Edgar Filing: CINEMARK INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 2002

REGISTRATION NO. 333-88618

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CINEMARK, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 7832 01-0687923
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)

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3900 DALLAS PARKWAY, SUITE 500
PLANO, TEXAS 75093
(972) 665-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

MICHAEL CAVALIER, VICE PRESIDENT-GENERAL COUNSEL
3900 DALLAS PARKWAY, SUITE 500
PLANO, TEXAS 75093
(972) 665-1000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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WITH A COPY TO:

TERRY M. SCHPOK, P.C. RHETT BRANDON
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. SIMPSON THACHER & BARTLETT
1700 PACIFIC AVENUE, SUITE 4100 425 LEXINGTON AVENUE
DALLAS, TEXAS 75201 NEW YORK, NEW YORK 10017
TELEPHONE: (214) 969-2800 TELEPHONE: (212) 455-2000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable on or after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ----------------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ----------------

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ----------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JUNE 28, 2002

PROSPECTUS

[CINEMARK LOGO]

CINEMARK, INC.

11,100,000 SHARES

CLASS A COMMON STOCK
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We are offering 11,100,000 shares of our Class A common stock in this initial
public offering. No public market for our Class A common stock currently exists.

We anticipate that the initial public offering price will be between $17.00 and
$19.00 per share. Our Class A common stock has been approved for listing,
subject to official notice of issuance, on the New York Stock Exchange under the
symbol CNK.

Upon completion of this offering, Lee Roy Mitchell, our Chairman and Chief
Executive Officer, his family and related entities will own 100% of our Class B
common stock, and The Cypress Group L.L.C. and its affiliates will own 59.2% of
our Class A common stock. Each share of Class A common stock has one vote and
each share of Class B common stock has ten votes, and our Class A and Class B
common stockholders are entitled to vote together as a class on all matters
submitted to a vote of our stockholders. Accordingly, following this offering,
the Mitchell Group and Cypress will own common stock representing 94.8% of the
combined voting power of our common stock.

Investing in our Class A common stock involves risks.
See "Risk Factors" beginning on page 9.

PER
SHARE TOTAL
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Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Cinemark, Inc. ............... $ $

We have granted the underwriters a 30-day option to purchase up to 1,665,000
additional shares of our Class A common stock to cover over-allotments.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on
or about , 2002.
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Sole Bookrunner and Lead Manager Joint Lead Manager

LEHMAN BROTHERS SALOMON SMITH BARNEY

BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.

, 2002

[CINEMARK LOGO]

The Best Seat In Town

Description of artwork:

Miscellaneous interior and exterior photographs of Cinemark theatres.

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.......................................... 1
Risk Factors................................................ 9
Cautionary Statement Regarding Forward-Looking Statements... 16
Use of Proceeds............................................. 17
Dividend Policy............................................. 18
Capitalization.............................................. 19
Dilution.................................................... 21
Selected Consolidated Financial Data........................ 22
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 25
Business.................................................... 42
Management.................................................. 54
Principal Stockholders...................................... 63
Certain Relationships and Related Party Transactions........ 65
Description of Capital Stock................................ 67
Material U.S. Federal Income Tax Considerations To Non-U.S.
Holders................................................... 71
Shares Eligible for Future Sale............................. 74
Underwriting................................................ 76
Legal Matters............................................... 79
Experts..................................................... 80
Where You Can Find More Information......................... 80
Index to Consolidated Financial Statements.................. F-1

You should rely only on the information contained in this document or other
documents to which we have referred you. We have not authorized anyone to
provide you with information that is different. This document may only be used
where it is legal to sell these securities. The information contained in this
document is current only as of its date.

MARKET INFORMATION

Information regarding market share, market position and industry data
pertaining to our business contained in this prospectus consists of estimates
based on data and reports compiled by industry professional organizations
(including the Motion Picture Association of America and the National
Association of Theatre Owners), analysts and our knowledge of our revenues and
markets.

We take responsibility for compiling and extracting, but have not
independently verified, market and industry data provided by third parties, or
by industry or general publications, and take no further responsibility for such
data. Similarly, while we believe our internal estimates are reliable, our
estimates have not been verified by any independent sources, and we cannot
assure you as to their accuracy.

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DEALER PROSPECTUS DELIVERY OBLIGATION

THROUGH AND INCLUDING , 2002 (25 DAYS AFTER THE DATE OF THE
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

PROSPECTUS SUMMARY

This summary contains basic information about us and the offering. You
should read this summary together with the entire prospectus, including the more
detailed information in our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Except as otherwise indicated by the
context, references in this prospectus to "we," "our," the "issuer" or
"Cinemark" are to the combined business of Cinemark, Inc. and all of its
consolidated subsidiaries, and references to North America are to the U.S. and
Canada. Unless otherwise specified, all operating data is as of March 31, 2002.
We present EBITDA, as defined in note 5 to Summary Consolidated Financial
Information, to help us describe our operating and financial performance. EBITDA
is a financial measure commonly used in our industry and should not be construed
as an alternative to net earnings or cash flows from operations (as determined
in accordance with generally accepted accounting principles in the U.S.), as a
better indicator of operating performance or as a measure of liquidity.

CINEMARK, INC.

We are one of the leaders in the motion picture exhibition industry, in
terms of both revenues and number of screens in operation. We were founded in
1987 by our Chairman and Chief Executive Officer Lee Roy Mitchell, and have
grown primarily through targeted new theatre construction. We operate 3,014
screens in 278 theatres. For the fiscal year ended December 31, 2001, we had
revenues of $853.7 million and EBITDA of $170.0 million, representing a 19.9%
EBITDA margin, and generated $57.0 million of free cash flow. During this same
twelve month period, our operating income was $57.6 million and our net loss was
$4.0 million. For the three months ended March 31, 2002, we grew our EBITDA
approximately 42.4% over the comparable period in 2001 and increased our EBITDA
margin to 22.1%. We have the highest EBITDA margin of the five largest motion
picture exhibitors in the U.S. We increased our operating income to $30.5
million during the three months ended March 31, 2002 from $16.5 million during
the comparable period in 2001. Our net income increased to $6.8 million during
the three months ended March 31, 2002 from a net loss of $2.7 million during the
comparable period in 2001.

Our geographic diversity within North America and internationally has
allowed us to maintain consistent revenue and EBITDA growth. In each of the past
three fiscal years, we have increased revenues and EBITDA by an average of 14.6%
and 16.6% per year, respectively. We operate 2,215 screens in 188 theatres in
North America. These theatres, located in 33 states and one province, are
primarily in mid-sized U.S. markets, including suburbs of major metropolitan
areas. We believe these markets are less competitive and generate high, stable
margins. We also operate 799 screens in 90 theatres outside of North America,
primarily located in major Latin American metropolitan markets, which we believe
are underscreened and have significant growth potential.

On May 16, 2002, we were formed as the Delaware holding company of Cinemark
USA, Inc. Under the share exchange agreement, dated May 17, 2002, and after
giving effect to a reverse stock split, each outstanding share, and each
outstanding option to purchase shares, of Cinemark USA, Inc. were exchanged for
220 shares, and options to purchase shares, respectively, of our common stock.
Simultaneously with the consummation of this offering, we intend to form an
intermediate holding company and contribute all of our stock of Cinemark USA,
Inc. to the intermediate holding company. The accompanying financial statements
have been revised to reflect the historical financial data of Cinemark USA, Inc.
as though it were our financial data and all financial and statistical data
contained in this prospectus has been revised accordingly. All shares and per
share amounts have been adjusted to retroactively reflect the share exchange and
the reverse stock split for the periods presented.

COMPETITIVE STRENGTHS

We believe the following strengths allow us to compete effectively:

exhibitors in the U.S. Our EBITDA margins have averaged 18.7% over the past
three fiscal years and our operating income margins have averaged 8.0% for the
same period. We generated EBITDA per screen of $56,660 and operating income per
screen of $19,196 for the year ended December 31, 2001, which we believe to be
among the highest in the industry.

STRONG MANAGEMENT TEAM WITH A TRACK RECORD OF FINANCIAL DISCIPLINE. Led by
Mr. Mitchell, our management team has an average of approximately 19 years of
theatre operating experience, has a proven track record of strong performance
and has navigated our organization through many industry cycles, including the
significant industry downturn between 1999 and 2001, during which period at
least twelve exhibitors filed for bankruptcy protection. We believe our strong
performance is a result of our financial discipline and focus on investment
returns, as demonstrated by our decision to decrease our building commitments
during this difficult period in the industry. We reduced our capital
expenditures from $248.4 million in 1999 to $40.4 million in 2001.

SELECTIVE BUILDING IN LESS COMPETITIVE U.S. MARKETS AND HEAVILY POPULATED
INTERNATIONAL MARKETS.

- Less Competitive U.S. Markets: We have historically built modern
theatres in mid-sized U.S. markets, including suburbs of major
metropolitan areas, which we believe were underserved. We believe our
targeting of these markets, together with the high quality of our theatre
circuit, has protected us from the negative financial impact of
overbuilding and reduces the risk of competition from new entrants. As
the sole exhibitor in approximately 83% of the film zones in which we
operate, we have maximum access to film product. This enables us to
select the films that we believe will deliver the highest returns in
those markets.

- Heavily Populated, High Growth International Markets: Since 1993, we
have directed our activities in international markets primarily toward
Latin America due to the growth potential in these under-screened
markets. Our EBITDA margins from our international operations are
generally higher than those in North America. We have successfully
established a significant presence in most of the major cities in Latin
America, with theatres in nine of the ten largest metropolitan areas. We
have strategic alliances with local partners in many countries, which
help us obtain additional market insight. We generally fund our operating
and capital expenditures in local currencies, thereby matching our
expenses to our revenues. We have also geographically diversified our
international portfolio in an effort to balance risk and become one of
the predominant Pan American motion picture exhibition companies.

STRONG BALANCE SHEET WITH SIGNIFICANT CASH FLOW. We believe that we will
have a conservative capital structure. As of March 31, 2002, on an as adjusted
basis giving effect to this offering and the concurrent refinancing of our
credit facility, we had $604.6 million of total debt outstanding and $59.4
million in cash and cash equivalents. Our high EBITDA margin and capital
structure allowed us to generate $57.6 million of operating income and $57.0
million of free cash flow (EBITDA after interest expense, taxes paid, capital
expenditures and changes in working capital) for the fiscal year ended December
31, 2001. This significant cash flow enables us to take advantage of future
growth opportunities.

MANAGEMENT ALIGNMENT WITH STOCKHOLDERS. The Mitchell Group and other
members of our management team will own approximately 41.7% of our outstanding
common stock following the completion of this offering. This large ownership
interest effectively aligns management and stockholder interests in maximizing
growth and returns on investment.

MODERN THEATRE CIRCUIT. We have built our modern theatre circuit primarily
through new theatre construction, which we believe provides a preferred
destination for moviegoers in our markets. Since 1996, we have built 1,910
screens, or 63% of our total screen count. Our ratio of screens to theatres is
one of the highest in the industry: 11.8 to 1 in North America and 8.9 to 1
internationally. Approximately 64% of our North American first-run screens and
74% of our international screens feature stadium seating.

OUR STRATEGY

We believe our operating philosophy provides us with a competitive
advantage. We intend to continue to focus on the following key components of our
business plan:

FOCUS ON LESS COMPETITIVE U.S. MARKETS AND TARGET PROFITABLE, HIGH GROWTH
INTERNATIONAL MARKETS. We will continue to seek growth opportunities in
underserved, mid-sized U.S. markets and major international metropolitan areas,
by building or acquiring modern theatres that meet our strategic, financial and
demographic criteria.

MAXIMIZE PROFITABILITY THROUGH CONTINUED FOCUS ON OPERATIONAL
EXCELLENCE. We will continue to focus on executing our operating philosophy. We
believe that our successful track record of executing this philosophy is
evidenced by the fact that we successfully navigated through the significant
industry downturn between 1999 and 2001, during which period at least twelve
exhibitors filed for bankruptcy protection.

PURSUE ADDITIONAL REVENUE OPPORTUNITIES. We will continue to pursue
additional growth opportunities by developing and expanding ancillary revenue
streams such as advertising. We are able to offer advertisers local, regional
and national coverage in a variety of formats to reach our patrons, which
numbered approximately 154 million during the fiscal year ended December 31,
2001. We are also expanding additional revenue sources through the use of
theatres for non-film events, digital video monitor advertising, virtual poster
cases and third party branding.

OUR INDUSTRY

The U.S. motion picture exhibition industry is enjoying the longest
expansion in its history, as revenues increased for the tenth straight year. For
the first time in history, single year U.S. motion picture box office revenues
exceeded the $8 billion mark, reaching a total of $8.4 billion in 2001,
according to the Motion Picture Association of America. This new national box
office record represents a 9% increase from the previous record of $7.7 billion
set in 2000. Factors contributing to the recent success of the industry include
the improvement of theatre circuits resulting from the creation of the modern
multiplex format, the improved quality and timing of film releases and the
screen rationalization of 2000 and 2001.

A strong movie release calendar has helped maintain the industry's
momentum, with seven films grossing over $100 million in the U.S. in 2002. U.S.
box office performance in the first quarter of 2002 was strong, with revenues up
15.3% and attendance up 11.3% over the first quarter of 2001.

DRIVERS OF CONTINUED INDUSTRY SUCCESS

We believe the following market trends will drive the continued growth and
strength of our industry:

IMPORTANCE OF THEATRICAL SUCCESS IN ESTABLISHING MOVIE BRANDS AND
SUBSEQUENT MARKETS. Theatrical exhibition is the primary distribution channel
for new motion picture releases. A successful theatrical release which "brands"
a film is one of the major factors in determining its success in "downstream"
distribution channels, such as home video, DVD, and network, syndicated and
pay-per-view television.

INCREASED IMPORTANCE OF INTERNATIONAL MARKETS FOR ENSURING BOX OFFICE
SUCCESS. International markets are becoming an increasingly important component
of the overall box office revenues generated by Hollywood films. For example,
markets outside of North America accounted for more than $1.4 billion, or
greater than 60%, of the global box office revenues for Harry Potter and the
Sorcerer's Stone, Lord of the Rings: Fellowship of the Ring and Monsters, Inc.
With the continued growth of the international motion

picture exhibition industry, the relative contribution of markets outside North
America should become even more significant.

INCREASED INVESTMENT IN PRODUCTION AND MARKETING OF FILMS BY
DISTRIBUTORS. As a result of the additional revenues generated by domestic,
international and downstream markets, studios have increased production and
marketing expenditures per new film at a compound annual growth rate of 6.2% and
9.9%, respectively, over the past ten years. This has led to an increase in
"blockbuster" features, which attract larger audiences to theatres.

FAVORABLE ATTENDANCE TRENDS. We believe that recent trends in motion
picture attendance will continue to benefit the industry. According to the
Motion Picture Association of America, annual admissions per capita in the U.S.
increased from 4.5x to 5.3x between 1991 and 2001. Additionally, the U.S.
teenage segment, defined as 12-17 year olds, represented 19% of admissions in
2001, up from 14% in 1997. During 2001, 51% of U.S. teenagers attended movies 12
or more times per year, compared with only 42% in 1997.

REDUCED SEASONALITY OF REVENUES. Historically, industry revenues have been
highly seasonal, coinciding with the timing of film releases by the major
distributors. The most marketable motion pictures were generally released during
the summer and the Thanksgiving through year-end holiday season. However, the
seasonality of motion picture exhibition has become less pronounced in recent
years. Studios have begun to release films more evenly throughout the year, and
hit films have emerged during traditionally weaker periods. This benefits
exhibitors by allowing them to more effectively cover their fixed cost base
throughout the year.

CONVENIENT AND AFFORDABLE FORM OF OUT-OF-HOME ENTERTAINMENT. Moviegoing
continues to be one of the most convenient and affordable forms of out-of-home
entertainment, with an average ticket price in the U.S. of $5.66 in 2001.
Average prices for other forms of out-of-home entertainment in the U.S.,
including sporting events, theme parks, musical concerts and plays, range from
approximately $18.00 to $56.00 per ticket. Movie ticket prices have risen at
approximately the rate of inflation, while ticket prices for other forms of
out-of-home entertainment have increased at higher rates.

RISK FACTORS

Investing in our common stock involves risk. Notwithstanding our
competitive strengths and the drivers of continued industry success described
above, our business is subject to a number of risks. We may not be able to
successfully execute our business strategy because of the competitive
environment in our industry as well as competition from alternative forms of
entertainment. We may not be able to identify suitable locations for expansion
or generate additional revenue opportunities. Our substantial lease and debt
obligations could impair our liquidity and financial condition. The net proceeds
of this offering will be used to repay outstanding debt and will not be
available for working capital and other purposes. In addition, our stock may be
subject to volatility as a result of our performance or market factors
generally. You should refer to the section entitled "Risk Factors," for a
discussion of these and other risks, before investing in our Class A common
stock.

ADDITIONAL INFORMATION

We were incorporated under the laws of Delaware. Our corporate headquarters
is located at 3900 Dallas Parkway, Suite 500, Plano, Texas 75093. Our telephone
number is (972) 665-1000. Our web site address is www.cinemark.com. The
information on our web site does not constitute part of this prospectus.

THE OFFERING

Class A common stock offered
by Cinemark................... 11,100,000 shares

Common stock to be outstanding
after the offering

Class A..................... 30,663,280 shares

Class B..................... 20,949,280 shares

Use of proceeds............... We intend to use the net proceeds from the
offering to repay outstanding debt.

Over-allotment option......... We have granted the underwriters a 30-day
option to purchase up to 1,665,000 additional
shares of our Class A common stock to cover
over-allotments.

Proposed New York Stock
Exchange symbol............... CNK

The outstanding share information is based upon 19,563,280 shares of our
Class A common stock and 20,949,280 shares of our Class B common stock that were
outstanding as of March 31, 2002. Unless otherwise indicated, information
contained in this prospectus regarding the number of outstanding shares of
common stock does not include the following:

- 1,665,000 shares of Class A common stock issuable upon exercise of the
underwriters' over-allotment option;

- approximately 810,260 to 2,025,760 shares of Class A common stock
issuable to our partners in our Brazilian operations upon exchange for
their shares of our subsidiary Cinemark Brasil S.A.;

- 1,411,300 shares of Class A common stock issuable upon the exercise of
outstanding stock options; and

- an aggregate of 875,380 shares of Class A common stock reserved for
future issuance under our Long Term Incentive Plan.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following table provides our summary consolidated financial data for
the periods ended and as of the dates indicated. You should read the summary
consolidated financial data set forth below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
with our consolidated annual financial statements and related notes and our
unaudited interim financial statements and related notes appearing elsewhere in
this prospectus.

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- ------------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- --------- -------- -------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (AS RESTATED)

CONSOLIDATED STATEMENT OF
OPERATIONS DATA: (1)
Revenues........................ $ 434,598 $ 571,219 $ 712,604 $786,264 $853,658 $196,070 $226,702
Theatre operating costs......... 283,727 371,979 463,673 504,519 531,967 123,747 138,103
Facility lease expense.......... 38,735 61,281 89,808 108,489 114,737 28,791 29,150
General and administrative
expenses...................... 27,598 32,947 34,833 39,013 42,690 9,843 10,643
Depreciation and amortization... 25,373 37,197 53,269 66,111 73,544 16,609 17,167
Asset impairment loss........... 2,214 9,950 3,720 3,872 20,723 450 558
(Gain) loss on sale of assets
and other..................... (189) (2,266) 2,420 912 12,408 111 539
--------- --------- --------- -------- -------- -------- --------
Total expenses.................. 377,458 511,088 647,723 722,916 796,069 179,551 196,160
--------- --------- --------- -------- -------- -------- --------
Operating income................ 57,140 60,131 64,881 63,348 57,589 16,519 30,542
Interest expense (2)............ 33,487 43,014 59,867 74,037 70,931 19,905 15,375
Income (loss) before
extraordinary items and
cumulative effect of an
accounting change............. 15,019 11,009 4,004 (10,423) (4,021) (2,663) 10,231
Net income (loss) (3)........... $ 14,705 $ 11,009 $ 1,035 $(10,423) $ (4,021) $ (2,663) $ 6,841
========= ========= ========= ======== ======== ======== ========
Income (loss) per share before
extraordinary items and
cumulative effect of an
accounting change (4):
Basic......................... $ 0.38 $ 0.28 $ 0.10 $ (0.27) $ (0.10) $ (0.07) $ 0.25
Diluted....................... 0.37 0.27 0.09 (0.27) (0.10) (0.07) 0.25
Net income (loss) per share (4):
Basic......................... 0.37 0.28 0.03 (0.27) (0.10) (0.07) 0.17
Diluted....................... 0.36 0.27 0.02 (0.27) (0.10) (0.07) 0.17
Weighted average shares
outstanding (4):
Basic......................... 39,275 39,232 39,240 39,329 39,497 39,388 40,513
Diluted....................... 41,072 41,038 42,186 39,329 39,497 39,388 41,253

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------- ---------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- ---------- ---------- -------- ---------- --------
(IN THOUSANDS)

OTHER FINANCIAL DATA
(CONSOLIDATED):(1)
EBITDA (5)........... $ 87,313 $ 107,457 $ 128,233 $ 141,978 $169,980 $ 35,139 $ 50,036
EBITDA margin........ 20.1% 18.8% 18.0% 18.1% 19.9% 17.9% 22.1%
Cash flow from (used
for):
Operating
activities....... $ 57,934 $ 52,173 $ 92,102 $ 54,796 $ 87,122 $ (21,427) $ 13,410
Investing
activities....... (225,659) (234,146) (223,044) (94,886) (33,799) (3,445) (6,652)
Financing
activities....... 185,424 175,907 114,927 51,280 (21,513) 30,105 2,815
Capital
expenditures....... 200,272 387,906 248,371 113,081 40,352 6,604 8,657

AS OF DECEMBER 31, AS OF MARCH 31, AS OF
--------------------------------------------------------- -------------------------- MARCH 31, 2002
1997 1998 1999 2000 2001 2001 2002 AS ADJUSTED (6)
--------- -------- ---------- ---------- -------- ---------- ------------- ---------------
(IN THOUSANDS) (AS RESTATED)

BALANCE SHEET DATA
(CONSOLIDATED): (1)
Cash and cash
equivalents........ $ 32,120 $ 25,646 $ 8,872 $ 19,840 $ 50,199 $ 24,922 $ 59,438 $ 59,438
Total assets (7)..... 661,597 882,673 1,041,861 1,060,576 996,544 1,046,076 978,029 983,343
Total long-term debt,
including current
portion............ 463,501 631,649 778,413 810,323 780,956 842,288 783,551 604,551
Stockholders'
equity............. 69,982 75,800 63,851 48,910 25,337 43,389 22,525 206,839

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- ---------------------
1997 1998 1999 2000 2001 2001 2002
--------- -------- ---------- ---------- -------- ---------- --------
(ATTENDANCE IN THOUSANDS)

OPERATING DATA:
North America (8)
Theatres operated
(at period end)... 155 173 185 190 188 190 188
Screens operated (at
period end)....... 1,437 1,813 2,102 2,217 2,217 2,217 2,215
Average screens per
theatre........... 9.3 10.5 11.4 11.7 11.8 11.7 11.8
Total attendance.... 74,592 85,693 90,996 92,425 100,022 22,779 25,699
International (9)
Theatres operated
(at period end)... 18 38 69 80 88 83 90
Screens operated (at
period end)....... 187 367 606 695 783 721 799
Average screens per
theatre........... 10.4 9.7 8.8 8.7 8.9 8.7 8.9
Total attendance.... 11,668 20,875 39,938 46,152 53,853 13,055 15,416
Worldwide
Theatres operated
(at period end)... 173 211 254 270 276 273 278
Screens operated (at
period end)....... 1,624 2,180 2,708 2,912 3,000 2,938 3,014
Average screens per
theatre........... 9.4 10.3 10.7 10.8 10.9 10.8 10.8
Total attendance.... 86,260 106,568 130,934 138,577 153,875 35,834 41,115

---------------

(1) The consolidated statement of operations data and consolidated balance sheet
data presented above for the five most recent fiscal years ended December 31
have been derived from our audited consolidated financial statements, which
have been audited by Deloitte & Touche LLP, independent auditors. The
consolidated statement of operations data for the three months ended March
31, 2001 and 2002 and the consolidated balance sheet data as of March 31,
2001 and 2002 are derived from our unaudited consolidated financial
statements that have been restated as described in Note 12 to such financial
statements. These financial statements have been prepared on the same basis
as the audited consolidated financial statements and, in our opinion,
include all adjustments necessary for a fair presentation of the information
presented in those statements. The historical results are not necessarily
indicative of the results to be expected in any future period. The operating
results for the three month period ended March 31, 2002 are not necessarily
indicative of the results to be achieved for the full year.

(2) Interest expense includes amortization of debt issue cost and debt discount
and excludes capitalized interest of $2.2 million, $4.4 million, $4.3
million, $0.6 million and $0.2 million in 1997, 1998, 1999, 2000 and 2001,
respectively.

(3) In 1997, an extraordinary loss on early extinguishment of debt of $0.3
million (net of tax benefit) was recorded. In 1999, a cumulative effect of a
change in accounting principle charge of $3.0 million (net of tax benefit)
was recorded in connection with the adoption of Statement of Position (SOP)
98-5 requiring start-up activities and organization costs to be expensed as
incurred. In 2002, a cumulative effect of a change in accounting principle
charge of $3.4 million (net of tax benefit) was recorded as a transitional
impairment adjustment in connection with the adoption of Statement of
Financial Accounting Standards No. 142 requiring that goodwill and other
intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually.

(4) Under the share exchange agreement, dated May 17, 2002, and after giving
effect to a reverse stock split, each outstanding share, and each
outstanding option to purchase shares, of Cinemark USA, Inc. were exchanged
for 220 shares, and options to purchase shares, respectively, of our common
stock.

(5) Represents net income (loss) before depreciation and amortization, asset
impairment loss, (gain) loss on sale of assets and other, interest expense,
amortization of debt issue cost and debt discount, interest income, foreign
currency exchange gain (loss), equity in income (loss) of affiliates,
minority interests in (income) loss of subsidiaries, income taxes (benefit),
extraordinary items and cumulative effect of a change in accounting
principle, changes in deferred lease expense and accrued and unpaid
compensation expense relating to any stock option plans. EBITDA is a
financial measure commonly used in our industry and should not be construed
as an alternative to net earnings or cash flows from operations (as
determined in accordance with generally accepted accounting principles in
the U.S.), as a better indicator of operating performance or as a measure of
liquidity. Other definitions of EBITDA may not be comparable with this
calculation.

(6) As adjusted to give effect to this offering and the concurrent refinancing
of our existing credit facility and the use of net proceeds therefrom.

(7) Total assets for March 31, 2002 (as adjusted) includes estimated debt issue
costs of $5.3 million related to the concurrent new senior secured credit
facility.

(8) The data excludes certain theatres we operate in North America pursuant to
management agreements that are not part of our consolidated operations.

(9) The data excludes certain theatres we operate internationally through our
affiliates that are not part of our consolidated operations.

RISK FACTORS

Before you invest in our Class A common stock, you should understand the
high degree of risk involved. You should consider carefully the following risks
and other information in this prospectus, including our pro forma and historical
financial statements and related notes, before you decide to purchase shares of
our Class A common stock. The following risks and uncertainties are not the only
ones we face. If any of the following risks actually occur, our business,
financial condition and operating results could be adversely affected. As a
result, the trading price of our Class A common stock could decline, perhaps
significantly.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

POOR MOTION PICTURE PRODUCTION OR PERFORMANCE COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.

Our business is dependent both upon the availability of suitable motion
pictures for exhibition in our theatres and the performance of such pictures in
our markets. Poor performance of films or disruption in the production of motion
pictures by, or a reduction in the marketing efforts of, the major studios
and/or independent producers could have a material adverse effect on our
business.

A DETERIORATION IN RELATIONSHIPS WITH FILM DISTRIBUTORS COULD ADVERSELY AFFECT
OUR ABILITY TO OBTAIN COMMERCIALLY SUCCESSFUL FILMS.

We rely on the film distributors for the motion pictures shown in our
theatres. The film distribution business is highly concentrated, with nine major
film distributors accounting for approximately 93% of U.S. admissions and 48 of
the top 50 grossing films during 2000. Numerous antitrust cases and consent
decrees resulting from these cases impact the distribution of motion pictures.
The consent decrees bind certain major film distributors to license films to
exhibitors on a theatre-by-theatre and film-by-film basis. Consequently, we
cannot guarantee a supply of films by entering into long-term arrangements with
major distributors. We are therefore required to negotiate licenses for each
film and for each theatre. We cannot assure you that we will be able to
negotiate favorable licensing terms for all first-run film. A deterioration in
our relationship with any of the nine major film distributors could adversely
affect our ability to negotiate film licenses and our ability to obtain
commercially successful films and, therefore could adversely affect our business
and operating results.

THE OVERSUPPLY OF SCREENS IN THE MOTION PICTURE EXHIBITION INDUSTRY AND OTHER
FACTORS MAY ADVERSELY AFFECT THE PERFORMANCE OF SOME OF OUR THEATRES.

Since 1999, several major theatre exhibition companies, including Regal
Cinemas, Loews Cineplex Entertainment and United Artists filed for bankruptcy.
One significant cause of those bankruptcies was the emphasis by theatre circuits
on the development of large multiplexes in recent years. The strategy of
aggressively building multiplexes was adopted throughout the industry which
generated significant competition and resulted in an oversupply of screens in
the North American exhibition industry. Consequently, many older multiplex
theatres were rendered obsolete more rapidly than expected. Many of these
theatres are under long-term lease commitments that make closing them
financially burdensome and some companies have elected to continue operating
them notwithstanding their lack of profitability. In other instances, because
theatres are typically limited use design facilities, or for other reasons,
landlords have been willing to make rent concessions to keep them open. As a
result, some analysts believe that there continues to be an oversupply of
screens in the North American exhibition industry. This has caused motion
picture exhibitors to experience impairment write-offs, losses on theatre
dispositions and downward adjustments of credit ratings, and some of our
competitors defaulted under their loan agreements. This oversupply of screens
may affect the performance of some of our theatres.

OUR SUBSTANTIAL LEASE AND DEBT OBLIGATIONS AS WELL AS OUR DEBT RATINGS COULD
IMPAIR OUR LIQUIDITY AND FINANCIAL CONDITION.

We have substantial lease and debt obligations. For the twelve months ended
December 31, 2001, our facility lease expense and interest expense were
approximately $114.7 million and $70.9 million, respectively.

As of March 31, 2002, we had approximately $783.6 million of debt outstanding,
excluding $38.9 million available under our credit facility. Our substantial
lease and debt obligations pose risk to you by:

- making it more difficult for us to satisfy our obligations;

- requiring us to dedicate a substantial portion of our cash flow to
payments on our lease and debt obligations, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other corporate requirements;

- impeding us from obtaining additional financing in the future for working
capital, capital expenditures and general corporate purposes; and

- making us more vulnerable to a downturn in our business and limit our
flexibility to plan for, or react to, changes in our business.

We believe that based on the current level of cash flow from operations, we
will have sufficient liquidity and access to capital to carry on our business
and we will be able to meet scheduled lease and debt service requirements and
financial covenants. However, we cannot assure you that we will continue to
generate cash flow at current levels. If we fail to make any required payment
under the agreements governing our leases and indebtedness or fail to comply
with the financial and operating covenants contained in them, we would be in
default. A default could have a significant adverse effect on the market value
and marketability of our Class A common stock. Our lenders would have the
ability to require that we immediately pay all outstanding indebtedness. If the
lenders required immediate payment, we may not have sufficient assets to satisfy
our obligations under our credit facility, our subordinated notes or our other
indebtedness.

Concurrently with the offering, we will enter into a new senior secured
credit facility consisting of a $100 million revolving credit line and a $150
million term loan. We intend to use borrowings under the term loan and a portion
of the revolving credit line, as well as part of the net proceeds from the
offerings to repay our existing credit facility, our existing Mexico (USA)
credit facility and our existing term loan from Lehman Brothers Bank, FSB.

In August 2000, Standard and Poor's lowered the rating on our three series
of senior subordinated notes due 2008 from B to B- and in December 2000, Moody's
Investor Services lowered the rating on these notes from B2 to Caa2. In June
2002, Standard and Poor's revised its outlook on us from negative to positive
and assigned a BB- rating to the new senior secured credit facility. Lower
ratings on our senior subordinated notes could impair our ability to obtain
additional financing on favorable terms.

OUR FOREIGN OPERATIONS ARE SUBJECT TO ADVERSE REGULATIONS AND CURRENCY EXCHANGE
RISK.

Outside of North America, we operate 90 theatres with 799 screens in
Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador,
Nicaragua, Costa Rica, Colombia and the United Kingdom, with Mexico and Brazil
representing approximately 9% and 7% of 2001 revenues, respectively. We will
continue to investigate opportunities in these and other foreign markets.
Governmental regulation of the motion picture industry in foreign markets
differs from those in the United States. Regulations affecting price controls or
admission prices, quota systems requiring the exhibition of films produced in
the subject country and restrictions on ownership of land may adversely affect
our international operations in foreign markets. Our international operations
are subject to certain political, economic and other uncertainties not
encountered by our domestic operations. We also face the additional risks of
currency fluctuations, hard currency shortages and controls of foreign currency
exchange. We do not actively hedge against foreign currency exchange risk.

IF WE DO NOT COMPLY WITH THE AMERICANS WITH DISABILITIES ACT OF 1990 WE COULD BE
SUBJECT TO FURTHER LITIGATION.

Our theatres must comply with Title III of the Americans with Disabilities
Act of 1990, or the ADA, and analogous state and local laws. Compliance with the
ADA requires among other things that public facilities "reasonably accommodate"
individuals with disabilities and that new construction or alterations made to
"commercial facilities" conform to accessibility guidelines unless "structurally
impracticable" for

new construction or technically infeasible for alterations. If we fail to comply
with the ADA, remedies could include imposition of injunctive relief, fines,
awards for damages to private litigants and additional capital expenditures to
remedy non-compliance. Imposition of significant fines, damage awards or capital
expenditures to cure non-compliance could adversely affect our business and
operating results.

We have been involved in significant litigation in which it is claimed that
many of our theatres do not comply with the ADA. Currently, we are the subject
of lawsuits brought by the Department of Justice in Cleveland, Ohio and by
private plaintiffs in two cases in Texas. In each of these cases it is alleged
that the wheelchair seating positions do not comply with the ADA, or in the
Texas cases, with the Texas Accessibility Standards. The plaintiffs in the DOJ
litigation, Austin, Texas litigation and Mission, Texas litigation have argued
that the theatres must provide wheelchair seating locations with viewing angles
to the screen that are at the median or better than all seats in the auditorium.
If we lose the DOJ litigation, our business and results of operations may be
materially and adversely affected. To date, however, three courts have rejected
that position. In two of the three cases, we were the defendant, and the courts
have found our theatres to be in compliance with the ADA; Lara v. Cinemark USA,
Inc., United States Court of Appeals for the Fifth Circuit; United States of
America v. Cinemark USA, Inc., United States District Court for the Northern
District of Ohio. The third case, Oregon Paralyzed Veterans of America v. Regal
Cinemas, Inc., United States District Court for the District of Oregon, adopted
the reasoning established in Lara and granted summary judgment in favor of Regal
Cinemas, Inc.

We are also currently the subject of a lawsuit brought by private
plaintiffs in Houston, Texas regarding the provision of captioning for hearing
impaired patrons. The lawsuit alleges violation of the ADA and the First
Amendment to the Constitution of the United States. Plaintiffs seek unspecified
injunctive relief, unspecified declaratory relief, unspecified monetary damages
(both actual and punitive) and unspecified attorneys' fees. The answer is not
yet due. We plan to deny any violation of the ADA or the First Amendment and to
vigorously defend against these claims.

Although we believe that our position in these cases is legally correct, we
cannot predict with a reasonable degree of certainty the likely outcome of any
case.

OUR INDUSTRY IS COMPETITIVE.

The motion picture industry is competitive. We compete against local,
national and international exhibitors. We compete for both patrons and licensing
of motion pictures. Some of our competitors have substantially greater
resources. The principal competitive factors with respect to film licensing
include licensing terms, number of seats and screens available for a particular
picture, revenue potential and the location and condition of an exhibitor's
theatres.

The competition for patrons is dependent upon such factors as the
availability of popular motion pictures, the location and number of theatres and
screens in a market, the comfort and quality of the theatres and pricing. Many
of our competitors have sought to increase the number of screens that they
operate. The multiplex building programs by many of our competitors during the
second half of the 1990s was aggressive, according to some industry analysts.
Most of the building was financed primarily with debt resulting in increased
operating and financial leverage. The significant increase in multiplexes
rendered many of the older theatre facilities obsolete more rapidly than
expected. Many of the landlords have been unwilling to make rent concessions or
terminate the leases for underperforming theatres. As a result, several of our
competitors filed for bankruptcy protection and have used the bankruptcy
proceedings to reject the leases for underperforming theatres. This has resulted
in the closure of a number of underperforming theatres in the U.S. Some analysts
believe that the U.S. is still overscreened, which may continue to affect some
of our theatres.

AN INCREASE IN THE USE OF ALTERNATIVE FILM DISTRIBUTION CHANNELS AND OTHER
COMPETING FORMS OF ENTERTAINMENT MAY DRIVE DOWN MOVIE THEATRE ATTENDANCE AND
LIMIT TICKET PRICES.

We face competition for patrons from a number of alternative motion picture
distribution channels, such as home video, pay-per-view, cable, DVD, syndicated
and broadcast television. We also compete with other forms of entertainment
competing for our patrons' leisure time and disposable income such as concerts,

amusement parks and sporting events. Alternative film distribution channels and
competing forms of entertainment could have a material adverse effect on our
business and results of operations.

WE MAY NOT BE ABLE TO GENERATE ADDITIONAL REVENUE OPPORTUNITIES.

We intend to continue to pursue additional revenue streams such as
advertising and the use of theatres for non-film events. Our ability to achieve
our business objectives may depend in part on our success in generating these
revenue streams. There can be no assurance that we will be able to effectively
generate these additional revenues and our inability to do so may have an
adverse effect on our financial performance.

OUR BUSINESS IS SEASONAL.

Our results of operations vary from period to period based upon the
quantity and quality of the motion pictures that we show in our theatres. The
major film distributors generally release during the summer and holiday seasons
those films that they anticipate will be the most successful. Consequently, we
typically generate higher revenues during these periods.

WE ARE SUBJECT TO UNCERTAINTIES RELATED TO DIGITAL CINEMA, INCLUDING POTENTIALLY
HIGH COSTS OF RE-EQUIPPING THEATRES.

If a digital cinema roll-out progresses rapidly, we may not have adequate
resources to finance the conversion costs. Digital cinema is in an experimental
stage in our industry. There are multiple parties vying for the position of
being the primary generator of the digital projector roll-out. However, there
are significant obstacles to such a roll-out plan including:

- Quality of image: Many industry leaders feel that the quality of the
digital image does not yet surpass the quality of the traditional 35mm
image, even though consumers have tended to respond favorably to test
screenings; and

- Costs: Electronic projectors will require substantial investment in
re-equipping theatres.

Even if the technical issues surrounding digital cinema are resolved,
business arrangements for the financing of the digital projector roll-out will
require significant discussions. Further, we cannot assure you that financing
alternatives to fund our portion of the digital cinema roll-out can be obtained
on terms we deem acceptable.

WE ARE SUBJECT TO UNCERTAINTIES RELATING TO FUTURE EXPANSION PLANS, INCLUDING
OUR ABILITY TO IDENTIFY SUITABLE ACQUISITION CANDIDATES OR SITE LOCATIONS.

We have greatly expanded our operations over the last decade through new
theatre construction and selective theatre acquisitions. We will continue to
pursue a strategy of expansion that will involve the development of new
theatres, including international markets, and may involve acquisitions of
existing theatres and theatre circuits. Acquisitions generally would be made to
provide initial entry into a new market or to strengthen our position in an
existing market. We may not be able to develop or acquire suitable theatres in
the future; therefore, we cannot assure you that our expansion strategy will
result in improvements to our business, financial condition or profitability.
There is significant competition for potential site locations and existing
theatre and theatre circuit acquisition opportunities. As a result of such
competition, we may not be able to acquire attractive site locations or existing
theatres or theatre circuits on terms we consider acceptable. Further, our
expansion programs may require financing in addition to the portion of the net
proceeds from the sale of the Class A common stock and internally generated
funds that we would use for such purpose. We cannot assure you that financing
will be available to us on acceptable terms.

WE DEPEND ON KEY PERSONNEL FOR OUR CURRENT AND FUTURE PERFORMANCE.

Our current and future performance depends to a significant degree upon the
continued contributions of our senior management team and other key personnel.
The loss or unavailability to us of any member of our senior management team or
a key employee could significantly harm us. We cannot assure you that we would

be able to locate or employ qualified replacements on acceptable terms for
senior management or key employees if their services are no longer available.

WE ARE SUBJECT TO IMPAIRMENT LOSSES DUE TO POTENTIAL DECLINES IN VALUATIONS.

We review our theatres for impairment on a quarterly basis and whenever
events or changes in circumstances indicate the carrying amount of the asset may
not be fully recoverable. The impairment evaluation is based on, among other
things, actual theatre level cash flow, future years budgeted theatre level cash
flow, theatre property and equipment values, goodwill values, competitive
theatres in the marketplace, theatre operating cash flows compared to annual
long-term lease payments, the sharing of a market with our other theatres, and
the age of a recently built theatre. In recent years, in the U.S., our
competitors' strategy of aggressively building multiplexes generated significant
competition and rendered many older theatres obsolete more rapidly than
expected. In addition, certain of the international markets served by us
experienced adverse economic conditions and currency devaluations. Due to these
factors, we recorded asset impairment charges of $3.7 million, $3.9 million and
$20.7 million for 1999, 2000 and 2001, respectively. We also test goodwill and
other intangible assets for impairment at least annually in accordance with
Statement of Financial Accounting Standards No. 142, which we adopted on January
1, 2002. The adoption of this accounting pronouncement resulted in a $3.4
million write-down of goodwill and other intangible assets to fair value on
January 1, 2002 (recorded as a cumulative effect of a change in accounting
principle). We have recorded an additional impairment of goodwill during the
three month period ended March 31, 2002 in the amount of $0.6 million (recorded
as an asset impairment loss in our statement of operations). The additional
impairment of goodwill relates to a further write-down of goodwill to fair value
associated with our Argentina operations which continue to be impacted by the
economic turmoil in the country. We cannot assure you that additional impairment
charges will not be required in the future, and such charges may have a material
adverse effect on our financial condition and results of operations.

RISKS RELATED TO OUR CORPORATE STRUCTURE

THE INTERESTS OF OUR CONTROLLING STOCKHOLDERS MAY CONFLICT WITH YOUR INTERESTS.

We are controlled by the Mitchell Group and Cypress. The Mitchell Group
beneficially owns 20,949,280 shares of Class B common stock and Cypress owns
18,160,560 shares of Class A common stock. The Mitchell Group will have
approximately 87.2% of the total voting power after the offering and Cypress
will have approximately 7.6% of the total voting power after the offering. Under
the Stockholders' Agreement among the Mitchell Group, Cypress and us, Cypress
has the right to exchange all of their shares of our Class A common stock for an
equal number of shares of our Class B common stock. Holders of our Class B
common stock are entitled to ten votes per share. If Cypress converts its
18,160,560 shares of Class A common stock for 18,160,560 shares of Class B
common stock, the Mitchell Group will have approximately 51.9% of the total
voting power after the offering and Cypress will have approximately 45.0% of the
total voting power after the offering. Accordingly, the Mitchell Group and
Cypress control virtually all decisions with respect to our company by our
stockholders, including decisions relating to the election of our directors. The
Mitchell Group and Cypress may, under certain circumstances, without the
concurrence of the remaining stockholders, amend our certificate of
incorporation, effect or prevent a merger, sale of assets or other business
acquisition or disposition, issue additional shares of common stock or other
equity securities, or restrict the payment of dividends on our common stock. The
Mitchell Group and Cypress could take other actions that might be desirable to
the Mitchell Group and Cypress but not to other stockholders.

INVESTORS IN THIS OFFERING WILL EXPERIENCE IMMEDIATE DILUTION.

Investors purchasing shares of Class A common stock in this offering will
experience immediate dilution of $14.37 per share, based upon an assumed initial
offering price of $18.00 per share.

WE HAVE NOT, AND CURRENTLY DO NOT ANTICIPATE, PAYING DIVIDENDS ON OUR COMMON
STOCK.

We have not paid any dividends on our capital stock and do not plan to pay
dividends on our common stock for the foreseeable future. In addition, our
ability to pay dividends is effectively limited by our status as a holding
company and the terms of our indentures, our new senior secured credit facility
and certain of our other debt instruments, which significantly restrict the
ability of certain of our subsidiaries to pay dividends directly or indirectly
to us. Furthermore, certain of our unrestricted subsidiaries currently have a
deficit in retained earnings which prevents us from declaring and paying
dividends from those subsidiaries. The payment of future cash dividends, if any,
will be reviewed periodically by the board of directors and will depend upon,
among other things, our financial condition, funds from operations, the level of
our capital and development expenditures and any restrictions imposed by present
or future debt instruments.

WE ARE A HOLDING COMPANY WITH NO OPERATIONS OF OUR OWN.

We are a holding company with no operations of our own. Therefore, our
ability to service our debt and pay dividends is dependent upon the earnings
from the businesses conducted by our subsidiaries. The distribution of those
earnings, or advances or other distributions of funds by these subsidiaries to
us, all of which could be subject to statutory or contractual restrictions, are
contingent upon the subsidiaries' earnings and are subject to various business
considerations.

PROVISIONS IN OUR CORPORATE DOCUMENTS AND CERTAIN AGREEMENTS, AS WELL AS
DELAWARE LAW, MAY HINDER A CHANGE OF CONTROL.

Provisions of our certificate of incorporation and bylaws, as well as
provisions of the Delaware General Corporation Law, could discourage unsolicited
proposals to acquire us, even though such proposals may be beneficial to you.
These provisions include:

- our board's authorization to issue shares of preferred stock without
stockholder approval;

- a board of directors classified into three classes of directors with the
directors of each class having staggered, three-year terms; and

- provisions of Delaware law that restrict many business combinations and
provide that directors serving on staggered boards of directors, such as
ours, may be removed only for cause.

Under our certificate of incorporation, holders of Class A common stock and
Class B common stock vote as a single class, with each share of Class A common
stock being entitled to one vote per share and each share of Class B common
stock being entitled to ten votes per share. As a result of such provisions, no
change of control requiring stockholder approval is possible without the
affirmative vote of the Mitchell Group or Cypress who after this offering
together beneficially own common stock representing approximately 94.8% of the
combined voting power of our common stock or approximately 96.9% of the combined
voting power of our common stock if Cypress converts its 18,160,560 shares of
Class A common stock for 18,160,560 shares of Class B common stock. These
provisions of our certificate of incorporation, bylaws and Delaware law could
discourage tender offers or other transactions that might otherwise result in
our stockholders receiving a premium over the market price of our common stock.

Certain provisions of the senior subordinated notes indentures and the new
senior secured credit facility may have the effect of delaying or preventing
future transactions involving a "change of control." A "change of control" would
require us to make an offer to the holders of our senior subordinated notes to
repurchase all of the outstanding notes at a purchase price equal to 101% of the
aggregate principal amount outstanding plus accrued unpaid interest to the date
of the purchase. A "change of control" would also be an event of default under
our new senior secured credit facility.

RISKS RELATED TO THIS OFFERING

THE MARKET PRICE OF OUR CLASS A COMMON STOCK MAY BE VOLATILE.

Prior to this offering, there has been no public market for our Class A
common stock, and there can be no assurance that an active trading market for
our Class A common stock will develop or continue upon completion of the
offering. The securities markets have recently experienced extreme price and
volume

fluctuations and the market prices of the securities of companies have been
especially volatile. The initial price to the public of our Class A common stock
will be determined through our negotiations with the underwriters. This market
volatility, as well as general economic or political conditions, could reduce
the market price of our Class A common stock regardless of our operating
performance. In addition, our operating results could be below the expectations
of investment analysts and investors and, in response, the market price of our
Class A common stock may decrease significantly and prevent investors from
reselling their shares of our Class A common stock at or above the offering
price. In the past, companies that have experienced volatility in the market
price of their stock have been the subject of securities class action
litigation. If we were the subject of securities class action litigation, it
could result in substantial costs, liabilities and a diversion of management's
attention and resources.

FUTURE SALES OF OUR CLASS A COMMON STOCK MAY ADVERSELY AFFECT THE PREVAILING
MARKET PRICE.

If a large number of shares of our Class A common stock are sold in the
open market after this offering, or the perception that such sales will occur,
the trading price of our Class A common stock could decrease. In addition, the
sale of these shares could impair our ability to raise capital through the sale
of additional Class A common stock. After this offering, we will have an
aggregate of 296,100,760 shares of our Class A common stock authorized but
unissued and not reserved for specific purposes, assuming our partners in our
Brazilian operation do not exchange all of their shares in Cinemark Brasil S.A.
into shares of Class A common stock upon completion of this offering. In
general, we may issue all of these shares without any action or approval by our
stockholders. We may issue shares of our Class A common stock in connection with
acquisitions.

Upon consummation of the offering, we will have 30,663,280 shares of our
Class A common stock outstanding and 20,949,280 shares of our Class B common
stock outstanding that may convert into Class A common stock on a one-for-one
basis. Of these shares, all shares sold in the offering, other than shares, if
any, purchased by our affiliates, will be freely tradable. The remaining shares
of our common stock will be "restricted securities" as that term is defined in
Rule 144 under the Securities Act. Provided the holders comply with the holding
periods and other conditions prescribed in Rule 144 under the Securities Act,
these restricted securities cease to be restricted and become freely tradeable
at various times after completion of this offering.

Mr. Mitchell, Cypress and our directors and executive officers have entered
into lock-up agreements and, with limited exceptions, have agreed not to sell or
otherwise dispose of our common stock for a period of 180 days after the date of
this prospectus. After this lock-up period, Mr. Mitchell and Cypress will be
able to sell their shares pursuant to registration rights we have granted to
them. We cannot predict whether substantial amounts of our Class A common stock
will be sold in the open market in anticipation of, or following, any
divestiture by Mr. Mitchell or Cypress or our directors or executive officers of
their shares of common stock.

We also reserved 2,154,680 shares of our Class A common stock for issuance
under our Long Term Incentive Plan, of which 1,279,300 shares of Class A common
stock are issuable upon exercise of options granted as of March 31, 2002,
including options to purchase 573,980 shares exercisable as of March 31, 2002 or
that will become exercisable within 60 days after March 31, 2002. We have
outstanding options to purchase 132,000 shares of Class A common stock under our
director option agreements which must be exercised upon the consummation of this
offering or such options will be forfeited. The sale of shares issued upon the
exercise of stock options could further dilute your investment in our Class A
common stock and adversely affect our stock price.

We have granted our partners in our Brazilian operations an option to
exchange all of their shares in Cinemark Brasil S.A. into shares of our Class A
common stock upon completion of this offering. If our partners exercise this
exchange option, we believe we will issue approximately 810,260 to 2,025,760
shares of our Class A common stock. The exercise of this option could dilute
your investment in our Class A common stock and adversely affect our stock
price.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes "forward-looking statements" based on 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 or our
inability to successfully license and exhibit popular films;

- competition from other exhibitors; and

- determinations in lawsuits in which we are defendants.

You can identify forward-looking statements by the use of words such as
"may," "should," "will," "could," "estimates," "predicts," "potential,"
"continue," "anticipates," "believes," "plans," "expects," "future" and
"intends" and similar expressions which are intended to identify 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.
In evaluating these forward-looking statements, you should carefully consider
the risks and uncertainties described in "Risk Factors" and elsewhere in this
prospectus. These forward-looking statements reflect our view only as of the
date of this prospectus. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements and risk factors contained throughout this prospectus.

USE OF PROCEEDS

We estimate the net proceeds from this offering will be approximately
$184.3 million, assuming the underwriters do not exercise their over-allotment
option, an initial public offering price of $18.00 per share and after deducting
underwriting discounts and commissions and estimated offering expenses. We
intend to use the net proceeds as follows:

- approximately $78.3 million to repay debt outstanding under our $350.0
million reducing, revolving credit facility maturing February 12, 2006
with an effective interest rate as of March 31, 2002 of 3.7% per annum;

- approximately $29.0 million to repay debt outstanding under the Cinemark
Mexico (USA) credit facility maturing January, 2003 with an effective
interest rate as of March 31, 2002 of 4.9% per annum; and

- approximately $77.0 million to repay debt outstanding under the Cinema
Properties, Inc. $77.0 million term loan from Lehman Brothers Bank, FSB
maturing December 31, 2003 with an effective interest rate as of March
31, 2002 of 7.7% per annum.

Pending the application of the net proceeds, we expect to invest the proceeds in
short-term, investment-grade marketable securities or money market obligations.

NEW SENIOR SECURED CREDIT FACILITY

Concurrently with the closing of and as a condition to this offering, our
subsidiary, Cinemark USA, Inc., will enter into a new senior secured credit
facility consisting of a $100 million revolving credit line and a $150 million
term loan with a syndicate of lenders led by Lehman Commercial Paper Inc., an
affiliate of Lehman Brothers Inc., the sole bookrunner and joint lead manager of
the offering. The senior secured credit facility will be secured by
substantially all of our present and future assets and the present and future
assets of Cinemark USA, Inc. and certain of our other domestic subsidiaries and
by a pledge of all of the capital stock of certain of our domestic subsidiaries
and 65% of the voting stock of certain of our foreign subsidiaries. The
obligations of Cinemark USA, Inc. will also be guaranteed by us.

Borrowings under the revolving credit line are proposed to bear interest,
at Cinemark USA, Inc.'s option, at: (A) a margin of 2.00% per annum plus a "base
rate" equal to the higher of (i) the prime lending rate as set forth on the
British Banking Association Telerate page 5 and (ii) the federal funds effective
rate from time to time plus 0.5%, or (B) a "eurodollar rate" equal to the rate
at which eurodollar deposits are offered in the interbank eurodollar market for
terms of one, two, three or six, or (if available to all lenders in their sole
discretion) nine or twelve months, as selected by Cinemark USA, Inc. plus a
margin of 3.00% per annum. After 180 days from the closing date, the margin
applicable to base rate loans will range from 2.00% per annum to 1.25% per annum
and the margin applicable to eurodollar rate loans will range from 3.00% per
annum to 2.25% per annum based upon Cinemark USA, Inc. achieving certain ratios
of debt to EBITDA (as defined in the senior secured credit facility).

The term loan will bear interest, at Cinemark USA, Inc.'s option, at: (A)
the base rate plus a margin of 2.00% per annum or (B) the eurodollar rate plus a
margin of 3.00% per annum.

The term of the revolving credit line will be five years. The term loan
will mature on December 31, 2007 or June 30, 2008, if the maturity of Cinemark
USA, Inc.'s senior subordinated notes is extended beyond such date.

Under the senior secured credit facility, we are required to maintain
specified levels of interest and fixed charge coverage and set limitations on
our leverage ratios. We are limited in our ability to pay dividends and in our
ability to incur additional indebtedness and liens and, following the issuance
of indebtedness or capital stock or the disposition of assets, we would be
required to apply certain of the proceeds to repay amounts outstanding under the
senior secured credit facility. The senior secured credit facility will also
contain certain other covenants and restrictions customary in credit agreements
of this kind.

We intend to use borrowings under the senior secured credit facility to
repay the unpaid balance of amounts borrowed under our existing credit facility
that are not repaid with the proceeds of the offering.

The foregoing represents our current intentions based upon our present
plans and business condition. Our management will have broad discretion in the
application of the net proceeds from this offering, and the occurrence of
unforeseen events or changed business conditions could result in the application
of the net proceeds from this offering in a manner different than described
above.

DIVIDEND POLICY

We have never declared or paid any dividends on our common stock. We do not
anticipate paying any cash dividends in the foreseeable future. In addition, our
ability to pay dividends is effectively limited by our status as a holding
company and the terms of our indentures, our new senior secured credit facility
and certain of our other debt instruments, which significantly restrict the
ability of certain of our subsidiaries to pay dividends directly or indirectly
to us. Furthermore, certain of our foreign subsidiaries currently have a deficit
in retained earnings which prevents us from declaring and paying dividends from
those subsidiaries. Any future determination to pay cash dividends will be at
the discretion of the board of directors and will be dependent upon our
financial condition, operating results, capital requirements, other factors that
the board deems relevant, requirements of financing agreements to which we are a
party and the General Corporation Law of the State of Delaware, which provides
that dividends are only payable out of surplus or current net profits.

CAPITALIZATION

The following table presents our capitalization as of March 31, 2002. Our
capitalization is presented:

- on an actual basis;

- on an adjusted basis to reflect (a) our receipt of the estimated net
proceeds from the sale of 11,100,000 shares of Class A common stock by us
in this offering at an assumed initial public offering price of $18.00
per share, after deducting the estimated underwriting discount and
estimated offering expenses, and the application of those proceeds, and
(b) borrowings under our new senior secured credit facility to be entered
into concurrently with the closing of this offering, after funding the
estimated debt issuance cost, and the application of the proceeds
therefrom.

You should read this table in conjunction with the consolidated financial
statements and related notes that are included in this prospectus.

AS OF MARCH 31, 2002
--------------------------
ACTUAL AS ADJUSTED (1)
-------- ---------------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)

Cash and cash equivalents................................... $ 59,438 $ 59,438
======== ========
Long-term debt, including current maturities:
Existing Credit Facility (2).............................. $263,000 $ --
New Senior Secured Credit Facility (2).................... -- 190,000
Cinemark Mexico (USA) Credit Facility..................... 29,000 --
9 5/8% Series B Senior Subordinated Notes due 2008 (3).... 199,528 199,528
9 5/8% Series D Senior Subordinated Notes due 2008 (4).... 76,286 76,286
8 1/2% Series B Senior Subordinated Notes due 2008 (5).... 104,367 104,367
Cinema Properties Facility................................ 77,000 --
Other indebtedness........................................ 34,370 34,370
-------- --------
Total long-term debt.............................. 783,551 604,551
Minority interest in subsidiaries........................... 36,443 36,443
Stockholders' equity:
Class A common stock, $0.001 par value, authorized
350,000,000 shares, 19,563,280 (actual) and 30,663,280
(as adjusted) issued and outstanding................... 20 31
Class B common stock, $0.001 par value, authorized
150,000,000 shares, 20,949,280 (actual) and (as
adjusted) issued and outstanding....................... 21 21
Additional paid-in capital................................ 40,368 224,671
Unearned compensation -- stock options.................... (3,949) (3,949)
Accumulated other comprehensive loss...................... (65,472) (65,472)
Retained earnings......................................... 51,537 51,537
-------- --------
Total stockholders' equity........................... 22,525 206,839
-------- --------
Total capitalization (6).......................... $842,519 $847,833
======== ========

---------------

(1) As adjusted information does not include 1,665,000 shares of Class A common
stock issuable upon exercise of the underwriters' over-allotment option,
approximately 810,260 to 2,025,760 shares of Class A common stock issuable
to our partners in our Brazilian operations upon exchange of their shares of
Cinemark Brasil S.A., 1,411,300 shares of Class A common stock issuable upon
the exercise of outstanding stock options at a weighted average exercise
price of approximately $5.45 per share and an

aggregate of 875,380 shares of Class A common stock reserved for future
issuance under our Long Term Incentive Plan as of March 31, 2002.

(2) As of March 31, 2002, $38.9 million is available to us under the credit
facility, subject to compliance with the terms thereof and the effective
interest rate on such borrowing was 3.7%. Concurrently with this offering,
we will enter into a senior secured credit facility with a syndicate of
lenders led by Lehman Commercial Paper Inc. The senior secured credit
facility will consist of a $100 million revolving credit facility with a
five year term and a $150 million term loan that matures as early as
December 2007. Borrowings will bear interest at either a base rate or a euro
dollar rate plus an applicable margin. We intend to use borrowings under
this facility to repay the unpaid balance of amounts borrowed under our
existing credit facility that are not repaid with the proceeds of the
offering.

(3) The amount shown is net of an unamortized debt discount of approximately
$0.5 million associated with the issuance of the 9 5/8% Series B Senior
Subordinated Notes.

(4) The amount shown is net of an unamortized premium of approximately $1.3
million associated with the issuance of the 9 5/8% Series D Senior
Subordinated Notes.

(5) The amount shown is net of an unamortized debt discount of approximately
$0.6 million associated with the issuance of the 8 1/2% Series B Senior
Subordinated Notes.

(6) As adjusted capitalization exceeds actual by $5.3 million due to estimated
debt issue costs related to the concurrent new senior secured credit
facility that will be capitalized and included in deferred charges and other
assets.

DILUTION

Purchasers of Class A common stock offered by this prospectus will suffer
an immediate and substantial dilution in net tangible book value per share. Our
net tangible book value as of March 31, 2002 was approximately $2.9 million, or
approximately $0.07 per share of common stock. Net tangible book value per share
represents the amount of total tangible assets less total liabilities, divided
by the number of shares of common stock outstanding.

Dilution in net tangible book value per share represents the difference
between the amount per share paid by purchasers of our Class A common stock in
this offering and the net tangible book value per share of our common stock
immediately after this offering. After giving effect to our sale of 11,100,000
shares of Class A common stock in this offering at an assumed initial public
offering price of $18.00 per share and after deduction of the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our net tangible book value as of March 31, 2002 would have been
approximately $187.3 million, or $3.63 per share. This represents an immediate
increase in net tangible book value of $3.56 per share of common stock to
existing stockholders and an immediate dilution of $14.37 per share to
purchasers of Class A common stock in this offering.

Assumed initial public offering price per share of Class A common
stock............................................................... $18.00
Net tangible book value per share as of March 31, 2002.... $0.07
Increase per share attributable to new investors.......... $3.56
-----
Net tangible book value per share after the offering................ $ 3.63
------
Net tangible book value dilution per share to new investors......... $14.37
======

The following table sets forth, as of March 31, 2002, the total
consideration paid and the average price per share paid by our existing
stockholders and by new investors, before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us at an
assumed initial public offering price of $18 per share.

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ------------ ------- ---------

Existing stockholders.......... 40,512,560 78.5% $ 22,524,965 10.1% $ 0.56
New investors.................. 11,100,000 21.5% $199,800,000 89.9 18.00
---------- ------ ------------ ------
Total..................... 51,612,560 100.0% $222,324,965 100.0%
========== ====== ============ ======

As of March 31, 2002, there were outstanding options to purchase a total of
1,411,300 shares of Class A common stock at a weighted average exercise price of
approximately $5.45 per share which includes 1,279,300 shares issuable under our
Long Term Incentive Plan and 132,000 shares issuable under outstanding director
stock options. To the extent that options are exercised in the future, there
will be further dilution to new investors.

In 2001, we gave our partners in our Brazilian operations an option to
exchange their shares in our subsidiary Cinemark Brasil S.A. for approximately
810,260 to 2,025,760 shares of our Class A common stock. To the extent that this
option is exercised, there will be further dilution to new investors.

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the selected consolidated financial data presented below in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated annual financial statements and
the related notes and our unaudited interim financial statements and related
notes appearing elsewhere in this prospectus.

CONSOLIDATED STATEMENT OF
OPERATIONS DATA: (1)
Revenues........................... $ 434,598 $ 571,219 $ 712,604 $786,264 $853,658 $196,070 $226,702
Theatre operating costs............ 283,727 371,979 463,673 504,519 531,967 123,747 138,103
Facility lease expense............. 38,735 61,281 89,808 108,489 114,737 28,791 29,150
General and administrative
expenses......................... 27,598 32,947 34,833 39,013 42,690 9,843 10,643
Depreciation and amortization...... 25,373 37,197 53,269 66,111 73,544 16,609 17,167
Asset impairment loss.............. 2,214 9,950 3,720 3,872 20,723 450 558
(Gain) loss on sale of assets and
other............................ (189) (2,266) 2,420 912 12,408 111 539
--------- --------- --------- -------- -------- -------- --------
Total expenses..................... 377,458 511,088 647,723 722,916 796,069 179,551 196,160
--------- --------- --------- -------- -------- -------- --------
Operating income................... 57,140 60,131 64,881 63,348 57,589 16,519 30,542
Interest expense (2)............... 33,487 43,014 59,867 74,037 70,931 19,905 15,375
Income (loss) before extraordinary
items and cumulative effect of an
accounting change................ 15,019 11,009 4,004 (10,423) (4,021) (2,663) 10,231
Net income (loss) (3).............. $ 14,705 $ 11,009 $ 1,035 $(10,423) $ (4,021) $ (2,663) $ 6,841
========= ========= ========= ======== ======== ======== ========
Income (loss) per share before
extraordinary items and
cumulative effect of an
accounting change (4):
Basic............................ $ 0.38 $ 0.28 $ 0.10 $ (0.27) $ (0.10) $ (0.07) $ 0.25
Diluted.......................... 0.37 0.27 0.09 (0.27) (0.10) (0.07) 0.25
Net income (loss) per share (4):
Basic............................ 0.37 0.28 0.03 (0.27) (0.10) (0.07) 0.17
Diluted.......................... 0.36 0.27 0.02 (0.27) (0.10) (0.07) 0.17
Weighted average shares outstanding
(4):
Basic............................ 39,275 39,232 39,240 39,329 39,497 39,388 40,513
Diluted.......................... 41,072 41,038 42,186 39,329 39,497 39,388 41,253

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- -------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- --------- -------- -------- -------- --------
(IN THOUSANDS)

OTHER FINANCIAL DATA
(CONSOLIDATED): (1)
EBITDA (5)........................ $ 87,313 $ 107,457 $ 128,233 $141,978 $169,980 $ 35,139 $ 50,036
EBITDA margin..................... 20.1% 18.8% 18.0% 18.1% 19.9% 17.9% 22.1%
Cash flow from (used for):
Operating activities............ $ 57,934 $ 52,173 $ 92,102 $ 54,796 $ 87,122 $(21,427) $ 13,410
Investing activities............ (225,659) (234,146) (223,044) (94,886) (33,799) (3,445) (6,652)
Financing activities............ 185,424 175,907 114,927 51,280 (21,513) 30,105 2,815
Capital expenditures.............. 200,272 387,906 248,371 113,081 40,352 6,604 8,657

AS OF DECEMBER 31, AS OF MARCH 31,
-------------------------------------------------------- --------------------------
1997 1998 1999 2000 2001 2001 2002
-------- -------- ---------- ---------- -------- ---------- -------------
(IN THOUSANDS)

BALANCE SHEET DATA
(CONSOLIDATED): (1)
Cash and cash
equivalents........... $ 32,120 $ 25,646 $ 8,872 $ 19,840 $ 50,199 $ 24,922 $ 59,438
Total assets (7)........ 661,597 882,673 1,041,861 1,060,576 996,544 1,046,076 978,029
Total long-term debt,
including current
portion............... 463,501 631,649 778,413 810,323 780,956 842,288 783,551
Stockholders' equity.... 69,982 75,800 63,851 48,910 25,337 43,389 22,525

AS OF MARCH 31, 2002
--------------------
AS ADJUSTED (6)
--------------------
(IN THOUSANDS)

BALANCE SHEET DATA
(CONSOLIDATED): (1)
Cash and cash
equivalents........... $ 59,438
Total assets (7)........ 983,343
Total long-term debt,
including current
portion............... 604,551
Stockholders' equity.... 206,839

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1997 1998 1999 2000 2001 2001 2002
-------- -------- ---------- ---------- -------- ---------- --------
(ATTENDANCE IN THOUSANDS)

OPERATING DATA:
North America (8)
Theatres operated (at
period end)........... 155 173 185 190 188 190 188
Screens operated (at
period end)........... 1,437 1,813 2,102 2,217 2,217 2,217 2,215
Average screens per
theatre............... 9.3 10.5 11.4 11.7 11.8 11.7 11.8
Total attendance........ 74,592 85,693 90,996 92,425 100,022 22,779 25,699
International (9)
Theatres operated (at
period end)........... 18 38 69 80 88 83 90
Screens operated (at
period end)........... 187 367 606 695 783 721 799
Average screens per
theatre............... 10.4 9.7 8.8 8.7 8.9 8.7 8.9
Total attendance........ 11,668 20,875 39,938 46,152 53,853 13,055 15,416
Worldwide
Theatres operated (at
period end)........... 173 211 254 270 276 273 278
Screens operated (at
period end)........... 1,624 2,180 2,708 2,912 3,000 2,938 3,014
Average screens per
theatre............... 9.4 10.3 10.7 10.8 10.9 10.8 10.8
Total attendance........ 86,260 106,568 130,934 138,577 153,875 35,834 41,115

---------------

tax benefit) was recorded in connection with the adoption of Statement of
Position (SOP) 98-5 requiring start-up activities and organization costs to
be expensed as incurred. In 2002, a cumulative effect of a change in
accounting principle charge of $3.4 million (net of tax benefit) was
recorded as a transitional impairment adjustment in connection with the
adoption of Statement of Financial Accounting Standards No. 142 requiring
that goodwill and other intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least annually.

(4) Under the share exchange agreement, dated May 17, 2002, and after giving
effect to a reverse stock split, each outstanding share, and each
outstanding option to purchase shares of Cinemark USA, Inc. were exchanged
for 220 shares, and options to purchase shares, respectively, of our common
stock.

(5) Represents net income (loss) before depreciation and amortization, asset
impairment loss, (gain) loss on sale of assets and other, interest expense,
amortization of debt issue cost and debt discount, interest income, foreign
currency exchange gain (loss), equity in income (loss) of affiliates,
minority interests in (income) loss of subsidiaries, income taxes (benefit),
extraordinary items and cumulative effect of a change in accounting
principle, changes in deferred lease expense and accrued and unpaid
compensation expense relating to any stock option plans. EBITDA is a
financial measure commonly used in our industry and should not be construed
as an alternative to net earnings or cash flows from operations (as
determined in accordance with generally accepted accounting principles in
the U.S.), or as a better indicator of operating performance or as a measure
of liquidity. Other definitions of EBITDA may not be comparable with this
calculation.

(6) As adjusted to give effect to this offering and the concurrent refinancing
of our existing credit facility and the use of net proceeds therefrom.

(7) Total assets for March 31, 2002 (as adjusted) includes estimated debt issue
costs of $5.3 million related to the concurrent new senior secured credit
facility.

(8) The data excludes certain theatres we operate in North America pursuant to
management agreements that are not part of our consolidated operations.

(9) The data excludes certain theatres we operate internationally through our
affiliates that are not part of our consolidated operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis generally relates to our historical
financial condition and results of operations and should be read in conjunction
with our financial statements and related notes included elsewhere in this
prospectus. As discussed in the notes to our consolidated financial statements,
subsequent to the issuance of our financial statements for the quarter ended
March 31, 2002, we revised the fair value of employee stock options granted in
December 2001 partly based on the anticipated offering price per share of our
Class A common stock. The accompanying Management's Discussion and Analysis of
Financial Condition and Results of Operations has been revised from the prior
public filings of Cinemark USA, Inc. to reflect the effects of this restatement
of our consolidated financial statements as of December 31, 2001 (see Note 17
thereto) and March 31, 2002 and for the three months ended March 31, 2002 (see
Note 12 thereto). This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Actual results may
differ materially from those anticipated in forward-looking statements as a
result of a number of factors, including, but not limited to those set forth
under "Risk Factors" and elsewhere in this prospectus.

REVENUES AND EXPENSES

We generate revenues primarily from box office receipts, concession sales
and screen advertising sales. Revenues are recognized when admissions and
concession sales are received at the box office and when screen advertising is
shown at the theatres. Our revenues are affected by changes in attendance and
average admissions and concession revenues per patron. Attendance is primarily
affected by the commercial appeal of the films released during the period
reported. We generate additional revenues related to theatre operations from
vendor marketing programs, pay phones, ATM machines and electronic video games
installed in video arcades located in some of our theatres.

Film rentals and advertising, concession supplies and salaries and wages
vary directly with changes in revenues. These expenses have historically
represented approximately 65% of all theatre operating expenses and
approximately 50% of revenues. Film rental costs are accrued based on the
applicable box office receipts and either the mutually agreed upon firm terms or
estimates of the final settlement depending upon the film licensing arrangement.
Advertising cost, which is expensed as incurred, is 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 ads is based
on, among other things, the size of the directory and the frequency and size of
the newspaper's circulation. We purchase concession supplies to replace units
sold. Although salaries and wages include a fixed component of cost (i.e. the
minimum staffing cost to operate a theatre facility during non-peak periods),
salaries and wages move in relation to revenues as theatre staffing is adjusted
to handle attendance volume.

Conversely, facility lease expense is primarily a fixed cost at the theatre
level as our facility leases generally require a fixed monthly minimum rent
payment. Facility lease expense as a percentage of revenues is also affected by
the number of leased versus fee owned facilities.

Utilities and other costs include certain costs that are fixed such as
property taxes, certain costs which are variable such as liability insurance,
and certain costs that possess both fixed and variable components such as
utilities, repairs and maintenance and security services.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in conformity with
accounting principles generally accepted in the U.S. As such, we are required to
make certain estimates, judgments and assumptions that we believe are reasonable
based upon the information available. These estimates, judgments and assumptions
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the periods presented. The significant accounting policies which we

believe are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:

REVENUE AND EXPENSE RECOGNITION

Revenues are recognized when admissions and concession sales are received
at the box office and screen advertising is shown at the theatres. Film rental
costs are accrued based on the applicable box office receipts and either the
mutually agreed upon firm terms or estimates of the final settlement depending
upon the film licensing arrangement. Estimates are made based on the expected
success of a film over the length of its run. The success of a film can
typically be determined a few weeks after a film is released when initial box
office performance of the film is known. Accordingly, final settlements
typically approximate estimates since box office receipts are known at the time
the estimate is made and the expected success of a film over the length of its
run can typically be estimated early in the film's run. The final film
settlement amount is negotiated at the conclusion of the film's run based upon
how a film actually performs. If actual settlements are higher than those
estimated, additional film rental costs are recorded at that time. Advertising
costs are expensed as incurred.

DEFERRED REVENUES

Advances collected on long-term screen advertising and concession contracts
are recorded as deferred revenues. The advances collected on screen advertising
contracts are recognized as other revenues in the period earned based primarily
on our attendance counts or screenings depending on the agreements. The periods
when we recognize revenues may differ from the period the advance was collected.
The advances collected on concession contracts are recognized as a reduction to
concession supplies expense in the period earned which may differ from the
period the advance was collected.

ASSET IMPAIRMENT LOSS

We review long-lived assets, including goodwill, for impairment in
conjunction with the preparation of our quarterly consolidated financial
statements and whenever events or changes in circumstances indicate the carrying
amount of the assets may not be fully recoverable. We assess many factors
including the following to determine whether to impair individual theatre
assets:

- actual theatre level cash flow;

- future years budgeted theatre level cash flow;

- theatre property and equipment values;

- goodwill values;

- competitive theatres in the marketplace;

- theatre operating cash flows compared to annual long-term lease payments;

- the sharing of a market with our other theatres; and

- the age of a recently built theatre.

The impairment evaluation is based on the estimated cash flows from
theatres 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 for leased properties and a period of twenty years for fee owned
properties. Additional impairment charges may be required in the future if
actual future cash flows differ from those we estimate in the impairment
evaluation.

RESULTS OF OPERATIONS

Set forth below is a summary of operating revenues and expenses, certain
income statement items expressed as a percentage of revenues, average screen
count and revenues per average screen count for the three most recent fiscal
years ended December 31, 1999, 2000 and 2001 and the three month periods ended
March 31, 2001 and 2002.

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ ---------------
1999 2000 2001 2001 2002
------ ------ ------ ------ ------

OPERATING DATA (in millions):
Revenues:
Admissions...................................... $459.3 $511.3 $548.9 $127.8 $146.4
Concession...................................... 221.1 235.7 257.6 57.9 69.3
Other........................................... 32.2 39.3 47.2 10.4 11.0
------ ------ ------ ------ ------
Total revenues............................... $712.6 $786.3 $853.7 $196.1 $226.7
====== ====== ====== ====== ======
Cost of operations:
Film rentals and advertising.................... $246.4 $271.0 $288.1 $ 65.3 $ 75.0
Concession supplies............................. 38.2 42.0 44.9 10.2 12.0
Salaries and wages.............................. 82.9 86.7 90.8 21.5 22.6
Facility leases................................. 89.8 108.5 114.7 28.8 29.1
Utilities and other............................. 96.2 104.8 108.2 26.7 28.6
------ ------ ------ ------ ------
Total cost of operations..................... $553.5 $613.0 $646.7 $152.5 $167.3
====== ====== ====== ====== ======
OPERATING DATA AS A PERCENTAGE OF TOTAL REVENUES
(1):
Revenues:
Admissions...................................... 64.5% 65.0% 64.3% 65.2% 64.6%
Concession...................................... 31.0 30.0 30.2 29.5 30.6
Other........................................... 4.5 5.0 5.5 5.3 4.8
------ ------ ------ ------ ------
Total revenues............................... 100.0 100.0 100.0 100.0 100.0
Cost of operations:
Film rentals and advertising (1)................ 53.6 53.0 52.5 51.1 51.2
Concession supplies (1)......................... 17.3 17.8 17.4 17.8 17.3
Salaries and wages.............................. 11.6 11.0 10.6 11.0 9.9
Facility leases................................. 12.6 13.8 13.4 14.7 12.9
Utilities and other............................. 13.5 13.3 12.7 13.6 12.6
Total cost of operations.......................... 77.7 77.9 75.8 77.8 73.8
General and administrative expenses............... 4.9 5.0 5.0 5.0 4.7
Depreciation and amortization..................... 7.5 8.4 8.6 8.5 7.6
Asset impairment loss............................. 0.5 0.5 2.4 0.2 0.2
Loss on sale of assets and other.................. 0.3 0.1 1.5 0.1 0.2
Operating income.................................. 9.1 8.1 6.7 8.4 13.5
Interest expense (2).............................. 8.4 9.4 8.3 10.1 6.8
Income taxes (benefit)............................ 0.5 0.0 (1.7) (0.7) 2.0
Income (loss) before cumulative effect of an
accounting change............................... 0.6 (1.3) (0.5) (1.4) 4.5
Net income (loss)................................. 0.1 (1.3) (0.5) (1.4) 3.0

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -----------------
1999 2000 2001 2001 2002
-------- -------- -------- ------- -------

Average screen count (month end
average)................................ 2,452 2,813 2,954 2,929 3,003
-------- -------- -------- ------- -------
Revenues per average screen count......... $290,612 $279,541 $288,961 $66,952 $75,492
======== ======== ======== ======= =======

---------------

(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.

(2) Includes amortization of debt issue cost and debt discount and excludes
capitalized interest of $4.3 million, $0.6 million and $0.2 million in 1999,
2000 and 2001, respectively.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31, 2001

Revenues. Revenues for the first quarter ended March 31, 2002 increased to
$226.7 million from $196.1 million for the first quarter ended March 31, 2001, a
15.6% increase. The increase in revenues for the first quarter is primarily
attributable to a 14.7% increase in attendance and a 5.0% increase in concession
revenues per patron. Revenues per screen increased 12.8% to $75,492 in the first
quarter of 2002 from $66,952 in the first quarter of 2001.

Cost of Operations. Cost of operations, as a percentage of revenues,
decreased to 73.8% in the first quarter of 2002 from 77.8% in the first quarter
of 2001. The decrease as a percentage of revenues was primarily due to the 15.6%
increase in revenues and our ability to effectively control our theatre
operating costs, many of which are of a fixed nature. The decrease as a
percentage of revenues resulted from a decrease in concession supplies as a
percentage of concession revenues to 17.3% in the first quarter of 2002 from
17.8% in the first quarter of 2001 resulting from lower concession procurement
costs and increased concession volume rebates, a decrease in salaries and wages
as a percentage of total revenues to 9.9% in the first quarter of 2002 from
11.0% in the first quarter of 2001, a decrease in facility lease expense as a
percentage of total revenues to 12.9% in the first quarter of 2002 from 14.7% in
the first quarter of 2001 and a decrease in utilities and other expenses as a
percentage of revenues to 12.6% in the first quarter of 2002 from 13.6% in the
first quarter of 2001, partially offset by an increase in film rentals and
advertising as a percentage of admissions revenues to 51.2% in the first quarter
of 2002 from 51.1% in the first quarter of 2001.

General and Administrative Expenses. General and administrative expenses,
as a percentage of revenues, decreased to 4.7% for the first quarter of 2002
from 5.0% for the first quarter of 2001 primarily as a result of the 15.6%
increase in revenues and our ability to effectively control our overhead costs.
The absolute level of general and administrative expenses increased to $10.6
million in the first quarter of 2002 from $9.8 million in the first quarter of
2001. The increase in the absolute level of general and administrative expenses
is attributed to increased accrued bonus expense.

Depreciation and Amortization. Depreciation and amortization as a
percentage of revenues decreased to 7.6% for the first quarter of 2002 from 8.5%
for the first quarter of 2001. The decrease is primarily related to the 15.6%
increase in revenues. The absolute level of depreciation and amortization
increased to $17.2 million in the first quarter of 2002 from $16.6 million in
the first quarter of 2001. The increase in the absolute level of depreciation
and amortization is primarily related to depreciation on new additions and
previously classified construction-in-progress assets that have been placed in
service.

Asset Impairment Loss. We recorded asset impairment charges of $0.6
million and $0.5 million in the first quarter of 2002 and 2001, respectively,
pursuant to Statement of Financial Accounting Standards No. 142 and No. 121,
respectively, related to assets held for use. The asset impairment charges
recorded in the first quarter of 2002 related to the write-down to fair value of
goodwill associated with our Argentina operations. The asset impairment charges
recorded in the first quarter of 2001 related to the write-down to fair value of
properties associated with our U.S. operations.

Interest Expense. Interest costs incurred, including amortization of debt
issue cost and debt discount, the mark-to-market adjustment to the interest rate
cap agreement and the capitalization of interest to properties under
construction, decreased 22.6% in the first quarter of 2002 to $15.4 million from
$19.9 million, including the capitalization of interest, in the first quarter of
2001. The decrease was due principally to a decrease in the average debt
outstanding and the average interest rates under our long-term debt agreements.

Income Taxes (Benefit). Income tax expense of $4.4 million was recorded
for the first quarter of 2002 as compared to an income tax benefit of $1.4
million in the first quarter of 2001. Our effective tax rate for the first
quarter of 2002 was 30.3% as compared to 34.9% for the first quarter of 2001.
The change in the effective tax rate is primarily due to the impact on the rate
resulting from the cumulative effect of the change in accounting principle
offset by the effect of the decrease in the tax rate for Cinemark de Mexico,
S.A. de C.V.

Income (Loss) Before Cumulative Effect of an Accounting Change. We
realized income before cumulative effect of an accounting change of $10.2
million for the first quarter of 2002 in comparison with a loss before
cumulative effect of an accounting change of $2.7 million for the first quarter
of 2001. The increase in income in the first quarter of 2002 is primarily
related to the 15.6% increase in revenues and the decrease in interest expense.

COMPARISON OF YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000

Revenues. Revenues in 2001 increased to $853.7 million from $786.3 million
in 2000, an 8.6% increase. The increase in revenues is primarily attributable to
an 11.0% increase in attendance, partially the result of the first full year of
operation of the 204 net screens added in 2000 and the net addition of 88 new
screens in 2001. Revenues were also positively impacted by an increase in other
revenues (primarily screen advertising) of 20.0%. Revenues per average screen
increased 3.3% to $288,961 for 2001 from $279,541 for 2000.

Cost of Operations. Cost of operations, as a percentage of revenues,
decreased to 75.8% in 2001 from 77.9% in 2000. The decrease as a percentage of
revenues resulted from a decrease in film rentals and advertising as a
percentage of admissions revenues to 52.5% in 2001 from 53.0% in 2000 resulting
from reduced advertising and promotion costs, a decrease in concession supplies
as a percentage of concession revenues to 17.4% in 2001 from 17.8% in 2000
resulting from lower concession procurement costs and increased concession
volume rebates, a decrease in salaries and wages as a percentage of total
revenues to 10.6% in 2001 from 11.0% in 2000, a decrease in facility lease
expense as a percentage of total revenues to 13.4% in 2001 from 13.8% in 2000
and a decrease in utilities and other expenses as a percentage of revenues to
12.7% in 2001 from 13.3% in 2000.

General and Administrative Expenses. General and administrative expenses,
as a percentage of revenues, of 5.0% in 2001 remained consistent with 2000.
General and administrative expenses increased to $42.7 million for 2001 from
$39.0 million for 2000 due to costs, primarily salaries and wages, associated
with our international expansion program and increased accrued bonus expense.

Depreciation and Amortization. Depreciation and amortization as a
percentage of total revenues increased to 8.6% in 2001 from 8.4% in 2000. The
increase is primarily related to depreciation on new additions and previously
classified construction-in-progress assets that were placed in service in 2001.

