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CINEMARK,
INC.  MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (I)(1)(a) AND
(b) OF FORM 10-K AND THEREFORE IS FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2007
 Commission File Number 001-31372
 CINEMARK, INC.
  Delaware
    
    01-0687923(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)
   None
  None
 o þ
 o þ
 þ o
 þ
  o o þ o
  o þ




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##### 



Table of Contents
 PageCautionary Statement Regarding Forward-Looking Statements
    
    
    1PART IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    12Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    17PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    18Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary Data
    
    
    24Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    24Item 9A(T). Controls and Procedures
    
    
    25PART IIIItem 14. Principal Accounting Fees and Services
    
    
    26PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    26SIGNATURESCalculation of Earnings to Fixed ChargesConsent of National CineMedia, LLCConsent of BIA Financial Networks, Inc.Certification of CEO pursuant to Rule 13a-14(a)Certification of CFO pursuant to Rule 13a-14(a)Certification of CEO pursuant to Rule 13a-14(b)Certification of CFO pursuant to Rule 13a-14(b)




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##### Table of Contents



Cautionary Statement Regarding Forward-Looking Statements
  
    
    future revenues, expenses and profitability;
    
    the future development and expected growth of our business;
    
    projected capital expenditures;
    
    attendance at movies generally or in any of the markets in which we operate;
    
    the number or diversity of popular movies released and our ability to successfully
license and exhibit popular films;
    
    national and international growth in our industry;
    
    competition from other exhibitors and alternative forms of entertainment; and
    
    determinations in lawsuits in which we are defendants.
  Certain Definitions
  1




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##### Table of Contents



PART I
 
 Item 1. Business
 Our Company
      Disclosures about Segments of an Enterprise and Related Information.
 www.cinemark.com.
 Description of Business
   2




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Motion Picture Industry Overview
 Domestic Markets
 Harry Potter and the Half-Blood Prince,
Indiana Jones and the Kingdom of the Crystal Skull, Chronicles of Narnia: Prince Caspian, The Dark
Knight, Wall-E, Hancock, The Mummy: Tomb of the Dragon Emperor Hannah Montana & Miley Cyrus: Best of Both Worlds Journey to the Center of the Earth Monsters vs. Aliens, Ice Age 3, Avatar.
  U.S. Box
    
    
    
    
    
    AverageOffice Revenues
    
    Attendance
    
    TicketYear
    
    ($ in millions)
    
    (in millions)
    
    Price1997
    
    $
    6,216
    
    
    
    1,354
    
    
    $
    4.591998
    
    $
    6,760
    
    
    
    1,438
    
    
    $
    4.691999
    
    $
    7,314
    
    
    
    1,440
    
    
    $
    5.082000
    
    $
    7,468
    
    
    
    1,383
    
    
    $
    5.392001
    
    $
    8,125
    
    
    
    1,438
    
    
    $
    5.662002
    
    $
    9,272
    
    
    
    1,599
    
    
    $
    5.812003
    
    $
    9,165
    
    
    
    1,521
    
    
    $
    6.032004
    
    $
    9,215
    
    
    
    1,484
    
    
    $
    6.212005
    
    $
    8,832
    
    
    
    1,376
    
    
    $
    6.412006
    
    $
    9,138
    
    
    
    1,395
    
    
    $
    6.552007
    
    $
    9,629
    
    
    
    1,400
    
    
    $
    6.88
 International Markets
   3




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Drivers of Continued Industry Success
  Importance of Theatrical Success in Establishing Movie Brands and Subsequent Markets.
 Increased Importance of International Markets for Box Office Success .
 Increased Investment in Production and Marketing of Films by Distributors .
 Stable Long-term Attendance Trends.
 Reduced Seasonality of Revenues.
 Convenient and Affordable Form of Out-Of-Home Entertainment.
 Competitive Strengths
  Solid Operating Performance and Discipline.
 Leading Position in Our U.S. Markets. fn
 Strategically Located in Heavily Populated Latin American Markets.
 4




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Modern Theatre Circuit.
 Solid Balance Sheet with Significant Cash Flow from Operating Activities.
 Experienced Management with Focused Operating Philosophy.
 Our Strategy
  Establish and Maintain Leading Market Positions.
 Continue to Focus on Operational Excellence.
 Selectively Build in Profitable, Strategic Latin American Markets.
 Theatre Operations
  5




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United States Theatres
 Total
    
    TotalState
    
    Theatres
    
    ScreensTexas
    
    
    78
    
    
    
    1,054California
    
    
    63
    
    
    
    710Ohio
    
    
    20
    
    
    
    221Utah
    
    
    12
    
    
    
    155Nevada
    
    
    10
    
    
    
    154Colorado
    
    
    8
    
    
    
    127Illinois
    
    
    9
    
    
    
    122Oregon
    
    
    7
    
    
    
    102Arizona
    
    
    6
    
    
    
    94Kentucky
    
    
    7
    
    
    
    83Pennsylvania
    
    
    5
    
    
    
    73Oklahoma
    
    
    6
    
    
    
    67Louisiana
    
    
    5
    
    
    
    58New Mexico
    
    
    4
    
    
    
    54Virginia
    
    
    4
    
    
    
    52Indiana
    
    
    5
    
    
    
    46North Carolina
    
    
    4
    
    
    
    41Mississippi
    
    
    3
    
    
    
    41Florida
    
    
    2
    
    
    
    40Iowa
    
    
    4
    
    
    
    39Arkansas
    
    
    3
    
    
    
    30Washington
    
    
    2
    
    
    
    30Georgia
    
    
    2
    
    
    
    27New York
    
    
    2
    
    
    
    27South Carolina
    
    
    2
    
    
    
    22Kansas
    
    
    1
    
    
    
    20Michigan
    
    
    1
    
    
    
    16Alaska
    
    
    1
    
    
    
    16New Jersey
    
    
    1
    
    
    
    16Missouri
    
    
    1
    
    
    
    15South Dakota
    
    
    1
    
    
    
    14Tennessee
    
    
    1
    
    
    
    14Wisconsin
    
    
    1
    
    
    
    14Massachusetts
    
    
    1
    
    
    
    12Delaware
    
    
    1
    
    
    
    10West Virginia
    
    
    1
    
    
    
    10Minnesota
    
    
    1
    
    
    
    8Montana
    
    
    1
    
    
    
    8Total United States
    
    
    286
    
    
    
    3,642Canada
    
    
    1
    
    
    
    12Total
    
    
    287
    
    
    
    3,654
 6




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International Theatres
 Total
    
    TotalCountry
    
    Theatres
    
    ScreensBrazil
    
    
    40
    
    
    
    339Mexico
    
    
    31
    
    
    
    304Chile
    
    
    12
    
    
    
    91Central America(1)
    
    
    12
    
    
    
    81Argentina
    
    
    9
    
    
    
    77Colombia
    
    
    9
    
    
    
    56Peru
    
    
    4
    
    
    
    37Ecuador
    
    
    4
    
    
    
    26Total
    
    
    121
    
    
    
    1,011
 
 (1)
    
    Includes Honduras, El Salvador, Nicaragua, Costa Rica and Panama.   Film Licensing
    7




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Juno, There Will Be Blood No Country For Old Men
 Concessions
  
    
    Optimization of product mix.Concession products are primarily comprised of various
sizes of popcorn, soft drinks and candy. Different varieties and flavors of candy and soft
drinks are offered at theatres based on preferences in that particular geographic region.
Specially priced combos are launched on a regular basis to increase average concession
purchases as well as to attract new buyers. Kids meals are also offered and packaged
towards younger patrons.
    
    Staff training.Employees are continually trained in suggestive-selling and
upselling techniques. Consumer promotions conducted at
the concession stand always include a motivational element which rewards theatre staff for
exceptional combo sales during the period.
  
    
    Theatre design.Our theatres are designed to optimize efficiencies at the concession
stands, which include multiple service stations to facilitate serving more customers
quicker. We strategically place large concession stands within theatres to heighten
visibility, reduce the length of concession lines, and improve traffic flow around the
concession stands. Centurys concession areas are designed as individual self-service
stations which allow customers to select their choice of refreshments and proceed to the
cash register. This design presents efficient service, enhanced choice and superior
visibility of concession items. Concession designs in many of our new theatres have begun to incorporate the
benefits experienced with the Century model.
    
    Cost control.We negotiate prices for concession supplies directly with concession
vendors and manufacturers to obtain bulk rates. Concession supplies are distributed through
a national distribution network. The concession distributor supplies and distributes
inventory to the theatres, which place volume orders directly with the vendors to replenish
stock. The concession distributor is paid a percentage fee for warehousing and delivery of
concession goods on a weekly basis.
 Participation in National CineMedia
  8




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
    
    Advertising:NCM develops, produces, sells and distributes a branded, pre-feature
entertainment and advertising program called FirstLook, along with an advertising program
for its lobby entertainment network and various marketing and promotional products in
theatre lobbies;
    
    CineMeetings:NCM provides live and pre-recorded networked and single-site meetings and
events in the theatres throughout its network; and
    
    Digital Programming Events:NCM distributes live and pre-recorded concerts, sporting
events and other non-film entertainment programming to theatres across its digital network.
    Participation in Digital Cinema Implementation Partners
  Marketing
    9




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Online Sales
 www.cinemark.com www.fandango.com.
 Point of Sale Systems
  Competition
   
    
    location, accessibility and capacity of an exhibitors theatre;
    
    theatre comfort;
    
    quality of projection and sound equipment;
    
    level of customer service; and
    
    licensing terms.
   10




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Corporate Operations
   Employees
  Regulations
    Financial Information About Geographic Areas
  11




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Item 1A. Risk Factors
 Our business depends on film production and performance.
  A deterioration in relationships with film distributors could adversely affect our ability to
obtain commercially successful films.
  We face intense competition for patrons and film licensing which may adversely affect our
business.
  The oversupply of screens in the motion picture exhibition industry and other factors may
adversely affect the performance of some of our theatres.
  An increase in the use of alternative or downstream film distribution channels and other
competing forms of entertainment may drive down movie theatre attendance and limit ticket price
growth.
  12




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Our results of operations may be impacted by shrinking video release windows.
  We have substantial long-term lease and debt obligations, which may restrict our ability to
fund current and future operations.
  
    
    making it more difficult for us to satisfy our obligations;
    
    requiring us to dedicate a substantial portion of our cash flow to payments on our
lease and debt obligations, thereby reducing the availability of our cash flow to fund
working capital, capital expenditures, acquisitions and other corporate requirements and to
pay dividends;
    
    impeding our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions and general corporate purposes;
    
    subjecting us to the risk of increased sensitivity to interest rate increases on our
variable rate debt, including our borrowings under our senior secured credit facility; and
    
    making us more vulnerable to a downturn in our business and competitive pressures and
limiting our flexibility to plan for, or react to, changes in our business.
 3 4
 We are subject to various covenants in our debt agreements that restrict our ability to enter
into certain transactions.
  13




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General political, social and economic conditions can adversely affect our attendance.
  Our foreign operations are subject to adverse regulations and currency exchange risk.
  We may not be able to generate additional revenues or realize value from our
investment in NCM.
   We are subject to uncertainties related to digital cinema, including potentially high costs of
re-equipping theatres with projectors to show digital movies.
  We are subject to uncertainties relating to future expansion plans, including our ability to
identify suitable acquisition candidates or site locations.
  14




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If we do not comply with the Americans with Disabilities Act of 1990 and a consent order we
entered into with the Department of Justice, we could be subject to further litigation.
  We depend on key personnel for our current and future performance.
  We are subject to impairment losses due to potential declines in the fair value of our assets.
   15




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Goodwill and Other Intangible Assets.
  Our results of operations vary from period to period based upon the quantity and quality of
the motion pictures that we show in our theatres.
  
 Item 2. Properties
 United States
  International
  16




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Item 3. Legal Proceedings
   17




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PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
 Market Information and Holder
  Dividends
  Securities Authorized for Issuance under Equity Compensation Plans
  Number ofSecurities RemainingNumber of
    
    Weighted
    
    Available for FutureSecurities to be
    
    Average Exercise
    
    Issuance UnderIssued upon
    
    Price of
    
    EquityExercise of
    
    Outstanding
    
    Compensation PlansOutstanding
    
    Options,
    
    (ExcludingOptions, Warrants
    
    Warrants and
    
    Securities ReflectedPlan Category
    
    and Rights
    
    Rights
    
    in the First Column)Equity compensation plans approved by security holders
    
    
    6,323,429
    
    
    $
    7.63
    
    
    
    2,202,700Equity compensation plans not approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    6,323,429
    
    
    $
    7.63
    
    
    
    2,202,700
 18




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis should be read in conjunction with the financial
statements and accompanying notes included in this report.
 Overview
    Disclosures
about Segments of an Enterprise and Related Information.
  19




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##### Table of Contents



Results of Operations
   Year Ended December 31,2006
    
    2007Operating data (in millions):RevenuesAdmissions
    
    $
    760.3
    
    
    $
    1,087.5Concession
    
    
    375.8
    
    
    
    516.5Other
    
    
    84.5
    
    
    
    78.8Total revenues
    
    $
    1,220.6
    
    
    $
    1,682.8Theatre operating costs(2)Film rentals and advertising
    
    $
    406.0
    
    
    $
    589.7Concession supplies
    
    
    59.0
    
    
    
    81.1Salaries and wages
    
    
    118.6
    
    
    
    173.3Facility lease expense
    
    
    157.8
    
    
    
    212.7Utilities and other
    
    
    144.8
    
    
    
    191.3Total theatre operating costs
    
    $
    886.2
    
    
    $
    1,248.1Operating data as a percentage of total revenues:RevenuesAdmissions
    
    
    62.3
    %
    
    
    64.6
    %Concession
    
    
    30.8
    
    
    
    30.7Other
    
    
    6.9
    
    
    
    4.7Total revenues
    
    
    100.0
    %
    
    
    100.0
    %Theatre operating costs(1)(2)Film rentals and advertising
    
    
    53.4
    %
    
    
    54.2
    %Concession supplies
    
    
    15.7
    
    
    
    15.7Salaries and wages
    
    
    9.7
    
    
    
    10.3Facility lease expense
    
    
    12.9
    
    
    
    12.6Utilities and other
    
    
    11.9
    
    
    
    11.4Total theatre operating costs
    
    
    72.6
    %
    
    
    74.2
    %Average screen count (month end average)
    
    
    3,628
    
    
    
    4,558Revenues per average screen
    
    $
    336,437
    
    
    $
    369,200
 
 (1)
    
    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.(2)
    
    Excludes depreciation and amortization expense. 20




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Comparison of Years Ended December 31, 2007 and December 31, 2006
 Revenues.
 U.S. Operating Segment
    
    International Operating Segment
    
    ConsolidatedYear Ended
    
    
    
    
    
    Year Ended
    
    
    
    
    
    Year EndedDecember 31,
    
    %
    
    December 31,
    
    %
    
December 31,
    
    %2006
    
    2007
    
    Change
    
    2006
    
    2007
    
    Change
    
    2006
    
    2007
    
    ChangeAdmissions revenues (in millions)
    
    $
    577.9
    
    
    $
    879.1
    
    
    
    52.1
    %
    
    $
    182.4
    
    
    $
    208.4
    
    
    
    14.3
    %
    
    $
    760.3
    
    
    $
    1,087.5
    
    
    
    43.0
    %Concession revenues (in millions)
    
    $
    297.4
    
    
    $
    424.4
    
    
    
    42.7
    %
    
    $
    78.4
    
    
    $
    92.1
    
    
    
    17.5
    %
    
    $
    375.8
    
    
    $
    516.5
    
    
    
    37.4
    %Other revenues (in millions) (1)
    
    $
    59.4
    
    
    $
    45.6
    
    
    
    (23.2
    )%
    
    $
    25.1
    
    
    $
    33.2
    
    
    
    32.3
    %
    
    $
    84.5
    
    
    $
    78.8
    
    
    
    (6.7
    )%Total revenues (in millions) (1)
    
    $
    934.7
    
    
    $
    1,349.1
    
    
    
    44.3
    %
    
    $
    285.9
    
    
    $
    333.7
    
    
    
    16.7
    %
    
    $
    1,220.6
    
    
    $
    1,682.8
    
    
    
    37.9
    %Attendance (in millions)
    
    
    118.7
    
    
    
    151.7
    
    
    
    27.8
    %
    
    
    59.6
    
    
    
    61.0
    
    
    
    2.3
    %
    
    
    178.3
    
    
    
    212.7
    
    
    
    19.3
    %Revenues per average screen (1)
    
    $
    346,812
    
    
    $
    376,771
    
    
    
    8.6
    %
    
    $
    306,459
    
    
    $
    341,451
    
    
    
    11.4
    %
    
    $
    336,437
    
    
    $
    369,200
    
    
    
    9.7
    %
 
 (1)
    
    U.S. operating segment revenues include eliminations of intercompany transactions
with the international operating segment. See Note 21 of our consolidated financial
statements. 
    
    Consolidated. The increase in admissions revenues of $327.2 million was attributable
to a 19.3% increase in attendance from 178.3 million patrons for 2006 to 212.7 million patrons
for 2007, which contributed $165.0 million, and a 20.0% increase in average ticket price from
$4.26 for 2006 to $5.11 for 2007, which contributed $162.2 million, and reflects the full year
of operations of the 77 Century theatres acquired during the fourth quarter of 2006. The
increase in concession revenues of $140.7 million was attributable to the 19.3% increase in
attendance, which contributed $84.5 million, and a 15.2% increase in concession revenues per
patron from $2.11 for 2006 to $2.43 for 2007, which contributed $56.2 million, and reflects
the full year of operations of the 77 Century theatres acquired during the fourth quarter of
2006. The increase in attendance was attributable to the additional attendance from the 77
Century theatres acquired, the solid slate of films released during 2007 and new theatre
openings. The increases in average ticket price and concession revenues per patron were due to
the higher ticket price structure at the 77 Century theatres acquired, price increases and
favorable exchange rates in certain countries in which we operate. The 6.7% 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 consolidated financial
statements.
    
    U.S. The increase in admissions revenues of $301.2 million was attributable to a
27.8% increase in attendance from 118.7 million patrons for 2006 to 151.7 million patrons for
2007, which contributed $160.7 million, and a 18.9% increase in average ticket price from
$4.87 for 2006 to $5.79 for 2007, which contributed $140.5 million, and reflects the full year
of operations of the 77 Century theatres acquired during the fourth quarter of 2006. The
increase in concession revenues of $127.0 million was attributable to the 27.8% increase in
attendance, which contributed $82.6 million, and an 11.6% increase in concession revenues per
patron from $2.51 for 2006 to $2.80 for 2007, which contributed $44.4 million, and reflects
the full year of operations of the 77 Century theatres acquired during the fourth quarter of
2006. The increase in attendance was attributable to the additional attendance from the 77
Century theatres acquired, the solid slate of films released during 2007 and new theatre
openings. The increases in average ticket price and concession revenues per patron were due to
the higher ticket price structure at the 77 Century theatres acquired and price increases. The
23.2% 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
consolidated financial statements.
    
    International. The increase in admissions revenues of $26.0 million was attributable
to a 2.3% increase in attendance from 59.6 million patrons for 2006 to 61.0 million patrons
for 2007, which contributed $4.3 million, and an 11.8% increase in average ticket price from
$3.06 for 2006 to $3.42 for 2007, which contributed $21.7 million. The increase in concession
revenues of $13.7 million was attributable to the 2.3% increase in attendance, which
contributed $1.9 million, and a 14.4% increase in concession revenues per patron from $1.32
for 2006 to $1.51 for 2007, which contributed $11.8 million. The increase in attendance was
primarily due to new theatre openings. The increases in average ticket price and concession
revenues per patron were due to price increases and favorable exchange rates in certain
countries in which we operate.
 21




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Theatre Operating Costs (excludes depreciation and amortization expense).
 International OperatingU.S. Operating Segment
    
    Segment
    
    ConsolidatedYear Ended
    
    Year Ended
    
    Year EndedDecember 31,
    
    December 31,
    
    December 31,2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007Film rentals and advertising
    
    $
    315.4
    
    
    $
    485.2
    
    
    $
    90.6
    
    
    $
    104.5
    
    
    $
    406.0
    
    
    $
    589.7Concession supplies
    
    
    38.7
    
    
    
    57.8
    
    
    
    20.3
    
    
    
    23.3
    
    
    $
    59.0
    
    
    $
    81.1Salaries and wages
    
    
    95.8
    
    
    
    146.7
    
    
    
    22.8
    
    
    
    26.6
    
    
    $
    118.6
    
    
    $
    173.3Facility lease expense
    
    
    114.5
    
    
    
    161.7
    
    
    
    43.3
    
    
    
    51.0
    
    
    $
    157.8
    
    
    $
    212.7Utilities and other
    
    
    108.3
    
    
    
    149.0
    
    
    
    36.5
    
    
    
    42.3
    
    
    $
    144.8
    
    
    $
    191.3Total theatre operating costs
    
    $
    672.7
    
    
    $
    1,000.4
    
    
    $
    213.5
    
    
    $
    247.7
    
    
    $
    886.2
    
    
    $
    1,248.1
 
    
    Consolidated. Film rentals and advertising costs were $589.7 million, or 54.2% of
admissions revenues, for 2007 compared to $406.0 million, or 53.4% of admissions revenues, for
2006. The increase in film rentals and advertising costs for 2007 of $183.7 million is due to
a $327.2 million increase in admissions revenues, which contributed $177.3 million, and an
increase in our film rental and advertising rate due to higher rates on certain blockbuster
sequels in 2007, which contributed $6.4 million. Concession supplies expense was $81.1
million, or 15.7% of concession revenues, for 2007 compared to $59.0 million, or 15.7% of
concession revenues, for 2006. The increase in concession supplies expense of $22.1 million is
primarily due to increased concession revenues.Salaries and wages increased to $173.3 million for 2007 from $118.6 million for 2006 primarily
due to the additional salaries and wages related to the 77 Century theatres, the increase in minimum wages in the U.S., and new theatre openings. Facility
lease expense increased to $212.7 million for 2007 from $157.8 million for 2006 primarily due to
the additional expense related to the 77 Century theatres, increased percentage rent related to
the increased revenues and new theatre openings. Utilities and other costs increased to $191.3
million for 2007 from $144.8 million for 2006 primarily due to the additional costs related to
the 77 Century theatres and new theatre openings.
 
    
    U.S. Film rentals and advertising costs were $485.2 million, or 55.2% of admissions
revenues, for 2007 compared to $315.4 million, or 54.6% of admissions revenues, for 2006. The
increase in film rentals and advertising costs for 2007 of $169.8 million is due to a $301.2
million increase in admissions revenues, which contributed $164.4 million, and an increase in
our film rentals and advertising rate due to higher rates on certain blockbuster sequels in
2007, which contributed $5.4 million. Concession supplies expense was $57.8 million, or 13.6%
of concession revenues, for 2007 compared to $38.7 million, or 13.0% of concession revenues,
for 2006. The increase in concession supplies expense of $19.1 million is due to increased
concession revenues, which contributed $16.6 million, and an increase in our concession
supplies rate, which contributed $2.5 million, both of which were attributable to the 77 Century theatres.
  
    
    International. Film rentals and advertising costs were $104.5 million, or 50.1% of
admissions revenues, for 2007 compared to $90.6 million, or 49.7% of admissions revenues, for
2006. The increase in film rentals and advertising costs of $13.9 million is due to a $26.0
million increase in admissions revenues, which contributed $12.9 million and an increase in
our film rental and advertising rate, which contributed $1.0 million. Concession supplies
expense was $23.3 million, or 25.3% of concession revenues, for 2007 compared to $20.3
million, or 25.9% of concession revenues, for 2006. The increase in concession supplies
expense of $3.0 million is primarily due to increased concession revenues.
 22




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##### 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.
 Gain on NCM Transaction.
 Gain on Fandango Transaction.
 Loss on Early Retirement of Debt 3 4
 23




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##### Table of Contents



3 4
 Distributions from NCM.
 Income Taxes.
 
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  24




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##### Table of Contents



Item 9A (T). Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
 Internal ControlIntegrated
Framework
 Changes in Internal Control Over Financial Reporting
  Limitations on Controls
  25




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##### Table of Contents



PART III
 
 Item 14. Principal Accounting Fees and Services
  Fees
    
    2006
    
    2007Audit
    
    $
    0.8
    
    
    $
    1.5Audit Related
    
    
    0.1
    
    
    
    0.1Tax (1)
    
    
    0.1
    
    
    
    0.2Other (2)
    
    
    
    
    
    
    1.7Total
    
    $
    1.0
    
    
    $
    3.5
 
 (1)
    
    Fees for assistance with our federal, state, local and foreign jurisdiction income tax
returns and consultation and advice related to various tax compliance planning projects.(2)
    
    Fees for review of our SEC filings associated with the Century Acquisition and Cinemark
Holdings, Inc.s initial public offering. 
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 Documents Filed as Part of this Report
 1.
    
    The financial statement schedules and related data listed in the accompanying Index
beginning on page F-1 are filed as a part of this report.2.
    
    The exhibits listed in the accompanying Index beginning on page E-1 are filed as a part
of this report.
 Exhibits
  Financial Statement Schedules
   26




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##### Table of Contents



SIGNATURES
  Dated: March 28, 2008
    
    CINEMARK, INC.BY:
    
    /s/ Alan W. Stock

Alan W. StockChief Executive OfficerBY:
    
    /s/ Robert Copple

Robert CoppleChief Financial Officer andPrincipal Accounting Officer
 POWER OF ATTORNEY
   Name
    
    Title
    
    Date/s/ Lee Roy MitchellLee Roy Mitchell
    
    Chairman
of the Board of Directors and Director
    
    March 28, 2008/s/ Alan W. Stock

Alan W. Stock
    
    Chief Executive Officer
(principal executive officer)
    
    March 28, 2008/s/ Robert Copple

Robert Copple
    
    Executive Vice President; Treasurer and Chief
Financial Officer (principal financial and
accounting officer)
    
    March 28, 2008/s/ Benjamin D. ChereskinBenjamin D. Chereskin
    
    Director
    
    March 28, 2008/s/ Vahe A. DombalagianVahe A. Dombalagian
    
    Director
    
    March 28, 2008/s/ Peter R. EzerskyPeter R. Ezersky
    
    Director
    
    March 28, 2008/s/ Enrique F. SeniorEnrique F. Senior
    
    Director
    
    March 28, 2008/s/ Raymond W. SyufyRaymond W. Syufy
    
    Director
    
    March 28, 2008/s/ Carlos M. SepulvedaCarlos M. Sepulveda
    
    Director
    
    March 28, 2008/s/ Roger T. StaubachRoger T. Staubach
    
    Director
    
    March 28, 2008/s/ Donald G. SoderquistDonald G. Soderquist
    
    Director
    
    March 28, 2008




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##### Table of Contents



SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageCINEMARK, INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets, December 31, 2006 (Successor) and 2007 (Successor)
    
    
    F-3Consolidated Statements of Operations for the Year Ended December 31, 2005 (Predecessor), the
Period from January 1, 2006 to October 4, 2006 (Predecessor), the Period from October 5, 2006 to December
31, 2006 (Successor) and the Year Ended December 31, 2007 (Successor)
    
    
    F-4Consolidated Statements of Stockholders Equity (Deficiency) and Comprehensive Income (Loss)
for the Year Ended December 31, 2005 (Predecessor), the Period from January 1, 2006 to October 4, 2006
(Predecessor), the Period from October 5, 2006 to December 31, 2006 (Successor) and the Year Ended December
31, 2007 (Successor)
    
    
    F-5Consolidated Statements of Cash Flows for the Year Ended December 31, 2005 (Predecessor), the
Period from January 1, 2006 to October 4, 2006 (Predecessor), the Period from October 5, 2006 to December
31, 2006 (Successor) and the Year Ended December 31, 2007 (Successor)
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7FINANCIAL STATEMENTS OF 50-PERCENT-OR-LESS-OWNED INVESTEE
    
    
    F-39SUPPLEMENTARY
SCHEDULES REQUIRED BY THE INDENTURE FOR THE SENIOR DISCOUNT
NOTES
    
    
    S-1Condensed Consolidating Balance Sheet Information, December 31, 2007
    
    
    S-2Condensed Consolidating Statement of Operations Information for the Year Ended December 31, 2007
    
    
    S-3Condensed Consolidating Statement of Cash Flows Information for the Year Ended December 31, 2007
    
    
    S-4
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Accounting for Uncertainty in Income Taxes  an interpretation of
SFAS No. 109
 Deloitte & Touche LLP
 
 F-2




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 December 31,
    
    
    December 31,2006
    
    
    2007(Successor)
    
    
    (Successor)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    147,099
    
    
    $
    233,402Inventories
    
    
    6,058
    
    
    
    7,000Accounts receivable
    
    
    31,165
    
    
    
    34,832Income tax receivable
    
    
    8,946
    
    
    
    18,422Current deferred tax asset
    
    
    4,661
    
    
    
    5,215Prepaid expenses and other
    
    
    8,424
    
    
    
    10,070Total current assets
    
    
    206,353
    
    
    
    308,941THEATRE PROPERTIES AND EQUIPMENTLand
    
    
    104,578
    
    
    
    97,532Buildings
    
    
    420,642
    
    
    
    389,581Property under capital lease
    
    
    143,776
    
    
    
    178,347Theatre furniture and equipment
    
    
    517,054
    
    
    
    558,483Leasehold interests and improvements
    
    
    490,861
    
    
    
    572,081Theatres under construction
    
    
    18,113
    
    
    
    22,481Total
    
    
    1,695,024
    
    
    
    1,818,505Less accumulated depreciation and amortization
    
    
    370,452
    
    
    
    504,439Theatre properties and equipment, net
    
    
    1,324,572
    
    
    
    1,314,066OTHER ASSETSGoodwill
    
    
    1,205,423
    
    
    
    1,134,689Intangible assets  net
    
    
    360,752
    
    
    
    353,047Investments in and advances to affiliates
    
    
    11,354
    
    
    
    5,071Deferred charges and other assets  net
    
    
    63,092
    
    
    
    77,393Total other assets
    
    
    1,640,621
    
    
    
    1,570,200TOTAL ASSETS
    
    $
    3,171,546
    
    
    $
    3,193,207LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    14,259
    
    
    $
    9,166Current portion of capital lease obligations
    
    
    3,649
    
    
    
    4,684Accounts payable
    
    
    47,272
    
    
    
    50,977Accrued film rentals
    
    
    47,862
    
    
    
    42,140Accrued interest
    
    
    23,706
    
    
    
    8,735Accrued payroll
    
    
    21,686
    
    
    
    21,614Accrued property taxes
    
    
    22,165
    
    
    
    23,031Accrued other current liabilities
    
    
    50,223
    
    
    
