##### Table of Contents



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 September 30, 2008
 Commission File Number: 001-33401
 CINEMARK HOLDINGS, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-5490327(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 3900 Dallas ParkwaySuite 500Plano, Texas
    
    75093(Address of principal executive offices)
    
    (Zip Code)
   þ o
  Large accelerated filer
o

    

  Accelerated filer
o

    

    Non-accelerated filer
þ
(Do not check if a smaller reporting company)

  

    Smaller reporting company
o
  o þ




---



##### 



CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of September 30, 2008
and December 31, 2007 (unaudited)
    
    
    4Condensed Consolidated Statements of Operations for the three
and nine months ended September 30, 2008 and 2007 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2008 and 2007 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4T. Controls and Procedures
    
    
    42PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    42Item 5. Other Information
    
    
    42Item 6. Exhibits
    
    
    43SIGNATURES
    
    
    44EX-31.1EX-31.1EX-32.1EX-32.2
  2




---



##### Table of Contents



Cautionary Statement Regarding Forward-Looking Statements
  3




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data, unaudited)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    371,297
    
    
    $
    338,043Inventories
    
    
    7,283
    
    
    
    7,000Accounts receivable
    
    
    28,205
    
    
    
    35,368Income tax receivable
    
    
    
    
    
    
    18,339Current deferred tax asset
    
    
    5,189
    
    
    
    5,215Prepaid expenses and other
    
    
    9,051
    
    
    
    10,070Total current assets
    
    
    421,025
    
    
    
    414,035THEATRE PROPERTIES AND EQUIPMENT
    
    
    1,856,793
    
    
    
    1,818,505Less accumulated depreciation and amortization
    
    
    585,425
    
    
    
    504,439Theatre properties and equipment  net
    
    
    1,271,368
    
    
    
    1,314,066OTHER ASSETSGoodwill
    
    
    1,133,911
    
    
    
    1,134,689Intangible assets  net
    
    
    348,063
    
    
    
    353,047Investments in and advances to affiliates
    
    
    22,972
    
    
    
    3,662Deferred charges and other assets  net
    
    
    52,234
    
    
    
    77,393Total other assets
    
    
    1,557,180
    
    
    
    1,568,791TOTAL ASSETS
    
    $
    3,249,573
    
    
    $
    3,296,892LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    12,671
    
    
    $
    9,166Current portion of capital lease obligations
    
    
    5,353
    
    
    
    4,684Current income tax payable
    
    
    761
    
    
    
    Current FIN 48 payable
    
    
    10,775
    
    
    
    Accounts payable and accrued expenses
    
    
    181,846
    
    
    
    204,472Total current liabilities
    
    
    211,406
    
    
    
    218,322LONG-TERM LIABILITIESLong-term debt, less current portion
    
    
    1,524,894
    
    
    
    1,514,579Capital lease obligations, less current portion
    
    
    120,228
    
    
    
    116,486Deferred income taxes
    
    
    152,774
    
    
    
    168,475Long-term portion FIN 48 liability
    
    
    6,123
    
    
    
    15,500Deferred lease expenses
    
    
    22,074
    
    
    
    19,235Deferred revenue  NCM
    
    
    190,335
    
    
    
    172,696Other long-term liabilities
    
    
    21,405
    
    
    
    36,214Total long-term liabilities
    
    
    2,037,833
    
    
    
    2,043,185COMMITMENTS AND CONTINGENCIES (see Note 20)MINORITY INTERESTS IN SUBSIDIARIES
    
    
    18,392
    
    
    
    16,182STOCKHOLDERS EQUITYCommon stock, $0.001 par value: 300,000 shares authorized;106,983,684 shares issued and outstanding at December 31, 2007
and

107,531,896 shares issued and outstanding at September 30, 2008
    
    
    108
    
    
    
    107Additional paid-in-capital
    
    
    943,896
    
    
    
    939,327Retained earnings
    
    
    30,303
    
    
    
    47,074Accumulated other comprehensive income
    
    
    7,635
    
    
    
    32,695Total stockholders equity
    
    
    981,942
    
    
    
    1,019,203TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,249,573
    
    
    $
    3,296,892
  4




---



##### Table of Contents



CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands except per share data, unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUESAdmissions
    
    $
    308,453
    
    
    $
    307,951
    
    
    $
    865,245
    
    
    $
    835,058Concession
    
    
    146,076
    
    
    
    144,330
    
    
    
    409,707
    
    
    
    397,865Other
    
    
    21,694
    
    
    
    19,218
    
    
    
    59,521
    
    
    
    56,634Total revenues
    
    
    476,223
    
    
    
    471,499
    
    
    
    1,334,473
    
    
    
    1,289,557COST OF OPERATIONSFilm rentals and advertising
    
    
    169,260
    
    
    
    166,822
    
    
    
    471,199
    
    
    
    454,200Concession supplies
    
    
    24,489
    
    
    
    22,546
    
    
    
    66,443
    
    
    
    62,671Salaries and wages
    
    
    47,405
    
    
    
    45,691
    
    
    
    135,313
    
    
    
    131,317Facility lease expense
    
    
    58,936
    
    
    
    54,943
    
    
    
    171,382
    
    
    
    159,841Utilities and other
    
    
    57,280
    
    
    
    51,597
    
    
    
    155,856
    
    
    
    144,009General and administrative expenses
    
    
    22,741
    
    
    
    20,617
    
    
    
    67,808
    
    
    
    57,731Termination of profit participation agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,952Depreciation and amortization
    
    
    38,115
    
    
    
    37,606
    
    
    
    113,362
    
    
    
    111,201Amortization of favorable leases
    
    
    702
    
    
    
    667
    
    
    
    2,105
    
    
    
    2,226Impairment of long-lived assets
    
    
    2,316
    
    
    
    3,624
    
    
    
    8,145
    
    
    
    60,390(Gain) loss on sale of assets and other
    
    
    2,301
    
    
    
    942
    
    
    
    3,211
    
    
    
    (617
    )Total cost of operations
    
    
    423,545
    
    
    
    405,055
    
    
    
    1,194,824
    
    
    
    1,189,921OPERATING INCOME
    
    
    52,678
    
    
    
    66,444
    
    
    
    139,649
    
    
    
    99,636OTHER INCOME (EXPENSE)Interest expense
    
    
    (27,613
    )
    
    
    (34,968
    )
    
    
    (89,747
    )
    
    
    (111,766
    )Interest income
    
    
    3,779
    
    
    
    5,636
    
    
    
    10,463
    
    
    
    13,873Gain on NCM Transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,773Gain on Fandango Transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,205Foreign currency exchange gain
    
    
    325
    
    
    
    205
    
    
    
    85
    
    
    
    368Loss on early retirement of debt
    
    
    
    
    
    
    (3,584
    )
    
    
    (40
    )
    
    
    (11,536
    )Distributions from NCM
    
    
    3,592
    
    
    
    4,392
    
    
    
    12,177
    
    
    
    5,754Equity in loss of affiliates
    
    
    (415
    )
    
    
    (335
    )
    
    
    (1,742
    )
    
    
    (1,831
    )Minority interests in income of subsidiaries
    
    
    (1,531
    )
    
    
    (1,132
    )
    
