment_industry.htm.

mann, jennifer. "star 50 profile: amc entertainment, inc." the kansas city star, 14 may 2001. avaiable at http://www.kcstar.com.

"movietickets.com announces agreement with yahoo!," 2 october 2001. available at http://www.investor.amctheatres.com.

yahoo! market guide. "profile-amc entertainment." yahoo finance, 28 march 2002. available at http://biz.yahoo.com/p/a/aen.html.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. amc entertainment inc.'s primary sics are:

6719 offices of other holding companies

7832 motion picture theaters, except drive-in

also investigate companies by their north american industry classification system codes, also known as naics codes. amc entertainment inc.'s primary naics codes are:

512131 motion picture theaters, except drive-in

551112 offices of other holding companies