##### Table of Contents



CINEMARK USA, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTION (H)(1)(A) AND (B) OF FORM 10-Q AND THEREFORE IS FILING THIS FORM
WITH THE REDUCED DISCLOSURE FORMAT
   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 Commission File Number: 033-47040
 CINEMARK USA, INC.
 (Exact name of registrant as specified in its charter)
 Texas
(State or other jurisdiction 
of incorporation or organization)
    
    75-2206284
(I.R.S. Employer
Identification No.)3900 Dallas Parkway 
Suite 500
Plano, Texas
(Address of principal executive offices)
    
    75093
(Zip Code)
   þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



CINEMARK USA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2010 and
December 31, 2009 (unaudited)
    
    
    4Condensed Consolidated Statements of Income for the three and
six months ended June 30, 2010 and 2009 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2010 and 2009 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    31Item 4. Controls and Procedures
    
    
    39PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    40Item 1A. Risk Factors
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    44SIGNATURES
    
    
    45EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Cautionary Statement Regarding Forward-Looking Statements
  3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CINEMARK USA, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data, unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assetsCash and cash equivalents
    
    $
    435,715
    
    
    $
    437,737Inventories
    
    
    10,302
    
    
    
    9,854Accounts receivable
    
    
    40,638
    
    
    
    32,793Income tax receivable
    
    
    13,961
    
    
    
    13,025Current deferred tax asset
    
    
    3,289
    
    
    
    3,321Prepaid expenses and other
    
    
    9,453
    
    
    
    10,051Accounts receivable from parent
    
    
    8,281
    
    
    
    7,656Total current assets
    
    
    521,639
    
    
    
    514,437Theatre properties and equipment
    
    
    1,948,064
    
    
    
    1,936,535Less accumulated depreciation and amortization
    
    
    763,810
    
    
    
    716,947Theatre properties and equipment  net
    
    
    1,184,254
    
    
    
    1,219,588Other assetsGoodwill
    
    
    1,114,343
    
    
    
    1,116,302Intangible assets  net
    
    
    339,210
    
    
    
    342,998Investment in NCM
    
    
    64,283
    
    
    
    34,232Investment in DCIP
    
    
    13,469
    
    
    
    640Investment in Real D
    
    
    6,521
    
    
    
    Investments in and advances to affiliates
    
    
    3,849
    
    
    
    2,889Deferred charges and other assets  net
    
    
    65,809
    
    
    
    52,502Total other assets
    
    
    1,607,484
    
    
    
    1,549,563Total assets
    
    $
    3,313,377
    
    
    $
    3,283,588Liabilities and equityCurrent liabilitiesCurrent portion of long-term debt
    
    $
    11,112
    
    
    $
    12,227Current portion of capital lease obligations
    
    
    7,344
    
    
    
    7,340Current liability for uncertain tax positions
    
    
    2,652
    
    
    
    13,229Accounts payable and accrued expenses
    
    
    229,254
    
    
    
    247,938Total current liabilities
    
    
    250,362
    
    
    
    280,734Long-term liabilitiesLong-term debt, less current portion
    
    
    1,526,805
    
    
    
    1,531,478Capital lease obligations, less current portion
    
    
    131,680
    
    
    
    133,028Deferred tax liability
    
    
    110,339
    
    
    
    124,823Liability for uncertain tax positions
    
    
    15,753
    
    
    
    18,432Deferred lease expenses
    
    
    29,359
    
    
    
    27,698Deferred revenue  NCM
    
    
    232,212
    
    
    
    203,006Other long-term liabilities
    
    
    48,188
    
    
    
    42,248Total long-term liabilities
    
    
    2,094,336
    
    
    
    2,080,713Commitments and contingencies (see Note 19)EquityCinemark USA, Inc.s stockholders equity:Class A common stock, $0.01 par value: 10,000,000 shares authorized, 1,500
shares issued and
outstanding
    
    
    
    
    
    
    Class B common stock, no par value: 1,000,000
shares authorized, 239,893 shares issued and 182,648
shares outstanding
    
    
    49,543
    
    
    
    49,543Treasury stock, 57,245 Class B shares at cost
    
    
    (24,233
    )
    
    
    (24,233
    )Additional paid-in-capital
    
    
    1,162,894
    
    
    
    1,151,166Retained deficit
    
    
    (220,633
    )
    
    
    (261,672
    )Accumulated other comprehensive loss
    
    
    (10,370
    )
    
    
    (7,459
    )Total Cinemark USA, Inc.s stockholders equity
    
    
    957,201
    
    
    
    907,345Noncontrolling interests
    
    
    11,478
    
    
    
    14,796Total equity
    
    
    968,679
    
    
    
    922,141Total liabilities and equity
    
    $
    3,313,377
    
    
    $
    3,283,588
  4




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesAdmissions
    
    $
    353,085
    
    
    $
    339,088
    
    
    $
    696,075
    
    
    $
    618,971Concession
    
    
    165,230
    
    
    
    158,926
    
    
    
    318,334
    
    
    
    288,957Other
    
    
    21,054
    
    
    
    19,494
    
    
    
    41,591
    
    
    
    35,380Total revenues
    
    
    539,369
    
    
    
    517,508
    
    
    
    1,056,000
    
    
    
    943,308Cost of operationsFilm rentals and advertising
    
    
    193,550
    
    
    
    190,826
    
    
    
    382,369
    
    
    
    337,952Concession supplies
    
    
    24,494
    
    
    
    24,027
    
    
    
    46,900
    
    
    
    43,744Salaries and wages
    
    
    56,250
    
    
    
    52,070
    
    
    
    108,792
    
    
    
    96,420Facility lease expense
    
    
    61,990
    
    
    
    59,195
    
    
    
    124,705
    
    
    
    114,933Utilities and other
    
    
    57,648
    
    
    
    54,168
    
    
    
    112,869
    
    
    
    102,896General and administrative expenses
    
    
    24,461
    
    
    
    23,247
    
    
    
    49,452
    
    
    
    44,658Depreciation and amortization
    
    
    34,657
    
    
    
    37,535
    
    
    
    68,590
    
    
    
    73,668Amortization of favorable/unfavorable leases
    
    
    258
    
    
    
    346
    
    
    
    416
    
    
    
    669Impairment of long-lived assets
    
    
    4,688
    
    
    
    3,930
    
    
    
    5,035
    
    
    
    4,969Loss on sale of assets and other
    
    
    1,191
    
    
    
    1,186
    
    
    
    4,358
    
    
    
    1,458Total cost of operations
    
    
    459,187
    
    
    
    446,530
    
    
    
    903,486
    
    
    
    821,367Operating income
    
    
    80,182
    
    
    
    70,978
    
    
    
    152,514
    
    
    
    121,941Other income (expense)Interest expense
    
    
    (28,605
    )
    
    
    (15,257
    )
    
    
    (54,615
    )
    
    
    (30,539
    )Interest income
    
    
    1,379
    
    
    
    937
    
    
    
    2,432
    
    
    
    2,610Foreign currency exchange gain
    
    
    348
    
    
    
    472
    
    
    
    80
    
    
    
    538Distributions from NCM
    
    
    1,332
    
    
    
    5,027
    
    
    
    11,278
    
    
    
    11,606Equity in loss of affiliates
    
    
    (3,182
    )
    
    
    (415
    )
    
    
    (3,155
    )
    
    
    (1,020
    )Total other expense
    
    
    (28,728
    )
    
    
    (9,236
    )
    
    
    (43,980
    )
    
    
    (16,805
    )Income before income taxes
    
    
    51,454
    
    
    
    61,742
    
    
    
    108,534
    
    
    
    105,136Income taxes
    
    
    10,392
    
    
    
    18,190
    
    
    
    30,425
    
    
    
    36,651Net income
    
    $
    41,062
    
    
    $
    43,552
    
    
    $
    78,109
    
    
    $
    68,485Less: Net income attributable to noncontrolling
interests
    
    
    1,077
    
    
    
    1,137
    
    
    
    2,695
    
    
    
    1,923Net income attributable to Cinemark USA, Inc.
    
    $
    39,985
    
    
    $
    42,415
    
    
    $
    75,414
    
    
    $
    66,562
  5




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CINEMARK USA, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands, unaudited)
 Six months ended June 30,2010
    
    
    2009Operating activitiesNet income
    
    $
    78,109
    
    
    $
    68,485Adjustments to reconcile net income to cash provided by operating activities:Depreciation
    
    
    66,378
    
    
    
    71,678Amortization of intangible and other assets and unfavorable leases
    
    
    2,628
    
    
    
    2,659Amortization of long-term prepaid rents
    
    
    779
    
    
    
    750Amortization of debt issue costs
    
    
    2,357
    
    
    
    1,727Amortization of deferred revenues, deferred lease incentives and other
    
    
    (3,005
    )
    
    
    (2,167
    )Amortization of accumulated other comprehensive loss related to interest rate
swap agreement
    
    
    2,317
    
    
    
    2,317Amortization of bond discount
    
    
    381
    
    
    
    Impairment of long-lived assets
    
    
    5,035
    
    
    
    4,969Share based awards compensation expense
    
    
    2,873
    
    
    
    2,153Loss on sale of assets and other
    
    
    2,325
    
    
    
    1,458Loss on contribution and sale of digital projection systems to DCIP
    
    
    2,033
    
    
    
    Deferred lease expenses
    
    
    1,697
    
    
    
    2,121Deferred income tax expenses
    
    
    (14,176
    )
    
    
    (17,006
    )Equity in loss of affiliates
    
    
    3,155
    
    
    
    1,020Tax benefit related to stock option exercises
    
    
    1,904
    
    
    
    Increase in deferred revenue related to new U.S. beverage agreement
    
    
    
    
    
    
    6,550Distributions from equity investees
    
    
    2,059
    
    
    
    1,078Changes in assets and liabilities
    
    
    (48,965
    )
    
    
    21,261Net cash provided by operating activities
    
    
    107,884
    
    
    
    169,053Investing activitiesAdditions to theatre properties and equipment
    
    
    (56,960
    )
    
    
    (60,918
    )Proceeds from sale of theatre properties and equipment
    
    
    2,148
    
    
    
    653Acquisition of theatres in the U.S.
    
    
    
    
    
    
    (48,950
    )Investment in joint venture  DCIP, net of cash distributions
    
    
    (644
    )
    
    
    (1,500
    )Net cash used for investing activities
    
    
    (55,456
    )
    
    
    (110,715
    )Financing activitiesCapital contributions from parent
    
    
    
    
    
    
    19,650Dividends paid to parent
    
    
    (34,375
    )
    
    
    (452,975
    )Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings
    
    
    (416
    )
    
    
    Proceeds from issuance of senior notes
    
    
    
    
    
    
    458,532Payment of debt issue costs
    
    
    (8,706
    )
    
    
    (12,423
    )Repayments of long-term debt
    
    
    (6,136
    )
    
    
    (6,289
    )Payments on capital leases
    
    
    (3,606
    )
    
    
    (2,830
    )Other
    
    
    (110
    )
    
    
    (795
    )Net cash provided by (used for)
financing activities
    
    
    (53,349
    )
    
    
    2,870Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,101
    )
    
    
    7,959Increase (decrease) in cash and cash equivalents
    
    
    (2,022
    )
    
    
    69,167Cash and cash equivalents:Beginning of period
    
    
    437,737
    
    
    
    313,238End of period
    
    $
    435,715
    
    
    $
    382,405Supplemental information (See Note 15)
  6




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##### Table of Contents



1. The Company and Basis of Presentation
    2. New Accounting Pronouncements
 Interim Disclosures about Fair Value of
Financial Instruments
 June 30, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueDebt (see Note 10)
    
    $
    (1,537,917
    )
    
    $
    (1,516,184
    )
    
    $
    (1,543,705
    )
    
    $
    (1,513,838
    )Interest rate swap agreements (see Note 11)
    
    $
    (19,257
    )
    
    $
    (19,257
    )
    
    $
    (18,524
    )
    
    $
    (18,524
    )
 Subsequent Events"
 7




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##### Table of Contents



The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles"
 Consolidations (Topic 810)  Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities.
 Fair Value Measurements and Disclosures:
Improving Disclosures about Fair Value Measurements Fair Value Measurements and Disclosures"
 3. Buyout of Colombia Noncontrolling Interest
  8




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##### Table of Contents



4. Equity
  CinemarkUSA, Inc.Stockholders
    
    
    Noncontrolling
    
    
    TotalEquity
    
    
    Interests
    
    
    EquityBalance at January 1, 2010
    
    $
    907,345
    
    
    $
    14,796
    
    
    $
    922,141Colombia Share Exchange (see Note 3)
    
    
    5,865
    
    
    
    (5,865
    )
    
    
    Share based awards compensation expense
    
    
    2,873
    
    
    
    
    
    
    
    2,873Dividends paid to parent
    
    
    (34,375
    )
    
    
    
    
    
    
    (34,375
    )Tax benefit related to stock option exercises
    
    
    1,904
    
    
    
    
    
    
    
    1,904Dividends paid to noncontrolling interests
    
    
    
    
    
    
    (110
    )
    
    
    (110
    )Comprehensive income:Net income
    
    
    75,414
    
    
    
    2,695
    
    
    
    78,109Fair value adjustments on interest rate swap agreements, net of
taxes of $276
    
    
    (456
    )
    
    
    
    
    
    
    (456
    )Amortization of accumulated other comprehensive loss on
terminated swap agreement
    
    
    2,317
    
    
    
    
    
    
    
    2,317Foreign currency translation adjustment
    
    
    (3,686
    )
    
    
    (38
    )
    
    
    (3,724
    )Balance at June 30, 2010
    
    $
    957,201
    
    
    $
    11,478
    
    
    $
    968,679
 CinemarkUSA, Inc.Stockholders
    
    
    Noncontrolling
    
    
    TotalEquity
    
    
    Interests
    
    
    EquityBalance at January 1, 2009
    
    $
    1,142,920
    
    
    $
    12,971
    
    
    $
    1,155,891Share based awards compensation expense
    
    
    2,153
    
    
    
    
    
    
    
    2,153Dividends paid to parent
    
    
    (452,975
    )
    
    
    
    
    
    
    (452,975
    )Capital contributions from parent
    
    
    55,525
    
    
    
    
    
    
    
    55,525Dividends paid to noncontrolling interests
    
    
    
    
    
    
    (700
    )
    
    
    (700
    )Purchase of noncontrolling interest share of an Argentina subsidiary
    
    
    23
    
    
    
    (117
    )
    
    
    (94
    )Comprehensive income:Net income
    
    
    66,562
    
    
    
    1,923
    
    
    
    68,485Fair value adjustments on interest rate swap agreements, net of
taxes of $2,181
    
    
    3,605
    
    
    
    
    
    
    
    3,605Amortization of accumulated other comprehensive loss on
terminated swap agreement
    
    
    2,317
    
    
    
    
    
    
    
    2,317Foreign currency translation adjustment
    
    
    33,414
    
    
    
    127
    
    
    
    33,541Balance at June 30, 2009
    
    $
    853,544
    
    
    $
    14,204
    
    
    $
    867,748
 5. Acquisition of U.S. Theatres
  9




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Theatre properties and equipment
    
    $
    25,575Brandname
    
    
    3,500Noncompete agreement
    
    
    1,630Goodwill
    
    
    44,565Unfavorable lease
    
    
    (3,600
    )Capital lease liability (for one theatre)
    
    
    (22,720
    )Total
    
    $
    48,950
  6. Investment in National CineMedia
  Investment
    
    
    Deferred
    
    
    Distributions
    
    
    Equity
    
    
    Other
    
    
    Cashin NCM
    
    
    Revenue
    
    
    from NCM
    
    
    Earnings
    
    
    Revenue
    
    
    ReceivedBalance as of December 31, 2009
    
    $
    34,232
    
    
    $
    (203,006
    )Receipt of common units due to annual
common unit adjustment
    
    
    30,683
    
    
    
    (30,683
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Change of interest gain due to 2010
extraordinary common unit adjustment
    
    
    271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revenues earned under exhibitor
services agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,434
    )
    
    
    2,434Receipt of excess cash distributions
    
    
    (1,454
    )
    
    
    
    
    
    
    (8,211
    )
    
    
    
    
    
    
    
    
    
    
    9,665Receipt under tax receivable agreement
    
    
    (477
    )
    
    
    
    
    
    
    (3,067
    )
    
    
    
    
    
    
    
    
    
    
    3,544Equity in earnings
    
    
    1,028
    
    
    
    
    
    
    
    
    
    
    
    (1,028
    )
    
    
    
    
    
    
    Amortization of deferred revenue
    
    
    
    
    
    
    1,477
    
    
    
    
    
    
    
    
    
    
    
    (1,477
    )
    
    
    Balance as of and for the period
ended June 30, 2010
    
    $
    64,283
    
    
    $
    (232,212
    )
    
    $
    (11,278
    )
    
    $
    (1,028
    )
    
    $
    (3,911
    )
    
    $
    15,643
  10




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded July 1, 2010
    
    
    Ended July 1, 2010Gross revenues
    
    $
    98,998
    
    
    $
    183,656Operating income
    
    $
    43,550
    
    
    $
    69,710Net earnings
    
    $
    27,546
    
    
    $
    40,193
 7. Investment in Digital Cinema Implementation Partners
     11




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8. Investment in Real D
  9. Share Based Awards
 Stock Options 
 Weighted AverageNumber of
    
    
    Weighted Average
    
    
    Grant Date Fair
    
    
    Aggregate IntrinsicOptions
    
    
    Exercise Price
    
    
    Value
    
    
    ValueOutstanding at December 31, 2009
    
    
    1,231,892
    
    
    $
    7.63
    
    
    $
    3.51Exercised
    
    
    (772,727
    )
    
    $
    7.63
    
    
    $
    3.51Outstanding at June 30, 2010
    
    
    459,165
    
    
    $
    7.63
    
    
    $
    3.51
    
    
    $
    2,535Options exercisable at June 30, 2010
    
    
    459,165
    
    
    $
    7.63
    
    
    $
    3.51
    
    
    $
    2,535
   Restricted Stock
 12




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##### Table of Contents



Shares of
    
    
    Weighted AverageRestricted
    
    
    Grant DateStock
    
    
    Fair ValueOutstanding at December 31, 2009
    
    
    764,078
    
    
    $
    11.10Granted
    
    
    679,308
    
    
    $
    17.94Forfeited
    
    
    (2,719
    )
    
    $
    11.03Vested
    
    
    (189,885
    )
    
    $
    12.64Outstanding at June 30, 2010
    
    
    1,250,782
    
    
    $
    14.58Unvested restricted stock at June 30, 2010
    
    
    1,250,782
    
    
    $
    14.58
  Restricted Stock Units
  Number ofShares
    
    
    Value atVesting
    
    
    Grantat IRR of at least 8.5%
    
    
    132,144
    
    
    $
    2,423at IRR of at least 10.5%
    
    
    264,288
    
    
    $
    4,847at IRR of at least 12.5%
    
    
    396,432
    
    
    $
    7,271
  13




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##### Table of Contents



10. Long-Term Debt Activity
 Senior Notes
 3 4
 Cash Tender Offer for Cinemark, Inc.s 9 3/4% Senior Discount Notes due 2014
 3 4 3 4
 Amendment and Extension of Senior Secured Credit Facility
  14




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##### Table of Contents



Fair Value of Long-Term Debt
  11. Interest Rate Swap Agreements
 .
 15




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##### Table of Contents



2010
    
    
    2009Beginning liability balance   January 1
    
    $
    18,524
    
    
    $
    24,781Total (gain) loss included in accumulated other comprehensive loss
    
    
    733
    
    
    
    (5,786
    )Ending liability balance  June 30
    
    $
    19,257
    
    
    $
    18,995
  12. Goodwill and Other Intangible Assets
  U.S.
    
    
    InternationalOperating
    
    
    OperatingSegment
    
    
    Segment
    
    
    TotalBalance at December 31, 2009 (1)
    
    $
    948,026
    
    
    $
    168,276
    
    
    $
    1,116,302Foreign currency translation adjustments
    
    
    
    
    
    
    (1,959
    )
    
    
    (1,959
    )Balance at June 30, 2010 (1)
    
    $
    948,026
    
    
    $
    166,317
    
    
    $
    1,114,343
 
 (1)
    
    Balances are presented net of accumulated impairment losses of $214,031 for
the U.S. operating segment and $27,622 for the international operating segment.   16




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##### Table of Contents



Balance at
    
    
    
    
    
    
    Foreign Currency
    
    
    Balance atDecember 31,
    
    
    
    
    
    
    Translation
    
    
    June 30,2009
    
    
    Amortization
    
    
    Adjustments & Other
    
    
    2010Intangible assets with finite lives:Vendor contracts:Gross carrying amount
    
    $
    56,474
    
    
    $
    
    
    
    $
    61
    
    
    $
    56,535Accumulated amortization
    
    
    (29,870
    )
    
    
    (1,634
    )
    
    
    
    
    
    
    (31,504
    )Net carrying amount
    
    
    26,604
    
    
    
    (1,634
    )
    
    
    61
    
    
    
    25,031Other intangible assets:Gross carrying amount
    
    
    26,510
    
    
    
    
    
    
    
    (1,896
    )
    
    
    24,614Accumulated amortization
    
    
    (20,596
    )
    
    
    (1,125
    )
    
    
    726
    
    
    
    (20,995
    )Net carrying amount
    
    
    5,914
    
    
    
    (1,125
    )
    
    
    (1,170
    )
    
    
    3,619Total net intangible assets with finite lives
    
    
    32,518
    
    
    
    (2,759
    )
    
    
    (1,109
    )
    
    
    28,650Intangible assets with indefinite lives:Tradename
    
    
    310,480
    
    
    
    
    
    
    
    80
    
    
    
    310,560Total intangible assets  net
    
    $
    342,998
    
    
    $
    (2,759
    )
    
    $
    (1,029
    )
    
    $
    339,210
 
  For the six months ended December 31, 2010
    
    $
    2,643For the twelve months ended December 31, 2011
    
    
    5,158For the twelve months ended December 31, 2012
    
    
    5,002For the twelve months ended December 31, 2013
    
    
    4,256For the twelve months ended December 31, 2014
    
    
    3,710Thereafter
    
    
    7,881Total
    
    $
    28,650
 13. Impairment of Long-Lived Assets
    17




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009United States theatre properties
    
    $
    2,494
    
    
    $
    3,844
    
    
    $
    2,841
    
    
    $
    4,665International theatre properties
    
    
    1,063
    
    
    
    86
    
    
    
    1,063
    
    
    
    233Subtotal
    
    $
    3,557
    
    
    $
    3,930
    
    
    $
    3,904
    
    
    $
    4,898Intangible assets
    
    
    1,131
    
    
    
    
    
    
    
    1,131
    
    
    
    71Impairment of long-lived assets
    
    $
    4,688
    
    
    $
    3,930
    
    
    $
    5,035
    
    
    $
    4,969
 14. Foreign Currency Translation
        18




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##### Table of Contents



15. Supplemental Cash Flow Information
  Six Months EndedJune 30,2010
    
    
    2009Cash paid for interest
    
    $
    47,788
    
    
    $
    28,220Cash paid for income taxes, net of refunds received
    
    $
    56,429
    
    
    $
    33,893Noncash investing and financing activities:Change in accounts payable and accrued expenses for the acquisition of theatre properties
and 
equipment (1)
    
    $
    97
    
    
    $
    (7,118
    )Theatre properties acquired under capital lease (2)
    
    $
    2,191
    
    
    $
    20,400Change in fair market values of interest rate swap agreements, net of taxes
    
    $
    (456
    )
    
    $
    3,605Investment in NCM  receipt of common units (see Note 6)
    
    $
    30,683
    
    
    $
    15,536Investment in NCM  change of interest gain (see Note 6)
    
    $
    271
    
    
    $
    Equipment contributed to DCIP (see Note 7)
    
    $
    18,090
    
    
    $
    Investment in Real D (see Note 8)
    
    $
    6,521
    
    
    $
    Capital contribution from former parent, Cinemark, Inc., primarily related to income taxes
    
    $
    
    
    
    $
    35,875Capital contribution from Cinemark Holdings, Inc. as a result of Colombia Share Exchange
(see Note 3)
    
    $
    6,951
    
    
    $
    
 
 (1)
    
    Additions to theatre properties and equipment included in accounts payable as of
December 31, 2009 and June 30, 2010 were $7,823 and $7,919, respectively.(2)
    
    Amount recorded during the six months ended June 30, 2009 was a result of the
acquisition of theatres in the U.S. as discussed in Note 5. 16. Segments
  19




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesU.S.
    
    $
    410,964
    
    
    $
    419,575
    
    
    $
    799,579
    
    
    $
    761,019International
    
    
    129,641
    
    
    
    98,962
    
    
    
    258,912
    
    
    
    184,158Eliminations
    
    
    (1,236
    )
    
    
    (1,029
    )
    
    
    (2,491
    )
    
    
    (1,869
    )Total Revenues
    
    $
    539,369
    
    
    $
    517,508
    
    
    $
    1,056,000
    
    
    $
    943,308Adjusted EBITDAU.S.
    
    $
    96,857
    
    
    $
    100,879
    
    
    $
    186,596
    
    
    $
    182,850International
    
    
    28,568
    
    
    
    20,216
    
    
    
    60,944
    
    
    
    36,485Total Adjusted EBITDA
    
    $
    125,425
    
    
    $
    121,095
    
    
    $
    247,540
    
    
    $
    219,335Capital ExpendituresU.S.
    
    $
    23,508
    
    
    $
    27,171
    
    
    $
    36,008
    
    
    $
    43,422International
    
    
    13,935
    
    
    
    10,875
    
    
    
    20,952
    
    
    
    17,496Total Capital Expenditures
    
    $
    37,443
    
    
    $
    38,046
    
    
    $
    56,960
    
    
    $
    60,918
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    41,062
    
    
    $
    43,552
    
    
    $
    78,109
    
    
    $
    68,485Add (deduct):Income taxes
    
    
    10,392
    
    
    
    18,190
    
    
    
    30,425
    
    
    
    36,651Interest expense (1)
    
    
    28,605
    
    
    
    15,257
    
    
    
    54,615
    
    
    
    30,539Other (income) expense (2)
    
    
    1,455
    
    
    
    (994
    )
    
    
    643
    
    
    
    (2,128
    )Depreciation and amortization
    
    
    34,657
    
    
    
    37,535
    
    
    
    68,590
    
    
    
    73,668Amortization of favorable/unfavorable leases
    
    
    258
    
    
    
    346
    
    
    
    416
    
    
    
    669Impairment of long-lived assets
    
    
    4,688
    
    
    
    3,930
    
    
    
    5,035
    
    
    
    4,969Loss on sale of assets and other
    
    
    1,191
    
    
    
    1,186
    
    
    
    4,358
    
    
    
    1,458Deferred lease expenses
    
    
    914
    
    
    
    1,034
    
    
    
    1,697
    
    
    
    2,121Amortization of long-term prepaid rents
    
    
    438
    
    
    
    360
    
    
    
    779
    
    
    
    750Share based awards compensation expense
    
    
    1,765
    
    
    
    699
    
    
    
    2,873
    
    
    
    2,153Adjusted EBITDA
    
    $
    125,425
    
    
    $
    121,095
    
    
    $
    247,540
    
    
    $
    219,335
 
 (1)
    
    Includes amortization of debt issue costs.(2)
    
    Includes interest income, foreign currency exchange gain, and equity in loss of
affiliates and excludes distributions from NCM. Distributions from NCM are reported entirely
within the U.S. operating segment. Financial Information About Geographic Areas
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Revenues
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009U.S. and Canada
    
    $
    410,964
    
    
    $
    419,575
    
    
    $
    799,579
    
    
    $
    761,019Brazil
    
    
    69,999
    
    
    
    49,323
    
    
    
    139,217
    
    
    
    92,581Mexico
    
    
    17,715
    
    
    
    15,311
    
    
    
    35,097
    
    
    
    29,528Other foreign countries
    
    
    41,927
    
    
    
    34,328
    
    
    
    84,598
    
    
    
    62,049Eliminations
    
    
    (1,236
    )
    
    
    (1,029
    )
    
    
    (2,491
    )
    
    
    (1,869
    )Total
    
    $
    539,369
    
    
    $
    517,508
    
    
    $
    1,056,000
    
    
    $
    943,308
 20




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##### Table of Contents



June 30,
    
    
    December 31,Theatre Properties and Equipment-net
    
    2010
    
    
    2009U.S. and Canada
    
    $
    1,000,033
    
    
    $
    1,040,395Brazil
    
    
    97,797
    
    
    
    91,996Mexico
    
    
    37,938
    
    
    
    39,371Other foreign countries
    
    
    48,486
    
    
    
    47,826Total
    
    $
    1,184,254
    
    
    $
    1,219,588
 17. Related Party Transactions
     18. Income Taxes
  19. Commitments and Contingencies
  21




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##### Table of Contents



20. Condensed Consolidating Financial Information of Subsidiary Guarantors
    1.
    
    Condensed consolidating balance sheet information as of December 31, 2009 and
June 30, 2010, condensed consolidating statements of income information for each of the
three and six months ended June 30, 2009 and 2010, and condensed consolidating
statements of cash flows information for each of the six months ended June 30, 2009 and
2010.2.
    
    Cinemark USA, Inc. (the Parent and Issuer), combined Guarantor Subsidiaries
and combined Non-Guarantor Subsidiaries with their investments in subsidiaries
accounted for using the equity method of accounting and therefore, the Parent column
reflects the equity income (loss) of its Guarantor Subsidiaries and Non-Guarantor
Subsidiaries, which are also separately reflected in the stand-alone Guarantor
Subsidiaries and Non-Guarantor Subsidiaries column. Additionally, the Guarantor
Subsidiaries column reflects the equity income (loss) of its Non-Guarantor
Subsidiaries, which are also separately reflected in the stand-alone Non-Guarantor
Subsidiaries column.3.
    
    Elimination entries necessary to consolidate the Parent and all of its
Subsidiaries.
 22




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
JUNE 30, 2010
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    34,538
    
    
    $
    217,660
    
    
    $
    183,517
    
    
    $
    
    
    
    $
    435,715Other current assets
    
    
    53,642
    
    
    
    34,251
    
    
    
    28,523
    
    
    
    (38,773
    )
    
    
    77,643Accounts receivable from (payable to) parent
    
    
    (196,230
    )
    
    
    246,966
    
    
    
    (42,455
    )
    
    
    
    
    
    
    8,281Total current assets
    
    
    (108,050
    )
    
    
    498,877
    
    
    
    169,585
    
    
    
    (38,773
    )
    
    
    521,639Theatre properties and equipment  net
    
    
    305,237
    
    
    
    675,837
    
    
    
    203,180
    
    
    
    
    
    
    
    1,184,254Other assets
    
    
    2,738,495
    
    
    
    632,858
    
    
    
    365,745
    
    
    
    (2,129,614
    )
    
    
    1,607,484Total assets
    
    $
    2,935,682
    
    
    $
    1,807,572
    
    
    $
    738,510
    
    
    $
    (2,168,387
    )
    
    $
    3,313,377Liabilities and equityCurrent liabilitiesCurrent portion of long-term debt
    
    $
    10,836
    
    
    $
    
    
    
    $
    276
    
    
    $
    
    
    
    $
    11,112Current portion of capital lease obligations
    
    
    1,436
    
    
    
    5,262
    
    
    
    646
    
    
    
    
    
    
    
    7,344Accounts payable and accrued expenses
    
    
    103,725
    
    
    
    75,432
    
    
    
    84,421
    
    
    
    (31,672
    )
    
    
    231,906Total current liabilities
    
    
    115,997
    
    
    
    80,694
    
    
    
    85,343
    
    
    
    (31,672
    )
    
    
    250,362Long-term liabilitiesLong-term debt, less current portion
    
    
    1,552,078
    
    
    
    1,440
    
    
    
    33,179
    
    
    
    (59,892
    )
    
    
    1,526,805Capital lease obligations, less current portion
    
    
    27,733
    
    
    
    97,374
    
    
    
    6,573
    
    
    
    
    
    
    
    131,680Other long-term liabilities and deferrals
    
    
    282,673
    
    
    
    166,446
    
    
    
    58,224
    
    
    
    (71,492
    )
    
    
    435,851Total long-term liabilities
    
    
    1,862,484
    
    
    
    265,260
    
    
    
    97,976
    
    
    
    (131,384
    )
    
    
    2,094,336Commitments and contingenciesEquityCinemark USA, Inc.s stockholders equity:Common stock
    
    
    49,543
    
    
    
    457,372
    
    
    
    167,765
    
    
    
    (625,137
    )
    
    
    49,543Other stockholders equity
    
    
    907,658
    
    
    
    1,003,877
    
    
    
    376,317
    
    
    
    (1,380,194
    )
    
    
    907,658Total Cinemark USA, Inc. stockholders equity
    
    
    957,201
    
    
    
    1,461,249
    
    
    
    544,082
    
    
    
    (2,005,331
    )
    
    
    957,201Noncontrolling interests
    
    
    
    
    
    
    369
    
    
    
    11,109
    
    
    
    
    
    
    
    11,478Total equity
    
    
    957,201
    
    
    
    1,461,618
    
    
    
    555,191
    
    
    
    (2,005,331
    )
    
    
    968,679Total liabilities and equity
    
    $
    2,935,682
    
    
    $
    1,807,572
    
    
    $
    738,510
    
    
    $
    (2,168,387
    )
    
    $
    3,313,377
 23




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2009
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    39,761
    
    
    $
    237,540
    
    
    $
    160,436
    
    
    $
    
    
    
    $
    437,737Other current assets
    
    
    55,841
    
    
    
    32,800
    
    
    
    16,516
    
    
    
    (36,113
    )
    
    
    69,044Accounts receivable from (payable to) parent
    
    
    (153,678
    )
    
    
    173,888
    
    
    
    (12,554
    )
    
    
    
    
    
    
    7,656Total current assets
    
    
    (58,076
    )
    
    
    444,228
    
    
    
    164,398
    
    
    
    (36,113
    )
    
    
    514,437Theatre properties and equipment  net
    
    
    307,089
    
    
    
    713,860
    
    
    
    198,639
    
    
    
    
    
    
    
    1,219,588Other assets
    
    
    2,623,968
    
    
    
    637,645
    
    
    
    318,536
    
    
    
    (2,030,586
    )
    
    
    1,549,563Total assets
    
    $
    2,872,981
    
    
    $
    1,795,733
    
    
    $
    681,573
    
    
    $
    (2,066,699
    )
    
    $
    3,283,588Liabilities and equityCurrent liabilitiesCurrent portion of long-term debt
    
    $
    11,200
    
    
    $
    
    
    
    $
    1,027
    
    
    $
    
    
    
    $
    12,227Current portion of capital lease obligations
    
    
    1,313
    
    
    
    5,527
    
    
    
    500
    
    
    
    
    
    
    
    7,340Accounts payable and accrued expenses
    
    
    120,790
    
    
    
    94,721
    
    
    
    75,982
    
    
    
    (30,326
    )
    
    
    261,167Total current liabilities
    
    
    133,303
    
    
    
    100,248
    
    
    
    77,509
    
    
    
    (30,326
    )
    
    
    280,734Long-term liabilitiesLong-term debt, less current portion
    
    
    1,532,151
    
    
    
    4,440
    
    
    
    35,930
    
    
    
    (41,043
    )
    
    
    1,531,478Capital lease obligations, less current portion
    
    
    28,491
    
    
    
    99,819
    
    
    
    4,718
    
    
    
    
    
    
    
    133,028Other long-term liabilities and deferrals
    
    
    271,691
    
    
    
    156,797
    
    
    
    57,898
    
    
    
    (70,179
    )
    
    
    416,207Total long-term liabilities
    
    
    1,832,333
    
    
    
    261,056
    
    
    
    98,546
    
    
    
    (111,222
    )
    
    
    2,080,713Commitments and contingenciesEquityCinemark USA, Inc.s stockholders equity:Common stock
    
    
    49,543
    
    
    
    457,372
    
    
    
    167,765
    
    
    
    (625,137
    )
    
    
    49,543Other stockholders equity
    
    
    857,802
    
    
    
    976,729
    
    
    
    323,285
    
    
    
    (1,300,014
    )
    
    
    857,802Total Cinemark USA, Inc. stockholders equity
    
    
    907,345
    
    
    
    1,434,101
    
    
    
    491,050
    
    
    
    (1,925,151
    )
    
    
    907,345Noncontrolling interests
    
    
    
    
    
    
    328
    
    
    
    14,468
    
    
    
    
    
    
    
    14,796Total equity
    
    
    907,345
    
    
    
    1,434,429
    
    
    
    505,518
    
    
    
    (1,925,151
    )
    
    
    922,141Total liabilities and equity
    
    $
    2,872,981
    
    
    $
    1,795,733
    
    
    $
    681,573
    
    
    $
    (2,066,699
    )
    
    $
    3,283,588
 24




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED JUNE 30, 2010
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    152,662
    
    
    $
    270,392
    
    
    $
    134,235
    
    
    $
    (17,920
    )
    
    $
    539,369Cost of operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Theatre operating expenses
    
    
    133,969
    
    
    
    176,658
    
    
    
    101,225
    
    
    
    (17,920
    )
    
    
    393,932General and administrative expenses
    
    
    4,725
    
    
    
    14,158
    
    
    
    5,578
    
    
    
    
    
    
    
    24,461Depreciation and amortization
    
    
    7,413
    
    
    
    19,289
    
    
    
    8,213
    
    
    
    
    
    
    
    34,915Impairment of long-lived assets
    
    
    166
    
    
    
    2,358
    
    
    
    2,164
    
    
    
    
    
    
    
    4,688Loss on sale of assets and other
    
    
    240
    
    
    
    271
    
    
    
    680
    
    
    
    
    
    
    
    1,191Total cost of operations
    
    
    146,513
    
    
    
    212,734
    
    
    
    117,860
    
    
    
    (17,920
    )
    
    
    459,187Operating income
    
    
    6,149
    
    
    
    57,658
    
    
    
    16,375
    
    
    
    
    
    
    
    80,182Other income (expense)Interest expense
    
    
    (25,970
    )
    
    
    (2,896
    )
    
    
    (812
    )
    
    
    1,073
    
    
    
    (28,605
    )Distributions from NCM
    
    
    1
    
    
    
    
    
    
    
    1,331
    
    
    
    
    
    
    
    1,332Equity in income (loss) of affiliates
    
    
    45,748
    
    
    
    6,637
    
    
    
    (3,169
    )
    
    
    (52,398
    )
    
    
    (3,182
    )Other income
    
    
    91
    
    
    
    1,157
    
    
    
    1,552
    
    
    
    (1,073
    )
    
    
    1,727Total other income (expense)
    
    
    19,870
    
    
    
    4,898
    
    
    
    (1,098
    )
    
    
    (52,398
    )
    
    
    (28,728
    )Income before income taxes
    
    
    26,019
    
    
    
    62,556
    
    
    
    15,277
    
    
    
    (52,398
    )
    
    
    51,454Income taxes
    
    
    (13,966
    )
    
    
    21,244
    
    
    
    3,114
    
    
    
    
    
    
    
    10,392Net income
    
    
    39,985
    
    
    
    41,312
    
    
    
    12,163
    
    
    
    (52,398
    )
    
    
    41,062Less: Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    11
    
    
    
    1,066
    
    
    
    
    
    
    
    1,077Net income attributable to Cinemark USA, Inc.
    
    $
    39,985
    
    
    $
    41,301
    
    
    $
    11,097
    
    
    $
    (52,398
    )
    
    $
    39,985
 25




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED JUNE 30, 2009
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    153,534
    
    
    $
    276,712
    
    
    $
    104,625
    
    
    $
    (17,363
    )
    
    $
    517,508Cost of operationsTheatre operating costs
    
    
    134,708
    
    
    
    183,497
    
    
    
    79,444
    
    
    
    (17,363
    )
    
    
    380,286General and administrative expenses
    
    
    4,044
    
    
    
    13,778
    
    
    
    5,425
    
    
    
    
    
    
    
    23,247Depreciation and amortization
    
    
    6,493
    
    
    
    24,203
    
    
    
    7,185
    
    
    
    
    
    
    
    37,881Impairment of long-lived assets
    
    
    166
    
    
    
    3,678
    
    
    
    86
    
    
    
    
    
    
    
    3,930(Gain) loss on sale of assets and other
    
    
    292
    
    
    
    906
    
    
    
    (12
    )
    
    
    
    
    
    
    1,186Total cost of operations
    
    
    145,703
    
    
    
    226,062
    
    
    
    92,128
    
    
    
    (17,363
    )
    
    
    446,530Operating income
    
    
    7,831
    
    
    
    50,650
    
    
    
    12,497
    
    
    
    
    
    
    
    70,978Other income (expense)Interest expense
    
    
    (12,570
    )
    
    
    (3,083
    )
    
    
    (902
    )
    
    
    1,298
    
    
    
    (15,257
    )Distributions from NCM
    
    
    960
    
    
    
    
    
    
    
    4,067
    
    
    
    
    
    
    
    5,027Equity in income (loss) of affiliates
    
    
    43,540
    
    
    
    14,970
    
    
    
    (409
    )
    
    
    (58,516
    )
    
    
    (415
    )Other income
    
    
    217
    
    
    
    1,243
    
    
    
    1,247
    
    
    
    (1,298
    )
    
    
    1,409Total other income (expense)
    
    
    32,147
    
    
    
    13,130
    
    
    
    4,003
    
    
    
    (58,516
    )
    
    
    (9,236
    )Income before income taxes
    
    
    39,978
    
    
    
    63,780
    
    
    
    16,500
    
    
    
    (58,516
    )
    
    
    61,742Income taxes
    
    
    (2,437
    )
    
    
    23,367
    
    
    
    (2,740
    )
    
    
    
    
    
    
    18,190Net income
    
    
    42,415
    
    
    
    40,413
    
    
    
    19,240
    
    
    
    (58,516
    )
    
    
    43,552Less: Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    15
    
    
    
    1,122
    
    
    
    
    
    
    
    1,137Net income attributable to Cinemark USA, Inc.
    
    $
    42,415
    
    
    $
    40,398
    
    
    $
    18,118
    
    
    $
    (58,516
    )
    
    $
    42,415
 26




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
SIX MONTHS ENDED JUNE 30, 2010
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    300,302
    
    
    $
    525,285
    
    
    $
    268,394
    
    
    $
    (37,981
    )
    
    $
    1,056,000Cost of operationsTheatre operating expenses
    
    
    268,852
    
    
    
    347,672
    
    
    
    197,092
    
    
    
    (37,981
    )
    
    
    775,635General and administrative expenses
    
    
    9,010
    
    
    
    27,771
    
    
    
    12,671
    
    
    
    
    
    
    
    49,452Depreciation and amortization
    
    
    14,325
    
    
    
    38,540
    
    
    
    16,141
    
    
    
    
    
    
    
    69,006Impairment of long-lived assets
    
    
    513
    
    
    
    2,358
    
    
    
    2,164
    
    
    
    
    
    
    
    5,035Loss on sale of assets and other
    
    
    628
    
    
    
    1,589
    
    
    
    2,141
    
    
    
    
    
    
    
    4,358Total cost of operations
    
    
    293,328
    
    
    
    417,930
    
    
    
    230,209
    
    
    
    (37,981
    )
    
    
    903,486Operating income
    
    
    6,974
    
    
    
    107,355
    
    
    
    38,185
    
    
    
    
    
    
    
    152,514Other income (expense)Interest expense
    
    
    (49,249
    )
    
    
    (5,806
    )
    
    
    (1,480
    )
    
    
    1,920
    
    
    
    (54,615
    )Distributions from NCM
    
    
    980
    
    
    
    
    
    
    
    10,298
    
    
    
    
    
    
    
    11,278Equity in income (loss) of affiliates
    
    
    96,333
    
    
    
    22,002
    
    
    
    (3,167
    )
    
    
    (118,323
    )
    
    
    (3,155
    )Other income
    
    
    215
    
    
    
    1,853
    
    
    
    2,364
    
    
    
    (1,920
    )
    
    
    2,512Total other income (expense)
    
    
    48,279
    
    
    
    18,049
    
    
    
    8,015
    
    
    
    (118,323
    )
    
    
    (43,980
    )Income before income taxes
    
    
    55,253
    
    
    
    125,404
    
    
    
    46,200
    
    
    
    (118,323
    )
    
    
    108,534Income taxes
    
    
    (20,161
    )
    
    
    39,297
    
    
    
    11,289
    
    
    
    
    
    
    
    30,425Net income
    
    
    75,414
    
    
    
    86,107
    
    
    
    34,911
    
    
    
    (118,323
    )
    
    
    78,109Less: Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    31
    
    
    
    2,664
    
    
    
    
    
    
    
    2,695Net income attributable to Cinemark USA, Inc.
    
    $
    75,414
    
    
    $
    86,076
    
    
    $
    32,247
    
    
    $
    (118,323
    )
    
    $
    75,414
 27




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
SIX MONTHS ENDED JUNE 30, 2009
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues
    
    $
    273,337
    
    
    $
    510,388
    
    
    $
    194,701
    
    
    $
    (35,118
    )
    
    $
    943,308Cost of operationsTheatre operating costs
    
    
    244,956
    
    
    
    337,180
    
    
    
    148,927
    
    
    
    (35,118
    )
    
    
    695,945General and administrative expenses
    
    
    7,731
    
    
    
    26,866
    
    
    
    10,061
    
    
    
    
    
    
    
    44,658Depreciation and amortization
    
    
    12,061
    
    
    
    48,695
    
    
    
    13,581
    
    
    
    
    
    
    
    74,337Impairment of long-lived assets
    
    
    981
    
    
    
    3,684
    
    
    
    304
    
    
    
    
    
    
    
    4,969(Gain) loss on sale of assets and other
    
    
    208
    
    
    
    1,342
    
    
    
    (92
    )
    
    
    
    
    
    
    1,458Total cost of operations
    
    
    265,937
    
    
    
    417,767
    
    
    
    172,781
    
    
    
    (35,118
    )
    
    
    821,367Operating income
    
    
    7,400
    
    
    
    92,621
    
    
    
    21,920
    
    
    
    
    
    
    
    121,941Other income (expense)Interest expense
    
    
    (24,981
    )
    
    
    (6,222
    )
    
    
    (1,500
    )
    
    
    2,164
    
    
    
    (30,539
    )Distributions from NCM
    
    
    960
    
    
    
    
    
    
    
    10,646
    
    
    
    
    
    
    
    11,606Equity in income (loss) of affiliates
    
    
    77,865
    
    
    
    17,378
    
    
    
    (1,073
    )
    
    
    (95,190
    )
    
    
    (1,020
    )Other income
    
    
    499
    
    
    
    2,135
    
    
    
    2,678
    
    
    
    (2,164
    )
    
    
    3,148Total other income (expense)
    
    
    54,343
    
    
    
    13,291
    
    
    
    10,751
    
    
    
    (95,190
    )
    
    
    (16,805
    )Income before income taxes
    
    
    61,743
    
    
    
    105,912
    
    
    
    32,671
    
    
    
    (95,190
    )
    
    
    105,136Income taxes
    
    
    (4,819
    )
    
    
    38,590
    
    
    
    2,880
    
    
    
    
    
    
    
    36,651Net income
    
    
    66,562
    
    
    
    67,322
    
    
    
    29,791
    
    
    
    (95,190
    )
    
    
    68,485Less: Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    23
    
    
    
    1,900
    
    
    
    
    
    
    
    1,923Net income attributable to Cinemark USA, Inc.
    
    $
    66,562
    
    
    $
    67,299
    
    
    $
    27,891
    
    
    $
    (95,190
    )
    
    $
    66,562
 28




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
SIX MONTHS ENDED JUNE 30, 2010
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Operating activitiesNet income
    
    $
    75,414
    
    
    $
    86,107
    
    
    $
    34,911
    
    
    $
    (118,323
    )
    
    $
    78,109Adjustments to reconcile net income to cash provided by
(used for) operating activities
    
    
    (97,447
    )
    
    
    31,845
    
    
    
    26,019
    
    
    
    118,323
    
    
    
    78,740Changes in assets and liabilities
    
    
    85,066
    
    
    
    (121,601
    )
    
    
    (12,430
    )
    
    
    
    
    
    
    (48,965
    )Net cash provided by (used for) operating activities
    
    
    63,033
    
    
    
    (3,649
    )
    
    
    48,500
    
    
    
    
    
    
    
    107,884Investing activitiesAdditions to theatre properties and equipment
    
    
    (18,818
    )
    
    
    (17,009
    )
    
    
    (21,133
    )
    
    
    
    
    
    
    (56,960
    )Proceeds from sale of theatre properties and equipment
    
    
    
    
    
    
    735
    
    
    
    1,413
    
    
    
    
    
    
    
    2,148Investment in joint venture  DCIP, net of cash distributions
    
    
    
    
    
    
    
    
    
    
    (644
    )
    
    
    
    
    
    
    (644
    )Net transactions with affiliates
    
    
    113
    
    
    
    2,753
    
    
    
    
    
    
    
    (2,866
    )
    
    
    Net cash used for investing activities
    
    
    (18,705
    )
    
    
    (13,521
    )
    
    
    (20,364
    )
    
    
    (2,866
    )
    
    
    (55,456
    )Financing activitiesDividends paid to parent
    
    
    (34,375
    )
    
    
    
    
    
    
    (115
    )
    
    
    115
    
    
    
    (34,375
    )Payroll taxes paid as a result of noncash stock option
exercises and restricted stock withholdings
    
    
    (416
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (416
    )Payment of debt issue costs
    
    
    (8,706
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,706
    )Repayments of other long-term debt
    
    
    (5,418
    )
    
    
    
    
    
    
    (718
    )
    
    
    
    
    
    
    (6,136
    )Net changes in intercompany notes
    
    
    
    
    
    
    
    
    
    
    (2,751
    )
    
    
    2,751
    
    
    
    Payments on capital leases
    
    
    (636
    )
    
    
    (2,710
    )
    
    
    (260
    )
    
    
    
    
    
    
    (3,606
    )Other
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    (110
    )Net cash used for financing activities
    
    
    (49,551
    )
    
    
    (2,710
    )
    
    
    (3,954
    )
    
    
    2,866
    
    
    
    (53,349
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (1,101
    )
    
    
    
    
    
    
    (1,101
    )Increase (decrease) in cash and cash equivalents
    
    
    (5,223
    )
    
    
    (19,880
    )
    
    
    23,081
    
    
    
    
    
    
    
    (2,022
    )Cash and cash equivalents:Beginning of year
    
    
    39,761
    
    
    
    237,540
    
    
    
    160,436
    
    
    
    
    
    
    
    437,737End of year
    
    $
    34,538
    
    
    $
    217,660
    
    
    $
    183,517
    
    
    $
    
    
    
    $
    435,715
 29




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
SIX MONTHS ENDED JUNE 30, 2009
 Parent
    
    
    Subsidiary
    
    
    SubsidiaryCompany
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)Operating activitiesNet income
    
    $
    66,562
    
    
    $
    67,322
    
    
    $
    29,791
    
    
    $
    (95,190
    )
    
    $
    68,485Adjustments to reconcile net income to cash provided
by operating activities
    
    
    (81,909
    )
    
    
    47,415
    
    
    
    18,611
    
    
    
    95,190
    
    
    
    79,307Changes in assets and liabilities
    
    
    115,367
    
    
    
    (86,624
    )
    
    
    (7,482
    )
    
    
    
    
    
    
    21,261Net cash provided by operating activities
    
    
    100,020
    
    
    
    28,113
    
    
    
    40,920
    
    
    
    
    
    
    
    169,053Investing activitiesAdditions to theatre properties and equipment
    
    
    (26,954
    )
    
    
    (16,158
    )
    
    
    (17,806
    )
    
    
    
    
    
    
    (60,918
    )Proceeds from sale of theatre properties and equipment
    
    
    395
    
    
    
    58
    
    
    
    200
    
    
    
    
    
    
    
    653Acquisition of theatres
    
    
    (48,950
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,950
    )Net transactions with affiliates
    
    
    6,998
    
    
    
    16,283
    
    
    
    
    
    
    
    (23,281
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )Net cash provided by (used for) investing activities
    
    
    (68,511
    )
    
    
    183
    
    
    
    (19,106
    )
    
    
    (23,281
    )
    
    
    (110,715
    )Financing activitiesCapital contributions from parent
    
    
    19,650
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,650Dividends paid to parent
    
    
    (452,975
    )
    
    
    
    
    
    
    (9,799
    )
    
    
    9,799
    
    
    
    (452,975
    )Proceeds from issuance of senior notes
    
    
    458,532
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    458,532Payment of debt issue costs
    
    
    (12,423
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,423
    )Repayments of long-term debt
    
    
    (5,600
    )
    
    
    
    
    
    
    (689
    )
    
    
    
    
    
    
    (6,289
    )Net changes in intercompany notes
    
    
    
    
    
    
    
    
    
    
    (13,482
    )
    
    
    13,482
    
    
    
    Payments on capital leases
    
    
    (382
    )
    
    
    (2,264
    )
    
    
    (184
    )
    
    
    
    
    
    
    (2,830
    )Other
    
    
    
    
    
    
    
    
    
    
    (795
    )
    
    
    
    
    
    
    (795
    )Net cash provided by (used for) financing activities
    
    
    6,802
    
    
    
    (2,264
    )
    
    
    (24,949
    )
    
    
    23,281
    
    
    
    2,870Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    7,959
    
    
    
    
    
    
    
    7,959Increase in cash and cash equivalents
    
    
    38,311
    
    
    
    26,032
    
    
    
    4,824
    
    
    
    
    
    
    
    69,167Cash and cash equivalents:Beginning of year
    
    
    39,039
    
    
    
    163,007
    
    
    
    111,192
    
    
    
    
    
    
    
    313,238End of year
    
    $
    77,350
    
    
    $
    189,039
    
    
    $
    116,016
    
    
    $
    
    
    
    $
    382,405
 30




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Segment Reporting
 Avatar Alice in Wonderland, How to Train Your Dragon, Clash of the Titans,
Iron Man 2, Shrek Forever After, The Karate Kid, Toy Story 3 The Twilight Saga: Eclipse The Last Airbender, Inception, Despicable Me, The Other Guys, Eat Pray
Love, Little Fockers, Tron: Legacy, Tangled, Megamind, Yogi Bear, Chronicles of Narnia: The Voyage
of the Dawn Treader Harry Potter
      31




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##### Table of Contents



Results of Operations
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Operating data (in millions):
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesAdmissions
    
    $
    353.1
    
    
    $
    339.1
    
    
    $
    696.1
    
    
    $
    619.0Concession
    
    
    165.2
    
    
    
    158.9
    
    
    
    318.3
    
    
    
    288.9Other
    
    
    21.1
    
    
    
    19.5
    
    
    
    41.6
    
    
    
    35.4Total revenues
    
    $
    539.4
    
    
    $
    517.5
    
    
    $
    1,056.0
    
    
    $
    943.3Cost of operationsFilm rentals and advertising
    
    
    193.5
    
    
    
    190.9
    
    
    
    382.3
    
    
    
    338.0Concession supplies
    
    
    24.5
    
    
    
    24.0
    
    
    
    46.9
    
    
    
    43.7Salaries and wages
    
    
    56.3
    
    
    
    52.0
    
    
    
    108.8
    
    
    
    96.4Facility lease expense
    
    
    62.0
    
    
    
    59.2
    
    
    
    124.7
    
    
    
    114.9Utilities and other
    
    
    57.7
    
    
    
    54.1
    
    
    
    112.9
    
    
    
    102.9General and administrative expenses
    
    
    24.5
    
    
    
    23.3
    
    
    
    49.5
    
    
    
    44.7Depreciation and amortization
    
    
    34.9
    
    
    
    37.9
    
    
    
    69.0
    
    
    
    74.3Impairment of long-lived assets
    
    
    4.6
    
    
    
    3.9
    
    
    
    5.0
    
    
    
    5.0Loss on sale of assets and other
    
    
    1.2
    
    
    
    1.2
    
    
    
    4.4
    
    
    
    1.5Total cost of operations
    
    $
    459.2
    
    
    $
    446.5
    
    
    $
    903.5
    
    
    $
    821.4Operating income
    
    $
    80.2
    
    
    $
    71.0
    
    
    $
    152.5
    
    
    $
    121.9Operating data as a percentage of total revenues:RevenuesAdmissions
    
    
    65.5
    %
    
    
    65.5
    %
    
    
    65.9
    %
    
    
    65.6
    %Concession
    
    
    30.6
    %
    
    
    30.7
    %
    
    
    30.1
    %
    
    
    30.6
    %Other
    
    
    3.9
    %
    
    
    3.8
    %
    
    
    4.0
    %
    
    
    3.8
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of operations (1)Film rentals and advertising
    
    
    54.8
    %
    
    
    56.3
    %
    
    
    54.9
    %
    
    
    54.6
    %Concession supplies
    
    
    14.8
    %
    
    
    15.1
    %
    
    
    14.7
    %
    
    
    15.1
    %Salaries and wages
    
    
    10.4
    %
    
    
    10.0
    %
    
    
    10.3
    %
    
    
    10.2
    %Facility lease expense
    
    
    11.5
    %
    
    
    11.4
    %
    
    
    11.8
    %
    
    
    12.2
    %Utilities and other
    
    
    10.7
    %
    
    
    10.5
    %
    
    
    10.7
    %
    
    
    10.9
    %General and administrative expenses
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.7
    %
    
    
    4.7
    %Depreciation and amortization
    
    
    6.5
    %
    
    
    7.3
    %
    
    
    6.5
    %
    
    
    7.9
    %Impairment of long-lived assets
    
    
    0.9
    %
    
    
    0.8
    %
    
    
    0.5
    %
    
    
    0.5
    %Loss on sale of assets and other
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    0.4
    %
    
    
    0.2
    %Total cost of operations
    
    
    85.1
    %
    
    
    86.3
    %
    
    
    85.6
    %
    
    
    87.1
    %Operating income
    
    
    14.9
    %
    
    
    13.7
    %
    
    
    14.4
    %
    
    
    12.9
    %Average screen count (month end average)
    
    
    4,897
    
    
    
    4,862
    
    
    
    4,895
    
    
    
    4,826Revenues per average screen (dollars)
    
    $
    110,154
    
    
    $
    106,450
    
    
    $
    215,730
    
    
    $
    195,452
 
 (1)
    
    All costs are expressed as a percentage of total revenues, except film
rentals and advertising, which are expressed as a percentage of admissions revenues
and concession supplies, which are expressed as a percentage of concession revenues. 32




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##### Table of Contents



Three months ended June 30, 2010 and 2009
 Revenues.
 U.S. Operating Segment
    
    
    International Operating Segment
    
    
    
    
    
    
    ConsolidatedThree Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    
    June 30,
    
    
    
    
    
    
    
    
    
    
    June 30,%
    
    
    
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeAdmissions revenues (1)
    
    $
    269.2
    
    
    $
    276.2
    
    
    
    (2.5
    )%
    
    $
    83.9
    
    
    $
    62.9
    
    
    
    33.4
    %
    
    $
    353.1
    
    
    $
    339.1
    
    
    
    4.1
    %Concession revenues (1)
    
    $
    129.6
    
    
    $
    131.2
    
    
    
    (1.2
    )%
    
    $
    35.6
    
    
    $
    27.7
    
    
    
    28.5
    %
    
    $
    165.2
    
    
    $
    158.9
    
    
    
    4.0
    %Other revenues (1) (2)
    
    $
    11.0
    
    
    $
    11.1
    
    
    
    (0.9
    )%
    
    $
    10.1
    
    
    $
    8.4
    
    
    
    20.2
    %
    
    $
    21.1
    
    
    $
    19.5
    
    
    
    8.2
    %Total revenues (1) (2)
    
    $
    409.8
    
    
    $
    418.5
    
    
    
    (2.1
    )%
    
    $
    129.6
    
    
    $
    99.0
    
    
    
    30.9
    %
    
    $
    539.4
    
    
    $
    517.5
    
    
    
    4.2
    %Attendance (1)
    
    
    41.6
    
    
    
    43.9
    
    
    
    (5.2
    )%
    
    
    18.6
    
    
    
    17.2
    
    
    
    8.1
    %
    
    $
    60.2
    
    
    
    61.1
    
    
    
    (1.5
    )%Revenues per average screen (2)
    
    $
    107,077
    
    
    $
    109,438
    
    
    
    (2.2
    )%
    
    $
    121,159
    
    
    $
    95,431
    
    
    
    27.0
    %
    
    $
    110,154
    
    
    $
    106,450
    
    
    
    3.5
    %
 
 (1)
    
    Amounts in millions.(2)
    
    U.S. operating segment revenues include eliminations of intercompany transactions
with the international operating segment. See Note 16 of our condensed consolidated financial
statements. 
    
    Consolidated. The increase in admissions revenues of $14.0 million was primarily
attributable to a 5.8% increase in average ticket price from $5.55 for the second quarter of
2009 to $5.87 for the second quarter of 2010, partially offset by a 1.5% decrease in
attendance. The increase in concession revenues of $6.3 million was primarily attributable to
a 5.4% increase in concession revenues per patron from $2.60 for the second quarter of 2009 to
$2.74 for the second quarter of 2010, partially offset by the 1.5% decrease in attendance. The
increase in average ticket price was primarily due to incremental 3-D and premium pricing and
other price increases and the favorable impact of exchange rates in certain countries in which
we operate. The increase in concession revenues per patron was primarily due to price
increases and the favorable impact of exchange rates in certain countries in which we operate.
The 8.2% increase in other revenues was primarily due to increases in ancillary revenue and
the favorable impact of exchange rates in certain countries in which we operate.
 
    
    U.S. The decrease in admissions revenues of $7.0 million was primarily attributable
to a 5.2% decrease in attendance, partially offset by a 2.9% increase in average ticket price
from $6.29 for the second quarter of 2009 to $6.47 for the second quarter of 2010. The
decrease in concession revenues of $1.6 million was primarily attributable to the 5.2%
decrease in attendance, partially offset by a 4.3% increase in concession revenues per patron
from $2.99 for the second quarter of 2009 to $3.12 for the second quarter of 2010. The
increase in average ticket price was primarily due to incremental 3-D and premium pricing and
other price increases and the increase in concession revenues per patron was primarily due to
price increases.
 
    
    International. The increase in admissions revenues of $21.0 million was primarily
attributable to an 8.1% increase in attendance and a 23.2% increase in average ticket price
from $3.66 for the second quarter of 2009 to $4.51 for the second quarter of 2010. The
increase in concession revenues of $7.9 million was primarily attributable to the 8.1%
increase in attendance and an 18.6% increase in concession revenues per patron from $1.61 for
the second quarter of 2009 to $1.91 for the second quarter of 2010. The increase in average
ticket price was primarily due to incremental 3-D and premium pricing and other price
increases and the favorable impact of exchange rates in certain countries in which we operate.
The increase in concession revenues per patron was primarily due to price increases and the
favorable impact of exchange rates in certain countries in which we operate. The 20.2%
increase in other revenues was primarily due to increases in ancillary revenue and the
favorable impact of exchange rates in certain countries in which we operate.
 33




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##### Table of Contents



Cost of Operations.
 International OperatingU.S. Operating Segment
    
    
    Segment
    
    
    ConsolidatedThree Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Film rentals and advertising
    
    $
    150.7
    
    
    $
    158.8
    
    
    $
    42.8
    
    
    $
    32.1
    
    
    $
    193.5
    
    
    $
    190.9Concession supplies
    
    
    15.6
    
    
    
    17.2
    
    
    
    8.9
    
    
    
    6.8
    
    
    
    24.5
    
    
    
    24.0Salaries and wages
    
    
    44.7
    
    
    
    43.8
    
    
    
    11.6
    
    
    
    8.2
    
    
    
    56.3
    
    
    
    52.0Facility lease expense
    
    
    45.1
    
    
    
    45.1
    
    
    
    16.9
    
    
    
    14.1
    
    
    
    62.0
    
    
    
    59.2Utilities and other
    
    
    40.5
    
    
    
    40.7
    
    
    
    17.2
    
    
    
    13.4
    
    
    
    57.7
    
    
    
    54.1
 
    
    Consolidated. Film rentals and advertising costs were $193.5 million, or 54.8% of
admissions revenues, for the second quarter of 2010 compared to $190.9 million, or 56.3% of
admissions revenues, for the second quarter of 2009. The decrease in the film rentals and
advertising rate was primarily due to favorable film rental rates on certain films in the U.S.
segment in the second quarter of 2010. Concession supplies expense was $24.5 million, or 14.8%
of concession revenues, for the second quarter of 2010 compared to $24.0 million, or 15.1% of
concession revenues, for the second quarter of 2009. The decrease in the concession supplies
rate was primarily due to favorable inventory procurement costs and the successful
implementation of price increases in the U.S. segment.
 Salaries and wages increased to $56.3 million for the second quarter of 2010 from $52.0 million
for the second quarter of 2009 primarily due to increased minimum wages in both our U.S. and
international segments, increased staffing levels to support the 8.1% increase in attendance in
our international segment and the impact of exchange rates in certain countries in which we
operate. Facility lease expense increased to $62.0 million for the second quarter of 2010 from
$59.2 million for the second quarter of 2009 primarily due to increased percentage rent in our
international segment and the impact of exchange rates in certain countries in which we operate.
Utilities and other costs increased to $57.7 million for the second quarter of 2010 from $54.1
million for the second quarter of 2009 primarily due to increased 3-D equipment rental fees and
the impact of exchange rates in certain countries in which we operate.
 
    
    U.S. Film rentals and advertising costs were $150.7 million, or 56.0% of admissions
revenues, for the second quarter of 2010 compared to $158.8 million, or 57.5% of admissions
revenues, for the second quarter of 2009. The decrease in film rentals and advertising costs
of $8.1 million is due to a $7.0 million decrease in admissions revenues, which contributed
$4.1 million and a decrease in our film rentals and advertising rate, which contributed $4.0
million. The decrease in the film rentals and advertising rate was primarily due to favorable
film rental rates on certain films in the second quarter of 2010. Concession supplies expense
was $15.6 million, or 12.0% of concession revenues, for the second quarter of 2010 compared to
$17.2 million, or 13.1% of concession revenues, for the second quarter of 2009. The decrease
in concession supplies expense is primarily due to a decrease in the concession supplies rate
due to favorable inventory procurement costs and the successful implementation of price
increases.
 Salaries and wages increased to $44.7 million for the second quarter of 2010 from $43.8 million
for the second quarter of 2009 primarily due to increased minimum wages, partially offset by
reduced staffing levels due to the 5.2% decrease in attendance. Facility lease expense remained
constant at $45.1 million for the second quarter of 2009 and 2010. Utilities and other costs
decreased to $40.5 million for the second quarter of 2010 from $40.7 million for the second
quarter of 2009 primarily due to decreased repairs and maintenance expense and decreased theatre
supplies expense, partially offset by increased 3-D equipment rental fees.
 
    
    International. Film rentals and advertising costs were $42.8 million for the second
quarter of 2010 compared to $32.1 million for the second quarter of 2009, or 51.0% of
admissions revenues for each period. The increase in film rentals and advertising costs of
$10.7 million was primarily due to a $21.0 million increase in admissions revenues. Concession
supplies expense was $8.9 million, or 25.0% of concession revenues, for the second quarter of
2010 compared to $6.8 million, or 24.5% of concession revenues, for the second quarter of
2009. The increase in concession supplies expense of $2.1 million was primarily due to a $7.9
million increase in concession revenues.
 34




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##### Table of Contents



Salaries and wages increased to $11.6 million for the second quarter of 2010 from $8.2 million
for the second quarter of 2009 primarily due to increased staffing levels to support the 8.1%
increase in attendance, increased
minimum wages and the impact of exchange rates in certain countries in which we operate.
Facility lease expense increased to $16.9 million for the second quarter of 2010 from $14.1
million for the second quarter of 2009 primarily due to increased percentage rent and the impact
of exchange rates in certain countries in which we operate. Utilities and other costs increased
to $17.2 million for the second quarter of 2010 from $13.4 million for the second quarter of
2009 primarily due to increased 3-D equipment rental fees and the impact of exchange rates in
certain countries in which we operate.
 General and Administrative Expenses.
 Depreciation and Amortization.
 Impairment of Long-Lived Asset.
 Loss on Sale of Assets and Other.
 Interest Expense.
 Interest Income.
 Distributions from NCM.
 Income Taxes.
 35




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##### Table of Contents



Six months ended June 30, 2010 and 2009
 Revenues.
 U.S. Operating Segment
    
    
    International Operating Segment
    
    
    ConsolidatedSix Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,%
    
    
    
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeAdmissions revenues (1)
    
    $
    528.5
    
    
    $
    501.7
    
    
    
    5.3
    %
    
    $
    167.6
    
    
    $
    117.3
    
    
    
    42.9
    %
    
    $
    696.1
    
    
    $
    619.0
    
    
    
    12.5
    %Concession revenues (1)
    
    $
    248.1
    
    
    $
    237.2
    
    
    
    4.6
    %
    
    $
    70.2
    
    
    $
    51.7
    
    
    
    35.8
    %
    
    $
    318.3
    
    
    $
    288.9
    
    
    
    10.2
    %Other revenues (1) (2)
    
    $
    20.5
    
    
    $
    20.2
    
    
    
    1.5
    %
    
    $
    21.1
    
    
    $
    15.2
    
    
    
    38.8
    %
    
    $
    41.6
    
    
    $
    35.4
    
    
    
    17.5
    %Total revenues (1) (2)
    
    $
    797.1
    
    
    $
    759.1
    
    
    
    5.0
    %
    
    $
    258.9
    
    
    $
    184.2
    
    
    
    40.6
    %
    
    $
    1,056.0
    
    
    $
    943.3
    
    
    
    11.9
    %Attendance (1)
    
    
    81.2
    
    
    
    81.2
    
    
    
    0.0
    %
    
    
    37.5
    
    
    
    34.0
    
    
    
    10.3
    %
    
    
    118.7
    
    
    
    115.2
    
    
    
    3.0
    %Revenues per average screen
(2)
    
    $
    208,272
    
    
    $
    200,379
    
    
    
    3.9
    %
    
    $
    242,459
    
    
    $
    177,636
    
    
    
    36.5
    %
    
    $
    215,730
    
    
    $
    195,452
    
    
    
    10.4
    %
 
 (1)
    
    Amounts in millions.(2)
    
    U.S. operating segment revenues include eliminations of intercompany transactions
with the international operating segment. See Note 16 of our condensed consolidated financial
statements. 
    
    Consolidated. The increase in admissions revenues of $77.1 million was primarily
attributable to a 3.0% increase in attendance and a 9.1% increase in average ticket price from
$5.37 for the 2009 period to $5.86 for the 2010 period. The increase in concession revenues of
$29.4 million was primarily attributable to the 3.0% increase in attendance and a 6.8%
increase in concession revenues per patron from $2.51 for the 2009 period to $2.68 for the
2010 period. The increase in average ticket price was primarily due to incremental 3-D and
premium pricing and other price increases and the favorable impact of exchange rates in
certain countries in which we operate. The increase in concession revenues per patron was
primarily due to price increases and the favorable impact of exchange rates in certain
countries in which we operate. The 17.5% increase in other revenues was primarily due to
increases in ancillary revenue and the favorable impact of exchange rates in certain countries
in which we operate.
 
    
    U.S. The increase in admissions revenues of $26.8 million was primarily attributable
to a 5.3% increase in average ticket price from $6.18 for the 2009 period to $6.51 for the
2010 period. The increase in concession revenues of $10.9 million was primarily attributable
to a 4.8% increase in concession revenues per patron from $2.92 for the 2009 period to $3.06
for the 2010 period. The increase in average ticket price was primarily due to incremental 3-D
and premium pricing and other price increases and the increase in concession revenues per
patron was primarily due to price increases.
 
    
    International. The increase in admissions revenues of $50.3 million was primarily
attributable to a 10.3% increase in attendance and a 29.6% increase in average ticket price
from $3.45 for the 2009 period to $4.47 for the 2010 period. The increase in concession
revenues of $18.5 million was primarily attributable to the 10.3% increase in attendance and a
23.0% increase in concession revenues per patron from $1.52 for the 2009 period to $1.87 for
the 2010 period. The increase in average ticket price was primarily due to incremental 3-D and
premium pricing and other price increases and the favorable impact of exchange rates in
certain countries in which we operate. The increase in concession revenues per patron was
primarily due to price increases and the favorable impact of exchange rates in certain
countries in which we operate. The increase in other revenues of $5.9 million was primarily
due to increases in ancillary revenue and the favorable impact of exchange rates in certain
countries in which we operate.
 36




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##### Table of Contents



Cost of Operations.
 International OperatingU.S. Operating Segment
    
    
    Segment
    
    
    ConsolidatedSix Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Film rentals and advertising
    
    $
    299.2
    
    
    $
    278.8
    
    
    $
    83.1
    
    
    $
    59.2
    
    
    $
    382.3
    
    
    $
    338.0Concession supplies
    
    
    29.5
    
    
    
    30.6
    
    
    
    17.4
    
    
    
    13.1
    
    
    
    46.9
    
    
    
    43.7Salaries and wages
    
    
    87.1
    
    
    
    81.1
    
    
    
    21.7
    
    
    
    15.3
    
    
    
    108.8
    
    
    
    96.4Facility lease expense
    
    
    90.8
    
    
    
    87.7
    
    
    
    33.9
    
    
    
    27.2
    
    
    
    124.7
    
    
    
    114.9Utilities and other
    
    
    80.1
    
    
    
    77.6
    
    
    
    32.8
    
    
    
    25.3
    
    
    
    112.9
    
    
    
    102.9
 
    
    Consolidated. Film rentals and advertising costs were $382.3 million, or 54.9% of
admissions revenues, for the 2010 period compared to $338.0 million, or 54.6% of admissions
revenues, for the 2009 period. The increase in film rentals and advertising costs of $44.3
million was due to a $77.1 million increase in admissions revenues, which contributed $42.1
million, and an increase in our film rentals and advertising rate, which contributed $2.2
million. The increase in the film rentals and advertising rate was primarily due to higher
film rental rates in the U.S. segment due to the increase in the number of blockbuster films
released, including the carryover of Avatar, which generally have higher film rental rates.
Concession supplies expense was $46.9 million, or 14.7% of concession revenues, for the 2010
period, compared to $43.7 million, or 15.1% of concession revenues, for the 2009 period. The
decrease in the concession supplies rate was primarily due to favorable inventory procurement
costs and the successful implementation of price increases in the U.S. segment.
 Salaries and wages increased to $108.8 million for the 2010 period from $96.4 million for the
2009 period primarily due to new theatres, increased minimum wages in both our U.S. and
international segments, increased staffing levels to support the 10.3% increase in attendance in
our international segment and the impact of exchange rates in certain countries in which we
operate. Facility lease expense increased to $124.7 million for the 2010 period from $114.9
million for the 2009 period primarily due to new theatres, increased percentage rent and the
impact of exchange rates in certain countries in which we operate. Utilities and other costs
increased to $112.9 million for the 2010 period from $102.9 million for the 2009 period
primarily due to new theatres, increased 3-D equipment rental fees and the impact of exchange
rates in certain countries in which we operate.
 
    
    U.S. Film rentals and advertising costs were $299.2 million, or 56.6% of admissions
revenues for the 2010 period compared to $278.8 million, or 55.6% of admissions revenues, for
the 2009 period. The increase in film rentals and advertising costs of $20.4 million is due to
a $26.8 million increase in admissions revenues, which contributed $14.9 million and an
increase in our film rentals and advertising rate, which contributed $5.5 million. The
increase in the film rentals and advertising rate was primarily due to the increase in the
number of blockbuster films released, including the carryover of Avatar, which generally have
higher film rental rates. Concession supplies expense was $29.5 million, or 11.9% of
concession revenues, for the 2010 period, compared to $30.6 million, or 12.9% of concession
revenues, for the 2009 period. The decrease in concession supplies expense is primarily due to
a decrease in the concession supplies rate due to favorable inventory procurement costs and
the successful implementation of price increases.
 Salaries and wages increased to $87.1 million for the 2010 period from $81.1 million for the
2009 period primarily due to new theatres and increased minimum wages. Facility lease expense
increased to $90.8 million for the 2010 period from $87.7 million for the 2009 period primarily
due to new theatres and increased percentage rent. Utilities and other costs increased to $80.1
million for the 2010 period from $77.6 million for the 2009 period primarily due to new theatres
and increased 3-D equipment rental fees.
 
    
    International. Film rentals and advertising costs were $83.1 million, or 49.6% of
admissions revenues, for the 2010 period compared to $59.2 million, or 50.5% of admissions
revenues, for the 2009 period. The increase in film rentals and advertising costs was
primarily due to a $50.3 million increase in admissions revenues, partially offset by a lower
film rentals and advertising rate. Concession supplies expense was $17.4 million, or 24.8% of
concession revenues, for the 2010 period compared to $13.1 million, or 25.3% of concession
revenues, for the 2009 period. The increase in concession supplies expense of $4.3 million was
primarily due to an $18.5 million increase in concession revenues, partially offset by a lower
concession supplies rate.
 37




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##### Table of Contents



Salaries and wages increased to $21.7 million for the 2010 period from $15.3 million for the
2009 period primarily due to new theatres, increased staffing levels to support the 10.3%
increase in attendance, increased minimum wages and the impact of exchange rates in certain
countries in which we operate. Facility lease expense increased to $33.9 million for the 2010
period from $27.2 million for the 2009 period primarily due to new theatres, increased
percentage rent and the impact of exchange rates in certain countries in which we operate.
Utilities and other costs increased to $32.8 million for the 2010 period from $25.3 million for
the 2009 period primarily due to new theatres, increased 3-D equipment rental fees and the
impact of exchange rates in certain countries in which we operate.
 General and Administrative Expenses.
 Depreciation and Amortization.
 Impairment of Long-Lived Assets.
 Loss on Sale of Assets and Other.
 Interest Expense.
 Interest Income.
 Distributions from NCM.
 Income Taxes.
 38




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 Evaluation of the Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  39




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 5.
    
    Other Information
 5 8
  PageCondensed Consolidating Balance Sheet Information as of June 30, 2010 (unaudited)
    
    
    41Condensed Consolidating Statement of Income Information for the six months ended
June 30, 2010 (unaudited)
    
    
    42Condensed Consolidating Statement of Cash Flows Information for the six months
ended June 30, 2010 (unaudited)
    
    
    43
 40




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2010
(In thousands, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assetsCash and cash equivalents
    
    $
    390,660
    
    
    $
    45,055
    
    
    $
    
    
    
    $
    435,715Other current assets
    
    
    103,522
    
    
    
    (17,598
    )
    
    
    
    
    
    
    85,924Total current assets
    
    
    494,182
    
    
    
    27,457
    
    
    
    
    
    
    
    521,639Theatre properties and equipment, net
    
    
    1,184,254
    
    
    
    
    
    
    
    
    
    
    
    1,184,254Other assets
    
    
    1,556,740
    
    
    
    77,763
    
    
    
    (27,019
    )
    
    
    1,607,484Total assets
    
    $
    3,235,176
    
    
    $
    105,220
    
    
    $
    (27,019
    )
    
    $
    3,313,377Liabilities and equityCurrent liabilitiesCurrent portion of long-term debt
    
    $
    11,112
    
    
    $
    
    
    
    $
    
    
    
    $
    11,112Current portion of capital lease obligations
    
    
    7,344
    
    
    
    
    
    
    
    
    
    
    
    7,344Accounts payable and accrued expenses
    
    
    231,906
    
    
    
    
    
    
    
    
    
    
    
    231,906Total current liabilities
    
    
    250,362
    
    
    
    
    
    
    
    
    
    
    
    250,362Long-term liabilitiesLong-term debt, less current portion
    
    
    1,526,805
    
    
    
    
    
    
    
    
    
    
    
    1,526,805Capital lease obligations, less current portion
    
    
    131,680
    
    
    
    
    
    
    
    
    
    
    
    131,680Other long-term liabilities
    
    
    405,130
    
    
    
    30,721
    
    
    
    
    
    
    
    435,851Total long-term liabilities
    
    
    2,063,615
    
    
    
    30,721
    
    
    
    
    
    
    
    2,094,336Commitments and contingenciesEquity
    
    
    921,199
    
    
    
    74,499
    
    
    
    (27,019
    )
    
    
    968,679Total liabilities and equity
    
    $
    3,235,176
    
    
    $
    105,220
    
    
    $
    (27,019
    )
    
    $
    3,313,377
  41




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2010
(In thousands, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    
    $1,056,000
    
    
    $
    
    
    
    $
    
    
    
    $
    1,056,000Cost of operationsTheatre operating costs
    
    
    775,635
    
    
    
    
    
    
    
    
    
    
    
    775,635General and administrative expenses
    
    
    49,449
    
    
    
    3
    
    
    
    
    
    
    
    49,452Depreciation and amortization
    
    
    69,006
    
    
    
    
    
    
    
    
    
    
    
    69,006Impairment of long-lived assets
    
    
    5,035
    
    
    
    
    
    
    
    
    
    
    
    5,035Loss on sale of assets and other
    
    
    3,412
    
    
    
    946
    
    
    
    
    
    
    
    4,358Total cost of operations
    
    
    902,537
    
    
    
    949
    
    
    
    
    
    
    
    903,486Operating income (loss)
    
    
    153,463
    
    
    
    (949
    )
    
    
    
    
    
    
    152,514Other income (expense)
    
    
    (51,153
    )
    
    
    7,173
    
    
    
    
    
    
    
    (43,980
    )Income before income taxes
    
    
    102,310
    
    
    
    6,224
    
    
    
    
    
    
    
    108,534Income taxes
    
    
    28,078
    
    
    
    2,347
    
    
    
    
    
    
    
    30,425Net income
    
    
    74,232
    
    
    
    3,877
    
    
    
    
    
    
    
    78,109Less: Net income attributable to noncontrolling interests
    
    
    2,695
    
    
    
    
    
    
    
    
    
    
    
    2,695Net income attributable to Cinemark USA, Inc.
    
    
    $71,537
    
    
    $
    3,877
    
    
    $
    
    
    
    $
    75,414
  42




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##### Table of Contents



CINEMARK USA, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2010
(In thousands, unaudited)
 Restricted
    
    
    UnrestrictedGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedOperating activitiesNet income
    
    $
    74,232
    
    
    $
    3,877
    
    
    $
    
    
    
    $
    78,109Adjustments to reconcile net income to cash provided by
operating activities and other
    
    
    72,696
    
    
    
    6,044
    
    
    
    
    
    
    
    78,740Changes in assets and liabilities
    
    
    (51,056
    )
    
    
    2,091
    
    
    
    
    
    
    
    (48,965
    )Net cash provided by operating activities
    
    
    95,872
    
    
    
    12,012
    
    
    
    
    
    
    
    107,884Investing activitiesAdditions to theatre properties and equipment
    
    
    (56,960
    )
    
    
    
    
    
    
    
    
    
    
    (56,960
    )Proceeds from sale of theatre properties and equipment
    
    
    951
    
    
    
    1,197
    
    
    
    
    
    
    
    2,148Investment in joint venture  DCIP, net of cash distributions
    
    
    
    
    
    
    (644
    )
    
    
    
    
    
    
    (644
    )Net cash provided by (used for) investing activities
    
    
    (56,009
    )
    
    
    553
    
    
    
    
    
    
    
    (55,456
    )Financing activitiesDividends paid to parent
    
    
    (34,375
    )
    
    
    
    
    
    
    
    
    
    
    (34,375
    )Payroll taxes paid as a result of noncash stock option
exercises and restricted stock withholdings
    
    
    (416
    )
    
    
    
    
    
    
    
    
    
    
    (416
    )Payment of debt issue costs
    
    
    (8,706
    )
    
    
    
    
    
    
    
    
    
    
    (8,706
    )Repayments of other long-term debt
    
    
    (6,136
    )
    
    
    
    
    
    
    
    
    
    
    (6,136
    )Payments on capital leases
    
    
    (3,606
    )
    
    
    
    
    
    
    
    
    
    
    (3,606
    )Other
    
    
    (110
    )
    
    
    
    
    
    
    
    
    
    
    (110
    )Net cash used for financing activities
    
    
    (53,349
    )
    
    
    
    
    
    
    
    
    
    
    (53,349
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,101
    )
    
    
    
    
    
    
    
    
    
    
    (1,101
    )Increase (decrease) in cash and cash equivalents
    
    
    (14,587
    )
    
    
    12,565
    
    
    
    
    
    
    
    (2,022
    )Cash and cash equivalents:Beginning of year
    
    
    405,247
    
    
    
    32,490
    
    
    
    
    
    
    
    437,737End of year
    
    $
    390,660
    
    
    $
    45,055
    
    
    $
    
    
    
    $
    435,715
  43




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##### Table of Contents



Item 6. Exhibits
 *31.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to 18
U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley
Act of 2002.*32.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant to
18 U.S.C. Section 1350, as added by Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith. 44




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##### Table of Contents



SIGNATURES
  CINEMARK USA, INC.RegistrantDATE: August 9, 2010/s/ Alan W. StockAlan W. StockChief Executive Officer/s/ Robert CoppleRobert CoppleChief Financial Officer
 45




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##### Table of Contents



EXHIBIT INDEX
 *31.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Alan Stock, Chief Executive Officer, pursuant to
18 U.S.C. Section 1350, as added by Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Robert Copple, Chief Financial Officer, pursuant
to 18 U.S.C. Section 1350, as added by Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith.