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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 March 31, 2011
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)
Registrant’s telephone number, including area code: (972) 665-1000
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ       No o
     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o       No o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer þ   Smaller reporting company o
        (Do not check if a smaller reporting company)    
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o       No þ
     As of April 30, 2011, 1,500 shares of Class A common stock and 182,648 shares of Class B common stock were issued and outstanding.
 
 

 


 

CINEMARK USA, INC. AND SUBSIDIARIES
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 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2

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Cautionary Statement Regarding Forward-Looking Statements
Certain matters within this Quarterly Report on Form 10Q include “forward—looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The “forward-looking statements” include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements relating to future revenues, expenses and profitability, the future development and expected growth of our business, projected capital expenditures, attendance at movies generally or in any of the markets in which we operate, the number or diversity of popular movies released and our ability to successfully license and exhibit popular films, national and international growth in our industry, competition from other exhibitors and alternative forms of entertainment and determinations in lawsuits in which we are defendants. Forward-looking statements can be identified by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. For a description of the risk factors, please review the “Risk Factors” section or other sections in the Company’s Annual Report on Form 10-K filed March 11, 2011 and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such risk factors. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data, unaudited)
                 
    March 31,     December 31,  
    2011     2010  
Assets
               
Current assets
               
Cash and cash equivalents
  $ 462,589     $ 464,765  
Inventories
    10,505       11,686  
Accounts receivable
    41,250       50,607  
Income tax receivable
    8,796       30,733  
Current deferred tax asset
    4,128       8,099  
Prepaid expenses and other
    8,479       10,931  
Accounts receivable from parent
    7,644       6,728  
 
           
Total current assets
    543,391       583,549  
 
               
Theatre properties and equipment
    2,080,882       2,048,204  
Less accumulated depreciation and amortization
    874,086       832,758  
 
           
Theatre properties and equipment, net
    1,206,796       1,215,446  
 
               
Other assets
               
Goodwill
    1,125,482       1,122,971  
Intangible assets — net
    328,491       329,204  
Investment in NCM
    72,162       64,376  
Investment in DCIP
    13,088       10,838  
Investment in Real D
    33,455       27,993  
Investments in and advances to affiliates
    2,462       2,619  
Deferred charges and other assets — net
    85,737       70,978  
 
           
Total other assets
    1,660,877       1,628,979  
 
           
 
Total assets
  $ 3,411,064     $ 3,427,974  
 
           
 
               
Liabilities and equity
               
 
               
Current liabilities
               
Current portion of long-term debt
  $ 10,836     $ 10,836  
Current portion of capital lease obligations
    7,570       7,348  
Current liability for uncertain tax positions
    463       1,948  
Accounts payable and accrued expenses
    220,400       251,660  
 
           
Total current liabilities
    239,269       271,792  
 
               
Long-term liabilities
               
Long-term debt, less current portion
    1,519,102       1,521,605  
Capital lease obligations, less current portion
    130,901       132,812  
Deferred income taxes
    124,162       129,293  
Liability for uncertain tax positions
    16,318       17,840  
Deferred lease expenses
    31,239       30,454  
Deferred revenue — NCM
    239,032       230,573  
Other long-term liabilities
    53,165       52,900  
 
           
Total long-term liabilities
    2,113,919       2,115,477  
 
               
Commitments and contingencies (see Note 18)
               
 
               
Equity
               
Cinemark 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       49,543  
Treasury stock, 57,245 Class B shares at cost
    (24,233 )     (24,233 )
Additional paid-in-capital
    1,170,775       1,167,994  
Retained deficit
    (190,901 )     (192,385 )
Accumulated other comprehensive income
    40,827       28,181  
 
           
Total Cinemark USA, Inc.’s stockholder’s equity
    1,046,011       1,029,100  
Noncontrolling interests
    11,865       11,605  
 
           
Total equity
    1,057,876       1,040,705  
 
           
 
               
Total liabilities and equity
  $ 3,411,064     $ 3,427,974  
 
           
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data, unaudited)
                 
    Three months ended March 31,  
    2011     2010  
Revenues
               
Admissions
  $ 311,692     $ 342,990  
Concession
    146,681       153,104  
Other
    24,763       20,537  
 
           
Total revenues
    483,136       516,631  
 
               
Cost of operations
               
Film rentals and advertising
    165,153       188,819  
Concession supplies
    23,282       22,406  
Salaries and wages
    50,079       52,542  
Facility lease expense
    66,426       62,715  
Utilities and other
    59,827       55,221  
General and administrative expenses
    28,552       24,991  
Depreciation and amortization
    38,922       33,933  
Amortization of favorable/unfavorable leases
    218       158  
Impairment of long-lived assets
    1,015       347  
Loss on sale of assets and other
    472       3,167  
 
           
Total cost of operations
    433,946       444,299  
 
           
 
               
Operating income
    49,190       72,332  
 
               
Other income (expense)
               
Interest expense
    (29,290 )     (26,010 )
Interest income
    1,769       1,053  
Foreign currency exchange gain (loss)
    823       (268 )
Distributions from NCM
    9,863       9,946  
Equity in income of affiliates
    2,438       27  
 
           
Total other expense
    (14,397 )     (15,252 )
 
           
 
               
Income before income taxes
    34,793       57,080  
Income taxes
    9,200       20,033  
 
           
Net income
  $ 25,593     $ 37,047  
Less: Net income attributable to noncontrolling interests
    359       1,618  
 
           
Net income attributable to Cinemark USA, Inc.
  $ 25,234     $ 35,429  
 
           
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                 
    Three Months Ended March 31,  
    2011     2010  
Operating activities
               
Net income
  $ 25,593     $ 37,047  
 
Adjustments to reconcile net income to cash provided by operating activities:
               
Depreciation
    38,033       32,829  
Amortization of intangible and other assets and unfavorable leases
    1,107       1,262  
Amortization of long-term prepaid rents
    667       341  
Amortization of debt issue costs
    1,184       1,181  
Amortization of deferred revenues, deferred lease incentives and other
    (2,339 )     (1,399 )
Amortization of accumulated other comprehensive loss related to interest rate swap agreement
    1,158       1,158  
Amortization of bond discount
    206       188  
Impairment of long-lived assets
    1,015       347  
Share based awards compensation expense
    1,871       1,108  
Loss on sale of assets and other
    472       1,457  
Loss on contribution of digital projection systems to DCIP
          1,710  
Deferred lease expenses
    780       783  
Deferred income tax expenses
    (4,770 )     (10,528 )
Equity in income of affiliates
    (2,438 )     (27 )
Tax benefit related to stock option exercises and restricted stock vesting
    1,854       1,667  
Distributions from equity investees
    2,420       1,674  
Changes in assets and liabilities
    (6,057 )     (27,158 )
 
           
Net cash provided by operating activities
    60,756       43,640  
 
               
Investing activities
               
Additions to theatre properties and equipment
    (35,769 )     (19,517 )
Proceeds from sale of theatre properties and equipment
    485       491  
Investment in joint venture — DCIP and other
    (572 )     (644 )
 
           
Net cash used for investing activities
    (35,856 )     (19,670 )
 
               
Financing activities
               
Dividends paid to parent
    (23,750 )     (14,375 )
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings
    (494 )     (299 )
Payment of debt issue costs
    (74 )     (8,706 )
Repayments of long-term debt
    (2,709 )     (3,070 )
Payments on capital leases
    (1,722 )     (1,739 )
Other
    (110 )      
 
           
Net cash used for financing activities
    (28,859 )     (28,189 )
 
               
Effect of exchange rate changes on cash and cash equivalents
    1,783       (359 )
 
           
 
               
Decrease in cash and cash equivalents
    (2,176 )     (4,578 )
 
               
Cash and cash equivalents:
               
Beginning of period
    464,765       437,737  
 
           
End of period
  $ 462,589     $ 433,159  
 
           
Supplemental information (see Note 14)
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
1. The Company and Basis of Presentation
     Cinemark USA, Inc. and subsidiaries (the “Company”) is a leader in the motion picture exhibition industry, with theatres in the United States (“U.S.”), Brazil, Mexico,Chile,Colombia, Argentina,Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The Company also managed additional theatres in the U.S., Brazil, and Colombia during the three months ended March 31, 2011.
     The condensed consolidated financial statements have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these interim financial statements reflect all adjustments of a recurring nature necessary to state fairly the financial position and results of operations as of, and for, the periods indicated. Majority-owned subsidiaries that the Company has control of are consolidated while those affiliates of which the Company owns between 20% and 50% and does not control are accounted for under the equity method. Those affiliates of which the Company owns less than 20% are generally accounted for under the cost method, unless the Company is deemed to have the ability to exercise significant influence over the affiliate, in which case the Company would account for its investment under the equity method. The results of these subsidiaries and affiliates are included in the condensed consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.
     These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2010, included in the Annual Report on Form 10-K filed March 11, 2011 by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results to be achieved for the full year.
2. New Accounting Pronouncements
     There were no new accounting pronouncements issued or effective during 2011 that had or are expected to have an impact on the Company’s condensed consolidated financial statements.
3. Equity
     Below is a summary of changes in stockholder’s equity attributable to Cinemark USA, Inc., noncontrolling interests and total equity for the three months ended March 31, 2011 and 2010:
                         
    Cinemark              
    USA, Inc.              
    Stockholder’s     Noncontrolling     Total  
    Equity     Interests     Equity  
     
Balance at January 1, 2011
  $ 1,029,100     $ 11,605     $ 1,040,705  
 
                       
Share based awards compensation expense
    1,871             1,871  
Tax benefit related to stock option exercises and restricted stock vesting
    910             910  
Dividends paid to parent
    (23,750 )           (23,750 )
Comprehensive income:
                       
Net income
    25,234       359       25,593  
Fair value adjustments on interest rate swap agreements, net of taxes of $1,936
    2,716             2,716  
Amortization of accumulated other comprehensive loss on terminated swap agreement
    1,158             1,158  
Fair value adjustments on available-for-sale securities, net of taxes of $729
    1,323             1,323  
Foreign currency translation adjustment
    7,449       (99 )     7,350  
     
Total comprehensive income
    37,880       260       38,140  
     
Balance at March 31, 2011
  $ 1,046,011     $ 11,865     $ 1,057,876  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
                         
    Cinemark              
    USA, Inc.              
    Stockholder’s     Noncontrolling     Total  
    Equity     Interests     Equity  
     
Balance at January 1, 2010
  $ 907,345     $ 14,796     $ 922,141  
 
                       
Share based awards compensation expense
    1,108             1,108  
Tax benefit related to stock option exercises
    1,667             1,667  
Dividends paid to parent
    (14,375 )           (14,375 )
Comprehensive income:
                       
Net income
    35,429       1,618       37,047  
Fair value adjustments on interest rate swap agreements, net of taxes of $314
    (518 )           (518 )
Amortization of accumulated other comprehensive loss on terminated swap agreement
    1,158             1,158  
Foreign currency translation adjustment
    (268 )     (236 )     (504 )
     
Total comprehensive income
    35,801       1,382       37,183  
     
Balance at March 31, 2010
  $ 931,546     $ 16,178     $ 947,724  
     
4. Investment in National CineMedia
     Below is a summary of activity with National CineMedia, LLC (“NCM”) included in the Company’s condensed consolidated financial statements:
                                                 
    Investment     Deferred     Distributions     Equity in     Other     Cash  
    in NCM     Revenue     from NCM     Earnings     Revenue     Received  
     
Balance as of December 31, 2010
  $ 64,376     $ (230,573 )                                
Receipt of common units due to annual common unit adjustment
    9,302       (9,302 )   $     $     $     $  
Revenues earned under exhibitor services agreement
                            (1,299 )     1,299  
Receipt of excess cash distributions
    (1,708 )           (5,909 )                 7,617  
Receipt under tax receivable agreement
    (712 )           (3,954 )                 4,666  
Equity in earnings
    904                   (904 )            
Amortization of deferred revenue
          843                   (843 )      
     
Balance as of and for the period ended March 31, 2011
  $ 72,162     $ (239,032 )   $ (9,863 )   $ (904 )   $ (2,142 )   $ 13,582  
     
     During March 2011, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 549,417 common units of NCM, each of which is convertible into one share of National CineMedia, Inc. common stock. The Company recorded the additional common units received at fair value as an investment with a corresponding adjustment to deferred revenue of approximately $9,302. The deferred revenue will be recognized under the units of revenue method over the remaining term of the Company’s Exhibitor Services Agreement with NCM, which is approximately 26 years. The common unit adjustment resulted in a change in the Company’s ownership percentage in NCM from approximately 15.3% to 15.8%.
     As of March 31, 2011, the Company owned a total of 17,495,920 common units of NCM. The Company continues to account for its investment in NCM under the equity method of accounting. During the three months ended March 31, 2011 and March 31, 2010, the Company recorded equity earnings of approximately $904 and $821, respectively.
     Pursuant to the terms of the Exhibitor Services Agreement, the Company recorded other revenues, excluding the amortization of deferred revenue, of approximately $1,299 and $1,190 during the three months ended March 31, 2011 and 2010, respectively. These amounts include the per patron and per digital advertising screen theatre access fee and theatre rental revenue, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire of $2,316 and $2,513, respectively.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     Below is summary financial information for NCM for the year ended December 31, 2010 (financial information was not yet available for the three months ended March 31, 2011):
         
    Year  
    Ended  
    December 31, 2010  
Gross revenues
  $ 427,445  
Operating income
  $ 190,559  
Net earnings
  $ 139,541  
5. Investment in Digital Cinema Implementation Partners
     On February 12, 2007, the Company, AMC Entertainment Inc. and Regal Entertainment Group entered into a joint venture known as Digital Cinema Implementation Partners LLC (“DCIP”) to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema.
     On March 10, 2010, the Company signed a master equipment lease agreement and other related agreements (collectively the “agreements”) with Kasima LLC (“Kasima”), which is an indirect subsidiary of DCIP and a related party to the Company. Upon signing the agreements, the Company contributed digital projection systems at a fair value of $16,380 to DCIP (collectively the “contributions”), which DCIP then contributed to Kasima. The net book value of the contributed equipment was approximately $18,090, and as a result, the Company recorded a loss of approximately $1,710, which is reflected in loss on sale of assets and other on the condensed consolidated statement of income for the three months ended March 31, 2010. As of March 31, 2011, the Company continues to have a 33% voting interest in DCIP and a 24.3% economic interest in DCIP.
     The Company has a variable interest in Kasima through the terms of its master equipment lease agreement; however,the Company has determined that it is not the primary beneficiary of Kasima, as the Company does not have the ability to direct the activities of Kasima that most significantly impact Kasima’s economic performance. The Company accounts for its investment in DCIP and its subsidiaries under the equity method of accounting. During the three months ended March 31, 2011 and 2010, the Company recorded equity income (losses) of $1,686 and ($818), respectively, relating to this investment. Below is a summary of activity with DCIP for the three months ended March 31, 2011:
         
    Investment in  
    DCIP  
Balance as of December 31, 2010
  $ 10,838  
Cash contributions to DCIP
    564  
Equity in income
    1,686  
 
     
Balance as of March 31, 2011
  $ 13,088  
 
     
     The Company continues to roll out digital projection systems to a majority of its first run U.S. theatres. The digital projection systems are leased from Kasima under an operating lease with an initial term of twelve years that contains ten one-year fair value renewal options. The equipment lease agreement also contains a fair value purchase option. Under the equipment lease agreement, the Company pays minimum annual rent of one thousand dollars per digital projection system for the first six and a half years from the effective date of the agreement and minimum annual rent of three thousand dollars per digital projection system beginning at six and a half years from the effective date through the end of the lease term. The Company is also subject to various types of other rent if such digital projection systems do not meet minimum performance requirements as outlined in the agreements. Certain of the other rent payments are subject to either a monthly or an annual maximum. As of March 31, 2011, the Company had 1,881 digital projection systems being leased under the master equipment lease agreement with Kasima. The Company recorded equipment lease expense of approximately $912 and $65 during the three months ended March 31, 2011 and 2010, respectively, which is included in utilities and other costs on the condensed consolidated statement of income.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     The digital projection systems leased from Kasima will replace a majority of the Company’s existing 35 millimeter projection systems in its U.S. theatres. Therefore, upon signing the agreements, the Company began accelerating the depreciation of these existing 35 millimeter projection systems, based on the estimated two year replacement timeframe. The Company recorded depreciation expense of approximately $3,541 on its domestic 35 millimeter projectors during the three months ended March 31, 2011. The net book value of the existing 35 millimeter projection systems to be replaced was approximately $7,058 as of March 31, 2011.
6. Investment in Real D
     Under its license agreement with Real D, a publicly traded company from whom the Company licenses its 3-D systems, the Company earned options to purchase shares of common stock upon installation of a certain number of 3-D systems as outlined in the license agreement. During 2010, the Company earned a total of 1,085,828 options to purchase shares of common stock in Real D. Upon vesting in these options, the Company recorded a total investment in Real D of approximately $18,909, which represented the estimated aggregate fair value of the options, with an offset to deferred lease incentive liability.
     During the three months ended March 31, 2011, the Company vested in an additional 136,952 Real D options by reaching the final target level, as outlined in the license agreement. Upon vesting in these additional options, the Company recorded an increase in its investment in Real D and its deferred lease incentive liability of approximately $3,402, which represented the estimated fair value of the Real D options. The fair value measurements were based upon Real D’s closing stock prices on the dates of vesting. These fair value measurements fall under Level 1 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. The deferred lease incentive liability, which is reflected in other long-term liabilities on the condensed consolidated balance sheets, is being amortized over the term of the license agreement, which is approximately seven and one-half years.
     During March 2011, the Company exercised all of its options to purchase shares of common stock in Real D for $0.00667 per share. The Company accounts for its investment in Real D as a marketable security. The Company has determined that its Real D shares are available-for-sale securities in accordance with ASC Topic 320-10-35-1, therefore unrealized holding gains and losses are reported as a component of accumulated other comprehensive income (loss) until realized.
     As of March 31, 2011, the Company owned 1,222,780 shares in Real D, with an estimated fair value of $33,455. The fair value of the Real D shares as of March 31, 2011 was determined based upon the closing price of Real D’s common stock on that date, which falls under Level 1 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. During the three months ended March 31, 2011, the Company recorded an unrealized holding gain of approximately $2,052 as a component of accumulated other comprehensive income on the condensed consolidated balance sheet.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
7. Share Based Awards
     Stock Options — A summary of stock option activity and related information for Cinemark Holdings, Inc. stock options that are held by the Company’s employees for the three months ended March 31, 2011 is as follows:
                                 
                    Weighted Average        
    Number of     Weighted Average     Grant Date Fair     Aggregate Intrinsic  
    Options     Exercise Price     Value     Value  
Outstanding at December 31, 2010
    140,356     $ 7.63     $ 3.51          
Exercised
    (45,596 )   $ 7.63     $ 3.51          
 
                             
Outstanding at March 31, 2011
    94,760     $ 7.63     $ 3.51     $ 1,111  
 
                           
Options exercisable at March 31, 2011
    94,760     $ 7.63     $ 3.51     $ 1,111  
 
                           
     The total intrinsic value of options exercised during the three month period ended March 31, 2011 was $520. The Company recognized a tax benefit of approximately $203 during the three months ended March 31, 2011 related to these option exercises.
     As of March 31, 2011, there was no remaining unrecognized compensation expense related to outstanding stock options as all outstanding options fully vested on April 2, 2009. Options outstanding at March 31, 2011 have an average remaining contractual life of approximately four years.
     Restricted Stock — During the three months ended March 31, 2011, Cinemark Holdings, Inc. granted 390,463 shares of restricted stock to employees of the Company. The fair value of the restricted stock granted was determined based on the market value of Cinemark Holdings, Inc.’s common stock on the date of grant, which was $19.35 per share. The Company assumed a forfeiture rate of 5% for the restricted stock awards. The restricted stock granted vests over four years based on continued service.
     Below is a summary of restricted stock activity for the three months ended March 31, 2011:
                 
    Shares of     Weighted Average  
    Restricted     Grant Date  
    Stock     Fair Value  
Outstanding at December 31, 2010
    1,254,691     $ 14.60  
Granted
    390,463     $ 19.35  
Forfeited
    (853 )   $ 12.89  
Vested
    (226,883 )   $ 10.21  
Canceled
    (4,613 )   $ 18.35  
 
             
Outstanding at March 31, 2011
    1,412,805     $ 16.60  
 
             
Unvested restricted stock at March 31, 2011
    1,412,805     $ 16.60  
 
             
     The Company recorded compensation expense of $1,173 and $540 related to restricted stock awards during the three months ended March 31, 2011 and 2010, respectively. Cinemark Holdings, Inc. recorded additional compensation expense of $142 and $205 related to restricted stock awards during the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, the remaining unrecognized compensation expense related to restricted stock awards was $18,264 and the weighted average period over which this remaining compensation expense will be recognized is approximately three years. Upon vesting, the Company receives an income tax deduction. The total fair value of shares that vested during the three months ended March 31, 2011 was $4,381. The Company recognized a tax benefit of approximately $1,651 during the three months ended March 31, 2011 related to these vested shares. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however the sale and transfer of the restricted shares is prohibited during the restriction period.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     Restricted Stock Units — During the three months ended March 31, 2011, Cinemark Holdings, Inc. granted restricted stock units representing 153,727 hypothetical shares of common stock to employees of the Company. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the three fiscal year period ending December 31, 2013 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments (as defined in the restricted stock unit award agreement).The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity. If the IRR for the three year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the three year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the three year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. All payouts of restricted stock units that vest will be subject to an additional service requirement and will be paid in the form of common stock if the participant continues to provide services through March 31, 2015, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest.
     Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the three months ended March 31, 2011 at each of the three target levels of financial performance (excluding forfeiture assumptions):
                 
    Number of        
    Shares     Value at  
    Vesting     Grant  
at IRR of at least 8.5%
    51,239     $ 991  
at IRR of at least 10.5%
    102,488     $ 1,983  
at IRR of at least 12.5%
    153,727     $ 2,975  
     Due to the fact that the IRR for the three year performance period could not be determined at the time of grant, the Company estimated that the most likely outcome is the achievement of the mid-point IRR level. The fair value of the restricted stock unit awards was determined based on the market value of the Company’s common stock on the date of grant, which was $19.35 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the three year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.
     No restricted stock unit awards have vested. There were no forfeitures of restricted stock unit awards during the three months ended March 31, 2011. The Company recorded compensation expense of $698 and $568 related to restricted stock unit awards during the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, the Company had restricted stock units outstanding that represented a total of 1,037,770 hypothetical shares of common stock, net of actual cumulative forfeitures of 19,918 units, assuming the maximum IRR of at least 12.5% is achieved for all of the grants. As of March 31, 2011, the remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $7,617. The weighted average period over which this remaining compensation expense will be recognized is approximately two years.
8. Long-Term Debt Activity
     Amendment and Extension of Senior Secured Credit Facility
     On March 2, 2010, the Company completed an amendment and extension to its senior secured credit facility to primarily extend the maturities of the facility and make certain other modifications. Approximately $924,375 of the Company’s then remaining outstanding $1,083,600 term loan debt was extended from an original maturity date of October 2013 to a maturity date of April 2016. The remaining term loan debt of approximately $159,225 that was not extended matures on the original maturity date of October 2013. Payments on the extended amount are due in equal quarterly installments of approximately $2,311 through March 31, 2016 with the remaining principal amount of approximately $866,602 due April 30, 2016. Payments on the original amount that was not extended are due in equal

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
quarterly installments of approximately $398 beginning March 31, 2010 through September 30, 2012 and increase to approximately $37,418 each calendar quarter from December 31, 2012 to June 30, 2013 with one final payment of approximately $42,593 due at maturity on October 5, 2013. The amendment also imposed a 1.0% prepayment premium for one year on certain prepayments of the extended portion of the term loan debt. The interest rate on the original term loan debt that was not extended accrues interest, at the Company’s option, at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50% (the “base rate”), plus a margin that ranges from 0.50% to 0.75% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.50% to 1.75%, per annum. The margin of the original term loan debt that was not extended is determined by the applicable corporate credit rating. The interest rate on the extended portion of the term loan debt accrues interest, at the Company’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a 2.25% margin per annum, or (B) a “eurodollar rate” plus a 3.25% margin per annum.
     The maturity date of $73,500 of the Company’s $150,000 revolving credit line was extended from October 2012 to March 2015. The maturity date of the remaining $76,500 of the Company’s revolving credit line did not change and remains October 2012. The interest rate on the original revolving credit line accrues interest, at the Company’s option, at: (A) a base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5 and (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.50% to 1.00% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.50% to 2.00% per annum. The interest rate on the extended revolving credit line accrues interest, at the Company’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 1.75% to 2.0% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 2.75% to 3.0% per annum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the credit agreement.
     The Company incurred debt issue costs of approximately $8,700 during the three months ended March 31, 2010 related to the amendment and extension of its senior secured credit facility. These costs will be amortized over the remaining term of the facility.
     Fair Value of Long-Term Debt
     The Company estimates the fair value of its long-term debt primarily using quoted market prices, which fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35. The carrying value of the Company’s long-term debt was $1,529,938 and $1,532,441 as of March 31, 2011 and December 31, 2010, respectively. The fair value of the Company’s long-term debt was $1,585,183 and $1,581,963 as of March 31, 2011 and December 31, 2010, respectively.
9. Interest Rate Swap Agreements
     The Company is currently a party to four interest rate swap agreements that qualify for cash flow hedge accounting. No premium or discount was incurred upon the Company entering into any of its interest rate swap agreements because the pay rates and receive rates on the interest rate swap agreements represented prevailing rates for each counterparty at the time each of the interest rate swap agreements was consummated. The fair values of the interest rate swaps are recorded on the Company’s consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive income (loss) and the ineffective portion reported in earnings. The Company’s current interest rate swap agreements exhibited no ineffectiveness during the three months ended March 31, 2011 and 2010.
     The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period, no transfers in or out of Level 3 and no gains or losses included in earnings that were attributable to the change in unrealized gains or losses related to the interest rate swap agreements.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     Below is a summary of the Company’s current interest rate swap agreements designated as hedge agreements:
                                                 
                                            Estimated  
    Amount     Effective     Pay     Receive     Expiration     Fair Value at  
Category   Hedged     Date     Rate     Rate     Date     March 31, 2011  
Interest Rate Swap Assets
                                               
 
  $ 175,000     December 2010     1.4000 %   1-Month LIBOR   September 2015   $ 5,380  
 
  $ 175,000     December 2010     1.3975 %   1-Month LIBOR   September 2015     5,447  
 
                                          $ 10,827  
 
                                             
 
                                               
Interest Rate Swap Liabilities
                                               
 
  $ 125,000     August 2007          4.9220 %   3-Month LIBOR   August 2012   $ (7,514 )
 
  $ 175,000     November 2008     3.6300 %   1-Month LIBOR   (1)     (5,676 )(2)
 
                                          $ (13,190 )
 
                                             
Total
  $ 650,000                                          
 
                                             
 
(1)   $100,000 of this swap expires November 2011 and $75,000 expires November 2012.
 
(2)   Approximately $2,093 is reflected in other current liabilities on the condensed consolidated balance sheet as of March 31, 2011.
     The Company amortized approximately $1,158 to interest expense during each of the three months ended March 31, 2010 and 2011, related to a previously terminated interest rate swap agreement. The Company will amortize approximately $4,633 to interest expense for this terminated interest rate swap agreement over the next twelve months. See Note 12 for additional information about the Company’s fair value measurements related to its interest rate swap agreements.
10. Goodwill and Other Intangible Assets
     The Company’s goodwill was as follows:
                         
    U.S.     International        
    Operating     Operating        
    Segment     Segment     Total  
Balance at December 31, 2010(1)
  $ 948,026     $ 174,945     $ 1,122,971  
Foreign currency translation adjustments
          2,511       2,511  
     
Balance at March 31, 2011(1)
  $ 948,026     $ 177,456     $ 1,125,482  
     
 
(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.
     The Company evaluates goodwill for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill might exceed its estimated fair value.
     The Company evaluates goodwill for impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. The Company considers the reporting unit to be each of its sixteen regions in the U.S. and each of its eight countries internationally (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit). Goodwill impairment is evaluated using a two-step approach requiring the Company to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of the reporting unit exceeds the estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was six and a half times for the evaluation performed during the fourth quarter of 2010. No events or changes in circumstances occurred during the three months ended March 31, 2011 that indicated that the carrying value of goodwill might exceed its

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
estimated fair value.
     Intangible assets consisted of the following:
                                 
    Balance at             Foreign Currency     Balance at  
    December 31,             Translation     March 31,  
    2010     Amortization     Adjustments     2011  
Intangible assets with finite lives:
                               
Gross carrying amount
  $ 64,319     $     $ 47     $ 64,366  
Accumulated amortization
    (46,185 )     (1,126 )           (47,311 )
     
Total net intangible assets with finite lives
  $ 18,134     $ (1,126 )   $ 47     $ 17,055  
 
                               
Intangible assets with indefinite lives:
                               
Tradename
    311,070             366       311,436  
     
Total intangible assets — net
  $ 329,204     $ (1,126 )   $ 413     $ 328,491  
     
     Estimated aggregate future amortization expense for intangible assets is as follows:
         
For the nine months ended December 31, 2011
  $ 2,854  
For the twelve months ended December 31, 2012
    2,997  
For the twelve months ended December 31, 2013
    2,437  
For the twelve months ended December 31, 2014
    1,902  
For the twelve months ended December 31, 2015
    1,799  
Thereafter
    5,066  
 
     
Total
  $ 17,055  
 
     
11. Impairment of Long-Lived Assets
     The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.
     The Company considers actual theatre level cash flows, future years budgeted theatre level cash flows, theatre property and equipment carrying values, amortizing intangible asset carrying values, the age of a recently built theatre, competitive theatres in the marketplace, the impact of recent ticket price changes, available lease renewal options and other factors considered relevant in its assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis, which the Company believes is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the useful life correlates with the available remaining lease period, which includes the probability of renewal periods for leased properties and a period of approximately twenty years for fee owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre)is written down to its estimated fair value. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was six and a half times for the evaluations performed during the three months ended March 31, 2010 and 2011. As of March 31, 2011, the estimated aggregate fair value of the long-lived assets impaired during the three months ended March 31, 2011 was approximately $176.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     The long-lived asset impairment charges recorded during each of the periods presented are specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or the conditions of the areas surrounding the theatre.
                 
    Three Months Ended  
    March 31,  
    2011     2010  
     
United States theatre properties
  $ 343     $ 347  
International theatre properties
    672        
     
Subtotal
  $ 1,015     $ 347  
Intangible assets
           
     
Impairment of long-lived assets
  $ 1,015     $ 347  
     
12. Fair Value Measurements
     The Company determines fair value measurements in accordance with FASB ASC Topic 820, which establishes a fair value hierarchy under which an asset or liability is categorized based on the lowest level of input significant to its fair value measurement. The levels of input defined by FASB ASC Topic 820 are as follows:
  Level 1   — quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date;
 
  Level 2   — other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and
 
  Level 3   — unobservable and should be used to measure fair value to the extent that observable inputs are not available.
     Below is a summary of assets and liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of March 31, 2011:
                                 
    Carrying     Fair Value  
Description   Value     Level 1     Level 2     Level 3  
Interest rate swap liabilities — current (see Note 9)
  $ (2,093 )   $     $     $ (2,093 )
Interest rate swap liabilities — long term (see Note 9)
  $ (11,097 )   $     $     $ (11,097 )
Interest rate swap assets — long term (see Note 9)
  $ 10,827     $     $     $ 10,827  
Investment in Real D (see Note 6)
  $ 33,455     $ 33,455     $     $  
     Below is a summary of assets and liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of December 31, 2010:
                                 
    Carrying     Fair Value  
Description   Value     Level 1     Level 2     Level 3  
Interest rate swap liabilities — current (see Note 9)
  $ (2,928 )   $     $     $ (2,928 )
Interest rate swap liabilities — long term (see Note 9)
  $ (13,042 )   $     $     $ (13,042 )
Interest rate swap assets — long term (see Note 9)
  $ 8,955     $     $     $ 8,955  
Investment in Real D (see Note 6)
  $ 27,993     $     $ 27,993     $  

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     Below is a reconciliation of the beginning and ending balance for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
                                 
    Liabilities     Assets  
    2011     2010     2011     2010  
Beginning balance — January 1
  $ (15,970 )   $ (18,524 )   $ 8,955     $  
Total gain (loss) included in accumulated other comprehensive income (loss)
    2,780       (832 )     1,872     $  
     
Ending balance — March 31
  $ (13,190 )   $ (19,356 )   $ 10,827     $  
     
     There were no changes in valuation techniques during the period. The fair value measurement for the Company’s investment in Real D transferred from Level 2 to Level 1. Previous fair value estimates for the investment were based on Real D’s stock price, discounted to reflect the impact of a lock-up period to which the Company was subject. The lock-up period expired during January 2011; therefore, the fair value estimate for the investment as of March 31, 2011 was based on Real D’s stock price with no adjustments. There were no transfers in or out of Level 3 and no gains or losses included in the earnings that were attributable to the change in unrealized gains or losses related to the interest rate swap agreements.
13. Foreign Currency Translation
     The accumulated other comprehensive income account in stockholder’s equity of $28,181 and $40,827 at December 31, 2010 and March 31, 2011, respectively, includes the cumulative foreign currency adjustments of $34,248 and $41,696, respectively, from translating the financial statements of the Company’s international subsidiaries, and also includes the change in fair values of the Company’s interest rate swap agreements and the change in fair value of the Company’s available-for-sale securities.
     In 2010 and 2011, all foreign countries where the Company has operations were deemed non-highly inflationary and the local currency is the same as the functional currency in all of the locations. Thus, any fluctuation in the currency results in a cumulative foreign currency translation adjustment recorded to accumulated other comprehensive income (loss).
     On March 31, 2011, the exchange rate for the Brazilian real was 1.65 reais to the U.S. dollar (the exchange rate was 1.67 reais to the U.S. dollar at December 31, 2010).As a result, the effect of translating the March 31, 2011 Brazilian financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income account as an increase in stockholder’s equity of $3,498. At March 31, 2011, the total assets of the Company’s Brazilian subsidiaries were U.S. $321,097.
     On March 31, 2011, the exchange rate for the Mexican peso was 11.95 pesos to the U.S. dollar (the exchange rate was 12.39 pesos to the U.S. dollar at December 31, 2010).As a result, the effect of translating the March 31, 2011 Mexican financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income account as an increase in stockholder’s equity of $3,054. At March 31, 2011, the total assets of the Company’s Mexican subsidiaries were U.S. $140,754.
     On March 31, 2011, the exchange rate for the Colombian peso was 1,894.60 pesos to the U.S. dollar (the exchange rate was 2,004.10 pesos to the U.S. dollar at December 31, 2010). As a result, the effect of translating the March 31, 2011 Colombian financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income account as an increase in stockholder’s equity of $1,115. At March 31, 2011, the total assets of the Company’s Colombian subsidiaries were U.S. $28,035.
     The effect of translating the March 31, 2011 financial statements of the Company’s other international subsidiaries, with local currencies other than the U.S. dollar, is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income account as a decrease in stockholder’s equity of $219.

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
14. Supplemental Cash Flow Information
The following is provided as supplemental information to the condensed consolidated statements of cash flows:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
     
Cash paid for interest
  $ 16,678     $ 12,371  
Cash paid for income taxes, net of refunds received
  $ (6,610 )   $ 12,903  
Noncash investing and financing activities:
               
Change in construction lease obligations related to construction of theatres
  $     $ 2,370  
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment(1)
  $ 1,466     $ 2,543  
Change in fair market values of interest rate swap agreements, net of taxes
  $ 2,716     $ (518 )
Investment in NCM — receipt of common units (see Note 4)
  $ 9,302     $ 30,683  
Equipment contributed to DCIP (see Note 5)
  $     $ 18,090  
Investment in Real D (see Note 6)
  $ 3,402     $  
Change in fair market value of available-for-sale securities, net of taxes (see Note 6)
  $ 1,323     $  
 
(1)   Additions to theatre properties and equipment included in accounts payable as of December 31, 2010 and March 31, 2011 were $11,162 and $9,696, respectively.
15. Segments
     The Company manages its international market and its U.S. market as separate reportable operating segments. The international segment consists of operations in Brazil, Mexico, Chile, Colombia, Argentina,Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The U.S. segment includes U.S. and Canada operations (note that the Company’s only Canadian theatre was sold during November 2010.) Each segment’s revenue is derived from admissions and concession sales and other ancillary revenues, primarily screen advertising. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance of or allocate resources between segments.
     Below is a breakdown of selected financial information by reportable operating segment:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
     
Revenues
               
U.S.
  $ 330,866     $ 388,615  
International
    154,471       129,271  
Eliminations
    (2,201 )     (1,255 )
     
Total revenues
  $ 483,136     $ 516,631  
     
 
               
Adjusted EBITDA
               
U.S.
  $ 69,083     $ 89,739  
International
    33,915       32,376  
     
Total Adjusted EBITDA
  $ 102,998     $ 122,115  
     
 
               
Capital expenditures
               
U.S.
  $ 11,468     $ 12,500  
International
    24,301       7,017  
     
Total capital expenditures
  $ 35,769     $ 19,517  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
     The following table sets forth a reconciliation of net income to Adjusted EBITDA:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
     
Net income
  $ 25,593     $ 37,047  
Add (deduct):
               
Income taxes
    9,200       20,033  
Interest expense (1)
    29,290       26,010  
Other income (2)
    (5,030 )     (812 )
Depreciation and amortization
    38,922       33,933  
Amortization of favorable/unfavorable leases
    218       158  
Impairment of long-lived assets
    1,015       347  
Loss on sale of assets and other
    472       3,167  
Deferred lease expenses
    780       783  
Amortization of long-term prepaid rents
    667       341  
Share based awards compensation expense
    1,871       1,108  
     
Adjusted EBITDA
  $ 102,998     $ 122,115  
     
 
(1)   Includes amortization of debt issue costs.
 
(2)   Includes interest income, foreign currency exchange gain (loss), and equity in income of affiliates and excludes distributions from NCM. Distributions from NCM are reported entirely within the U.S. operating segment.
     Financial Information About Geographic Areas
     The Company has operations in the U.S., Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala, which are reflected in the condensed consolidated financial statements. Below is a breakdown of selected financial information by geographic area:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
     
Revenues
               
U.S.
  $ 330,866     $ 388,615  
Brazil
    86,841       69,218  
Mexico
    15,917       17,382  
Other foreign countries
    51,713       42,671  
Eliminations
    (2,201 )     (1,255 )
     
Total
  $ 483,136     $ 516,631  
     
                 
    March 31,     December 31,  
    2011     2010  
     
Theatre Properties and Equipment-net
               
U.S.
  $ 956,994     $ 972,358  
Brazil
    129,768       129,361  
Mexico
    46,549       43,127  
Other foreign countries
    73,485       70,600  
     
Total
  $ 1,206,796     $ 1,215,446  
     
16. Related Party Transactions
     The Company leased one theatre from Plitt Plaza Joint Venture (“Plitt Plaza”) on a month-to-month basis. Plitt Plaza is indirectly owned by Lee Roy Mitchell, Cinemark Holdings, Inc.’s Chairman of the Board, who directly and indirectly owns approximately 10% of Cinemark Holdings, Inc.’s issued and outstanding shares of common stock. The Company closed this theatre during March 2010. The Company recorded $30 of facility lease and other operating expenses payable to Plitt Plaza joint venture during the three months ended March 31, 2010.
     The Company manages one theatre for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25% of the limited partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenues

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
up to $50,000 and 3% of annual theatre revenues in excess of $50,000. The Company recorded $22 and $27 of management fee revenues during the three months ended March 31, 2010 and 2011, respectively. All such amounts are included in the Company’s condensed consolidated financial statements with the intercompany amounts eliminated in consolidation.
     The Company leases 20 theatres and one parking facility from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy. Raymond Syufy is one of Cinemark Holdings, Inc.’s directors and is an officer of the general partner of Syufy. Of these 21 leases, 17 have fixed minimum annual rent in an aggregate amount of approximately $21,044. The four leases without minimum annual rent have rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For the three months ended March 31, 2010 and 2011, the Company paid approximately $321 and $281, respectively, in percentage rent for these four leases.
     The Company has paid certain fees and expenses on behalf of its parent, Cinemark Holdings, Inc. and Cinemark Holdings, Inc. has paid income taxes on behalf of the Company. The net receivable from Cinemark Holdings, Inc. as of March 31, 2011 and December 31, 2010 was $7,644 and $6,728, respectively.
17. Income Taxes
     During the three months ended March 31, 2011, the Company had a reduction in its liabilities for uncertain tax positions and a reduction in its income tax expense of approximately $3,637 due to settlements and closures of various tax years.
18. Commitments and Contingencies
     From time to time, the Company is involved in various legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, landlord-tenant disputes, patent claims and contractual disputes, some of which are covered by insurance. The Company believes its potential liability with respect to proceedings currently pending is not material, individually or in the aggregate, to the Company’s financial position, results of operations and cash flows.
19. Condensed Consolidating Financial Information of Subsidiary Guarantors
     As of March 31, 2011, the Company had outstanding $470,000 aggregate principal amount of 8.625% senior notes due 2019. These senior notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the following subsidiaries of Cinemark USA, Inc.:
     Cinemark, L.L.C., Sunnymead Cinema Corp., Cinemark Properties, Inc., Greeley Holdings, Inc., Trans Texas Cinema, Inc., Cinemark Mexico (USA), Inc., Brasil Holdings, LLC, Cinemark Leasing Company, Cinemark Partners I, Inc., Multiplex Properties, Inc., Multiplex Services, Inc., CNMK Investments, Inc., CNMK Texas Properties, LLC., Cinemark Concessions LLC, Laredo Theatres, Ltd, Century Theatres, Inc., Marin Theatre Management, LLC, Century Theatres NG, LLC, Cinearts LLC, Cinearts Sacramento, LLC, Corte Madera Theatres, LLC, Novato Theatres, LLC, San Rafael Theatres, LLC, Northbay Theatres, LLC, Century Theatres Summit Sierra, LLC and Century Theatres Seattle, LLC.
     The following supplemental condensed consolidating financial information presents:
  1.   Condensed consolidating balance sheet information as of December 31, 2010 and March 31, 2011, condensed consolidating statements of income information for the three months ended March 31, 2010 and 2011, and condensed consolidating statements of cash flows information for the three months ended March 31, 2010 and 2011.
  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

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
      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

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
MARCH 31, 2011
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Assets
                                       
Current assets
                                       
Cash and cash equivalents
  $ 45,058     $ 213,059     $ 204,472     $     $ 462,589  
Other current assets
    41,448       34,351       30,657       (33,298 )     73,158  
Accounts receivable from parent or subsidiaries
    163,647                   (156,003 )     7,644  
     
Total current assets
    250,153       247,410       235,129       (189,301 )     543,391  
 
                                       
Theatre properties and equipment — net
    304,488       634,224       268,084             1,206,796  
 
                                       
Investment in subsidiaries
    1,277,339       468,744             (1,746,083 )      
 
                                       
Other assets
    1,201,352       171,065       388,382       (99,922 )     1,660,877  
 
                                       
     
Total assets
  $ 3,033,332     $ 1,521,443     $ 891,595     $ (2,035,306 )   $ 3,411,064  
     
 
                                       
Liabilities and equity
                                       
 
                                       
Current liabilities
                                       
 
                                       
Current portion of long-term debt
  $ 10,836     $     $     $     $ 10,836  
Current portion of capital lease obligations
    1,668       5,231       671             7,570  
Accounts payable and accrued expenses
    99,557       55,427       94,767       (28,888 )     220,863  
Accounts payable to parent or subsidiaries
          107,306       48,697       (156,003 )      
     
Total current liabilities
    112,061       167,964       144,135       (184,891 )     239,269  
 
                                       
Long-term liabilities
                                       
Long-term debt, less current portion
    1,525,732             28,901       (35,531 )     1,519,102  
Capital lease obligations, less current portion
    31,147       93,382       6,372             130,901  
Other long-term liabilities and deferrals
    318,381       146,354       67,982       (68,801 )     463,916  
     
Total long-term liabilities
    1,875,260       239,736       103,255       (134,763 )     2,113,919  
 
                                       
Commitments and contingencies
                                       
 
                                       
Equity
                                       
Cinemark USA, Inc.’s stockholder’s equity:
                                       
Common stock
    49,543       457,372       167,765       (625,137 )     49,543  
Other stockholder’s equity
    996,468       655,942       465,004       (1,120,946 )     996,468  
     
Total Cinemark USA, Inc. stockholder’s equity
    1,046,011       1,113,314       632,769       (1,746,083 )     1,046,011  
Noncontrolling interests
          429       11,436             11,865  
     
Total equity
    1,046,011       1,113,743       644,205       (1,746,083 )     1,057,876  
 
                                       
Total liabilities and equity
  $ 3,033,332     $ 1,521,443     $ 891,595     $ (2,035,306 )   $ 3,411,064  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2010
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Assets
                                       
Current assets
                                       
Cash and cash equivalents
  $ 70,054     $ 185,660     $ 209,051     $     $ 464,765  
Other current assets
    73,774       39,221       34,458       (35,397 )     112,056  
Accounts receivable from parent or subsidiaries
    135,527                   (128,799 )     6,728  
     
Total current assets
    279,355       224,881       243,509       (164,196 )     583,549  
 
                                       
Theatre properties and equipment — net
    307,302       646,906       261,238             1,215,446  
 
                                       
Investment in subsidiaries
    1,230,403       455,423             (1,685,826 )      
 
                                       
Other assets
    1,195,916       167,587       362,047       (96,571 )     1,628,979  
 
                                       
     
Total assets
  $ 3,012,976     $ 1,494,797     $ 866,794     $ (1,946,593 )   $ 3,427,974  
     
 
                                       
Liabilities and equity
                                       
 
                                       
Current liabilities
                                       
 
                                       
Current portion of long-term debt
  $ 10,836     $     $     $     $ 10,836  
Current portion of capital lease obligations
    1,626       5,057       665             7,348  
Accounts payable and accrued expenses
    105,748       78,779       100,788       (31,707 )     253,608  
Accounts payable to parent or subsidiaries
          85,468       43,331       (128,799 )      
     
Total current liabilities
    118,210       169,304       144,784       (160,506 )     271,792  
 
                                       
Long-term liabilities
                                       
Long-term debt, less current portion
    1,523,640             30,145       (32,180 )     1,521,605  
Capital lease obligations, less current portion
    31,580       94,762       6,470             132,812  
Other long-term liabilities and deferrals
    310,446       145,948       72,747       (68,081 )     461,060  
     
Total long-term liabilities
    1,865,666       240,710       109,362       (100,261 )     2,115,477  
 
                                       
Commitments and contingencies
                                       
 
                                       
Equity
                                       
Cinemark USA, Inc.’s stockholder’s equity:
                                       
Common stock
    49,543       457,372       167,765       (625,137 )     49,543  
Other stockholder’s equity
    979,557       627,013       433,676       (1,060,689 )     979,557  
     
Total Cinemark USA, Inc. stockholder’s equity
    1,029,100       1,084,385       601,441       (1,685,826 )     1,029,100  
Noncontrolling interests
          398       11,207             11,605  
     
Total equity
    1,029,100       1,084,783       612,648       (1,685,826 )     1,040,705  
 
                                       
     
Total liabilities and equity
  $ 3,012,976     $ 1,494,797     $ 866,794     $ (1,946,593 )   $ 3,427,974  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED MARCH 31, 2011
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Revenues
  $ 126,218     $ 210,599     $ 157,325     $ (11,006 )   $ 483,136  
 
                                       
Cost of operations
                                       
Theatre operating expenses
    110,374       148,607       116,792       (11,006 )     364,767  
General and administrative expenses
    4,713       14,880       8,959             28,552  
Depreciation and amortization
    9,134       20,494       9,512             39,140  
Impairment of long-lived assets
    234       110       671             1,015  
(Gain) loss on sale of assets and other
    351       191       (70 )           472  
     
Total cost of operations
    124,806       184,282       135,864       (11,006 )     433,946  
     
 
                                       
Operating income
    1,412       26,317       21,461             49,190  
 
                                       
Other income (expense)
                                       
Interest expense
    (26,492 )     (2,687 )     (600 )     489       (29,290 )
Distributions from NCM
    1,492             8,371             9,863  
Equity in income of affiliates
    39,601       6,380       2,424       (45,967 )     2,438  
Other income
    53       525       2,503       (489 )     2,592  
     
Total other income
    14,654       4,218       12,698       (45,967 )     (14,397 )
     
Income before income taxes
    16,066       30,535       34,159       (45,967 )     34,793  
Income taxes
    (9,168 )     9,185       9,183             9,200  
     
Net income
    25,234       21,350       24,976       (45,967 )     25,593  
Less: Net income attributable to noncontrolling interests
          13       346             359  
     
Net income attributable to Cinemark USA, Inc.
  $ 25,234     $ 21,337     $ 24,630     $ (45,967 )   $ 25,234  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED MARCH 31, 2010
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Revenues
  $ 147,640     $ 254,893     $ 134,159     $ (20,061 )   $ 516,631  
 
                                       
Cost of operations
                                       
Theatre operating expenses
    134,883       171,014       95,867       (20,061 )     381,703  
General and administrative expenses
    4,285       13,613       7,093             24,991  
Depreciation and amortization
    6,912       19,251       7,928             34,091  
Impairment of long-lived assets
    347                         347  
Loss on sale of assets and other
    388       1,318       1,461             3,167  
     
Total cost of operations
    146,815       205,196       112,349       (20,061 )     444,299  
     
 
                                       
Operating income
    825       49,697       21,810             72,332  
 
                                       
Other income (expense)
                                       
Interest expense
    (23,279 )     (2,910 )     (668 )     847       (26,010 )
Distributions from NCM
    979             8,967             9,946  
Equity in income of affiliates
    50,585       15,365       2       (65,925 )     27  
Other income
    124       696       812       (847 )     785  
     
Total other income
    28,409       13,151       9,113       (65,925 )     (15,252 )
     
Income before income taxes
    29,234       62,848       30,923       (65,925 )     57,080  
Income taxes
    (6,195 )     18,053       8,175             20,033  
     
Net income
    35,429       44,795       22,748       (65,925 )     37,047  
Less: Net income attributable to noncontrolling interests
          20       1,598             1,618  
     
Net income attributable to Cinemark USA, Inc.
  $ 35,429     $ 44,775     $ 21,150     $ (65,925 )   $ 35,429  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
THREE MONTHS ENDED MARCH 31, 2011
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Operating activities
                                       
Net income
  $ 25,234     $ 21,350     $ 24,976     $ (45,967 )   $ 25,593  
Adjustments to reconcile net income to cash provided by operating activities
    (31,809 )     16,005       11,057       45,967       41,220  
Changes in assets and liabilities
    11,736       (1,936 )     (15,857 )           (6,057 )
     
Net cash provided by operating activities
    5,161       35,419       20,176             60,756  
 
                                       
Investing activities
                                       
Additions to theatre properties and equipment
    (3,337 )     (7,728 )     (24,704 )           (35,769 )
Proceeds from sale of theatre properties and equipment
          162       323             485  
Net transactions with affiliates
    113       1,246             (1,359 )      
Investment in joint venture-DCIP and other
    (8 )           (564 )           (572 )
     
Net cash used for investing activities
    (3,232 )     (6,320 )     (24,945 )     (1,359 )     (35,856 )
 
                                       
Financing activities
                                       
Dividends paid to parent
    (23,750 )           (115 )     115       (23,750 )
Payroll taxes paid as a result of restricted stock withholdings
          (494 )                 (494 )
Repayments of other long-term debt
    (2,709 )                       (2,709 )
Net changes in intercompany notes
                (1,244 )     1,244        
Payments on capital leases
    (392 )     (1,206 )     (124 )           (1,722 )
Payment of debt issue costs
    (74 )                       (74 )
Other
                (110 )           (110 )
     
Net cash used for financing activities
    (26,925 )     (1,700 )     (1,593 )     1,359       (28,859 )
 
                                       
Effect of exchange rate changes on cash and cash equivalents
                1,783             1,783  
     
Increase (decrease) in cash and cash equivalents
    (24,996 )     27,399       (4,579 )           (2,176 )
Cash and cash equivalents:
                                       
Beginning of year
    70,054       185,660       209,051             464,765  
     
End of year
  $ 45,058     $ 213,059     $ 204,472     $     $ 462,589  
     

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CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
THREE MONTHS ENDED MARCH 31, 2010
                                         
    Parent     Subsidiary     Subsidiary              
    Company     Guarantors     Non-Guarantors     Eliminations     Consolidated  
                    (In thousands)                  
Operating activities
                                       
Net income
  $ 35,429     $ 44,795     $ 22,748     $ (65,925 )   $ 37,047  
 
                                       
Adjustments to reconcile net income to cash provided by operating activities
    (53,637 )     10,417       11,046       65,925       33,751  
Changes in assets and liabilities
    25,446       (41,595 )     (11,009 )           (27,158 )
     
Net cash provided by operating activities
    7,238       13,617       22,785             43,640  
 
                                       
Investing activities
                                       
Additions to theatre properties and equipment
    (5,673 )     (6,721 )     (7,123 )           (19,517 )
Proceeds from sale of theatre properties and equipment
          395       96             491  
Investment in joint venture — DCIP, net of cash distributions
                (644 )           (644 )
Net transactions with affiliates
          1,361             (1,361 )      
     
Net cash used for investing activities
    (5,673 )     (4,965 )     (7,671 )     (1,361 )     (19,670 )
 
                                       
Financing activities
                                       
Dividends paid to parent
    (14,375 )                       (14,375 )
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings
    (44 )     (255 )                 (299 )
Repayments of other long-term debt
    (2,709 )           (361 )           (3,070 )
Net changes in intercompany notes
                (1,361 )     1,361        
Payments on capital leases
    (314 )     (1,336 )     (89 )           (1,739 )
Payment of debt issue costs
    (8,706 )                       (8,706 )
Other
                             
     
Net cash used for financing activities
    (26,148 )     (1,591 )     (1,811 )     1,361       (28,189 )
 
                                       
Effect of exchange rate changes on cash and cash equivalents
                (359 )           (359 )
     
Increase (decrease) in cash and cash equivalents
    (24,583 )     7,061       12,944             (4,578 )
Cash and cash equivalents:
                                       
Beginning of year
    39,761       237,540       160,436             437,737  
     
End of year
  $ 15,178     $ 244,601     $ 173,380     $     $ 433,159  
     

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
     The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes and schedules included elsewhere in this report.
     We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. As of March 31, 2011, we managed our business under two reportable operating segments — U.S. markets and international markets. See Note 15 to our condensed consolidated financial statements.
     We generate revenues primarily from box office receipts and concession sales with additional revenues from screen advertising sales and other revenue streams, such as vendor marketing promotions and electronic video games located in some of our theatres. Our contracts with NCM have assisted us in expanding our offerings to domestic advertisers and broadening ancillary revenue sources such as digital video monitor advertising, third party branding, and the use of our domestic theatres for alternative entertainment, such as live and pre-recorded concert events, the opera, sports programs and other cultural events. Films leading the box office during the three months ended March 31, 2011 included Rango, Just Go With It, King’s Speech,True Grit and Green Hornet.Our revenues are affected by changes in attendance and average admissions and concession revenues per patron. Attendance is primarily affected by the quality and quantity of films released by motion picture studios. Films scheduled for release during the remainder of 2011 include Rio, Fast Five, Thor, Pirates of the Caribbean: On Stranger Tides, The Hangover Part II, Kung Fu Panda 2: The Kaboom of Doom, Cars 2, X Men: First Class, Super 8, Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows: Part 2, Twilight: Breaking Dawn, Captain America: The First Avenger, Cowboys and Aliens, Rise of the Planet of the Apes, Puss in Boots, Happy Feet 2, Mission: Impossible — Ghost Protocol, Sherlock Holmes 2 and Alvin and the Chipmunks: Chipwrecked, among other films.
     Film rental costs are variable in nature and fluctuate with our admissions revenues. Film rental costs as a percentage of revenues are generally higher for periods in which more blockbuster films are released. Film rental costs can also vary based on the length of a film’s run. Film rental rates are generally negotiated on a film-by-film and theatre-by-theatre basis. Advertising costs, which are expensed as incurred, are primarily fixed at the theatre level as daily movie directories placed in newspapers represent the largest component of advertising costs. The monthly cost of these advertisements is based on, among other things, the size of the directory and the frequency and size of the newspaper’s circulation.
     Concession supplies expense is variable in nature and fluctuates with our concession revenues. We purchase concession supplies to replace units sold. We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates.
     Although salaries and wages include a fixed cost component (i.e. the minimum staffing costs to operate a theatre facility during non-peak periods), salaries and wages move in relation to revenues as theatre staffing is adjusted to respond to changes in attendance.
     Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain of our leases are subject to percentage rent only while others are subject to percentage rent in addition to their fixed monthly rent if a target annual revenue level is achieved. Facility lease expense as a percentage of revenues is also affected by the number of theatres under operating leases, the number of theatres under capital leases and the number of fee-owned theatres.
     Utilities and other costs include certain costs that have both fixed and variable components such as utilities, property taxes, janitorial costs, repairs and maintenance and security services.

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Results of Operations
     The following table sets forth, for the periods indicated, certain operating data and, the percentage of revenues represented by certain items reflected in our condensed consolidated statements of income:
                 
    Three Months Ended
    March 31,
Operating data (in millions):   2011     2010
Revenues
               
Admissions
  $ 311.7     $ 343.0  
Concession
    146.7       153.1  
Other
    24.7       20.5  
     
Total revenues
    483.1       516.6  
Cost of operations
               
Film rentals and advertising
    165.2       188.8  
Concession supplies
    23.3       22.4  
Salaries and wages
    50.1       52.5  
Facility lease expense
    66.4       62.7  
Utilities and other
    59.8       55.2  
General and administrative expenses
    28.6       25.0  
Depreciation and amortization
    39.1       34.1  
Impairment of long-lived assets
    1.0       0.4  
Loss on sale of assets and other
    0.5       3.2  
     
Total cost of operations
    434.0       444.3  
     
Operating income
  $ 49.1     $ 72.3  
     
 
               
Operating data as a percentage of total revenues:
               
Revenues
               
Admissions
    64.5 %     66.4 %
Concession
    30.4 %     29.6 %
Other
    5.1 %     4.0 %
     
Total revenues
    100.0 %     100.0 %
     
Cost of operations (1)
               
Film rentals and advertising
    53.0 %     55.0 %
Concession supplies
    15.9 %     14.6 %
Salaries and wages
    10.4 %     10.2 %
Facility lease expense
    13.7 %     12.1 %
Utilities and other
    12.4 %     10.7 %
General and administrative expenses
    5.9 %     4.8 %
Depreciation and amortization
    8.1 %     6.6 %
Impairment of long-lived assets
    0.2 %     0.1 %
Loss on sale of assets and other
    0.1 %     0.6 %
Total cost of operations
    89.8 %     86.0 %
Operating income
    10.2 %     14.0 %
     
Average screen count (month end average)
    4,941       4,891  
     
Revenues per average screen (dollars)
  $ 97,791     $ 105,634  
     
 
(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.

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Three months ended March 31, 2011 and 2010
     Revenues. Total revenues decreased $33.5 million to $483.1 million for the three months ended March 31, 2011 (“first quarter of 2011”) from $516.6 million for the three months ended March 31, 2010 (“first quarter of 2010”). The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.
                                                                         
    U.S. Operating Segment     International Operating Segment     Consolidated  
    Three Months Ended     Three Months Ended     Three Months Ended  
    March 31,     March 31,     March 31,  
                    %                     %                     %  
    2011     2010     Change     2011     2010     Change     2011     2010     Change  
Admissions revenues (1)
  $ 213.6     $ 259.3       (17.6 %)   $ 98.1     $ 83.7       17.2 %   $ 311.7     $ 343.0       (9.1 %)
Concession revenues (1)
  $ 104.8     $ 118.5       (11.6 %)   $ 41.9     $ 34.6       21.1 %   $ 146.7     $ 153.1       (4.2 %)
Other revenues (1) (2)
  $ 10.3     $ 9.5       8.4 %   $ 14.4     $ 11.0       30.9 %   $ 24.7     $ 20.5       20.5 %
Total revenues (1) (2)
  $ 328.7     $ 387.3       (15.1 %)   $ 154.4     $ 129.3       19.4 %   $ 483.1     $ 516.6       (6.5 %)
Attendance (1)
    33.4       39.6       (15.7 %)     20.4       18.9       7.9 %     53.8       58.5       (8.0 %)
Revenues per average screen (2)
  $ 86,038     $ 101,264       (15.0 %)   $ 137,859     $ 121,325       13.6 %   $ 97,791     $ 105,634       (7.4 %)
 
(1)   Amounts in millions.
 
(2)   U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 15 of our condensed consolidated financial statements.
  Consolidated. The decrease in admissions revenues of $31.3 million was attributable to an 8.0% decrease in attendance and a 1.2% decrease in average ticket price from $5.86 for the first quarter of 2010 to $5.79 for the first quarter of 2011. The decrease in concession revenues of $6.4 million was attributable to the 8.0% decrease in attendance partially offset by a 4.2% increase in concession revenues per patron from $2.62 for the first quarter of 2010 to $2.73 for the first quarter of 2011. The decrease in average ticket price was primarily due to the increased weighting of 2-D attendance during the first quarter of 2011. 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 20.5% 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 decrease in admissions revenues of $45.7 million was attributable to a 15.7% decrease in attendance and a 2.3% decrease in average ticket price from $6.55 for the first quarter of 2010 to $6.40 for the first quarter of 2011. The decrease in concession revenues of $13.7 million was attributable to the 15.7% decrease in attendance, partially offset by a 5.0% increase in concession revenues per patron from $2.99 for the first quarter of 2010 to $3.14 for the first quarter of 2011. The decrease in average ticket price was primarily due to the increased weighting of 2-D attendance during the first quarter of 2011. The increase in concession revenues per patron was primarily due to price increases.
 
  International. The increase in admissions revenues of $14.4 million was attributable to a 7.9% increase in attendance and an 8.6% increase in average ticket price from $4.43 for the first quarter of 2010 to $4.81 for the first quarter of 2011. The increase in concession revenues of $7.3 million was attributable to the 7.9% increase in attendance and a 12.0% increase in concession revenues per patron from $1.83 for the first quarter of 2010 to $2.05 for the first quarter of 2011. The increase in average ticket price was primarily due to the favorable impact of exchange rates in certain countries in which we operate and price increases. 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 30.9% 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.

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     Cost of Operations. The table below summarizes certain of our year-over-year theatre operating costs by reportable operating segment (in millions).
                                                 
                    International Operating        
    U.S. Operating Segment     Segment     Consolidated  
    Three Months Ended     Three Months Ended     Three Months Ended  
    March 31,     March 31,     March 31,  
    2011     2010     2011     2010     2011     2010  
Film rentals and advertising
  $ 116.2     $ 148.5     $ 49.0     $ 40.3     $ 165.2     $ 188.8  
Concession supplies
    12.6       13.9       10.7       8.5       23.3       22.4  
Salaries and wages
    37.9       42.4       12.2       10.1       50.1       52.5  
Facility lease expense
    45.7       45.7       20.7       17.0       66.4       62.7  
Utilities and other
    39.9       39.6       19.9       15.6       59.8       55.2  
  Consolidated. Film rentals and advertising costs were $165.2 million, or 53.0% of admissions revenues, for the first quarter of 2011 compared to $188.8 million, or 55.0% of admissions revenues, for the first quarter of 2010. The decrease in film rentals and advertising costs of $23.6 million was due to a $31.3 million decrease in admissions revenues, which contributed $19.3 million, and a decrease in our film rentals and advertising rate, which contributed $4.3 million. The decrease in the film rentals and advertising rate was primarily due to lower film rental rates in the U.S. segment during the first quarter of 2011 due to fewer blockbuster films during that period. Concession supplies expense was $23.3 million, or 15.9% of concession revenues, for the first quarter of 2011 compared to $22.4 million, or 14.6% of concession revenues, for the first quarter of 2010. The increase in the concession supplies rate was primarily due to the increased weighting of our international segment and increases in inventory procurement costs.
    Salaries and wages decreased to $50.1 million for the first quarter of 2011 from $52.5 million for the first quarter of 2010 primarily due to a reduction in staffing levels given the decline in attendance in the U.S. segment, partially offset by new theatres and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $66.4 million for the first quarter of 2011 from $62.7 million for the first quarter of 2010 primarily due to new theatres, increased percentage rent in the international segment and the impact of exchange rates in certain countries in which we operate. Utilities and other costs increased to $59.8 million for the first quarter of 2011 from $55.2 million for the first quarter of 2010 primarily due to new theatres,increased expenses related to digital and 3-D equipment, increased utility expenses and the impact of exchange rates in certain countries in which we operate.
  U.S. Film rentals and advertising costs were $116.2 million, or 54.4% of admissions revenues, for the first quarter of 2011 compared to $148.5 million, or 57.3% of admissions revenues, for the first quarter of 2010. The decrease in film rentals and advertising costs of $32.3 million was due to a $45.7 million decrease in admission revenues, which contributed $26.2 million, and a decrease in our film rentals and advertising rate, which contributed $6.1 million. The decrease in the film rentals and advertising rate was primarily due to the decrease in the number of blockbuster films released, which generally have higher film rental rates. Concession supplies expense was $12.6 million, or 12.0% of concession revenues, for the first quarter of 2011 compared to $13.9 million, or 11.7% of concession revenues, for the first quarter of 2010. The increase in the concession supplies rate was primarily due to increases in inventory procurement costs.
    Salaries and wages decreased to $37.9 million for the first quarter of 2011 from $42.4 million for the first quarter of 2010 primarily due to a reduction in staffing levels given the 15.7% decline in attendance. Facility lease expense was $45.7 million for the first quarter of 2011 and 2010. Utilities and other costs increased to $39.9 million for the first quarter of 2011 from $39.6 million for the first quarter of 2010.
  International. Film rentals and advertising costs were $49.0 million, or 49.9% of admissions revenues, for the first quarter of 2011 compared to $40.3 million, or 48.1% of admissions revenues, for the first quarter of 2010. The increase in film rentals and advertising costs was due to a $14.4 million increase in admissions revenues, which contributed $6.9 million, and an increase in the film rentals and advertising rate, which contributed $1.8 million. Concession supplies expense was $10.7 million, or 25.5% of concession revenues, for the first quarter of 2011 compared to $8.5 million, or 24.6% of concession revenues, for the first quarter of 2010. The increase in concession supplies expense of $2.2 million was primarily due to a $7.3 million increase in concession revenues. The increased concession supplies rate was primarily due to increases in inventory procurement costs.

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    Salaries and wages increased to $12.2 million for the first quarter of 2011 from $10.1 million for the first quarter of 2010 primarily due to new theatres, increased staffing levels to support the 7.9% increase in attendance, increased minimum wages and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $20.7 million for the first quarter of 2011 from $17.0 million for the first quarter of 2010 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 $19.9 million for the first quarter of 2011 from $15.6 million for the first quarter of 2010 primarily due to new theatres, increased expenses related to 3-D equipment,increased utility expenses and the impact of exchange rates in certain countries in which we operate.
     General and Administrative Expenses. General and administrative expenses increased to $28.6 million for the first quarter of 2011 from $25.0 million for the first quarter of 2010. The increase was primarily due to increased salaries and incentive compensation expense, increased share based award compensation expense and the impact of exchange rates in certain countries in which we operate.
     Depreciation and Amortization. Depreciation and amortization expense, including amortization of favorable/unfavorable leases, was $39.1 million during the first quarter of 2011 compared to $34.1 million during the first quarter of 2010. The increase was primarily related to the impact of exchange rates in certain countries in which we operate, new theatres and the impact of accelerated depreciation taken on our domestic 35 millimeter projection systems that are being replaced with digital projection systems, which began in March 2010. We recorded approximately $3.5 million of depreciation expense related to these 35 millimeter projection systems during the first quarter of 2011 compared to $1.3 million during the first quarter of 2010.
     Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $1.0 million during the first quarter of 2011 compared to $0.4 million during the first quarter of 2010. Impairment charges for the first quarter of 2011 consisted of U.S. and international theatre properties, impacting nine of our twenty-four reporting units. Impairment charges for the first quarter of 2010 consisted of U.S. theatre properties, impacting six of our twenty-four reporting units. See Note 11 to our condensed consolidated financial statements.
     Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $0.5 million during the first quarter of 2011 compared to $3.2 million during the first quarter of 2010. The loss recorded during the first quarter of 2010 included $1.7 million that was recorded upon the contribution of digital projection systems to DCIP. See Note 5 to our condensed consolidated financial statements for discussion of DCIP.
     Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $29.3 million during the first quarter of 2011 compared to $26.0 million during the first quarter of 2010. The increase in interest expense is due to the increase in interest rates on a portion of our term loan debt that was amended and extended during March 2010.
     Distributions from NCM. We recorded distributions from NCM of $9.9 million during the first quarter of 2011 and 2010, which were in excess of the carrying value of our investment. See Note 4 to our condensed consolidated financial statements.
     Equity in Income of Affiliates. We recorded equity in income of affiliates of $2.4 million during the first quarter of 2011 compared to $0.03 million during the first quarter of 2010. The equity in income of affiliates recorded during the first quarter of 2011 primarily included income of approximately $1.7 million related to our equity investment in DCIP (see Note 5 to our condensed consolidated financial statements) and income of approximately $0.9 million related to our equity investment in NCM (see Note 4 to our condensed consolidated financial statements). The equity in income of affiliates recorded during the first quarter of 2010 primarily included income of approximately $0.8 million related to our equity investment in NCM, offset by a loss of approximately $0.8 million related to our equity investment in DCIP.
     Income Taxes. Income tax expense of $9.2 million was recorded for the first quarter of 2011 compared to $20.0 million for the first quarter of 2010. The effective tax rate was 26.4% for the first quarter of 2011 compared to 35.1% for the first quarter of 2010. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate. During the first quarter of 2011, the Company reduced its liabilities for uncertain tax positions due to settlements and closures of various tax years, which resulted in a tax benefit of approximately $3.6 million that impacted the effective tax rate for the period.

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Item 4. Controls and Procedures
Evaluation of the Effectiveness of Disclosure Controls and Procedures
     As of March 31, 2011, we carried out an evaluation required by the Exchange Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 15d-15(e) of the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2011, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Controls Over Financial Reporting
     There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 15d-15 that occurred during the quarter ended March 31, 2011 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
     Previously reported under “Business — Legal Proceedings” in the Company’s Annual Report on Form 10-K filed March 11, 2011.
Item 1A. Risk Factors
     There have been no material changes from risk factors previously disclosed in “Risk Factors” in the Company’s Annual Report on Form 10-K filed March 11, 2011.
Item 5. Other Information
     As required by the Indenture governing the Company’s 8 5/8% senior notes, the Company has included in this filing, interim financial information for its subsidiaries that have been designated as unrestricted subsidiaries, as defined by the Indenture. As required by the Indenture, the Company has included a condensed consolidating balance sheet and condensed consolidating statements of income and cash flows for the Company and its subsidiaries. These supplementary schedules separately identify the Company’s restricted subsidiaries and unrestricted subsidiaries as required by the Indenture.
     Supplemental Schedules Specified by the Senior Notes Indenture:

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2011
(In thousands, unaudited)
                                 
    Restricted     Unrestricted              
    Group     Group     Eliminations     Consolidated
Assets
                               
Current assets
                               
Cash and cash equivalents
  $ 393,352     $ 69,237     $     $ 462,589  
Other current assets
    103,637       (22,835 )           80,802  
     
Total current assets
    496,989       46,402             543,391  
 
                               
Theatre properties and equipment, net
    1,206,796                   1,206,796  
 
                               
Other assets
    1,602,582       85,314       (27,019 )     1,660,877  
     
Total assets
  $ 3,306,367     $ 131,716     $ (27,019 )   $ 3,411,064  
     
 
                               
Liabilities and equity
                               
 
                               
Current liabilities
                               
Current portion of long-term debt
  $ 10,836     $     $     $ 10,836  
Current portion of capital lease obligations
    7,570                   7,570  
Accounts payable and accrued expenses
    220,863                   220,863  
     
Total current liabilities
    239,269                   239,269  
 
                               
Long-term liabilities
                               
Long-term debt, less current portion
    1,519,102                   1,519,102  
Capital lease obligations, less current portion
    130,901                   130,901  
Other long-term liabilities and deferrals
    414,114       49,802             463,916  
     
Total long-term liabilities
    2,064,117       49,802             2,113,919  
 
                               
Commitments and contingencies
                               
 
                               
Equity
    1,002,981       81,914       (27,019 )     1,057,876  
     
Total liabilities and equity
  $ 3,306,367     $ 131,716     $ (27,019 )   $ 3,411,064  
     
Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2011
(In thousands, unaudited)
                                 
    Restricted     Unrestricted              
    Group     Group     Eliminations     Consolidated
Revenues
  $ 483,136     $     $     $ 483,136  
 
                               
Cost of operations
                               
Theatre operating costs
    364,767                   364,767  
General and administrative expenses
    28,551       1             28,552  
Depreciation and amortization
    39,140                   39,140  
Impairment of long-lived assets
    1,015                   1,015  
Loss on sale of assets and other
    472                   472  
     
Total cost of operations
    433,945       1             433,946  
     
 
                               
Operating income (loss)
    49,191       (1 )           49,190  
 
                               
Other income (expense)
    (25,220 )     10,823             (14,397 )
     
 
                               
Income before income taxes
    23,971       10,822             34,793  
Income taxes
    5,163       4,037             9,200  
     
Net income
    18,808       6,785             25,593  
Less: Net income attributable to noncontrolling interests
    359                   359  
     
Net income attributable to Cinemark USA, Inc.
  $ 18,449     $ 6,785     $     $ 25,234  
     
Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

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CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2011
(In thousands, unaudited)
                                 
    Restricted     Unrestricted              
    Group     Group     Eliminations     Consolidated
Operating activities
                               
Net income
  $ 18,808     $ 6,785     $     $ 25,593  
Adjustments to reconcile net income to cash provided by operating activities
    41,224       (4 )             41,220  
Changes in assets and liabilities
    (10,094 )     4,037               (6,057 )
     
Net cash provided by operating activities
    49,938       10,818             60,756  
 
                               
Investing activities
                               
Additions to theatre properties and equipment
    (35,769 )                 (35,769 )
Proceeds from sale of theatre properties and equipment
    485                   485  
Investment in joint venture — DCIP and other
    (8 )     (564 )           (572 )
     
Net cash used for investing activities
    (35,292 )     (564 )           (35,856 )
 
                               
Financing activities
                               
Dividends paid to parent
    (23,750 )                 (23,750 )
Payroll taxes paid as a result of restricted stock withholdings
    (494 )                 (494 )
Payment of debt issue costs
    (74 )                 (74 )
Repayments of long-term debt
    (2,709 )                 (2,709 )
Payments on capital leases
    (1,722 )                 (1,722 )
Other
    (110 )                 (110 )
     
Net cash used for financing activities
    (28,859 )                 (28,859 )
 
                               
Effect of exchange rate changes on cash and cash equivalents
    1,783                   1,783  
     
 
                               
Increase (decrease) in cash and cash equivalents
    (12,430 )     10,254             (2,176 )
Cash and cash equivalents:
                               
Beginning of year
    405,782       58,983             464,765  
     
End of year
  $ 393,352     $ 69,237     $     $ 462,589  
     
Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

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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.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  CINEMARK USA, INC.
Registrant
 
 
DATE: May 6, 2011

   
  /s/ Alan W. Stock    
  Alan W. Stock
Chief Executive Officer 
 
     
  /s/ Robert Copple    
  Robert Copple   
  Chief Financial Officer   

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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.