    
    (3,775
    )
    
    
    (2,027
    )Total other income (expense)
    
    
    (21,863
    )
    
    
    (29,786
    )
    
    
    (72,579
    )
    
    
    112,813INCOME BEFORE INCOME TAXES
    
    
    30,815
    
    
    
    36,658
    
    
    
    67,070
    
    
    
    212,449Income taxes
    
    
    10,367
    
    
    
    60,054
    
    
    
    25,848
    
    
    
    69,764NET INCOME (LOSS)
    
    $
    20,448
    
    
    $
    (23,396
    )
    
    $
    41,222
    
    
    $
    142,685WEIGHTED AVERAGE SHARES OUTSTANDINGBasic
    
    
    107,101
    
    
    
    106,465
    
    
    
    107,022
    
    
    
    100,659Diluted
    
    
    109,405
    
    
    
    106,465
    
    
    
    109,219
    
    
    
    102,937NET EARNINGS (LOSS) PER SHAREBasic
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    0.39
    
    
    $
    1.42Diluted
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    0.38
    
    
    $
    1.39
  5




---



##### Table of Contents



CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands, unaudited)
 Nine months ended September 30,2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    41,222
    
    
    $
    142,685Adjustments to reconcile net income to cash provided by operating activities:Depreciation
    
    
    110,372
    
    
    
    108,122Amortization of intangible and other assets
    
    
    5,095
    
    
    
    5,305Amortization of long-term prepaid rents
    
    
    1,292
    
    
    
    826Amortization of debt issue costs
    
    
    3,526
    
    
    
    3,543Amortization of debt premium
    
    
    
    
    
    
    (678
    )Amortization of deferred revenues, deferred lease incentives and other
    
    
    (2,739
    )
    
    
    (1,649
    )Impairment of long-lived assets
    
    
    8,145
    
    
    
    60,390Share based award compensation expense
    
    
    3,338
    
    
    
    2,165Gain on NCM Transaction
    
    
    
    
    
    
    (210,773
    )Gain on Fandango Transaction
    
    
    
    
    
    
    (9,205
    )(Gain) loss on sale of assets and other
    
    
    3,211
    
    
    
    (617
    )Write-off of unamortized bond premiums and unamortized debt issue costs
related to the early retirement of debt
    
    
    193
    
    
    
    (16,109
    )Accretion of interest on senior discount notes
    
    
    30,310
    
    
    
    31,467Amortization of other comprehensive loss related to interest rate swap agreement
    
    
    193
    
    
    
    Noncash gain related to fair value adjustment on interest rate swap agreement
    
    
    (3,324
    )
    
    
    Deferred lease expenses
    
    
    2,856
    
    
    
    4,606Deferred income tax expenses
    
    
    (20,844
    )
    
    
    (73,226
    )Equity in loss of affiliates
    
    
    1,742
    
    
    
    1,831Minority interests in income of subsidiaries
    
    
    3,775
    
    
    
    2,027Changes in assets and liabilities:Inventories
    
    
    (283
    )
    
    
    (481
    )Accounts receivable
    
    
    7,163
    
    
    
    (3,679
    )Prepaid expenses and other
    
    
    1,019
    
    
    
    (904
    )Other assets
    
    
    1,467
    
    
    
    (962
    )Advances with affiliates
    
    
    163
    
    
    
    294Accounts payable and accrued expenses
    
    
    (46,722
    )
    
    
    (46,275
    )Interest paid on repurchased senior discount notes
    
    
    (2,929
    )
    
    
    (10,932
    )Increase in deferred revenues related to NCM Transaction
    
    
    
    
    
    
    174,001Increase in deferred revenues related to Fandango Transaction
    
    
    
    
    
    
    5,000Other long-term liabilities
    
    
    984
    
    
    
    (3,730
    )Income tax receivable/payable
    
    
    20,498
    
    
    
    41,083Net cash provided by operating activities
    
    
    169,723
    
    
    
    204,125INVESTING ACTIVITIESAdditions to theatre properties and equipment
    
    
    (71,335
    )
    
    
    (110,049
    )Proceeds from sale of theatre properties and equipment
    
    
    2,461
    
    
    
    14,004Increase in escrow deposits due to like-kind exchange
    
    
    (2,089
    )
    
    
    Return of escrow deposits
    
    
    24,828
    
    
    
    Acquisition of one U.S. theatre and two Brazil theatres
    
    
    (10,111
    )
    
    
    Investment in joint venture  DCIP
    
    
    (2,500
    )
    
    
    (1,500
    )Net proceeds from sale of NCM stock
    
    
    
    
    
    
    214,842Net proceeds from sale of Fandango stock
    
    
    
    
    
    
    11,347Other
    
    
    231
    
    
    
    Net cash provided by (used for) investing activities
    
    
    (58,515
    )
    
    
    128,644FINANCING ACTIVITIESNet proceeds from initial public offering
    
    
    
    
    
    
    245,849Proceeds from stock option exercises
    
    
    1,232
    
    
    
    117Dividends paid to stockholders
    
    
    (57,944
    )
    
    
    (13,840
    )Retirement of senior discount notes
    
    
    (6,174
    )
    
    
    (29,331
    )Retirement of senior subordinated notes
    
    
    (3
    )
    
    
    (332,066
    )Repayments of long-term debt
    
    
    (7,260
    )
    
    
    (17,936
    )Payments on capital leases
    
    
    (3,617
    )
    
    
    (2,705
    )Other
    
    
    (1,099
    )
    
    
    (529
    )Net cash used for financing activities
    
    
    (74,865
    )
    
    
    (150,441
    )EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
    
    
    (3,089
    )
    
    
    3,649INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    33,254
    
    
    
    185,977CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    338,043
    
    
    
    147,099End of period
    
    $
    371,297
    
    
    $
    333,076SUPPLEMENTAL INFORMATION (see Note 17)
  
 6




---



##### Table of Contents



1. The Company and Basis of Presentation
     2. New Accounting Pronouncements
 Fair Value Measurements.
 The Fair Value Option for Financial Assets
and Financial Liabilities.
 Business Combinations
 7




---



##### Table of Contents



Noncontrolling Interest in Consolidated
Financial Statements
 Disclosures about Derivative Instruments and
Hedging Activitiesan Amendment of FASB Statement No. 133
 The Hierarchy of Generally Accepted Accounting
Principles.
 Determining Whether Instruments Granted in Share Based Payment Transactions Are Participating
Securities
 3. Initial Public Offering
 3 4
 8




---



##### Table of Contents



4. Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    20,448
    
    
    $
    (23,396
    )
    
    $
    41,222
    
    
    $
    142,685Basic:Weighted average common shares outstanding
    
    
    107,101
    
    
    
    106,465
    
    
    
    107,022
    
    
    
    100,659Net income (loss) per common share
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    0.39
    
    
    $
    1.42Diluted:Weighted average common shares outstanding
    
    
    107,101
    
    
    
    106,465
    
    
    
    107,022
    
    
    
    100,659Common equivalent shares for stock options (1)
    
    
    2,214
    
    
    
    
    
    
    
    2,167
    
    
    
    2,278Common equivalent shares for restricted stock and
restricted stock units
    
    
    90
    
    
    
    
    
    
    
