UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 28, 2013

Commission file number: 033-49598

___________________________________

UNITED ARTISTS THEATRE CIRCUIT, INC.

(Exact name of Registrant as Specified in its Charter)



Maryland	13-1424080
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

7132 Regal Lane Knoxville, TN	37918
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: 865-922-1123

____________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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



Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer x	Smaller reporting company ¨
(Do not check if a smaller reporting company)

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

The number of shares outstanding of $1.00 par value common stock at May 13, 2013 was 100 shares.

Table of Contents

TABLE OF CONTENTS



PART I	Financial Information	3

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Income	4
	Unaudited Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

PART II	Other Information	16

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 6.	Exhibits	16

Signatures		16

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

UNITED ARTISTS THEATRE CIRCUIT, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)



	March 28, 2013			December 27, 2012
Assets
Current assets:
Cash and cash equivalents	$	51.1		$	54.7
Receivables	2.4			1.1
Prepaid expenses, concession inventory and other current assets	4.9			1.4
Deferred income tax asset	2.3			2.3
Total current assets	60.7			59.5
Property and equipment:
Land	2.7			2.7
Buildings, leasehold improvements and equipment	108.6			107.1
Total property and equipment	111.3			109.8
Accumulated depreciation and amortization	(76.1		)	(74.2		)
Total property and equipment, net	35.2			35.6
Goodwill	7.1			7.1
Other non-current assets	9.5			5.9
Total assets	$	112.5		$	108.1
Liabilities and Equity
Current liabilities:
Accounts payable	$	4.3		$	5.1
Accrued expenses and other	5.5			6.3
Current portion of debt obligations	0.3			0.3
Total current liabilities	10.1			11.7
Other non-current liabilities	5.0			1.8
Non-current deferred revenue	23.9			24.1
Long-term debt, less current portion	0.7			0.8
Deferred income tax liability	24.0			24.1
Total liabilities	63.7			62.5
Commitments and contingencies
Equity:
Preferred stock, $1.00 par value; 500,000 shares authorized, no shares issued and outstanding at March 28, 2013 and December 27, 2012	—			—
Common stock, $1.00 par value; 1,000 shares authorized, 100 shares issued and outstanding at March 28, 2013 and December 27, 2012	—			—
Additional paid-in capital	93.2			93.2
Retained earnings	48.4			47.7
Related party receivables	(93.0		)	(95.6		)
Total stockholder’s equity of United Artists Theatre Circuit, Inc.	48.6			45.3
Noncontrolling interest	0.2			0.3
Total equity	48.8			45.6
Total liabilities and equity	$	112.5		$	108.1

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents

UNITED ARTISTS THEATRE CIRCUIT, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions)



	Quarter Ended March 28, 2013		Quarter Ended March 29, 2012
Revenues:
Admissions	$	28.8	$	34.9
Concessions	10.9		13.1
Other operating revenues	1.7		1.9
Total revenues	41.4		49.9
Operating expenses:
Film rental and advertising costs	13.9		17.0
Cost of concessions	1.5		1.7
Other theatre operating expenses	17.9		19.6
Sale and leaseback rentals	3.8		3.8
General and administrative expenses	1.3		1.5
Depreciation and amortization	1.8		2.2
Net loss on disposal and impairment of operating assets	—		0.2
Total operating expenses	40.2		46.0
Income from operations	1.2		3.9
Other expense (income):
Interest expense (income), net	—		—
Total other expense (income), net	—		—
Income before income taxes	1.2		3.9
Provision for income taxes	0.5		1.5
Net income	0.7		2.4
Noncontrolling interest, net of tax	—		—
Net income attributable to controlling interest	$	0.7	$	2.4

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

UNITED ARTISTS THEATRE CIRCUIT, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)



	Quarter Ended March 28, 2013			Quarter Ended March 29, 2012
Cash flows from operating activities:
Net income	$	0.7		$	2.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1.8			2.2
Net loss on disposal and impairment of operating assets and other	—			0.2
Deferred income tax benefit	(0.1		)	(0.1		)
Effect of leases with escalating minimum annual rentals	(0.3		)	(0.3		)
Change in operating assets and liabilities:
Receivables	(1.3		)	0.9
Prepaid expenses, concession inventory and other assets	(3.6		)	(3.9		)
Accounts payable	(0.8		)	(1.5		)
Deferred revenue	(0.2		)	(0.1		)
Accrued expenses and other liabilities	(0.8		)	(0.7		)
Net cash used in operating activities	(4.6		)	(0.9		)
Cash flows from investing activities:
Capital expenditures	(1.5		)	(1.1		)
Proceeds from disposition of assets	0.1			—
Distributions to partnership	(0.1		)	(0.1		)
Net cash used in investing activities	(1.5		)	(1.2		)
Cash flows from financing activities:
Debt payments	(0.1		)	—
(Increase) decrease in related party receivables and other	2.6			(1.8		)
Net cash provided by (used in) financing activities	2.5			(1.8		)
Net decrease in cash and cash equivalents	(3.6		)	(3.9		)
Cash and cash equivalents:
Beginning of period	54.7			54.8
End of period	$	51.1		$	50.9

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

UNITED ARTISTS THEATRE CIRCUIT, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 28, 2013 AND MARCH 29, 2012


(1)	The Company and Basis of Presentation

United Artists Theatre Company (the "Parent" or "United Artists"), a Delaware corporation, is the parent company of United Artists Theatre Circuit, Inc. ("we," "us," "our," the "Company" or "UATC") and United Artists Realty Company ("UAR"), which is the parent company of United Artists Properties I Corp. ("Prop I"). UATC leases certain theatres from Prop I. The terms UATC and the Company shall be deemed to include the respective subsidiaries of such entity when used in discussions included herein regarding the current operations or assets of such entity.

UATC operated 485 screens in 54 theatres in 17 states as of March 28, 2013. As of March 29, 2012, UATC operated 516 screens in 58 theatres in 17 states. The Company formally operates on a 52-week fiscal year with each quarter generally consisting of 13 weeks, unless otherwise noted. The Company’s fiscal year ends on the first Thursday after December 25, which in certain years results in a 53-week fiscal year.

The Company is a wholly owned subsidiary of Regal Cinemas, Inc. ("RCI"), which is an indirect wholly owned subsidiary of Regal Entertainment Group ("REG" or "Regal"). REG is controlled by Anschutz Company ("Anschutz"). RCI manages all aspects of the theatre operations of UATC and its subsidiaries and makes all business decisions on behalf of UATC pursuant to a management agreement. In certain markets where UATC operates theatres, RCI also operates theatres.

For a discussion of the series of events leading to the formation of REG, REG’s acquisition of the Company and other significant transactions which have occurred through December 27, 2012, please refer to Notes 1 and 2 to the consolidated financial statements included in Part II, Item 8 of our annual report on Form 10-K, filed on March 22, 2013 with the Securities and Exchange Commission (the "Commission") (File No. 33-49598) for the fiscal year ended December 27, 2012 (the "2012 Audited Consolidated Financial Statements"). For a summary of our significant accounting policies, please refer to Note 3 to the 2012 Audited Consolidated Financial Statements.

The Company has prepared the unaudited condensed consolidated balance sheet as of March 28, 2013 and the unaudited condensed consolidated statements of income and cash flows for the quarters ended March 28, 2013 and March 29, 2012 in accordance with U.S. generally accepted accounting principles for interim financial information and the rules and regulations of the Commission. Accordingly, certain information and footnote disclosures typically included in an annual report have been condensed or omitted for this quarterly report. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented have been made. The December 27, 2012 unaudited condensed consolidated balance sheet information is derived from the 2012 Audited Consolidated Financial Statements. These unaudited condensed consolidated financial statements should be read in conjunction with the 2012 Audited Consolidated Financial Statements and notes thereto. The results of operations for the quarter ended March 28, 2013 are not necessarily indicative of the operating results that may be achieved for the full 2013 fiscal year.

Net income and total comprehensive income are the same for all periods presented.


(2)	Debt Obligations

Debt obligations are summarized as follows (amounts in millions):



	March 28, 2013			December 27, 2012
Debt obligations(a)	$	1.0		$	1.1
Less current portion	(0.3		)	(0.3		)
Long-term debt, less current portion	$	0.7		$	0.8

______________________________

(a) Debt obligations include $1.0 million and $1.1 million of capital lease obligations as of March 28, 2013 and December 27, 2012, respectively, which have an interest rate of 10.0%, maturing in 2016.

Table of Contents


(3)	Related Party Transactions

Management Agreement

RCI manages all aspects of the theatre operations of UATC and its subsidiaries pursuant to the terms of a management agreement, which includes all of its cash collections, cash disbursements and other cash management functions. During the quarters ended March 28, 2013 and March 29, 2012, UATC recorded management fee expenses of approximately $1.3 million and $1.5 million, respectively, related to this agreement. Such fees have been recorded in the accompanying unaudited condensed consolidated statements of income as a component of "General and administrative expenses."

Related Party Receivables

The related party receivables balance of $95.6 million as of December 27, 2012 was comprised of approximately $9.8 million related to advances made to Prop I to fund additions and/or renovations to theatres leased from Prop I and approximately $85.8 million related to intercompany transactions and cash management. The related party receivables balance of $93.0 million as of March 28, 2013 continued to be comprised of the $9.8 million receivable from Prop I and approximately $83.2 million related to intercompany transactions and cash management.

UATC leases three theatres from Prop I in accordance with a master lease (the "Prop I Master Lease"). The Prop I Master Lease commenced in 1988 with an original base term of 15 years and in 2003 UATC exercised a 10 years renewal extension of the lease. The Prop I Master Lease provides for basic monthly or quarterly rentals and may require additional rentals, based on the revenue of the underlying theatre. In order to fund the cost of additions and/or renovations to the theatres leased by UATC from Prop I, UATC made advances to Prop I prior to becoming a wholly owned subsidiary of REG in 2002. Since 2002, UATC has not funded any additions and/or renovations for these properties and does not expect to make any advances to Prop 1 in future periods. The Prop I portion of the related party receivable balance ($9.8 million at March 28, 2013 and December 27, 2012) will be reduced upon any sale of the three properties by Prop I, with UATC receiving the net proceeds of the sale. The fair value of each of the three locations is evaluated periodically using the expected selling price less selling costs for each property. Management’s estimates (Level 3 inputs as described in Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures) are based on recent market transactions and current real estate values within each market. The Company has no current intention to market or sell the properties at this time, but believes that the fair market value of the three properties will be sufficient to substantially recover the current receivable from Prop I.

The decrease in the related party receivables balance of $2.6 million during the quarter ended March 28, 2013 was due primarily to the timing of intercompany cash collections and disbursements particularly with respect to (1) the redemption of gift cards and discount tickets at UATC theatres that were sold by a subsidiary of RCI, Regal CineMedia Corporation ("RCM"), and (2) cash received by RCI for various revenue items, such as on-line ticket sales and rebates from vendor marketing programs, for UATC’s share of the revenues for such items. RCI (or RCM) receives the cash for these items, revenue is recorded by UATC and a corresponding intercompany receivable is created, which is payable by RCI (or RCM) to UATC. Increases in the intercompany receivable recorded by UATC could continue to occur in future periods as long as the above described cash management activities continue as usual. As of March 28, 2013, management believes the intercompany receivable is fully collectible.

National CineMedia, LLC Transactions

Pursuant to the Company’s management agreement with RCI, RCI, through an agreement with National CineMedia, LLC ("National CineMedia"), provides all on-screen and lobby advertising and event services to UATC.

In connection with the completion of the initial public offering, or IPO, of National CineMedia Inc.’s ("NCM Inc.") common stock, RCI amended and restated its existing exhibitor services agreement ("ESA") with National CineMedia, whereby in exchange for its pro rata share of the IPO proceeds, RCI agreed to a modification of National CineMedia’s payment obligation under the ESA. The modification extended the term of the ESA to 30 years, provided National CineMedia with a five-year right of first refusal beginning one year prior to the end of the term and changed the basis upon which RCI is paid by National CineMedia from a percentage of revenues associated with advertising contracts entered into by National CineMedia to a monthly theatre access fee. Also, with respect to any on-screen advertising time provided by us to our beverage concessionaire, RCI is required to purchase such time from National CineMedia at a negotiated rate.

Table of Contents

As a result of the ESA amendment and related modification payment, RCI recognizes various types of other revenue from National CineMedia, including per patron and per digital screen theatre access fees, net of payments for on-screen advertising time provided to the Company’s beverage concessionaire, other National CineMedia revenue and amortization of upfront ESA modification fees utilizing the units of revenue amortization method.

The Company’s portion of these revenues are presented as a component of "Other operating revenues" in the Company’s unaudited condensed consolidated financial statements and consist of the following amounts (in millions):



	Quarter Ended March 28, 2013			Quarter Ended March 29, 2012
Theatre access fees per patron	$	0.2		$	0.3
Theatre access fees per digital screen	0.1			0.1
Other NCM revenue	0.1			0.1
Amortization of ESA modification fees	0.1			0.1
Payments for beverage concessionaire advertising	(0.2		)	(0.3		)
Total	$	0.3		$	0.3

Digital Cinema Implementation Partners, LLC Transactions

Regal maintains an investment in Digital Cinema Implementation Partners, LLC, a Delaware limited liability company ("DCIP"). DCIP is a joint venture company formed by Regal, AMC Entertainment, Inc. ("AMC") and Cinemark, Inc. ("Cinemark"). On March 10, 2010, DCIP executed definitive agreements and related financing transactions in connection with the conversion to digital projection. Concurrent with closing, RCI entered into a master equipment lease agreement (the "Master Lease") and other related agreements with Kasima, LLC, a wholly-owned subsidiary of DCIP.

