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00001906 1. MARKETABLE SECURITIES AND TIME DEPOSITS: The unused portion of the reserve for decline in market prices of securities established at August 31, 1966, amounting to $1,394,100 (after taxes of $468,000), was reversed to income in the year ended August 31, 1967. 2. FIXED ASSETS: Fixed assets are stated at cost except certain land and a building which are carried at 1925 appraisals. The excess of such appraisals over cost, after deducting re- lated depreciation charged to income, was $2,880,079 at August 31, 1967. 3. LONG-TERM DEBT: Aggregate maturities of long-term debt at August 31, 1967, principally mortgages, are summarized as fol- lows: Due within one year ..........................$ 4,228,167 Maturities during years ending August 31: 1969 .................................... 6,915,849 1970 .................................... 4,106,967 1971 .................................... 5,666,821 1972 .................................... 4,313,070 Subsequent maturities ...................... 67,173,149 Due after one year ............................$$$175,856 Interest rates on long-term debt range from 4% to 61/Z% per annum. 4. EQUITY RESTRICTION: Under the terms of a mortgage payable, the Company is required to maintain consolidated.stockholders' equity of at least five times the unpaid mortgage principal. Stockholders' equity at August 31, 1967 was approxi- mately three times the required amount. 5. STOCK OPTIONS: At August 31, 1966 and 1967, there were 101,000 shares of common_stock reserved for the granting at any time until June 19, 1969 of options under the Company's restricted stock option plan. 6. TREASURY STOCK: The Board of Directors has authorized the cancellation of 790,111 shares of common stock held in the Com- pany's treasury as of October 31, 1967. Effective at that date the reduction of surplus and capital equal to the cost of these shares, in the amount of $14,622,335, will be allocated against the equity accounts as follows: Common stock . ................................$ 790,111 Additional paid-in capital .................. 3,912,386 Earnings retained in the business ...... 9,919,838 $14,622,335 7. COMMITMENTS: Minimum rentals under long-term leases expiring more than three years after August 31, 1967 aggregate $5,610,000 per annum. Under certain of the leases the Company is required to pay taxes and other charges and additional rentals based upon gross receipts. 8. LITIGATION: Pending litigation includes antitrust and other civil suits for damages incident to the companies' business. The outcome of such actions will not, in the opinion of man- agement, materially affect the business or assets of Loew's Theatres, Inc. and subsidiary companies. . ~;' Printed In U.S.A. 11

0 TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF LOEW'S THEATRES, INC.: 12 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS LObT0000 We have examined the consolidated balance sheet of Loew's Theatres, Inc. and Subsidiary Com- panies as of August 31, 1967, and the related consolidated statements of income and earnings retained in the business for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We previously examined and reported upon the consolidated financial statements for the year ended August 31,1966. In our opinion, the accompanying balance sheets and statements of income and earnings retained in the business present fairly the consolidated financial position of Loew's Theatres, Inc. and Subsidiary Companies at August 31, 1967 and 1966, and the results of their operations for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. New York, November 7,1967. " ky

1 AflO Ufr'U~~id~ CHARLES B. BENENSON HERBERT A. HOFMANN LAURENCE A. TISCH Benenson Realty Company Senior Vice President Chairman of the Board and President JAMES BRUCE JOHN F. MURPHY Director, American Airlines, Incorporated, BERNARD MYERSON PRESTON R. TISCH Republic Steel Corporation Executive Vice President Chairman of Executive Committee_ and other corporations. and President, SIMON H. RIFKIND Loew's Hotels, Inc. LEWIS GRUBER Member, Law Firm of Honorary Chairman, Paul, Weiss, Rifkind, ARTHUR M. TOLCHIN P. Lorillard Company Wharton & Garrison Assistant to the President HERBERT A. HOFMANN Senior Vice President BERNARD MYERSON Executive Vice President LESTER POLLACK Secretary & General Counsel LAURENCE A. TISCH Chairman of the Board and President PRESTON R. TISCH Chairman of Executive Committee ERNEST EMERLING Vice President RICHARD C. GODFREY Vice President JACOB STILLMAN Treasurer JOHN C. PODESTER Assistant Secretary LEONARD POLLACK Assistant Treasurer SEYMOUR H. SMITH Assistant Secretary INDEPENDENT AUDITORS TRANSFER AGENT Lybrand, Ross Bros. & Montgomery First National City Bank 806t0400 (a-'Le LOEW'S THEATRES INC. ARTHUR M. TOLCHIN Assistant to the President ARTHUR J. RAPORTE Vice President IRVING B. SCHLOSSBERG Assistant Treasurer REGISTRAR Bankers Trust Company

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