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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 September 25, 2003

Commission file number: 033-49598

UNITED ARTISTS THEATRE CIRCUIT, INC.
(Exact name of registrant as Specified in its Charter)

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 ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o    No ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý    No o

The number of shares outstanding of $1.00 par value common stock at November 10, 2003 was 100 shares.

TABLE OF CONTENTS

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PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

UNITED ARTISTS THEATRE CIRCUIT, INC.
AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(Amounts in millions, except share data)

See accompanying notes to unaudited condensed consolidated financial statements.

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UNITED ARTISTS THEATRE CIRCUIT, INC.
AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(Amounts in millions)

See accompanying notes to unaudited condensed consolidated financial statements.

4

UNITED ARTISTS THEATRE CIRCUIT, INC.
AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(Amounts in millions)

See accompanying notes to unaudited condensed consolidated financial statements.

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UNITED ARTISTS THEATRE CIRCUIT, INC.
AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 25, 2003

(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") and United Artists Properties II Corp. ("Prop II"). UATC leases certain theatres from both UAR and one of UAR's wholly owned subsidiaries, 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.

        The accompanying consolidated financial statements include the accounts of the Company and those of all majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

        UATC operates 977 screens in 127 theatres in 21 states as of September 25, 2003. The Company formally operates on a 52-week fiscal year with each quarter generally consisting of 13 weeks, unless otherwise noted. During 2002, UATC changed its fiscal year, which formerly ended on the Thursday closest to December 31 each year, to conform to Regal Entertainment Group's fiscal year. The Company's fiscal year now ends on the first Thursday after December 25, which in certain years results in a 53-week fiscal year. The new reporting period is also based on a calendar that coincides with film playweeks. This resulted in the first quarter of 2002 containing one less week of operating results compared to the first quarter of 2003.

        The Company became a subsidiary of Regal Entertainment Group ("REG" or "Regal") on April 12, 2002 in conjunction with an exchange transaction in which REG, through its wholly owned subsidiary Regal Entertainment Holdings, Inc. ("REH"), also acquired Edwards Theatres, Inc. ("Edwards"), Regal Cinemas Corporation and Regal CineMedia Corporation ("RCM"). REG is controlled by The Anschutz Corporation and its subsidiaries ("TAC"), which controlled each of us, Edwards, Regal Cinemas Corporation, United Artists and RCM prior to REG's acquisition of us and them in the exchange transaction. In May 2002, REG issued 18.0 million shares of its Class A common stock in an initial public offering at a price of $19.00 per share, receiving aggregate net offering proceeds, net of underwriting discounts, commissions and offering expenses, of $314.8 million.

        In connection with Regal's acquisition of its subsidiaries, Regal Cinemas, Inc., an indirect subsidiary of Regal, agreed to manage the theatre operations of UATC and its subsidiaries pursuant to a management agreement.

        In August 2002, REH acquired the remaining outstanding shares of common stock of United Artists held by the United Artists minority stockholders and warrants to purchase shares of common stock of United Artists held by various institutional holders for approximately $34.0 million. Immediately prior to the acquisition, the common stock of United Artists was the only outstanding class of voting stock, of which the minority stockholders owned approximately 9.9%, and REH owned the remaining 90.1%. As a result of this transaction, United Artists became a wholly owned subsidiary of REH.

        On March 28, 2003, as part of an acquisition by REG of Hoyts Cinemas Corporation ("Hoyts"), two theatre locations and 20 screens were contributed to UATC and recorded as a capital contribution

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totaling approximately $12.4 million. The results of operations of the two Hoyts theatres are reflected on the accompanying unaudited condensed consolidated statements of operations from March 28, 2003.

        On June 6, 2003, UATC completed the sale of certain leased theatres consisting of 46 theatres and 438 screens in 11 states and certain other assets under construction to United Artists Theatre Group ("UATG"), a wholly owned subsidiary of REH, for total cash consideration of approximately $291.4 million, pursuant to an asset purchase agreement between UATG and UATC. Also on June 6, 2003, UATG and Prop I entered into a purchase and sale agreement under which Prop I sold its right, title and interest in certain owned theatre properties to UATG for total cash consideration of approximately $20.0 million. With the proceeds of the sale of such properties, Prop I effected a payment of $20.0 million on its outstanding indebtedness to UATC. The purchase price for the leased theatres was based on a valuation of the operations of the leased theatres on an ongoing basis and the purchase price for the owned theatre properties was based on the appraised value for such properties.

        In connection with the series of transactions described above, UATC used the proceeds from the sale of the theatre assets of approximately $291.4 million and the $20.0 million repayment from Prop I along with cash on hand of approximately $57.4 million to (i) repay its outstanding indebtedness of approximately $263.8 million under a note payable to United Artists and (ii) effect a cash dividend of approximately $105.0 million to United Artists.

        The Company has prepared the unaudited condensed consolidated balance sheet as of September 25, 2003 and the unaudited condensed consolidated statements of operations and cash flows in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange 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 26, 2002 information is derived from the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2002 filed with the Securities and Exchange Commission on March 26, 2003 (File No. 033-49598). These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the audited consolidated financial statements. The results of operations for the thirteen weeks and thirty-nine weeks ended September 25, 2003 are not necessarily indicative of the operating results that may be achieved for the full 2003 fiscal year.

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

        Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

(2) Recent Accounting Pronouncements

        Effective December 27, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes

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accounting standards for recognition and measurement of the fair value of obligations associated with the retirement of long-lived assets when there is a legal obligation to incur such costs. Under SFAS No. 143, the costs of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. The adoption of SFAS No. 143 did not have a material impact on the Company's financial position or results of operations.

        In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements including the rescission of Statement 4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion No. 30 will now be used to classify those gains and losses. In connection with the adoption of SFAS No. 145, the Company reclassified to continuing operations the $1.4 million loss on debt extinguishment recognized in fiscal 2002.

        Effective December 27, 2002, the Company adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses significant issues relating to the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities, and nullifies the guidance in Emerging Issues Task Force ("EITF") Issue No. 94-3 (EITF 94-3), "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring"). Retroactive application of SFAS No. 146 is prohibited and, accordingly, liabilities recognized prior to the initial application of SFAS No. 146 will continue to be accounted for in accordance with EITF 94-3 or other applicable preexisting guidance.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This interpretation will significantly change current practice in the accounting for, and disclosure of, guarantees. Guarantees meeting the characteristics described in the interpretation are required to be initially recorded at fair value, which is different from general current practice of recognition of a liability only when loss is probable and reasonably estimable, as prescribed in SFAS No. 5, "Accounting for Contingencies." The interpretation also requires a guarantor to make significant new disclosures for virtually all guarantees even if the likelihood of the guarantor's having to make payments under the guarantee is remote. The disclosure requirements in this interpretation were effective for financial statements of interim or annual periods ending after December 15, 2002. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The adoption of this interpretation did not have a material impact on the Company's financial position or results of operations.

        In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51." This interpretation addresses consolidation by business enterprises of entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Variable interest entities are required to be

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consolidated by their primary beneficiaries if they do not effectively disperse risks among parties involved. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns. The consolidation requirements of this interpretation apply immediately to variable interest entities created after January 31, 2003 and apply to existing entities for interim or annual periods ending after December 15, 2003. Certain new disclosure requirements apply to all financial statements issued after January 31, 2003. The adoption of this interpretation is not expected to have a material impact on the Company's financial position or results of operations.

        In November 2002, the EITF reached a consensus on Issue No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor" ("EITF 02-16"). EITF 02-16 addresses the accounting for cash consideration given to a reseller of a vendor's products from a vendor. EITF 02-16 indicates that cash consideration received by a customer from a vendor is presumed to be a reduction in the price of the vendor's products or services and should, therefore, be characterized as a reduction of cost of sales when recognized in the customer's income statement. The EITF indicated that such presumption is overcome when the consideration is either (a) a reimbursement of costs incurred by the customer to sell the vendor's products, in which case the cash consideration should be characterized as a reduction of that cost when recognized in the customer's income statement, or (b) a payment for assets or services delivered to the vendor, in which case the cash consideration should be characterized as revenue when recognized in the customer's income statement. The EITF also reached a consensus that a rebate or refund of a specified amount of cash consideration that is payable only if the customer completes a specified cumulative level of purchases or remains a customer for a specified time period should be recognized as a reduction of the cost of sales based on a systematic and rational allocation of the cash consideration offered to each of the underlying transactions that results in progress by the customer toward earning the rebate or refund, provided the amounts are reasonably estimable. On December 27, 2002, the Company adopted EITF 02-16, effective with arrangements entered into or after November 21, 2002. Such adoption did not have a material impact on the Company's financial position or results of operations.

        In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. Many of these instruments previously were classified as equity or temporary equity and as such, SFAS No. 150 represents a significant change in practice in the accounting for a number of mandatory redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and to other instruments at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the Company's financial position, cash flows or results of operations.

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(3) Long-Term Debt

        Long-term debt is summarized as follows (amounts in millions):

(a)

The related party payable represented a note payable to the Parent, which was obligated under a substantially similar note payable to REH. The note payable to the Parent bore interest at a rate of 9.375% and was to mature in December 2006. UATC used the proceeds from the sale of the theatre assets to UATG, described in Note 1, to repay the principal and all unpaid and accrued interest on the note payable of approximately $263.8 million on June 6, 2003.

(b)

Other debt includes $2.5 million of capital lease obligations, $1.3 million of payment-in-kind notes, $0.2 million of unsecured creditor notes and $3.5 million of mortgages secured by land and buildings as of September 25, 2003 and $2.6 million of capital lease obligations, $1.2 million of payment-in-kind notes, $0.2 million of unsecured creditor notes and $3.8 million of mortgages secured by land and buildings as of December 26, 2002.

(4) Related Party Transactions

        UATC leases certain of its theatres from UAR and Prop I in accordance with two master leases (the "Master Leases"). The Master Leases provide 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 UAR or Prop I, UATC has periodically made advances to UAR. As part of the application of fresh-start reporting the receivable was reclassified from other assets to stockholder's equity and interest no longer accrues on this account. The receivable will be reduced upon any sale of properties by UAR and Prop I, with UATC receiving the net proceeds of the sale. As described in Note 1, Prop I used the proceeds from the sale of its interest in certain owned theatre properties to UATG to repay $20.0 million on its outstanding indebtedness to UATC.

        Regal Cinemas, Inc. manages the theatre operations of UATC pursuant to the terms of a management agreement. During the thirteen weeks and thirty-nine weeks ended September 25, 2003, UATC recorded management fee expenses of approximately $2.5 million and $8.9 million related to this agreement. Such fees have been recorded in the accompanying unaudited condensed consolidated statement of operations for the thirteen weeks and Thirty-nine weeks ended September 25, 2003 as a component of "General and Administrative" expenses.

        See Note 1 for a description of certain other related party transactions that were effected during the thirty-nine weeks ended September 25, 2003, including the description of REH's contribution to

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UATC of certain Hoyts assets, UATC's sale of leased theatres and Prop I's sale of owned theatres to UATG, UATC's repayment of a note payable to United Artists and UATC's payment of a cash dividend to United Artists.

(5) Sale—Leaseback Transactions

        In December 1995, UATC entered into a sale and leaseback transaction whereby the land and buildings underlying 27 of its operating theatres and four theatres and a screen addition under development were sold to and leased back from an unaffiliated third party. The transaction requires UATC to lease the underlying theatres for a period of 21 years and one month, with the option to extend for up to an additional 10 years. In conjunction with the transaction, the buyer of the properties issued publicly traded pass-through certificates. Several of its properties included in the sale and leaseback transaction have been determined by UATC to be economically obsolete for theatre use. As of September 25, 2003, 25 theatres were subject to the transaction. UATC amended the lease on March 7, 2001 to allow UATC to terminate the master lease with respect to the obsolete properties, to allow the owner trustee to sell those properties and pay down the underlying debt (at a discount to par through September 2002 and par thereafter) and to reduce the amount of rent paid by UATC on the lease. Included in the 2001 amendment is a $35.0 million cap on the ability to sell properties. Through September 25, 2003 approximately $13.6 million of this cap has been utilized through theatre sales. Three additional properties which are no longer operational are being marketed for sale. The Company evaluates the remaining theatres on an ongoing basis. Approximately $81.2 million in principal amount of pass-through certificates were outstanding as of September 25, 2003.

        In connection with the 1995 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.

        In November 1996, UATC entered into a sale and leaseback transaction, pursuant to which UATC sold three of its operating theatres and two theatres under development to an unaffiliated third party for approximately $21.5 million and leased back those theatres pursuant to a lease that terminates in 2017. The lease provides UATC with an option to extend the term of the lease for an additional 10 years. Two of the theatres have been determined by UATC to be economically obsolete and are no longer in operation.

        The UATC 1995 and 1996 sale and leaseback transactions resulted in UATC having two separate master lease agreements, each covering multiple properties. Each agreement provides for a single lease payment to be made to the landlord with respect to all of the properties subject to the respective master lease without regards to any lease rate that might otherwise be attributable to a specific lease property.

        In connection with UATC's adoption of fresh-start reporting upon its emergence from bankruptcy, the Company assessed the lease payment obligations under the two master lease agreements and concluded that such aggregate obligations provided economically consistent returns on the underlying leased properties as compared with similar leased facilities. As such, the amount of rent currently being

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paid under the master lease agreement is substantially attributable to the value of the key theatres. Accordingly, the Company has accounted for the total rent paid under these agreements as expense and have included the future annual rental due under the master lease agreement in rent commitments described in Note 10 to the consolidated financial statements included in Item 8 of our Annual Report on Form 10K for the fiscal year ended December 26, 2002, filed with the Securities Exchange Commission on March 26, 2003 (File No. 033-49598).

        In December 1997, UATC entered into a sale and leaseback transaction, pursuant to which UATC sold two theatres under development and leased them back from an unaffiliated third party for approximately $18.1 million. Approximately $9.2 million of the sales proceeds were paid to UATC during 1999 for reimbursement of some construction costs associated with the two theatres. The lease has a term of 22 years with options to extend the term of the lease for an additional 10 years.

        During 1999, UATC entered into a sale and leaseback transaction on one existing theatre. Proceeds were received in the amount of $5.4 million by UATC during 1999. The lease has a term of 20 years, with an option to extend the term of the lease for up to 20 additional years.

(6) Income Taxes

        The provision for income taxes of $2.9 million and $8.5 million for the thirteen weeks and thirty-nine weeks ended September 25, 2003 reflect effective tax rates of approximately 38.7% and 39.2%, respectively. The provision for income taxes of $4.5 million and $12.4 million for the thirteen weeks and thirty-eight weeks ended September 26, 2002 reflect effective tax rates of approximately 45.0% and 46.8%, respectively. The decline in the effective tax rates during the thirteen and thirty-nine weeks ended September 25, 2003 is primarily attributable to the impact of certain 2002 nondeductible restructuring expenses and minority interest.

        In connection with the sale of theatres to UATG on June 6, 2003, as described in Note 1, the Company recorded deferred tax liability in the amount of $74.2 million.

        In assessing the valuation 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 has recorded a valuation allowance of $28.2 million and $53.5 million respectively, against deferred tax assets at September 25, 2003 and December 26, 2002, as management believes it more likely than not that such deferred tax asset amounts would not be realized in future tax periods. The valuation allowance relates to pre-acquisition deferred tax assets of UATC. Accordingly, future reductions in the valuation allowance will reduce goodwill related to the acquisition of UATC. During the twenty-six weeks ended June 26, 2003, management concluded that it was more likely than not that approximately $25.3 million of pre-acquisition deferred tax assets would be realized. As a result, the valuation allowance and goodwill were reduced by such amount.

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(7) Commitments and Contingencies

        On September 5, 2000 (the "Petition Date") UATC and certain of its subsidiaries, as well as the Parent and certain of the Parent's subsidiaries, filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Chapter 11 Cases"), as well as a joint plan of reorganization. Upon the filing of the Chapter 11 Cases and petitions, the Bankruptcy Code imposed a stay applicable to all entities, of, among other things, the commencement or continuation of judicial, administrative, or other actions or proceedings against United Artists that were or could have been commenced before the bankruptcy petition.

        Notwithstanding, the Company and its subsidiaries are presently involved in various legal proceedings arising in the ordinary course of its business operations, including personal injury claims, employment and contractual matters and other disputes. The Company believes it has adequately provided for the settlement of such matters. Management believes any additional liability with respect to the above proceedings will not be material in the aggregate to the Company's consolidated financial position, results of operations or cash flows.

        The Americans with Disabilities Act of 1990 (the "ADA") and certain state statutes, among other things, require that places of public accommodation, including theatres (both existing and newly constructed), be accessible to and that assistive listening devices be available for use by certain patrons with disabilities. With respect to access to theatres, the ADA may require modifications to be made to existing theatres to make them accessible to certain theatre patrons and employees who are disabled.

        The ADA requires that theatres be constructed in such a manner that persons with disabilities have full use of the theatre and its facilities and reasonable access to work stations. The ADA provides for a private right of action and reimbursement of plaintiffs' attorneys' fees and expenses under certain circumstances. UATC has established a program to review and evaluate UATC theatres and to make any changes that may be required by the ADA. UATC estimates the costs to comply with these requirements will total between $2.5 million and $5.0 million.

        On March 18, 2003, Reading International, Inc., Citadel Cinemas, Inc. and Sutton Hill Capital, LLC (collectively, the "Plaintiffs") filed a complaint and demand for jury trial in the United States District Court for the Southern District of New York against Oaktree Capital Management LLC, Onex Corporation, Regal, United Artists, UATC, Loews Cineplex Entertainment Corporation, Columbia Pictures Industries, Inc., The Walt Disney Company, Universal Studios, Inc., Paramount Pictures Corporation, Metro-Goldwyn-Mayer Distribution Company, Fox Entertainment Group, Inc., Dreamworks LLC, Stephen Kaplan and Bruce Karsh (collectively, the "Defendants") alleging various violations by the Defendants of federal and state antitrust laws and New York common law. The Plaintiffs allege, among other things, that the consolidation of the theatre industry has adversely impacted their ability to release first-run industry-anticipated top-grossing commercial films, and are seeking, among other things, a declaration that the Defendants' conduct is in violation of antitrust laws, damages, and equitable relief enjoining Defendants from engaging in future anticompetitive conduct. Management believes that the allegations are without merit and intends to defend vigorously the Plaintiffs' claims.

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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. 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. The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein.

Overview

        UATC operates 977 screens in 127 theatres in 21 states as of September 25, 2003. The Company formally operates on a 52-week fiscal year with each quarter generally consisting of 13 weeks, unless otherwise noted. During 2002, UATC changed its fiscal year, which formerly ended on the Thursday closest to December 31 each year, to conform to Regal's fiscal year. The Company's fiscal year now ends on the first Thursday after December 25, which in certain years results in a 53-week fiscal year. The new reporting period is also based on a calendar that coincides with film playweeks. This resulted in the first quarter of 2002 containing one less week of operating results compared to the first quarter of 2003.

        On March 28, 2003, as part of an acquisition by REG of Hoyts, two theatre locations and 20 screens were contributed to UATC and recorded as a capital contribution totaling approximately $12.4 million. The results of operations of the two Hoyts theatres are reflected in the unaudited condensed consolidated statements of operations from March 28, 2003.

        On June 6, 2003, UATC completed the sale of certain leased theatres consisting of 46 theatres and 438 screens in 11 states and certain other assets under construction to UATG, for total cash consideration of approximately $291.4 million, pursuant to an asset purchase agreement between UATG and UATC. Also on June 6, 2003, UATG and Prop I entered into a purchase and sale agreement under which Prop I sold its right, title and interest in certain owned theatre properties to UATG for total cash consideration of approximately $20.0 million. With the proceeds of the sale of such properties, Prop I effected a payment of $20.0 million on its outstanding indebtedness to UATC. The purchase price for the leased theatres was based on a valuation of the operations of the leased theatres on an ongoing basis and the purchase price for the owned theatre properties was based on the appraised value for such properties.

        In connection with the series of transactions described above, UATC used the proceeds from the sale of the theatre assets of approximately $291.4 million and the $20.0 million repayment from Prop I along with cash on hand of approximately $57.4 million to (i) repay its outstanding indebtedness of approximately $263.8 million under a note payable to United Artists and (ii) effect a cash dividend of approximately $105.0 million to United Artists.

        The Company generates revenues primarily from admissions and concession sales. Additional revenues are generated by electronic video games located adjacent to the lobbies of certain of the Company's theatres, vendor marketing programs and on-screen advertisements and rental of theatres for business meetings and other events generated by RCM, which is an affiliate of UATC. Direct theatre costs consist of film rental and advertising costs, costs of concessions and other theatre

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operating expenses. Film rental costs depend on the popularity of a film and the length of time since the film's release and generally decline as a percentage of admission revenues the longer a film is in exhibition. Because the Company purchases certain concession items, such as fountain drinks and popcorn, in bulk and not pre-packaged for individual servings, the Company is able to improve its margins by negotiating volume discounts. Other theatre operating expenses consist primarily of theatre labor and occupancy costs.

Critical Accounting Policies

        Our significant accounting policies are described in Note 4 to the consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 26, 2002 filed with the Securities and Exchange Commission on March 26, 2003 (File No. 033-49598). Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet as well as the reported amounts of revenues and expenses during the reporting period. We routinely make estimates and judgments about the carrying value of our assets and liabilities that are not readily apparent from other sources. The Company evaluates and modifies such estimates and assumptions on an ongoing basis, including but not limited to those related to film costs, property and equipment, income taxes and reorganization and purchase accounting. Estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities. Actual results, under conditions and circumstances different from those assumed, may differ from estimates. The impact and any associated risks related to estimates, assumptions, and accounting policies are discussed within Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to the Unaudited Condensed Consolidated Financial Statements, if applicable, where such estimates, assumptions, and accounting policies affect the Company's reported and expected results.

        The Company believes the following accounting policies are critical to its business operations and the understanding of results of operations and affect the more significant judgments and estimates used in the preparation of its consolidated financial statements:

•

The Company estimates its film cost expense and related film cost payable based on management's best estimate of the ultimate settlement of the film costs with the distributors. Film costs and the related film costs payable are adjusted to the final film settlement in the period that the Company settles with the distributors. Actual film costs and film costs payable could differ materially from those estimates.



•

We depreciate and amortize the components of our property and equipment on a straight-line basis over the estimated useful lives of the assets. The estimates of the assets' useful lives require our judgment and our knowledge of the assets being depreciated and amortized. When necessary, the assets' useful lives are revised and the impact on depreciation and amortization is recognized on a prospective basis. Actual values could differ materially from these estimates. In addition, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets might not be recoverable. When the future undiscounted cash flows of the operations to which the assets relate do not exceed the carrying value of the asset, the intangible assets are written down, followed by the other long-lived assets, to fair value.



•

The Company adopted SFAS 142, "Goodwill and Other Intangible Assets" in 2002. SFAS 142 specifies that goodwill and indefinite-lived intangible assets will no longer be amortized but instead will be subject to an annual impairment test. Based on an impairment test conducted

15

during the fourth quarter of 2002, the Company was not required to record a charge for goodwill impairment. The Company will perform a forth quarter goodwill impairment test on an annual basis. In assessing the recoverability of the goodwill, the Company must make various assumptions regarding estimated future cash flows and other factors in determining the fair values of the respective assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets in future periods.

•

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. In addition, income tax rules and regulations are subject to interpretation and require judgment by the Company and may be challenged by the tax authorities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance if it is deemed more likely than not, that its deferred income tax assets will not be realized. The Company reassesses its need for such allowance on an ongoing basis. Should the Company realize certain tax assets with a valuation allowance that relate to pre-acquisition periods, goodwill would be reduced.



•

We applied the principles of purchase and reorganization accounting when recording the acquisition of controlling equity interest by TAC and the exchange of stock for minority interests and the emergence from bankruptcy of the Company. These accounting principles require that we estimate the fair value of the individual assets and liabilities including estimates of bankruptcy-related claims. The valuation of the fair value of the assets and liabilities involves a number of judgments and estimates that could differ materially from actual amounts.

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Results of Operations

        The following table sets forth for the fiscal periods indicated the percentage of total revenues represented by certain items included in the unaudited condensed consolidated statements of operations:

Total Revenues

        The following table summarizes revenues and revenue-related data for the thirteen weeks and thirty-nine weeks ended September 25, 2003 and the thirteen weeks and thirty-eight weeks ended September 26, 2002 (in millions, except averages):

17

Admissions

        Total admissions revenues decreased $43.8 million, or 42.5%, to $59.2 million, for the thirteen weeks ended September 25, 2003, from $103.0 million for the thirteen weeks ended September 26, 2002. The decrease in admissions revenues during the thirteen weeks ended September 25, 2003 compared to the thirteen weeks ended September 26, 2002 was primarily attributable to a 45.3% decrease in attendance, partially offset by a 5.1% increase in average ticket prices. The decrease in attendance was primarily the result of the sale of the 46 theatres to UATG on June 6, 2003, partially offset by the inclusion of the two Hoyts theatres from March 28, 2003.

        Total admissions revenues decreased $61.1 million, or 20.6%, to $234.8 million, for the thirty-nine weeks ended September 25, 2003 from $295.9 million for the thirty-eight weeks ended September 26, 2002. The decrease in admissions revenues during the thirty-nine weeks ended September 25, 2003 compared to the thirty-eight weeks ended September 26, 2002 was primarily attributable to a 25.5% decrease in attendance, partially offset by a 6.6% increase in average ticket prices. The decrease in attendance was primarily the result of the sale of the 46 theatres to UATG on June 6, 2003, partially offset by one additional week of operating results during the fiscal 2003 period and the inclusion of the two Hoyts theatres from March 28, 2003.

Concessions

        Total concessions revenues decreased $19.3 million, or 45.5%, to $23.1 million for the thirteen weeks ended September 25, 2003 from $42.4 million for the thirteen weeks ended September 26, 2002. The decrease in concessions revenues during the thirteen weeks ended September 25, 2003 compared to the thirteen weeks ended September 26, 2002 was primarily due to the lower attendance as a result of the sale of the 46 theatres to UATG on June 6, 2003 coupled with a decrease of 0.4% in the average concession sale per patron, partially offset by the inclusion of the two Hoyts theatres from March 28, 2003.

        Total concessions revenues decreased $31.2 million, or 25.4%, to $91.7 million for the thirty-nine weeks ended September 25, 2003 from $122.9 million for the thirty-eight weeks ended September 26, 2002.The decrease in concessions revenues during the thirty-nine weeks ended September 25, 2003 compared to the thirty-eight weeks ended September 26, 2002 was primarily due to the lower attendance as a result of the sale of the 46 theatres to UATG on June 6, 2003, partially offset by a 0.4% increase in the average concession sale per patron, one additional week of operating results during the fiscal 2003 period and the inclusion of the two Hoyts theatres from March 28, 2003.

Other Operating Revenues

        Total other operating revenues decreased $1.9 million or 30.2%, to $4.4 million for the thirteen weeks ended September 25, 2003 from $6.3 million for the thirteen weeks ended September 26, 2002. Total other operating revenues remained consistent at $16.8 million for the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002. Included in other operating revenues are on-screen advertising revenues and other marketing revenues from certain of the Company's vendor marketing programs. The decrease in other operating revenues during the thirteen weeks ended September 25, 2003 was primarily the result of the sale of the 46 theatres to UATG on June 6, 2003, partially offset by increases in advertising revenues from vendor marketing programs and the inclusion of the two Hoyts theatres from March 28, 2003.

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Operating Expenses

        The following table summarizes theatre operating expenses for the thirteen weeks and thirty-nine weeks ended September 25, 2003 and the thirteen weeks and thirty-eight weeks ended September 26, 2002 (dollars in millions):

(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 decreased $23.9 million, or 43.9%, to $30.5 million for the thirteen weeks ended September 25, 2003, from $54.4 million for the thirteen weeks ended September 26, 2002. Film rental and advertising costs as a percentage of admissions revenue decreased by 1.3% to 51.5% for the thirteen weeks ended September 25, 2003 from 52.8% for the thirteen weeks ended September 26, 2002. Film rental and advertising costs decreased $36.4 million, or 22.9%, to $122.5 million for the thirty-nine weeks ended September 25, 2003, from $158.9 million for the thirty-eight weeks ended September 26, 2002. Film rental and advertising costs as a percentage of admissions revenue decreased by 1.5% to 52.2% for the thirty-nine weeks ended September 25, 2003 from 53.7% for the thirty-eight weeks ended September 26, 2002. The decrease in film rental and advertising costs during the thirteen and thirty-nine weeks ended September 25, 2003 was primarily attributable to lower box office revenues, as a result of the sale of the 46 theatres to UATG on June 6, 2003 coupled with product mix, which in turn translated in to lower film rental costs.

Cost of Concessions

        Cost of concessions decreased $2.6 million, or 43.3%, to $3.4 million for the thirteen weeks ended September 25, 2003 from $6.0 million for the thirteen weeks ended September 26, 2002. Cost of concessions as a percentage of concessions revenues increased to 14.7% for the thirteen weeks ended September 25, 2003 as compared to 14.2% for the thirteen weeks ended September 26, 2002. The increase in concession costs as a percentage of concessions revenue was primarily due to a changes in product mix during the period ended September 25, 2003.

        Cost of concessions decreased $3.8 million, or 22.5%, to $13.1 million for the thirty-nine weeks ended September 25, 2003 from $16.9 million for the thirty-eight weeks ended September 26, 2002. Cost of concessions as a percentage of concessions revenues increased to 14.3% for the thirty-nine weeks ended September 25, 2003 as compared to 13.8% for the thirty-eight weeks ended September 26, 2002. The increase in concession costs as a percentage of concessions revenue was primarily due to a change in vendor marketing contracts in the second quarter of 2002 related to payments received for

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marketing and advertising services that are classified on the income statement as other operating revenues rather than a reduction of concession costs. Such increase was partially offset by the realization of operating efficiencies realized through the combination of the theatre companies' under a consolidated purchasing group during 2002.

Other Theatre Operating Expenses

        Other theatre operating expenses decreased $25.6 million, or 43.5%, to $33.2 million for the thirteen weeks ended September 25, 2003 from $58.8 million for the thirteen weeks ended September 26, 2002. Other theatre operating expenses as a percentage of total revenues decreased to 38.3% for the thirteen weeks ended September 25, 2003 from 38.8% for the thirteen weeks ended September 26, 2002. Other theatre operating expenses decreased $29.5 million, or 17.9%, to $135.0 million for the thirty-nine weeks ended September 25, 2003 from $164.5 million for the thirty-eight weeks ended September 26, 2002. Other theatre operating expenses as a percentage of total revenues increased to 39.3% for the thirty-nine weeks ended September 25, 2003 from 37.8% for the thirty-eight weeks ended September 26, 2002. The decrease in other theatre operating expenses during the thirteen and thirty-nine weeks ended September 25, 2003 was primarily the result of the sale of the 46 theatres to UATG on June 6, 2003. The increase in other theatre operating expenses as a percentage of total revenues during the thirty-nine weeks ended September 25, 2003 was primarily attributable to lower box office results during the period coupled with certain fixed operating costs. Such increases were partially offset by operating efficiencies realized through the 2002 integration of the theatre companies under Regal.

Sale and Leaseback Rentals

        Sale and leaseback expenses decreased $0.3 million, or 6.7%, to $4.2 million for the thirteen weeks ended September 25, 2003 from $4.5 million for the thirteen weeks ended September 26, 2002. Sale and leaseback expenses decreased $1.1 million, or 8.0%, to $12.6 million for the thirty-nine weeks ended September 25, 2003 from $13.7 million for the thirty-eight weeks ended September 26, 2002. The decrease in sale and leaseback expense in the thirteen and thirty-nine weeks ended September 25, 2003 was due to the sale of certain underperforming properties during the preceding twelve month period ended September 25, 2003.

General and Administrative Expenses

        General and administrative expenses increased $0.8 million, or 34.8%, to $3.1 million for the thirteen weeks ended September 25, 2003, from $2.3 million for the thirteen weeks ended September 26, 2002. As a percentage of total revenues, general and administrative expenses were approximately 3.6% and 1.5% for the thirteen weeks ended September 25, 2003 and September 26, 2002, respectively. General and administrative expenses increased $1.0 million, or 10.1%, to $10.9 million for the thirty-nine weeks ended September 25, 2003, from $9.9 million for the thirty-eight weeks ended September 26, 2002. As a percentage of total revenues, general and administrative expenses were approximately 3.2% and 2.3% for the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002, respectively. Included in general and administrative expenses for the thirteen weeks and thirty-nine weeks ended September 25, 2003 are management fees associated with the management agreement between Regal Cinemas, Inc. and UATC under which Regal Cinemas, Inc. manages the theatre operations of UATC. The increase in general and administrative expenses during the thirteen and thirty-nine weeks ended September 25, 2003 was primarily due to the management fee costs incurred during such periods.

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Depreciation and Amortization

        Depreciation and amortization expenses decreased $2.3 million, or 39.0%, to $3.6 million for the thirteen weeks ended September 25, 2003, from $5.9 million for the thirteen weeks ended September 26, 2002. Depreciation and amortization expenses decreased $5.3 million, or 25.9%, to $15.2 million for the thirty-nine weeks ended September 25, 2003, from $20.5 million for the thirty-eight weeks ended September 26, 2002. The decrease in depreciation and amortization expenses during the thirteen weeks and thirty-nine weeks ended September 25, 2003 was primarily due to the sale of the 46 theatres to UATG.

Loss on Disposal and Impairment of Operating Assets

        The Company evaluates assets for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. If the sum of the expected future cash flows, undiscounted and without interest charges, is less than the carrying amount of the asset, the Company recognizes an impairment charge in the amount by which the carrying value of the asset exceeds their fair market value. The fair value of assets is determined using the present value of the estimated future cash flows or the expected selling price less selling costs for assets of which the Company expects to dispose. The Company periodically sells properties relating to under-performing theatres and other non-theatre real estate, along with equipment from closed theatres that can not be used at other locations. UATC recorded a loss on the disposal and impairment of operating assets of $2.5 million and $3.3 million for the thirteen weeks and the thirty-eight weeks ended September 26, 2002, respectively.