DCIP funds the cost of conversion to digital projection principally through the collection of virtual print fees from motion picture studios and equipment lease payments from participating exhibitors, including Regal. In accordance with the Master Lease, RCI will sublease (the "Sublease") the digital projection systems to UATC under a twelve-year term with ten one-year fair value renewal options. The Master Lease also contains a fair value purchase option. Under the Master Lease and the Sublease, UATC pays RCI annual minimum rent of $1,000 per digital projection system from the effective date of the agreement through the end of the lease term and is, upon the conditions described below, subject to incremental annual rent of $2,000 per digital projection system beginning at six and a half years from the effective date of the agreement through the end of the lease term. In the event that the junior capital raised by DCIP in the initial financing transactions remains outstanding at any time on or after the date that is six years, six months after the closing date of March 2010, the holders of the related notes will have the right to require Regal and other participating exhibitors to make incremental minimum rent payments of $2,000 per digital projection system per year through the earlier of the end of the lease term or until such notes are repaid. UATC considers both the $1,000 minimum rental and the incremental minimum rental payment of $2,000 per digital projection system to be minimum rents and accordingly has recorded such rents on a straight-line basis in its consolidated financial statements. UATC is also subject to various types of other rent if such digital projection systems do not meet minimum performance requirements as outlined in the Master Lease and the Sublease. Certain of the other rent payments are subject to either a monthly or an annual maximum. UATC accounts for the Sublease as an operating lease for accounting purposes. During the quarters ended March 28, 2013 and March 29, 2012, the Company incurred total rent of approximately $0.3 million and $0.2 million, respectively, associated with the leased digital projection systems. As of March 28, 2013, we operated 473 screens outfitted with digital projection systems.


(4)	Sale—Leaseback Transactions

In December 1995, UATC entered into a sale and leaseback transaction whereby 31 owned properties were sold to and leased back from an unaffiliated third party. In conjunction with the transaction, the buyer of the properties issued publicly traded pass-through certificates. In connection with this sale and leaseback transaction, UATC entered into a Participation Agreement that requires UATC to comply with various covenants, including limitations on indebtedness, restricted payments, transactions with affiliates, guarantees, issuance of preferred stock of subsidiaries and subsidiary distributions, transfer of assets and payment of dividends. As of March 28, 2013, 11 theatres were subject to the sale leaseback transaction and approximately $17.9 million in principal amount of pass-through certificates were outstanding.

Table of Contents


(5)	Income Taxes

The provision for income taxes of $0.5 million and $1.5 million for the quarters ended March 28, 2013 and March 29, 2012, respectively, reflect effective tax rates of approximately 41.7% and 38.5%, respectively. The effective tax rates for the quarters ended March 28, 2013 and March 29, 2012 reflect the impact of certain non-deductible expenses.

In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. The Company maintains a valuation allowance against deferred tax assets of $2.4 million as of March 28, 2013 and December 27, 2012 as management believes it is more likely than not that certain deferred tax assets will not be realized in future tax periods. Future reductions in the valuation allowance associated with a change in management’s determination of the Company’s ability to realize these deferred tax assets will result in a decrease in the provision for income taxes.

The Company files income tax returns in the U.S. federal jurisdiction and certain state jurisdictions as part of the REG income tax filings and files separate income tax returns in various other state jurisdictions as well. The Company's share of the REG current and deferred tax expense is determined on a separate company basis. REG and the Company are no longer subject to U.S. federal income tax examinations by taxing authorities for years before 2009, and with limited exceptions, are no longer subject to state income tax examinations for years before 2008. However, the taxing authorities still have the ability to review the propriety of tax attributes created in closed tax years if such tax attributes are utilized in an open tax year.


(6)	Litigation and Contingencies

The Company and its subsidiaries are presently involved in various judicial, administrative, regulatory and arbitration proceedings concerning matters arising in the ordinary course of business operations, including but not limited to, personal injury claims, landlord-tenant disputes, employment and other contractual matters, some of which are described below. Many of these proceedings are at preliminary stages, and many of these cases seek an indeterminate amount of damages. The Company’s theatre operations are also subject to federal, state and local laws governing such matters as wages, working conditions, citizenship and health and sanitation and environmental protection requirements.

Under ASC Topic 450, Contingencies—Loss Contingencies, an event is "reasonably possible" if "the chance of the future event or events occurring is more than remote but less than likely" and an event is "remote" if "the chance of the future event or events occurring is slight." Thus, references to the upper end of the range of reasonably possible loss for cases in which the Company is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the Company believes the risk of loss is more than slight. Management is unable to estimate a range of reasonably possible loss for cases in which damages have not been specified and (i) the proceedings are in early stages, (ii) there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (iii) there is uncertainty as to the outcome of pending appeals or motions, (iv) there are significant factual issues to be resolved, and/or (v) there are novel legal issues presented. However, for these cases, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on the Company’s financial condition, though the outcomes could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

On October 9, 2012, staff at the San Francisco Regional Water Quality Board (the "Regional Board") notified the Company, that the Regional Board is contemplating issuing a cleanup and abatement order to the Company with respect to a property in Santa Clara, California that the Company owned and then leased during the 1960s and 1970s. According to the Regional Board, the property in question has been contaminated by dry cleaning facilities that operated at the property in question from 1961 until 1996. The Regional Board is also contemplating issuing the order to the current property owner, who has been conducting site investigation and remediation activities at the site for several years. While the Company intends to vigorously defend these matters, we cannot yet predict the outcome or the magnitude of any clean-up costs. We believe that we are, and were during the period in question described in this paragraph, in compliance with such applicable laws and regulations.