    57,830Total current liabilities
    
    
    230,822
    
    
    
    218,177LONG-TERM LIABILITIESLong-term debt, less current portion
    
    
    1,897,394
    
    
    
    1,514,579Capital lease obligations, less current portion
    
    
    112,178
    
    
    
    116,486Deferred income taxes
    
    
    198,320
    
    
    
    168,475Long-term portion FIN 48 liability
    
    
    
    
    
    
    15,500Deferred lease expenses
    
    
    14,285
    
    
    
    19,235Deferred revenue  NCM
    
    
    
    
    
    
    172,696Deferred revenues and other long-term liabilities
    
    
    12,672
    
    
    
    36,214Total long-term liabilities
    
    
    2,234,849
    
    
    
    2,043,185COMMITMENTS AND CONTINGENCIES (see Note 20)MINORITY INTERESTS IN SUBSIDIARIES
    
    
    16,613
    
    
    
    16,182STOCKOLDERS EQUITYClass A common stock, $0.001 par value: 40,000,000 shares authorized,
27,896,316 outstanding at December 31, 2006 and December 31, 2007
    
    
    28
    
    
    
    28Additional paid-in-capital
    
    
    685,463
    
    
    
    806,742Retained earnings (deficit)
    
    
    (7,692
    )
    
    
    76,198Accumulated other comprehensive income
    
    
    11,463
    
    
    
    32,695Total stockholders equity
    
    
    689,262
    
    
    
    915,663TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,171,546
    
    
    $
    3,193,207
  F-3




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 YEAR ENDED DECEMBER 31, 2005 AND THE PERIODS FROM JANUARY 1, 2006 TO OCTOBER 4, 2006 AND
 OCTOBER 5, 2006 TO DECEMBER 31, 2006 AND THE YEAR ENDED DECEMBER 31, 2007
 (In thousands)
 Year Ended
    
    
    January 1, 2006 to
    
    
    
    October 5, 2006 to
    
    
    Year EndedDecember 31, 2005
    
    
    October 4, 2006
    
    
    
    December 31, 2006
    
    
    December 31, 2007(Predecessor)
    
    
    (Predecessor)
    
    
    
    (Successor)
    
    
    (Successor)REVENUESAdmissions
    
    $
    641,240
    
    
    $
    514,183
    
    
    
    $
    246,092
    
    
    $
    1,087,480Concession
    
    
    320,072
    
    
    
    260,223
    
    
    
    
    115,575
    
    
    
    516,509Other
    
    
    59,285
    
    
    
    54,683
    
    
    
    
    29,838
    
    
    
    78,852Total revenues
    
    
    1,020,597
    
    
    
    829,089
    
    
    
    
    391,505
    
    
    
    1,682,841COST OF OPERATIONSFilm rentals and advertising
    
    
    347,727
    
    
    
    275,005
    
    
    
    
    130,982
    
    
    
    589,717Concession supplies
    
    
    52,507
    
    
    
    41,863
    
    
    
    
    17,157
    
    
    
    81,074Salaries and wages
    
    
    101,431
    
    
    
    79,002
    
    
    
    
    39,614
    
    
    
    173,290Facility lease expense
    
    
    136,593
    
    
    
    109,513
    
    
    
    
    48,246
    
    
    
    212,730Utilities and other
    
    
    123,831
    
    
    
    100,924
    
    
    
    
    43,884
    
    
    
    191,279General and administrative expenses
    
    
    50,884
    
    
    
    45,958
    
    
    
    
    21,810
    
    
    
    78,916Termination of profit participation agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,952Depreciation and amortization
    
    
    76,229
    
    
    
    59,913
    
    
    
    
    34,281
    
    
    
    148,781Amortization of favorable leases
    
    
    232
    
    
    
    130
    
    
    
    
    667
    
    
    
    2,935Impairment of long-lived assets
    
    
    9,672
    
    
    
    5,741
    
    
    
    
    23,337
    
    
    
    86,558(Gain) loss on sale of assets and other
    
    
    2,625
    
    
    
    2,938
    
    
    
    
    2,345
    
    
    
    (2,953
    )Total cost of operations
    
    
    901,731
    
    
    
    720,987
    
    
    
    
    362,323
    
    
    
    1,569,279OPERATING INCOME
    
    
    118,866
    
    
    
    108,102
    
    
    
    
    29,182
    
    
    
    113,562OTHER INCOME (EXPENSE)Interest expense
    
    
    (86,867
    )
    
    
    (69,191
    )
    
    
    
    (42,220
    )
    
    
    (145,596
    )Interest income
    
    
    6,600
    
    
    
    5,563
    
    
    
    
    1,477
    
    
    
    11,271Gain on NCM transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,773Gain on Fandango transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,205Foreign currency exchange gain (loss)
    
    
    (1,276
    )
    
    
    94
    
    
    
    
    (352
    )
    
    
    438Loss on early retirement of debt
    
    
    (46
    )
    
    
    (3,315
    )
    
    
    
    (5,782
    )
    
    
    (13,456
    )Distributions from NCM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,499Dividend income
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    
    50Equity in income (loss) of affiliates
    
    
    227
    
    
    
    (1,800
    )
    
    
    
    154
    
    
    
    (2,462
    )Minority interests in (income) loss of subsidiaries
    
    
    (924
    )
    
    
    (1,790
    )
    
    
    
    321
    
    
    
    (792
    )Total other income (expense)
    
    
    (82,286
    )
    
    
    (70,338
    )
    
    
    
    (46,402
    )
    
    
    80,930INCOME (LOSS) BEFORE INCOME TAXES
    
    
    36,580
    
    
    
    37,764
    
    
    
    
    (17,220
    )
    
    
    194,492Income taxes
    
    
    14,193
    
    
    
    9,078
    
    
    
    
    3,111
    
    
    
    109,509NET INCOME (LOSS)
    
    $
    22,387
    
    
    $
    28,686
    
    
    
    $
    (20,331
    )
    
    $
    84,983
  F-4




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) AND COMPREHENSIVE INCOME (LOSS)
 YEAR ENDED DECEMBER 31, 2005 AND THE PERIODS FROM JANUARY 1, 2006 TO OCTOBER 4, 2006 AND
 OCTOBER 5, 2006 TO DECEMBER 31, 2006 AND THE YEAR ENDED DECEMBER 31, 2007
 (In thousands)
 Class A
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon Stock
    
    
    Additional
    
    
    Retained
    
    
    OtherShares
    
    
    
    
    
    
    Paid-in
    
    
    Earnings
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveIssued
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    Total
    
    
    Income (Loss)Predecessor balance at January 1, 2005
    
    
    27,675
    
    
    $
    28
    
    
    $
    599,525
    
    
    $
    (725,155
    )
    
    $
    (77,122
    )
    
    $
    (202,724
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,387
    
    
    
    
    
    
    
    22,387
    
    
    $
    22,387Issuance of stock
    
    
    221
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Tax adjustment related to Recapitalization fees
    
    
    
    
    
    
    
    
    
    
    (82
    )
    
    
    
    
    
    
    
    
    
    
    (82
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,937
    
    
    
    16,937
    
    
    
    16,937Predecessor balance at December 31, 2005
    
    
    27,896
    
    
    $
    28
    
    
    $
    604,443
    
    
    $
    (702,768
    )
    
    $
    (60,185
    )
    
    $
    (158,482
    )
    
    $
    39,324Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,686
    
    
    
    
    
    
    
    28,686
    
    
    $
    28,686Share based awards compensation expense
    
    
    
    
    
    
    
    
    
    
    2,148
    
    
    
    
    
    
    
    
    
    
    
    2,148Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,872
    
    
    
    3,872
    
    
    
    3,872Predecessor balance at October 4, 2006
    
    
    27,896
    
    
    $
    28
    
    
    $
    606,591
    
    
    $
    (674,082
    )
    
    $
    (56,313
    )
    
    $
    (123,776
    )
    
    $
    32,558Successor balance at October 5, 2006
    
    
    27,896
    
    
    $
    28
    
    
    $
    534,747
    
    
    $
    12,639
    
    
    $
    (734
    )
    
    $
    546,680Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,331
    )
    
    
    
    
    
    
    (20,331
    )
    
    $
    (20,331
    )Capital contribution from Cinemark Holdings, Inc.
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Share based awards compensation expense
    
    
    
    
    
    
    
    
    
    
    716
    
    
    
    
    
    
    
    
    
    
    
    716Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,197
    
    
    
    12,197
    
    
    
    12,197Successor balance at December 31, 2006
    
    
    27,896
    
    
    $
    28
    
    
    $
    685,463
    
    
    $
    (7,692
    )
    
    $
    11,463
    
    
    $
    689,262
    
    
    $
    (8,134
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,983
    
    
    
    
    
    
    
    84,983
    
    
    $
    84,983Capital contributions from Cinemark Holdings, Inc.
    
    
    
    
    
    
    
    
    
    
    117,045
    
    
    
    
    
    
    
    
    
    
    
    117,045Tax adjustment related to the adoption of FIN48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,093
    )
    
    
    
    
    
    
    (1,093
    )Share based awards compensation expense
    
    
    
    
    
    
    
    
    
    
    2,881
    
    
    
    
    
    
    
    
    
    
    
    2,881Tax benefit related to stock option exercises
    
    
    
    
    
    
    
    
    
    
    1,353
    
    
    
    
    
    
    
    
    
    
    
    1,353Fair value adjustment on interest rate swap agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,348
    )
    
    
    (11,348
    )
    
    
    (11,348
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,580
    
    
    
    32,580
    
    
    
    32,580Successor balance at December 31, 2007
    
    
    27,896
    
    
    $
    28
    
    
    $
    806,742
    
    
    $
    76,198
    
    
    $
    32,695
    
    
    $
    915,663
    
    
    $
    106,215
  F-5




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEAR ENDED DECEMBER 31, 2005 AND THE PERIODS FROM JANUARY 1, 2006 TO OCTOBER 4, 2006 AND
 OCTOBER 5, 2006 TO DECEMBER 31, 2006 AND THE YEAR ENDED DECEMBER 31, 2007
 (In thousands)
 Year Ended
    
    
    January 1, 2006 to
    
    
    
    October 5, 2006 to
    
    
    Year EndedDecember 31, 2005
    
    
    October 4, 2006
    
    
    
    December 31, 2006
    
    
    December 31, 2007(Predecessor)
    
    
    (Predecessor)
    
    
    
    (Successor)
    
    
    (Successor)OPERATING ACTIVITIESNet income (loss)
    
    $
    22,387
    
    
    $
    28,686
    
    
    
    $
    (20,331
    )
    
    $
    84,983Adjustments to reconcile net income (loss) to cash provided by operating activities:Depreciation
    
    
    73,796
    
    
    
    58,564
    
    
    
    
    33,241
    
    
    
    144,629Amortization of intangible and other assets
    
    
    2,665
    
    
    
    1,479
    
    
    
    
    1,707
    
    
    
    7,087Amortization of long-term prepaid rents
    
    
    1,258
    
    
    
    816
    
    
    
    
    197
    
    
    
    1,146Amortization of debt issue costs
    
    
    3,984
    
    
    
    3,082
    
    
    
    
    1,183
    
    
    
    4,727Amortization of deferred revenues, deferred lease incentives and other
    
    
    (963
    )
    
    
    (582
    )
    
    
    
    (71
    )
    
    
    (2,508
    )Amortization of debt premium
    
    
    (1,564
    )
    
    
    (1,173
    )
    
    
    
    (763
    )
    
    
    (678
    )Impairment of long-lived assets
    
    
    9,672
    
    
    
    5,741
    
    
    
    
    23,337
    
    
    
    86,558Share based awards compensation expense
    
    
    
    
    
    
    2,148
    
    
    
    
    716
    
    
    
    2,881Gain on NCM transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,773
    )Gain on Fandango transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,205
    )(Gain) loss on sale of assets and other
    
    
    2,625
    
    
    
    2,938
    
    
    
    
    2,345
    
    
    
    (2,953
    )Write-off unamortized debt issue costs and debt premium
related to the early retirement of debt
    
    
    46
    
    
    
    1,183
    
    
    
    
    5,782
    
    
    
    (15,661
    )Accretion of interest on senior discount notes
    
    
    38,549
    
    
    
    30,222
    
    
    
    
    10,203
    
    
    
    41,423Deferred lease expenses
    
    
    1,556
    
    
    
    724
    
    
    
    
    378
    
    
    
    5,979Deferred income tax expenses
    
    
    (7,547
    )
    
    
    (7,986
    )
    
    
    
    1,580
    
    
    
    (34,614
    )Equity in (income) loss of affiliates
    
    
    (227
    )
    
    
    1,800
    
    
    
    
    (154
    )
    
    
    2,462Minority interests in income (loss) of subsidiaries
    
    
    924
    
    
    
    1,790
    
    
    
    
    (321
    )
    
    
    792Tax benefit related to stock option exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353Other
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    
    Changes in assets and liabilities:Inventories
    
    
    (309
    )
    
    
    274
    
    
    
    
    513
    
    
    
    (942
    )Accounts receivable
    
    
    (4,102
    )
    
    
    (9,174
    )
    
    
    
    (710
    )
    
    
    (3,667
    )Prepaid expenses and other
    
    
    (649
    )
    
    
    (1,443
    )
    
    
    
    3,121
    
    
    
    (1,646
    )Other assets
    
    
    (12,373
    )
    
    
    (8,394
    )
    
    
    
    4,812
    
    
    
    (4
    )Advances with affiliates
    
    
    (121
    )
    
    
    (189
    )
    
    
    
    81
    
    
    
    (1,245
    )Accounts payable and accrued liabilities
    
    
    14,082
    
    
    
    (20,993
    )
    
    
    
    21,075
    
    
    
    1,977Interest paid on repurchased senior discount notes
    
    
    
    
    
    
    (5,381
    )
    
    
    
    
    
    
    
    (16,592
    )Increase in deferrred revenues related to NCM transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,001Increase in deferrred revenues related to Fandango transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000Other long-term liabilities
    
    
    1,198
    
    
    
    484
    
    
    
    
    5,250
    
    
    
    1,323Income tax receivable/payable
    
    
    20,181
    
    
    
    (9,572
    )
    
    
    
    (12,518
    )
    
    
    58,282Net cash provided by operating activities
    
    
    165,270
    
    
    
    75,044
    
    
    
    
    80,653
    
    
    
    324,115INVESTING ACTIVITIESAdditions to theatre properties and equipment
    
    
    (75,605
    )
    
    
    (77,902
    )
    
    
    
    (29,179
    )
    
    
    (146,304
    )Proceeds from sale of theatre properties and equipment
    
    
    1,317
    
    
    
    1,236
    
    
    
    
    5,210
    
    
    
    37,532Increase in escrow deposit due to like-kind exchange
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,739
    )Acquisition of Century Theatres, Inc., net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    (531,383
    )
    
    
    Purchase of shares in National CineMedia
    
    
    (7,329
    )
    
    
    
    
    
    
    
    
    
    
    
    Net proceeds from sale of NCM stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,842Net proceeds from sale of Fandango stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,347Investment in joint venture  DCIP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,500
    )Other
    
    
    
    
    
    
    271
    
    
    
    
    
    
    
    
    Net cash provided by (used for) investing activities
    
    
    (81,617
    )
    
    
    (76,395
    )
    
    
    
    (555,352
    )
    
    
    93,178FINANCING ACTIVITIESIssuance of common stock
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    Capital contribution from parent to fund retirement of senior discount notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,694Retirement of senior discount notes
    
