Cinemark USA, Inc.

Reconciliation of Adjusted EBITDA to Net Income

For the Three and Six Months Ended June 30, 2006 and 2005

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30,

Six months ended June 30,

 

 

2006

2005

2006

2005

Net income

$    22,360

$    14,467

$    36,292

$   26,520

 

Income taxes

      11,691

        5,837

      13,031

     12,478

 

Interest expense (1)

      12,529

      11,632

      25,058

     22,899

 

Other income

         (370)

             (4)

         (863)

        (746)

Operating income

      46,210

       31,932

      73,518

     61,151

 

Add:  Depreciation, amortization and impairment of long-lived assets

      20,658

       19,667

      41,103

      38,147

 

Add:  Loss on sale of assets and other

           815

            150

        1,543

           838

 

Add:  Amortized compensation - stock options (2)

           716

                -

        1,432

                        -

 

Add:  Deferred lease expenses (3)

           614

            675

        1,147

             1,380

 

Adjusted EBITDA (4)

$    69,013

$      52,424

$   118,743

$    101,516

 

 

 

 

 

 

 

(1)     Includes amortization of debt issue costs and excludes capitalized interest. 

(2)     Non-cash expense included in general and administrative expenses.

(3)     Non-cash expense included in facility lease expense.

(4)     Adjusted EBITDA as calculated in the chart above represents net income before income taxes, interest expense, other income, depreciation, amortization and impairment of long-lived assets, loss on sale of assets and other, stock option compensation expense and changes in deferred lease expense.  Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net income or operating income as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The calculation of Adjusted EBITDA is consistent with the definition of EBITDA in our senior subordinated notes indentures. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and liquidity, estimate our value and evaluate our ability to service debt. In addition, we use Adjusted EBITDA for incentive compensation purposes.