In situations where management believes that a loss arising from the above and similar other proceedings is probable and can be reasonably estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no amount within the range in more probable than another. As additional information becomes available, any potential liability related to these proceedings is assessed and the estimates are revised, if necessary. The amounts reserved for such proceeding totaled approximately $2.8 million as of March 28, 2013. Management believes any

Table of Contents

additional liability with respect to these claims and disputes will not be material in the aggregate to the Company's consolidated financial position, results of operations or cash flows.

Our theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA") to the extent that such properties are "public accommodations" and/or "commercial facilities" as defined by the ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, awards of damages to private litigants and additional capital expenditures to remedy such non-compliance.

In addition, from time to time, the Company receives letters from the state officials in states where we operate theatres regarding investigation into the accessibility of our theatres to persons with visual impairments or that are deaf or hard of hearing. On July 20, 2010, the DOJ issued Advance Notice of Proposed Rulemaking concerning the provision of closed captioning and descriptive audio within the theatre environment. Significantly, this is the first time the DOJ has stated that open captioning may not be required by the ADA. However, by so stating, the DOJ has implied that closed captioning may be required. The Company believes it provides the members of the visually and hearing impaired communities with reasonable access to the movie-going experience but has announced its intention to deploy new digital captioning and descriptive video systems during 2013 that should meet all such potential requirements or expectations of any federal, state or individual concerns. Notwithstanding these efforts, the Company continues to defend claims made by private litigants that it has violated state law by not providing captioning for the deaf and hard of hearing. Regardless, the Company believes that it is in substantial compliance with all current applicable regulations relating to accommodations for the disabled. The Company intends to comply with future regulations in this regard and except as set forth above, does not currently anticipate that compliance will require the Company to expend substantial funds.


(7)	Recent Accounting Pronouncements

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. ASU 2013-02 became effective for the Company as of the beginning of fiscal 2013. The adoption of ASU 2013-02 had no impact on the Company's consolidated financial position, cash flows, or results of operations.

Table of Contents


Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the information in this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts included in this Form 10-Q, including, without limitation, certain statements under "Management’s Discussion and Analysis of Financial Condition and Results of Operations", may constitute forward-looking statements. In some cases you can identify these "forward-looking statements" by words like "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of those words and other comparable words. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these statements as a result of certain factors as more fully discussed under the heading "Risk Factors" contained in our annual report on Form 10-K filed on March 22, 2013 with the Commission (File No. 033-49598) for the Company’s fiscal year ended December 27, 2012. The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein.

Overview and Basis of Presentation

UATC operated 485 screens in 54 theatres in 17 states as of March 28, 2013. As of March 29, 2012, UATC operated 516 screens in 58 theatres in 17 states. The theatres we operate are managed by RCI, a wholly owned subsidiary of Regal, pursuant to a management arrangement described below. The Company formally operates on a 52-week fiscal year (ending on the first Thursday after December 25 each year) with each quarter generally consisting of 13 weeks, unless otherwise noted. The Company manages its business under one reportable segment: theatre exhibition operations.

We generate revenues primarily from admissions and concession sales. Additional revenues are generated by our vendor marketing programs, various other activities in our theatres and our relationship with National CineMedia pursuant to the Company's arrangement with RCI (described further in Note 3 — "Related Party Transactions"). Film rental costs depend primarily on the popularity and box office revenues of a film, and such film rental costs generally increase as the admissions revenues generated by a film increase. Because we purchase certain concession items, such as fountain drinks and popcorn, in bulk and not pre-packaged for individual servings, we are able to improve our margins by negotiating volume discounts. Other operating expenses consist primarily of theatre labor and occupancy costs.

The Company’s revenues are usually seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, motion picture studios release the most marketable motion pictures during the summer and holiday seasons. The unexpected emergence or continuance of a "hit" film during other periods can alter the traditional pattern. The timing of movie releases can have a significant effect on the Company’s results of operations, and the results of one fiscal quarter are not necessarily indicative of the results for the next or any other fiscal quarter. The seasonality of motion picture exhibition, however, has become less pronounced as motion picture studios are releasing motion pictures somewhat more evenly throughout the year. The Company does not believe that inflation has had a material impact on its financial position or results of operations.

For a summary of industry trends as well as other risks and uncertainties relevant to the Company, see "Business-Industry Overview and Trends" and "Risk Factors" contained in our annual report on Form 10-K for the fiscal year ended December 27, 2012 and incorporated herein by reference and "Results of Operations" below.

Critical Accounting Estimates

For a discussion of accounting policies that we consider critical to our business operations and the understanding of our results of operations and affect the more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, please refer to Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" contained in our annual report on Form 10-K for the fiscal year ended December 27, 2012 and incorporated by reference herein. As of March 28, 2013, there were no significant changes in our critical accounting policies or estimation procedures.

Significant Events

For a discussion of other significant operating, financing and investing transactions which have occurred through December 27, 2012, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations

Table of Contents

—Liquidity and Capital Resources" included in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 27, 2012 and incorporated herein by reference.

Results of Operations

Based on our review of industry sources, North American box office revenues for the time period that corresponds to Regal’s first fiscal quarter of 2013 were estimated to have decreased by approximately nine to ten percent in comparison to the first fiscal quarter of 2012. The industry’s box office results for the first quarter of 2013 were negatively impacted by difficult comparisons with the strong attendance experienced in the first quarter of 2012, including the commercial success of premium format pictures such as The Hunger Games and Dr. Suess’ The Lorax.

The following table sets forth the percentage of total revenues represented by certain items included in our unaudited condensed consolidated statements of income for the quarter ended March 28, 2013 ("Q1 2013 Period") and the quarter ended March 29, 2012 ("Q1 2012 Period"):



	Q1 2013 Period		Q1 2012 Period
Revenues:
Admissions	69.6	%	69.9	%
Concessions	26.3		26.3
Other operating revenues	4.1		3.8
Total revenues	100.0		100.0
Operating expenses:
Film rental and advertising costs	33.6		34.1
Cost of concessions	3.6		3.4
Other theatre operating expenses	43.2		39.3
Sale and leaseback rentals	9.2		7.6
General and administrative expenses	3.1		3.0
Depreciation and amortization	4.3		4.4
Net loss on disposal and impairment of operating assets	—		0.4
Total operating expenses	97.1		92.2
Income from operations	2.9	%	7.8	%

Total Revenues

The following table summarizes revenues and revenue-related data for the Q1 2013 Period and the Q1 2012 Period (in millions, except average ticket prices and average concessions per patron):



	Q1 2013 Period		Q1 2012 Period
Admissions	$	28.8	$	34.9
Concessions	10.9		13.1
Other operating revenues	1.7		1.9
Total revenues	$	41.4	$	49.9
Attendance	3.2		3.9
Average ticket price(1)	$	9.00	$	8.95
Average concessions revenues per patron(2)	$	3.41	$	3.36

__________________________________


(1)	Calculated as admissions revenue/attendance.


(2)	Calculated as concessions revenue/attendance.

Table of Contents

Q1 2013 Period Compared to Q1 2012 Period

Admissions

Total admissions revenues decreased $6.1 million during the Q1 2013 Period, or 17.5%, to $28.8 million, from $34.9 million in the Q1 2012 Period primarily due to a 17.9% decrease in attendance, partially offset by a 0.6% increase in average ticket prices. We believe that our attendance is primarily dependent upon the commercial appeal of content released by the motion picture studios. Attendance for the Q1 2013 Period in comparison to that of the Q1 2012 Period was negatively impacted by difficult comparisons with the strong attendance experienced in the Q1 2012 Period, including the commercial success of premium format pictures such as The Hunger Games and Dr. Suess’ The Lorax, and the closure of 31 underperforming screens during the twelve month period ended March 28, 2013.

Concessions

During the Q1 2013 Period, total concessions revenues decreased $2.2 million, or 16.8%, to $10.9 million, from $13.1 million in the Q1 2012 Period. Average concessions revenues per patron increased 1.5%, to $3.41 during the Q1 2013 Period, from $3.36 in the Q1 2012 Period. The decrease in total concessions revenues during the Q1 2013 Period was attributable to the aforementioned decline in attendance during the period, partially offset by an increase in average concessions revenues per patron. The increase in average concessions revenues per patron for the Q1 2013 Period was primarily a result of an increase in popcorn and beverage sales volume during the Q1 2013 Period.

Other Operating Revenues

During the Q1 2013 Period, other operating revenues decreased $0.2 million, or 10.5%, to $1.7 million, from $1.9 million for the Q1 2012 Period. Included in other operating revenues are the theatre access fees paid by National CineMedia (net of payments for onscreen advertising time provided to our beverage concessionaire), revenues from our vendor marketing programs and other theatre revenues. The decrease in other operating revenues during the Q1 2013 Period was primarily driven by decreases in revenues from our vendor marketing programs.

Operating Expenses

The following table summarizes certain operating expenses for the Q1 2013 Period and the Q1 2012 Period (dollars in millions):



	Q1 2013 Period		Q1 2012 Period
	$	% of Revenues	$	% of Revenues
Film rental and advertising costs(1)	13.9	48.3	17.0	48.7
Cost of concessions(2)	1.5	13.8	1.7	13.0
Other theatre operating expenses(3)	17.9	43.2	19.6	39.3
Sale and leaseback rentals(3)	3.8	9.2	3.8	7.6
General and administrative expenses(3)	1.3	3.1	1.5	3.0

____________________________________________


(1)	Percentage of revenues calculated as a percentage of admissions revenues.


(2)	Percentage of revenues calculated as a percentage of concessions revenues.


(3)	Percentage of revenues calculated as a percentage of total revenues.