    30
    
    
    
    Weighted average common and common equivalent shares
outstanding
    
    
    109,405
    
    
    
    106,465
    
    
    
    109,219
    
    
    
    102,937Net income (loss) per common and common equivalent share
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    0.38
    
    
    $
    1.39
 
 (1)
    
    Common equivalent shares for stock options of approximately 2,220 were excluded from
the diluted earnings (loss) per share calculation for the three months ended September 30,
2007 because they were anti-dilutive. 5. Dividend Payment
  6. Investment in National CineMedia and Transaction Related to its Initial Public Offering
  9




---



##### Table of Contents



10




---



##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 25, 2008
    
    September 25, 2008Gross revenues
    
    $
    107,709
    
    
    $
    257,097Operating income
    
    $
    57,207
    
    
    $
    113,995Net earnings
    
    $
    47,009
    
    
    $
    77,925
 11




---



##### Table of Contents



7. Investment in Digital Cinema Implementation Partners
   8. Sale of Investment in Fandango, Inc.
   9. Share Based Awards
      12




---



##### Table of Contents



Stock
Options 
 WeightedNumber
    
    Averageof
    
    ExerciseOptions
    
    PriceOutstanding at December 31, 2007
    
    
    6,323,429
    
    
    $
    7.63Granted
    
    
    
    
    
    
    Exercised
    
    
    (161,292
    )
    
    $
    7.63Forfeited
    
    
    (12,398
    )
    
    $
    7.63Outstanding at September 30, 2008
    
    
    6,149,739
    
    
    $
    7.63Options exercisable at September 30, 2008
    
    
    5,483,817
    
    
    $
    7.63
  Restricted Stock
  13




---



##### Table of Contents



Shares ofRestrictedStockOutstanding at December 31, 2007
    
    
    21,880Granted
    
    
    390,908Vested
    
    
    (21,880
    )Forfeited
    
    
    (3,988
    )Outstanding at September 30, 2008
    
    
    386,920Unvested restricted stock at September 30, 2008
    
    
    386,920
 Restricted
Stock Units
  Number ofShares
    
    Value atVesting
    
    Grantat IRR of at least 8.5%
    
    
    68,116
    
    
    $
    885at IRR of at least 10.5%
    
    
    136,239
    
    
    $
    1,771at IRR of at least 12.5%
    
    
    204,361
    
    
    $
    2,656
  14




---



##### Table of Contents



10. Early Retirement of Long-Term Debt
  3 4
 3 4
 11. Interest Rate Swap Agreements
  Accounting for Derivative Instruments and Hedging Activities
  15




---



##### Table of Contents



12. Goodwill
  U.S.
    
    InternationalOperating
    
    OperatingSegment
    
    Segment
    
    TotalBalance at December 31, 2007
    
    $
    979,148
    
    
    $
    155,541
    
    
    $
    1,134,689Acquisition of one U.S. theatre (1)
    
    
    2,892
    
    
    
    
    
    
    
    2,892Acquisition of two Brazil theatres (2)
    
    
    
    
    
    
    2,247
    
    
    
    2,247Foreign currency translation adjustments
    
    
    
    
    
    
    (5,917
    )
    
    
    (5,917
    )Balance at September 30, 2008
    
    $
    982,040
    
    
    $
    151,871
    
    
    $
    1,133,911
 
 (1)
    
    The Company acquired one theatre in the U.S. during 2008 for approximately
$5,011, which resulted in $2,892 of goodwill and $2,119 of theatre properties and
equipment.(2)
    
    The Company acquired two theatres in Brazil during 2008 for approximately $5,100,
which resulted in a preliminary allocation of $2,247 to goodwill, $2,368 to theatre
properties and equipment, and $485 to intangible assets. Goodwill and Other Intangible Assets
 16




---



##### Table of Contents



13. Other Intangible Assets
  ForeignCurrencyBalance at
    
    
    
    
    
    Translation
    
    Balance atDecember 31,
    
    
    
    
    
    Adjustments
    
    September 30,2007
    
    Amortization
    

& Other (1)
    
    2008Intangible assets with finite lives:Capitalized licensing fees:Gross carrying amount
    
    $
    5,138
    
    
    $
    
    
    
    $
    
    
    
    $
    5,138Accumulated amortization
    
    
    (1,565
    )
    
    
    (319
    )
    
    
    
    
    
    
    (1,884
    )Net carrying amount
    
    
    3,573
    
    
    
    (319
    )
    
    
    
    
    
    
    3,254Vendor contracts:Gross carrying amount
    
    
    56,973
    
    
    
    
    
    
    
    400
    
    
    
    57,373Accumulated amortization
    
    
    (23,342
    )
    
    
    (2,548
    )
    
    
    
    
    
    
    (25,890
    )Net carrying amount
    
    
    33,631
    
    
    
    (2,548
    )
    
    
    400
    
    
    
    31,483Net favorable leases:Gross carrying amount
    
    
    20,691
    
    
    
    
    
    
    
    (279
    )
    
    
    20,412Accumulated amortization
    
    
    (15,581
    )
    
    
    (2,105
    )
    
    
    38
    
    
    
    (17,648
    )Net carrying amount
    
    
    5,110
    
    
    
    (2,105
    )
    
    
    (241
    )
    
    
    2,764Other intangible assets:Gross carrying amount
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    69Accumulated amortization
    
    
    (20
    )
    
    
    (3
    )
    
    
    
    
    
    
    (23
    )Net carrying amount
    
    
    49
    
    
    
    (3
    )
    
    
    
    
    
    
    46Total net intangible assets with finite lives
    
    
    42,363
    
    
    
    (4,975
    )
    
    
    159
    
    
    
    37,547Intangible assets with indefinite lives:Tradename
    
    
    310,681
    
    
    
    
    
    
    
    (168
    )
    
    
    310,513Other unamortized intangible assets
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Total intangible assets  net
    
    $
    353,047
    
    
    $
    (4,975
    )
    
    $
    (9
    )
    
    $
    348,063
 
 (1)
    
    Includes approximately $485 of vendor contracts recorded as a result of the acquisition of two theatres in Brazil during 2008.  For the three months ended December 31, 2008
    
    $
    1,365For the twelve months ended December 31, 2009
    
    
    5,031For the twelve months ended December 31, 2010
    
    
    4,749For the twelve months ended December 31, 2011
    
    
    4,440For the twelve months ended December 31, 2012
    
    
    3,647Thereafter
    
    
    18,315Total
    
    $
    37,547
 17




---



##### Table of Contents



14. Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
   15. Foreign Currency Translation
      18




---



##### Table of Contents



16. Comprehensive Income
 Reporting Comprehensive Income
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Net income (loss)
    
    $
    20,448
    
    
    $
    (23,396
    )
    
    $
    41,222
    
    
    $
    142,685Fair value adjustments on interest rate swap
agreements (see Note 11)
    
    
    (10,748
    )
    
    
    (8,484
    )
    
    
    (9,662
    )
    
    
    (2,062
    )Foreign currency translation adjustment (see Note 15)
    
    
    (42,838
    )
    
    
    7,310
    
    
    
    (15,398
    )
    
    
    24,436Comprehensive income (loss)
    
    $
    (33,138
    )
    
    $
    (24,570
    )
    
    $
    16,162
    
    
    $
    165,059
 17. Supplemental Cash Flow Information
  Nine Months EndedSeptember 30,2008
    
    2007Cash paid for interest
    
    $
    61,824
    
    
    $
    102,839Cash paid for income taxes, net of refunds received
    
    $
    26,904
    
    
    $
    101,445Noncash investing and financing activities:Change in construction lease obligations related to construction of theatres
    
    $
    
    
    
    $
    (2,404
    )Change in accounts payable and accrued expenses for the acquisition of
theatre properties and equipment
    
    $
    1,798
    
    
    $
    (7,788
    )Theatre properties acquired under capital lease
    
    $
    7,911
    
    
    $
    2,943Investment in NCM (see Note 6)
    
    $
    19,020
    
    
    $
    Dividends accrued on unvested restricted stock unit awards (see Note 9)
    
    $
    (49
    )
    
    $
    
  19




---



##### Table of Contents



18. Segments
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007RevenuesU.S.
    
    $
    358,935
    
    
    $
    378,417
    
    
    $
    1,027,982
    
    
    $
    1,033,835International
    
    
    118,448
    
    
    
    93,910
    
    
    
    309,457
    
    
    
    257,961Eliminations
    
    
    (1,160
    )
    
    
    (828
    )
    
    
    (2,966
    )
    
    
    (2,239
    )Total Revenues
    
    $
    476,223
    
    
    $
    471,499
    
    
    $
    1,334,473
    
    
    $
    1,289,557Adjusted EBITDAU.S.
    
    $
    75,163
    
    
    $
    94,732
    
    
    $
    218,854
    
    
    $
    237,606International
    
    
    26,975
    
    
    
    21,268
    
    
    
    67,281
    
    
    
    55,533Total Adjusted EBITDA
    
    $
    102,138
    
    
    $
    116,000
    
    
    $
    286,135
    
    
    $
    293,139Capital ExpendituresU.S.
    
    $
    12,296
    
    
    $
    28,802
    
    
    $
    50,681
    
    
    $
    81,847International
    
    
    7,123
    
    
    
    8,099
    
    
    
    20,654
    
    
    
    28,202Total Capital Expenditures
    
    $
    19,419
    
    
    $
    36,901
    
    
    $
    71,335
    
    
    $
    110,049
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Net income (loss)
    
    $
    20,448
    
    
    $
    (23,396
    )
    
    $
    41,222
    
    
    $
    142,685Add (deduct):Income taxes
    
    
    10,367
    
    
    
    60,054
    
    
    
    25,848
    
    
    
    69,764Interest expense (1)
    
    
    27,613
    
    
    
    34,968
    
    
    
    89,747
    
    
    
    111,766Gain on NCM Transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,773
    )Gain on Fandango Transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,205
    )Loss on early retirement of debt
    
    
    
    
    
    
    3,584
    
    
    
    40
    
    
    
    11,536Other income (2)
    
    
    (2,158
    )
    
    
    (4,374
    )
    
    
    (5,031
    )
    
    
    (10,383
    )Termination of profit participation agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,952Depreciation and amortization
    
    
    38,115
    
    
    
    37,606
    
    
    
    113,362
    
    
    
    111,201Amortization of favorable leases
    
    
    702
    
    
    
    667
    
    
    
    2,105
    
    
    
    2,226Impairment of long-lived assets
    
    
    2,316
    
    
    
    3,624
    
    
    
    8,145
    
    
    
    60,390(Gain) loss on sale of assets and other
    
    
    2,301
    
    
    
    942
    
    
    
    3,211
    
    
    
    (617
    )Deferred lease expenses
    
    
    710
    
    
    
    1,295
    
    
    
    2,856
    
    
    
    4,606Amortization of long-term prepaid rents
    
    
    463
    
    
    
    314
    
    
    
    1,292
    
    
    
    826Share based awards compensation expense
    
    
    1,261
    
    
    
    716
    
    
    
    3,338
    
    
    
    2,165Adjusted EBITDA
    
    $
    102,138
    
    
    $
    116,000
    
    
    $
    286,135
    
    
    $
    293,139
 
 (1)
    
    Includes amortization of debt issue costs.(2)
    
    Includes interest income, foreign currency exchange gain, equity in loss of
affiliates and minority interests in income of subsidiaries and excludes distributions from
NCM. 20




---



##### Table of Contents



Financial Information About Geographic Areas
  Three Months Ended September 30,
    
    Nine Months Ended September 30,Revenues
    
    2008
    
    2007
    
    2008
    
    2007U.S. and Canada
    
    $
    358,935
    
    
    $
    378,417
    
    
    $
    1,027,982
    
    
    $
    1,033,835Brazil
    
    
    57,780
    
    
    
    41,945
    
    
    
    149,414
    
    
    
    117,970Mexico
    
    
    23,290
    
    
    
    20,429
    
    
    
    63,694
    
    
    
    58,317Other foreign countries
    
    
    37,378
    
    
    
    31,536
    
    
    
    96,349
    
    
    
    81,674Eliminations
    
    
    (1,160
    )
    
    
    (828
    )
    
    
    (2,966
    )
    
    
    (2,239
    )Total
    
    $
    476,223
    
    
    $
    471,499
    
    
    $
    1,334,473
    
    
    $
    1,289,557
 September 30,
    
    December 31,Theatre Properties and Equipment-net
    
    2008
    
    2007U.S. and Canada
    
    $
    1,104,220
    
    
    $
    1,137,244Brazil
    
    
    71,337
    
    
    
    72,635Mexico
    
    
    54,818
    
    
    
    59,201Other foreign countries
    
    
    40,993
    
    
    
    44,986Total
    
    $
    1,271,368
    
    
    $
    1,314,066
 19. Related Party Transactions
     21




---



##### Table of Contents



20. Commitments and Contingencies
   21. Subsequent Event  Share Exchange with Minority Partners
   22




---



##### Table of Contents



22. Subsequent Event  Termination of Existing Interest Rate Swap Agreement and New Interest
Rate Swap Agreement
  Accounting for
Derivative Instruments and Hedging Activities
 23. Subsequent Event  Repurchases of Senior Discount Notes
 3 4
 24. Subsequent Event  Dividend Declaration
  23




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Iron Man, Indiana Jones and the Kingdom of the Crystal
Skull, Hancock, Kung Fu Panda, WALL-E, Horton Hears a Who, Sex and the City, Mamma Mia, Tropic
Thunder, Eagle Eye, Dark Knight, . Beverly Hills
Chihuahua, High School Musical 3, Quantum of Solace, Madagascar: Escape 2 Africa, Twilight, The Day
the Earth Stood Still, Bedtime Stories, Seven Pounds Bolt. Monsters vs. Aliens, Ice Age 3: Dawn of the
Dinosaurs, Avatar Up.
      24




---



##### Table of Contents



Recent Developments
  Accounting for Derivative Instruments and Hedging
Activities
 3 4
  25




---



##### Table of Contents



Results of Operations
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Operating data (in millions):
    
    2008
    
    2007
    
    2008
    
    2007RevenuesAdmissions
    
    $
    308.5
    
    
    $
    308.0
    
    
    $
    865.3
    
    
    $
    835.1Concession
    
    
    146.1
    
    
    