    
    (1,302
    )
    
    
    (24,950
    )
    
    
    
    
    
    
    
    (43,136
    )Retirement of senior subordinated notes
    
    
    
    
    
    
    (10,000
    )
    
    
    
    
    
    
    
    (332,066
    )Proceeds from senior secured credit facility
    
    
    
    
    
    
    
    
    
    
    
    1,120,000
    
    
    
    Proceeds from other long-term debt
    
    
    660
    
    
    
    2,273
    
    
    
    
    57
    
    
    
    Payoff of long-term debt assumed in Century acquisition
    
    
    
    
    
    
    
    
    
    
    
    (360,000
    )
    
    
    Payoff of former senior secured credit facility
    
    
    
    
    
    
    
    
    
    
    
    (253,500
    )
    
    
    Repayments of other long-term debt
    
    
    (6,671
    )
    
    
    (5,009
    )
    
    
    
    (3,886
    )
    
    
    (19,438
    )Payments on capital leases
    
    
    
    
    
    
    
    
    
    
    
    (839
    )
    
    
    (3,759
    )Debt issue costs
    
    
    (239
    )
    
    
    
    
    
    
    
    (22,926
    )
    
    
    Other
    
    
    (1,198
    )
    
    
    (1,226
    )
    
    
    
    (52
    )
    
    
    (1,730
    )Net cash provided by (used for) financing activities
    
    
    (3,750
    )
    
    
    (38,912
    )
    
    
    
    478,854
    
    
    
    (336,435
    )EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
    
    
    2,048
    
    
    
    268
    
    
    
    
    740
    
    
    
    5,445INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    81,951
    
    
    
    (39,995
    )
    
    
    
    4,895
    
    
    
    86,303CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    100,248
    
    
    
    182,199
    
    
    
    
    142,204
    
    
    
    147,099End of period
    
    $
    182,199
    
    
    $
    142,204
    
    
    
    $
    147,099
    
    
    $
    233,402
   F-6




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 In thousands, except share and per share data
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business
 Basis of Presentation 
   Principles of Consolidation
 Cash and Cash Equivalents
 Inventories
 Theatre Properties and Equipment
 Category
    
    Useful LifeBuildings on owned land
    
    40 yearsBuildings on leased land
    
    Lesser of lease term or useful lifeBuildings under capital lease
    
    Lesser of lease term or useful lifeTheatre furniture and equipment
    
    5 to 15 yearsLeasehold interests and improvements
    
    Lesser of lease term or useful life
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 F-7




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
   Goodwill and Other Intangible Assets Goodwill and Other Intangible
Assets
  Intangible Asset
    
    Amortization MethodGoodwill
    
    Indefinite-livedTradename
    
    Indefinite-livedCapitalized licensing fees
    
    Straight-line method over 15 years. The
remaining terms of the underlying agreements
range from 7 to 12 years.Vendor contracts
    
    Straight-line method over the terms of the
underlying contracts. The remaining terms of
the underlying contracts range from 1 to 15
years.Net favorable leases
    
    Based on the pattern in which the economic
benefits are realized over the terms of the
lease agreements. The remaining terms of the
lease agreements range from 1 to 29 years.Other intangible assets
    
    Straight-line method over the terms of the
underlying agreement. The remaining term of the
underlying agreement is 11 years.
 Deferred Charges and Other Assets
 Lease Accounting Accounting for Leases
 F-8




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 Accounting for Operating Leases with Scheduled Rent Increases The Effect of Lessee Involvement in Asset
Construction Accounting for Leases: Sale-leaseback
Transactions Involving Real Estate
 Deferred Revenues
 Revenue and Expense Recognition
  Accounting for Share Based Awards
 F-9




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Share Based Payment
  Accounting for
Stock-Based Compensation Accounting for Stock-Based Compensation Transition and
Disclosure
 Net income as reported
    
    $
    22,387Compensation expense included in reported net income, net of tax
    
    
    Compensation expense under fair-value method, net of tax
    
    
    (2,964
    )Pro-forma net income
    
    $
    19,423
 Income Taxes  Accounting for Uncertainty in
Income Taxes  an interpretation of SFAS No. 109 Accounting for Income Taxes
 F-10




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Segments Disclosures About Segments of an Enterprise and Related
Information.
 Use of Estimates
 Foreign Currency Translations
 Fair Values of Financial Instruments
 Acquisitions Business Combinations
 Comprehensive Income (Loss) 
 2. NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements.
 The Fair Value Option for Financial Assets
and Financial Liabilities.
 F-11




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 Business Combinations
 Noncontrolling Interest in Consolidated
Financial Statements
 3. INITIAL PUBLIC OFFERING OF COMMON STOCK
 3 4 3 4 3 4 3 4
 4. MERGER WITH MADISON DEARBORN PARTNERS AND RELATED CHANGE IN ACCOUNTING BASIS
  F-12




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Current assets
    
    $
    79,967Fixed assets
    
    
    650,653Goodwill
    
    
    620,540Tradename
    
    
    173,882Net favorable leases
    
    
    31,047Vendor contracts
    
    
    52,012Internally developed software
    
    
    1,626Other long term assets
    
    
    42,384Current liabilities
    
    
    (90,940
    )Other long term liabilities
    
    
    (120,232
    )Long-term debt
    
    
    (922,694
    )Total
    
    $
    518,245
  Net increase in fixed assets
    
    $
    15,013Net increase in goodwill
    
    
    508,760Net increase in intangible assets
    
    
    228,424Net increase in investments in and advances to affiliates
    
    
    2,600Net decrease in deferred charges and other assets
    
    
    (7,277
    )Net increase in long-term debt
    
    
    (9,059
    )Net increase in deferred income taxes
    
    
    (87,059
    )Net decrease in deferred lease expense
    
    
    16,561Net decrease in deferred revenues and other long-term liabilities
    
    
    2,493Net increase in stockholders equity
    
    $
    670,456
  5. ACQUISITION OF CENTURY THEATRES, INC. AND RELATED REFINANCING OF CERTAIN LONG-TERM DEBT
  Business Combinations
 F-13




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 Current assets (1)
    
    $
    32,635Fixed assets (2)
    
    
    548,451Goodwill (2)
    
    
    640,436Tradename
    
    
    136,000Other long term assets
    
    
    4,956Net unfavorable leases
    
    
    (9,360
    )Current liabilities
    
    
    (74,488
    )Other long term liabilities (2)
    
    
    (229,957
    )Total
    
    $
    1,048,673
 
 (1)
    
    Includes cash of $7,290.(2)
    
    In 2007, the Company adjusted its preliminary purchase price
allocation to fixed assets (increase of $29,398), goodwill (decrease of $18,110)
and other long-term liabilities (increase of $11,288) due to additional
information obtained regarding the fair value of these assets and liabilities
acquired.    F-14




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 Pro Forma
    
    Pro FormaYear Ended
    
    Year EndedDecember 31, 2005
    
    December 31, 2006(unaudited)RevenuesAdmissions
    
    $
    982,699
    
    
    $
    1,029,881Concession
    
    
    457,190
    
    
    
    487,416Other
    
    
    74,559
    
    
    
    94,807Total revenues
    
    $
    1,514,448
    
    
    $
    1,612,104Cost of operationsFilm rentals and advertising
    
    
    526,002
    
    
    
    546,144Concession supplies
    
    
    72,631
    
    
    
    75,359Salaries and wages
    
    
    154,072
    
    
    
    160,689Facility lease expense
    
    
    192,510
    
    
    
    203,335Utilities and other
    
    
    169,507
    
    
    
    184,699General and administrative expenses (1)
    
    
    77,338
    
    
    
    84,619Depreciation and amortization (2)(3)
    
    
    131,329
    
    
    
    136,936Impairment of long-lived assets
    
    
    9,672
    
    
    
    29,485Loss on sale of assets and other
    
    
    7,582
    
    
    
    5,345Total cost of operations
    
    
    1,340,643
    
    
    
    1,426,611Operating income
    
    
    173,805
    
    
    
    185,493Interest expense (4)
    
    
    (164,916
    )
    
    
    (170,134
    )Other income (expense)
    
    
    6,105
    
    
    
    (5,370
    )Income before income taxes
    
    
    14,994
    
    
    
    9,989Income taxes (5)
    
    
    6,961
    
    
    
    6,024Net income
    
    $
    8,033
    
    
    $
    3,965
 
 (1)
    
    Gives effect to the elimination of change of control payments of
$15,672 to Centurys management for the year ended December 31, 2006.(2)
    
    Reflects increase in depreciation related to the fair value of the theatre
properties and equipment pursuant to purchase accounting for the Century Acquisition.(3)
    
    Reflects the amortization associated with intangible assets recorded pursuant
to purchase accounting for the Century Acquisition.(4)
    
    Reflects interest expense and amortization of debt issue costs resulting from
the changes to the Companys debt structure pursuant to the Century Acquisition.(5)
    
    Reflects the tax effect of the aforementioned proforma adjustments at the
Companys statutory income tax rate of 39%. 6. INVESTMENT IN NATIONAL CINEMEDIA LLC AND TRANSACTION RELATED TO ITS INITIAL PUBLIC OFFERING
   F-15




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
      F-16




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
    7. INVESTMENT IN DIGITAL CINEMA IMPLEMENTATION PARTNERS
  8. SALE OF INVESTMENT IN FANDANGO, INC.
    F-17




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 9. GOODWILL AND OTHER INTANGIBLE ASSETS  NET
  U.S.
    
    InternationalOperating
    
    OperatingSegment
    
    Segment
    
    TotalPredecessor balance at January 1, 2006
    
    $
    4,265
    
    
    $
    37,842
    
    
    $
    42,107Foreign currency translation adjustment and other (3)
    
    
    
    
    
    
    2,066
    
    
    
    2,066Predecessor balance at October 4, 2006
    
    $
    4,265
    
    
    $
    39,908
    
    
    $
    44,173Net basis adjustment (1)
    
    
    394,893
    
    
    
    113,867
    
    
    
    508,760Acquisition of Century Theatres, Inc. (2)
    
    
    658,546
    
    
    
    
    
    
    
    658,546Impairment charges
    
    
    (5,116
    )
    
    
    (8,478
    )
    
    
    (13,594
    )Foreign currency translation adjustments and other (3)
    
    
    4,228
    
    
    
    3,310
    
    
    
    7,538Successor balance at December 31, 2006
    
    $
    1,056,816
    
    
    $
    148,607
    
    
    $
    1,205,423Purchase price allocation adjustment for Century Acquisition (2)
    
    
    (18,109
    )
    
    
    
    
    
    
    (18,109
    )Impairment charges
    
    
    (60,154
    )
    
    
    (7,571
    )
    
    
    (67,725
    )Foreign currency translation adjustment and other (3)
    
    
    595
    
    
    
    14,505
    
    
    
    15,100Successor balance at December 31, 2007
    
    $
    979,148
    
    
    $
    155,541
    
    
    $
    1,134,689
 
 (1)
    
    Represents net basis adjustments to intangible assets related to the push down of
Cinemark Holdings, Inc.s accounting basis to the Company and its subsidiaries. See Note 4
for further discussion.(2)
    
    See Note 5 regarding the acquisition of Century Theatres, Inc.(3)
    
    U.S. operating segment includes one theatre located in Canada. Goodwill and Other Intangible Assets
   F-18




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  ForeignCurrencySuccessor
    
    
    
    
    
    
    
    
    
    
    
    
    
    Translation
    
    SuccessorBalance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjustments
    
    Balance atDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    and
    
    December 31,2006
    
    Additions
    
    Amortization
    
    Impairment
    
    Other
    
    2007Intangible assets with finite lives:Capitalized licensing fees:Gross carrying amount
    
    $
    5,138
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,138Accumulated amortization
    
    
    (1,139
    )
    
    
    
    
    
    
    (426
    )
    
    
    
    
    
    
    
    
    
    
    (1,565
    )Net carrying amount
    
    $
    3,999
    
    
    $
    
    
    
    $
    (426
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,573Vendor contracts:Gross carrying amount
    
    
    56,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447
    
    
    
    56,973Accumulated amortization
    
    
    (19,924
    )
    
    
    
    
    
    
    (3,418
    )
    
    
    
    
    
    
    
    
    
    
    (23,342
    )Net carrying amount
    
    $
    36,602
    
    
    $
    
    
    
    $
    (3,418
    )
    
    $
    
    
    
    $
    447
    
    
    $
    33,631Net favorable leases:Gross carrying amount
    
    
    21,999
    
    
    
    
    
    
    
    
    
    
    
    (4,611
    )
    
    
    3,303
    
    
    
    20,691Accumulated amortization
    
    
    (12,023
    )
    
    
    
    
    
    
    (2,935
    )
    
    
    
    
    
    
    (623
    )
    
    
    (15,581
    )Net carrying amount
    
    $
    9,976
    
    
    $
    
    
    
    $
    (2,935
    )
    
    $
    (4,611
    )
    
    $
    2,680
    
    
    $
    5,110Other intangible assets:Gross carrying amount
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    69Accumulated amortization
    
    
    (16
    )
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )Net carrying amount
    
    $
    54
    
    
    $
    
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    (1
    )
    
    $
    49Total net intangible assets with finite lives
    
    $
    50,631
    
    
    $
    
    
    
    $
    (6,783
    )
    
    $
    (4,611
    )
    
    $
    3,126
    
    
    $
    42,363Intangible assets with indefinite lives:Tradename
    
    
    310,118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563
    
    
    
    310,681Other unamortized intangible assets
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Total intangible assets  net
    
    $
    360,752
    
    
    $
    
    
    
    $
    (6,783
    )
    
    $
    (4,611
    )
    
    $
    3,689
    
    
    $
    353,047
  For the year ended December 31, 2008
    
    $
    6,404For the year ended December 31, 2009
    
    
    5,287For the year ended December 31, 2010
    
    
    5,005For the year ended December 31, 2011
    
    
    4,551For the year ended December 31, 2012
    
    
    3,686Thereafter
    
    
    17,430Total
    
    $
    42,363
 F-19




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 10. IMPAIRMENT OF LONG-LIVED ASSETS
 Accounting for the Impairment or Disposal of Long-Lived
Assets
   Period from
    
    
    Period fromJanuary 1,
    
    
    October 5,Year Ended
    
    to
    
    
    to
    
    Year EndedDecember 31,
    
    October 4,
    
    
    December 31,
    
    December 31,2005
    
    2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)United States theatre properties
    
    $
    6,788
    
    
    $
    5,731
    
    
    
    $
    5,315
    
    
    $
    12,423International theatre properties
    
    
    1,616
    
    
    
    10
    
    
    
    
    3,094
    
    
    
    1,799Subtotal
    
    $
    8,404
    
    
    $
    5,741
    
    
    
    $
    8,409
    
    
    $
    14,222Intangible assets (see Note 9)
    
    
    
    
    
    
    
    
    
    
    
    1,334
    
    
    
    4,611Goodwill (see Note 9)
    
    
    1,268
    
    
    
    
    
    
    
    
    13,594
    
    
    
    67,725Impairment of long-lived assets
    
    $
    9,672
    
    
    $
    5,741
    
    
    
    $
    23,337
    
    
    $
    86,558
  11. DEFERRED CHARGES AND OTHER ASSETS  NET
  Balance at
    
    Balance atDecember 31, 2006
    
    December 31, 2007(Successor)
    
    (Successor)Debt issue costs
    
    $
    39,646
    
    
    $
    37,660Less: Accumulated amortization
    
    
    (4,794
    )
    