Film Rental and Advertising Costs

Film rental and advertising costs as a percentage of admissions revenues decreased to 48.3% during the Q1 2013 Period from 48.7% in the Q1 2012 Period. The decrease in film rental and advertising costs as a percentage of box office revenues during the Q1 2013 Period was primarily attributable to the overall decline in box office revenues and a lack of box office concentration as compared to the Q1 2012 Period.

Cost of Concessions

During the Q1 2013 Period, cost of concessions decreased $0.2 million, or 11.8%, to $1.5 million as compared to $1.7 million during the Q1 2012 Period. For the Q1 2013 Period, cost of concessions as a percentage of concession revenues was

Table of Contents

approximately 13.8% compared to 13.0% for the Q1 2012 Period. The increase in cost of concessions as a percentage of concessions revenues during the Q1 2013 Period was primarily related to slightly higher raw material and packaged good costs and a minor shift in the mix of products sold at the concession stand.

Other Theatre Operating Expense

During the Q1 2013 Period, other theatre operating expenses decreased $1.7 million, or 8.7%, to $17.9 million, from $19.6 million in the Q1 2012 Period. The decrease in other theatre operating expenses during the Q1 2013 Period was attributable to a reduction in theatre level payroll and certain non-rent occupancy costs resulting from the closure of 31 underperforming screens during the twelve month period ended March 28, 2013.

Sale and Leaseback Rentals

Sale and leaseback expenses of $3.8 million for the Q1 2013 Period were consistent with those of the Q1 2012 Period. See Note 4 — "Sale-Leaseback Transactions" for further discussion of sale and leaseback transactions.

General and Administrative Expenses

General and administrative expenses decreased $0.2 million, or 13.3%, to $1.3 million during the Q1 2013 Period, from $1.5 million in the Q1 2012 Period. Included in general and administrative expenses are management fees associated with the management agreement between RCI and UATC under which RCI manages the theatre operations of UATC. The decrease in general and administrative expenses during the Q1 2013 Period was due to the decrease in management fee costs incurred resulting from the decline in total revenues during the Q1 2013 Period. As a percentage of total revenues, general and administrative expenses during the Q1 2013 Period were relatively consistent with that of the Q1 2012 Period.

Depreciation and Amortization

During the Q1 2013 Period, depreciation and amortization expense decreased $0.4 million, or 18.2%, to $1.8 million, from $2.2 million in the Q1 2012 Period. The decrease in depreciation and amortization expense during the Q1 2013 Period as compared to the Q1 2012 Period was primarily due to the reduction in our screen count subsequent to the end of the Q1 2012 Period.

Net Loss on Disposal and Impairment of Operating Assets

Net loss on disposal and impairment of operating assets decreased $0.2 million, to zero in the Q1 2013 Period, from $0.2 million in the Q1 2012 Period. The decrease in net loss on disposal and impairment of operating assets during the Fiscal 2013 Period was primarily attributable to the closure of two underperforming theatres during the Q1 2012 Period.

Income from Operations

During the Q1 2013 Period, income from operations decreased $2.7 million, or 69.2% to $1.2 million, from $3.9 million in the Q1 2012 Period. The decrease in income from operations during the Q1 2013 Period as compared to the Q1 2012 Period was primarily attributable to the decline in total revenues, partially offset by reductions in certain variable operating expense line items described above.

Income Taxes

The provision for income taxes of $0.5 million and $1.5 million for the Q1 2013 Period and the Q1 2012 Period, respectively, reflect effective tax rates of approximately 41.7% and 38.5%, respectively. The effective tax rates for all periods presented reflect the impact of certain non-deductible expenses.

Net Income Attributable to Controlling Interest

During the Q1 2013 Period, net income attributable to controlling interest totaled $0.7 million, which represents an decrease of $1.7 million, from net income attributable to controlling interest of $2.4 million in the Q1 2012 Period. The decrease in net income attributable to controlling interest for the Q1 2013 Period was primarily attributable to a decrease in operating income described above, partially offset by a decrease in income taxes described above.

Liquidity and Capital Resources

Table of Contents

On a consolidated basis, we expect our primary uses of cash to be for operating expenses, capital expenditures, investments, general corporate purposes related to corporate operations and debt services. The principal sources of liquidity are cash generated from operations and cash on hand.

Operating Activities

Our revenues are generated principally through admissions and concessions sales with proceeds received in cash or via credit cards at the point of sale. Our operating expenses are primarily related to film and advertising costs, rent and occupancy and payroll. Film costs are ordinarily paid to distributors within 30 days following receipt of admissions revenues and the cost of the Company’s concessions are generally paid to vendors approximately 30 to 35 days from purchase. Our current liabilities include items that will become due within 12 months. In addition, from time to time, we may use cash from operations to fund dividends to our Parent in excess of net income attributable to controlling interest and cash flows from operating activities less cash flows from investing and other financing activities. As a result, at any given time, our balance sheet may reflect a working capital deficit.