    144.3
    
    
    
    409.7
    
    
    
    397.9Other
    
    
    21.6
    
    
    
    19.2
    
    
    
    59.5
    
    
    
    56.6Total revenues
    
    $
    476.2
    
    
    $
    471.5
    
    
    $
    1,334.5
    
    
    $
    1,289.6Theatre operating costs (1)Film rentals and advertising
    
    $
    169.3
    
    
    $
    166.8
    
    
    $
    471.2
    
    
    $
    454.2Concession supplies
    
    
    24.5
    
    
    
    22.5
    
    
    
    66.4
    
    
    
    62.7Salaries and wages
    
    
    47.4
    
    
    
    45.7
    
    
    
    135.3
    
    
    
    131.3Facility lease expense
    
    
    58.9
    
    
    
    54.9
    
    
    
    171.4
    
    
    
    159.8Utilities and other
    
    
    57.3
    
    
    
    51.6
    
    
    
    155.9
    
    
    
    144.0Total theatre operating costs
    
    $
    357.4
    
    
    $
    341.5
    
    
    $
    1,000.2
    
    
    $
    952.0Operating data as a percentage of revenues:RevenuesAdmissions
    
    
    64.8
    %
    
    
    65.3
    %
    
    
    64.8
    %
    
    
    64.8
    %Concession
    
    
    30.7
    %
    
    
    30.6
    %
    
    
    30.7
    %
    
    
    30.9
    %Other
    
    
    4.5
    %
    
    
    4.1
    %
    
    
    4.5
    %
    
    
    4.3
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Theatre operating costs (1) (2)Film rentals and advertising
    
    
    54.9
    %
    
    
    54.2
    %
    
    
    54.5
    %
    
    
    54.4
    %Concession supplies
    
    
    16.8
    %
    
    
    15.6
    %
    
    
    16.2
    %
    
    
    15.8
    %Salaries and wages
    
    
    10.0
    %
    
    
    9.7
    %
    
    
    10.1
    %
    
    
    10.2
    %Facility lease expense
    
    
    12.4
    %
    
    
    11.7
    %
    
    
    12.8
    %
    
    
    12.4
    %Utilities and other
    
    
    12.0
    %
    
    
    10.9
    %
    
    
    11.7
    %
    
    
    11.2
    %Total theatre operating costs
    
    
    75.0
    %
    
    
    72.4
    %
    
    
    75.0
    %
    
    
    73.8
    %Average screen count (month end average)
    
    
    4,709
    
    
    
    4,590
    
    
    
    4,683
    
    
    
    4,532Revenues per average screen (in dollars)
    
    $
    101,136
    
    
    $
    102,717
    
    
    $
    284,943
    
    
    $
    284,520
 
 (1)
    
    Excludes depreciation and amortization expense.(2)
    
    All costs are expressed as a percentage of total revenues, except film
rentals and advertising, which are expressed as a percentage of admissions revenues
and concession supplies, which are expressed as a percentage of concession revenues. 26




---



##### Table of Contents



Three months ended September 30, 2008 and 2007
 Revenues.
 U.S. Operating Segment
    
    International Operating Segment
    
    ConsolidatedThree Months Ended
    
    Three Months Ended
    
    Three Months EndedSeptember 30,
    
    September 30,
    
    September 30,%
    
    
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    %2008
    
    2007
    
    Change
    
    2008
    
    2007
    
    Change
    
    2008
    
    2007
    
    ChangeAdmissions revenues (in millions)
    
    $
    235.4
    
    
    $
    249.0
    
    
    
    (5.5
    %)
    
    $
    73.1
    
    
    $
    59.0
    
    
    
    23.9
    %
    
    $
    308.5
    
    
    $
    308.0
    
    
    
    0.2
    %Concession revenues (in millions)
    
    $
    112.5
    
    
    $
    118.0
    
    
    
    (4.7
    %)
    
    $
    33.6
    
    
    $
    26.3
    
    
    
    27.8
    %
    
    $
    146.1
    
    
    $
    144.3
    
    
    
    1.2
    %Other revenues (in millions) (1)
    
    $
    9.9
    
    
    $
    10.6
    
    
    
    (6.6
    %)
    
    $
    11.7
    
    
    $
    8.6
    
    
    
    36.0
    %
    
    $
    21.6
    
    
    $
    19.2
    
    
    
    12.5
    %Total revenues (in millions) (1)
    
    $
    357.8
    
    
    $
    377.6
    
    
    
    (5.2
    %)
    
    $
    118.4
    
    
    $
    93.9
    
    
    
    26.1
    %
    
    $
    476.2
    
    
    $
    471.5
    
    
    
    1.0
    %Attendance (in millions)
    
    
    39.4
    
    
    
    43.0
    
    
    
    (8.4
    %)
    
    
    18.4
    
    
    
    17.2
    
    
    
    7.0
    %
    
    
    57.8
    
    
    
    60.2
    
    
    
    (4.0
    %)Revenues per screen (in dollars) (1)
    
    $
    97,011
    
    
    $
    104,711
    
    
    
    (7.4
    %)
    
    $
    116,040
    
    
    $
    95,437
    
    
    
    21.6
    %
    
    $
    101,136
    
    
    $
    102,717
    
    
    
    (1.5
    %)
 
 (1)
    
    U.S. operating segment revenues include eliminations of intercompany transactions
with the international operating segment. See Note 18 of our condensed consolidated financial
statements. 
    
    Consolidated. The increase in admissions revenues of $0.5 million was primarily
attributable to a 4.5% increase in average ticket price from $5.11 for the third quarter of
2007 to $5.34 for the third quarter of 2008, partially offset by a 4.0% decline in attendance.
The increase in concession revenues of $1.8 million was primarily attributable to a 5.4%
increase in concession revenues per patron from $2.40 for the third quarter of 2007 to $2.53
for the third quarter of 2008, partially offset by the decline in attendance. The increases in
average ticket price and concession revenues per patron were primarily due to price increases
and the favorable impact of exchange rates in certain countries in which we operate. The 12.5%
increase in other revenues was primarily due to increased screen advertising and other
ancillary revenues in certain of our international locations and the favorable impact of
exchange rates in certain countries in which we operate.
    
    U.S. The decrease in admissions revenues of $13.6 million was primarily attributable
to an 8.4% decline in attendance, partially offset by a 3.1% increase in average ticket price
from $5.79 for the third quarter of 2007 to $5.97 for the third quarter of 2008. The decrease
in concession revenues of $5.5 million was primarily attributable to the decline in
attendance, partially offset by a 4.0% increase in concession revenues per patron from $2.75
for the third quarter of 2007 to $2.86 for the third quarter of 2008. The increases in average
ticket price and concession revenues per patron were primarily due to price increases.
    
    International. The increase in admissions revenues of $14.1 million was primarily
attributable to a 16.4% increase in average ticket price from $3.41 for the third quarter of
2007 to $3.97 for the third quarter of 2008, and a 7.0% increase in attendance. The increase
in concession revenues of $7.3 million was primarily attributable to a 20.4% increase in
concession revenues per patron from $1.52 for the third quarter of 2007 to $1.83 for the third
quarter of 2008, and the increase in attendance. The increases in average ticket price and
concession revenues per patron were primarily due to price increases and the favorable impact
of exchange rates in certain countries in which we operate. The 36.0% increase in other
revenues was primarily due to increased screen advertising and other ancillary revenues and
the favorable impact of exchange rates in certain countries in which we operate.
 27




---



##### Table of Contents



Theatre Operating Costs (excludes depreciation and amortization expense).
 International OperatingU.S. Operating Segment
    
    Segment
    
    ConsolidatedThree Months Ended
    
    Three Months Ended
    
    Three Months EndedSeptember 30,
    
    September 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Film rentals and advertising
    
    $
    132.5
    
    
    $
    137.1
    
    
    $
    36.8
    
    
    $
    29.7
    
    
    $
    169.3
    
    
    $
    166.8Concession supplies
    
    
    15.6
    
    
    
    16.0
    
    
    
    8.9
    
    
    
    6.5
    
    
    
    24.5
    
    
    
    22.5Salaries and wages
    
    
    38.2
    
    
    
    38.6
    
    
    
    9.2
    
    
    
    7.1
    
    
    
    47.4
    
    
    
    45.7Facility lease expense
    
    
    42.1
    
    
    
    41.3
    
    
    
    16.8
    
    
    
    13.6
    
    
    
    58.9
    
    
    
    54.9Utilities and other
    
    
    41.8
    
    
    
    39.4
    
    
    
    15.5
    
    
    
    12.2
    
    
    
    57.3
    
    
    
    51.6Total theatre operating costs
    
    $
    270.2
    
    
    $
    272.4
    
    
    $
    87.2
    
    
    $
    69.1
    
    
    $
    357.4
    
    
    $
    341.5
 
    
    Consolidated. Film rentals and advertising costs were $169.3 million, or 54.9% of
admissions revenues, for the third quarter of 2008 compared to $166.8 million, or 54.2% of
admissions revenues, for the third quarter of 2007. Our film rentals and advertising rate for
the third quarter of 2008 was impacted by higher film rental on the record-breaking Dark
Knight, which grossed over $500 million in domestic box office. Concession supplies expense
was $24.5 million, or 16.8% of concession revenues, for the third quarter of 2008 compared to
$22.5 million, or 15.6% of concession revenues, for the third quarter of 2007. The increased
rate was primarily due to the relative increase in concession revenues from our international
operations and increases in product costs from some of our international concession suppliers.Salaries and wages increased to $47.4 million for the third quarter of 2008 from $45.7 million
for the third quarter of 2007, facility lease expense increased to $58.9 million for the third
quarter of 2008 from $54.9 million for the third quarter of 2007, and utilities and other costs
increased to $57.3 million for the third quarter of 2008 from $51.6 million for the third
quarter of 2007, all of which increased primarily due to new theatre openings and the impact of
exchange rates in certain countries in which we operate. Utilities and other costs also
reflected increased utility costs and increased repairs and maintenance expenses for our U.S.
locations.
    
    U.S. Film rentals and advertising costs were $132.5 million, or 56.3% of admissions
revenues, for the third quarter of 2008 compared to $137.1 million, or 55.1% of admissions
revenues, for the third quarter of 2007. The decrease in film rentals and advertising costs of
$4.6 million was primarily due to a $13.6 million decrease in admissions revenues, partially
offset by the higher film rentals and advertising rate. Our rate for the third quarter of 2008
was impacted by higher film rental on the record-breaking Dark Knight, which grossed over $500
million in domestic box office. Concession supplies expense was $15.6 million, or 13.9% of
concession revenues, for the third quarter of 2008 compared to $16.0 million, or 13.6% of
concession revenues, for the third quarter of 2007.Salaries and wages decreased to $38.2 million for the third quarter of 2008 from $38.6 million
for the third quarter of 2007 primarily due to improved operating efficiencies. Facility lease
expense increased to $42.1 million for the third quarter of 2008 from $41.3 million for the
third quarter of 2007 primarily due to new theatre openings. Utilities and other costs increased
to $41.8 million for the third quarter of 2008 from $39.4 million for the third quarter of 2007
primarily due to new theatre openings, increased utility costs and increased repairs and
maintenance expenses.
    
    International. Film rentals and advertising costs were $36.8 million, or 50.3% of
admissions revenues, for the third quarter of 2008 compared to $29.7 million, or 50.3% of
admissions revenues, for the third quarter of 2007. Concession supplies expense was $8.9
million, or 26.5% of concession revenues, for the third quarter of 2008 compared to $6.5
million, or 24.7% of concession revenues, for the third quarter of 2007. The increased rate
was primarily due to increases in product costs from some of our concession suppliers.Salaries and wages increased to $9.2 million for the third quarter of 2008 from $7.1 million for
the third quarter of 2007, facility lease expense increased to $16.8 million for the third
quarter of 2008 from $13.6 million for the third quarter of 2007, and utilities and other costs
increased to $15.5 million for the third quarter of 2008 from
 28




---



##### Table of Contents



$12.2 million for the third quarter of 2007, all of which increased primarily due to increased
revenues, new theatre openings and the impact of exchange rates in certain countries in which we
operate.
 General and Administrative Expenses.
 Depreciation and Amortization.
 Impairment of Long-Lived Assets
 Loss on Sale of Assets and Other.
 Interest Expense. 3 4
 Interest Income.
 Loss on Early Retirement of Debt. 3 4
 Distributions from NCM.
 Income Taxes.
 29




---



##### Table of Contents



Nine months ended September 30, 2008 and 2007
 Revenues.
 International OperatingU.S. Operating Segment
    
    Segment
    
    ConsolidatedNine Months Ended
    
    Nine Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,%
    
    
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    %2008
    
    2007
    
    Change
    
    2008
    
    2007
    
    Change
    
    2008
    
    2007
    
    ChangeAdmissions revenues (in millions)
    
    $
    672.5
    
    
    $
    671.6
    
    
    
    0.1
    %
    
    $
    192.8
    
    
    $
    163.5
    
    
    
    17.9
    %
    
    $
    865.3
    
    
    $
    835.1
    
    
    
    3.6
    %Concession revenues (in millions)
    
    $
    323.5
    
    
    $
    326.4
    
    
    
    (0.9
    %)
    
    $
    86.2
    
    
    $
    71.5
    
    
    
    20.6
    %
    
    $
    409.7
    
    
    $
    397.9
    
    
    
    3.0
    %Other revenues (in millions) (1)
    
    $
    29.0
    
    
    $
    33.6
    
    
    
    (13.7
    %)
    
    $
    30.5
    
    
    $
    23.0
    
    
    
    32.6
    %
    
    $
    59.5
    
    
    $
    56.6
    
    
    
    5.1
    %Total revenues (in millions) (1)
    
    $
    1,025.0
    
    
    $
    1,031.6
    
    
    
    (0.6
    %)
    
    $
    309.5
    
    
    $
    258.0
    
    
    
    20.0
    %
    
    $
    1,334.5
    
    
    $
    1,289.6
    
    
    
    3.5
    %Attendance (in millions)
    
    
    112.2
    
    
    
    116.8
    
    
    
    (3.9
    %)
    
    
    48.7
    
    
    
    48.3
    
    
    
    0.8
    %
    
    
    160.9
    
    
    
    165.1
    
    
    
    (2.5
    %)Revenues per screen (in dollars) (1)
    
    $
    279,372
    
    
    $
    289,490
    
    
    
    (3.5
    %)
    
    $
    305,094
    
    
    $
    266,241
    
    
    
    14.7
    %
    
    $
    284,943
    
    
    $
    284,520
    
    
    
    0.1
    %
 
 (1)
    
    U.S. operating segment revenues include eliminations of intercompany transactions
with the international operating segment. See Note 18 of our condensed consolidated financial
statements. 
    
    Consolidated. The increase in admissions revenues of $30.2 million was primarily
attributable to a 6.3% increase in average ticket price from $5.06 for the 2007 period to
$5.38 for the 2008 period, partially offset by a 2.5% decline in attendance. The increase in
concession revenues of $11.8 million was primarily attributable to a 5.8% increase in
concession revenues per patron from $2.41 for the 2007 period to $2.55 for the 2008 period,
partially offset by the decline in attendance. The increases in average ticket price and
concession revenues per patron were primarily due to price increases and the favorable impact
of exchange rates in certain countries in which we operate. The 5.1% increase in other
revenues was primarily due to increased screen advertising and other ancillary revenues in
certain of our international locations and the favorable impact of exchange rates in certain
countries in which we operate.
    
    U.S. The increase in admissions revenues of $0.9 million was primarily attributable
to a 4.2% increase in average ticket price from $5.75 for the 2007 period to $5.99 for the
2008 period, partially offset by a 3.9% decline in attendance. The decrease in concession
revenues of $2.9 million was primarily attributable to the decline in attendance, partially
offset by a 3.2% increase in concession revenues per patron from $2.79 for the 2007 period to
$2.88 for the 2008 period. The increases in average ticket price and concession revenues per
patron were primarily due to price increases. The 13.7% decrease in other revenues was
primarily attributable to reduced screen advertising revenues earned under the amended
Exhibitor Services Agreement with NCM. See Note 6 to the condensed consolidated financial
statements.
    
    International. The increase in admissions revenues of $29.3 million was primarily
attributable to a 17.2% increase in average ticket price from $3.38 for the 2007 period to
$3.96 for the 2008 period and a 0.8% increase in attendance. The increase in concession
revenues of $14.7 million was primarily attributable to a 19.6% increase in concession
revenues per patron from $1.48 for the 2007 period to $1.77 for the 2008 period and the
increase in attendance. The increases in average ticket price and concession revenues per
patron were primarily due to price increases and the favorable impact of exchange rates in
certain countries in which we operate. The 32.6% increase in other revenues was primarily due
to increased screen advertising and other ancillary revenues and the favorable impact of
exchange rates in certain countries in which we operate.
 30




---



##### Table of Contents



Theatre Operating Costs (excludes depreciation and amortization expense).
 U.S. Operating
    
    International OperatingSegment
    
    Segment
    
    ConsolidatedNine Months Ended
    
    Nine Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Film rentals and advertising
    
    $
    375.7
    
    
    $
    372.3
    
    
    $
    95.5
    
    
    $
    81.9
    
    
    $
    471.2
    
    
    $
    454.2Concession supplies
    
    
    44.4
    
    
    
    44.7
    
    
    
    22.0
    
    
    
    18.0
    
    
    
    66.4
    
    
    
    62.7Salaries and wages
    
    
    111.0
    
    
    
    111.6
    
    
    
    24.3
    
    
    
    19.7
    
    
    
    135.3
    
    
    
    131.3Facility lease expense
    
    
    124.9
    
    
    
    121.5
    
    
    
    46.5
    
    
    
    38.3
    
    
    
    171.4
    
    
    
    159.8Utilities and other
    
    
    113.5
    
    
    
    110.0
    
    
    
    42.4
    
    
    
    34.0
    
    
    
    155.9
    
    
    
    144.0Total theatre operating costs
    
    $
    769.5
    
    
    $
    760.1
    
    
    $
    230.7
    
    
    $
    191.9
    
    
    $
    1,000.2
    
    
    $
    952.0
 
    
    Consolidated. Film rentals and advertising costs were $471.2 million, or 54.5% of
admissions revenues, for the 2008 period compared to $454.2 million, or 54.4% of admissions
revenues, for the 2007 period. The increase in film rentals and advertising costs of $17.0
million is due to a $30.2 million increase in admissions revenues, which contributed $15.2
million and an increase in our film rental and advertising rate, which contributed $1.8
million. Concession supplies expense was $66.4 million, or 16.2% of concession revenues, for
the 2008 period, compared to $62.7 million, or 15.8% of concession revenues, for the 2007
period. The increased rate was primarily due to the relative increase in concession revenues
from our international operations and increases in product costs from some of our
international concession suppliers.Salaries and wages increased to $135.3 million for the 2008 period from $131.3 million for the
2007 period, facility lease expense increased to $171.4 million for the 2008 period from $159.8
million for the 2007 period, and utilities and other costs increased to $155.9 million for the
2008 period from $144.0 million for the 2007 period, all of which increased primarily due to new
theatre openings and the impact of exchange rates in certain countries in which we operate.
Utilities and other costs also reflected increased utility costs for our U.S. locations.
    
    U.S. Film rentals and advertising costs were $375.7 million, or 55.9% of admissions
revenues, for the 2008 period compared to $372.3 million, or 55.4% of admissions revenues, for
the 2007 period. The increase in our film rentals and advertising rate is primarily due to the
higher film rental rate on the record-breaking Dark Knight, which grossed over $500 million in
domestic box office. Concession supplies expense was $44.4 million, or 13.7% of concession
revenues, for the 2008 period, compared to $44.7 million, or 13.7% of concession revenues, for
the 2007 period.Salaries and wages decreased to $111.0 million for the 2008 period from $111.6 million for the
2007 period primarily due to improved operating efficiencies. Facility lease expense increased
to $124.9 million for the 2008 period from $121.5 million for the 2007 period primarily due to
new theatre openings. Utilities and other costs increased to $113.5 million for the 2008 period
from $110.0 million for the 2007 period primarily due to new theatre openings and increased
utility costs.
    
    International. Film rentals and advertising costs were $95.5 million, or 49.5% of
admissions revenues, for the 2008 period compared to $81.9 million, or 50.1% of admissions
revenues, for the 2007 period. The increase in film rentals and advertising costs is primarily
due to increased admissions revenues, partially offset by a decrease in the film rentals and
advertising rate. Concession supplies expense was $22.0 million, or 25.5% of concession
revenues, for the 2008 period compared to $18.0 million, or 25.2% of concession revenues, for
the 2007 period. The increased rate was primarily due to increases in product costs from some
of our concession suppliers.Salaries and wages increased to $24.3 million for the 2008 period from $19.7 million for the
2007 period, facility lease expense increased to $46.5 million for the 2008 period from $38.3
million for the 2007 period, and utilities and other costs increased to $42.4 million for the
2008 period from $34.0 million for the 2007 period, all of which increased primarily due to
increased revenues, new theatre openings and the impact of exchange rates in certain countries
in which we operate.
 31




---



##### Table of Contents



General and Administrative Expenses.
 Termination of Profit Participation Agreement.
 Depreciation and Amortization.
 Impairment of Long-Lived Assets
 (Gain) Loss on Sale of Assets and Other.
 Interest Expense. 3 4
 Interest Income.
 Gain on NCM transaction.
 Gain on Fandango transaction.
 Loss on Early Retirement of Debt.
 32




---



##### Table of Contents



3 4
 Distributions from NCM.
 Income Taxes.
 Liquidity and Capital Resources
 Operating Activities
  3 4 3 4
 Investing Activities
   New
    
    ExistingPeriod
    
    Theatres
    
    Theatres
    
    TotalNine Months Ended September 30, 2008
    
    $
    48.4
    
    
    $
    22.9
    
    
    $
    71.3Nine Months Ended September 30, 2007
    
    $
    82.9
    
    
    $
    27.1
    
    
    $
    110.0
  33




---



##### Table of Contents



Financing Activities
   3 4
  September 30, 2008
    
    
    December 31, 2007Cinemark, Inc. 9 3/4% senior discount notes due 2014
    
    $
    436,976
    
    
    $
    415,768Cinemark USA, Inc. term loan
    
    
    1,097,600
    
    
    
    1,101,686Cinemark USA, Inc. 9% senior subordinated notes due 2013
    
    
    181
    
    
    
    184Other long-term debt
    
    
    2,808
    
    
    
    6,107Total long-term debt
    
    
    1,537,565
    
    
    
    1,523,745Less current portion
    
    
    12,671
    
    
    
    9,166Long-term debt, less current portion
    
    $
    1,524,894
    
    
    $
    1,514,579
 34




---



##### Table of Contents



3 4
  Payments Due by Period(in millions)LessThan
    
    1-3
    
    4-5
    
    AfterContractual Obligations
    
    Total
    
    One Year
    
    Years
    
    Years
    
    5 YearsLong-term debt 1
    
    $
    1,557.0
    
    
    $
    12.7
    
    
    $
    23.7
    
    
    $
    801.0
    
    
    $
    719.6Scheduled interest payments on long-term debt 2
    
    $
    470.5
    
    
    
    76.9
    
    
    
    196.5
    
    
    
    176.7
    
    
    
    20.4Operating lease obligations
    
    $
    1,886.6
    
    
    
    179.5
    
    
    
    351.4
    
    
    
    330.8
    
    
    
    1,024.9Capital lease obligations
    
    $
    125.6
    
    
    
    5.4
    
    
    
    12.2
    
    
    
    13.2
    
    
    
    94.8Scheduled interest payments on capital leases
    
    $
    108.8
    
    
    
    12.4
    
    
    
    23.2
    
    
    
    21.3
    
    
    
    51.9Letters of credit
    
    $
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Employment agreements
    
    $
    9.6
    
    
    
    3.2
    
    
    
    6.4
    
    
    
    
    
    
    
    Purchase commitments 3
    
    $
    97.8
    
    
    
    29.1
    
    
    
    68.3
    
    
    
    0.4
    
    
    
    FIN 48 liabilities 4
    
    $
    10.8
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    Total obligations
    
    $
    4,266.8
    
    
    $
    330.1
    
    
    $
    681.7
    
    
    $
    1,343.4
    
    
    $
    1,911.6
 
 1
    
    Includes the 93/4% senior discount notes in the aggregate principal amount at maturity
of $456.4 million.2
    
    Amounts include scheduled interest payments on fixed rate and variable rate debt
agreements. Estimates for the variable rate interest payments were based on interest rates in
effect on September 30, 2008. The average interest rates on our fixed rate and variable rate debt
were 8.2% and 4.6%, respectively, as of September 30, 2008.3
    
    Includes estimated capital expenditures associated with the construction of new theatres to
which we were committed as of September 30, 2008.4
    
    Excludes the Companys long-term FIN 48 liabilities of $6.1 million because the
Company cannot make a reliable estimate of the timing of the related cash payments. Cinemark, Inc. 9 3/4% Senior Discount Notes
 3 4 9 3/4%
 9 3/4%
 3 4
 35




---



##### Table of Contents



3 4 3 4
  3 4
 3 4
 3 4
 Senior Secured Credit Facility
    36




---



##### Table of Contents



3 4
  37




---



##### Table of Contents



Accounting for Derivative Instruments and Hedging
Activities
 Cinemark USA, Inc. 9% Senior Subordinated Notes
    38




---



##### Table of Contents



Seasonality
  39




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
     Accounting for Derivative
 40




---



##### Table of Contents



Instruments and Hedging
Activities
  Expected Maturity as of September 30, 2008(in millions)
    
    AverageFair
    
    Interest2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Value
    
    RateFixed rate (1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    37.0
    
    
    $
    719.6
    
    
    $
    756.6
    
    
    $
    734.7
    
    
    
    8.2
    %Variable rate
    
    
    12.7
    
    
    
    12.5
    
    
    
    11.2
    
    
    
    11.2
    
    
    
    752.8
    
    
    
    
    
    
    
    800.4
    
    
    
    802.9
    
    
    
    4.6
    %Total debt
    
    $
    12.7
    
    
    $
    12.5
    
    
    $
    11.2
    
    
    $
    11.2
    
    
    $
    789.8
    
    
    $
    719.6
    
    
    $
    1,557.0
    
    
    $
    1,537.6
 Expected Maturity as of December 31, 2007(in millions)AverageFair
    
    Interest2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    Thereafter
    
    Total
    
    Value
    
    RateFixed rate
(2)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    966.6
    
    
    $
    966.6
    
    
    $
    940.1
    
    
    
    8.2
    %Variable rate
    
    
    9.2
    
    
    
    13.8
    
    
    
    12.4
    
    
    
    11.2
    
    
    
    271.6
    
    
    
    289.6
    
    
    
    607.8
    
    
    
    612.8
    
    
    
    6.7
    %Total debt
    
    $
    9.2
    
    
    $
    13.8
    
    
    $
    12.4
    
    
    $
    11.2
    
    
    $
    271.6
    
    
    $
    1,256.2
    
    
    $
    1,574.4
    
    
    $
    1,552.9
 
 (1)
    
    Includes $300.0 million of the Cinemark USA, Inc. term loan, which represents the
debt hedged with the Companys interest rate swap agreements.(2)
    
    Includes $500.0 million of the Cinemark USA, Inc. term loan, which represents the
debt hedged with the Companys interest rate swap agreements
that were in effect as of December 31, 2007. Foreign Currency Exchange Rate Risk
  41




---



##### Table of Contents



Item 4T. Controls and Procedures
 Evaluation of the Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Use of Proceeds
 3 4
 
 Item 5. Other Information
 Central America
Share Exchange Central
America Exchange Agreement
 42




---



##### Table of Contents



Ecuador Share Exchange Ecuador Exchange Agreement
  
 Item 6. Exhibits
 *31.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith. 43




---



##### Table of Contents



SIGNATURES
  DATE:November 10, 2008
    CINEMARK HOLDINGS, INC.
Registrant/s/Alan W. StockAlan W. StockChief Executive Officer/s/Robert CoppleRobert CoppleChief Financial Officer 44




---



##### Table of Contents



EXHIBIT INDEX
 *31.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith.