##### Table of Contents



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, 2005
 Commission File Number 333-116292
 CINEMARK, INC.
 (Exact Name of Registrant as Specified in its Charter)
 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)
 www.cinemark.com
  None
(Title of Class)
  None
(Title of Class)
 o þ
 o þ
 þ o
 þ
 
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 o þ




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##### 



Table of Contents
 PART I
    
    
    3Item 1. Business
    
    
    3Item 2. Properties
    
    
    19Item 3. Legal Proceedings
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20PART II
    
    
    20Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    20Item 6. Selected Financial Data
    
    
    21Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    23Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8. Financial
Statements and Supplementary Data
    
    
    39Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    39Item 9A. Controls and Procedures
    
    
    39PART III
    
    
    40Item 10. Directors and Executive Officers of the Registrant
    
    
    40Item 11. Executive Compensation
    
    
    43Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    48Item 13. Certain Relationships and Related Transactions
    
    
    51Item 14. Principal Accounting Fees and Services
    
    
    52PART IV
    
    
    53Item 15. Exhibits, Financial Statement Schedules
    
    
    53SIGNATURES
    
    
    54Calculation of Earnings to Fixed ChargesSubsidiariesCertification of Chief Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of Chief Executive Officer Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906
  2




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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;
    
    our ability to successfully license and exhibit popular films;
    
    competition from other exhibitors; and
    
    determinations in lawsuits in which we are a defendant.
  
 PART I
 
 Item 1. Business
 The Company
   3




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www.cinemark.com.
 Description of Business
  Domestic Developments
  International Developments
  Recent Developments
   4




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Competitive Strategy
  Focus on Less Competitive Domestic Markets and Target Profitable, High Growth International
Markets .
 Maximize Profitability Through Continued Focus on Operational Excellence .
 Pursue Additional Revenue Opportunities .
 Competitive Strengths
  Strong Operating Cash Flow .
 Focused Philosophy Resulting in Strong Financial Performance .
 Strong Management Team .
 Selective Building in Less Competitive Domestic Markets and Heavily Populated International
Markets.
 Less Competitive Domestic Markets
 Heavily Populated, High Growth International Markets
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Modern Theatre Circuit .
 Motion Picture Industry Overview
 Domestic Markets
   % Change
    
    Average
    
    % Change
    
    U.S. Box
    
    % ChangeYear
    
    Attendance
    
    Since 1996
    
    Ticket Price
    
    Since 1996
    
    Office Sales
    
    Since 1996(in millions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($ in millions)1996
    
    
    1,339
    
    
    
    
    
    
    $
    4.42
    
    
    
    
    
    
    $
    5,912
    
    
    
    1997
    
    
    1,388
    
    
    
    3.7
    %
    
    $
    4.59
    
    
    
    3.8
    %
    
    $
    6,366
    
    
    
    7.7
    %1998
    
    
    1,481
    
    
    
    10.6
    %
    
    $
    4.69
    
    
    
    6.1
    %
    
    $
    6,949
    
    
    
    17.5
    %1999
    
    
    1,465
    
    
    
    9.4
    %
    
    $
    5.08
    
    
    
    14.9
    %
    
    $
    7,448
    
    
    
    26.0
    %2000
    
    
    1,421
    
    
    
    6.1
    %
    
    $
    5.39
    
    
    
    21.9
    %
    
    $
    7,661
    
    
    
    29.6
    %2001
    
    
    1,487
    
    
    
    11.1
    %
    
    $
    5.66
    
    
    
    28.1
    %
    
    $
    8,413
    
    
    
    42.3
    %2002
    
    
    1,639
    
    
    
    22.4
    %
    
    $
    5.81
    
    
    
    31.4
    %
    
    $
    9,520
    
    
    
    61.0
    %2003
    
    
    1,574
    
    
    
    17.6
    %
    
    $
    6.03
    
    
    
    36.4
    %
    
    $
    9,489
    
    
    
    60.5
    %2004
    
    
    1,536
    
    
    
    14.7
    %
    
    $
    6.21
    
    
    
    40.5
    %
    
    $
    9,539
    
    
    
    61.3
    %2005
    
    
    1,403
    
    
    
    4.8
    %
    
    $
    6.41
    
    
    
    45.0
    %
    
    $
    8,991
    
    
    
    52.1
    %
 International Markets
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Market Trends
  Increased Investment in Film Production and Marketing.
 Increased Importance of International Markets for Ensuring Box Office Success .
 Favorable Attendance Trends .
 Reduced Seasonality of Revenues .
 Convenient and Affordable Form of Out-of-Home Entertainment .
 Increasing Other Revenue.
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Theatre Operations
  North American Theatres
 Total
    
    TotalState
    
    Theatres
    
    ScreensTexas
    
    
    69
    
    
    
    886Ohio
    
    
    20
    
    
    
    213California
    
    
    16
    
    
    
    158Utah
    
    
    10
    
    
    
    123Kentucky
    
    
    7
    
    
    
    75Illinois
    
    
    6
    
    
    
    72Oklahoma
    
    
    6
    
    
    
    67Colorado
    
    
    5
    
    
    
    79Pennsylvania
    
    
    5
    
    
    
    73Louisiana
    
    
    5
    
    
    
    68Indiana
    
    
    5
    
    
    
    46Virginia
    
    
    4
    
    
    
    52Oregon
    
    
    4
    
    
    
    50North Carolina
    
    
    4
    
    
    
    41Michigan
    
    
    3
    
    
    
    50Mississippi
    
    
    3
    
    
    
    41Arkansas
    
    
    3
    
    
    
    30Iowa
    
    
    3
    
    
    
    19Florida
    
    
    2
    
    
    
    40Georgia
    
    
    2
    
    
    
    27New York
    
    
    2
    
    
    
    27South Carolina
    
    
    2
    
    
    
    22New Mexico
    
    
    2
    
    
    
    16Arizona
    
    
    2
    
    
    
    14Kansas
    
    
    1
    
    
    
    20New Jersey
    
    
    1
    
    
    
    16Missouri
    
    
    1
    
    
    
    14Tennessee
    
    
    1
    
    
    
    14Wisconsin
    
    
    1
    
    
    
    14Massachusetts
    
    
    1
    
    
    
    12Delaware
    
    
    1
    
    
    
    10Montana
    
    
    1
    
    
    
    8Minnesota
    
    
    1
    
    
    
    8Total United States
    
    
    199
    
    
    
    2,405Canada
    
    
    1
    
    
    
    12Total North America
    
    
    200
    
    
    
    2,417
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International Theatres
 Total
    
    TotalCountry
    
    Theatres
    
    ScreensBrazil
    
    
    34
    
    
    
    295Mexico
    
    
    29
    
    
    
    282Chile
    
    
    12
    
    
    
    91Central America(1)
    
    
    10
    
    
    
    67Argentina
    
    
    9
    
    
    
    77Colombia
    
    
    7
    
    
    
    44Ecuador
    
    
    4
    
    
    
    26Peru
    
    
    3
    
    
    
    30Total
    
    
    108
    
    
    
    912
 
 (1)
    
    Includes Honduras, El Salvador, Nicaragua, Costa Rica and Panama.   Corporate Operations
   Film Licensing
  9




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Concessions
  10




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
    
    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. This training occurs through situational role-playing conducted at
our Customer Satisfaction University as well as continued on-the-job training. Theatre
managers receive additional compensation based on concession sales at their theatres and
are therefore motivated to maximize concession sales. Consumer promotions conducted at the
concession stand always include a motivational element which rewards theatre staff for
exceptional combo sales during the period.A formalized crew program is in place to reward front line employees who excel in delivering
rapid service. The Speed of Service (SOS) program is held annually to kick off peak
business periods and refresh training and the importance of speed at the front line.Also, a year-round crew incentive called Pour More & Score is in place. All concession
programs include a points-earning opportunity designed to primarily drive sales of drinks
and popcorn. Theatres compete against their own prior year performance in an effort to win
staff prizes
    
    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.
    
    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.
 Marketing
   11




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
    
    Advertising.We believe the advertising industry recognizes the value of in-theatre
advertising as an important medium due to the demographics of theatre patrons and the
ability to market to specific demographics according to film title. On-screen advertising
revenue overall in the United States grew 23% in 2004 to $438 million according to the
Cinema Advertising Council and is expected to have grown 20% in 2005. During 2005, we
invested in National CineMedia LLC, a joint venture between Regal Entertainment Group, AMC
Entertainment Inc. and our company. National CineMedia LLC provides marketing, sales and
distribution of cinema advertising and promotional products; business communications and
training services; and the distribution of digital alternative content across its Digital
Content Network to its theatre owners and other network affiliate circuits. Our
participation in this joint venture will assist us in expanding our offerings to
advertisers, exploring additional revenue sources such as digital video monitor
advertising, third party branding, and the use of theatres for non-film events. In
participating in this joint venture, we are able to sell a different kind of advertising to
the movie-going public. The entertainment-based pre-show is delivered digitally to the
majority of screens and lobby plasma monitors owned by three of the largest U.S. theatre
exhibitors and focuses on a First Look at movies, television and sports events with ads
that have been made especially for the big screen and generally have not been shown on
other media. Movie-goers will get a behind-the-scenes look at the making of a film or see
exclusive interviews with their favorite stars. In addition, the digital equipment enables
us to use theatres during non-peak hours for concerts, sporting events, and other cultural
events, which are also sold by National CineMedia on behalf of all three circuits. We are
able to offer advertisers national, regional or local coverage in a variety of formats to
reach our patrons. National CineMedia also generates other revenue from imaging in the
lobby, including mini-billboards and displays, and distributing coupons and samples to
patrons passing through the theatre complex. Similarly, in our international markets, we
generally outsource our screen advertising to local companies, who have established
relationships with local advertisers that provide similar benefits as National CineMedia.
    
    Sales.We employ sales personnel at our corporate office who work with
National CineMedia to oversee the development and implementation of a comprehensive
domestic theatre rental and group sales effort. National CineMedia and our sales
department are responsible for increasing theatre rental income during periods when the
theatre is normally closed and maximizing group film bookings to specialized groups such as
schools, daycare centers and religious organizations. We believe the large lobbies,
comfortable seating, big screens and sound capabilities make our theatres an attractive
venue for corporate events, private parties, private screenings and team building meetings.
With the digital equipment that will be installed in the majority of our theatres, we can
also offer capacity to do PowerPoint and other presentations for corporate meetings. We
believe the trend to use theatre auditoriums for non-film events during non-peak times will
increase, which will add revenue and attract new audiences to our theatres while not
significantly increasing costs. In addition, targeted efforts to sell niche films to
particular groups will also increase overall revenues.
    
    Business Development. Our marketing personnel are responsible for
the sale of our gift cards, gift certificates and discount tickets, which are called
SuperSavers. We market these programs to such business representatives as realtors, human
resource managers, incentive program managers, hospital and pharmaceutical personnel. Gift
cards and gift certificates can be purchased at our theatres. Gift cards, gift
certificates and SuperSavers are also sold online, via phone, fax, email and regular mail
and fulfilled in-house from the local corporate office.
 Online Sales
  12




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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.
   Seasonality
  13




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Employees
  Regulations
    Financial Information About Geographic Areas
  14




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Item 1A. Risk Factors
 Poor motion picture production or performance could have an adverse effect on our business.
  A deterioration in relationships with film distributors could adversely affect our ability to
obtain commercially successful films.
  The oversupply of screens in the motion picture exhibition industry and other factors may adversely
affect the performance of some of our theatres.
  Our foreign operations are subject to adverse regulations and currency exchange risk, which may
have an adverse effect on our business.
  If we do not comply with the Americans with Disabilities Act of 1990, we could be subject to
further litigation.
  15




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We face intense competition for patrons, film licensing and theatre locations, which may adversely
affect our business.
  An increase in the use of alternative film distribution channels and other competing forms of
entertainment may drive down movie theatre attendance and limit ticket prices.
  Our results of operations may be impacted by shrinking video release windows.
  We may not be able to generate additional revenues.
  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.
  General political, social and economic conditions can adversely affect our attendance.
  16




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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.
  We depend on key personnel for our current and future performance.
  We are subject to impairment losses due to potential declines in valuations.
   17




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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;
    
    impeding us from obtaining 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 the amended 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.
  Item 1B. Unresolved Staff Comments
  18




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Item 2. Properties
 North America
  International
   
 Item 3. Legal Proceedings
 DOJ Litigation United States v.
Cinemark USA, Inc.
 19




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Mission, Texas Litigation rd
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   20




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Item 6. Selected Financial Data
  SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
 Year Ended December 31,2001
    
    2002
    
    2003
    
    2004
    
    2005(In thousands, except theatres and screen data)Statement of Operations Data (Consolidated)(1):Revenues
    
    $
    853,658
    
    
    $
    935,854
    
    
    $
    950,872
    
    
    $
    1,024,242
    
    
    $
    1,020,597Theatre operating costs
    
    
    531,967
    
    
    
    570,948
    
    
    
    582,574
    
    
    
    618,627
    
    
    
    625,496Facility lease expense
    
    
    114,737
    
    
    
    115,588
    
    
    
    119,517
    
    
    
    126,643
    
    
    
    136,593General and administrative expenses
    
    
    42,597
    
    
    
    47,952
    
    
    
    44,286
    
    
    
    51,672
    
    
    
    50,884Stock option compensation and change of control
expenses related to the Recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,995
    
    
    
    Depreciation and amortization
    
    
    73,079
    
    
    
    66,583
    
    
    
    65,085
    
    
    
    67,051
    
    
    
    76,461Impairment of long-lived assets
    
    
    20,723
    
    
    
    3,869
    
    
    
    5,049
    
    
    
    1,667
    
    
    
    9,672(Gain) loss on sale of assets and other
    
    
    12,408
    
    
    
    470
    
    
    
    (1,202
    )
    
    
    4,851
    
    
    
    2,625Total costs and expenses
    
    
    795,511
    
    
    
    805,410
    
    
    
    815,309
    
    
    
    902,506
    
    
    
    901,731Operating income
    
    
    58,147
    
    
    
    130,444
    
    
    
    135,563
    
    
    
    121,736
    
    
    
    118,866Interest expense(2)
    
    
    70,931
    
    
    
    57,793
    
    
    
    54,163
    
    
    
    72,943
    
    
    
    86,867Income (loss) from continuing operations before
cumulative effect of an accounting change
    
    
    (3,462
    )
    
    
    40,407
    
    
    
    47,389
    
    
    
    23,041
    
    
    
    22,387Income (loss) from discontinued operations, net of taxes
    
    
    (559
    )
    
    
    (1,542
    )
    
    
    (2,740
    )
    
    
    3,584
    
    
    
    Cumulative
effect of an accounting change(3)
    
    
    
    
    
    
    (3,390
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (4,021
    )
    
    $
    35,475
    
    
    $
    44,649
    
    
    $
    26,625
    
    
    $
    22,387Other Financial Data (Consolidated):Ratio of earnings to fixed charges(4)
    
    
    
    
    
    
    1.75
    x
    
    
    1.80
    x
    
    
    1.36
    x
    
    
    1.29
    xCash flow provided by (used for):Operating activities
    
    $
    87,122
    
    
    $
    150,119
    
    
    $
    135,522
    
    
    $
    123,086
    
    
    $
    165,270Investing activities
    
    
    (33,799
    )
    
    
    (34,750
    )
    
    
    (47,151
    )
    
    
    (116,947
    )
    
    
    (81,617
    )Financing activities
    
    
    (21,513
    )
    
    
    (96,140
    )
    
    
    (45,738
    )
    
    
    (14,443
    )
    
    
    (3,750
    )Capital expenditures
    
    
    40,352
    
    
    
    38,032
    
    
    
    51,002
    
    
    
    81,008
    
    
    
    75,605Balance Sheet Data (Consolidated):Cash and cash equivalents
    
    $
    50,199
    
    
    $
    63,719
    
    
    $
    107,322
    
    
    $
    100,248
    
    
    $
    182,199Theatre properties and equipment, net
    
    
    866,406
    
    
    
    791,731
    
    
    
    775,880
    
    
    
    785,595
    
    
    
    790,566Total assets
    
    
    996,544
    
    
    
    916,814
    
    
    
    960,736
    
    
    
    1,016,757
    
    
    
    1,112,288Total long-term debt, including current portion
    
    
    780,956
    
    
    
    692,587
    
    
    
    658,431
    
    
    
    1,013,674
    
    
    
    1,044,255Stockholders
equity (deficiency)
    
    
    25,337
    
    
    
    27,664
    
    
    
    79,947
    
    
    
    (202,724
    )
    
    
    (158,482
    )Operating Data:North America(5)(7)Theatres operated (at period end)
    
    
    188
    
    
    
    188
    
    
    
    189
    
    
    
    191
    
    
    
    200Screens operated (at period end)
    
    
    2,217
    
    
    
    2,215
    
    
    
    2,244
    
    
    
    2,303
    
    
    
    2,417Total attendance(1)
    
    
    100,022
    
    
    
    111,959
    
    
    
    112,581
    
    
    
    113,646
    
    
    
    105,573
 21




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Year Ended December 31,2001
    
    2002
    
    2003
    
    2004
    
    2005(In thousands, except theatres and screen data)International(6)Theatres operated (at period end)
    
    
    88
    
    
    
    92
    
    
    
    97
    
    
    
    101
    
    
    
    108Screens operated (at period end)
    
    
    783
    
    
    
    816
    
    
    
    852
    
    
    
    869
    
    
    
    912Total attendance(1)
    
    
    53,853
    
    
    
    60,109
    
    
    
    60,553
    
    
    
    65,695
    
    
    
    60,104Worldwide(5)(6)(7)Theatres operated (at period end)
    
    
    276
    
    
    
    280
    
    
    
    286
    
    
    
    292
    
    
    
    308Screens operated (at period end)
    
    
    3,000
    
    
    
    3,031
    
    
    
    3,096
    
    
    
    3,172
    
    
    
    3,329Total attendance(1)
    
    
    153,875
    
    
    
    172,068
    
    
    
    173,134
    
    
    
    179,341
    
    
    
    165,677
 
 (1)
    
    Statement of Operations Data and attendance data exclude the results of the two United
Kingdom theatres and the eleven Interstate theatres for all periods presented as these
theatres were sold during 2004. The results of operations for these theatres are presented as
discontinued operations. (See Note 6 to the consolidated financial statements.)(2)
    
    Includes amortization of debt issue costs and excludes capitalized interest for all
periods presented.(3)
    
    In 2002, a cumulative effect of a change in accounting principle charge of $3.4 million (net
of tax benefit) was recorded as a transitional impairment adjustment in connection with the
adoption of SFAS No. 142 requiring that goodwill and other intangible assets with indefinite
useful lives no longer be amortized but instead be tested for impairment at least annually.(4)
    
    For the purposes of calculating the ratio of earnings to fixed charges, earnings consist of
income (loss) from continuing operations before taxes and cumulative effect of an accounting
change plus fixed charges excluding capitalized interest. Fixed charges consist of interest
expense, capitalized interest, amortization of debt issue cost and that portion of rental
expense which we believe to be representative of the interest factor. For the year ended
December 31, 2001, earnings were insufficient to cover fixed charges by $17.9 million.(5)
    
    The data as of period end 2001, 2002, 2003, 2004 and 2005 excludes certain theatres operated
by us in North America pursuant to management agreements that are not part of our consolidated
operations.(6)
    
    The data as of period end 2001, 2002, 2003, 2004 and 2005 excludes certain theatres operated
internationally through our affiliates that are not part of our consolidated operations.(7)
    
    Figures for 2003 exclude theatres, screens and attendance for eight theatres and 46 screens
acquired on December 31, 2003, as the results of operations for these theatres are not
included in our 2003 consolidated results of operations. 22




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operation
  Revenues and Expenses
 Star Wars:
Episode III  Revenge of the Sith War of the Worlds Madagascar King Kong Harry Potter and the
Goblet of Fire The Chronicles of Narnia: The Lion, the Witch and the Wardrobe Pirates of the Carribean: Dead Mans Chest Superman Returns X Men 3, Mission Impossible III, Ice Age 2: The Meltdown Cars.
      Critical Accounting Policies
  23




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##### Table of Contents



Revenue and Expense Recognition
     24




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##### Table of Contents



Impairment of Long-Lived Assets
  
    
    actual theatre level cash flows;
    
    future years budgeted theatre level cash flows;
    
    theatre property and equipment carrying values;
    
    theatre goodwill carrying values;
    
    the age of a recently built theatre;
    
    competitive theatres in the marketplace;
    
    the sharing of a marketplace with our other theatres;
    
    changes in foreign currency exchange rates;
    
    the impact of recent ticket price changes;
    
    available lease renewal options; and
    
    other factors considered relevant in our assessment of impairment of individual theatre assets.
  Goodwill
 ,
 Acquisitions
  25




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##### Table of Contents



Income Taxes
 Accounting for Contingencies
 26




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##### Table of Contents



Results of Operation
  Year Ended December 31,2003
    
    2004
    
    2005Operating Data (in millions)(1):Revenues:Admissions
    
    $
    597.5
    
    
    $
    647.0
    
    
    $
    641.2Concession
    
    
    300.6
    
    
    
    321.6
    
    
    
    320.1Other
    
    
    52.8
    
    
    
    55.6
    
    
    
    59.3Total revenues
    
    $
    950.9
    
    
    $
    1,024.2
    
    
    $
    1,020.6Cost of
operations(3):Film rentals and advertising
    
    $
    324.9
    
    
    $
    348.8
    
    
    $
    347.7Concession supplies
    
    
    49.7
    
    
    
    53.8
    
    
    
    52.5Salaries and wages
    
    
    97.2
    
    
    
    103.1
    
    
    
    101.5Facility lease expense
    
    
    119.5
    
    
    
    126.6
    
    
    
    136.6Utilities and other
    
    
    110.8
    
    
    
    113.0
    
    
    
    123.8Total cost of operations
    
    $
    702.1
    
    
    $
    745.3
    
    
    $
    762.1Operating data as a percentage of total revenues(1):Revenues:Admissions
    
    
    62.8
    %
    
    
    63.2
    %
    
    
    62.8
    %Concession
    
    
    31.6
    
    
    
    31.4
    
    
    
    31.4Other
    
    
    5.6
    
    
    
    5.4
    
    
    
    5.8Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of
operations(2)(3):Film rentals and advertising
    
    
    54.4
    %
    
    
    53.9
    %
    
    
    54.2
    %Concession supplies
    
    
    16.5
    
    
    
    16.7
    
    
    
    16.4Salaries and wages
    
    
    10.2
    
    
    
    10.1
    
    
    
    9.9Facility lease expense
    
    
    12.6
    
    
    
    12.4
    
    
    
    13.4Utilities and other
    
    
    11.7
    
    
    
    11.0
    
    
    
    12.1Total cost of operations
    
    
    73.8
    %
    
    
    72.8
    %
    
    
    74.7
    %Average screen count (month end average)
    
    
    3,027
    
    
    
    3,135
    
    
    
    3,239Revenues per average screen
    
    $
    314,178
    
    
    $
    326,664
    
    
    $
    315,104
 
 (1)
    
    Certain reclassifications have been made to the 2003 and 2004 consolidated financial
statements to conform to the 2005 presentation. Results exclude the results of our two United
Kingdom theatres and our eleven Interstate theatres sold during 2004. The results of
operations for these theatres are included as discontinued operations for all periods
presented.(2)
    
    All costs are expressed as a percentage of total revenues, except film rentals and
advertising, which are expressed as a percentage of admissions revenues, and concession
supplies, which are expressed as a percentage of concession revenues.(3)
    
    Excludes depreciation and amortization. 27




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##### Table of Contents



Comparison of Years Ended December 31, 2005 and December 31, 2004
 Revenues.
 Year Ended December 31,2005
    
    
    2004
    
    
    % ChangeAdmissions
revenues (in millions)
    
    $
    641.2
    
    
    $
    647.0
    
    
    
    (0.9
    %)Concession
revenues (in millions)
    
    $
    320.1
    
    
    $
    321.6
    
    
    
    (0.5
    %)Total revenues (in millions)
    
    $
    1,020.6
    
    
    $
    1,024.2
    
    
    
    (0.4
    %)Attendance (in millions)
    
    
    165.7
    
    
    
    179.3
    
    
    
    (7.6
    %)Average ticket price
    
    $
    3.87
    
    
    $
    3.61
    
    
    
    7.2
    %Concession revenues per patron
    
    $
    1.93
    
    
    $
    1.79
    
    
    
    7.8
    %Revenues per screen
    
    $
    315,104
    
    
    $
    326,664
    
    
    
    (3.6
    %)
  Cost of Operations.
   General and Administrative Expenses.
 Stock Option Compensation and Change of Control Expenses related to the Recapitalization
 Depreciation and Amortization.
 28




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##### Table of Contents



Impairment of Long-Lived Assets
 Years Ended December 31,2005
    
    
    2004U.S.
    
    $
    7.5
    
    
    $
    1.7Chile
    
    
    0.9
    
    
    
    Brazil
    
    
    0.6
    
    
    
    Central America
    
    
    0.7
    
    
    
    Total
    
    $
    9.7
    
    
    $
    1.7
  Loss on Sale of Assets and Other.
 Interest Expense. 3 4
 Loss on Early Retirement of Debt. 1 2
 Income Taxes.
 Income from Discontinued Operations, Net of Taxes.
 Comparison of Years Ended December 31, 2004 and December 31, 2003
 Revenues. Shrek 2 The Passion of the Christ Spider-Man 2, Harry Potter and the
Prisoner of Azkaban The Incredibles
 29




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##### Table of Contents



Cost of Operations
   General and Administrative Expenses.
 Stock Option Compensation and Change of Control Expenses related to the Recapitalization
 Depreciation and Amortization.
 Impairment of Long-Lived Assets
 Years Ended December 31,2004
    
    
    2003U.S.
    
    $
    1.7
    
    
    $
    3.0Mexico
    
    
    
    
    
    
    1.2Chile
    
    
    
    
    
    
    0.7Other
    
    
    
    
    
    
    0.1Total
    
    $
    1.7
    
    
    $
    5.0
 (Gain) Loss on Sale of Assets and Other.
 Interest Expense. 3 4
 Loss on Early Retirement of Debt. 1 2
 30




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##### Table of Contents



5 8
 Income Taxes.
 Income (Loss) from Discontinued Operations, Net of Taxes.
 Liquidity and Capital Resources
 Operating Activities
  Investing Activities
    31




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##### Table of Contents



New
    
    ExistingYear Ended December 31,
    
    Theatres
    
    Theatres
    
    Total2003
    
    $
    33.7
    
    
    $
    17.3
    
    
    $
    51.02004
    
    $
    61.5
    
    
    $
    19.5
    
    
    $
    81.02005
    
    $
    50.3
    
    
    $
    25.3
    
    
    $
    75.6
     Financing Activities
  32




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##### Table of Contents



Payments Due by Period(in millions)Less Than
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    One Year
    
    1 - 3 Years
    
    4 - 5 Years
    
    5 YearsLong-term debt1
    
    $
    1,195.7
    
    
    $
    6.9
    
    
    $
    9.8
    
    
    $
    189.2
    
    
    $
    989.8Scheduled interest payments on
long-term debt2
    
    
    550.7
    
    
    
    48.2
    
    
    
    95.0
    
    
    
    160.7
    
    
    
    246.8Lease obligations3
    
    
    1,537.4
    
    
    
    121.4
    
    
    
    252.6
    
    
    
    237.9
    
    
    
    925.5Letters of credit
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Employment agreements3
    
    
    9.3
    
    
    
    3.1
    
    
    
    6.2
    
    
    
    
    
    
    
    Purchase commitments 4
    
    
    88.4
    
    
    
    66.5
    
    
    
    20.9
    
    
    
    0.4
    
    
    
    0.6Total obligations
    
    $
    3,381.6
    
    
    $
    246.2
    
    
    $
    384.5
    
    
    $
    588.2
    
    
    $
    2,162.7
 
 1
    Includes the 9 3/4% senior discount notes in the aggregate principal amount
at maturity of $575.3 million.2
    Amounts include scheduled interest payments on fixed rate and variable rate
debt agreements. Estimates for the variable rate interest payments were based on
interest rates in effect on December 31, 2005.3
    See Note 18 to the consolidated financial statements for additional information
about our lease obligations and employment agreements.4
    Includes estimated capital expenditures associated with the construction of new
theatres to which we were committed as of December 31, 2005. Recapitalization and Issuance of Senior Discount Notes
  3 4 3 4 3 4
 33




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##### Table of Contents



3 4 3 4
 Historical Financings
 Senior Subordinated Notes
 1 2 1 2 1 2 1 2
  1 2
    Senior Secured Credit Facility
  34




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##### Table of Contents



8 1/2%
     Cinemark Chile Note Payable
   35




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##### Table of Contents



Ratings
  Category
    
    Moodys
    
    Standard and PoorsCinemark, Inc. 9 3/4% Senior Discount Notes
    
    Caa1
    
    B-Cinemark USA, Inc. Senior Secured Credit
Facility
    
    Ba3
    
    BB-Cinemark USA, Inc. 9% Senior Subordinated
Notes
    
    B3
    
    B-
 New Accounting Pronouncements
 Exchanges of Non-monetary Assets-Amendment of APB Opinion No. 29
  Share-Based Payment Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation.
 36




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
   Expected Maturity as of December 31, 2005(in millions)
    
    
    
    
    
    AverageDecember 31,
    
    Fair
    
    Interest2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    Value
    
    RateFixed rate
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    928.7
    
    
    $
    928.8
    
    
    $
    792.8
    
    
    
    9.5
    %Variable rate
    
    
    6.8
    
    
    
    5.5
    
    
    
    4.3
    
    
    
    4.1
    
    
    
    185.1
    
    
    
    61.1
    
    
    
    266.9
    
    
    
    268.4
    
    
    
    6.6
    %Total debt
    
    $
    6.9
    
    
    $
    5.5
    
    
    $
    4.3
    
    
    $
    4.1
    
    
    $
    185.1
    
    
    $
    989.8
    
    
    $
    1,195.7
    
    
    $
    1,061.2
 Expected Maturity as of December 31, 2004(in millions)
    
    
    
    
    
    AverageDecember 31,
    
    Fair
    
    Interest2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    Thereafter
    
    Total
    
    Value
    
    RateFixed rate
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    932.1
    
    
    $
    932.3
    
    
    $
    826.4
    
    
    
    9.5
    %Variable rate
    
    
    6.4
    
    
    
    6.5
    
    
    
    5.0
    
    
    
    4.0
    
    
    
    3.9
    
    
    
    246.0
    
    
    
    271.8
    
    
    
    271.4
    
    
    
    4.5
    %Total debt
    
    $
    6.5
    
    
    $
    6.6
    
    
    $
    5.0
    
    
    $
    4.0
    
    
    $
    3.9
    
    
    $
    1,178.1
    
    
    $
    1,204.1
    
    
    $
    1,097.8
 Foreign Currency Exchange Rate Risk
   37




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38




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##### Table of Contents



Item 8.
Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  39




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
 Name
    
    
    Age
    
    
    PositionLee Roy Mitchell
    
    
    68
    
    
    Chairman of the Board; Chief Executive Officer; DirectorTandy Mitchell
    
    
    55
    
    
    Executive Vice President; Assistant SecretaryAlan Stock
    
    
    45
    
    
    President; Chief Operating OfficerRobert Copple
    
    
    47
    
    
    Senior Vice President; Treasurer; Chief Financial
Officer; Assistant SecretaryTim Warner
    
    
    61
    
    
    Senior Vice President; President of Cinemark
International, L.L.C.Robert Carmony
    
    
    48
    
    
    Senior Vice President-OperationsMichael Cavalier
    
    
    39
    
    
    Senior Vice President-General Counsel; SecretaryMargaret Richards
    
    
    47
    
    
    Vice President-Real Estate; Assistant SecretaryJohn Lundin
    
    
    56
    
    
    Vice President-Film LicensingWalter Hebert, III
    
    
    60
    
    
    Vice President-PurchasingDon Harton
    
    
    48
    
    
    Vice President-ConstructionTerrell Falk
    
    
    55
    
    
    Vice President-Marketing and CommunicationsTom Owens
    
    
    49
    
    
    Vice President-DevelopmentBenjamin D.
Chereskin
    
    
    47
    
    
    DirectorJames N. Perry, Jr
    
    
    45
    
    
    DirectorRobin P.
Selati
    
    
    39
    
    
    DirectorVahe A.
Dombalagian
    
    
    32
    
    
    DirectorEnrique F. Senior
    
    
    62
    
    
    DirectorPeter R.
Ezersky
    
    
    45
    
    
    Director
   Lee Roy Mitchell
 Tandy Mitchell
 Alan Stock
 Robert Copple
 Tim Warner
 40




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##### Table of Contents



Robert Carmony
 Michael Cavalier
 Margaret Richards
 John Lundin
 Walter Hebert, III
 Don Harton
 Terrell Falk
 Tom Owens
 Benjamin D. Chereskin
 James N. Perry, Jr.
 Robin P. Selati
 Vahe A. Dombalagian
 Enrique F. Senior
 41




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##### Table of Contents



Peter R. Ezersky
 42




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##### Table of Contents



Item 11. Executive Compensation
  Long-TermCompensationAnnual Compensation
    
    AwardsSecurities
    
    All OtherSalary(1)
    
    Bonus
    
    Underlying
    
    CompensationName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    Options/SAR
    
    ($)Lee Roy Mitchell, Chairman of the
    
    
    2005
    
    
    $
    741,707
    
    
    $
    
    (2)
    
    
    
    
    
    $
    120,119
    (5)Board and Chief Executive
    
    
    2004
    
    
    
    716,625
    
    
    
    417,526
    (3)
    
    
    
    
    
    
    2,532,271
    (6)Officer
    
    
    2003
    
    
    
    682,500
    
    
    
    652,740
    (4)
    
    
    
    
    
    
    132,020
    (7)Alan Stock, President and Chief
    
    
    2005
    
    
    
    438,929
    
    
    
    
    (2)
    
    
    
    
    
    
    681,299
    (8)Operating Officer
    
    
    2004
    
    
    
    424,086
    
    
    
    247,084
    (3)
    
    
    307,499
    (14)
    
    
    4,315,751
    (9)2003
    
    
    
    403,891
    
    
    
    98,826
    (4)
    
    
    
    
    
    
    10,500
    (10)Tim Warner, Senior Vice
    
    
    2005
    
    
    
    355,938
    
    
    
    
    (2)
    
    
    
    
    
    
    11,025
    (10)President and President -
    
    
    2004
    
    
    
    343,901
    
    
    
    200,366
    (3)
    
    
    307,499
    (14)
    
    
    3,929,017
    (11)Cinemark International, L.L.C.
    
    
    2003
    
    
    
    327,525
    
    
    
    80,140
    (4)
    
    
    
    
    
    
    10,500
    (10)Robert Copple, Senior Vice
    
    
    2005
    
    
    
    320,503
    
    
    
    
    (2)
    
    
    
    
    
    
    11,025
    (10)President and Chief Financial
    
    
    2004
    
    
    
    309,665
    
    
    
    180,419
    (3)
    
    
    307,499
    (14)
    
    
    3,162,632
    (12)Officer
    
    
    2003
    
    
    
    294,919
    
    
    
    72,162
    (4)
    
    
    
    
    
    
    10,500
    (10)Robert Carmony, Senior Vice
    
    
    2005
    
    
    
    308,978
    
    
    
    
    (2)
    
    
    
    
    
    
    11,025
    (10)President -Operations
    
    
    2004
    
    
    
    298,529
    
    
    
    173,931
    (3)
    
    
    199,874
    (14)
    
    
    1,814,225
    (13)2003
    
    
    
    284,313
    
    
    
    69,567
    (4)
    
    
    
    
    
    
    9,035
    (10)
 
 (1)
    
    Amounts shown include cash and non-cash compensation earned and received by executive
officers.(2)
    
    No bonuses were earned in 2005.(3)
    
    Bonuses were earned in 2004 but were paid in 2005.(4)
    
    Bonuses were earned in 2003 but were paid in 2004.(5)
    
    Represents an $11,025 annual matching contribution to executives 401(k) savings plan,
$10,250 representing the value of the use of a company vehicle for one year and $98,844 of
life insurance premiums paid by us for the benefit of Mr. Mitchell.(6)
    
    Represents a $10,762 annual matching contribution to executives 401(k) savings plan, $22,665
representing the value of the use of a company vehicle for one year and $98,844 of life
insurance premiums paid by us for the benefit of Mr. Mitchell and a $2,400,000 bonus payment
made to Mr. Mitchell under Mr. Mitchells new employment agreement upon the Recapitalization.(7)
    
    Represents a $10,500 annual matching contribution to executives 401(k) savings plan, $22,665
representing the value of the use of a company vehicle for one year and $98,855 of life
insurance premiums paid by us for the benefit of Mr. Mitchell. 43




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##### Table of Contents



(8)
    
    Represents an $11,025 annual matching contribution to executives 401(k) savings plan and a
$670,274 payment under Mr. Stocks profit participation agreement for certain of our theatres.(9)
    
    Represents a $10,762 annual matching contribution to executives 401(k) savings plan,
$364,699 payment under Mr. Stocks profit participation agreement for certain of our theatres,
and, upon the Recapitalization, a $1,742,391 payment made to Mr. Stock under a sale bonus
agreement, a $1,159,640 change of control compensation payment under Mr. Stocks prior
employment agreement, a $50,000 bonus payment under Mr. Stocks new employment agreement and
$988,259 net consideration paid for options that were acquired as part of the
Recapitalization.(10)
    
    Represents an annual matching contribution to executives 401(k) savings plan.(11)
    
    Represents a $10,762 annual matching contribution to executives 401(k) savings plan, and,
upon the Recapitalization, a $1,939,614 payment made to Mr. Warner under a sale bonus
agreement, a $940,382 change of control compensation payment under Mr. Warners prior
employment agreement, a $50,000 bonus payment under Mr. Warners new employment agreement and
$988,259 net consideration paid for options that were acquired as part of the
Recapitalization.(12)
    
    Represents a $10,762 annual matching contribution to executives 401(k) savings plan, and,
upon the Recapitalization a $1,733,757 payment made to Mr. Copple under a sale bonus
agreement, a $846,763 change of control compensation payment under Mr. Copples prior
employment agreement, a $50,000 bonus payment under Mr. Copples new employment agreement and
$521,350 net consideration paid for options that were acquired as part of the
Recapitalization.(13)
    
    Represents a $9,652 annual matching contribution to executives 401(k) savings plan and, upon
the Recapitalization an $816,314 change of control compensation payment under Mr. Carmonys
prior employment agreement and $988,259 net consideration paid for options that were acquired
as part of the Recapitalization.(14)
    
    On September 30, 2004, the Company granted each of Mr. Stock, Mr. Warner, and Mr. Copple
options to purchase an aggregate of 307,499 shares of its Class A common stock, and granted
Mr. Carmony options to purchase an aggregate of 199,874 shares of its Class A common stock,
under its Long Term Incentive Plan at an exercise price of $22.58 per share. On the date of
grant, the Companys Class A common stock had a market value of $22.58 per share. For Messrs.
Stock, Warner and Copple, options to purchase 30,497 shares vested immediately and for Mr.
Carmony, options to purchase 19,823 shares vested immediately. The remaining options vest
daily over the period ending April 1, 2009. Options/ Stock Appreciation Right Grants in Last Fiscal Year
  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value Table
  44




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##### Table of Contents



Director Compensation
  Committees of the Board of Directors
  Employment Agreements
  Lee Roy Mitchell
   45




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##### Table of Contents



Tandy Mitchell, Alan Stock, Robert Copple, Timothy Warner, Robert Carmony, John Lundin and
Michael Cavalier
     Non-Competition, Non-Solicitation and Non-Disclosure Agreement
  46




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##### Table of Contents



401(k) Plan
  Stock Option Plan
    Compensation Committee Interlocks and Insider Participation
  47




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##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 Equity Compensation Plan Information
  Equity
    
    Equitycompensation
    
    compensationplans approved
    
    plans notby security
    
    approved byholders
    
    security holders
    
    Total(a) Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
    
    
    2,365,665
    
    
    
    
    
    
    
    2,365,665(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
    
    $
    22.58
    
    
    
    
    
    
    $
    22.58(c) Number of
securities
remaining available
for future issuance
under equity
compensation plans
(excluding
securities
reflected in row
(a))
    
    
    709,326
    
    
    
    
    
    
    
    709,326
 48




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##### Table of Contents



Beneficial Ownership
  
    
    each person known by us to beneficially hold five percent or more of our common stock;
    
    each of our directors;
    
    each of our named executive officers; and
    
    all of our executive officers and directors as a group.
  Number ofSharesBeneficially
    
    Percent ofNames of Beneficial Owner (1)
    
    Owned
    
    ClassDirectors and Executive OfficersMadison Dearborn Capital Partners IV, L.P. (1)
    
    
    20,676,263
    
    
    
    74.12
    %Mitchell Special Trust (2)
    
    
    2,169,713
    
    
    
    7.78
    %Lee Roy Mitchell(3)
    
    
    4,427,986
    
    
    
    15.87
    %Quadrangle Capital Partners LP (4)
    
    
    2,213,993
    
    
    
    7.94
    %Alan W. Stock(5)
    
    
    211,074
    
    
    
    *Tim Warner (5)
    
    
    210,440
    
    
    
    *Robert Copple(5)
    
    
    201,820
    
    
    
    *Robert Carmony(6)
    
    
    82,906
    
    
    
    *Benjamin D. Chereskin (7)
    
    
    20,676,263
    
    
    
    74.12
    %James N. Perry, Jr. (7)
    
    
    20,676,263
    
    
    
    74.12
    %Robin P. Selati (7)
    
    
    20,676,263
    
    
    
    74.12
    %Vahe A. Dombalagian
    
    
    
    
    
    
    *Enrique Senior (8)
    
    
    
    
    
    
    *Peter Ezersky (9)
    
    
    2,213,993
    
    
    
    7.94
    %All directors and executive officers as a
group (19 persons)(10)
    
    
    28,304,831
    
    
    
    99.02
    %
 
 *
    
    Represents less than 1%(1)
    
    The address of Madison Dearborn Capital Partners IV, L.P. is Three First National Plaza,
Suite 3800, 70 West Madison Street, Chicago, Illinois 60602.(2)
    
    The address of the Mitchell Special Trust is 3900 Dallas Parkway, Suite 500, Plano, Texas
75093.  49




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th
  50




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions
 Certain Agreements
   Profit Participation
  Indemnification of Directors
  51




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##### Table of Contents



Item 14. Principal Accounting Fees and Services
  (in millions)Category
    
    2005
    
    2004Audit Fees (a)
    
    $
    0.7
    
    
    $
    0.8Audit-Related Fees (b)
    
    
    
    
    
    
    0.3Tax Fees (c)
    
    
    0.2
    
    
    
    0.6All Other Fees (d)
    
    
    
    
    
    
    Total
    
    $
    0.9
    
    
    $
    1.7
 
 (a)
    
    Fees for audit services billed in 2005 and 2004 consisted of the audit of our annual
consolidated financial statements, reviews of our quarterly consolidated financial statements,
statutory audits and comfort letters, consents and other services related to Securities and
Exchange Commission (SEC) matters, including fees and services related to our bond
offerings.(b)
    
    Fees for audit-related services billed in 2004 consisted of due diligence associated with
mergers and acquisitions.(c)
    
    Fees for tax services billed in 2005 and 2004 consisted of assistance with our federal,
state, local and foreign jurisdictions income tax returns. We have additionally sought
consultation and advice related to various tax compliance planning projects.(d)
    
    No material other fees were billed in 2005 or 2004.   52




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 (a)
    
    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 financial statement schedules beginning on S-1 are filed
as part of this report.3.
    
    The exhibits listed in the accompanying Index beginning on page E-1 are filed as a part
of this report, which exhibits are bound separately.
 (b)
    
    Exhibits
 See the accompanying Index beginning on page E-1, which exhibits are bound separately.
 (c)
    
    Financial Statement Schedules
 See the accompanying Index beginning on page F-1.
 53




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##### Table of Contents



SIGNATURES
  Dated: March 27, 2006
    
    CINEMARK, INC.BY:
    
    /s/ Alan W. Stock

          Alan W. Stock, President
  Name
    
    Title
    
    Date/s/ Lee Roy Mitchell

Lee Roy Mitchell
    
    Chairman of the Board of
Directors and Chief
Executive Officer
    
    March 27, 2006/s/ Robert Copple

Robert Copple
    
    Senior Vice President and
Treasurer (Chief Financial
and Accounting Officer)
    
    March 27, 2006/s/ Benjamin D. Chereskin

Benjamin D. Chereskin
    
    Director
    
    March 27, 2006/s/ James N. Perry, Jr.

James N. Perry, Jr.
    
    Director
    
    March 27, 2006/s/ Robin P. Selati

Robin P. Selati
    
    Director
    
    March 27, 2006/s/ Vahe A. Dombalagian

Vahe A. Dombalagian
    
    Director
    
    March 27, 2006/s/ Enrique F. Senior

Enrique F. Senior
    
    Director
    
    March 27, 2006/s/ Peter R. Ezersky

Peter R. Ezersky
    
    Director
    
    March 27, 2006
 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.
  54




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
(ITEMS 8 AND 15 OF FORM 10-K) AND SUPPLEMENTAL SCHEDULES
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-2CONSOLIDATED FINANCIAL STATEMENTS AND NOTES:Consolidated Balance Sheets, December 31, 2004 and 2005
    
    
    F-3Consolidated Statements of Income for the Years Ended December 31, 2003, 2004 and 2005
    
    
    F-4Consolidated Statements of Stockholders Equity and Comprehensive Income for the Years Ended
December 31, 2003, 2004 and 2005
    
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2004 and 2005
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7SUPPLEMENTAL
SCHEDULES REQUIRED BY THE INDENTURE FOR THE SENIOR DISCOUNT NOTESCondensed
Consolidating Balance Sheet Information, December 31, 2005
    
    
    S-1Condensed
Consolidating Statement of Income Information for the Year Ended
December 31, 2005
    
    
    S-2Condensed
Consolidating Statement of Cash Flows Information for the Year Ended
December 31, 2005
    
    
    S-3
 F-1




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F-2




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 December 31,
    
    
    December 31,2004
    
    
    2005ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    100,248
    
    
    $
    182,199Inventories
    
    
    4,237
    
    
    
    4,546Accounts receivable
    
    
    11,303
    
    
    
    15,405Income tax receivable
    
    
    7,037
    
    
    
    Prepaid expenses and other
    
    
    3,889
    
    
    
    4,538Total current assets
    
    
    126,714
    
    
    
    206,688THEATRE PROPERTIES AND EQUIPMENTLand
    
    
    60,700
    
    
    
    62,470Buildings
    
    
    337,559
    
    
    
    348,038Theatre furniture and equipment
    
    
    509,737
    
    
    
    559,994Leasehold interests and improvements
    
    
    385,043
    
    
    
    413,759Theatres under construction
    
    
    14,049
    
    
    
    14,537Total
    
    
    1,307,088
    
    
    
    1,398,798Less accumulated depreciation and amortization
    
    
    521,493
    
    
    
    608,232Theatre properties and equipment, net
    
    
    785,595
    
    
    
    790,566OTHER ASSETSGoodwill
    
    
    45,006
    
    
    
    42,107Intangible assets - net
    
    
    6,084
    
    
    
    9,958Investments in and advances to affiliates
    
    
    1,219
    
    
    
    8,593Deferred charges and other assets - net
    
    
    52,139
    
    
    
    54,376Total other assets
    
    
    104,448
    
    
    
    115,034TOTAL ASSETS
    
    $
    1,016,757
    
    
    $
    1,112,288LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)CURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    6,539
    
    
    $
    6,871Accounts payable
    
    
    34,257
    
    
    
    47,234Income tax payable
    
    
    
    
    
    
    13,144Accrued film rentals
    
    
    21,395
    
    
    
    21,441Accrued interest
    
    
    14,569
    
    
    
    15,333Accrued payroll
    
    
    14,335
    
    
    
    11,226Accrued property taxes
    
    
    14,326
    
    
    
    16,345Accrued other current liabilities
    
    
    23,462
    
    
    
    28,473Total current liabilities
    
    
    128,883
    
    
    
    160,067LONG-TERM LIABILITIESLong-term debt, less current portion
    
    
    1,007,135
    
    
    
    1,037,384Deferred income taxes
    
    
    23,138
    
    
    
    15,591Deferred lease expenses
    
    
    27,962
    
    
    
    29,518Deferred gain on sale leasebacks
    
    
    3,641
    
    
    
    3,275Deferred revenues and other long-term liabilities
    
    
    12,025
    
    
    
    8,513Total long-term liabilities
    
    
    1,073,901
    
    
    
    1,094,281COMMITMENTS AND CONTINGENCIES (see Note 18)
    
    
    
    
    
    
    MINORITY INTERESTS IN SUBSIDIARIES
    
    
    16,697
    
    
    
    16,422STOCKHOLDERS EQUITY (DEFICIENCY)Class A common stock, $0.001 par value: 40,000,000 shares authorized
and 27,896,316 shares issued and outstanding at December 31, 2005
and 27,674,916 shares issued and outstanding at December 31, 2004
    
    
    28
    
    
    
    28Additional paid-in-capital
    
    
    599,525
    
    
    
    604,443Retained deficit
    
    
    (725,155
    )
    
    
    (702,768
    )Accumulated other comprehensive loss
    
    
    (77,122
    )
    
    
    (60,185
    )Total stockholders equity (deficiency)
    
    
    (202,724
    )
    
    
    (158,482
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
    
    $
    1,016,757
    
    
    $
    1,112,288
  F-3




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
 (In thousands, except per share data)
 2003
    
    
    2004
    
    
    2005REVENUESAdmissions
    
    $
    597,548
    
    
    $
    646,999
    
    
    $
    641,240Concession
    
    
    300,568
    
    
    
    321,621
    
    
    
    320,072Other
    
    
    52,756
    
    
    
    55,622
    
    
    
    59,285Total revenues
    
    
    950,872
    
    
    
    1,024,242
    
    
    
    1,020,597COSTS AND EXPENSESCost of
operations (excludes depreciation and amortization):Film rentals and advertising
    
    
    324,902
    
    
    
    348,816
    
    
    
    347,727Concession supplies
    
    
    49,640
    
    
    
    53,761
    
    
    
    52,507Salaries and wages
    
    
    97,240
    
    
    
    103,084
    
    
    
    101,431Facility lease expense
    
    
    119,517
    
    
    
    126,643
    
    
    
    136,593Utilities and other
    
    
    110,792
    
    
    
    112,966
    
    
    
    123,831Total cost of operations
    
    
    702,091
    
    
    
    745,270
    
    
    
    762,089General and administrative expenses
    
    
    44,286
    
    
    
    51,672
    
    
    
    50,884Stock option compensation and change of control
expenses related to the Recapitalization
    
    
    
    
    
    
    31,995
    
    
    
    Depreciation and amortization
    
    
    65,085
    
    
    
    67,051
    
    
    
    76,461Impairment of long-lived assets
    
    
    5,049
    
    
    
    1,667
    
    
    
    9,672(Gain) loss on sale of assets and other
    
    
    (1,202
    )
    
    
    4,851
    
    
    
    2,625Total costs and expenses
    
    
    815,309
    
    
    
    902,506
    
    
    
    901,731OPERATING INCOME
    
    
    135,563
    
    
    
    121,736
    
    
    
    118,866OTHER INCOME (EXPENSE)Interest expense
    
    
    (51,853
    )
    
    
    (69,471
    )
    
    
    (82,883
    )Amortization of debt issue costs
    
    
    (2,310
    )
    
    
    (3,472
    )
    
    
    (3,984
    )Interest income
    
    
    2,035
    
    
    
    1,970
    
    
    
    6,600Foreign currency exchange loss
    
    
    (196
    )
    
    
    (266
    )
    
    
    (1,276
    )Loss on early retirement of debt
    
    
    (7,540
    )
    
    
    (5,974
    )
    
    
    (46
    )Equity in income of affiliates
    
    
    141
    
    
    
    173
    
    
    
    227Minority interests in income of subsidiaries
    
    
    (3,410
    )
    
    
    (4,353
    )
    
    
    (924
    )Total other expenses
    
    
    (63,133
    )
    
    
    (81,393
    )
    
    
    (82,286
    )INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    72,430
    
    
    
    40,343
    
    
    
    36,580Income taxes
    
    
    25,041
    
    
    
    17,302
    
    
    
    14,193INCOME FROM CONTINUING OPERATIONS AFTER INCOME TAXES
    
    
    47,389
    
    
    
    23,041
    
    
    
    22,387Income (loss) from discontinued operations, net of taxes (See Note 6)
    
    
    (2,740
    )
    
    
    3,584
    
    
    
    NET INCOME
    
    $
    44,649
    
    
    $
    26,625
    
    
    $
    22,387EARNINGS (LOSS) PER SHAREBasic:Income from
continuing operations after income taxes
    
    $
    1.17
    
    
    $
    0.75
    
    
    $
    0.81Income (loss) from discontinued operations
    
    
    (0.07
    )
    
    
    0.11
    
    
    
    Net income
    
    $
    1.10
    
    
    $
    0.86
    
    
    $
    0.81Diluted:Income from
continuing operations after income taxes
    
    $
    1.16
    
    
    $
    0.75
    
    
    $
    0.81Income (loss) from discontinued operations
    
    
    (0.07
    )
    
    
    0.11
    
    
    
    Net income
    
    $
    1.09
    
    
    $
    0.86
    
    
    $
    0.81
  F-4




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) AND COMPREHENSIVE INCOME
 YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
 (In thousands)
 Class A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon Stock
    
    
    Common Stock
    
    
    Additional
    
    
    Unearned
    
    
    Retained
    
    
    OtherShares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Paid-in
    
    
    Compensation
    
    
    Earnings
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveIssued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Capital
    
    
    Stock Options
    
    
    (Deficit)
    
    
    Loss
    
    
    Total
    
    
    IncomeBalance at December 31, 2002
    
    
    19,563
    
    
    $
    20
    
    
    
    20,949
    
    
    $
    21
    
    
    $
    40,350
    
    
    $
    (3,105
    )
    
    $
    80,172
    
    
    $
    (89,794
    )
    
    $
    27,664Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,649
    
    
    
    
    
    
    
    44,649
    
    
    $
    44,649Unearned compensation from stock options forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (285
    )
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,080
    
    
    
    
    
    
    
    
    
    
    
    1,080Stock options exercised, including tax benefit of $204
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,249
    
    
    
    3,249
    
    
    
    3,249Balance at December 31, 2003
    
    
    19,664
    
    
    $
    20
    
    
    
    20,949
    
    
    $
    21
    
    
    $
    40,369
    
    
    $
    (1,740
    )
    
    $
    124,821
    
    
    $
    (86,545
    )
    
    $
    76,946
    
    
    $
    47,898Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,625
    
    
    
    
    
    
    
    26,625
    
    
    
    26,625Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    145Recapitalization:Retirement of existing stock
    
    
    (19,664
    )
    
    
    (20
    )
    
    
    (20,949
    )
    
    
    (21
    )
    
    
    (40,369
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,410
    )Issuance of stock
    
    
    27,675
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    624,972
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    625,000Write-off of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    1,595Recapitalization fees, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,447
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,447
    )Impact on retained earnings (deficit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (876,601
    )
    
    
    
    
    
    
    (876,601
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,423
    
    
    
    9,423
    
    
    
    9,423Balance at December 31, 2004
    
    
    27,675
    
    
    $
    28
    
    
    
    
    
    
    $
    
    
    
    $
    599,525
    
    
    $
    
    
    
    $
    (725,155
    )
    
    $
    (77,122
    )
    
    $
    (202,724
    )
    
    $
    36,048Net 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
    
    
    
    16,937Balance at December 31, 2005
    
    
    27,896
    
    
    $
    28
    
    
    
    
    
    
    $
    
    
    
    $
    604,443
    
    
    $
    
    
    
    $
    (702,768
    )
    
    $
    (60,185
    )
    
    $
    (158,482
    )
    
    $
    39,324
  F - 5




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
 (In thousands)
 2003
    
    
    2004
    
    
    2005OPERATING ACTIVITIESNet income
    
    $
    44,649
    
    
    $
    26,625
    
    
    $
    22,387Adjustments to reconcile net income to cash provided by operating activities:Depreciation
    
    
    64,429
    
    
    
    66,398
    
    
    
    73,796Amortization of intangible and other assets
    
    
    656
    
    
    
    653
    
    
    
    2,665Amortization of foreign advanced rents
    
    
    1,806
    
    
    
    1,713
    
    
    
    1,258Amortized compensation  stock options
    
    
    1,080
    
    
    
    145
    
    
    
    Amortization of debt issue costs
    
    
    2,310
    
    
    
    3,472
    
    
    
    3,984Amortization of gain on sale leasebacks
    
    
    (366
    )
    
    
    (366
    )
    
    
    (366
    )Amortization of debt discount and premium
    
    
    (972
    )
    
    
    (1,535
    )
    
    
    (1,564
    )Amortization of deferred revenues
    
    
    (2,623
    )
    
    
    (753
    )
    
    
    (597
    )Impairment of long-lived assets
    
    
    5,049
    
    
    
    1,667
    
    
    
    9,672(Gain) loss on sale of assets and other
    
    
    (1,202
    )
    
    
    4,851
    
    
    
    2,625Write-off unamortized debt issue costs and debt discount and
premium related to the early retirement of debt
    
    
    3,601
    
    
    
    938
    
    
    
    46Write-off unearned compensation related to the Recapitalization
    
    
    
    
    
    
    1,595
    
    
    
    Accretion of interest on senior discount notes
    
    
    
    
    
    
    26,731
    
    
    
    38,549Deferred lease expenses
    
    
    2,741
    
    
    
    309
    
    
    
    1,556Deferred income tax expenses
    
    
    1,863
    
    
    
    10,105
    
    
    
    (7,547
    )Equity in income of affiliates
    
    
    (141
    )
    
    
    (173
    )
    
    
    (227
    )Minority interests in income of subsidiaries
    
    
    3,410
    
    
    
    4,353
    
    
    
    924Tax expense related to common stock issued for options exercised
    
    
    204
    
    
    
    
    
    
    
    Other
    
    
    3,374
    
    
    
    (1,916
    )
    
    
    202Changes in assets and liabilities:Inventories
    
    
    (635
    )
    
    
    86
    
    
    
    (309
    )Accounts receivable
    
    
    (2,998
    )
    
    
    3,700
    
    
    
    (4,102
    )Prepaid expenses and other
    
    
    (1,382
    )
    
    
    1,587
    
    
    
    (649
    )Other assets
    
    
    (5,909
    )
    
    
    (7,448
    )
    
    
    (12,373
    )Advances with affiliates
    
    
    405
    
    
    
    54
    
    
    
    (121
    )Accounts payable and accrued liabilities
    
    
    6,906
    
    
    
    (8,000
    )
    
    
    14,082Other long-term liabilities
    
    
    3,234
    
    
    
    649
    
    
    
    1,198Income tax receivable/payable
    
    
    6,033
    
    
    
    (12,354
    )
    
    
    20,181Net cash provided by operating activities
    
    
    135,522
    
    
    
    123,086
    
    
    
    165,270INVESTING ACTIVITIESAdditions to theatre properties and equipment
    
    
    (51,002
    )
    
    
    (81,008
    )
    
    
    (75,605
    )Proceeds from sale of theatre properties and equipment
    
    
    3,084
    
    
    
    12,945
    
    
    
    1,317Purchase of shares in National CineMedia
    
    
    
    
    
    
    
    
    
    
    (7,329
    )Proceeds from sale of equity investment
    
    
    
    
    
    
    1,250
    
    
    
    Purchase of minority partner shares in Cinemark Brasil
    
    
    
    
    
    
    (44,958
    )
    
    
    Purchase of minority partner shares in Cinemark Mexico
    
    
    
    
    
    
    (5,379
    )
    
    
    Other
    
    
    767
    
    
    
    203
    
    
    
    Net cash used for investing activities
    
    
    (47,151
    )
    
    
    (116,947
    )
    
    
    (81,617
    )FINANCING ACTIVITIESProceeds from equity investors related to Recapitalization
    
    
    
    
    
    
    518,245
    
    
    
    Net payments to stockholders, option holders and other
    
    
    
    
    
    
    (835,704
    )
    
    
    Issuance of common stock
    
    
    101
    
    
    
    
    
    
    
    5,000Issuance of senior discount notes
    
    
    
    
    
    
    360,000
    
    
    
    Retirement of senior discount notes
    
    
    
    
    
    
    
    
    
    
    (1,302
    )Issuance of senior subordinated notes
    
    
    375,225
    
    
    
    
    
    
    
    Retirement of senior subordinated notes
    
    
    (275,000
    )
    
    
    (122,750
    )
    
    
    Proceeds from long-term debt
    
    
    403,516
    
    
    
    291,446
    
    
    
    660Repayments of long-term debt
    
    
    (537,765
    )
    
    
    (200,070
    )
    
    
    (6,671
    )Debt issue costs
    
    
    (15,622
    )
    
    
    (24,354
    )
    
    
    (239
    )Increase in minority investment in subsidiaries
    
    
    4,573
    
    
    
    969
    
    
    
    155Decrease in minority investment in subsidiaries
    
    
    (766
    )
    
    
    (2,225
    )
    
    
    (1,353
    )Net cash used for financing activities
    
    
    (45,738
    )
    
    
    (14,443
    )
    
    
    (3,750
    )EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
    
    
    970
    
    
    
    1,230
    
    
    
    2,048INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    43,603
    
    
    
    (7,074
    )
    
    
    81,951CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    63,719
    
    
    
    107,322
    
    
    
    100,248End of period
    
    $
    107,322
    
    
    $
    100,248
    
    
    $
    182,199
   F - 6




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##### Table of Contents



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business
 Share Exchange
 Principles of Consolidation
 Cash and Cash Equivalents
 Inventories
 Theatre Properties and Equipment
 Category
    
    Useful LifeBuildings
    
    40 yearsTheatre furniture and equipment
    
    5 to 15 yearsLeasehold interests and improvements
    
    Lesser of lease term or useful life
 ,
 Lease Accounting Accounting for Leases Accounting for Operating Leases with Scheduled Rent Increases
 F - 7




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##### Table of Contents



The Effect of Lessee Involvement in Asset
Construction
 Goodwill and Other Intangible Assets
  Intangible Asset
    
    Amortization MethodCapitalized licensing fees
    
    Straight-line method over 15 yearsVendor contracts
    
    Straight-line method over the terms of the underlying contractsFavorable leases
    
    Based on the pattern in which the economic benefits arerealized over the terms of the lease agreementsOther intangible assets
    
    Straight-line method over the terms of the underlying agreements
  Deferred Charges and Other Assets
 Deferred Revenues
 F - 8




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##### Table of Contents



Revenue and Expense Recognition
  Stock Option Accounting
  F - 9




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##### Table of Contents



Accounting for Stock-Based Compensation Accounting for
Stock-Based Compensation Transition and Disclosure
 Years Ended December 31,2003
    
    2004
    
    2005Net income as reported
    
    $
    44,649
    
    
    $
    26,625
    
    
    $
    22,387Compensation expense included in reported
net income, net of tax1
    
    
    707
    
    
    
    87
    
    
    
    Compensation expense under fair-value method,
net of tax
    
    
    (1,054
    )
    
    
    (2,219
    )
    
    
    (2,964
    )Pro-forma net income
    
    $
    44,302
    
    
    $
    24,493
    
    
    $
    19,423Basic earnings per shareAs reported
    
    $
    1.10
    
    
    $
    0.86
    
    
    $
    0.81Pro-forma
    
    $
    1.09
    
    
    $
    0.79
    
    
    $
    0.70Diluted earnings per shareAs reported
    
    $
    1.09
    
    
    $
    0.86
    
    
    $
    0.81Pro-forma
    
    $
    1.09
    
    
    $
    0.79
    
    
    $
    0.70
 1

    Amount for 2004 excludes compensation expense of $16,245 related to the
Recapitalization included in net income.
  Income Taxes  Accounting for Contingencies
 F - 10




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##### Table of Contents



Use of Estimates
 Foreign Currency Translations
 Fair Values of Financial Instruments
 2. NEW ACCOUNTING PRONOUNCEMENTS
 Exchanges of Non-monetary
Assets-Amendment of APB Opinion No. 29
 Share-Based Payment Accounting for Stock Issued to Employees, Accounting
for Stock-Based Compensation
 3. RECAPITALIZATION AND REFINANCING OF CERTAIN LONG-TERM DEBT
 Recapitalization 
 F - 11




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##### Table of Contents



3 4 3 4 3 4 3 4 3 4
   Refinancing of Certain Long-Term Debt 1 2 1 2
  F - 12




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##### Table of Contents



1 2
    4. ACQUISITIONS
 Interstate Theatres
  Cinemark Brasil, S.A.
  F - 13




---



##### Table of Contents



Net favorable leases
    
    $
    730Vendor contracts
    
    
    2,231Goodwill
    
    
    23,962Reduction of minority interest liability
    
    
    18,806$
    45,729
  Cinemark Mexico
  Vendor contract
    
    $
    439Net favorable leases
    
    
    480Tradename
    
    
    1,179Goodwill
    
    
    1,715Reduction of minority interest liability
    
    
    1,566$
    5,379
  5. INVESTMENT IN NATIONAL CINEMEDIA LLC
  F - 14




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##### Table of Contents



6. DISCONTINUED OPERATIONS
 Accounting for Impairment or Disposal of Long-Lived
Assets.
  F - 15




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##### Table of Contents



Year EndedDecember 31,2003
    
    2004RevenuesAdmissions
    
    $
    4,328
    
    
    $
    4,893Concession
    
    
    1,878
    
    
    
    5,341Other
    
    
    513
    
    
    
    1,137Total revenues
    
    
    6,719
    
    
    
    11,371Costs and ExpensesCost of operations:Film rentals and advertising
    
    
    1,863
    
    
    
    2,191Concession supplies
    
    
    365
    
    
    
    905Salaries and wages
    
    
    1,043
    
    
    
    2,266Facility lease expense
    
    
    1,395
    
    
    
    1,684Utilities and other
    
    
    799
    
    
    
    2,216Total cost of operations
    
    
    5,465
    
    
    
    9,262General and administrative expenses
    
    
    496
    
    
    
    497Depreciation and amortization
    
    
    656
    
    
    
    295Impairment of long-lived assets
    
    
    2,500
    
    
    
    (Gain) loss on sale of assets and other
    
    
    540
    
    
    
    (2,252
    )Total costs and expenses
    
    
    9,657
    
    
    
    7,802Operating income (loss)
    
    
    (2,938
    )
    
    
    3,569Equity in income of affiliates
    
    
    323
    
    
    
    Minority interests in income of
subsidiaries
    
    
    
    
    
    
    (41
    )Income (loss) before income taxes
    
    
    (2,615
    )
    
    
    3,528Income tax expense (benefit)
    
    
    125
    
    
    
    (56
    )Income (loss) from discontinued operations
    
    $
    (2,740
    )
    
    $
    3,584
  F - 16




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##### Table of Contents



7. EARNINGS PER SHARE
   Year Ended December 31,2003
    
    2004
    
    2005Income from continuing operations after income taxes
    
    $
    47,389
    
    
    $
    23,041
    
    
    $
    22,387Basic:Weighted average common shares outstanding
    
    
    40,516
    
    
    
    30,865
    
    
    
    27,784Income from continuing operations after income taxes per
common share
    
    $
    1.17
    
    
    $
    0.75
    
    
    $
    0.81Diluted:Weighted average common shares outstanding
    
    
    40,516
    
    
    
    30,865
    
    
    
    27,784Common equivalent shares for stock options
    
    
    279
    
    
    
    
    
    
    
    Weighted average common and common
equivalent shares outstanding
    
    
    40,795
    
    
    
    30,865
    
    
    
    27,784Income from continuing operations after income taxes per
common and common equivalent share
    
    $
    1.16
    
    
    $
    0.75
    
    
    $
    0.81
 8. GOODWILL AND OTHER INTANGIBLE ASSETS  NET
  U.S.
    
    Brazil
    
    Mexico
    
    Argentina
    
    Chile
    
    Peru
    
    TotalBalance at December 31, 2003
    
    $
    6,312
    
    
    $
    
    
    
    $
    
    
    
    $
    239
    
    
    $
    2,994
    
    
    $
    2,538
    
    
    $
    12,083Purchase from minority
investors
    
    
    
    
    
    
    26,923
    
    
    
    3,813
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,736Write-off related to
theatre closure
    
    
    (350
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (350
    )Sale of Interstate
Theatres, L.L.C.
    
    
    (1,030
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,030
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    3,146
    
    
    
    71
    
    
    
    (3
    )
    
    
    212
    
    
    
    141
    
    
    
    3,567Balance at December 31, 2004
    
    $
    4,932
    
    
    $
    30,069
    
    
    $
    3,884
    
    
    $
    236
    
    
    $
    3,206
    
    
    $
    2,679
    
    
    $
    45,006Impairment charge
    
    
    (667
    )
    
    
    (601
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,268
    )Purchase from minority
investors purchase price
allocation adjustments
    
    
    
    
    
    
    (2,961
    )
    
    
    (2,098
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,059
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    3,223
    
    
    
    44
    
    
    
    (5
    )
    
    
    284
    
    
    
    (118
    )
    
    
    3,428Balance at December 31, 2005
    
    $
    4,265
    
    
    $
    29,730
    
    
    $
    1,830
    
    
    $
    231
    
    
    $
    3,490
    
    
    $
    2,561
    
    
    $
    42,107
 F -17




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##### Table of Contents



ForeignBalance at
    
    
    
    
    
    Currency
    
    Balance atDecember 31,
    
    
    
    
    
    Translation
    
    December 31,2004
    
    Additions
    
    Adjustment
    
    2005Intangible assets with finite lives:Capitalized licensing fees:Gross carrying amount
    
    $
    7,750
    
    
    $
    500
    
    
    $
    
    
    
    $
    8,250Accumulated amortization
    
    
    (2,066
    )
    
    
    (525
    )
    
    
    
    
    
    
    (2,591
    )Net carrying amount
    
    $
    5,684
    
    
    $
    (25
    )
    
    $
    
    
    
    $
    5,659Vendor contracts:Gross carrying amount
    
    
    
    
    
    
    2,670
    
    
    
    547
    
    
    
    3,217Accumulated amortization
    
    
    
    
    
    
    (1,703
    )
    
    
    
    
    
    
    (1,703
    )Net carrying amount
    
    $
    
    
    
    $
    967
    
    
    $
    547
    
    
    $
    1,514Net favorable leases:Gross carrying amount
    
    
    
    
    
    
    1,210
    
    
    
    182
    
    
    
    1,392Accumulated amortization
    
    
    
    
    
    
    (232
    )
    
    
    
    
    
    
    (232
    )Net carrying amount
    
    $
    
    
    
    $
    978
    
    
    $
    182
    
    
    $
    1,160Other intangible assets:Gross carrying amount
    
    
    437
    
    
    
    
    
    
    
    (8
    )
    
    
    429Accumulated amortization
    
    
    (53
    )
    
    
    (26
    )
    
    
    
    
    
    
    (79
    )Net carrying amount
    
    $
    384
    
    
    $
    (26
    )
    
    $
    (8
    )
    
    $
    350Total net intangible assets with finite
lives
    
    $
    6,068
    
    
    $
    1,894
    
    
    $
    721
    
    
    $
    8,683Intangible assets with indefinite lives:Tradename
    
    
    
    
    
    
    1,179
    
    
    
    80
    
    
    
    1,259Other unamortized intangible assets
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Total intangible assets - net
    
    $
    6,084
    
    
    $
    3,073
    
    
    $
    801
    
    
    $
    9,958
  F -18




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##### Table of Contents



For the year ended December 31, 2006
    
    $
    1,615For the year ended December 31, 2007
    
    
    1,179For the year ended December 31, 2008
    
    
    942For the year ended December 31, 2009
    
    
    719For the year ended December 31, 2010
    
    
    700Thereafter
    
    
    3,528Total
    
    $
    8,683
 9. IMPAIRMENT OF LONG-LIVED ASSETS
 Accounting for the Impairment or Disposal of Long-Lived
Assets
   Years Ended December 31,Theatre properties and equipment
    
    2003
    
    2004
    
    2005United StatesTheatre properties
    
    $
    820
    
    
    $
    1,667
    
    
    $
    6,788Land parcels
    
    
    2,200
    
    
    
    
    
    
    
    Chile theatre properties
    
    
    529
    
    
    
    
    
    
    
    866Mexico theatre properties
    
    
    1,241
    
    
    
    
    
    
    
    Central America theatre properties
    
    
    
    
    
    
    
    
    
    
    750Subtotal
    
    $
    4,790
    
    
    $
    1,667
    
    
    $
    8,404Goodwill (see Note 8)
    
    
    259
    
    
    
    
    
    
    
    1,268Impairment of long-lived assets
    
    $
    5,049
    
    
    $
    1,667
    
    
    $
    9,672
 F -19




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##### Table of Contents



10. DEFERRED CHARGES AND OTHER ASSETS - NET
  2004
    
    2005Debt issue costs
    
    $
    40,188
    
    
    $
    40,389Less: Accumulated amortization
    
    
    (5,901
    )
    
    
    (9,885
    )Subtotal
    
    
    34,287
    
    
    
    30,504Foreign advanced rents
    
    
    6,626
    
    
    
    11,782Construction advances and other deposits
    
    
    1,728
    
    
    
    2,026Equipment to be placed in service
    
    
    3,599
    
    
    
    3,744Brazil value added tax deposit
    
    
    3,178
    
    
    
    3,602Other
    
    
    2,721
    
    
    
    2,718Total
    
    $
    52,139
    
    
    $
    54,376
 11. LONG-TERM DEBT
  2004
    
    2005Cinemark, Inc. 9 3/4% senior discount notes due 2014
    
    $
    386,731
    
    
    $
    423,978Cinemark USA, Inc. 9% senior subordinated notes due 2013
    
    
    354,894
    
    
    
    353,330Cinemark USA, Inc. Term Loan
    
    
    258,050
    
    
    
    255,450Cinemark Chile S.A. Notes Payable
    
    
    7,324
    
    
    
    6,587Other long-term debt
    
    
    6,675
    
    
    
    4,910Total long-term debt
    
    
    1,013,674
    
    
    
    1,044,255Less current portion
    
    
    6,539
    
    
    
    6,871Long-term debt, less current portion
    
    $
    1,007,135
    
    
    $
    1,037,384
 Senior Discount Notes
 3 4 3 4 3 4 9 3/4% 3 4
 F -20




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##### Table of Contents



Retirement of Outstanding Senior Subordinated Notes
 1 2 1 2 1 2
  1 2 1 2
 Senior Subordinated Notes
    F -21




---



##### Table of Contents



Senior Secured Credit Facility
 1 2
     Cinemark Chile Notes Payable
  F -22




---



##### Table of Contents



2006
    
    $
    6,8712007
    
    
    5,5572008
    
    
    4,2772009
    
    
    4,1082010
    
    
    185,034Thereafter
    
    
    838,408Total
    
    $
    1,044,255
   1 2
 12. FOREIGN CURRENCY TRANSLATION
    F -23




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##### Table of Contents



13. INVESTMENTS IN AND ADVANCES TO AFFILIATES
  2004
    
    2005Investment in National CineMedia LLC  21% interest
    
    $
    
    
    
    $
    7,329Cinemark Theatres Alberta, Inc. - investment, at equity  50% interest
    
    
    293
    
    
    
    303Fandango, Inc. - investment, at cost  1% interest
    
    
    171
    
    
    
    171Cinemark - Core Pacific, Ltd. (Taiwan) - investment, at cost  14%
interest
    
    
    338
    
    
    
    338Other
    
    
    417
    
    
    
    452Total
    
    $
    1,219
    
    
    $
    8,593
  14. MINORITY INTERESTS IN SUBSIDIARIES
  2004
    
    2005Cinemark Partners II - 49.2% interest
    
    $
    8,494
    
    
    $
    8,554Cinemark Equity Holdings Corp. (Central America) - 49.9% interest
    
    
    3,227
    
    
    
    2,577Cinemark Colombia, S.A. - 49.0% interest
    
    
    2,056
    
    
    
    2,333Greeley Ltd.  49.0% interest
    
    
    1,586
    
    
    
    1,491Cinemark del Ecuador, S.A. - 40.0% interest
    
    
    827
    
    
    
    932Cinemark de Mexico, S.A. de C.V. - 0.6% interest
    
    
    204
    
    
    
    272Others
    
    
    303
    
    
    
    263Total
    
    $
    16,697
    
    
    $
    16,422
 F -24




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##### Table of Contents



15. CAPITAL STOCK
 Common and Preferred Stock-
   Stock Option Plans 
  Employee Stock Option Plan Independent Director Stock Options Long Term Incentive Plan
  F -25




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##### Table of Contents



16. SUPPLEMENTAL CASH FLOW INFORMATION
  Years Ended December 31,2003
    
    2004
    
    2005Cash paid for interest
    
    $
    50,992
    
    
    $
    46,686
    
    
    $
    45,166Net cash paid for income taxes
    
    $
    17,330
    
    
    $
    16,682
    
    
    $
    2,911Noncash activities:Change in construction lease obligations
related to construction of theatres
    
    $
    
    
    
    $
    6,463
    
    
    $
    (4,312
    )Changes in accounts payable and accrued expenses
for the acquisition of theatre properties and
equipment
    
    $
    3,218
    
    
    $
    (1,149
    )
    
    $
    8,945Issuance of common stock to existing stockholders
    
    $
    
    
    
    $
    106,755
    
    
    $
    
 F -26




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##### Table of Contents



17. INCOME TAXES
  2003
    
    2004
    
    2005Income from continuing
operations before income
taxes:U.S.
    
    $
    65,348
    
    
    $
    12,390
    
    
    $
    19,838Foreign
    
    
    7,082
    
    
    
    27,953
    
    
    
    16,742Total
    
    $
    72,430
    
    
    $
    40,343
    
    
    $
    36,580Current:Federal
    
    $
    16,280
    
    
    $
    2,729
    
    
    $
    17,651Foreign
    
    
    5,885
    
    
    
    4,008
    
    
    
    2,115State
    
    
    1,013
    
    
    
    460
    
    
    
    1,972Total current expense
    
    
    23,178
    
    
    
    7,197
    
    
    
    21,738Deferred:Federal
    
    
    2,898
    
    
    
    4,825
    
    
    
    (7,513
    )Foreign
    
    
    (1,053
    )
    
    
    5,474
    
    
    
    356State
    
    
    18
    
    
    
    (194
    )
    
    
    (388
    )Total deferred expense
    
    
    1,863
    
    
    
    10,105
    
    
    
    (7,545
    )Income tax expense
    
    $
    25,041
    
    
    $
    17,302
    
    
    $
    14,193
  2003
    
    2004
    
    2005Computed normal tax expense
    
    $
    25,351
    
    
    $
    14,120
    
    
    $
    12,803Goodwill
    
    
    (20
    )
    
    
    (42
    )
    
    
    91Foreign inflation adjustments
    
    
    11
    
    
    
    (100
    )
    
    
    (3,405
    )State and local income
taxes, net of federal income
tax benefit
    
    
    666
    
    
    
    173
    
    
    
    1,030Foreign losses not benefited
and other changes in
valuation allowance
    
    
    221
    
    
    
    (3,201
    )
    
    
    (917
    )Foreign tax rate differential
    
    
    883
    
    
    
    (117
    )
    
    
    (33
    )Section 965 dividends
    
    
    
    
    
    
    
    
    
    
    1,537Other - net
    
    
    (2,071
    )
    
    
    6,469
    
    
    
    3,087Income tax expense
    
    $
    25,041
    
    
    $
    17,302
    
    
    $
    14,193
 F -27




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##### Table of Contents



2004
    
    2005Deferred liabilities:Theatre properties and equipment
    
    $
    40,134
    
    
    $
    33,657Deferred intercompany sale
    
    
    2,985
    
    
    
    2,961Total
    
    $
    43,119
    
    
    $
    36,618Deferred assets:Deferred lease expenses
    
    $
    10,155
    
    
    $
    10,289Theatre properties and equipment
    
    
    4,012
    
    
    
    6,772Deferred gain on sale leasebacks
    
    
    1,986
    
    
    
    1,220Deferred screen advertising revenues
    
    
    107
    
    
    
    Tax loss carryforward
    
    
    14,501
    
    
    
    13,549AMT and other credit carryforwards
    
    
    1,147
    
    
    
    2,159Other expenses, not currently
deductible for tax purposes
    
    
    (2,111
    )
    
    
    (4,064
    )Total
    
    $
    29,797
    
    
    $
    29,925Net long-term deferred income tax
liability before valuation allowance
    
    $
    13,322
    
    
    $
    6,693Valuation allowance
    
    
    9,816
    
    
    
    8,898Net long-term deferred income tax liability
    
    $
    23,138
    
    
    $
    15,591Net deferred tax asset  Foreign
    
    $
    (2,763
    )
    
    $
    (2,407
    )Net deferred tax liability  U.S.
    
    
    25,901
    
    
    
    17,998Total of all deferrals
    
    $
    23,138
    
    
    $
    15,591
      18. COMMITMENTS AND CONTINGENCIES
 Leases
 F -28




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##### Table of Contents



2003
    
    2004
    
    2005Fixed rent expense
    
    $
    100,562
    
    
    $
    104,954
    
    
    $
    110,995Contingent rent expense
    
    
    18,955
    
    
    
    21,689
    
    
    
    25,598Facility lease expense
    
    
    119,517
    
    
    
    126,643
    
    
    
    136,593Corporate office rent expense
    
    
    1,401
    
    
    
    1,406
    
    
    
    1,432Total rent expense
    
    $
    120,918
    
    
    $
    128,049
    
    
    $
    138,025
   OperatingLeases2006
    
    $
    121,3532007
    
    
    127,2632008
    
    
    125,2872009
    
    
    122,0302010
    
    
    115,937Thereafter
    
    
    925,537Total
    
    $
    1,537,407
 Employment Agreements
 Lee Roy Mitchell
  F -29




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##### Table of Contents



Tandy Mitchell, Alan Stock, Robert Copple, Timothy Warner, Robert Carmony, John Lundin and
Michael Cavalier
    F -30




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##### Table of Contents



Retirement Savings Plan
 Letters of Credit and Collateral
 Litigation and Litigation Settlements DOJ Litigation United States v. Cinemark
USA, Inc.
 Mission, Texas Litigation rd
  F -31




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##### Table of Contents



19. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
  Years Ended December 31,Revenues(1)
    
    2003
    
    2004
    
    2005U.S. and Canada
    
    $
    743,843
    
    
    $
    783,394
    
    
    $
    757,902Mexico
    
    
    70,246
    
    
    
    76,148
    
    
    
    74,919Brazil
    
    
    74,853
    
    
    
    90,872
    
    
    
    112,182Other foreign countries
    
    
    63,475
    
    
    
    75,200
    
    
    
    77,213Eliminations
    
    
    (1,545
    )
    
    
    (1,372
    )
    
    
    (1,619
    )Total
    
    $
    950,872
    
    
    $
    1,024,242
    
    
    $
    1,020,597
 December, 31,
    
    December 31,Theatre properties and equipment, net
    
    2004
    
    2005U.S. and Canada
    
    $
    622,578
    
    
    $
    634,938Mexico
    
    
    61,043
    
    
    
    55,366Brazil
    
    
    51,982
    
    
    
    52,371Other foreign countries
    
    
    49,992
    
    
    
    47,891Total
    
    $
    785,595
    
    
    $
    790,566
 
 (1)
    
    Revenues for all periods do not include results of the two United Kingdom theatres
or the eleven Interstate theatres, which were sold during 2004, as the results of
operations for these theatres are included as discontinued operations 20. OTHER RELATED PARTY TRANSACTIONS
  2003
    
    2004
    
    2005Facility lease expense -
theatre and equipment
leases with shareholder
affiliates
    
    $
    288
    
    
    $
    138
    
    
    $
    152Management fee revenues
for property and theatre
management:Equity investee
    
    $
    395
    
    
    $
    169
    
    
    $
    146Other related parties
    
    $
    32
    
    
    $
    
    
    
    $
    66
   F -32




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##### Table of Contents



21. VALUATION AND QUALIFYING ACCOUNTS
  ValuationAllowance forDeferred TaxAssetsBalance at December 31, 2002
    
    $
    11,767Additions
    
    
    2,876Deductions
    
    
    (1,626
    )Balance at December 31, 2003
    
    $
    13,017Additions
    
    
    999Deductions
    
    
    (4,200
    )Balance at December 31, 2004
    
    $
    9,816Additions
    
    
    1,464Deductions
    
    
    (2,382
    )Balance at December 31, 2005
    
    $
    8,898
 F -33




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2005
(In thousands, except share data, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    182,199
    
    
    $
    
    
    
    $
    
    
    
    $
    182,199Other current assets
    
    
    24,489
    
    
    
    
    
    
    
    
    
    
    
    24,489Total current assets
    
    
    206,688
    
    
    
    
    
    
    
    
    
    
    
    206,688THEATRE PROPERTIES AND EQUIPMENT  net
    
    
    790,566
    
    
    
    
    
    
    
    
    
    
    
    790,566OTHER ASSETS
    
    
    115,034
    
    
    
    7,592
    
    
    
    (7,592
    )
    
    
    115,034TOTAL ASSETS
    
    $
    1,112,288
    
    
    $
    7,592
    
    
    $
    (7,592
    )
    
    $
    1,112,288LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)CURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    6,871
    
    
    $
    
    
    
    $
    
    
    
    $
    6,871Income tax payable
    
    
    13,144
    
    
    
    
    
    
    
    
    
    
    
    13,144Accounts payable and accrued expenses
    
    
    140,052
    
    
    
    
    
    
    
    
    
    
    
    140,052Total current liabilities
    
    
    160,067
    
    
    
    
    
    
    
    
    
    
    
    160,067LONG-TERM LIABILITIESLong-term debt, excluding current portion
    
    
    1,037,384
    
    
    
    
    
    
    
    
    
    
    
    1,037,384Other long-term liabilities
    
    
    56,897
    
    
    
    
    
    
    
    
    
    
    
    56,897Total long-term liabilities
    
    
    1,094,281
    
    
    
    
    
    
    
    
    
    
    
    1,094,281COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    MINORITY INTERESTS IN SUBSIDIARIES
    
    
    16,422
    
    
    
    
    
    
    
    
    
    
    
    16,422STOCKHOLDERS EQUITY (DEFICIENCY)
    
    
    (158,482
    )
    
    
    7,592
    
    
    
    (7,592
    )
    
    
    (158,482
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
    
    $
    1,112,288
    
    
    $
    7,592
    
    
    $
    (7,592
    )
    
    $
    1,112,288
  S-1




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2005
(In thousands, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedREVENUES
    
    $
    1,020,597
    
    
    $
    
    
    
    $
    
    
    
    $
    1,020,597COSTS AND EXPENSESCost of operations
    
    
    762,089
    
    
    
    
    
    
    
    
    
    
    
    762,089General and administrative expenses
    
    
    50,884
    
    
    
    
    
    
    
    
    
    
    
    50,884Depreciation and amortization
    
    
    76,461
    
    
    
    
    
    
    
    
    
    
    
    76,461Impairment of long-lived assets
    
    
    9,672
    
    
    
    
    
    
    
    
    
    
    
    9,672Loss on sale of assets and other
    
    
    2,625
    
    
    
    
    
    
    
    
    
    
    
    2,625Total costs and expenses
    
    
    901,731
    
    
    
    
    
    
    
    
    
    
    
    901,731OPERATING INCOME
    
    
    118,866
    
    
    
    
    
    
    
    
    
    
    
    118,866OTHER INCOME (EXPENSE)
    
    
    (82,286
    )
    
    
    
    
    
    
    
    
    
    
    (82,286
    )INCOME BEFORE INCOME TAXES
    
    
    36,580
    
    
    
    
    
    
    
    
    
    
    
    36,580Income taxes
    
    
    14,193
    
    
    
    
    
    
    
    
    
    
    
    14,193NET INCOME
    
    $
    22,387
    
    
    $
    
    
    
    $
    
    
    
    $
    22,387
  S-2




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##### Table of Contents



CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
(In thousands, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIESNet income
    
    $
    22,387
    
    
    $
    
    
    
    $
    
    
    
    $
    22,387Adjustments to reconcile net income to cash provided
by (used for) operating activities:Depreciation and amortization
    
    
    79,176
    
    
    
    
    
    
    
    
    
    
    
    79,176Impairment of long-lived assets
    
    
    9,672
    
    
    
    
    
    
    
    
    
    
    
    9,672Loss on sale of assets and other
    
    
    2,625
    
    
    
    
    
    
    
    
    
    
    
    2,625Accretion of interest on senior discount notes
    
    
    38,549
    
    
    
    
    
    
    
    
    
    
    
    38,549Other
    
    
    (5,046
    )
    
    
    
    
    
    
    
    
    
    
    (5,046
    )Changes in assets and liabilities
    
    
    18,170
    
    
    
    (263
    )
    
    
    
    
    
    
    17,907Net cash provided by (used for) operating activities
    
    
    165,533
    
    
    
    (263
    )
    
    
    
    
    
    
    165,270INVESTING ACTIVITIESAdditions to theatre properties and equipment
    
    
    (75,605
    )
    
    
    
    
    
    
    
    
    
    
    (75,605
    )Proceeds from sale of theatre properties and equipment
    
    
    1,317
    
    
    
    
    
    
    
    
    
    
    
    1,317Purchase of shares in National CineMedia
    
    
    
    
    
    
    (7,329
    )
    
    
    
    
    
    
    (7,329
    )Investment
in affiliate
    
    
    (7,592
    )
    
    
    
    
    
    
    7,592
    
    
    
    Net cash used for investing activities
    
    
    (81,880
    )
    
    
    (7,329
    )
    
    
    7,592
    
    
    
    (81,617
    )FINANCING ACTIVITIESCapital contribution from parent
    
    
    
    
    
    
    7,592
    
    
    
    (7,592
    )
    
    
    Issuance of common stock
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Retirement of senior discount notes
    
    
    (1,302
    )
    
    
    
    
    
    
    
    
    
    
    (1,302
    )Proceeds from long-term debt
    
    
    660
    
    
    
    
    
    
    
    
    
    
    
    660Repayments of long-term debt
    
    
    (6,671
    )
    
    
    
    
    
    
    
    
    
    
    (6,671
    )Debt issue costs
    
    
    (239
    )
    
    
    
    
    
    
    
    
    
    
    (239
    )Increase in minority investment in subsidiaries
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    155Decrease in minority investment in subsidiaries
    
    
    (1,353
    )
    
    
    
    
    
    
    
    
    
    
    (1,353
    )Net cash provided by (used for) financing activities
    
    
    (3,750
    )
    
    
    7,592
    
    
    
    (7,592
    )
    
    
    (3,750
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    2,048
    
    
    
    
    
    
    
    
    
    
    
    2,048INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    81,951
    
    
    
    
    
    
    
    
    
    
    
    81,951CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    100,248
    
    
    
    
    
    
    
    
    
    
    
    100,248End of period
    
    $
    182,199
    
    
    $
    
    
    
    $
    
    
    
    $
    182,199
  S-3




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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, 2005
 E-1




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##### Table of Contents



EXHIBIT INDEX
 2.1
    
    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 the Companys Registration Statement
on Form S-4 (File No. 333-116292) filed June 8, 2004).2.2
    
    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 the Company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 the
Company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 the Companys Registration Statement
on Form S-4 (File No. 333-116292) filed June 8, 2004).4.1
    
    Exchange and Registration Rights Agreement dated March 31, 2004
among Cinemark, Inc., certain subsidiary guarantors party thereto
and the initial purchasers named therein (incorporated by
reference to Exhibit 4.1 to the Company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 9 3/4%
senior discount notes issued thereunder (incorporated by
reference to Exhibit 4.2(a) to the Companys Registration
Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).4.2(b)
    
    Form of 9 3/4% senior discount notes (contained in the indenture
listed as Exhibit 4.2(a) above) (incorporated by reference to
Exhibit 4.2(b) to the Companys Registration Statement on Form
S-4 (File No. 333-116292) filed June 8, 2004).4.2(c)
    
    Indenture dated 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 No. 033-47040) filed March 19, 2003).4.2(d)
    
    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 to Exhibit 4.2(i) to Cinemark USA, Inc.s
Registration Statement on Form S-4 (File No. 333-104940) filed
May 28, 2003).4.2(e)
    
    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).4.2(d)
    
    Form of 9% Note (contained in the Indenture listed as Exhibit
4.2(h) 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 as of July 28, 1993, between Cinemark
USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to
Exhibit 10.1(a) to Cinemark, Inc.s Registration Statement on
Form S-1 (File No. 333-88618) filed May 17, 2002).10.1(b)
    
    Management Agreement, dated as of September 10, 2002, between
Cinemark USA, Inc. and Cinemark de Mexico (incorporated by
reference to Exhibit 10.8 to Cinemark Mexico (USA)s Registration
Statement on Form S-4 (File No. 033-72114) filed on November 24,
1994).10.1(c)
    
    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(d)
    
    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).10.1(e)
    
    Management Agreement, dated September 1, 1994, between Cinemark
Partners II, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.4(i) to Cinemark USA, Inc.s Annual
Report on Form 10-K (File No. 033-47040) filed March 29, 1995).10.1(f)
    
    First Amendment to Management Agreement of Cinemark Partners II,
Ltd. dated as of January 5, 1998 by and between Cinemark USA,
Inc. and Cinemark Partners II, Ltd. (incorporated by reference to
Exhibit 10.1(f) to the Companys Registration Statement on Form
S-4 (File No. 333-116292) filed June 8, 2004).
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10.1(g)
    
    Management Services Agreement dated April 10, 2003 between
Greeley Partners L.P. and CNMK Texas Properties, Ltd.
(incorporated by reference to Exhibit 10.1(g) to the Company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(a)
    
    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).10.3(b)
    
    License Agreement, dated September 1, 1994, between Cinemark
Partners II, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.10(c) to Cinemark USA, Inc.s Annual
Report on Form 10-K (File No. 033-47040) filed March 29, 1995).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
    
    Form of Indemnification Agreement (incorporated by reference to
Exhibit 10.6 to the Companys Registration Statement on Form S-1
(File No. 333-88618) filed on May 17, 2002).10.6(a)
    
    Senior Secured Credit Agreement dated December 4, 1995 among
Cinemark International, L.L.C. (f/k/a Cinemark II, Inc., Cinemark
Mexico (USA) and Cinemark de Mexico (incorporated by reference to
Exhibit 10.18 to Cinemark USA, Inc.s Annual Report on Form 10-K
(File No. 033-47040) filed April 1, 1996).10.6(b)
    
    First Amendment to Senior Secured Credit Agreement, dated as of
September 30, 1996, by and among Cinemark II, Inc., Cinemark
Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V.
(incorporated by reference to Exhibit 10.11(b) to Cinemark,
Inc.s Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).10.6(c)
    
    Second Amendment to Senior Secured Credit Agreement, dated as of
September 28, 2000, by and among Cinemark II, Inc., Cinemark
Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V.
(incorporated by reference to Exhibit 10.11(c) to Cinemark,
Inc.s Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).10.7(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).10.7(b)
    
    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).10.7(c)
    
    Employment Agreement, dated as of March 12, 2004, between
Cinemark, Inc. and Tim 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).10.7(d)
    
    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).10.7(e)
    
    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).10.7(f)
    
    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).10.8(a)
    
    Amended and Restated Credit Agreement, dated April 2, 2004, among
Cinemark, Inc., CNMK Holdings, Inc., Cinemark USA, Inc., the
several lenders from time to time parties thereto, Lehman
Brothers Inc. and Goldman Sachs Credit Partners LP, as Joint
Legal Arrangers, Goldman Sachs Credit Partners LP, as
Syndication Agent, Deutsche Bank Securities, Inc., The Bank of
New York, General Electric Capital Corporation and CIBC Inc. as
Documentation Agents and Lehman Commercial Paper Inc. as
Administrative Agent (incorporated by reference to Exhibit 10.15
to Cinemark USA, Inc.s Quarterly Report on Form 10-Q (File No.
033-47040) filed May 14, 2004).
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##### Table of Contents



10.8(b)
    
    First Amendment to the Amended and Restated Credit Agreement,
dated August 18, 2004, among Cinemark, Inc., CNMK Holdings, Inc.,
Cinemark USA, Inc., the several lenders from time to time parties
thereto, Lehman Brothers Inc. and Goldman Sachs Credit Partners
LP, as Joint Lead Arrangers, Goldman Sachs Credit Partners LP,
as Syndication Agent, Deutsche Bank Securities, Inc., The Bank of
New York, General Electric Capital Corporation and CIBC Inc. as
Documentation Agents and Lehman Commercial Paper Inc. as
Administrative Agent (incorporated by reference to Exhibit
10.15(b) to Cinemark USA, Inc.s Quarterly Report on Form 10-Q
(File No. 033-47040) filed November 10, 2004).10.9
    
    Amended and Restated Guaranty and Collateral Agreement, dated
April 2, 2004, among Cinemark, Inc., CNMK Holdings Inc., Cinemark
USA, Inc. and certain of it subsidiaries in favor of Lehman
Commercial Paper, Inc., as administrative agent (incorporated by
reference to Exhibit 10.16 to Cinemark USA, Inc.s Quarterly
Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).10.10(a)
    
    Cinemark, Inc. Stockholders Agreement dated as of March 12, 2004,
among Madison Dearborn Capital Partners IV, L.P., each of the
investors listed on the Schedule of Mitchell Investors and each
of the executives listed on the Schedule of Executives
(incorporated by reference to Exhibit 10.9 to the Companys
Registration Statement on Form S-4 (File No. 333-116292) filed
June 8, 2004).10.10(b)
    
    Amended and Restated Stockholders Agreement dated as of December
30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP,
Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital
Partners LP, Quadrangle Select Partners LP, Quadrangle Capital
Partners, A LP and the other stockholders party thereto
(incorporated by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K (File No. 333-116292) filed January 4,
2005).10.11(a)
    
    Registration Agreement dated as of March 12, 2004 among the
Company, Madison Dearborn Capital Partners IV, L.P., Lee Roy
Mitchell and The Mitchell Special Trust (incorporated by
reference to Exhibit 10.10 to the Companys Registration
Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).10.11(b)
    
    First Amendment to Registration Agreement dated as of December
30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP,
Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital
Partners LP, Quadrangle Select Partners LP, Quadrangle Capital
Partners, A LP and the other stockholders party thereto
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 333-116292) filed January 4,
2005).10.12(a)
    
    Cinemark, Inc. Long Term Incentive Plan Document, dated September
30, 2004 (incorporated by reference to Exhibit 10.19(a) to the
Companys Quarterly Report on Form 10-Q (File No. 333-116292)
filed November 10, 2004).10.12(b)
    
    Form of Stock Option Agreement (incorporated by reference to
Exhibit 10.19(b) to the Companys Quarterly Report on Form 10-Q
(File No. 333-116292) filed November 10, 2004).10.13(a)
    
    Stock Purchase Agreement dated as of August 18, 2004, among
Cinemark Empreendimentos e Participacoes, Ltda, Venture II Equity
Holdings Corporation, Inc. and Kristal Holdings Limited
(incorporated by reference to Exhibit 10.20(a) to the Companys
Quarterly Report on Form 10-Q (File No. 333-116292) filed
November 10, 2004).10.13(b)
    
    Stock Purchase Agreement dated as of August 18, 2004, among
Cinemark Empreendimentos e Participacoes, Ltda, Prona Global
Ltd., Messrs. Edgar Gleich, Riccardo Arduini, Moises Pinsky,
Eduardo Alalou, and Robert Luis Leme Klabin (incorporated by
reference to Exhibit 10.20(b) to the Companys Quarterly Report
on Form 10-Q (File No. 333-116292) filed November 10, 2004).*12
    
    Calculation of Earnings to Fixed Charges*21
    
    Subsidiaries of the Registrant*31.1
    
    Certification of Chief Executive Officer of Cinemark, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Chief Financial Officer of Cinemark, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of the Chief Executive Officer of Cinemark, Inc.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of the Chief Financial Officer of Cinemark, Inc.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *

    Filed herewith E-4