Restructure Costs and Amortization of Deferred Stock Compensation

        Restructure costs relate to the Company's restructuring and severance plan charges associated with the combination of the Company with other theatre companies also controlled by Regal. A total of $0.3 million and $0.4 million were recorded as restructuring costs for the thirteen weeks ended September 25, 2003 and September 26, 2002, respectively. A total of $0.6 million and $2.7 million were recorded as restructuring costs for the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002, respectively. During the thirteen weeks ended September 25, 2003, and September 26, 2002, amortization of deferred stock compensation of $0.7 million and $0.6 million, respectively, was recorded. During the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002, amortization of deferred stock compensation of $1.9 million and $1.2 million, respectively, was recorded.

Operating Income

        Operating income decreased by $8.6 million to $7.7 million for the thirteen weeks ended September 25, 2003, from $16.3 million for the thirteen weeks ended September 26, 2002. Operating income decreased by $12.5 million to $31.5 million for the thirty-nine weeks ended September 25, 2003, from $44.0 million for the thirty-eight weeks ended September 26, 2002. Operating income as a percentage of total revenues decreased to 8.9% for the thirteen weeks ended September 25, 2003 from 10.7% for the thirteen weeks ended September 26, 2002. Operating income as a percentage of total revenues decreased to 9.2% for the thirty-nine weeks ended September 25, 2003 from 10.1% for the thirty-eight weeks ended September 26, 2002. The decrease in operating income during the thirteen and thirty-nine weeks ended September 25, 2003 was primarily attributable to the sale of the 46 theatres to UATG, partially offset by one additional week of operating results during the 2003 fiscal period and the inclusion of the two Hoyts theatres from March 28, 2003.

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Interest Expense, Net

        Interest expense, net, decreased $5.6 million, or 98.2%, to $0.1 million for the thirteen weeks ended September 25, 2003 from $5.7 million for the thirteen weeks ended September 26, 2002. Interest expense, net, decreased $4.9 million, or 34.3%, to $9.4 million for the thirty-nine weeks ended September 25, 2003 from $14.3 million for the thirty-eight weeks ended September 26, 2002. The decrease in interest expense during the thirteen and thirty-nine weeks ended September 25, 2003 was primarily due to the Company's repayment of the note payable to the Parent in June 2003 as a result of the theatres sold to UATG, partially offset by an extra week of operating results during the thirty-nine weeks ended September 25, 2003.

Loss on Extinguishment of Debt

        As part of the payoff of UATC'S term facility and revolving credit facility during May 2002, deferred loan costs of $1.4 million were written off during the thirty-eight weeks ended September 26, 2002.

Income Taxes

        A provision for income taxes of $2.9 million and $4.5 million were recorded for the thirteen weeks ended September 25, 2003 and September 26, 2002, respectively. Accordingly the effective tax rate was 38.7% and 45.0% for the thirteen weeks ended September 25, 2003 and September 26, 2002, respectively. A provision for income taxes of $8.5 million and $12.4 million were recorded for the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002, respectively. Accordingly the effective tax rate was 39.2% and 46.8% for the thirty-nine weeks ended September 25, 2003 and the thirty-eight weeks ended September 26, 2002, respectively. The decline in the effective tax rates during the thirteen and thirty-nine weeks ended September 25, 2003 is primarily attributable to the impact of certain 2002 nondeductible restructuring expenses and minority interest.

Net Income

        Net income totaled $4.6 million for the thirteen weeks ended September 25, 2003. The reported net income for the thirteen weeks ended September 25, 2003 represents a decrease of $0.9 million from $5.5 million for the thirteen weeks ended September 26, 2002. Net income totaled $13.2 million for the thirty-nine weeks ended September 25, 2003, which represents a decrease of $0.9 million from $14.1 million for the thirty-eight weeks ended September 26, 2002.

Changes in Cash Flows

        Cash flows generated from operating activities were approximately $22.0 million for the thirty-nine weeks ended September 25, 2003 compared to approximately $42.1 million for the thirty-eight weeks ended September 26, 2002. The decrease was attributable to a decrease in net income (as adjusted for non-cash charges) and changes in working capital items. Capital expenditures were $10.8 million for the thirty-nine weeks ended September 25, 2003 compared to $21.5 million for the thirty-eight weeks ended September 26, 2002. Cash flows provided by investing activities were approximately $312.4 million for the thirty-nine weeks ended September 25, 2003 compared to cash flows used in investing activities of approximately $20.4 million for the thirty-eight weeks ended September 26, 2002. The increase in cash flows from investing activities was primarily attributable to the sale of the 46 theatres to UATG for $291.4 million and the $20.0 million repayment from Prop 1. Cash flows used in financing activities were approximately $378.5 million for the thirty-nine weeks ended September 25, 2003 compared to cash flows used in financing activities of approximately $8.8 million for the thirty-eight weeks ended September 26, 2002. The increase in cash flows used in financing activities was primarily attributable to the repayment of the affiliate note payable to the parent of $263.8 million and the payment of a cash

22

dividend of approximately $105.0 million to the Parent in connection with the sale of the 46 theatres to UATG.

Liquidity and Capital Resources

        The Company's revenues are generally collected in cash through admissions and concessions revenues. The Company's 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 days from purchase. The Company's current liabilities generally include items that will become due within twelve months and, as a result, at any given time, the Company's balance sheet is likely to reflect a working capital deficit.

        The Company funds the cost of its capital expenditures through internally generated cash flow and cash on hand. The Company's capital requirements have historically arisen principally in connection with new theatre openings, adding new screens to existing theatres, upgrading the Company's theatre facilities and replacing equipment. The Company intends to continue to grow its theatre circuit through selective expansion. The Company currently expects capital expenditures for theatre development, expansion, upgrading, maintenance and replacements to be approximately $10 million to $20 million in 2003. During the thirty-nine weeks ended September 25, 2003, the Company invested $10.8 million in capital expenditures.

        As part of the Company's bankruptcy restructuring, debt was reduced from approximately $439.7 million under the Company's bank credit facility, as it existed before the Petition Date, to approximately $252.1 million under the Company's restructured term bank credit facility (the "Term Facility"). During fiscal year 2002, a portion of the proceeds from the public offering of Regal were loaned to the Parent by Regal to repay the Company's Term Facility. This debt was replaced by a note payable to the Parent, which was obligated under a substantially similar note payable to REH. On June 6, 2003, UATC used the proceeds from the sale of the theatre assets to UATG to repay the principal and all unpaid and accrued interest on the note payable of approximately $263.8 million.

Contractual Cash Obligations

        The Company primarily leases its theatres pursuant to long-term non-cancelable operating leases. As of September 25, 2003, the Company's estimated contractual cash obligations over the next several years are as follows (amounts in millions):

Contractual cash obligations

        The Company believes 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 strategy and meet anticipated requirements for lease obligations, capital expenditures, working capital and debt service for at least 12 months.

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Recent Accounting Pronouncements

        Effective December 27, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and measurement of the fair value of obligations associated with the retirement of long-lived assets when there is a legal obligation to incur such costs. Under SFAS No. 143, the costs of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. The adoption of SFAS No. 143 did not have a material impact on the Company's financial position or results of operations.

        In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements including the rescission of Statement 4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion No. 30 will now be used to classify those gains and losses. In connection with the adoption of SFAS No. 145, the Company reclassified to continuing operations the $1.4 million loss on debt extinguishment recognized in fiscal 2002.

        Effective December 27, 2002, the Company adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses significant issues relating to the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities, and nullifies the guidance in Emerging Issues Task Force ("EITF") Issue No. 94-3 (EITF 94-3), "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring"). Retroactive application of SFAS No. 146 is prohibited and, accordingly, liabilities recognized prior to the initial application of SFAS No. 146 will continue to be accounted for in accordance with EITF 94-3 or other applicable preexisting guidance.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This interpretation will significantly change current practice in the accounting for, and disclosure of, guarantees. Guarantees meeting the characteristics described in the interpretation are required to be initially recorded at fair value, which is different from general current practice of recognition of a liability only when loss is probable and reasonably estimable, as prescribed in SFAS No. 5, "Accounting for Contingencies." The interpretation also requires a guarantor to make significant new disclosures for virtually all guarantees even if the likelihood of the guarantor's having to make payments under the guarantee is remote. The disclosure requirements in this interpretation were effective for financial statements of interim or annual periods ending after December 15, 2002. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The adoption of this interpretation did not have a material impact on the Company's financial position or results of operations.

        In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51." This interpretation addresses consolidation by business enterprises of entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Variable interest entities are required to be consolidated by their primary beneficiaries if they do not effectively disperse risks among parties involved. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns. The consolidation requirements of this interpretation apply immediately to variable interest entities created after

24

January 31, 2003 and apply to existing entities for interim or annual periods ending after December 15, 2003. Certain new disclosure requirements apply to all financial statements issued after January 31, 2003. The adoption of this interpretation is not expected to have a material impact on the Company's financial position or results of operations.

        In November 2002, the EITF reached a consensus on Issue No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor" ("EITF 02-16"). EITF 02-16 addresses the accounting for cash consideration given to a reseller of a vendor's products from a vendor. EITF 02-16 indicates that cash consideration received by a customer from a vendor is presumed to be a reduction in the price of the vendor's products or services and should, therefore, be characterized as a reduction of cost of sales when recognized in the customer's income statement. The EITF indicated that such presumption is overcome when the consideration is either (a) a reimbursement of costs incurred by the customer to sell the vendor's products, in which case the cash consideration should be characterized as a reduction of that cost when recognized in the customer's income statement, or (b) a payment for assets or services delivered to the vendor, in which case the cash consideration should be characterized as revenue when recognized in the customer's income statement. The EITF also reached a consensus that a rebate or refund of a specified amount of cash consideration that is payable only if the customer completes a specified cumulative level of purchases or remains a customer for a specified time period should be recognized as a reduction of the cost of sales based on a systematic and rational allocation of the cash consideration offered to each of the underlying transactions that results in progress by the customer toward earning the rebate or refund, provided the amounts are reasonably estimable. On December 27, 2002, the Company adopted EITF 02-16, effective with arrangements entered into or after November 21, 2002. Such adoption did not have a material impact on the Company's financial position or results of operations.

        In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. Many of these instruments previously were classified as equity or temporary equity and as such, SFAS No. 150 represents a significant change in practice in the accounting for a number of mandatory redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and to other instruments at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the Company's financial position, cash flows or results of operations.

Seasonality

        The Company's revenues are usually seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, studios release the most marketable motion pictures during the summer and the holiday seasons. The unexpected emergence 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 quarter are not necessarily indicative of the results for the next or any other quarter. The seasonality of motion picture exhibition, however, has become less pronounced in recent years as studios have begun to release major motion pictures somewhat more evenly throughout the year.

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Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        UATC's market risk is confined to interest rate exposure of its debt obligations that bear interest based on floating rates. As of September 25, 2003, the Company maintained no debt obligations bearing floating interest rates.

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 Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, 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 and principal financial 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 September 25, 2003, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 25, 2003, 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.

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PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

        Pursuant to the introductory instruction to Part II (Other Information) of Form 10-Q, the information required to be furnished by us under this Part II, Item 1 (Legal Proceedings) is incorporated by reference to Note 7 (Commitments and Contingencies) of our notes to unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this report on Form 10-Q.

Item 6.
EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits:

(b)

Current Reports on Form 8-K filed during our second fiscal quarter of 2003:

None

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.

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UNITED ARTISTS THEATRE CIRCUIT, INC.

Exhibit Index

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