    
    (9,522
    )Subtotal
    
    
    34,852
    
    
    
    28,138Long-term prepaid rents
    
    
    16,283
    
    
    
    17,457Construction advances and other deposits
    
    
    1,869
    
    
    
    24,080Equipment to be placed in service
    
    
    3,990
    
    
    
    4,821Brazil value added tax deposit
    
    
    3,943
    
    
    
    409Other
    
    
    2,155
    
    
    
    2,488Total
    
    $
    63,092
    
    
    $
    77,393
 F-20




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 3 4
 12. LONG-TERM DEBT
  Balance at
    
    Balance atDecember 31, 2006
    
    December 31, 2007(Successor)
    
    (Successor)Cinemark, Inc. 9 3/4% senior discount notes due 2014
    
    $
    434,073
    
    
    $
    415,768Cinemark USA, Inc. term loan
    
    
    1,117,200
    
    
    
    1,101,686Cinemark USA, Inc. 9% senior subordinated notes due 2013
    
    
    350,820
    
    
    
    184Other long-term debt
    
    
    9,560
    
    
    
    6,107Total long-term debt
    
    
    1,911,653
    
    
    
    1,523,745Less current portion
    
    
    14,259
    
    
    
    9,166Long-term debt, less current portion
    
    $
    1,897,394
    
    
    $
    1,514,579
 Senior Discount Notes
 3 4 3 4
 3 4 3 4
 3 4 3 4
  3 4
 F-21




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  3 4
 Senior Secured Credit Facility
     F-22




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
   3 4
  Senior Subordinated Notes
    F-23




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
   Former Senior Secured Credit Facility
 1 2
  Covenant Compliance and Debt Maturity
  2008
    
    $
    9,1662009
    
    
    13,7752010
    
    
    12,4522011
    
    
    11,2002012
    
    
    271,600Thereafter
    
    
    1,256,187Total
    
    $
    1,574,380
  F-24




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  13. INTEREST RATE SWAP AGREEMENTS
 Accounting for Derivative Instruments and Hedging Activities
  14. FOREIGN CURRENCY TRANSLATION
     F-25




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 15. INVESTMENTS IN AND ADVANCES TO AFFILIATES
  December 31,
    
    December 31,2006
    
    2007(Successor)
    
    (Successor)Investment in National CineMedia LLC  investment, at equity
    
    $
    5,353
    
    
    $
    Fandango, Inc.  investment, at cost
    
    
    2,142
    
    
    
    Investment in DCIP  investment at equity  33% interest
    
    
    
    
    
    
    260Cinemark  Core Pacific, Ltd. (Taiwan)  investment, at cost  14% interest
    
    
    1,383
    
    
    
    1,383Other
    
    
    2,476
    
    
    
    3,428Total
    
    $
    11,354
    
    
    $
    5,071
    16. MINORITY INTERESTS IN SUBSIDIARIES
  December 31,
    
    December 31,2006
    
    2007(Successor)
    
    (Successor)Cinemark Partners II  49.2% interest
    
    $
    8,862
    
    
    $
    8,260Cinemark Equity Holdings Corp. (Central America)  49.9% interest
    
    
    2,263
    
    
    
    2,344Cinemark Colombia, S.A.  49.0% interest
    
    
    2,483
    
    
    
    2,766Greeley Ltd.  49.0% interest
    
    
    1,422
    
    
    
    1,244Cinemark del Ecuador, S.A.  40.0% interest
    
    
    994
    
    
    
    1,196Cinemark de Mexico, S.A. de C.V.  0.6% interest
    
    
    346
    
    
    
    326Others
    
    
    243
    
    
    
    46Total
    
    $
    16,613
    
    
    $
    16,182
 17. CAPITAL STOCK
 Common and Preferred Stock-
  F-26




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Share Based Awards 
     Stock Options 
  September 30,
    
    January 28,2004
    
    2005Grant
    

GrantExpected life
    
    6.5 years
    
    6.5 yearsExpected volatility(1)
    

    39%

    

    44%Risk-free interest rate
    

    3.79%

    

    3.93%Dividend yield
    

    0%

    

    0%Grant date fair value
    

    $3.51
    


    $3.80
 
 (1)
    
    Expected volatility is based on historical volatility of the common
stock price of comparable public companies.  F-27




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
   Year Ended
    
    January 1, 2006 to
    
    
    October 5, 2006 to
    
    Year EndedDecember 31, 2005
    
    October 4, 2006
    
    
    December 31, 2006
    
    December 31, 2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at January 1
    
    
    6,986,731
    
    
    $
    7.63
    
    
    
    6,998,786
    
    
    $
    7.63
    
    
    
    
    6,989,689
    
    
    $
    7.63
    
    
    
    6,980,593
    
    
    $
    7.63Granted
    
    
    12,055
    
    
    $
    7.63
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Forfeited
    
    
    
    
    
    $
    
    
    
    
    (9,097
    )
    
    $
    7.63
    
    
    
    
    (4,493
    )
    
    $
    7.63
    
    
    
    (112,416
    )
    
    $
    7.63Exercised
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    (4,603
    )
    
    $
    7.63
    
    
    
    (544,748
    )
    
    $
    7.63Outstanding at December
31
    
    
    6,998,786
    
    
    $
    7.63
    
    
    
    6,989,689
    
    
    $
    7.63
    
    
    
    
    6,980,593
    
    
    $
    7.63
    
    
    
    6,323,429
    
    
    $
    7.63Options exercisable at
December 31
    
    
    2,444,533
    
    
    $
    7.63
    
    
    
    3,487,090
    
    
    $
    7.63
    
    
    
    
    3,834,295
    
    
    $
    7.63
    
    
    
    4,647,460
    
    
    $
    7.63
   WeightedAverageGrant DateNonvested Stock Options
    
    Shares
    
    Fair ValueOutstanding at January 1, 2007
    
    
    3,146,298
    
    
    $
    3.51Granted
    
    
    
    
    
    
    Vested
    
    
    (1,357,913
    )
    
    $
    3.51Forfeited
    
    
    (112,416
    )
    
    $
    3.51Outstanding at December 31, 2007
    
    
    1,675,969
    
    
    $
    3.51
 F-28




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 18. SUPPLEMENTAL CASH FLOW INFORMATION
  Year Ended
    
    January 1, 2006
    
    
    October 5, 2006 to
    
    Year EndedDecember 31,
    
    to October 4,
    
    
    December 31,
    
    December 31,2005
    
    2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Cash paid for interest
    
    $
    45,166
    
    
    $
    43,132
    
    
    
    $
    22,584
    
    
    $
    132,029Net cash paid for income taxes
    
    $
    2,911
    
    
    $
    26,616
    
    
    
    $
    428
    
    
    $
    139,443Noncash investing and financing activities:Change in construction lease obligations
related to construction of theatres
    
    $
    (4,312
    )
    
    $
    (2,151
    )
    
    
    $
    2,546
    
    
    $
    (2,546
    )Changes in accounts payable and accrued
expenses for the acquisition of theatre
properties and equipment
    
    $
    8,945
    
    
    $
    (7,832
    )
    
    
    $
    11,494
    
    
    $
    (9,754
    )Exchange of theatre properties
    
    $
    
    
    
    $
    5,400
    
    
    
    $
    
    
    
    $
    Theatre properties and equipment acquired
under capital lease
    
    $
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    9,102Capital contribution from Cinemark
Holdings, Inc. related to the Century
acquisition
    
    $
    
    
    
    $
    
    
    
    
    $
    150,000
    
    
    $
    Capital contribution from Cinemark
Holdings, Inc. related to income taxes
    
    $
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    53,351
  19. INCOME TAXES
  January 1, 2006
    
    
    October 5, 2006Year Ended
    
    to
    
    
    to
    
    Year EndedDecember 31,
    
    October 4,
    
    
    December 31,
    
    December 31,2005
    
    2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Income (loss) before income taxes:U.S.
    
    $
    19,838
    
    
    $
    20,546
    
    
    
    $
    (6,213
    )
    
    $
    181,727Foreign
    
    
    16,742
    
    
    
    17,218
    
    
    
    
    (11,007
    )
    
    
    12,765Total
    
    $
    36,580
    
    
    $
    37,764
    
    
    
    $
    (17,220
    )
    
    $
    194,492Current:Federal
    
    $
    17,651
    
    
    $
    11,021
    
    
    
    $
    8,266
    
    
    $
    121,517Foreign
    
    
    2,115
    
    
    
    5,312
    
    
    
    
    (5,567
    )
    
    
    5,519State
    
    
    1,972
    
    
    
    731
    
    
    
    
    137
    
    
    
    17,087Total current expense
    
    
    21,738
    
    
    
    17,064
    
    
    
    
    2,836
    
    
    
    144,123Deferred:Federal
    
    
    (7,513
    )
    
    
    (3,725
    )
    
    
    
    (8,358
    )
    
    
    (33,103
    )Foreign
    
    
    356
    
    
    
    (4,905
    )
    
    
    
    8,976
    
    
    
    286State
    
    
    (388
    )
    
    
    644
    
    
    
    
    (343
    )
    
    
    (1,797
    )Total deferred expense
    
    
    (7,545
    )
    
    
    (7,986
    )
    
    
    
    275
    
    
    
    (34,614
    )Income tax expense
    
    $
    14,193
    
    
    $
    9,078
    
    
    
    $
    3,111
    
    
    $
    109,509
 F-29




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Year Ended
    
    January 1, 2006
    
    
    October 5, 2006 to
    
    Year EndedDecember 31,
    
    to October 4,
    
    
    December 31,
    
    December 31,2005
    
    2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Computed normal tax expense
    
    $
    12,803
    
    
    $
    13,217
    
    
    
    $
    (6,027
    )
    
    $
    68,073Goodwill impairments
    
    
    91
    
    
    
    (42
    )
    
    
    
    4,764
    
    
    
    23,050Foreign inflation adjustments
    
    
    (2,332
    )
    
    
    (1,553
    )
    
    
    
    3,356
    
    
    
    (620
    )State and local income taxes, net of federal income tax benefit
    
    
    1,030
    
    
    
    893
    
    
    
    
    (134
    )
    
    
    9,861Foreign losses not benefited and other changes in valuation
allowance
    
    
    (918
    )
    
    
    (1,909
    )
    
    
    
    1,872
    
    
    
    (536
    )Foreign tax rate differential
    
    
    (33
    )
    
    
    40
    
    
    
    
    906
    
    
    
    3,721Foreign dividends, including Section 965
    
    
    3,158
    
    
    
    433
    
    
    
    
    145
    
    
    
    1,405Other  net
    
    
    394
    
    
    
    (2,001
    )
    
    
    
    (1,771
    )
    
    
    4,555Income tax expense
    
    $
    14,193
    
    
    $
    9,078
    
    
    
    $
    3,111
    
    
    $
    109,509
  2006
    
    
    2007(Successor)
    
    
    (Successor)Deferred liabilities:Theatre properties and equipment
    
    $
    125,950
    
    
    $
    164,407Deferred intercompany sale
    
    
    7,207
    
    
    
    13,719Intangible asset  contracts
    
    
    12,394
    
    
    
    11,505Intangible asset  tradenames
    
    
    117,019
    
    
    
    117,197Intangible asset  net favorable leases
    
    
    3,695
    
    
    
    1,731Total deferred liabilities
    
    
    266,265
    
    
    
    308,559Deferred assets:Deferred lease expenses
    
    
    3,937
    
    
    
    7,375Theatre properties and equipment
    
    
    5,915
    
    
    
    7,248Deferred revenue related to NCM Transaction and Fandango Transaction
    
    
    
    
    
    
    67,961Capital lease obligations
    
    
    44,477
    
    
    
    46,194Bonds
    
    
    7,598
    
    
    
    (989
    )Interest rate swaps agreements
    
    
    
    
    
    
    7,074Debt issue costs
    
    
    2,194
    
    
    
    557Tax loss carryforward
    
    
    15,535
    
    
    
    14,359AMT and other credit carryforwards
    
    
    2,583
    
    
    
    2,903Other expenses, not currently deductible for tax purposes
    
    
    (771
    )
    
    
    2,489Total deferred assets
    
    
    81,468
    
    
    
    155,171Net deferred income tax liability before valuation allowance
    
    
    184,797
    
    
    
    153,388Valuation allowance
    
    
    8,862
    
    
    
    9,872Net deferred income tax liability
    
    $
    193,659
    
    
    $
    163,260Net deferred tax liability  foreign
    
    $
    11,256
    
    
    $
    11,542Net deferred tax liability  U.S.
    
    
    182,403
    
    
    
    151,718Total of all deferrals
    
    $
    193,659
    
    
    $
    163,260
    F-30




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Accounting for Uncertainty in Income Taxes
  Balance at January 1, 2007
    
    $
    10,512Gross
increases  tax positions in prior period
    
    
    1,432Gross
increases  current-period tax positions
    
    
    549Balance at December 31, 2007
    
    $
    12,493
    F-31




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 20. COMMITMENTS AND CONTINGENCIES
 Leases
 Period from
    
    
    Period fromYear Ended
    
    January 1, 2006 to
    
    
    October 5, 2006 to
    
    Year EndedDecember 31,
    
    October 4,
    
    
    December 31,
    
    December 31,2005
    
    2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Fixed rent expense
    
    $
    110,995
    
    
    $
    89,296
    
    
    
    $
    37,815
    
    
    $
    164,915Contingent rent expense
    
    
    25,598
    
    
    
    20,217
    
    
    
    
    10,431
    
    
    
    47,815Facility lease expense
    
    
    136,593
    
    
    
    109,513
    
    
    
    
    48,246
    
    
    
    212,730Corporate office rent expense
    
    
    1,432
    
    
    
    1,067
    
    
    
    
    543
    
    
    
    1,996Total rent expense
    
    $
    138,025
    
    
    $
    110,580
    
    
    
    $
    48,789
    
    
    $
    214,726
  Operating
    
    
    CapitalLeases
    
    
    Leases2008
    
    $
    177,089
    
    
    $
    17,0022009
    
    
    176,433
    
    
    
    17,0572010
    
    
    172,767
    
    
    
    17,3102011
    
    
    166,705
    
    
    
    16,2722012
    
    
    161,947
    
    
    
    16,423Thereafter
    
    
    1,103,437
    
    
    
    150,691Total
    
    $
    1,958,378
    
    
    $
    234,755Amounts representing interest payments
    
    
    
    
    
    
    (113,585
    )Present value of future minimum payments
    
    
    
    
    
    $
    121,170Current portion of capital lease obligations
    
    
    
    
    
    
    4,684Capital lease obligations, less current portion
    
    
    
    
    
    $
    116,486
 Employment Agreements
 F-32




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 Lee Roy Mitchell
     Tandy Mitchell, Alan Stock, Robert Copple, Timothy Warner, Robert Carmony, John Lundin and Michael
Cavalier
  F-33




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
    Retirement Savings Plan
 Letters of Credit and Collateral
 Litigation and Litigation Settlements United States v. Cinemark USA, Inc.
 F-34




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  21.
    
    SEGMENTSAt December 31, 2007, the Company identified its international market and its U.S. market as
separate reportable operating segments. The international segment consists of operations in Mexico,
Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and
Colombia. The U.S. segment includes U.S. and Canada operations. Each segments revenue is derived
from admissions and concession sales and other ancillary revenues, primarily screen advertising.
The primary measure of segment profit and loss the Company uses to evaluate performance and
allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The
Companys management evaluates the performance of its assets on a consolidated basis. Below is a
breakdown of select financial information by reportable operating segment:
 Period from
    
    
    Period fromYear Ended
    
    January 1, 2006
    
    
    October 5, 2006
    
    Year EndedDecember 31,
    
    to
    
    
    to
    
    December 31,2005
    
    October 4, 2006
    
    
    December 31, 2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Revenues:U.S.
    
    $
    757,902
    
    
    $
    607,729
    
    
    
    $
    328,955
    
    
    $
    1,352,042International
    
    
    264,314
    
    
    
    222,780
    
    
    
    
    63,074
    
    
    
    333,624Eliminations
    
    
    (1,619
    )
    
    
    (1,420
    )
    
    
    
    (524
    )
    
    
    (2,825
    )Total revenues
    
    $
    1,020,597
    
    
    $
    829,089
    
    
    
    $
    391,505
    
    
    $
    1,682,841Period from
    
    
    Period fromYear Ended
    
    January 1, 2006
    
    
    October 5, 2006
    
    Year EndedDecember 31,
    
    to
    
    
    to
    
    December 31,2005
    
    October 4, 2006
    
    
    December 31, 2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Adjusted EBITDA:U.S.
    
    $
    155,987
    
    
    $
    135,300
    
    
    
    $
    82,545
    
    
    $
    310,202International
    
    
    54,148
    
    
    
    45,212
    
    
    
    
    8,558
    
    
    
    67,138Total Adjusted EBITDA
    
    $
    210,135
    
    
    $
    180,512
    
    
    
    $
    91,103
    
    
    $
    377,340
 Year Ended
    
    Year EndedDecember 31,
    
    December 31,2006
    
    2007(Successor)
    
    (Successor)Capital Expenditures:U.S.
    
    $
    80,786
    
    
    $
    110,496International
    
    
    26,295
    
    
    
    35,808Total Capital Expenditures
    
    $
    107,081
    
    
    $
    146,304
 F-35




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  Period fromPeriod from
    
    
    October 5, 2006Year Ended
    
    January 1, 2006
    
    
    to
    
    Year EndedDecember 31,
    
    to
    
    
    December 31,
    
    December 31,2005
    
    October 4, 2006
    
    
    2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)Net income (loss)
    
    $
    22,387
    
    
    $
    28,686
    
    
    
    $
    (20,331
    )
    
    $
    84,983Add (deduct):Income taxes
    
    
    14,193
    
    
    
    9,078
    
    
    
    
    3,111
    
    
    
    109,509Interest expense (1)
    
    
    86,867
    
    
    
    69,191
    
    
    
    
    42,220
    
    
    
    145,596Gain on NCM Transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,773
    )Gain on Fandango transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,205
    )Loss on early retirement of debt
    
    
    46
    
    
    
    3,315
    
    
    
    
    5,782
    
    
    
    13,456Other income
    
    
    (4,627
    )
    
    
    (2,168
    )
    
    
    
    (1,600
    )
    
    
    (8,505
    )Termination of profit participation agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,952Depreciation and amortization
    
    
    76,229
    
    
    
    59,913
    
    
    
    
    34,281
    
    
    
    148,781Amortization of net favorable leases
    
    
    232
    
    
    
    130
    
    
    
    
    667
    
    
    
    2,935Impairment of long-lived assets
    
    
    9,672
    
    
    
    5,741
    
    
    
    
    23,337
    
    
    
    86,558(Gain) loss on sale of assets and other
    
    
    2,625
    
    
    
    2,938
    
    
    
    
    2,345
    
    
    
    (2,953
    )Deferred lease expenses
    
    
    1,253
    
    
    
    724
    
    
    
    
    378
    
    
    
    5,979Amortization of long-term prepaid rents
    
    
    1,258
    
    
    
    816
    
    
    
    
    197
    
    
    
    1,146Share based awards compensation expense
    
    
    
    
    
    
    2,148
    
    
    
    
    716
    
    
    
    2,881Adjusted EBITDA
    
    $
    210,135
    
    
    $
    180,512
    
    
    
    $
    91,103
    
    
    $
    377,340
 
 (1)
    
    Includes amortization of debt issue costs. Financial Information About Geographic Areas
  Period from
    
    
    Period fromYear Ended
    
    January 1, 2006
    
    
    October 5, 2006
    
    Year EndedDecember 31,
    
    to October 4,
    
    
    to December
    
    December 31,2005
    
    2006
    
    
    31, 2006
    
    2007(Predecessor)
    
    (Predecessor)
    
    
    (Successor)
    
    (Successor)RevenuesU.S. and Canada
    
    $
    757,902
    
    
    $
    607,729
    
    
    
    $
    328,955
    
    
    $
    1,352,042Mexico
    
    
    74,919
    
    
    
    55,704
    
    
    
    
    15,885
    
    
    
    74,983Brazil
    
    
    112,182
    
    
    
    98,950
    
    
    
    
    29,605
    
    
    
    157,158Other foreign countries
    
    
    77,213
    
    
    
    68,126
    
    
    
    
    17,584
    
    
    
    101,483Eliminations
    
    
    (1,619
    )
    
    
    (1,420
    )
    
    
    
    (524
    )
    
    
    (2,825
    )Total
    
    $
    1,020,597
    
    
    $
    829,089
    
    
    
    $
    391,505
    
    
    $
    1,682,841
 December 31,
    
    December 31,2006
    
    2007(Successor)
    
    (Successor)Theatres properties and
equipment, netU.S. and Canada
    
    $
    1,169,456
    
    
    $
    1,137,244Mexico
    
    
    51,272
    
    
    
    59,201Brazil
    
    
    55,749
    
    
    
    72,635Other foreign countries
    
    
    48,095
    
    
    
    44,986Total
    
    $
    1,324,572
    
    
    $
    1,314,066
 F-36




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
 22. OTHER RELATED PARTY TRANSACTIONS
       F-37




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
  23. VALUATION AND QUALIFYING ACCOUNTS
  ValuationAllowancefor DeferredTax AssetsPredecessor Balance at January 1, 2005
    
    $
    9,816Additions
    
    
    1,464Deductions
    
    
    (2,382
    )Predecessor Balance at December 31, 2005
    
    $
    8,898Additions
    
    
    3,000Deductions
    
    
    (4,909
    )Predecessor Balance at October 4, 2006
    
    $
    6,989Additions
    
    
    1,932Deductions
    
    
    (59
    )Successor Balance at December 31, 2006
    
    $
    8,862Additions
    
    
    2,370Deductions
    
    
    (1,360
    )Successor Balance at December 31, 2007
    
    $
    9,872
 24. SUBSEQUENT EVENT  REPURCHASE OF SENIOR DISCOUNT NOTES
 3 4
 F-38




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-39




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
BALANCE SHEETS
(In millions)
 December 27, 2007
    
    
    December 28, 2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    7.5
    
    
    $
    6.7Receivables, net of allowance of $1.5 million in 2007
and $1.1 million in 2006
    
    
    91.6
    
    
    
    63.9Prepaid expenses
    
    
    1.9
    
    
    
    1.6Prepaid management fees to managing member
    
    
    0.5
    
    
    
    Total current assets
    
    
    101.5
    
    
    
    72.2PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $17.3 million in 2007 and $12.7 million in 2006
    
    
    22.2
    
    
    
    12.6OTHER ASSETS:Debt issuance costs, net
    
    
    13.0
    
    
    
    0.2Investment in affiliate
    
    
    7.0
    
    
    
    Restricted cash
    
    
    0.3
    
    
    
    Other assets
    
    
    0.2
    
    
    
    5.0Total other assets
    
    
    20.5
    
    
    
    5.2TOTAL
    
    $
    144.2
    
    
    $
    90.0LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    6.6
    
    
    $
    5.4Amounts due to founding members
    
    
    15.8
    
    
    
    53.9Amounts due to managing member
    
    
    16.7
    
    
    
    Accrued payroll and related expenses
    
    
    7.2
    
    
    
    6.4Accrued expenses
    
    
    10.0
    
    
    
    5.5Deferred revenue
    
    
    3.3
    
    
    
    3.4Total current liabilities
    
    
    59.6
    
    
    
    74.6OTHER LIABILITIES:Unit option plan payable
    
    
    
    
    
    
    1.9Interest rate swap agreements and other liabilities
    
    
    14.4
    
    
    
    Borrowings
    
    
    784.0
    
    
    
    10.0Total other liabilities
    
    
    798.4
    
    
    
    11.9Total liabilities
    
    
    858.0
    
    
    
    86.5COMMITMENTS AND CONTINGENCIES (NOTE 10)MEMBERS EQUITY (DEFICIT)
    
    
    (713.8
    )
    
    
    3.5TOTAL
    
    $
    144.2
    
    
    $
    90.0
  F-40




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
 Period
    
    
    PeriodFebruary 13,
    
    
    December 29,
    
    
    
    
    
    Period March2007 through
    
    
    2006 through
    
    Year Ended
    
    29, 2005 throughDecember 27,
    
    
    February 12,
    
    December 28,
    
    December 29,2007
    
    
    2007
    
    2006
    
    2005REVENUE:Advertising (including revenue from
founding members of $40.9 and $0.0
for all remaining periods)
    
    $
    282.7
    
    
    
    $
    20.6
    
    
    $
    188.2
    
    
    $
    56.0Administrative feesfounding members
    
    
    
    
    
    
    
    0.1
    
    
    
    5.4
    
    
    
    30.8Meetings and events
    
    
    25.4
    
    
    
    
    2.9
    
    
    
    25.4
    
    
    
    11.7Other
    
    
    0.2
    
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3Total
    
    
    308.3
    
    
    
    
    23.6
    
    
    
    219.3
    
    
    
    98.8EXPENSES:Advertising operating costs
    
    
    9.1
    
    
    
    
    1.1
    
    
    
    9.2
    
    
    
    6.3Meetings and events operating costs
    
    
    15.4
    
    
    
    
    1.4
    
    
    
    11.1
    
    
    
    5.4Network costs
    
    
    13.3
    
    
    
    
    1.7
    
    
    
    14.7
    
    
    
    9.2Theatre access fees/circuit share
costsfounding members
    
    
    41.5
    
    
    
    
    14.4
    
    
    
    130.1
    
    
    
    38.6Selling and marketing costs
    
    
    40.9
    
    
    
    
    5.2
    
    
    
    38.2
    
    
    
    24.9Administrative costs
    
    
    10.0
    
    
    
    
    2.8
    
    
    
    16.4
    
    
    
    9.8Administrative fee- managing member
    
    
    9.2
    
    
    
    
    
    
    
    
    
    
    
    
    Severance plan costs
    
    
    1.5
    
    
    
    
    0.4
    
    
    
    4.2
    
    
    
    8.5Depreciation and amortization
    
    
    5.0
    
    
    
    
    0.7
    
    
    
    4.8
    
    
    
    3.0Other costs
    
    
    0.9
    
    
    
    
    
    
    
    
    0.6
    
    
    
    Total
    
    
    146.8
    
    
    
    
    27.7
    
    
    
    229.3
    
    
    
    105.7OPERATING INCOME (LOSS)
    
    
    161.5
    
    
    
    
    (4.1
    )
    
    
    (10.0
    )
    
    
    (6.9
    )Interest Expense, Net
    
    
    47.8
    
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    NET INCOME (LOSS)
    
    $
    113.7
    
    
    
    $
    (4.2
    )
    
    $
    (10.5
    )
    
    
    (6.9
    )
  F-41




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
STATEMENTS OF MEMBERS EQUITY/ (DEFICIT)
AND COMPREHENSIVE INCOME
(In millions, except share data)
 TotalMembers EquityBalanceMarch 29, 2005
    
    
    Issuance of
initial units at inception date in exchange for contributed assets, net of liabilities assumed
    
    $
    0.9Issuance of additional units in exchange for cash
    
    $
    7.3Contribution of Severance Plan payments
    
    $
    8.5Net loss
    
    $
    (6.9
    )BalanceDecember 29, 2005
    
    $
    9.8Capital contribution from Members
    
    $
    0.9Contribution of Severance Plan payments
    
    $
    4.2Distribution to Members
    
    $
    (0.9
    )Net loss
    
    $
    (10.5
    )BalanceDecember 28, 2006
    
    $
    3.5Contribution of Severance Plan payments
    
    $
    0.4Net loss
    
    $
    (4.2
    )BalanceFebruary 12, 2007
    
    $
    (0.3
    )Members EquityBalanceFebruary 13, 2007
    
    $
    (0.3
    )Contribution of Severance Plan payments
    
    $
    1.5Capital contribution from managing member
    
    $
    746.1Capital contribution from founding members
    
    $
    11.2Distribution to managing member
    
    $
    (53.3
    )Distributions to founding members
    
    $
    (1,521.6
    )Reclassification of unit option plan
    
    $
    2.3Comprehensive Income:Unrealized (loss) on cash flow hedge
    
    $
    (14.4
    )Net income
    
    $
    113.7Total Comprehensive Income, net of tax
    
    $
    99.3Share-based compensation expense
    
    $
    1.0BalanceDecember 27, 2007
    
    $
    (713.8
    )
  F-42




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
STATEMENTS OF CASH FLOWS
(In millions)
 Period
    
    
    PeriodFebruary 13,
    
    
    December 29,
    
    
    
    
    
    Period March 29,2007 through
    
    
    2006 through
    
    Year Ended
    
    2005 throughDecember 27,
    
    
    February 12,
    
    December 28,
    
    December 29,2007
    
    
    2007
    
    2006
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income(loss)
    
    $
    113.7
    
    
    
    $
    (4.2
    )
    
    $
    (10.5
    )
    
    $
    (6.9
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    5.0
    
    
    
    
    0.7
    
    
    
    4.8
    
    
    
    3.0Non-cash severance plan and share-based compensation
    
    
    2.5
    
    
    
    
    0.7
    
    
    
    6.1
    
    
    
    8.0Amortization of debt issuance costs and loss on
repayment of debt
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:(Increase) decrease in receivablesnet
    
    
    (40.3
    )
    
    
    
    12.6
    
    
    
    (27.3
    )
    
    
    (36.6
    )Increase (decrease) in accounts payable and accrued
expenses
    
    
    10.4
    
    
    
    
    (4.4
    )
    
    
    4.4
    
    
    
    8.2(Decrease) increase in amounts due to founding
members and managing member
    
    
    (51.1
    )
    
    
    
    (3.7
    )
    
    
    33.4
    
    
    
    20.5Payment of severance plan costs
    
    
    
    
    
    
    
    
    
    
    
    (3.5
    )
    
    
    Increase (decrease)in other
    
    
    (1.3
    )
    
    
    
    0.5
    
    
    
    0.9
    
    
    
    0.9Net cash provided by operating activities
    
    
    40.6
    
    
    
    
    2.2
    
    
    
    8.3
    
    
    
    (2.9
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (13.8
    )
    
    
    
    (0.5
    )
    
    
    (6.3
    )
    
    
    (5.9
    )Investment in restricted cash
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    
    Increase in investment in affiliate
    
    
    (7.0
    )
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (21.1
    )
    
    
    
    (0.5
    )
    
    
    (6.3
    )
    
    
    (5.9
    )CASH FLOWS FROM FINANCING ACTIVITIES:Reimbursement (payment) of offering costs and fees
    
    
    4.7
    
    
    
    
    (0.1
    )
    
    
    (4.0
    )
    
    
    Proceeds of short-term borrowings from founding members
    
    
    
    
    
    
    
    
    
    
    
    3.0
    
    
    
    9.5Repayments of short-term borrowings to founding members
    
    
    