Net cash flows used in operating activities totaled approximately $4.6 million and $0.9 million for the Q1 2013 Period and the Q1 2012 Period, respectively. The $3.7 million increase in net cash flows used in operating activities for the Q1 2013 Period as compared to the Q1 2012 Period was caused by a $2.3 million decrease in net income excluding non-cash items, coupled with negative fluctuations in working capital activity of approximately $1.4 million. Working capital activity was primarily impacted by changes in accounts receivable and accounts payable activity during the Q1 2013 Period as compared to the Q1 2012 Period. The decrease in accounts receivable activity was attributable to timing of other receivables activity during the Q1 2013 Period as compared to the Q1 2012 Period. The increase in accounts payable activity during the Q1 2013 Period as compared to the Q1 2012 Period was primarily associated with the timing of film and certain other vendor payments during such periods.

Investing Activities

Our capital requirements have historically arisen principally in connection with retrofitting existing theatres, upgrading the Company’s theatre facilities and replacing equipment. We fund the cost of capital expenditures through internally generated cash flows and cash on hand.

The Company has a formal and intensive review procedure for the authorization of capital projects, with the most important financial measure of acceptability for a discretionary non-maintenance capital project being whether its projected discounted cash flow return on investment meets or exceeds the Company’s internal rate of return targets. We currently expect capital expenditures for theatre expansion, upgrading and equipment replacements to be in the range of approximately $4.0 million to $8.0 million in fiscal year 2013.

Net cash flows used in investing activities totaled approximately $1.5 million and $1.2 million for the Q1 2013 Period and the Q1 2012 Period, respectively. The $0.3 million increase in cash flows used in investing activities during the Q1 2013 Period, as compared to the Q1 2012 Period, was attributable a $0.3 million increase in capital expenditures (net of proceeds from disposals) during the Q1 2013 Period.

Financing Activities

Net cash flows provided by (used in) financing activities totaled approximately $2.5 million and $(1.8) million for the Q1 2013 Period and the Q1 2012 Period, respectively. The $4.3 million increase in cash flows provided by financing activities during the Q1 2013 Period, as compared to the Q1 2012 Period, was primarily attributable to the change in the related party receivable during the Q1 2013 Period as compared to the Q1 2012 Period.

Contractual Cash Obligations and Commitments

For a summary of our contractual cash obligations and commitments and off-balance sheet arrangements as of December 27, 2012, please refer to Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Cash Obligations and Commitments" contained in our annual report on Form 10-K for the fiscal year ended December 27, 2012 and incorporated by reference herein. As of March 28, 2013, there were no material changes outside the ordinary course of our business in our contractual cash obligations and commitments. We believe that the amount of cash and cash equivalents on hand and cash flow expected from operations will be adequate for the Company to execute its business

Table of Contents

strategy and meet anticipated requirements for lease obligations, capital expenditures, working capital and debt service for the next 12 months.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements relevant to our operations, please refer to the information provided under Note 7 — "Recent Accounting Pronouncements" of our notes to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this Form 10-Q, which information is incorporated by reference herein.


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

UATC does not maintain any direct exposure to market risk as of March 28, 2013.


Item 4.	CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Commission under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive, principal financial and principal accounting officers (whom we refer to in this periodic report as our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures as of March 28, 2013, pursuant to Rule 15d-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 28, 2013, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.	LEGAL PROCEEDINGS

Information required to be furnished by us under this Part II, Item 1 (Legal Proceedings) is incorporated by reference to Note 6 — "Litigation and Contingencies" of our notes to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this quarterly report on Form 10-Q.


Item 1A.	RISK FACTORS

There have been no material changes from risk factors as previously disclosed in our annual report on Form 10-K for the fiscal year ended December 27, 2012, filed with the Commission on March 22, 2013 (File No. 033-49598).


Item 6.	EXHIBITS



Exhibit Number			Description
31.1			Rule 15d-14(a) Certification of Principal Executive Officer
31.2			Rule 15d-14(a) Certification of Principal Financial Officer
101			Financial statements from the quarterly report on Form 10-Q of United Artists Theatre Circuit, Inc. for the quarter ended March 28, 2013, filed on May 13, 2013, formatted in XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements tagged as detailed text.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		UNITED ARTISTS THEATRE CIRCUIT, INC.

Date:	May 13, 2013	By:	/s/ AMY E. MILES
			Amy E. Miles
			President
			(Principal Executive Officer)

Date:	May 13, 2013	By:	/s/ DAVID H. OWNBY
			David H. Ownby
			Vice President and Treasurer
			(Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX



Exhibit Number			Description
31.1			Rule 15d-14(a) Certification of Principal Executive Officer
31.2			Rule 15d-14(a) Certification of Principal Financial Officer
101			Financial statements from the quarterly report on Form 10-Q of United Artists Theatre Circuit, Inc. for the quarter ended March 28, 2013, filed on May 13, 2013, formatted in XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements tagged as detailed text.

UNITED ARTISTS THEATRE CIRCUIT INC /MD/ 10-Q