    
    
    
    
    
    
    
    
    (4.3
    )
    
    
    (8.2
    )Proceeds from borrowings
    
    
    924.0
    
    
    
    
    13.0
    
    
    
    66.0
    
    
    
    Repayments of borrowings
    
    
    (150.0
    )
    
    
    
    (13.0
    )
    
    
    (56.0
    )
    
    
    Payment of debt issuance costs
    
    
    (14.6
    )
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from issuance of units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.3Contributions from managing member
    
    
    746.1
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from founding member contributions
    
    
    7.5
    
    
    
    
    
    
    
    
    0.9
    
    
    
    0.2Distribution to founding members and managing member
    
    
    (1,538.0
    )
    
    
    
    
    
    
    
    (0.9
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (20.3
    )
    
    
    
    (0.1
    )
    
    
    4.7
    
    
    
    8.8(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (0.8
    )
    
    
    
    1.6
    
    
    
    6.7
    
    
    
    CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    8.3
    
    
    
    
    6.7
    
    
    
    
    
    
    
    End of period
    
    $
    7.5
    
    
    
    $
    8.3
    
    
    $
    6.7
    
    
    $
    
 Continued
  F-43




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
 Period
    
    
    
    PeriodFebruary 13,
    
    
    
    December 29,
    
    
    
    
    
    
    Period March 29,2007 through
    
    
    
    2006 through
    
    
    Year Ended
    
    
    2005 throughDecember 27,
    
    
    
    February 12,
    
    
    December 28,
    
    
    December 29,2007
    
    
    
    2007
    
    
    2006
    
    
    2005Supplemental disclosure of non-cash financing and
investing activity:Contribution for severance plan payments
    
    $
    1.5
    
    
    
    $
    0.4
    
    
    $
    4.2
    
    
    $
    8.5Increase in distributions payable to founding
members and managing member
    
    $
    37.0
    
    
    
    
    
    
    
    
    
    
    
    
    Contributions from members collected after period end
    
    $
    3.7
    
    
    
    
    
    
    
    
    
    
    
    
    Increase in property and equipment not requiring
cash in the period
    
    $
    0.6
    
    
    
    
    
    
    
    $
    0.3
    
    
    
    Increase in deferred offering costs
    
    
     
    
    
    
    
    
    
    
    $
    0.5
    
    
    
    Unit option plan reclassified to equity
    
    $
    2.3
    
    
    
    
    
    
    
    
    
    
    
    
    Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    44.0
    
    
    
    $
    0.1
    
    
    $
    0.4
    
    
    
    
  F-44




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 1.
    
    THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Description of Business
  Accounting by a Joint Venture for Businesses Received at its Formation The Equity Method
of Accounting for Investments in Common Stock
     F-45




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
   Basis of Presentation
     F-46




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 Summary of Significant Accounting Policies
 Accounting Period
 Revenue Recognition
 Operating Costs
    Leases
 Advertising Costs
 Cash and Cash Equivalents
 Restricted Cash
 Investments
 Receivables
 F-47




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
  Property and Equipment
 Equipment
    
    4-10 yearsComputer hardware and software
    
    3-5 yearsLeasehold improvements
    
    Lesser of lease term or asset life
 Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use.
  Accounting for the Impairment or Disposal of Long-Lived Assets .
 Amounts Due to/from Founding Members
 Amounts Due to/from Managing Member
 Network Affiliate Agreements
 Income Taxes
 F-48




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 Interest Rate Swap Accounting for Derivative Instruments and Hedging Activities,
 (in millions)Fair value of swap at inception
    
    $
    Change in fair value  interest rate changes
    
    
    (14.4
    )Fair value of swap (liability) at December 27, 2007
    
    $
    (14.4
    )
  Debt Issuance Costs
 Fair Value of Financial Instruments
 Share-Based Compensation Share-Based Payment
 Estimates
 Recent Accounting Pronouncements
 Fair Value Measurements
 F-49




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 The Fair Value Option for Financial
Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115
  2. RECEIVABLES
  As of December
    
    As of December27, 2007
    
    28, 2006Trade accounts
    
    $
    92.2
    
    
    $
    64.8Other
    
    
    0.9
    
    
    
    0.2Less allowance for doubtful accounts
    
    
    (1.5
    )
    
    
    (1.1
    )Total
    
    $
    91.6
    
    
    $
    63.9
   PeriodFebruary 13,
    
    
    Period December 29,
    
    
    
    
    
    Period March2007 through
    
    
    2006 through
    
    Year Ended
    
    29, 2005 throughDecember 27,
    
    
    February 12,
    
    December 28,
    
    December 29,2007
    
    
    2007
    
    2006
    
    2005ALLOWANCE FOR DOUBTFUL ACCOUNTS:Balance at beginning of period
    
    $
    1.1
    
    
    
    $
    1.1
    
    
    $
    0.5
    
    
    $
    Provision for bad debt
    
    
    1.0
    
    
    
    
    0.1
    
    
    
    0.8
    
    
    
    0.5Write-offs, net
    
    
    (0.6
    )
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    Balance at end of period
    
    $
    1.5
    
    
    
    $
    1.1
    
    
    $
    1.1
    
    
    $
    0.5
 3. PROPERTY AND EQUIPMENT
 As of December 27,
    
    
    As of December 28,2007
    
    
    2006Equipment
    
    $
    37.3
    
    
    $
    24.1Leasehold Improvements
    
    
    1.4
    
    
    
    1.2Less accumulated depreciation
    
    
    (17.3
    )
    
    
    (12.7
    )Subtotal
    
    
    21.4
    
    
    
    12.6Construction in Progress
    
    
    0.8
    
    
    
    Total property and equipment
    
    $
    22.2
    
    
    $
    12.6
  F-50




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 4. ACCRUED EXPENSES
 As of December 27,
    
    
    As of December 28,2007
    
    
    2006Makegood Reserve
    
    $
    4.0
    
    
    $
    2.6Accrued Interest
    
    
    2.3
    
    
    
    0.1Accrued beverage concessionaire unit cost
    
    
    2.4
    
    
    
    1.1Other accrued expenses
    
    
    1.3
    
    
    
    1.7Total accrued expenses
    
    $
    10.0
    
    
    $
    5.5
 5. INVESTMENT IN AFFILIATE
 Accounting for Certain Investments in Debt and Equity Securities,
 Fair Value Measurements
  F-51




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##### Table of Contents



NATIONAL
CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 6. RELATED-PARTY TRANSACTIONS
 2007 Pre-IPO Period, 2006 and 2005 
  Pre-IPO Period December29, 2006 through February
    
    
    Year Ended December 28,
    
    
    Period March 29, 200512, 2007
    
    
    2006
    
    
    through December 29, 2005Circuit
    
    
    
    
    
    
    Circuit
    
    
    
    
    
    
    CircuitShare
    
    
    Administrative Fee
    
    
    Share
    
    
    Administrative Fee
    
    
    Share
    
    
    Administrative FeeCost
    
    
    Revenue
    
    
    Cost
    
    
    Revenue
    
    
    Cost
    
    
    RevenueAMC
    
    $
    4.1
    
    
    $
    
    
    
    $
    38.6
    
    
    $
    0.2
    
    
    $
    19.4
    
    
    $
    8.3Cinemark
    
    
    3.7
    
    
    
    0.1
    
    
    
    29.7
    
    
    
    0.4
    
    
    
    0.1
    
    
    
    Regal
    
    
    6.6
    
    
    
    
    
    
    
    61.8
    
    
    
    4.8
    
    
    
    19.1
    
    
    
    22.5Total
    
    $
    14.4
    
    
    $
    0.1
    
    
    $
    130.1
    
    
    $
    5.4
    
    
    $
    38.6
    
    
    $
    30.8
    AMC
    
    
    Cinemark
    
    
    Regal
    
    
    TotalCircuit share payments
    
    $
    15.2
    
    
    $
    14.0
    
    
    $
    24.8
    
    
    $
    54.0Cost reimbursement
    
    
    0.1
    
    
    
    
    
    
    
    0.4
    
    
    
    0.5Administrative fee
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    (0.6
    )Total
    
    $
    15.3
    
    
    $
    13.9
    
    
    $
    24.7
    
    
    $
    53.9
 2007 Post-IPO Period 
  F-52




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
    AMC
    
    
    Cinemark
    
    
    Regal
    
    
    TotalTheatre access fees, net of beverage revenues
    
    $
    (0.2
    )
    
    $
    0.1
    
    
    $
    0.2
    
    
    $
    0.1Cost and other reimbursement
    
    
    (0.4
    )
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    (1.1
    )Distributions payable, net
    
    
    3.2
    
    
    
    5.2
    
    
    
    8.4
    
    
    
    16.8Total
    
    $
    2.6
    
    
    $
    5.1
    
    
    $
    8.1
    
    
    $
    15.8
 Founding Members Other 
    RCI Unit Option Plan 
  F-53




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
  National
CineMedia, Inc. 
    TotalDistributions payable
    
    $
    16.6Cost and other reimbursement
    
    
    0.1Total
    
    $
    16.7
 7. BORROWINGS
 Short-Term Borrowings From Members
 Long-Term
Borrowings
 Revolving Credit Agreement
 Senior Secured Credit Facility
 F-54




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
  Future
Maturities of Long-Term Borrowings
  8. SHARE-BASED COMPENSATION
   F-55




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
  Weighted-Weighted-
    
    Average
    
    AggregateAverage
    
    Remaining
    
    Intrinsic ValueShares
    
    Exercise Price
    
    Life (in year)

(in Millions)Outstanding at December 28, 2006
    
    
    1,131,728
    
    
    $
    23.85Granted
    
    
    274,500
    
    
    
    22.33Exercised
    
    
    
    
    
    
    Anti-dilution adjustments made to outstanding options in
connection with the plan
conversion
    
    
    457,897
    
    
    
    16.98Forfeited
    
    
    (41,219
    )
    
    
    18.72Outstanding at December 27, 2007
    
    
    1,822,906
    
    
    $
    17.75
    
    
    
    12.7
    
    
    $
    12.1Vested at December 27, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable at December 27, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
   Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedNumber
    
    Average
    
    Average
    
    Number
    
    AverageOutstanding at
    
    Remaining Life
    
    Exercise
    
    Exercisable at
    
    ExerciseRange of Exercise Price
    
    Dec. 27, 2007
    
    (in years)
    
    Price
    
    Dec. 27, 2007
    
    Price$16.35$18.01
    
    
    1,473,041
    
    
    
    13.3
    
    
    $
    16.52
    
    
    
    
    
    
    $
    $21.00
    
    
    197,000
    
    
    
    9.1
    
    
    
    21.00
    
    
    
    
    
    
    
    $24.04$24.74
    
    
    114,865
    
    
    
    13.0
    
    
    
    24.25
    
    
    
    
    
    
    
    $26.76$29.05
    
    
    38,000
    
    
    
    14.1
    
    
    
    28.87
    
    
    
    
    
    
    
    1,822,906
    
    
    
    12.7
    
    
    $
    17.75
    
    
    
    
    
    
    $
    
  
    
    Expected life of options6.5 to 9 years. The expected life of the options was
determined by using the average of the vesting and contractual terms of the options (the
simplified method as described in Securities and Exchange Commission Staff Accounting
Bulletin 110).
    
    Risk free interest rate4.1% to 4.9%. The risk-free interest rate was determined by
using the applicable Treasury rates as of the grant dates, commensurate with the expected
terms of the options.
    
    Expected volatility30.0%. Expected volatility was estimated based on comparable
companies for historic stock price volatility.
 F-56




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 
   Non-vested Stock
  WeightedPeriod February 13, 2007
    
    Average Grant-through
December 27, 2007
    
    Date Fair ValueNon-vested at December 28, 2006
    
    
    Granted
    
    
    275,184
    
    
    $
    21.21Forfeited
    
    
    (3,339
    )
    
    
    21.00Non-vested as of December 27, 2007
    
    
    271,845
    
    
    $
    21.21
  9. EMPLOYEE BENEFIT PLANS
  F-57




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##### Table of Contents



NATIONAL CINEMEDIA, LLC
NOTES TO FINANCIAL STATEMENTS
 10. COMMITMENTS AND CONTINGENCIES
  Operating Lease Commitments
   2008
    
    $
    1.82009
    
    
    1.82010
    
    
    1.52011
    
    
    1.32012
    
    
    1.3Thereafter
    
    
    1.3Total
    
    $
    9.0
 F-58




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##### Table of Contents



SUPPLEMENTARY
SCHEDULES REQUIRED BY THE INDENTURE FOR THE SENIOR DISCOUNT
NOTES
 3 4
 S-1




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2007
(In thousands, unaudited)
 Restricted
    
    UnrestrictedGroup
    
    Group
    
    Eliminations
    
    ConsolidatedASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    210,119
    
    
    $
    23,283
    
    
    $
    
    
    
    $
    233,402Other current assets
    
    
    75,451
    
    
    
    88
    
    
    
    
    
    
    
    75,539Total current assets
    
    
    285,570
    
    
    
    23,371
    
    
    
    
    
    
    
    308,941THEATRE PROPERTIES AND EQUIPMENT  net
    
    
    1,314,066
    
    
    
    
    
    
    
    
    
    
    
    1,314,066OTHER ASSETS
    
    
    1,578,166
    
    
    
    259
    
    
    
    (8,225
    )
    
    
    1,570,200TOTAL ASSETS
    
    $
    3,177,802
    
    
    $
    23,630
    
    
    $
    (8,225
    )
    
    $
    3,193,207LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    9,166
    
    
    $
    
    
    
    $
    
    
    
    $
    9,166Current portion of capital lease obligations
    
    
    4,684
    
    
    
    
    
    
    
    
    
    
    
    4,684Accounts payable and accrued expenses
    
    
    204,327
    
    
    
    
    
    
    
    
    
    
    
    204,327Total current liabilities
    
    
    218,177
    
    
    
    
    
    
    
    
    
    
    
    218,177LONG-TERM LIABILITIESLong-term debt, less current portion
    
    
    1,514,579
    
    
    
    
    
    
    
    
    
    
    
    1,514,579Other long-term liabilities
    
    
    624,522
    
    
    
    
    
    
    
    (95,916
    )
    
    
    528,606Total long-term liabilities
    
    
    2,139,101
    
    
    
    
    
    
    
    (95,916
    )
    
    
    2,043,185COMMITMENTS AND CONTINGENCIESMINORITY INTERESTS IN SUBSIDIARIES
    
    
    16,182
    
    
    
    
    
    
    
    
    
    
    
    16,182STOCKHOLDERS EQUITY
    
    
    804,342
    
    
    
    23,630
    
    
    
    87,691
    
    
    
    915,663TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,177,802
    
    
    $
    23,630
    
    
    $
    (8,225
    )
    
    $
    3,193,207
 
 Note:
    
    Restricted Group and Unrestricted Group are defined in the Indenture for the senior
discount notes. S-2




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2007
(In thousands, unaudited)
 Restricted
    
    UnrestrictedGroup
    
    Group
    
    Eliminations
    
    ConsolidatedREVENUES
    
    $
    1,682,841
    
    
    $
    
    
    
    $
    
    
    
    $
    1,682,841COST OF OPERATIONSTheatre operating costs
    
    
    1,248,090
    
    
    
    
    
    
    
    
    
    
    
    1,248,090General and administrative expenses and other
    
    
    85,845
    
    
    
    23
    
    
    
    
    
    
    
    85,868Depreciation and amortization
    
    
    151,716
    
    
    
    
    
    
    
    
    
    
    
    151,716Impairment of long-lived assets
    
    
    86,558
    
    
    
    
    
    
    
    
    
    
    
    86,558Gain on sale of assets and other
    
    
    (2,953
    )
    
    
    
    
    
    
    
    
    
    
    (2,953
    )Total cost of operations
    
    
    1,569,256
    
    
    
    23
    
    
    
    
    
    
    
    1,569,279OPERATING INCOME (LOSS)
    
    
    113,585
    
    
    
    (23
    )
    
    
    
    
    
    
    113,562OTHER INCOME (EXPENSE)
    
    
    (20,559
    )
    
    
    221,489
    
    
    
    (120,000
    )
    
    
    80,930INCOME BEFORE INCOME TAXES
    
    
    93,026
    
    
    
    221,466
    
    
    
    (120,000
    )
    
    
    194,492Income taxes
    
    
    122,227
    
    
    
    83,198
    
    
    
    (95,916
    )
    
    
    109,509NET INCOME (LOSS)
    
    $
    (29,201
    )
    
    $
    138,268
    
    
    $
    (24,084
    )
    
    $
    84,983
 
 Note:
    
    Restricted Group and Unrestricted Group are defined in the Indenture for the senior
discount notes. S-3




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2007
(In thousands, unaudited)
 Restricted
    
    UnrestrictedGroup
    
    Group
    
    Eliminations
    
    ConsolidatedOPERATING ACTIVITIESNet income (loss)
    
    $
    (29,201
    )
    
    $
    138,268
    
    
    $
    (24,084
    )
    
    $
    84,983Adjustments
to reconcile net income (loss) to cash provided by (used for) operating activities
    
    
    326,809
    
    
    
    (208,248
    )
    
    
    (95,916
    )
    
    
    22,645Changes in assets and liabilities
    
    
    216,574
    
    
    
    (87
    )
    
    
    
    
    
    
    216,487Net cash provided by (used for) operating activities
    
    
    514,182
    
    
    
    (70,067
    )
    
    
    (120,000
    )
    
    
    324,115INVESTING ACTIVITIESAdditions to theatre properties and equipment
    
    
    (146,304
    )
    
    
    
    
    
    
    
    
    
    
    (146,304
    )Proceeds from sale of theatre properties and equipment
    
    
    37,532
    
    
    
    
    
    
    
    
    
    
    
    37,532Increase in escrow deposit due to like-kind exchange
    
    
    (22,739
    )
    
    
    
    
    
    
    
    
    
    
    (22,739
    )Net proceeds from sale of NCM stock
    
    
    
    
    
    
    214,842
    
    
    
    
    
    
    
    214,842Net proceeds from sale of Fandango stock
    
    
    11,347
    
    
    
    
    
    
    
    
    
    
    
    11,347Investment in joint venture  DCIP
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )Net cash provided by (used for) investing activities
    
    
    (120,164
    )
    
    
    213,342
    
    
    
    
    
    
    
    93,178FINANCING ACTIVITIESCapital contributions from parent
    
    
    63,694
    
    
    
    
    
    
    
    
    
    
    
    63,694Retirement of senior discount notes
    
    
    (43,136
    )
    
    
    
    
    
    
    
    
    
    
    (43,136
    )Retirement of senior subordinated notes
    
    
    (332,066
    )
    
    
    
    
    
    
    
    
    
    
    (332,066
    )Repayments of long-term debt
    
    
    (19,438
    )
    
    
    
    
    
    
    
    
    
    
    (19,438
    )Dividends paid to parent
    
    
    
    
    
    
    (120,000
    )
    
    
    120,000
    
    
    
    Other
    
    
    (5,489
    )
    
    
    
    
    
    
    
    
    
    
    (5,489
    )Net cash used for financing activities
    
    
    (336,435
    )
    
    
    (120,000
    )
    
    
    120,000
    
    
    
    (336,435
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    5,445
    
    
    
    
    
    
    
    
    
    
    
    5,445INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    63,028
    
    
    
    23,275
    
    
    
    
    
    
    
    86,303Beginning of period
    
    
    147,091
    
    
    
    8
    
    
    
    
    
    
    
    147,099End of period
    
    $
    210,119
    
    
    $
    23,283
    
    
    $
    
    
    
    $
    233,402
 
 Note:
    
    Restricted Group and Unrestricted Group are defined in the Indenture for the senior
discount notes. S-4




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##### Table of Contents



EXHIBITS
 TO
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR
 CINEMARK, INC.
 FOR FISCAL YEAR ENDED
DECEMBER 31, 2007




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Exhibit Title2.1
    
    
    Stock Contribution and Exchange Agreement, dated as of August 7, 2006, by and between Cinemark Holdings, Inc., Cinemark,
Inc., Syufy Enterprises, LP and Century Theatres Holdings, LLC (incorporated by reference to Exhibit 10.2 to Current Report
on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on August 11, 2006).2.2
    
    
    Contribution and Exchange Agreement, dated as of August 7, 2006, by and among Cinemark Holdings, Inc. and Lee Roy Mitchell,
The Mitchell Special Trust, Alan W. Stock, Timothy Warner, Robert Copple, Michael Cavalier, Northwestern University, John
Madigan, Quadrangle Select Partners LP, Quadrangle Capital Partners A LP, Madison Dearborn Capital Partners IV, L.P., K&E
Investment Partners, LLC  2004-B-DIF, Piola Investments Ltd., Quadrangle (Cinemark) Capital Partners LP and Quadrangle
Capital Partners LP (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K, File No. 000-47040, filed by
Cinemark USA, Inc. on August 11, 2006).2.3
    
    
    Agreement and Plan of Merger dated March 12, 2004, by and between Cinemark, Inc. and Popcorn Merger Corp. (incorporated by
reference to Exhibit 2.1 to Cinemark, Inc.s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004).2.4
    
    
    Stock Purchase Agreement dated as of March 12, 2004 by and between Cinemark, Inc. and Madison Dearborn Capital Partners IV,
L.P. (incorporated by reference to Exhibit 2.2 to Cinemark, Inc.s Registration Statement on Form S-4, File No. 333-116292,
filed June 8, 2004).3.1
    
    
    Second Amended and Restated Certificate of Incorporation of Cinemark, Inc. filed with the Delaware Secretary of State on
April 2, 2004 (incorporated by reference to Exhibit 3.1 to Cinemark, Inc.s Registration Statement on Form S-4, File No. 333-
116292, filed June 8, 2004).3.2
    
    
    Amended and Restated Bylaws of Cinemark, Inc. (incorporated by reference to Exhibit 3.2 to Cinemark, Inc.s Registration
Statement on Form S-4, File No. 333-116292, filed June 8, 2004).4.2
    (a)
    
    Indenture, dated as of March 31, 2004, between Cinemark, Inc. and The Bank of New York Trust Company, N.A. governing the
93/4% senior discount notes issued thereunder (incorporated by reference to Exhibit 4.2(a) to Cinemark, Inc.s Registration
Statement on Form S-4, File No. 333-116292, filed June 8, 2004).4.2
    (b)
    
    Form of 93/4% senior discount notes (contained in the indenture listed as Exhibit 4.2(a) above) (incorporated by reference
to Exhibit 4.2(b) to Cinemark, Inc.s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004).4.3
    (a)
    
    Indenture, dated as of February 11, 2003, between Cinemark USA, Inc. and The Bank of New York Trust Company of Florida, N.A.
governing the 9% senior subordinated notes issued thereunder (incorporated by reference to Exhibit 10.2(b) to Cinemark USA,
Inc.s Annual Report on Form 10-K, File 033-47040, filed March 19, 2003).4.3
    (b)
    
    First Supplemental Indenture, dated as of May 7, 2003, between Cinemark USA, Inc., the subsidiary guarantors party thereto
and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference from Exhibit 4.2(i) to Cinemark USA,
Inc.s Registration Statement on Form S-4/A, File No. 333-104940, filed May 28, 2003).4.3
    (c)
    
    Second Supplemental Indenture dated as of November 11, 2004, between Cinemark USA, Inc., the subsidiary guarantors party
thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(c) to Cinemark
USA, Inc.s Annual Report on Form 10-K, File No. 033-047040, filed March 28, 2005).4.3
    (d)
    
    Third Supplemental Indenture, dated as of October 5, 2006, among Cinemark USA, Inc., the subsidiaries of Cinemark USA, Inc.
named therein, and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 10.7 to
Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006).4.3
    (e)
    
    Fourth Supplemental Indenture, dated as of March 20, 2007, among Cinemark USA, Inc., the subsidiaries of Cinemark USA, Inc.
named therein, and The Bank of New York Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K, File No. 033-47040, filed by Cinemark USA, Inc. on March 26, 2007).4.3
    (f)
    
    Form of 9% Senior Subordinated Note, Due 2013 (contained in the Indenture listed as Exhibit 4.3(a) above) (incorporated by
reference to Exhibit 10.2(b) to Cinemark USA, Inc.s Annual Report on Form 10-K, File 033-47040, filed March 19, 2003).10.1
    (a)
    
    Management Agreement, dated December 10, 1993, between Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.14(b) to Cinemark USA, Inc.s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994).10.1
    (b)
    
    First Amendment to Management Agreement of Laredo Theatre, Ltd., effective as of December 10, 2003, between CNMK Texas
Properties, Ltd. (successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd. (incorporated by reference to Exhibit
10.1(d) to Cinemark, Inc.s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004).+10.2
    
    
    Amended and Restated Agreement to Participate in Profits and Losses, dated as of March 12, 2004, between Cinemark USA, Inc.
and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No.
033-47040, filed May 14, 2004).10.3
    
    
    License Agreement, dated December 10, 1993, between Laredo Joint Venture and Cinemark USA, Inc. (incorporated by reference
to Exhibit 10.14(c) to Cinemark USA, Inc.s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994).10.4
    (a)
    
    Tax Sharing Agreement, between Cinemark USA, Inc. and Cinemark International, L.L.C. (f/k/a Cinemark II, Inc. ), dated as of
June 10, 1992 (incorporated by reference to Exhibit 10.22 to Cinemark USA, Inc.s Annual Report on Form 10-K, File No.
033-47040, filed March 31, 1993).10.4
    (b)
    
    Tax Sharing Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by
reference to Exhibit 10.10 to Cinemark Mexico (USA)s Registration Statement on Form S-4, File No. 033-72114, filed on
November 24, 1993).+10.5
    (a)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Lee Roy Mitchell (incorporated by reference to
Exhibit 10.14(a) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).+10.5
    (b)
    
    First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Lee Roy
Mitchell (incorporated by reference to Exhibit 10.1 to Cinemark, Inc.s Current Report on Form 8-K, File No. 001-31372,
filed December 18, 2006).+10.5
    (c)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Alan Stock (incorporated by reference to
Exhibit 10.14(b) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).+10.5
    (d)
    
    First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Alan W. Stock
(incorporated by reference to Exhibit 10.2 to Cinemark, Inc.s Current Report on Form 8-K, File No. 001-31372, filed
December 18, 2006).+10.5
    (e)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Timothy Warner (incorporated by reference to
Exhibit 10.14(c) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).+10.5
    (f)
    
    First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Timothy Warner
(incorporated by reference to Exhibit 10.3 to Cinemark, Inc.s Current Report on Form 8-K, File No. 001-31372, filed
December 18, 2006).+10.5
    (g)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Robert Copple (incorporated by reference to
Exhibit 10.14(d) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).+10.5
    (h)
    
    First Amendment to Employment Agreement, effective as of January 25, 2007, between Cinemark, Inc. and Robert Copple
(incorporated by reference to Exhibit 10.5(j) to Cinemark Holdings, Inc.s Registration Statement on Form S-1, File No.
333-140390, filed February 1, 2007).+10.5
    (i)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Rob Carmony (incorporated by reference to
Exhibit 10.14(e) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).+10.5
    (j)
    
    First Amendment to Employment Agreement, effective as of January 14, 2008, between Cinemark, Inc. and Rob Carmony
(incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.s Current Report on Form 8K, File No. 001-33401, filed
January 16, 2008).+10.5
    (k)
    
    Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tandy Mitchell (incorporated by reference to
Exhibit 10.14(f) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004).10.6
    (a)
    
    Credit Agreement, dated as of October 5, 2006, among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding, Inc., Cinemark
USA, Inc., the several banks and other financial institutions or entities from time to time parties to the Agreement, Lehman
Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, Morgan Stanley Senior
Funding, Inc., as syndication agent, BNP Paribas and General Electric Capital Corporation as co-documentation agents, and
Lehman Commercial Paper Inc., as administrative agent (incorporated by reference to Exhibit 10.5 to Current Report on Form
8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006).10.6
    (b)
    
    First Amendment to Credit Agreement dated as of March 14, 2007 among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding,
Inc., Cinemark USA, Inc., the several banks and other financial institutions or entities from time to time parties thereto,
Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, Morgan Stanley
Senior Funding, Inc., as syndication agent, BNP Paribas and General Electric Capital Corporation, as co-documentation
agents, and Lehman Commercial Paper Inc., as administrative agent (incorporated by reference to Exhibit 10.6(b) to Amendment
No. 1 to Cinemark Holdings, Inc.s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007).10.6
    (c)
    
    Guarantee and Collateral Agreement, dated as of October 5, 2006, among Cinemark Holdings, Inc., Cinemark, Inc., CNMK
Holding, Inc., Cinemark USA, Inc. and each subsidiary guarantor party thereto (incorporated by reference to Exhibit 10.6 to
Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006).10.7
    
    
    Exhibitor Services Agreement, dated as of February 13, 2007, by and between National CineMedia, LLC and Cinemark USA, Inc.
(incorporated by reference to Exhibit 10.8 to Amendment No. 1 to Cinemark Holdings, Inc.s Registration Statement on Form
S-1, File No. 333-140390, filed March 16, 2007).10.8
    
    
    Third Amended and Restated Limited Liability Company Operating Agreement, dated as of February 12, 2007, by and between
Cinemark Media, Inc., American Multi-Cinema, Inc., Regal CineMedia, LLC and National CineMedia, Inc. (incorporated by
reference to Exhibit 10.9 to Amendment No. 1 to Cinemark Holdings, Inc.s Registration Statement on Form S-1, File No.
333-140390, filed March 16, 2007).10.9
    
    
    Stock Purchase Agreement, dated as of August 7, 2006, by and among Cinemark USA, Inc, Cinemark Holdings, Inc., Syufy
Enterprises LP, Century Theatres, Inc. and Century Theatres Holdings, LLC (incorporated by reference to Exhibit 10.1 to
current Report on Form 8-K, File No, 000-47040, filed by Cinemark USA, Inc. on August 11, 2006).10.10
    
    
    Termination Agreement to Amended and Restated Agreement to Participate in Profits and Losses, dated as of May 3, 2007 by and
between Cinemark USA, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark Holdings, Inc.s Current
Report on Form 8K, File No. 001-33401, filed May 3, 2007).*12
    
    
    Calculation of Ratio of Earnings to Fixed Charges.*23.1
    
    
    Consent of National CineMedia, LLC.*23.2
    
    
    Consent of BIA Financial Networks, Inc.*31.1
    
    
    Certification of Alan Stock, Chief Executive Officer*31.2
    
    
    Certification of Robert Copple, Chief Financial Officer.*32.1
    
    
    Certification of Alan Stock, Chief Executive Officer*32.2
    
    
    Certification of Robert Copple, Chief Financial Officer.
 
 *
    
    Filed herewith.+
    
    Any management contract, compensatory plan or arrangement.