Asset Impairment Loss. We recorded asset impairment charges of $20.7
million in 2001 and $3.9 million in 2000 pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 121 related to assets held for use. All of the
impairment charges recorded in 2001 and 2000 were in the U.S. except for an
impairment charge of $1.7 million recorded in Brazil in 2001. In accordance with
SFAS No. 121, we wrote down these assets to their fair value.

Loss on Sale of Assets and Other. We recorded a loss on sale of assets and
other of $12.4 million in 2001 and $0.9 million in 2000. Included in loss on
sale of assets and other in 2001 is a charge of

$7.2 million to write down one property to be disposed of in the U.S. to fair
value and a charge of $1.5 million to write down one property to be disposed of
in Argentina to fair value.

Interest Expense. Interest costs incurred, including amortization of debt
issue cost and debt discount and the capitalization of $0.2 million of interest
to properties under construction, decreased 4.8% to $71.1 million in 2001 from
$74.7 million in 2000, including the capitalization of $0.6 million of interest
to properties under construction. The decrease in interest costs incurred during
2001 was due principally to a decrease in average debt outstanding resulting
from borrowings under our credit facility and lower interest rates on our
variable rate debt facilities.

Income Taxes (Benefit). An income tax benefit of $14.1 million was
recorded in 2001 in comparison with income tax expense of $0.3 million in 2000.
Our effective tax rate for 2001 increased to 77.8% from (2.5)% in 2000. The
change in the effective tax rate is mainly due to inflation adjustments on
foreign assets and the benefit for state loss carryforwards.

Loss Before Cumulative Effect of an Accounting Change. Loss before
cumulative effect of an accounting change decreased to $4.0 million for 2001
from $10.4 million for 2000 primarily due to the income tax benefit recorded in
2001.

COMPARISON OF YEARS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

Revenues. Revenues in 2000 increased to $786.3 million from $712.6 million
in 1999, a 10.3% increase. The increase in revenues is primarily attributable to
a 5.8% increase in attendance as the result of the first full year of operation
of the 528 net screens added in 1999 and the net addition of 204 new screens in
2000. Revenues were also positively impacted by an increase in admissions and
concession revenues per patron of 3.7% and an increase in other revenues
(primarily screen advertising) of 22.0%. Revenues per average screen decreased
3.8% to $279,541 for 2000 from $290,612 for 1999.

Cost of Operations. Cost of operations, as a percentage of revenues,
increased to 77.9% in 2000 from 77.7% in 1999. The increase as a percentage of
revenues resulted from an increase in concession supplies as a percentage of
concession revenues to 17.8% in 2000 from 17.3% in 1999 primarily as a result of
the greater number of international theatres in operation and an increase in
facility lease expense as a percentage of revenues to 13.8% in 2000 from 12.6%
in 1999. These increases were partially offset by a decrease in film rentals and
advertising expense as a percentage of admissions revenues to 53.0% in 2000 from
53.6% in 1999 resulting from reduced advertising and promotion costs, a decrease
in salaries and wages as a percentage of revenues to 11.0% in 2000 from 11.6% in
1999 and a decrease in utilities and other expenses as a percentage of revenues
to 13.3% in 2000 from 13.5% in 1999.

General and Administrative Expenses. General and administrative expenses,
as a percentage of revenues, increased to 5.0% in 2000 from 4.9% in 1999.
General and administrative expenses increased to $39.0 million for 2000 from
$34.8 million for 1999 due to costs (primarily salaries and wages) associated
with our international expansion program and the additional rent expense
associated with our corporate office which was sold and leased back in December
1999.

Depreciation and Amortization. Depreciation and amortization as a
percentage of revenues increased to 8.4% in 2000 from 7.5% in 1999. The increase
is primarily a result of the net addition of $85.7 million in theatre property
and equipment during 2000 and depreciation on previously classified
construction-in-progress assets that were placed in service in 2000.

Asset Impairment Loss. We recorded asset impairment charges of $3.9
million in 2000 and $3.7 million in 1999 pursuant to SFAS No. 121 related to
assets held for use. All of the impairment charges recorded in 2000 and 1999
were in the U.S. In accordance with SFAS No. 121, we wrote down the assets of
these properties to their fair value.

Loss on Sale of Assets and Other. We recorded a loss on sale of assets and
other of $0.9 million in 2000 and $2.4 million in 1999.

Interest Expense. Interest costs incurred, including amortization of debt
issue cost and debt discount and the capitalization of $0.6 million of interest
to properties under construction, increased 16.4% to $74.7 million in 2000 from
$64.2 million in 1999, including the capitalization of $4.3 million of interest
to properties under construction. The increase in interest costs incurred during
2000 was due principally to an increase in average debt outstanding resulting
from borrowings under our credit facility and increased interest rates on our
variable rate debt facilities.

Income Taxes. Income tax expense of $0.3 million was recorded in 2000 as
compared to income tax expense of $3.7 million in 1999. Our effective tax rate
for 2000 was (2.5%) as compared to 48.1% in 1999. The change in the effective
tax rate is mainly due to the benefit of the U.S. loss offset by foreign income,
goodwill and other permanent items.

Income (Loss) Before Cumulative Effect of an Accounting Change. Income
(loss) before cumulative effect of an accounting change decreased to $(10.4)
million for 2000 from $4.0 million for 1999 primarily related to the increase in
interest expense and depreciation and amortization expense in 2000 in comparison
with 1999 partially offset by the reduction of income taxes in 2000 in
comparison with 1999.

INFLATION AND FOREIGN CURRENCY

We export from the U.S. the majority of the equipment and certain
construction interior finish items and other operating supplies used by our
international subsidiaries. Principally all the revenues and operating expenses
of our international subsidiaries are transacted in the country's local
currency.

Generally accepted accounting principles in the U.S. require that our
subsidiaries use the currency of the primary economic environment in which they
operate as their functional currency. If our subsidiary operates in a highly
inflationary economy, generally accepted accounting principles in the U.S.
require that the U.S. dollar be used as the functional currency for the
subsidiary. We must report foreign currency fluctuations as foreign currency
exchange gains (losses) or cumulative foreign currency translation adjustments
relating to our international subsidiaries depending on the inflationary
environment of the country in which the subsidiary operates.

The accumulated other comprehensive loss account in stockholders' equity of
$65,471,814 at March 31, 2002 primarily relates to the cumulative foreign
currency adjustments from translating the financial statements of Cinemark
Argentina, S.A., Cinemark Brasil S.A., Cinemark Chile, S.A. and Cinemark de
Mexico, S.A. de C.V. into U.S. dollars.

In 1999, the economy of Mexico became non-highly inflationary and the
functional currency of Cinemark de Mexico, S.A. de C.V. changed from the U.S.
dollar to the peso. Thus, assets and liabilities of Cinemark de Mexico, S.A. de
C.V. are now translated at year-end exchange rates and income and expense
accounts are now translated at the average rates prevailing during the year
(consistent with other non-highly inflationary consolidated foreign
subsidiaries). Accordingly, changes in the peso have been recorded in the
accumulated other comprehensive loss account as a reduction of stockholders'
equity since 1999.

In 1999 and a portion of 2000, we were required to utilize the U.S. dollar
as the functional currency of Cinemark del Ecuador, S.A. for U.S. reporting
purposes in place of the sucre due to the highly inflationary economy of
Ecuador. Devaluations in the sucre during 1999 and a portion of 2000 that
affected our investment in Ecuador were charged to foreign currency exchange
gain (loss) rather than to the accumulated other comprehensive loss account as a
reduction of stockholders' equity. A foreign currency exchange gain of $74,078
and $32,300 was recognized in 1999 and 2000, respectively, and is included in
other income (expense). In September 2000, the country of Ecuador officially
switched to the U.S. dollar as its official currency, thereby eliminating any
foreign currency exchange gain (loss) from operations in Ecuador on a going
forward basis.

regime and established a dual exchange rate system, with a "commercial rate" and
a "market rate". The commercial rate of 1.4 pesos to the U.S. dollar was to be
utilized to settle all exports and certain essential imports. The market rate
traded for the first time on January 11, 2002 and closed at a rate of 1.7 pesos
to the U.S. dollar. As a result, the effect of translating the December 31, 2001
peso balances for assets and liabilities into U.S. dollars at the first known
free-floating market rate as of January 11, 2002 (1.7 pesos to the U.S. dollar)
is reflected as a cumulative foreign currency translation adjustment to the
accumulated other comprehensive loss account as a reduction of stockholders'
equity in the amount of $19.1 million at December 31, 2001. Income and expense
accounts from January through November 2001 were converted into U.S. dollars at
the exchange rate of 1.0 peso to the U.S. dollar and income and expense accounts
in December 2001 were converted into U.S. dollars at the exchange rate of 1.7
pesos to the U.S. dollar. On January 14, 2002, the Argentine government unified
the commercial rate and the market rate into one floating rate which is
presently in use. At March 31, 2002, the floating rate was 3.0 pesos to the U.S.
dollar. As a result, the effect of translating the March 31, 2002 peso balances
for assets and liabilities into U.S. dollars is reflected as a cumulative
foreign currency translation adjustment to the accumulated other comprehensive
loss account as an additional reduction of stockholder's equity in the amount of
$11.1 million at March 31, 2002. Income and expense accounts from January
through March 2002 were converted into U.S. dollars at the prevailing average
floating rate for each of those three months.

Since 1999, the remaining countries where we operate, including Argentina,
were deemed non-highly inflationary. Thus, we have recorded a cumulative foreign
currency translation adjustment to the accumulated other comprehensive loss
account as an increase or reduction to stockholders' equity for any fluctuations
in the currency.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities. We primarily collect our revenues in cash, primarily
through box office receipts and the sale of concession supplies. We are
expanding the number of theatres that provide the patron a choice of using a
credit card, in place of cash, which we convert to cash in approximately three
to four days. Because our revenues are received in cash prior to the payment of
related expenses, we have an operating "float" and, as a result, historically
have not required traditional working capital financing. We typically operate
with a negative working capital position for our ongoing theatre operations
throughout the year primarily because of the lack of significant inventory and
accounts receivable. Cash flow provided by (used for) operating activities, as
reflected in the Consolidated Statements of Cash Flows, amounted to $92.1
million, $54.8 million and $87.1 million in 1999, 2000 and 2001, respectively,
and $(21.4) million and $13.4 million for the three month periods ended March
31, 2001 and 2002, respectively.

Investing Activities. Our investing activities have been principally
related to the development and acquisition of additional theatres. New theatre
openings and acquisitions historically have been financed with internally
generated cash and by debt financing, including borrowings on our credit
facility. Cash flow provided by (used for) investing activities, as reflected in
the Consolidated Statements of Cash Flows, amounted to $(223.0) million, $(94.9)
million and $(33.8) million in 1999, 2000 and 2001, respectively, and $(3.4)
million and $(6.7) million for the three month periods ended March 31, 2001 and
2002, respectively.

We are continuing to expand our U.S. theatre circuit. During 2001, we
opened one new theatre with 12 screens, acquired one theatre with 6 screens and
closed four theatres with 18 screens in the U.S. Since January 1, 2002, we have
opened one new domestic theatre with four screens, in Park City, Utah, which
screens first run films and also acts as the home of the Sundance Film Festival.
We currently have one new theatre with 12 screens and a five screen addition to
an existing theatre scheduled to open by the end of 2002. We also have signed
commitments for two new theatres with 31 screens scheduled to open after 2002.
We estimate that the capital expenditures for the development of these 48
remaining screens in the U.S. will be approximately $5 million. Actual
expenditures for continued theatre development and acquisitions during 2002 and
thereafter are subject to change based upon the availability and terms of
attractive opportunities. We plan to fund capital expenditures for continued
development from cash flow from operations, borrowings under the Credit
Facility, proceeds from sale leaseback transactions and/or sales of excess real
estate. As of March 31, 2002, we own approximately $275 million of real estate
and improvements resulting from the

development of multiplex theatres over the last several years. Additionally,
from time to time, subject to compliance with our debt instruments, we may
purchase on the open market our debt securities depending upon the availability
and prices of such securities.

We are also continuing to expand our international operations. During 2001,
we opened nine new theatres with 87 screens, added seven screens to two existing
theatres and closed one theatre with five screens and closed one screen at an
existing theatre. Since January 1, 2002, we have opened two new theatres with 18
screens and closed two screens at an existing theatre. We currently have three
theatres with 24 screens under construction and scheduled to open in
international markets by the end of 2002. We estimate that the remaining capital
expenditures for the development of the remaining 24 screens under construction
will be approximately $10 million. Although we are reviewing sites, there are no
signed commitments to build any theatres in international markets beyond 2002.
Actual expenditures for continued theatre development and acquisitions during
2002 and thereafter are subject to change based upon the availability of
attractive opportunities for expansion of our international theatre circuit. We
anticipate that investments in excess of available cash will be funded by us or
by debt or equity financing to be provided by third parties directly to our
subsidiaries.

Financing Activities. Cash flow provided by (used for) financing
activities amounted to $114.9 million, $51.3 million and $(21.5) million in
1999, 2000 and 2001, respectively, and $30.1 million and $2.8 million for the
three month periods ended March 31, 2001 and 2002, respectively.

As of March 31, 2002, our long-term debt obligations, capital lease
obligations and future minimum lease obligations under non-cancelable operating
leases for each period indicated are summarized as follows:

PAYMENTS DUE BY PERIOD

LESS THAN 1-3 4-5 AFTER
CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR YEARS YEARS 5 YEARS
----------------------- -------- --------- ------ ------ --------
(IN MILLIONS)

Long-term debt....................... $ 783.6 $ 59.1 $248.0 $ 94.8 $ 381.7
Capital lease obligations............ 0.4 0.2 0.2 -- --
Operating lease obligations.......... 1,541.7 103.1 210.0 210.0 1,018.6

SENIOR SUBORDINATED NOTES

We have outstanding three issues of senior subordinated notes: (1) $200
million in 9 5/8% Series B Senior Subordinated Notes due 2008; (2) $75 million
in 9 5/8% Series D Senior Subordinated Notes due 2008; and (3) $105 million in
8 1/2% Series B Senior Subordinated Notes due 2008. Interest in each issue is
payable semi-annually on February 1 and August 1 of each year.

The indentures governing the senior subordinated notes contain covenants
that limit, among other things, dividends, transactions with affiliates,
investments, sale of assets, mergers, repurchases of our capital stock, liens
and additional indebtedness. Upon a change of control, we would be required to
make an offer to repurchase the senior subordinated notes at a price equal to
101% of the principal amount outstanding plus accrued and unpaid interest
through the date of repurchase. The indentures governing the senior subordinated
notes allow us to incur additional indebtedness if we satisfy the coverage ratio
specified in each indenture, both at the time of incurrence and after giving
effect to the incurrence of the additional indebtedness, and in certain other
circumstances.

The senior subordinated notes are general unsecured obligations
subordinated in right of payment to the credit agreement or other senior
indebtedness. Generally, if we are in default under the senior credit facility
and other senior indebtedness, we would not be allowed to make payments on the
senior subordinated notes until the defaults have been cured or waived. If we
fail to make any payments when due or within the applicable grace period, we
would be in default under the indentures governing the senior subordinated
notes. As of March 31, 2002, we were in full compliance with all agreements
governing our outstanding debt.

CINEMARK USA REVOLVING CREDIT FACILITY

In February 1998, our subsidiary, Cinemark USA, Inc., entered into a
reducing revolving credit facility with a group of banks for which Bank of
America, N.A. acts as administrative agent. The credit facility provided for an
initial commitment of $350 million which is automatically reduced each quarter
by 2.5%, 3.75%, 5.0%, 6.25% and 6.25% of the aggregate $350 million in 2001,
2002, 2003, 2004 and 2005, respectively, until maturity in 2006. As of March 31,
2002, the aggregate commitment available to us is $301.9 million. Borrowings
under the credit facility are secured by a pledge of all of the stock of
Cinemark USA, Inc. and guarantees by material subsidiaries. The credit facility
requires us to maintain certain financial ratios; restricts the payment of
dividends, payment of subordinated debt prior to maturity and issuance of
preferred stock and other indebtedness; and contains other restrictive covenants
typical for agreements of this type. Funds borrowed pursuant to the credit
facility bear interest at a rate per annum equal to the Offshore Rate or the
Base Rate, as the case may be, plus the Applicable Margin (as defined in the
credit facility). As of March 31, 2002, we had $263 million outstanding under
the credit facility and the effective interest rate on such borrowings is 3.7%
per annum. A portion of the proceeds from this offering and borrowings under our
new senior secured credit facility to be entered into concurrently with the
closing of this offering will be used to pay down all of the amounts outstanding
under the credit facility.

CINEMARK INVESTMENTS CREDIT AGREEMENT

In September 1998, Cinemark Investments Corporation borrowed $20 million
pursuant to a credit agreement with Bank of America National Trust and Savings
Association. In September 2001, Cinemark Investments Corporation repaid the $20
million at maturity.

CINEMARK MEXICO REVOLVING CREDIT FACILITY

In November 1998, Cinemark Mexico (USA), Inc. executed a credit agreement
with Bank of America National Trust and Savings Association (the "Cinemark
Mexico Credit Agreement"). The Cinemark Mexico Credit Agreement is a revolving
credit facility and provides for a loan to Cinemark Mexico of up to $30 million
in the aggregate. The Cinemark Mexico Credit Agreement is secured by a pledge of
65% of the stock of Cinemark de Mexico, S.A. de C.V. and Cinemark Holdings
Mexico S. de R.L. de C.V. and an unconditional guarantee by us. Pursuant to the
terms of the Cinemark Mexico Credit Agreement, funds borrowed bear interest at a
rate per annum equal to the Offshore Rate or the Base Rate, as the case may be,
plus the Applicable Margin (as defined in the Cinemark Mexico Credit Agreement).
Cinemark Mexico is required to make principal payments of $1.5 million per
quarter in 2002 with the remaining principal outstanding of $23 million due in
January 2003. As of March 31, 2002, $29 million is outstanding under the
Cinemark Mexico Credit Agreement and the effective interest rate on such
borrowing is 4.9% per annum. A portion of the proceeds from this offering will
be used to prepay all of the amounts outstanding under the Cinemark Mexico
Credit Agreement.

SALE AND LEASEBACK

In December 1999, we sold the land, building and site improvements of our
corporate office property to a third party special purpose entity for an
aggregate purchase price equal to approximately $20.3 million. Simultaneously
with the sale, we entered into an operating lease for approximately 60% of the
property for a base term equal to ten years at a fixed monthly rental payment of
$114,000 or $1.4 million annually for the first seven years and a fixed monthly
rental payment of $123,000 or $1.5 million annually for the final three years.
We have two options to extend the office lease; five years for the first option
and ten years for the second option. The fixed monthly rental during the first
extension is $130,612 or $1.6 million annually. The fixed monthly rental during
the second extension is 95% of the fair rental value.

CINEMA PROPERTIES TERM LOAN

In December 2000, Cinema Properties, Inc., a wholly owned subsidiary that
is not subject to restrictions imposed by the credit facility or the indenture
governing the senior subordinated notes, borrowed a

$77 million 3-year term loan from Lehman Brothers Bank, FSB (the "Cinema
Properties Facility"), which matures on December 31, 2003. At the lender's
discretion, Cinema Properties, Inc. may be required to make principal payments
of $1.5 million in the third and fourth quarters of 2002. Any remaining
principal outstanding matures on December 31, 2003. Cinema Properties, Inc. has
the unilateral ability to extend the maturity date two times for one year each
by paying extension fees of 1.5% and 3.0% of the outstanding borrowing,
respectively. Funds borrowed pursuant to the Cinema Properties Facility bear
interest at a rate per annum equal to LIBOR plus 5.75%. Borrowings are secured
by, among other things, a mortgage placed on six of Cinema Properties, Inc.'s
theatres and certain equipment leases. The Cinema Properties Facility requires
Cinema Properties, Inc. to comply with certain interest coverage ratios and
contains other restrictive covenants typical of agreements of this type. Cinema
Properties, Inc. has a separate legal existence, separate assets, separate
creditors and separate financial statements. The assets of Cinema Properties,
Inc. are not available to satisfy the debts of any of our other consolidated
entities. Cinema Properties, Inc. also purchased from Lehman Brothers Derivative
Products Inc. an Interest Rate Cap Agreement with a notional amount equal to $77
million with a five year term and a strike rate equal to the excess of three
month LIBOR over the strike price of 6.58%. Three month LIBOR as of the date of
closing was 6.58%. As of March 31, 2002, $77 million is outstanding under the
Cinema Properties Facility and the effective interest rate on such borrowing is
7.7% per annum. A portion of the proceeds from this offering will be used to pay
off the Cinema Properties Facility.

CINEMARK BRASIL NOTES PAYABLE

Cinemark Brasil S.A. currently has five main types of funding sources
executed with local and international banks. These include:

(1) BNDES (Banco Nacional de Desenvolvimento Economico e Social (the
Brazilian National Development Bank)) credit line in the U.S. dollar
equivalent in Brazilian reais of US$4.7 million executed in October 1999
with a term of 5 years (with a nine month grace period) and accruing
interest at a BNDES basket rate, which is a multiple currency rate based on
the rate at which the bank borrows, plus a spread amounting to 14.5%;

(2) BNDES credit line in the U.S. dollar equivalent in Brazilian reais
of US$2.3 million executed in November 2001 with a term of 5 years (with a
one year grace period) and accruing interest at a BNDES basket rate plus a
spread amounting to 13.8%;

(3) BNDES credit lines, through FINAME (Fundo de Financiamento para
Aquisicao de Maquinas e Equipamentos Industriais (the Government Agency for
Equipment Financing)) in the U.S. dollar equivalent in Brazilian reais of
US$190,000 executed in December 1999 with a term of 3 years (with a six
month grace period) and accruing interest at a BNDES basket rate plus a
spread amounting to 13.0%;

(4) Import financing executed with several banks from April 2001
through February 2002 in the amount of US$6.3 million with a term of 360 to
365 days and accruing interest at an average rate of 8.2% per annum; and

(5) Project developer financing executed with two engineering
companies in September 2000 in the amount of US$1.8 million with a term of
5 years (with a six month grace period) and accruing interest at a rate of
TJLP+5% (Taxa de Juros de Longo Prazo (a long term interest rate published
by the Brazilian government)).

These sources are secured by a variety of instruments, including comfort
letters from Cinemark International, promissory notes for up to 130% of the
value, a revenue reserve account and equipment collateral. As of March 31, 2002,
an aggregate of $13.4 million was outstanding and the average effective interest
rate on such borrowing is approximately 11.7% per annum.

CINEMARK BRASIL EQUITY FINANCING

During 2001, Cinemark Brasil S.A. received additional capital from its
Brazilian shareholders in an aggregate amount equal to approximately the U.S.
dollar equivalent in Brazilian reais of $11.0 million in exchange for shares of
common stock of Cinemark Brasil S.A. The contributions were made in July in the
aggregate amount of $5.0 million (US dollar equivalent) and in November in the
aggregate amount of $6.0 million (US dollar equivalent). The additional capital
will be used to fund development in Brazil and to reduce Cinemark Brasil S.A.'s
outstanding indebtedness. After giving effect to the additional issuance of
common stock, Cinemark International's ownership interest was diluted to
approximately 53%. As part of the additional capitalization, we agreed to give
our Brazilian partners an option to exchange shares they own in Cinemark Brasil
S.A. for shares of the class of our common stock to be registered in an initial
public offering under the Securities Act occurring any time prior to December
31, 2007. We have given notice to our Brazilian partners that we intend to
consummate an initial public offering. If our Brazilian partners exercise their
exchange option, we may be required to obtain appraisals from independent
investment banks of the fair market value of us and of Cinemark Brasil S.A. The
number of shares issued in exchange would be determined by multiplying the
number of shares of common stock owned by each Brazilian partner by a fraction,
the numerator of which is equal to the appraised value per share of Cinemark
Brasil S.A. and the denominator of which is the appraised value per share of our
common stock. The Exchange Option Agreement also provides that, subject to a
number of conditions and limitations, if our Brazilian partners exercise their
option, they will have piggy-back registration rights in connection with our
future public offerings of our Class A common stock. In addition, we are
required to indemnify our Brazilian partners, and they in turn are required to
indemnify us with respect to any information they provide, against certain
liabilities in respect of any registration statement or offering covered by the
Exchange Option Agreement.

CINEMARK CHILE NOTES PAYABLE

On March 26, 2002, Cinemark Chile S.A. entered into a Debt Acknowledgement,
Rescheduling and Joint Guarantee and Co-Debt Agreement with Scotiabank Sud
Americano and three local banks. Under this agreement, Cinemark Chile S.A.
borrowed the U.S. dollar equivalent of approximately $10.6 million in Chilean
pesos (adjusted for inflation pursuant to the Unidades de Fomento). Cinemark
Chile S.A. is required to make 24 equal quarterly installments of principal plus
accrued and unpaid interest, commencing March 27, 2002. The indebtedness is
secured by a first priority commercial pledge of the shares of Cinemark Chile
S.A., a chattel mortgage over Cinemark Chile's personal property and by
guarantees issued by Cinemark International, L.L.C. and Chile Films S.A., a
shareholder of Cinemark Chile S.A. The agreement requires Cinemark Chile S.A. to
maintain certain financial ratios and contains other restrictive covenants
typical for agreements of this type such as a limitation on dividends. Funds
borrowed under this agreement bear interest at the Banking Rate, 90 day TAB rate
(360 day TAB rate with respect to one of the four banks), as published by the
Association of Banks and Financial Institutions Act plus 2%. As of March 31,
2002, $10.1 million is outstanding under this agreement and the effective
interest rate on such borrowing is 7.7% per annum.

NEW SENIOR SECURED CREDIT FACILITY

interbank eurodollar market for terms of one, two, three or six, or (if
available to all lenders in their sole discretion) nine or twelve months, as
selected by Cinemark USA, Inc. plus a margin of 3.00% per annum. After 180 days
from the closing date, the margin applicable to base rate loans will range from
2.00% per annum to 1.25% per annum and the margin applicable to eurodollar rate
loans will range from 3.00% per annum to 2.25% per annum based upon Cinemark
USA, Inc. achieving certain ratios of debt to EBITDA (as defined in the senior
secured credit facility).

The term loan will bear interest, at Cinemark USA, Inc.'s option, at: (A)
the base rate plus a margin of 2.00% per annum or (B) the eurodollar rate plus a
margin of 3.00% per annum.

CREDIT RATINGS

In August 2000, Standard and Poor's lowered the rating on our three series
of senior subordinated notes due 2008 from B to B-, and in December 2000,
Moody's Investor Services lowered the rating on these notes from B2 to Caa2.
These downgrades have had no effect on our compliance of, or the interest rates
payable under, existing agreements governing our debt. Since the downgrades, we
borrowed $10.6 million from Scotiabank Sud Americano and, concurrently with this
offering, we will enter into a new senior secured credit facility consisting of
a $100 million revolving credit line and $150 million term loan. In June 2002,
Standard and Poor's revised its outlook on us from negative to positive and
assigned a BB- rating to the new senior secured credit facility.

NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2002, we adopted Statement of Financial Accounting Standards
SFAS No. 142, "Goodwill and Other Intangible Assets". This statement requires
that goodwill and other intangible assets with indefinite useful lives no longer
be amortized, but instead be tested for impairment at least annually.

Our goodwill at December 31, 2001 was as follows:

GROSS CARRYING ACCUMULATED NET GOODWILL
GOODWILL AMOUNT AMORTIZATION AMOUNT
-------- -------------- ------------ ------------

U.S. operations.............................. $ 9,313,165 $(4,004,427) $ 5,308,738
Argentina operations......................... 5,162,418 (893,308) 4,269,110
Chile operations............................. 3,663,883 (732,777) 2,931,106
Peru operations.............................. 3,270,000 (654,000) 2,616,000
----------- ----------- -----------
$21,409,466 $(6,284,512) $15,124,954
=========== =========== ===========

The adoption of this accounting pronouncement resulted in the aggregate
write down of goodwill to fair value as a cumulative effect of a change in
accounting principle on January 1, 2002 as follows:

U.S. operations............................................. $ 27,226
Argentina operations........................................ 3,298,385
----------
$3,325,611
==========

We have recorded an additional impairment of goodwill in the amount of
$558,398 in the three month period ended March 31, 2002 (recorded as a component
of asset impairment loss in the statement of operations). The additional
impairment of goodwill relates to a further write-down of goodwill to fair value
associated with our Argentina operations which continue to be impacted by the
economic turmoil in the country. Fair value for this goodwill reporting unit was
estimated based on a multiple of estimated cash flows for each of the individual
Argentina properties. No additional goodwill was acquired in the three month
period ended March 31, 2002.

Our other intangible assets included in deferred charges and other on the
balance sheet at December 31, 2001 were as follows:

GROSS CARRYING ACCUMULATED NET INTANGIBLE
OTHER INTANGIBLE ASSETS AMOUNT AMORTIZATION ASSET AMOUNT
----------------------- -------------- ------------ --------------

Capitalized licensing fees.................... $9,000,000 $(566,666) $8,433,334
Trademarks.................................... 147,919 (83,751) 64,168
Non-compete fee............................... 72,403 (64,876) 7,527
Other intangible assets....................... 40,406 (24,243) 16,163
---------- --------- ----------
$9,260,728 $(739,536) $8,521,192
========== ========= ==========

The adoption of this accounting pronouncement resulted in the aggregate
write down of other intangible assets with indefinite useful lives to fair value
as a cumulative effect of a change in accounting principle on January 1, 2002 as
follows:

Trademarks.................................................. $64,168
-------
$64,168
=======

Our other intangible assets have indefinite useful lives remaining but were
not written down on January 1, 2002 since they are presently recorded at or
below their fair value. Our capitalized licensing fees have a definite useful
life and thus are continuing to be amortized over the remaining useful life
period. Our non-compete fee has a definite useful life and thus is continuing to
be amortized over the remaining useful life period.

Our other intangible assets at March 31, 2002 are as follows:

GROSS CARRYING ACCUMULATED NET INTANGIBLE
OTHER INTANGIBLE ASSETS AMOUNT AMORTIZATION ASSET AMOUNT
----------------------- -------------- ------------ --------------

Amortized Intangible Assets:
Capitalized licensing fees.................. $9,000,000 $(691,666) $8,308,334
Non-compete fee............................. 72,403 (68,103) 4,300
---------- --------- ----------
$9,072,403 $(759,769) $8,312,634
========== ========= ==========
Unamortized Intangible Assets:
Trademarks.................................. $ 147,919 $(147,919) $ --
Other intangible assets..................... 40,406 (24,243) 16,163
---------- --------- ----------
$ 188,325 $(172,162) $ 16,163
========== ========= ==========
Aggregate Amortization Expense:
For the three month period ended March 31,
2002..................................... $ 209,228
=========

Aggregate amortization expense for the three month period ended March 31,
2002 consists of $128,227 of amortization of other intangible assets and $81,001
of amortization of other assets (both of which are included in deferred charges
and other on our balance sheet).

Estimated Amortization Expense:
For the year ended December 31, 2002........................ $ 507,527
For the year ended December 31, 2003........................ 500,000
For the year ended December 31, 2004........................ 500,000
For the year ended December 31, 2005........................ 500,000
For the year ended December 31, 2006........................ 500,000

Our non-compete fee will be fully amortized by December 31, 2002.

The impact on net income (loss) and earnings (loss) per share related to
the adoption of this accounting pronouncement is as follows:

FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2002 2001
------------ ------------

Diluted earnings (loss) per share:
Reported net income (loss)............................... $ 0.17 $ (0.07)
Add back: Cumulative effect of an accounting change...... 0.08 --
Add back: Goodwill amortization.......................... -- 0.01
Add back: Other intangible asset amortization............ -- --
----------- -----------
Adjusted net income (loss)............................... $ 0.25 $ (0.06)
=========== ===========

In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations". This statement requires the
establishment of a liability for an asset retirement obligation. This statement
is effective for financial statements issued for fiscal years beginning after
June 15, 2002. We are currently considering the impact, if any, that this
statement will have on our consolidated financial statements.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long Lived Assets", which
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
of Long-Lived Assets to be Disposed Of", and portions of APB No. 30, "Reporting
the Results of Operations -- Reporting the Effects of Disposal of a Segment of
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", and amends Accounting Research Bulletin No. 51, "Consolidated
Financial Statements". This statement generally conforms, among other things,
impairment accounting for assets to be disposed of including those in
discontinued operations and eliminates the exception to consolidation for which
control is likely to be temporary. This statement became effective for our
financial statements on January 1, 2002. The adoption of this statement did not
have a material effect on our consolidated financial statements.

In April 2002, the Financial Accounting Standards Board issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections". This statement requires, among
other things, that gains and losses on the early extinguishment of debt be
classified as extraordinary only if they meet the criteria for extraordinary
treatment set forth in Accounting Principles Board Opinion No. 30. The
provisions of this statement related to classification of gains and losses on
the early extinguishment of debt are effective for fiscal years beginning after
May 15, 2002. We are currently considering the impact, if any, that this
statement will have on the consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in interest
rates, foreign currency exchange rates and other relevant market prices. We do
not have any derivative financial instruments in place as of March 31, 2002 that
would have a material effect on our financial position, results of operations
and cash flows.

Interest Rate Risk. An increase or decrease in interest rates would affect
interest costs relating to our variable rate credit facilities. As of March 31,
2002, we had outstanding an aggregate of approximately $403 million of variable
rate debt outstanding under these facilities. These facilities represent
approximately 51% of our outstanding long-term debt. Changes in interest rates
do not have a direct impact on interest expense relating to the remaining fixed
rate debt facilities.

The table below provides information about our fixed rate and variable rate
long-term debt agreements:

EXPECTED MATURITY DATE AS OF MARCH 31, 2002
--------------------------------------------------------------------------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2003 2004 2005 2006 2007 THEREAFTER TOTAL FAIR VALUE
--------- --------- --------- --------- --------- ---------- ------ ----------
(IN MILLIONS)

Long-term debt:
Fixed rate............. $ -- $ 0.1 $ -- $ 0.1 $0.1 $380.2 $380.5 $390.2
Average interest
rate............... 9.3%
Variable rate.......... $59.1 $156.2 $91.7 $92.2 $2.4 $ 1.5 $403.1 $400.4
Average interest
rate............... 5.0%
Total debt............. $59.1 $156.3 $91.7 $92.3 $2.5 $381.7 $783.6 $790.6

In December 2000, Cinema Properties, Inc., one of our wholly-owned
subsidiaries, entered into the Cinema Properties Facility. Pursuant to the terms
of the Cinema Properties Facility, funds borrowed bear interest at a rate per
annum equal to LIBOR plus 5.75%. As part of the Cinema Properties Facility, in
order to hedge against future changes in interest rates, Cinema Properties, Inc.
purchased from Lehman Brothers Derivative Products Inc. an Interest Rate Cap
Agreement with a notional amount equal to $77 million with a five year term and
a strike rate equal to the excess of three month LIBOR over the strike price of
6.58%. Three month LIBOR as of the date of closing was 6.58%. The interest rate
cap agreement is recorded at its fair value of approximately $0.9 million at
March 31, 2002.

Foreign Currency Exchange Rate Risk. We are also exposed to market risk
arising from changes in foreign currency exchange rates as a result of our
international operations. Generally accepted accounting principles in the U.S.
require that our subsidiaries use the currency of the primary economic
environment in which they operate as their functional currency. If our
subsidiary operates in a highly inflationary economy, generally accepted
accounting principles in the U.S. require that the U.S. dollar be used as the
functional currency for the subsidiary. Currency fluctuations result in us
reporting exchange gains (losses) or foreign currency translation adjustments
relating to our international subsidiaries depending on the inflationary
environment of the country in which our subsidiary operates. Based upon our
equity ownership in our international subsidiaries as of March 31, 2002, holding
everything else constant, a 10% immediate unfavorable change in each of the
foreign currency exchange rates to which we are exposed would decrease the net
fair value of our investments in our international subsidiaries by approximately
$7 million.

BUSINESS

We are one of the leaders in the motion picture exhibition industry, in
terms of both revenues and number of screens in operation. We were founded in
1987 by our Chairman and Chief Executive Officer Lee Roy Mitchell, and have
grown primarily through targeted new theatre construction. We operate 3,014
screens in 278 theatres. For the fiscal year ended December 31, 2001, we
generated revenues of $853.7 million and EBITDA of $170.0 million, representing
a 19.9% EBITDA margin, and generated $57.0 million of free cash flow. During
this same twelve month period, our operating income was $57.6 million and our
net loss was $4.0 million. For the three months ended March 31, 2002, we grew
our EBITDA approximately 42.4% over the comparable period in 2001 and increased
our EBITDA margin to 22.1%. We have the highest EBITDA margin of the five
largest motion picture exhibitors in the U.S. We increased our operating income
to $30.5 million during the three months ended March 31, 2002 from $16.5 million
during the comparable period in 2001. Our net income increased to $6.8 million
during the three months ended March 31, 2002 from a net loss of $2.7 million
during the comparable period in 2001.

MOTION PICTURE INDUSTRY

DOMESTIC OVERVIEW

The following table represents the results of a survey by Motion Picture
Association of America Worldwide Market Research outlining the historical trends
in U.S. theatre attendance, average ticket prices and box office sales for the
last ten years.

% CHANGE AVERAGE % CHANGE U.S. BOX % CHANGE
YEAR ATTENDANCE SINCE 1992 TICKET PRICE SINCE 1992 OFFICE SALES SINCE 1992
---- ---------- ---------- ------------ ---------- --------------- ----------
(MILLIONS) ($ IN MILLIONS)

1992................. 1,173 -- $4.15 -- $4,871 --
1993................. 1,244 6.1% 4.14 (0.2)% 5,154 5.8%
1994................. 1,292 10.1 4.18 0.7 5,396 10.8
1995................. 1,263 7.7 4.35 4.8 5,493 12.8
1996................. 1,339 14.2 4.42 6.5 5,912 21.4
1997................. 1,388 18.3 4.59 10.6 6,366 30.7
1998................. 1,481 26.3 4.69 13.0 6,949 42.7
1999................. 1,465 24.9 5.08 22.4 7,448 52.9
2000................. 1,421 21.1 5.39 29.9 7,661 57.3
2001................. 1,487 26.8 5.66 36.4 8,413 72.7

INTERNATIONAL OVERVIEW

International growth has also been strong. Global box office revenues have
increased 12.2% from $15.6 billion in 1998 to an estimated $17.5 billion in 2001
as a result of the increasing acceptance of moviegoing as a popular form of
entertainment throughout the world, ticket price increases and new theatre
construction. According to Informa Media Group, Latin America is the fastest
growing region in the world in terms of box office revenues. We believe many
international markets for theatrical exhibition have historically been
underserved due to antiquated or run-down theatres, among other things, and that
international markets, especially those in Latin America, will continue to
experience growth as additional modern stadium seating theatres are introduced.

RECENT HISTORY

In recent years, the U.S. exhibition industry has felt the impact of rapid
overbuilding by the largest industry players, high levels of overall capital
expenditures and high leverage. As a result of the financial burden imposed on
theatre operators by these three factors, the industry entered a period of
significant industry rationalization. Many industry players had already begun
the rationalization process in 2000 by closing hundreds of smaller, less
profitable theatres. The pace of theatre closings increased during 2001 as a
number of companies took advantage of the protections provided by the bankruptcy
process to reject long-term leases on many underperforming theatres. The overall
reduction in the numbers of theatres and screens in operation and reduced rent
expense per theatre will substantially improve industry profitability going
forward. According to the National Association of Theatre Owners, the total
number of screens in the U.S. reached an all-time high of 37,185 in 1999, and
then declined in both 2000 and 2001. There were approximately 35,153 screens at
the end of 2001, a decline of nearly 5% from 1999. In addition to closing
hundreds of theatres, the largest players in the industry have dramatically
scaled back new theatre builds, resulting in significant decreases in capital
expenditures.

Significant capital expenditures by major industry players during this time
resulted in a higher quality theatre base. Current circuits are comprised of a
significant number of modern multiplex theatres, which generally include 10 or
more screens, digital sound and stadium seating. We believe these improved
facilities, which have been well-received by patrons, will benefit the industry
both by stimulating demand and by limiting the need for future capital
expenditures.

DRIVERS OF CONTINUED INDUSTRY SUCCESS

We believe the following market trends will drive the continued growth and
strength of our industry:

INCREASED IMPORTANCE OF INTERNATIONAL MARKETS FOR ENSURING BOX OFFICE
SUCCESS. International markets are becoming an increasingly important component
of the overall box office revenues generated by Hollywood films. For example,
markets outside of North America accounted for more than $1.4 billion, or
greater than 60% of the global box office revenues for Harry Potter and the
Sorcerer's Stone, Lord of the Rings: Fellowship of the Ring and Monsters, Inc.
With the continued growth of the international motion picture exhibition
industry, the relative contribution of markets outside North America should
become even more significant.

FAVORABLE ATTENDANCE TRENDS. We believe that recent trends in motion
picture attendance will continue to benefit the industry. According to the
Motion Picture Association of America, annual admissions per capita in the U.S.
increased from 4.5x to 5.3x, between 1991 and 2001. Additionally, the U.S.
teenage segment, defined as 12-17 year olds, represented 19% of admissions in
2001, up from 14% in 1997. During 2001 51% of U.S. teenagers attended movies 12
or more times per year, compared with only 42% in 1997.

COMPETITIVE STRENGTHS

We believe the following strengths allow us to compete effectively:

FOCUSED PHILOSOPHY RESULTING IN STRONG FINANCIAL PERFORMANCE. We focus on
negotiating favorable theatre facility economics, providing a superior viewing
experience and controlling theatre operating costs. As a result of this
philosophy, we generate the highest EBITDA margin of the five largest motion
picture exhibitors in the U.S. Our EBITDA margins have averaged 18.7% over the
past three fiscal years and our operating income margins have averaged 8.0% for
the same period. We generated EBITDA per screen of $56,660 and operating income
per screen of $19,196 for the year ended December 31, 2001, which we believe to
be among the highest in the industry.

including the significant industry downturn between 1999 and 2001, during which
period at least twelve exhibitors filed for bankruptcy protection. We believe
our strong performance is a result of our financial discipline and focus on
investment returns, as demonstrated by our decision to decrease our building
commitments during this difficult period in the industry. We reduced our capital
expenditures from $248.4 million in 1999 to $40.4 million in 2001.

SELECTIVE BUILDING IN LESS COMPETITIVE U.S. MARKETS AND HEAVILY POPULATED
INTERNATIONAL MARKETS.

- Heavily Populated, High Growth International Markets: Since 1993, we
have directed our activities in international markets primarily toward
Latin America due to the growth potential in these under-screened
markets. Our EBITDA margins from our international operations are
generally higher than those in North America. We have successfully
established a significant presence in most of the major cities in Latin
America with theatres in nine of the ten largest metropolitan areas. We
have strategic alliances with local partners in many countries, which
help us obtain additional market insight. We generally fund our operating
and capital expenditures in local currencies, thereby matching our
expenses to our revenues. We have also geographically diversified our
international portfolio in an effort to balance risk and become one of
the predominant Pan American motion picture exhibition companies.

STRONG BALANCE SHEET WITH SIGNIFICANT CASH FLOW. We believe that we will
have a conservative capital structure. As of March 31, 2002, on an as adjusted
basis giving effect to this offering and the concurrent refinancing of our
credit facility, we had $604.6 million of total debt outstanding and $59.4
million in cash and cash equivalents. Our high EBITDA margin and capital
structure allowed us to generate $57.6 million of operating income and $57.0
million of free cash flow for the fiscal year ended December 31, 2001. This
significant cash flow enables us to take advantage of future growth
opportunities.

BUSINESS STRATEGY

OUR INTERNATIONAL OPERATIONS

We have been successfully introducing American-style modern multiplex
theatres to underserved international markets since 1993. Our activities in
international markets have been primarily directed toward Latin America, where
we have successfully established a significant presence in most of the major
cities in Latin America. We presently have theatres in nine of the top ten
largest major metropolitan areas in Latin America. We have become one of the
predominant Pan American exhibition companies while balancing our risk through a
diversified international portfolio. In addition, however, we have achieved
significant scale in Mexico and Brazil, two of the most important Latin American
markets.

We believe that Latin America is one of the fastest growing international
markets in terms of box office revenues. Penetration of movie screens per capita
in Latin American markets is substantially lower than in the U.S. and European
markets. Our geographic diversity throughout Latin America has allowed us to
maintain consistent revenue and EBITDA growth notwithstanding currency
fluctuations that may affect any particular market.

We will continue to consider selective opportunities for development of
modern multiplex theatres in underserved international markets, emphasizing
Latin America, funded primarily utilizing cash flow generated in those
countries. Also, because of our ability to use local currencies to fund
substantially all aspects of our operations, including rent expense, we are able
to mitigate exposure to currency fluctuations.

The growth potential throughout Latin America combined with stable ticket
prices and limited entertainment choices, as compared to North American markets,
has translated into strong growth in box office revenues. From 1995 to 2000,
Latin American box office revenues grew at a 19% compound annual rate. Box
office revenues are projected to continue to grow from 2000 through 2005 by an
11.6% compound annual rate.

This growth is expected to be fueled by a combination of continued
development of modern theatres, attractive demographics, i.e., a significant
teenage population, strong product from Hollywood and the emergence of a local
film industry. In many Latin American countries the local film industry had been
dormant because of the lack of sufficient theatres to screen the film product.
The development of new modern theatres has awakened the local film industry in
many countries and local film product is now playing a significant role in
driving attendance growth.

THEATRE CIRCUIT

As of March 31, 2002, we operated 3,014 screens in 278 theatres located in
33 states and 14 countries. We operate 2,664 screens in 237 "first run" theatres
and 350 screens in 41 "discount" theatres. The following tables summarize the
geographic locations of our theatre circuit as of March 31, 2002.

NORTH AMERICAN THEATRES

TOTAL TOTAL
THEATRES SCREENS
-------- -------

Texas....................................................... 60 767
Ohio........................................................ 20 202
California.................................................. 18 172
Utah........................................................ 9 111
Kentucky.................................................... 7 75
Illinois.................................................... 6 72
Colorado.................................................... 4 67
Oklahoma.................................................... 6 67
Louisiana................................................... 4 54
Virginia.................................................... 4 52
Oregon...................................................... 4 50
Indiana..................................................... 6 50
Florida..................................................... 3 48
Pennsylvania................................................ 3 43
Mississippi................................................. 3 41
North Carolina.............................................. 4 39
Michigan.................................................... 2 36
Arkansas.................................................... 3 30
Georgia..................................................... 2 27
New York.................................................... 2 27
Kansas...................................................... 1 20
Iowa........................................................ 3 19
New Jersey.................................................. 1 16
New Mexico.................................................. 2 16
Arizona..................................................... 2 14
Missouri.................................................... 1 14
Tennessee................................................... 1 14
Wisconsin................................................... 1 14
Massachusetts............................................... 1 12
Delaware.................................................... 1 10
Minnesota................................................... 1 8
Nebraska.................................................... 1 8
South Carolina.............................................. 1 8
Total United States......................................... 187 2,203
Canada...................................................... 1 12
-------- -------
TOTAL NORTH AMERICA......................................... 188 2,215
======== =======

INTERNATIONAL THEATRES

TOTAL TOTAL
COUNTRY THEATRES SCREENS
------- -------- -------

Brazil...................................................... 29 264
Mexico...................................................... 26 256
Chile....................................................... 11 88
Argentina................................................... 9 79
Central America (1)......................................... 7 43
Colombia.................................................... 3 22
Peru........................................................ 2 21
Ecuador..................................................... 2 16
United Kingdom.............................................. 1 10
-------- -------
TOTAL....................................................... 90 799
======== =======

---------------

(1) Includes Honduras, El Salvador, Nicaragua and Costa Rica.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS.

See Note 14 to our consolidated financial statements for the fiscal year
ended December 31, 2001 for information on our revenues and long-lived assets in
the U.S. and Canada, Mexico, Brazil and other foreign countries.

OPERATIONS

The personnel at our corporate office, which employs approximately 185
individuals, is responsible for theatre operations support, film licensing and
settlements, human resources, finance and accounting, operational audit, theatre
maintenance and construction, internet and information systems, lease site
planning and marketing. Our North American operations are divided into eleven
regions, each of which is headed by a region leader.

Regular inspections of each theatre are conducted. We also have a program
to maintain quality and consistency within our theatres involving unannounced
visits by unidentified customers who report on the quality of service, film
presentation and cleanliness of the theatre.

FILM LICENSING

Films are typically licensed from film distributors that are owned by major
film production companies or from independent film distributors that distribute
films for smaller production companies. For new release films, film distributors
typically establish geographic zones and offer each available film to one
theatre in each zone. The size of a film zone is generally determined by the
population density, demographics and box office potential of a particular market
or region. A film zone can range from a radius of three to five miles in major
metropolitan and suburban areas to up to fifteen miles in small towns. We
currently operate theatres in 142 first-run film zones in North America. New
film releases are licensed at the discretion of the film distributors.
Approximately 83% of our North American first-run theatres have no direct
competition within their respective film zones, which allows us to select those
pictures that we believe will be the most successful in our markets from those
offered to us by distributors. We usually license films on an allocation basis
in film zones where we face competition. A particular distributor will rotate
films among exhibitors under an allocation process that enables film
distributors to charge a premium rental rate in these zones. Films are released
to discount theatres once the attendance levels substantially drop off at the
first run theatres. For discount films, film distributors generally establish
availability on a market-by-market basis after the completion of exhibition at
first run theatres and permit each theatre within a market to exhibit such films
without regard to film zones.

Unlike our North American operations, distributors in our international
markets do not allocate film to a single theatre in a geographic film zone.
Rather, competitive theatres can play the same films at the same time as other
theatres. Our theatre personnel focus on providing excellent customer service,
and we provide a modern facility with the most up-to-date sound systems,
comfortable stadium style seating and other amenities typical of modern
American-style multiplexes which we believe gives us a competitive advantage in
markets where there are competing theatres. Of the 90 theatres we operate
outside of North America, approximately 88% of these theatres do not have direct
competition.

Our film rental licenses typically state that rental fees are based on
either mutually agreed upon firm terms established prior to the opening of the
picture or on a mutually agreed settlement upon the conclusion of the picture
run. Under a firm terms formula, we pay the distributor a specified percentage
of box office receipts, with the percentages declining over the term of the run.
Firm term film rental fees are generally the greater of (i) 60% or 70% of box
office admissions, gradually declining to as low as 30% over a period of four to
seven weeks versus (ii) a specified percentage (i.e. 90%) of the excess of box
office receipts over a negotiated allowance for theatre expenses (commonly known
as a 90-10 clause). The settlement process allows for negotiation upon the
conclusion of the picture run based upon how a film actually performs. In
international markets, film rental percentages can vary between 35% and 60% of
box office revenues and gradually decline over a similar period as in the U.S.

We also operate discount theatres, with admissions ranging from $0.50 to $2
per ticket, in the U.S. to serve an alternative market of patrons that extends
the life of a film past the first run screening. By serving this alternative
market of patrons in our discount theatres, we have been able to increase the
number of potential customers beyond traditional first run moviegoers. Our
discount theatres offer many of the same amenities as our first run theatres,
including wall-to-wall screens, comfortable seating with cupholder armrests,
digital sound and multiple concession stands. Discount films' rental percentages
typically begin at 35% of box office receipts and often decline to 30% after the
first week.

Film rental costs are accrued based on the applicable box office receipts
and either the mutually agreed upon firm terms or estimates of the final
settlement depending upon the film licensing arrangement. Estimates are made
based on the expected success of a film over the length of its run. The success
of a film can typically be determined a few weeks after a film is released when
initial box office performance of the film is known. Accordingly, final
settlements typically approximate estimates since box office receipts are known
at the time the estimate is made and the expected success of a film over the
length of its run can typically be estimated early in the film's run. The final
film settlement amount is negotiated at the conclusion of the film's run based
upon how a film actually performs. If actual settlements are higher than those
estimated, additional film rental costs would be required in the future.

CONCESSIONS

Concession sales are our second largest revenue source, representing
approximately 30% of total revenues for 2001. Concession sales have a much
higher margin than admissions sales. We have devoted considerable management
effort to increase concession sales and improve operating margins. These efforts
include implementation of the following strategies:

- Optimization of product mix. Concession products are primarily comprised
of various sizes of popcorn, soft drinks and candy. Different varieties
and flavors of candy and soft drinks are offered at theatres based on
preferences in that particular geographic region. Specially priced
"combo-meals" have been implemented for all patrons as well as "movie
meals" targeted toward children and senior citizens. We periodically
introduce new concession products designed to attract additional
concession purchases.

- Staff training. Employees are continually trained in
"suggestive-selling" and "upselling" techniques. This training occurs
through situational role-playing conducted at our "Customer Satisfaction
University" as well as continuing on-the-job training as part of
concession promotions and sales contests. Individual theatre managers
receive a portion of their compensation based on concession sales at
their theatres and are therefore motivated to maximize concession sales.

- Theatre design. Our theatres are designed to optimize efficiencies at
the concession stands, which includes multiple service stations to make
it easier to serve larger numbers of customers rapidly. We strategically
place large concession stands within theatres, which heightens
visibility, reduces the length of concession lines and improves traffic
flow around the concession stands.

- Cost control. We negotiate prices for concession supplies directly with
concession vendors and manufacturers on a bulk rate basis. Concession
supplies are distributed through a national distribution network. The
concession distributor provides inventory and distribution services to
the theatres, which place volume orders directly to replenish stock. The
concession distributor is paid a percentage fee for this service. We
believe that utilizing a concession distributor is more cost effective
than owning a concession warehousing network.

MARKETING

In order to attract customers, we rely on newspaper display advertisements,
substantially paid for by film distributors, newspaper directory film schedules,
generally paid for by the exhibitor, and internet advertising which has emerged
as a strong media source to inform patrons of film titles and show times. Radio
and television advertising spots, generally paid for by film distributors, are
used to promote certain motion

pictures and special events. We also exhibit previews in our theatres of coming
attractions and films presently playing on the other screens which we operate in
the same theatre or market.

Additionally, our marketing department focuses on maximizing revenue
generation opportunities, including the following:

- Advertising. We believe the advertising industry recognizes the value of
in-theatre advertising as an important medium due to the demographics of
theatre patrons. Recent research has shown that movie audiences have a
78% retention rate for advertisements seen in a movie theatre by a
captive audience which exceeds the retention rate for television, radio
or print advertising. In order to effectively realize and manage this
opportunity, we entered into advertising contracts for rolling stock and
screen slide advertising. We deliver advertising through "lights-up"
on-screen slide advertising in the auditoriums, audio ads paired with
music played throughout the theatre and rolling stock advertisements. We
are also exploring additional revenue sources such as digital video
monitor advertising, virtual poster cases and third party branding. We
are able to offer advertisers national, regional or local coverage in a
variety of formats to reach our patrons, which numbered approximately 154
million patrons during the fiscal year ended December 31, 2001. We
currently carry advertising for several large advertisers. We also
generate ancillary revenue potential from "imaging" in the lobby,
including mini-billboards and displays and distributing coupons and
samples to patrons passing through the theatre complex.

- Sales. In 2001, we formed a sales department to oversee the development
and implementation of a comprehensive theatre rental effort. This
department is responsible for increasing theatre rental income during
periods when the theatre is normally closed. We believe the large
lobbies, comfortable seating, big screen and sound capabilities make our
theatres an attractive venue to hold corporate events, private parties,
private screenings and team building meetings and will generate
additional revenues. Our theatres have been used for simulcast concerts,
pay-per-view sporting events and cultural events. We believe the trend to
use theatre auditoriums for non-film events during non-peak times will
increase, which will add revenue and attract new audiences to our
theatres while not significantly increasing costs.

INTERNET

We have successfully used the internet to provide patrons access to movie
times, the ability to buy tickets and print their tickets at home. The internet
is quickly becoming the primary way to check movie times, replacing the
traditional newspaper source. Over time, the internet will allow us to reduce
our advertising costs related to newspaper directory advertisements. Patrons may
purchase advance tickets from over 70 of our North American theatres, with 1,100
screens, and print tickets at home for ten theatres by simply accessing our
website at www.cinemark.com. These functions are also currently available to
patrons by accessing www.fandango.com.

Our internet initiatives help improve customer satisfaction, as customers
who purchase tickets over the internet are often able to bypass lines at the box
office by printing their tickets at home using bar code technology or picking up
their tickets at kiosks in the theatre lobby. We were the first major exhibitor
to introduce this technology and also the first major exhibitor to make
showtimes available for patrons utilizing wireless technology using Personal
Digital Assistants (PDA's), also known as Palm(R) hand held computers.

MANAGEMENT INFORMATION SYSTEMS

We developed our own proprietary point of sale management information
system to further enhance our ability to maximize revenues, control costs and
efficiently manage our business. This management information system provides
corporate management with real-time admissions and concession revenue reports
allowing management to make real-time adjustments to movie schedules, extend
runs or increase the number of screens on which successful movies are being
played and substitute films when gross receipts cease to meet expected goals.
Real-time seating and box office information is available to box office
personnel, making it possible for theatre management to avoid overselling a
particular film and providing faster and more accurate response to customer
inquiries regarding showings and available seating. The management information
system also tracks concession sales and provides in-theatre inventory reports,
leading to better inventory management and
50

control. It also has multiple language capabilities, numerous ticket pricing
options, integrates internet ticket sales and has the ability to process credit
cards. The system also supports barcode scanners, pole displays, touch screens,
credit card readers and other equipment specific to individual country
requirements.

COMPETITION

We are one of the leading motion picture exhibitors in terms of both
revenues and the number of screens in operation. We compete against local,
national and international exhibitors.

We are the sole exhibitor operating within a film zone in approximately 83%
of our first-run North American theatres. Of the 90 theatres we operate outside
of North America, approximately 88% of those theatres have no direct
competition. In film zones where there is no direct competition, we select those
pictures we believe will be the most successful from among those offered to us
by distributors. Where there is competition, we usually license films based on
an allocation process. We currently operate in 142 first-run film zones in North
America. The principal competitive factors with respect to film licensing are:

- capacity and location of an exhibitor's theatre;

- theatre comfort;

- quality of projection and sound equipment;

- level of customer service; and

- licensing terms.

The competition for customers is dependent upon factors such as the
availability of popular films, the location of theatres, the comfort and quality
of theatres and ticket prices. Our admission prices at first run and discount
theatres are competitive with admission prices of respective competing theatres.

We also face competition from a number of other motion picture exhibition
delivery systems, such as home video, DVD, network, syndicated and pay-per-view
television. We do not believe that these additional distribution channels have
adversely affected theatre attendance; however, we can give no assurance that
existing or future alternative delivery systems will not have an adverse impact
on attendance. We also face competition from other forms of entertainment
competing for the public's leisure time and disposable income.

SEASONALITY

Our revenues have historically been seasonal, coinciding with the timing of
releases of motion pictures by the major distributors. Generally, the most
successful motion pictures have been released during the summer extending from
Memorial Day to Labor Day and during the holiday season extending from
Thanksgiving through year-end. The unexpected emergence of a hit film during
other periods can alter this seasonality trend. The timing of such film releases
can have a significant effect on our results of operations, and the results of
one quarter are not necessarily indicative of results for the next quarter or
for the same period in the following year. The seasonality of the release of
successful films, however, has become less pronounced in recent years with the
release of major motion pictures occurring more evenly throughout the year.

EMPLOYEES

We have approximately 8,300 employees in North America, approximately 10%
of whom are full time employees and 90% of whom are part time employees. We have
approximately 4,300 employees outside of North America. Approximately 20 North
American employees are represented by unions under collective bargaining
agreements. Some of our international operations utilize union labor. We regard
our relations with our employees as satisfactory.

REGULATION

The distribution of motion pictures is largely regulated by federal and
state antitrust laws and has been the subject of numerous antitrust cases. We
have never been a party to any of such cases, but the manner in

which we can license films from certain major film distributors is subject to
consent decrees resulting from these cases. Consent decrees bind certain major
film distributors and require the films of such distributors to be offered and
licensed to exhibitors on a theatre-by-theatre and film-by-film basis.
Consequently, exhibitors cannot assure themselves of a supply of films by
entering long-term arrangements with major distributors, but must negotiate for
licenses on a film-by-film and theatre-by-theatre basis.

We are subject to various general regulations applicable to our operations
including the Americans with Disabilities Act of 1990. We develop new theatres
to be accessible to the disabled, and we believe we are in substantial
compliance with current regulations relating to accommodating the disabled.
Although we believe that our theatres generally comply with the ADA where
readily achievable, we are a party to various lawsuits which claim that our
wheelchair seating arrangements do not comply with the ADA.

We are also subject to federal, state and local laws governing such matters
as wages, working conditions, citizenship, health and sanitation requirements
and licensing.

PROPERTIES

As of March 31, 2002, we operated 156 theatres, with 1,739 screens,
pursuant to leases and own the land and building for 32 theatres, with 476
screens in North America. Our leases are generally entered into on a long term
basis with terms, including renewal options, generally ranging from 20 to 40
years. As of March 31, 2002, approximately 8% of our theatre leases in North
America, covering 78 screens, have remaining terms, including optional renewal
periods, of less than five years and approximately 81% of our theatre leases in
North America, covering 1,519 screens, have remaining terms, including optional
renewal periods, of more than 15 years. Rent is typically calculated as a
percentage of box office receipts or total theatre revenues, subject to an
annual minimum. We lease our office building in Plano, Texas.

As of March 31, 2002, we operated 90 theatres, with 799 screens, outside of
North America, all of which are leased pursuant to ground or building leases.
The leases generally provide for contingent rental based upon operating results,
some of which are subject to an annual minimum. Generally, these leases will
include renewal options for various periods at stipulated rates. We attempt to
obtain lease terms that provide for build-to-suit construction obligations of
the landlord. No international leases have remaining terms, including optional
renewal periods, of less than five years, and approximately 89% of our
international leases, with 708 screens, have remaining terms, including optional
renewal periods, of more than 15 years.

We periodically review the profitability of each of our theatres,
particularly those whose lease terms are about to expire, to determine whether
to continue its operations. In 2001, as a result of the expiration or settlement
of the lease term, we sold or closed five theatres, with 23 screens and also
closed one screen at an existing theatre. The closing of these theatres did not
have a material effect on our financial position, results of operations and cash
flows.

LEGAL PROCEEDINGS

DOJ LITIGATION

In March 1999, the Department of Justice filed suit in the U.S. District
Court, Northern District of Ohio, Eastern Division, against us alleging certain
violations of the ADA relating to our wheelchair seating arrangements and
seeking remedial action. An Order granting Summary Judgment to us was issued by
the presiding federal judge in November 2001. The Department of Justice has
filed a Notice of Appeal with the United States Court of Appeals for the Sixth
Circuit. However, if we ultimately lose the Department of Justice litigation,
our financial position, results of operations and cash flows may be materially
and adversely affected. We are unable to predict the outcome of this litigation
or the range of potential loss, however, we believe that based upon current
precedent our potential liability with respect to such proceeding is not
material in the aggregate to our financial position, results of operations and
cash flows. Accordingly, we have not established a reserve for loss in
connection with this proceeding.

AUSTIN, TX LITIGATION

In August 2001, David Wittie, Rona Schnall, Ron Cranston, Jennifer McPhail,
Peggy Garaffa and ADAPT of Texas filed suit in the 201st Judicial District Court
of Travis County, Texas alleging certain violations of the Human Resources Code,
the Texas Architectural Barriers Act, the Texas Accessibility Standards and the
Deceptive Trade Practices Act relating to accessibility of movie theatres for
patrons using wheelchairs at two theatres located in the Austin, Texas market.
The plaintiffs are seeking remedial action and unspecified damages. We have
filed an answer denying the allegations and are vigorously defending this suit.
We are unable to predict the outcome of this litigation or the range of
potential loss, however, we believe that based upon current precedent our
potential liability with respect to such proceeding is not material in the
aggregate to our financial position, results of operations and cash flows.
Accordingly, we have not established a reserve for loss in connection with this
proceeding.

MISSION, TX LITIGATION

In July 2001, Sonia-Rivera-Garcia and Valley Association for Independent
Living filed suit in the 93rd Judicial District Court of Hidalgo County, Texas
alleging certain violations of the Human Resources Code, the Texas Architectural
Barriers Act, the Texas Accessibility Standards and the Deceptive Trade
Practices Act relating to accessibility of movie theatres for patrons using
wheelchairs at one theatre located in the Mission, Texas market. The plaintiffs
are seeking remedial action and unspecified damages. We have filed an answer
denying the allegations and are vigorously defending this suit. We are unable to
predict the outcome of this litigation or the range of potential loss, however,
we believe that based upon current precedent our potential liability with
respect to such proceeding is not material in the aggregate to our financial
position, results of operations and cash flows. Accordingly, we have not
established a reserve for loss in connection with this proceeding.

The plaintiffs in the DOJ litigation, Austin, Texas litigation and Mission,
Texas litigation have argued that the theatres must provide wheelchair seating
locations with viewing angles to the screen that are at the median or better
than all seats in the auditorium. To date, three courts have rejected that
position. In two of the three courts, we were the defendant, and the courts have
found our theatres to comply with the ADA; Lara v. Cinemark USA, Inc., United
States Court of Appeals for the Fifth Circuit; United States of America v.
Cinemark USA, Inc., United States District Court for the Northern District of
Ohio. The third case, Oregon Paralyzed Veterans of America v. Regal Cinemas,
Inc., United States District Court for the District of Oregon, adopted the
reasoning established in Lara and granted summary judgment in favor of Regal
Cinemas, Inc.

HOUSTON, TX LITIGATION

In May 23, 2002, Robert Todd on behalf of Robert Preston Todd, his minor
child, and "all individuals who are deaf or are severely hearing impaired" filed
suit in the United States District Court for the Southern District of Texas,
Houston Division against several movie operators including, AMC Entertainment,
Inc., Regal Entertainment, Inc., Cinemark USA, Inc. and Century Theaters as well
as eight movie production companies. The lawsuit alleges violation of Title III
of the ADA, and the First Amendment to the Constitution of the United States.
Plaintiffs seek unspecified injunctive relief, unspecified declaratory relief,
unspecified monetary damages (both actual and punitive) and unspecified
attorneys' fees. The answer is not yet due and we have not yet filed any
pleadings in the case. We plan to deny any violation of law and to vigorously
defend against all claims. We are unable to predict the outcome of this
litigation or the range of potential loss, however, we believe that based upon
current precedent our potential liability with respect to such proceeding is not
material in the aggregate to our financial position, results of operations and
cash flows. Accordingly, we have not established a reserve for loss in
connection with this proceeding.

From time to time, we are involved in other various legal proceedings
arising from the ordinary course of our business operations, such as personal
injury claims, employment matters and contractual disputes, most of which are
covered by insurance. We believe our potential liability with respect to
proceedings currently pending is not material in the aggregate to our financial
position, results of operations and cash flows.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors, and their ages and positions as of
the date of this prospectus are as follows:

NAME AGE POSITION
---- --- --------

Lee Roy Mitchell........ 65 Chairman of the Board; Chief Executive Officer;
Director
Tandy Mitchell.......... 51 Executive Vice President; Director
Alan Stock.............. 42 President; Chief Operating Officer; Director
Robert Copple........... 43 Senior Vice President; Treasurer; Chief Financial
Officer; Director
Robert Carmony.......... 44 Senior Vice President -- Operations
Tim Warner.............. 57 Senior Vice President; President, Cinemark
International, L.L.C.
Michael Cavalier........ 35 Vice President -- General Counsel; Secretary
John Lundin............. 53 Vice President -- Film Licensing
Walter Hebert, III...... 56 Vice President -- Purchasing
Don Harton.............. 45 Vice President -- Construction
Margaret Richards....... 43 Vice President -- Real Estate; Assistant Secretary
Terrell Falk............ 51 Vice President -- Marketing and Communications
James Stern............. 51 Director
Denny Rydberg........... 57 Director
William Spiegel......... 39 Director

The following is a brief description of the business experience of our
directors and executive officers for at least the past five years.

Lee Roy Mitchell has served as Chairman of the Board since March 1996 and
as Chief Executive Officer and a Director since our inception in 1987. Mr.
Mitchell was Vice Chairman of the Board of Directors from March 1993 to March
1996 and was President from our inception in 1987 until March 1993. From 1985 to
1987, Mr. Mitchell served as President and Chief Executive Officer of a
predecessor corporation. Since March 1999, Mr. Mitchell has served as a director
of Texas Capital Bancshares, Inc., a bank holding company. Mr. Mitchell has
served on the Board of Directors of the National Association of Theatre Owners
since 1991. Mr. Mitchell has been engaged in the motion picture exhibition
business for nearly 45 years.

Tandy Mitchell has served as a Director since April 1992 and as Executive
Vice President since October 1989. Mrs. Mitchell served as the Vice Chairman of
the Board and Secretary from 1987 until May 2002. Mrs. Mitchell was General
Manager of the theatre division of a predecessor corporation from 1985 to 1987.
From 1978 to 1985, Mrs. Mitchell was employed by Southwest Cinemas Corporation
as Director of Operations. Mrs. Mitchell is the wife of Lee Roy Mitchell and the
sister of Walter Hebert, III.

Alan Stock has served as President since March 1993, as a Director since
April 1992 and as Chief Operating Officer since March 1992. Mr. Stock was Senior
Vice President from October 1989 to March 1993. Mr. Stock was General Manager
from our inception in 1987 to March 1992. Mr. Stock was employed by the theatre
division of a predecessor corporation from January 1986 to December 1987 as
Director of Operations. From 1981 to 1985, he was employed by Consolidated
Theaters, most recently as District Manager.

Robert Copple has served as Senior Vice President, Treasurer and Chief
Financial Officer since August 2000 and as a Director since September 2001. Mr.
Copple was acting Chief Financial Officer from March 2000 to August 2000. From
August 1997 to March 2000, Mr. Copple was President of PBA Development, Inc., an
investment management and venture capital company. From June 1993 to July 1997,
Mr. Copple was our Director of Finance. Prior to joining our company, Mr. Copple
was a Senior Manager with Deloitte & Touche, LLP where he was employed from 1982
to 1993.

Robert Carmony has served as Senior Vice President-Operations since July
1997, as Vice President -- Operations since March 1996 and as Director of
Operations since June 1988. Prior to joining our company, Mr. Carmony was owner
of O.C. Enterprises, a software development firm, from 1986 to 1988. Mr. Carmony
worked for Plitt-Cineplex Odeon theatres from 1985 to 1986 and worked as a
Systems Analyst for Electronic Data Systems (EDS) from 1984 to 1985.

Tim Warner has served as Senior Vice President of the Company since May
2002 and as President of Cinemark International, L.L.C. since April 1996. From
1990 to 1996, Mr. Warner served as Chairman/CEO of the National Association of
Theatre Owners of California and General Chairman of NATO/Showest. From 1970 to
1989, Mr. Warner was General Manager/President/Owner of Theatre Operator Inc.
and President of Warner Marketing Inc. Mr. Warner has served on the Board of
Directors of the National Association of Theatre Owners since 1982 and is
currently the Chairman of the National Association of Theatre Owners
International Committee. He has been active in the theatre industry for over 35
years.

Michael Cavalier has served as Secretary since May 2002 and Vice
President -- General Counsel since July 1999. From July 1997 to July 1999, Mr.
Cavalier was General Counsel and from July 1993 to July 1997 was Associate
General Counsel. Prior to joining our company in July 1993, Mr. Cavalier was an
associate attorney at the Dallas office of Akin, Gump, Strauss, Hauer & Feld,
L.L.P.

John Lundin has served as Vice President -- Film Licensing since September
2000, as Head Film Buyer from September 1997 to September 2000 and was a film
buyer from September 1994 to September 1997. Prior to joining our company, Mr.
Lundin was Vice President -- General Sales Manager of Cannon Pictures. He has
also held the positions of Vice President -- Assistant General Sales Manager for
Columbia Pictures and Head Film Buyer for Litchfield Theatres. Mr. Lundin has
nearly thirty years of experience in the motion picture exhibition business.

Walter Hebert, III has served as Vice President -- Purchasing since July
1997 and was the Director of Purchasing from October 1996 until July 1997. From
December 1995 until October 1996, Mr. Hebert was the President of 2 Day Video,
Inc., a 21-store video chain that was our subsidiary. Prior to joining our
company, Mr. Hebert worked for Dillards Department Stores from 1973 to 1993,
serving as a Divisional Merchandise Manager in the Arkansas Division from 1981
until 1993. Mr. Hebert is the brother of Tandy Mitchell.

Don Harton has served as Vice President -- Construction since July 1997.
From August 1996 to July 1997, Mr. Harton was Director of Construction. Prior to
joining our company in August 1996, Mr. Harton was an architect with Urban
Architecture, where he was employed from October 1983 until July 1996.

Margaret Richards has served as Vice President -- Real Estate since March
1994 and as a Vice President and Assistant Secretary since October 1989. Ms.
Richards has been Director of Leasing since our inception in 1987 and was
employed by the theatre division of a predecessor corporation in its real estate
department from August 1986 to December 1987.

Terrell Falk has served as Vice President -- Marketing and Communications
since April 2001. From March 1998 to April 2001, Ms. Falk was Director of Large
Format Theatres, overseeing the marketing and operations of our IMAX theatres.
From March 1995 until joining our company, she was Vice President of Marketing
for JQH Film Entertainment, a large format film production and distribution
company, where she was responsible for film marketing, distribution and
production. Ms. Falk was also Director of Marketing for the Houston Museum of
Natural Science and Wortham IMAX Theatre from February 1982 to March 1995.

James Stern has served as a Director since March 1997. Mr. Stern has been
Chairman of The Cypress Group L.L.C. since its formation in April 1994. Prior to
joining Cypress, Mr. Stern spent his entire career with Lehman Brothers, an
investment banking firm, most recently as Head of the Merchant Banking Group. He
served as Head of Lehman's High Yield and Primary Capital Markets Groups, and
was Co-Head of Investment Banking. In addition, Mr. Stern was a member of the
firm's Operating Committee. Mr. Stern also serves on the Board of Directors of
Amtrol, Inc., FNC Holdings, WESCO International, Inc. and Lear Corporation.

Denny Rydberg has served as a Director since July 1997. Mr. Rydberg has
been President of Young Life since July 1993. Prior to joining Young Life, Mr.
Rydberg was Director of University Ministries at University Presbyterian Church,
Vice President of Youth Specialties and Director of Operations for Inspirational
Films.

William Spiegel has served as a Director since September 2001. Mr. Spiegel
is a Managing Director at The Cypress Group L.L.C. He has been with Cypress
since its formation in 1994. Prior to joining Cypress, he was a member of the
Merchant Banking Group at Lehman Brothers. Mr. Spiegel currently manages
Cypress' efforts in the healthcare and financial services industries. Mr.
Spiegel has been actively involved with us since March 1996. Mr. Spiegel is also
a Director of Medpointe Inc. and Montpelier Re Holdings Ltd.

BOARD COMPOSITION AND COMPENSATION

The Stockholders' Agreement contains a voting agreement pursuant to which
the Mitchell Group agrees to vote their shares of Class B common stock to elect
designees of Cypress to our board of directors. As of June 21, 2002, Cypress had
the right to nominate two board members.

Our certificate of incorporation authorizes there to be between six and
eleven directors as determined by our board of directors. Our board of directors
currently consists of nine members with two vacancies. We intend to appoint two
independent directors to fill those vacancies. Our board is divided into three
classes that serve staggered three-year terms, as follows:

CLASS EXPIRATION OF TERM MEMBERS
----- ------------------ -------

Class I.............. 2003 Lee Roy Mitchell, Robert Copple, and James A. Stern
Class II............. 2004 Tandy Mitchell and Denny Rydberg
Class III............ 2005 Alan W. Stock and William Spiegel

Newly elected directors and any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of one-third of the
directors.

Directors are reimbursed for expenses actually incurred for each board of
directors meeting which they attend. In addition, our independent directors
receive a fee of $1,000 for each meeting of the board of directors attended. We
may grant non-employee directors non-qualified stock options to purchase shares
of our Class A common stock on a periodic basis in an amount and with a vesting
schedule to be determined by our board of directors.

BOARD COMMITTEES

Our board intends to establish an audit committee and compensation
committee.

Audit Committee. The audit committee will consist of three independent
directors. We plan to appoint two members of the audit committee within three
months following this offering and the third member within 12 months after the
consummation of this offering. The audit committee reviews the accounting and
auditing principles and procedures of our company with a view to providing for
the safeguard of our assets and the reliability of our financial records,
recommending to the board of directors the engagement of our independent
accountants, reviewing with the independent accountants the plans and results of
the auditing engagement, and considering the independence of our accountants.
Membership on the audit committee will consist of at least three directors who
are financially literate, one of whom has significant experience in accounting
or finance matters, and independent of management and free from any relationship
that, in the opinion of the board of directors, would interfere with the
exercise of independent judgment as a committee member.

Compensation Committee. The compensation committee will include two
independent directors. The principal responsibilities of the compensation
committee are to establish policies and periodically determine matters involving
executive compensation, recommend changes in employee benefit programs and grant
or recommend the grant of stock options and stock awards under our incentive
plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of our executive officers served as a member of the board of directors
or the compensation committee of any entity that has one or more executive
officers serving on our board of directors or on the compensation committee of
our board of directors.

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to
compensation for the last three fiscal years ended December 31, 2001, December
31, 2000 and December 31, 1999, respectively, earned by our chief executive
officer and our four other most highly compensated executive officers as of
December 31, 2001. In this prospectus, we refer to these individuals as our
named executive officers.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS OPTIONS/SARS COMPENSATION
--------------------------- ---- ---------- ---------- ------------- ------------

Lee Roy Mitchell........................ 2001 $474,516 $1,525,484 (5) -- $223,285 (2)
Chairman of the Board 2000 431,378 -- -- 12,700 (3)
and Chief Executive Officer 1999 392,162 -- -- 118,040 (4)
Alan Stock.............................. 2001 366,341 198,899 (5) -- 267,308 (6)
President and Chief Operating 2000 342,375 79,804 (11) -- 7,875 (10)
Officer 1999 311,250 -- -- 7,500 (10)
Tim Warner.............................. 2001 297,075 161,291 (5) -- 336,445 (7)
Senior Vice President and 2000 277,640 64,715 (11) -- 7,875 (10)
President -- Cinemark 1999 252,400 -- -- 7,500 (10)
International
Robert Copple........................... 2001 267,500 145,235 (5) 154,000 (14) 138,274 (8)
Senior Vice President, Treasurer 2000 250,000 (13) 58,272 (11) -- --
and Chief Financial Officer (12) 1999 -- -- -- --
Robert Carmony.......................... 2001 257,881 140,012 (5) -- 225,827 (9)
Senior Vice 2000 241,010 56,177 (11) -- 7,875 (10)
President -- Operations 1999 219,100 -- -- 7,500 (10)

---------------

(1) Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election
of those officers.

(2) Represents a $1,950 annual contribution to our 401(k) savings plan, $15,940
representing the value of the use of a company vehicle for one year,
$98,844 for 2001 life insurance premiums and $106,551 for 2000 life
insurance premiums and interest on such premiums paid in 2001 by us for the
benefit of Mr. Mitchell.

(3) Represents a $1,950 annual contribution to our 401(k) savings plan and
$10,750 representing the value of the use of a company vehicle for one
year.

(4) Represents a $1,950 annual contribution to our 401(k) savings plan, $17,246
representing the value of the use of a vehicle of ours for one year and
$98,844 of life insurance premiums paid by us for the benefit of Mr.
Mitchell.

(5) Bonuses were earned in 2001 but were paid in 2002.

(6) Represents a $4,590 annual contribution to our 401(k) savings plan,
$156,194 of compensation relating to the value of stock options exercised
for 104,500 shares of Class A Common Stock over the

$0.0045 per share exercise price and a $106,524 reimbursement for estimated
tax obligations incurred upon the exercise of such stock options.

(7) Represents a $4,590 annual contribution to our 401(k) savings plan,
$197,298 of compensation relating to the value of stock options exercised
for 132,000 shares of Class A common stock over the $0.0045 per share
exercise price and a $134,557 reimbursement for estimated tax obligations
incurred upon the exercise of such stock options.

(8) Represents $82,208 of compensation relating to the value of stock options
exercised for 55,000 shares of Class A common stock over the $0.0045 per
share exercise price and a $56,066 reimbursement for estimated tax
obligations incurred upon the exercise of such stock options.

(9) Represents a $4,590 annual contribution to our 401(k) savings plan,
$131,532 of compensation relating to the value of stock options exercised
for 88,000 shares of Class A common stock over the $0.0045 per share
exercise price and an $89,705 reimbursement for estimated tax obligations
incurred upon the exercise of such stock options.

(10) Represents our annual contribution to our 401(k) savings plan.

(11) Bonuses were earned in 2000 but were paid in February 2001.

(12) Mr. Copple joined our company in March 2000.

(13) Represents Mr. Copple's annualized salary. Mr. Copple was acting Chief
Financial Officer from March 2000 to August 2000 and became Senior Vice
President and Chief Financial Officer in August 2000.

(14) In October 2001 we granted Mr. Copple options to purchase an aggregate of
55,000 shares of Class A common stock under the Cinemark 1991 nonqualified
stock option plan at an exercise price of $0.0045 per share. On the date of
grant, the Class A common stock had a market value of $1.50 per share.
These options were immediately vested and such options were exercised by
Mr. Copple. See Footnote 8. On December 28, 2001, we granted Mr. Copple
options to purchase 99,000 shares of Class A common stock at an exercise
price of $1.50 per share. We believed that on the date of grant, the Class
A common stock had a market value of $1.50 per share. In connection with
the offering and Staff Accounting Bulletin Topic 4.D., we revised the
market value of a share of the Class A common stock in December 2001 to
$11.45 which exceeded the option price of $1.50 by $9.95. These options
vest 20% per year for five years.

STOCK OPTION GRANTS

The following table sets forth the stock options we granted during the
fiscal year ended December 31, 2001 to each of the named executive officers.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM (2)
OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
---- ---------- --------------- ----------- ---------- ----------- -----------

Lee Roy Mitchell..... -- -- n/a n/a $ -- $ --
Alan Stock........... -- -- n/a n/a -- --
Tim Warner........... -- -- n/a n/a -- --
Robert Copple (1).... 55,000 25.24% $0.0045 n/a 134,136 213,736
99,000 14.02% $1.50 12/2011 1,697,934 2,791,637
Robert Carmony....... -- -- n/a n/a -- --

---------------

(1) In October 2001 we granted Mr. Copple options to purchase an aggregate of
55,000 shares of Class A common stock under the Cinemark 1991 nonqualified
stock option plan at an exercise price of $0.0045 per share. On the date of
grant, the Class A common stock had a market value of $1.50 per share. These
options were immediately vested and such options were exercised by Mr.
Copple. On

December 28, 2001, we granted Mr. Copple options to purchase 99,000 shares
of Class A common stock at an exercise price of $1.50 per share. We believed
that on the date of grant, the Class A common stock had a market value of
$1.50 per share. In connection with the offering and Staff Accounting
Bulletin Topic 4.D., we revised the market value of a share of the Class A
common stock for the December 2001 option grants to $11.45 which exceeded
the option price of $1.50 by $9.95 per share. These options vest 20% per
year for five years.

(2) Amounts shown as potential realizable values are based on compounded annual
rates of share price appreciation of five and ten percent over the 10-year
term of the options, as mandated by rules of the Securities and Exchange
Commission, and are not indicative of expected share price performance.
Actual gains, if any, on share option exercises are dependent on future
performance of the overall market conditions, as well as the option holders'
continued employment through the vesting period. The amounts reflected in
this table may not necessarily be achieved or may be exceeded. The indicated
amounts are net of the option exercise price but before taxes that may be
payable upon exercise.

FISCAL YEAR END OPTION VALUES

The following table provides information concerning each exercise of stock
options during the fiscal year ended December 31, 2001 by each of the named
executive officers and the value of unexercised options held by the named
executive officers as of December 31, 2001.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- --------- ----------- ------------- ----------- -------------

Lee Roy Mitchell...... -- -- -- --
Alan Stock............ 104,500 $ 156,194 39,600 26,400 653,400 435,600
Tim Warner............ 132,000 197,298 39,600 26,400 653,400 435,600
Robert Copple......... 55,000 82,208 -- 99,000 -- 1,633,500
Robert Carmony........ 88,000 131,532 39,600 26,400 653,400 435,600

---------------

(1) Values for "in-the-money" options represent the positive spread between the
respective exercise prices of outstanding options and the anticipated
initial public offering price of $18 per share.

EMPLOYMENT AGREEMENTS

On June 19, 2002, we entered into executive employment agreements with each
of Lee Roy Mitchell, Alan W. Stock, Tim Warner, Robert Copple and Robert
Carmony, pursuant to which Messrs. Mitchell, Stock, Warner, Copple and Carmony
serve, respectively, as our Chairman and Chief Executive Officer, President and
Chief Operating Officer, Senior Vice President and President of Cinemark
International, L.L.C., Senior Vice President and Chief Financial Officer and
Senior Vice President -- Operations. The initial term of each employment
agreement is three years, subject to automatic extensions for a one-year period
at the end of each year of the term, unless the agreement is terminated.
Pursuant to the employment agreements, each of these individuals receives a base
salary, which is subject to annual review for increase (but not decrease) each
fiscal year by the board of directors, in the following amounts: Lee Roy
Mitchell -- $650,000, Alan W. Stock -- $384,658, Tim Warner -- $311,929, Robert
Copple -- $280,875 and Robert Carmony -- $270,775. In addition, each of these
executives is eligible to receive an annual incentive cash bonus ranging from
20% to 60% of base salary (or up to 150% in the case of Mr. Mitchell) upon our
company meeting certain financial performance goals established by the board of
directors for the fiscal year. Mr. Mitchell is also entitled to additional
fringe benefits including life insurance benefits of not less than $5 million,
disability benefits of not less than 66% of base salary, a luxury automobile and
a membership at a country club.

In the event of a change of control, each named executive, other than Mr.
Mitchell, will be entitled to receive, as additional benefits, a cash lump sum
equal to: his respective accrued compensation (which includes base salary and a
pro rata bonus) and benefits, base salary for the balance of the term, an amount
equal to the most recent annual bonus received by such executive multiplied by
the number of years remaining on his term, and the value of his employee
benefits for the balance of his term. In addition, each named executive's
equity-based or performance-based awards will become fully vested and
exercisable upon the change of control in accordance with the terms of the
applicable plan or agreement.

The employment agreement with each named executive also provides for
severance payments upon termination of employment, the amount and nature of
which depends upon the reason for the termination of employment. For example, if
such executive resigns for good reason (which, in the case of Mr. Mitchell,
includes failure to be elected to serve as our chairman) or is terminated by us
without cause (as defined in the agreement), the executive will receive his
respective accrued compensation (which includes base salary and a pro rata
bonus) and benefits and an amount determined by multiplying his annual base
salary and the most recent annual bonus by the number of years remaining on his
term. Each such executive's equity-based or performance-based awards will become
fully vested and exercisable upon such termination or resignation. Each named
executive will also have an option to receive the one-year value, and in the
case of Mr. Mitchell, the five-year value of his employee benefits.
Alternatively, these executives may choose to continue to participate in our
company benefit plans and programs on the same terms as other similarly situated
active employees for a one-year period, and in the case of Mr. Mitchell, for a
five-year period from the date of such resignation or termination. Mr. Mitchell
will also be entitled, for a period of five years, to office space and related
expenses upon his resignation for good reason or termination without cause and
to tax preparation assistance upon termination of his employment for any reason.

On June 19, 2002, we also entered into an executive employment agreement
with Tandy Mitchell, our director and the wife of Lee Roy Mitchell, pursuant to
which Mrs. Mitchell serves as our Executive Vice President. The employment
agreement with Mrs. Mitchell provides for a base salary of $250,000 per year
upon substantially the same terms, including, without limitation, bonus, change
of control and severance provisions, as the employment agreements with the named
executives listed above, other than Mr. Mitchell, except: Mrs. Mitchell is
entitled to life insurance benefits of not less than $1 million during the term
of her employment, a luxury automobile and tax preparation assistance for a
period of five years upon termination of her employment for any reason.

The employment agreement with each executive, other than Mr. and Mrs.
Mitchell, also includes a non-solicitation provision with respect to employees,
customers and suppliers of our company for a one-year period following the
termination of such person's employment with our company, plus a provision
requiring such executive to execute a release as a condition of the executive's
severance benefits.

401(k) Plan

We sponsor a defined contribution savings plan, or 401(k) Plan, whereby
certain employees may elect to contribute, in whole percentages between 1% and
15% of such employee's compensation, provided no employee's elective
contribution shall exceed the amount permitted under Section 402(g) of the
Internal Revenue Code of 1986, as amended ($10,500 in 2001). We may make an
annual discretionary matching contribution. Our discretionary matching
contribution is subject to vesting and forfeiture. Our discretionary matching
contributions vest to individual accounts at the rate of twenty percent per year
beginning two years from the date of employment. Employees are fully vested in
the discretionary matching contributions after six years of employment.

STOCK OPTION AND OTHER EMPLOYEE INCENTIVE PLANS

EMPLOYEE STOCK OPTION PLAN

We established a 1991 nonqualified stock option plan under which our Chief
Executive Officer, in his sole discretion, could grant employees options to
purchase up to an aggregate of 2,350,700 shares of Class A common stock. The
Chief Executive Officer had the ability to set the exercise price and the term,
up to ten

years, of the options. All options vest at the rate of one-fifth of the total
options granted per year generally beginning one year from the date of grant,
subject to acceleration by the Chief Executive Officer. An employee's options
were forfeited if the employee was terminated for cause. If an employee's
employment with us was terminated for any reason other than cause, we had the
option to repurchase any of our shares of capital stock that were acquired by
the employee pursuant to the plan at a specified formula price based on theatre
level cash flow.

In October 2001, we granted options to purchase 56,760 shares of our Class
A common stock with an exercise price of $0.0045 per share. We believe that the
market value of a share of Class A common stock on the date of grant exceeded
the option exercise price by $1.50. These options were immediately vested and
exercised which resulted in $84,882 of compensation expense being recorded at
that time. In October 2001, all remaining unvested options under the plan were
vested and exercised prior to year end. We recognized additional compensation
expense of approximately $185,000 for this accelerated vesting. During 2001,
there were 1,080,420 options exercised and 326,700 options forfeited. As of
March 31, 2002, no shares remain available for issuance under our 1991
nonqualified stock option plan and there were no outstanding options to purchase
shares of our Class A common stock under our stock option plan as all
outstanding options were either exercised or forfeited in 2001.

INDEPENDENT DIRECTOR STOCK OPTIONS

We granted our independent directors options to purchase up to an aggregate
of 176,000 shares of our Class A common stock at an exercise price of $0.0045
per share. The options vest five years from the date of grant and expire ten
years from the date of grant. A director's unvested options are forfeited if the
director resigns or is removed from the board of directors.

During 2001, there were 44,000 director options exercised and no options
granted or forfeited. As of March 31, 2002, there were outstanding options to
purchase 132,000 shares of our Class A common stock. Upon consummation of the
offering all of these options vest and must be exercised or forfeited.

LONG TERM INCENTIVE PLAN

In November 1998 our board of directors adopted, and in February 1999 our
stockholders approved, a Long Term Incentive Plan under which our Compensation
Committee, in its sole discretion, may grant our employees incentive stock
options, non-qualified stock options, stock appreciation rights, restricted
stock awards, performance units, performance shares or phantom stock. In
connection with the share exchange, the Long Term Incentive Plan was amended and
restated effective May 17, 2002, subject to the stockholder approval. The
current plan contains terms regarding options and other awards that are
substantially similar to the terms of the predecessor plan, except that pursuant
to the current plan non-employee directors and consultants may, if the
compensation committee so determines, receive non-qualified options to purchase
shares of our Class A common stock or other types of awards under the plan,
excluding incentive stock options.

Up to an aggregate of 2,154,680 shares of our Class A common stock have
been reserved for issuance under the plan. The Compensation Committee has the
discretion, among other things, to determine the individuals who are eligible to
receive awards, the type of awards that will be made under the plan and to set
the exercise price, the vesting schedule and the term, up to ten years, of the
options. All options currently issued under the Long Term Incentive Plan vest at
the rate of one-fifth of the total award per year beginning one year from the
date of grant, subject to acceleration by the Compensation Committee. With
respect to any future grants under the plan, the Compensation Committee may
provide that an option will be immediately vested and exercisable and that upon
exercise, the option holder will receive restricted shares subject to vesting
restrictions.

In December 2001, we granted options to purchase 335,500 shares of Class A
common stock with an exercise price of $1.50 per share. We believed that the
market value of a share of Class A common stock on the date of grant was $1.50.
In connection with the offering and Staff Accounting Bulletin Topic 4.D., we
revised the market value of a share of Class A common stock to $11.45 which
exceeded the option price of

$1.50 by $9.95 per share. As a result, we accrued $3,338,225 for unearned
compensation and began amortizing this noncash expense at a rate of $667,645 per
year during the five year vesting period of the options granted. During 2001,
there were no options exercised and 115,500 options were forfeited under the
Long Term Incentive Plan. As of March 31, 2002, there were outstanding options
to purchase 1,279,300 shares of our Class A common stock under the Long Term
Incentive Plan.

A participant's option under the Long Term Incentive Plan is forfeited if
the participant's service to our company is terminated for cause. Upon
termination of a participant's service, we have a right to repurchase the
participant's vested options and, prior to the listing of our shares of Class A
common stock on a national exchange or NASDAQ National Market, any shares of
common stock that were acquired pursuant to the exercise of options, at the fair
market value of the share of Class A common stock as determined in accordance
with the plan. Upon termination of a participant's service, we also have a right
to repurchase restricted shares granted to such participant under the plan. The
repurchase price for the restricted shares will be the lesser of the fair market
value of the share of Class A common stock underlying the restricted shares or
the amount the participant paid for the restricted shares.

COMPANY DEDUCTIONS

Section 162(m) of the Internal Revenue Code limits publicly held companies
to an annual deduction for federal income tax purposes of $1,000,000 for
compensation paid to their chief executive officer and the four highest
compensated executive officers (other than the chief executive officer)
determined at the end of each year. An exception, however, exists for privately
held companies that become public via a public offering. According to this
exception, our compensation plans and agreements that existed during the period
we were not public are not subject to the $1,000,000 limit to the extent they
are properly disclosed in this offering. This exception only applies until the
earliest of the expiration of the plan or agreement, a material modification of
the plan or agreement, the issuance of all of the stock or other compensation
allocated to the plan or agreement or the first meeting of the stockholders at
which directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which the initial public offering
occurs. In the case of compensation received pursuant to stock options, stock
appreciation rights or restricted stock, the grant of such right must be made
before the earliest of these dates. An exception to the $1,000,000 limitation
also applies for performance based compensation. With respect to the Long Term
Incentive Plan, the plan has been designed to permit the compensation committee
to grant awards that qualify as performance based for purposes of satisfying the
conditions of Section 162(m).

PRINCIPAL STOCKHOLDERS

The following table presents information regarding beneficial ownership of
our common stock as of June 21, 2002 by:

- each person known by us to beneficially hold five percent or more of our
common stock;

- each of our directors;

- each of our named executive officers; and

- all of our executive officers and directors as a group.

Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Shares of common stock subject to options that are currently
exercisable or exercisable within 60 days of March 31, 2002 are deemed to be
outstanding and to be beneficially owned by the person holding the options for
the purpose of computing the percentage ownership of that person but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person. Percentage ownership is based on 19,563,280 shares of our
Class A common stock and 20,949,280 shares of our Class B common stock
outstanding on June 21, 2002 and 30,663,280 shares of our Class A common stock
and 20,949,280 shares of our Class B common stock outstanding immediately after
this offering. As of June 21, 2002, there were 31 holders of record of our Class
A common stock and 9 holders of record of Class B common stock.

CLASS A COMMON STOCK CLASS B COMMON STOCK
----------------------------------- ----------------------------------- PERCENT OF VOTING
PERCENT OF CLASS PERCENT OF CLASS POWER (2)
NO. OF -------------------- NO. OF -------------------- --------------------
SHARES PRIOR TO FOLLOWING SHARES PRIOR TO FOLLOWING PRIOR TO FOLLOWING
BENEFICIALLY THE THE BENEFICIALLY THE THE THE THE
NAMES OF BENEFICIAL OWNER (1) OWNED OFFERING OFFERING OWNED OFFERING OFFERING OFFERING OFFERING
----------------------------- ------------ -------- --------- ------------ -------- --------- -------- ---------

DIRECTORS AND EXECUTIVE
OFFICERS
Lee Roy Mitchell (3)(10)....... -- -- -- 20,949,280 100.0% 100.0% 91.5% 87.2%
Tandy Mitchell (4)(10)......... -- -- -- 17,443,140 83.3% 83.3% 76.2% 72.6%
James Stern (5)................ 18,160,560 92.8% 59.2% -- -- -- 7.9% 7.6%
Alan W. Stock (6).............. 144,100 * * -- -- -- * *
Robert Copple.................. 77,000 * * -- -- -- * *
Robert Carmony (7)............. 127,600 * * -- -- -- * *
Tim Warner (8)................. 171,600 * * -- -- -- * *
All directors and executive
officers as a group (15
persons) (4)(5)(9)........... 19,027,580 97.3% 62.1% 20,949,280 100% 100% 99.8% 95.2%
FIVE PERCENT STOCKHOLDERS
The Cypress Group L.L.C. (5)... 18,160,560 92.8% 59.2% -- -- -- 7.9% 7.6%
CGI Equities, Ltd. (10)........ -- -- -- 7,370,000 35.2% 35.2% 32.2% 30.7%
Mitchell Special Trust (11).... -- -- -- 3,226,740 15.4% 15.4% 14.1% 13.4%

---------------

* Represents less than 1%

(1) Unless otherwise indicated, we believe the beneficial owner has both sole
voting and investment powers over such shares.

(2) Each share of Class A common stock has one vote and each share of Class B
common stock has ten votes on all matters to be voted on by stockholders.
This column represents the combined voting power of the outstanding shares
of Class B common stock and Class A common stock held by such beneficial
owner and assumes that no shares of Class B common stock have been
converted into Class A common stock.

(3) Includes 7,370,000 shares of Class B common stock held by CGI Equities,
Ltd., and 3,226,740 shares of Class B common stock held by the Mitchell
Special Trust, 279,400 shares of Class B common stock held in trust for the
benefit of certain of Lee Roy Mitchell's grandchildren, 10,051,140 shares
of

Class B common stock owned by Lee Roy Mitchell and 22,000 shares of Class B
common stock owned by Tandy Mitchell. Lee Roy and Tandy Mitchell are
married to each other. Lee Roy and Tandy Mitchell each control the general
partner of CGI Equities Ltd. Lee Roy Mitchell is the co-trustee of the
Mitchell Special Trust and other trusts held for the benefit of certain of
his grandchildren. Mr. Mitchell disclaims ownership of all shares other
than 10,051,140 shares of Class B common stock that he owns of record.

(4) Includes 7,370,000 shares of Class B common stock owned by CGI Equities,
Ltd.; 10,051,140 shares of Class B common stock owned by Lee Roy Mitchell
and 22,000 shares of Class B common stock owned by Tandy Mitchell. Lee Roy
Mitchell and Tandy Mitchell each control the general partner of CGI
Equities Ltd. Mrs. Mitchell disclaims ownership of all shares other than
22,000 shares of Class B common stock that she owns of record.

(5) 17,263,180 shares shown as beneficially owned by The Cypress Group L.L.C.
are owned of record by Cypress Merchant Banking Partners L.P. The Cypress
Group L.L.C. is the general partner of Cypress Associates L.P., which is
the general partner of Cypress Merchant Banking Partners L.P. 897,380
shares shown as beneficially owned by The Cypress Group L.L.C. are owned of
record by Cypress Pictures Ltd. The Cypress Group L.L.C. is the general
partner of Cypress Associates L.P., which is the general partner of Cypress
Offshore Partners L.P., which is the parent of Cypress Pictures Ltd. James
Stern is a member of The Cypress Group L.L.C. Mr. Stern disclaims
beneficial ownership of the shares owned by Cypress. The address of The
Cypress Group L.L.C. is 65 East 55th Street, New York, New York 10022.
Under the Stockholders' Agreement among the Mitchell Group, Cypress and us,
Cypress has the right to exchange all of their shares of our Class A common
stock for an equal number of our Class B common stock. If Cypress converts
its 18,160,560 shares of Class A common stock for 18,160,560 shares of
Class B common stock, Cypress will have approximately 45.0% of the total
voting power after the offering and the Mitchell Group will have
approximately 51.9% of the total voting power after the offering.

(6) Includes 39,600 shares of Class A common stock issuable upon the exercise
of options that may be exercised within 60 days of the date of this
prospectus.

(7) Includes 39,600 shares of Class A common stock issuable upon the exercise
of options that may be exercised within 60 days of the date of this
prospectus.

(8) Includes 39,600 shares of Class A common stock issuable upon the exercise
of options that may be exercised within 60 days of the date of this
prospectus.

(9) Includes 271,700 shares of Class A common stock issuable upon the exercise
of options that may be exercised within 60 days of the date of this
prospectus.

(10) The address of CGI Equities, Ltd. is 3900 Dallas Parkway, Suite 500, Plano,
Texas 75093.

(11) The address of the Mitchell Special Trust is 3900 Dallas Parkway, Suite
500, Plano, Texas 75093.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

CERTAIN AGREEMENTS

We manage one theatre with 12 screens for Laredo Theatre, Ltd. Lone Star
Theatres, Inc. owns 25% of the limited partnership interests in Laredo. We are
the sole general partner and own the remaining limited partnership interests.
Lone Star Theatres, Inc. is owned 100% by Mr. David Roberts, who is Mr.
Mitchell's son-in-law. Under the agreement, management fees are paid by Laredo
to us at a rate of 5% of theatre revenues in each year up to $50,000,000 and 3%
of theater revenues in each year in excess of $50,000,000. We received $180,366
of management fee revenues and dividends of $487,500 from Laredo in 2001. In
2001, Laredo distributed dividends of $162,500 to Lone Star Theatres in
accordance with the terms of the limited partnership agreement. All such amounts
are included in our consolidated financial statements with the intercompany
amounts eliminated in consolidation.

We managed two theatres with 11 screens for Westward Ltd. in 2001. Westward
is a Texas limited partnership of which Cinemark of Utah, Inc. is the general
partner and owns a 1% interest in Westward. Cinemark of Utah, Inc. is 100% owned
by Mr. Mitchell. Mr. Mitchell also owns a 48.425% limited partner interest in
Westward. Under the agreement, management fees are paid to us by Westward at a
rate of 3% of theatre revenues. We recorded $29,325 of management fee revenues
from Westward in 2001. The term ends in November 2002. However, we have the
option to renew for one or more five-year periods. One of the two theatres
managed by us was closed by Westward in February 2002.

We manage one theatre with eight screens for Mitchell Theatres. Mitchell
Theatres is 100% owned by members of Mr. Mitchell's family. Under the agreement,
management fees are paid to us by Mitchell Theatres at a rate of 5% of theatre
revenues. We recorded $21,389 of management fee revenues from Mitchell Theatres
in 2001. The term ends in November 2003. However, we have the option to renew
for one or more five-year periods.

We lease one theatre with 7 screens from Plitt Plaza joint venture. Plitt
Plaza is indirectly owned by Lee Roy Mitchell. The term of the lease expires in
July 2003, however we have 2 five-year renewal options. The annual rent is
approximately $264,000 plus certain taxes, maintenance expenses, insurance, and
a percentage of gross admission and concession receipts in excess of certain
amounts. We recorded $272,341 of facility lease expense payable to Plitt Plaza
joint venture during 2001.

PROFIT PARTICIPATION

We entered into a profit participation agreement dated May 17, 2002 with
Alan Stock, our President, pursuant to which Mr. Stock receives a profit
interest in two recently built theatres after we have recovered our capital
investment in these theatres plus our borrowing costs. Under this agreement,
operating losses and disposition losses for any year are allocated 100% to us.
Operating profits and disposition profits for these theatres for any fiscal year
are allocated first to us to the extent of its total operating losses and losses
from any disposition of these theatres. Thereafter, net cash from operations
from these theatres or from any disposition of these theatres is paid first to
us until such payments equal our investment in these theatres, plus interest,
and then 51% to us and 49% to Mr. Stock. In the event that Mr. Stock's
employment is terminated without cause, profits will be distributed according to
this formula without first allowing us to recoup our investment plus interest
thereon. No amounts have been paid to Mr. Stock to date pursuant to the profit
participation agreement. Upon completion of this offering, we will have the
option to purchase Mr. Stock's interest in the theatres for a price equal to the
fair market value of the profit interest, as determined by an independent
appraiser. We do not anticipate exercising this option in connection with this
offering. We do not intend to enter into similar arrangements with our executive
officers in the future.

STOCKHOLDERS' AGREEMENT

We entered into the Stockholders' Agreement dated May 17, 2002 with the
Mitchell Group and Cypress. Among other things, the Stockholders' Agreement
provides that, subject to certain conditions and exceptions, we must obtain the
consent of Cypress for certain corporate acts including, but not limited to,
amendments to

our certificate of incorporation, approval of annual budgets under certain
circumstances, asset dispositions or acquisitions in excess of specified
amounts, merger, sale of substantially all our assets or consolidation,
incurrence of indebtedness over specified amounts, certain stock redemptions or
non pro rata dividends, transactions with affiliates over specified amounts,
certain management changes or new compensation plans, financing theatres through
limited partnerships, settlements of litigation over specified amounts and
issuance of common stock by private placement. The above-described provisions
terminate on the earlier of (1) the public owning 25% or more of our common
stock, (2) our merger with and into any publicly traded company or (3) four
years after the date of the Stockholders' Agreement. The Stockholders' Agreement
also provides that Cypress will have the right to exchange their shares of our
Class A common stock for an equal number of shares of our Class B common stock.
The Stockholders' Agreement also contains a voting agreement pursuant to which
the Mitchell Group agrees to vote their shares of common stock to elect certain
designees of Cypress to our board of directors.

Under the Stockholders' Agreement, after the six-month period following
this offering, Cypress, subject to a number of conditions and limitations, may
require us to file a registration statement under the Securities Act to register
the sale of shares of our common stock held by them. We may be required to file
up to three registration statements. The Stockholders' Agreement also provides,
subject to a number of conditions and limitations, that Cypress and the Mitchell
Group have piggy-back registration rights in connection with registered
offerings of our shares that we initiate after the six-month period following
this offering. Under the Stockholders' Agreement, the selling stockholder will
be required to pay all registration expenses. In addition, we are required to
indemnify Cypress and the Mitchell Group, and they in turn are required to
indemnify us with respect to any information they provide, against certain
liabilities in respect of any registration statement or offering covered by the
Stockholders' Agreement.

Cypress and the Mitchell Group have preemptive rights to cause us to offer
them a pro rata share of certain of our future offerings. In addition, the
Stockholders' Agreement provides for certain rights and obligations among the
stockholders related to share transfers by stockholders, including rights of
first offer, tag-along rights and drag-along rights. If Cypress or the Mitchell
Group receives an offer to purchase all or any part of their shares of our
common stock, they must first offer to sell such common stock to us and each
other on substantially the same terms and conditions. In addition, if the
Mitchell Group proposes to transfer their shares of our common stock, Cypress
may require that the third party purchaser purchase a pro rata portion of
Cypress' shares of our common stock. If the Mitchell Group receive a bona fide
written offer from a third party purchaser to purchase all of their shares of
our common stock, and Cypress chooses not to exercise its first offer rights,
the Mitchell Group may require Cypress affiliates to sell all of their shares of
our common stock to the third party purchaser.

The Mitchell Group also agreed that in the event any corporate opportunity
is presented to the Mitchell Group to acquire or enter into any significant
business transaction involving the motion picture exhibition business, the
Mitchell Group would submit such opportunity to our board of directors before
taking any action.

DESCRIPTION OF CAPITAL STOCK

At the time of the offering, our authorized capital stock will consist of
(1) 50,000,000 shares of preferred stock, par value $0.001 per share; (2)
350,000,000 shares of Class A common stock, par value $0.001 per share; and (3)
150,000,000 shares of Class B common stock, par value $0.001 per share. Upon
completion of this offering, there will be 30,663,280 shares of Class A common
stock issued and outstanding, 20,949,280 shares of Class B common stock issued
and outstanding and no shares of preferred stock issued and outstanding. Under
the Stockholders' Agreement, among the Mitchell Group, Cypress and us, Cypress
will have the right to exchange all of their shares of our Class A common stock
for an equal number of our Class B common stock. The following summary of our
capital stock is qualified in its entirety by reference to our certificate of
incorporation and our bylaws filed as exhibits to this registration statement
and the Delaware General Corporate Law.

COMMON STOCK

Our Class A and Class B common stockholders are entitled to vote together
as a class on all matters submitted to a vote of our stockholders, except that
the holders of Class A common stock are entitled to one vote for each share held
and the holders of Class B common stock are entitled to ten votes for each share
held. Other than these voting rights, the holders of Class A common stock and
Class B common stock have identical rights and privileges in every respect. Each
share of Class B common stock is convertible into one share of Class A common
stock at the option of the holder or automatically upon a transfer of the
holder's Class B common stock, other than to certain transferees. Our common
stockholders do not have cumulative voting rights. Subject to the rights of
holders of any then outstanding shares of our preferred stock, our common
stockholders are entitled to any dividends that may be declared by our board of
directors. Holders of our common stock are entitled to share ratably in our net
assets upon our dissolution or liquidation after payment or provision for all
liabilities and any preferential liquidation rights of our preferred stock then
outstanding. Other than the Mitchell Group and Cypress to whom we have granted
preemptive rights under the Stockholders' Agreement, our common stockholders
have no preemptive rights to purchase shares of our stock. The shares of our
common stock are not subject to any redemption provisions and, other than the
Class B common stock, are not convertible into any other shares of our capital
stock. All outstanding shares of our common stock are, and the shares of common
stock to be issued in the offering will be, upon payment therefor, fully paid
and nonassessable. The rights, preferences and privileges of holders of our
common stock will be subject to those of the holders of any shares of our
preferred stock we may issue in the future.

PREFERRED STOCK

Our board of directors may from time to time authorize the issuance of one
or more classes or series of preferred stock without stockholder approval.
Subject to the provisions of our certificate of incorporation and limitations
prescribed by law, our board of directors is authorized to adopt resolutions to
issue shares, establish the number of shares, change the number of shares
constituting any series, and provide or change the voting powers, designations,
preferences and relative rights, qualifications, limitations or restrictions on
shares of our preferred stock, including dividend rights, terms of redemption,
conversion rights and liquidation preferences, in each case without any action
or vote by our stockholders.

One of the effects of undesignated preferred stock may be to enable our
board of directors to discourage an attempt to obtain control of our company by
means of a tender offer, proxy contest, merger or otherwise. The issuance of
preferred stock may adversely affect the rights of our common stockholders by,
among other things:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock;

- delaying or preventing a change in control without further action by the
stockholders; or

- decreasing the market price of Class A common stock.

EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Upon consummation of the offering there will be 500,000,000 authorized
shares of our common stock, 446,100,760 of which will be unissued and unreserved
for specific purposes, and 50,000,000 shares of preferred stock available for
our future issuance without stockholder approval. Of the shares of common stock
available for future issuance, 2,154,680 shares have been reserved for issuance
under our Long Term Incentive Plan and 132,000 shares have been reserved for
issuance under our director option agreements.

Shares of common stock and preferred stock available for future issuance
may be utilized for a variety of corporate purposes, including facilitating
acquisitions or future public offerings to raise additional capital. We do not
currently have any plans to issue additional shares of common stock or preferred
stock, other than shares of common stock issuable under our stock option plan
and restricted stock plan and our employee stock purchase plan.

OPTIONS

We have reserved 2,154,680 shares of our Class A common stock for issuance
under our Long Term Incentive Plan, of which 1,279,300 shares of Class A common
stock are issuable upon exercise of options granted as of March 31, 2002,
including options to purchase 573,980 shares exercisable as of March 31, 2002 or
that will become exercisable within 60 days after March 31, 2002. We have
reserved 132,000 shares of Class A common stock for issuance under our director
option agreements.

ANTI-TAKEOVER CONSIDERATIONS AND SPECIAL PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW

Certificate of Incorporation and Bylaws. A number of provisions of our
certificate of incorporation and bylaws concern matters of corporate governance
and the rights of our stockholders. Provisions such as those that provide for
the classification of our board of directors and that grant our board of
directors the ability to issue shares of preferred stock and to set the voting
rights, preferences and other terms thereof may have an anti-takeover effect by
discouraging takeover attempts not first approved by our board of directors,
including takeovers which may be considered by some stockholders to be in their
best interests. To the extent takeover attempts are discouraged, temporary
fluctuations in the market price of our common stock, which may result from
actual or rumored takeover attempts, may be inhibited. Such provisions also
could delay or frustrate the removal of incumbent directors or the assumption of
control by stockholders, even if such removal or assumption would be beneficial
to our stockholders. These provisions also could discourage or make more
difficult a merger, tender offer or proxy contest, even if they could be
favorable to the interests of stockholders, and could potentially depress the
market price of our common stock. Our board of directors believes that these
provisions are appropriate to protect our interests and the interests of our
stockholders.

Classified Board of Directors. Our certificate of incorporation divides
our board of directors into three classes. The directors in each class serve in
terms of three years and until their successors are duly elected and qualified.
The terms of directors are staggered by class. The classification system of
electing directors may tend to discourage a third party from making a tender
offer or otherwise attempting to obtain control of our company and may maintain
the incumbency of our board of directors, as this structure generally increases
the difficulty of, or may delay, replacing a majority of the directors. At any
time that the outstanding shares of Class B common stock represents less than
50% of the combined voting power of the common stock, directors may not be
removed by vote of the stockholders except for cause. A majority of the
directors then in office may elect a successor to fill any vacancies or newly
created directorships.

Meetings of Stockholders. Our bylaws provide that annual meetings of our
stockholders may take place at the time and place established by our board of
directors. A special meeting of our stockholders may be

called by the chairman of the board or our president and will be called by our
president or secretary upon written request by a majority of our board of
directors.

Stockholder Action by Written Consent. Except as provided in the following
sentence, pursuant to the Delaware General Corporation Law, our bylaws and the
requirements of the New York Stock Exchange, any action required or permitted to
be taken by the stockholders must be effected at a duly called annual or special
meeting of such holders, and may not be effected by any consent in writing by
such holders. Any action required or permitted to be taken at a special
stockholders' meeting may be taken without a meeting, without prior notice and
without a vote, if (1) the outstanding shares of our Class B common stock
represents greater than 50% of the combined voting power of the outstanding
shares of our common stock and (2) the action is taken by persons who would be
entitled to vote at a meeting and who hold shares having voting power equal to
not less than the minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares entitled to vote were
present and voted. The action must be evidenced by one or more written consents
describing the action taken, signed by the stockholders entitled to take action
without a meeting, and delivered to us in the manner prescribed by the Delaware
General Corporation Law.

Advance Notice Provisions. Our bylaws provide that nominations for
directors may not be made by stockholders at any annual or special meeting
thereof unless the stockholder intending to make a nomination notifies us of its
intention a specified number of days in advance of the meeting and furnishes to
us certain information regarding itself and the intended nominee. Our bylaws
also require a stockholder to provide to our secretary advance notice of
business to be brought by such stockholder before any annual or special meeting
of our stockholders, as well as certain information regarding the stockholder
and any material interest the stockholder may have in the proposed business.
These provisions could delay stockholder actions that are favored by the holders
of a majority of our outstanding stock until the next stockholders' meeting.

Filling of Board Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by the affirmative vote of a majority of our directors then in office. Whenever
the holders of any class or classes of our stock or series thereof are entitled
to elect one or more directors, vacancies and newly created directorships of
such class or classes or series may be filled by the affirmative vote of a
majority of our directors elected by such class or classes or series thereof
then in office, or by a sole remaining director so elected. Each such director
will hold office until the next election of directors of that director's class,
and until such director's successor is elected and qualified, or until the
director's earlier death, resignation or removal. Stockholders are not permitted
to fill vacancies.

Amendment of the Bylaws. Our bylaws may be altered, amended, repealed or
replaced by our board of directors or our stockholders at any annual or regular
meeting, or at any special meeting if notice of the alteration, amendment,
repeal or replacement is given in the notice of the meeting.

Delaware Anti-Takeover Law. We are subject to the provisions of Section
203 of the Delaware General Corporation Law regulating corporate takeovers. This
section prevents certain Delaware corporations, under certain circumstances,
from engaging in a "business combination" with:

- a stockholder who owns 15% or more of our outstanding voting stock
(otherwise known as an "interested stockholder"),

- an affiliate of an interested stockholder, or

- an associate of an interested stockholder,

for three years following the date that the stockholder became an "interested
stockholder." A "business combination" includes a merger or sale of more than
10% of our assets.

However, the above provisions of Section 203 do not apply if:

- our board approves the transaction that made the stockholder an
"interested stockholder," prior to the date of that transaction;

- after the completion of the transaction that resulted in the stockholder
becoming an "interested stockholder," that stockholder owned at least 85%
of our voting stock outstanding at the time the transaction commenced,
excluding shares owned by our officers and directors; or

- on or subsequent to the date of the transaction, the business combination
is approved by our board and authorized at a meeting of our stockholders
by an affirmative vote of at least two-thirds of the outstanding voting
stock not owned by the "interested stockholder."

This statute could prohibit or delay mergers or other change in control
attempts, and thus may discourage attempts to acquire us.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our certificate of incorporation includes a provision that eliminates the
personal liability of our directors for monetary damages for breach of fiduciary
duty as a director, to the fullest extent permitted by Delaware law.

Our certificate of incorporation and bylaws provide that:

- we must indemnify our directors, officers, employees and agents to the
fullest extent permitted by applicable law; and

- we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware law, subject to very limited exceptions.

Prior to the consummation of this offering, we intend to obtain directors'
and officers' insurance for our directors, officers and some employees for
specified liabilities.

The limitation of liability and indemnification provisions in our
certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duty. They
may also have the effect of reducing the likelihood of derivative litigation
against directors and officers, even though an action of this kind, if
successful, might otherwise benefit us and our stockholders. Furthermore, a
stockholders' investment may be adversely affected to the extent we pay the
costs of settlement and damage awards against directors and officers pursuant to
these indemnification provisions. However, we believe that these indemnification
provisions are necessary to attract and retain qualified directors and officers.

TRANSFER AGENT AND REGISTRAR

We intend to retain The Bank of New York as the transfer agent and
registrar for our Class A common stock.

LISTING

Our Class A common stock has been approved for listing, subject to official
notice of issuance, on the New York Stock Exchange under the trading symbol CNK.

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS

GENERAL

The following summary discusses the material U.S. federal income and estate
tax consequences of the ownership of our Class A common stock by a Non-U.S.
Holder (as defined below) as of the date hereof. This discussion assumes that a
Non-U.S. Holder holds shares of our Class A common stock as a capital asset
(generally property held for investment). This discussion does not address all
aspects of U.S. federal income and estate taxes and does not deal with foreign,
state and local consequences that may be relevant to Non-U.S. Holders in light
of their personal circumstances. Special rules that may apply to certain Non-
U.S. Holders, such as "controlled foreign corporations," "passive foreign
investment companies," "foreign personal holding companies," individuals who are
U.S. expatriates, partnerships or other pass-through entities, and corporations
that accumulate earnings to avoid U.S. federal income tax, that are subject to
special treatment under the Internal Revenue Code of 1986, as amended (the
"Code"), are not described herein. Those individuals or entities should consult
their own tax advisors to determine the U.S. federal, state, local and other tax
consequences that may be relevant to them. Furthermore, the discussion below is
based upon the provisions of the Code and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified, possibly with retroactive effect, so as to result
in U.S. federal income tax consequences different from those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR CLASS A COMMON
STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME
TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

If a partnership holds our Class A common stock, the tax treatment of a
partner will generally depend on the status of the partner and the activities of
the partnership. Persons who are partners of partnerships holding our Class A
common stock should consult their tax advisors.

As used herein, a Non-U.S. Holder of our Class A common stock means a
beneficial owner that is an individual or entity other than (1) a citizen or
resident of the United States, (2) a corporation or business entity treated as a
corporation created or organized in or under the laws of the United States or
any state, (3) an estate the income of which is subject to U.S. federal income
taxation regardless of its source or (4) a trust (A) that is subject to the
primary supervision of a court within the United States and one or more U.S.
persons has the authority to control all substantial decisions of the trust, or
(B) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.

DIVIDENDS

As previously discussed, we do not intend to declare or pay any cash
dividends on our Class A common stock in the foreseeable future. See "Dividend
Policy." In the event we do declare or pay cash dividends, however, dividends
paid to a Non-U.S. Holder of our Class A common stock generally will be subject
to withholding of U.S. federal income tax at a 30% rate or such lower rate as
may be specified by an applicable income tax treaty. However, dividends that are
effectively connected with the conduct of a trade or business by the Non-U.S.
Holder within the United States and, where a tax treaty applies, are
attributable to a U.S. permanent establishment of the Non-U.S. Holder, are not
subject to the withholding tax, but instead are subject to U.S. federal income
tax on a net income basis at applicable graduated individual or corporate rates.
Certain Internal Revenue Service certification and disclosure requirements must
be complied with in order for effectively connected income to be exempt from
withholding. Any such effectively connected dividends received by a foreign
corporation may, under certain circumstances, be subject to an additional branch
profits tax at a 30% rate or a lower rate as may be specified by an applicable
income tax treaty.

A Non-U.S. Holder of our Class A common stock who wishes to claim an
exemption from, or reduction in, withholding under the benefit of an applicable
treaty rate (and avoid backup withholding as discussed below) for dividends,
will be required to (a) complete Internal Revenue Service Form W-8BEN (or
successor form) and satisfy certain relevant certification requirements of
applicable Treasury regulations. Special certification and other requirements
apply to certain Non-U.S. Holders that are entities rather than individuals.

A Non-U.S. Holder of our Class A common stock eligible for a reduced rate
of U.S. withholding tax under an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service, or the IRS, on a timely basis.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of our Class A
common stock unless (1) the gain is effectively connected with a trade or
business of the Non-U.S. Holder in the United States, and, where a tax treaty
applies, is attributable to a U.S. permanent establishment of the Non-U.S.
Holder, (2) in the case of a Non-U.S. Holder who is an individual and holds the
common stock as a capital asset, such holder is present in the United States for
183 or more days in the taxable year of the sale or other disposition and
certain other conditions are met, or (3) the company is or has been a U.S. real
property holding corporation for U.S. federal income tax purposes at any time
during the shorter of the five-year period ending on the date of disposition and
the Non-U.S. Holder's holding period for the common stock.

An individual Non-U.S. Holder described in clause (1) above will be subject
to tax on the net gain derived from the sale under regular graduated U.S.
federal income tax rates. An individual Non-U.S. Holder described in clause (2)
above will be subject to a flat 30% tax on the gain derived from the sale, which
may be offset by U.S. source capital losses (even though the individual is not
considered a resident of the United States). If a Non-U.S. Holder that is a
foreign corporation falls under clause (1) above, it will be subject to tax on
its gain under regular graduated U.S. federal income tax rates and, in addition,
may be subject to the branch profits tax equal to 30% of its effectively
connected earnings and profits or at such lower rate as may be specified by an
applicable income tax treaty.

The determination of whether a corporation is a "U.S. real property holding
corporation" for U.S. federal income tax purposes involves a complex factual
analysis, including a valuation of the corporation's assets. We have not
determined at this time whether we are a U.S. real property holding corporation,
although there is a possibility that we are or will become a U.S. real property
holding corporation. If we are or become a U.S. real property holding
corporation, then assuming our Class A common stock is regularly traded on an
established securities market, only a Non-U.S. Holder who holds or held (at any
time during the shorter of the five-year period end on the date of disposition
and the Non-U.S. Holder's holding period for the common stock) more than 5% of
our Class A common stock will be subject to the U.S. federal income tax on the
disposition of the common stock under these rules.

U.S. ESTATE TAX

Class A common stock held by an individual Non-U.S. Holder at the time of
death will be included in such holder's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Our company must report annually to the IRS and to each Non-U.S. Holder the
amount of dividends paid to that holder and the tax withheld with respect to
those dividends, regardless of whether withholding was required. Copies of the
information returns reporting those dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provision of an applicable income tax treaty.

A Non-U.S. Holder will be subject to backup withholding unless applicable
certification requirements are met.

Proceeds of a sale of our Class A common stock paid within the United
States or through certain U.S. related financial intermediaries are subject to
both backup withholding and information reporting unless the beneficial owner
certifies under penalties of perjury that it is a Non-U.S. Holder (and the payor
does not have actual knowledge that the beneficial owner is a U.S. person), or
the holder establishes another exemption.

Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability if
the required information is furnished to the Internal Revenue Service.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock, and we cannot predict the effect, if any, that market sales of shares of
our Class A common stock or the availability of shares of our Class A common
stock for sale will have on the market price of our Class A common stock
prevailing from time to time. Nevertheless, sales of substantial amounts of our
Class A common stock in the public market could adversely affect the market
price of our Class A common stock and could impair our future ability to raise
capital through the sale of our equity securities.

Upon the completion of this offering, we will have 30,663,280 shares of our
Class A common stock and 20,949,280 shares of our Class B common stock issued
and outstanding which are convertible at the holder's option into Class A common
stock on a one-for-one basis, assuming no exercise of the underwriters' over-
allotment option and no exercise of outstanding options. Of the outstanding
shares, all of the shares sold in this offering will be freely tradable, except
that any shares held by our "affiliates," as that term is defined in Rule 144
promulgated under the Securities Act, may only be sold in compliance with the
limitations described below. The remaining shares of our common stock will be
deemed "restricted securities" as defined under Rule 144. Restricted shares may
be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 promulgated under the Securities Act,
which are summarized below. Subject to the lock-up agreements described below
and other lock-up agreements and the provisions of Rules 144, additional shares
will be available for sale in the public market as follows:

LOCK-UP AGREEMENTS

Our executive officers, directors and certain other stockholders, have
agreed not to sell or otherwise dispose of any shares of our common stock or any
securities which may be converted into or exchanged or exercised for any common
stock for a period of 180 days after the date of this prospectus, without the
prior written consent of Lehman Brothers Inc.

REGISTRATION RIGHTS

The stockholders which are parties to the Stockholders' Agreement have
rights to cause us to register under the Securities Act the sale of all or part
of the shares of our capital stock owned by them.

RULE 144

In general, under Rule 144, a person, or group of persons whose shares are
aggregated, who has beneficially owned restricted shares for at least one year
following the later of the date of the acquisition of such shares from the
issuer or an affiliate of the issuer would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- 1% of the number of shares of our common stock then outstanding; or

- the average weekly trading volume of our common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such
sale.

Sales under Rule 144 are subject to certain manner of sale provisions and
notice requirements and the availability of current public information about us.

RULE 144(k)

Under Rule 144(k), a person who is not deemed to have been an affiliate of
us at any time during the 90 days preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years following the later
of the date of the acquisition of such shares from the issuer or an affiliate of
the issuer, is entitled to sell such shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.

STOCK OPTIONS

Following expiration of the 180 day lock-up period described above, we
intend to file a registration statement on Form S-8 under the Securities Act to
register all shares of common stock subject to outstanding stock options and
common stock issued or issuable under our stock option plans. Shares of Class A
common stock registered under any registration statement will, subject to Rule
144 volume limitations applicable to affiliates, be available for sale in the
open market.

UNDERWRITING

Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each of the underwriters
named below, for whom Lehman Brothers Inc. and Salomon Smith Barney Inc. are
acting as representatives, has agreed to purchase from us the respective number
of shares of Class A common stock shown opposite its name below. Subject to the
terms and conditions of the underwriting agreement, the underwriters are
obligated to purchase all the shares (other than those covered by the
over-allotment option described below) if they purchase any of the shares.

NUMBER OF
UNDERWRITERS SHARES
------------ ----------

Lehman Brothers Inc. .......................................
Salomon Smith Barney Inc. ..................................
Bear, Stearns & Co. Inc. ...................................
Credit Suisse First Boston Corporation......................
Goldman, Sachs & Co.........................................
----------
Total....................................................... 11,100,000
==========

The underwriting agreement provides that the underwriters' obligations to
purchase our Class A common stock depend on the satisfaction of the conditions
contained in the underwriting agreement, which includes:

- the representations and warranties made by us to the underwriters are
true;

- there is no material change in the financial markets; and

- we deliver customary closing documents to the underwriters.

COMMISSIONS AND EXPENSES

The representatives have advised us that the underwriters propose to offer
the Class A common stock directly to the public at the public offering price
presented on the cover page of this prospectus, and to selected dealers, that
may include the underwriters, at the public offering price less a selling
concession not in excess of $ per share. The underwriters may allow, and the
selected dealers may reallow, a concession not in excess of $ per share to
brokers and dealers. After the offering, the underwriters may change the
offering price and other selling terms.

The following table summarizes the underwriting discounts and commissions
we will pay. The underwriting discounts and commissions are equal to the public
offering price per share, less the amount paid to us per share. The underwriting
discounts and commissions equal % of the initial public offering price.

TOTAL
-------------------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------

Underwriting discounts and commissions to be
paid to the underwriters by us............... $ $ $

We estimate that the total expenses of the offering, including
approximately $319,660 in filing fees, $750,000 in professional fees and
expenses and $430,340 for other fees and expenses, excluding underwriting
discounts and commissions, will be approximately $1,500,000.

OVER-ALLOTMENT OPTION

We have granted to the underwriters an option to purchase up to an
aggregate of 1,665,000 shares of Class A common stock, exercisable to cover
over-allotments, if any, at the public offering price less the underwriting
discounts and commissions shown on the cover page of this prospectus. The
underwriters may exercise this option at any time until 30 days after the date
of the underwriting agreement. To the extent the underwriters exercise this
option, each underwriter will be committed, so long as the conditions of the

underwriting agreement are satisfied, to purchase a number of additional shares
proportionate to that underwriter's initial commitment as indicated in the
preceding table.

LOCK-UP AGREEMENTS

We have agreed that, without the prior written consent of Lehman Brothers
Inc., we will not, directly or indirectly, offer, sell or dispose of any common
stock or any securities which may be converted into or exchanged for any common
stock for a period of 180 days from the date of this prospectus. All of our
executive officers, directors and certain other stockholders, holding in the
aggregate 40,221,500 shares of our common stock, have agreed under lock-up
agreements not to, without the prior written consent of Lehman Brothers Inc.,
directly or indirectly, offer, sell or otherwise dispose of any common stock or
any securities which may be converted into or exchanged or exercised for any
common stock for a period of 180 days from the date of this prospectus.

OFFERING PRICE DETERMINATION

Prior to this offering, there has been no public market for our Class A
common stock. The initial public offering price has been negotiated between the
representatives and us. In determining the initial public offering price of our
Class A common stock, the representatives considered:

- prevailing market conditions;

- our historical performance and capital structure;

- estimates of our business potential and earnings prospects;

- an overall assessment of our management; and

- the consideration of these factors in relation to market valuation of
companies in related businesses.

INDEMNIFICATION

We have agreed to indemnify the underwriters against liabilities relating
to the offering, including liabilities under the Securities Act and liabilities
arising from breaches of the representations and warranties contained in the
underwriting agreement, and to contribute to payments that the underwriters may
be required to make for these liabilities. We have further agreed to indemnify
against liabilities related to the directed share program referred to below,
including liabilities under the Securities Act.

STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

The representatives may engage in over-allotment, stabilizing transactions,
syndicate short covering transactions, and penalty bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Class A common stock,
in accordance with Regulation M under the Securities Exchange Act of 1934:

- Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any short position by either
exercising their over-allotment option, in whole or in part, or
purchasing shares in the open market.

- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specific maximum.

- Syndicate short covering transactions involve purchases of the Class A
common stock in the open market after the distribution has been completed
in order to cover syndicate short positions. In determining the source of
shares to close out the short position, the underwriters will consider,
among
77

other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares through
the over-allotment option. If the underwriters sell more shares than
could be covered by the over-allotment option, a naked short position,
the position can only be closed out by buying shares in the open market.
A naked short position is more likely to be created if the underwriters
are concerned that there could be downward pressure on the price of the
shares in the open market after pricing that could adversely affect
investors who purchase in the offering.

- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the Class A common stock originally sold by
the syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of our Class
A common stock or preventing or retarding a decline in the market price of our
common stock. As a result, the price of our Class A common stock may be higher
than the price that might otherwise exist in the open market. These transactions
may be effected on the New York Stock Exchange or otherwise and, if commenced,
may be discontinued at any time.

Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our Class A common stock. In addition,
neither we nor any of the underwriters make any representation that the
underwriters will engage in these stabilizing transactions or that any
transaction, once commenced, will not be discontinued without notice.

LISTING

Our Class A common stock has been approved for listing, subject to official
notice of issuance, on the New York Stock Exchange under the symbol CNK. In
connection with that listing, the underwriters have undertaken to sell the
minimum number of shares to the minimum number of beneficial owners necessary to
meet the New York Stock Exchange listing requirements.

STAMP TAXES

Purchasers of the shares of our Class A common stock offered by this
prospectus may be required to pay stamp taxes and other charges under the laws
and practices of the country of purchase, in addition to the offering price
listed on the cover of this prospectus.

OFFERS AND SALES IN CANADA

This prospectus is not, and under no circumstances is it to be construed
as, an advertisement or a public offering of shares in Canada or any province or
territory thereof. Any offer or sale of shares in Canada will be made only under
an exemption from the requirements to file a prospectus or prospectus supplement
with the relevant Canadian securities regulations and only by a registered
dealer or, alternatively pursuant to an exemption from the dealer registration
requirement in the relevant province or territory of Canada in which such offer
or sale is made.

DIRECTED SHARE PROGRAM

At our request, the underwriters have reserved up to 555,000 shares, or 5%
of our Class A common stock offered by this prospectus, for sale under a
directed share program to specified business associates and have agreed to
permit them to buy the reserved shares at the initial public offering price. All
of the persons purchasing the reserved shares must agree not to, directly or
indirectly, offer, sell or otherwise dispose of shares of our Class A common
stock for a period of up to 60 days from the date of this prospectus. The number
of shares available for sale to the general public will be reduced to the extent
these persons purchase the reserved shares. Shares committed to be purchased by
directed share participants which are not so purchased will be reallocated for
sale to the general public in the offering.

DISCRETIONARY SALES

The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed 5% of the total number of shares of our
Class A common stock offered by them.

ELECTRONIC DISTRIBUTION

A prospectus in electronic format may be made available on the Internet
sites or through other online services maintained by one or more of the
underwriters and/or selling group members participating in this offering, or by
their affiliates. In those cases, prospective investors may view offering terms
online and, depending upon the particular underwriter or selling group member,
prospective investors may be allowed to place orders online. The underwriters
may agree with us to allocate a specific number of shares for sale to online
brokerage account holders. Any such allocation for online distributions will be
made by the underwriters on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any
underwriter's or selling group member's website and any information contained in
any other website maintained by an underwriter or selling group member is not
part of this prospectus or the registration statement of which this prospectus
forms a part, has not been approved and/or endorsed by us or any underwriter or
selling group member in its capacity as underwriter or selling group member and
should not be relied upon by investors.

NASD

This offering is being conducted pursuant to Rule 2710(c)(8) of the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD"), as a
result we will appoint a qualified independent underwriter in connection with
this offering. Salomon Smith Barney Inc. will act as our qualified independent
underwriter and in this role it has performed due diligence investigations and
has recommended a maximum price for the securities. We and the other
underwriters have agreed to indemnify Salomon Smith Barney Inc. in its capacity
as qualified independent underwriter against certain liabilities including
liabilities under the Securities Act, or to contribute to payments Salomon Smith
Barney Inc. in its capacity as qualified independent underwriter, may be
required to make in respect to those liabilities. We intend to use approximately
$77.0 million of the proceeds from this offering to repay debt outstanding under
the Cinema Properties, Inc. $77.0 million term loan evidenced by a $77.0 million
note made payable to Lehman Brothers Bank, FSB.

OTHER

Some of the underwriters or their affiliates have provided investment
banking and financial advisory services for us from time to time for which they
have received customary fees and reimbursements of expenses and may in the
future provide additional services. Lehman Brothers Bank, FSB, an affiliate of
Lehman Brothers Inc., is the payee under our $77 million promissory note dated
December 15, 2000. A portion of the net proceeds from this offering will be used
to repay this promissory note. An affiliate of Lehman Brothers Inc. will be the
arranger and administrative agent for the new senior secured credit facility,
for which it will receive customary fees and reimbursements of expenses.

LEGAL MATTERS

The validity of the shares of Class A common stock offered by this
prospectus will be passed upon for our company by Akin, Gump, Strauss, Hauer &
Feld, L.L.P., Dallas, Texas. Certain legal matters in connection with shares of
Class A common stock offered in this prospectus will be passed upon for the
underwriters by Simpson Thacher & Bartlett, New York, New York.

EXPERTS

The financial statements as of December 31, 2001 and 2000, and for each of
the three years in the period ended December 31, 2001, included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein (which report expresses an unqualified
opinion and includes explanatory paragraphs referring to a restatement of our
2001 financial statements and the adoption of SOP 98-5 in 1999), and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act for the Class A common stock sold
in this offering. This prospectus does not contain all of the information set
forth in the registration statement and the accompanying exhibits and schedules.
For further information about us and our Class A common stock, we refer you to
the registration statement and the accompanying exhibits and schedules.
Statements contained in this prospectus regarding the contents of any contract
or any other document to which we refer are not necessarily complete. In each
instance, reference is made to the copy of the contract or document filed as an
exhibit to the registration statement, and each statement is qualified in all
respects by that reference. Copies of the registration statement and the
accompanying exhibits and schedules may be inspected without charge at the
public reference facilities maintained by the Securities and Exchange Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Securities and Exchange Commission located at the Northeast
Regional Office located at 233 Broadway, New York, New York 10279 and the
Midwest Regional Office located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials may be
obtained at prescribed rates from the Public Reference Room of the Securities
and Exchange Commission Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the Securities and Exchange Commission at 1-800-SEC-0330. The
Securities and Exchange Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Securities and Exchange Commission. The
address of the site is http://www.sec.gov.

After this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act. As a result, we will file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission. After completion of this offering we intend to provide
access to these reports on our web site, www.cinemark.com. These reports may be
accessed electronically with the Securities and Exchange Commission, free of
charge, at www.freeedgar.com. You may request paper copies of the filings, at no
cost, by telephone at (972) 665-1000 or by mail at: Cinemark, Inc., 3900 Dallas
Parkway, Suite 500, Plano, Texas 75093.

CINEMARK, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Independent Auditors Report................................. F-2
Consolidated Balance Sheets, December 31, 2000 and 2001
(Restated)................................................ F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1999, 2000 and 2001.......................... F-4
Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the Years Ended December
31, 1999, 2000 and 2001 (Restated)........................ F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 2000 and 2001.......................... F-6
Notes to the Consolidated Financial Statements.............. F-7

CINEMARK, INC. AND SUBSIDIARIES

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of March 31, 2002
(unaudited) and December 31, 2001 (Restated).............. F-31
Condensed Consolidated Statements of Operations (unaudited)
for the Three Months Ended March 31, 2002 (Restated) and
2001...................................................... F-32
Condensed Consolidated Statements of Cash Flows (unaudited)
for the Three Months Ended March 31, 2002 (Restated) and
2001...................................................... F-33
Notes to the Condensed Consolidated Financial Statements
(unaudited)............................................... F-34

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Cinemark, Inc. and Subsidiaries
Plano, TX

We have audited the accompanying consolidated balance sheets of Cinemark
Inc. and subsidiaries as of December 31, 2000 and 2001, and the related
consolidated statements of operations, stockholders' equity and comprehensive
income (loss), and cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Cinemark, Inc. and subsidiaries
as of December 31, 2000 and 2001, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note 17, the Company restated stockholders' equity at
December 31, 2001 to reflect additional unearned compensation related to stock
options.

As discussed in Note 1 to the consolidated financial statements, in 1999
the Company changed its method of accounting for start-up activities and
organizational costs to conform with AICPA Statement of Position 98-5.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas

February 8, 2002 (June 27, 2002, as to the restatement of stockholders' equity
described in Note 17 and the effects of the stock exchange and reverse stock
split described in Note 1)

F-2

CINEMARK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 2001

2000 2001
-------------- --------------

ASSETS
Current assets
Cash and cash equivalents................................. $ 19,839,994 $ 50,199,223
Inventories............................................... 3,734,955 3,322,032
Accounts receivable....................................... 8,246,024 11,049,648
Income tax receivable..................................... 1,462,721 1,438,794
Prepaid expenses and other................................ 3,591,666 3,246,829
-------------- --------------
Total current assets.................................... 36,875,360 69,256,526
Theatre properties and equipment
Land...................................................... 67,645,774 63,463,978
Buildings................................................. 306,634,606 314,423,663
Leasehold interests and improvements...................... 343,347,473 352,294,695
Theatre furniture and equipment........................... 460,891,679 466,953,793
Theatres under construction............................... 14,987,487 4,198,208
-------------- --------------
Total..................................................... 1,193,507,019 1,201,334,337
Less accumulated depreciation and amortization............ 243,372,299 334,927,920
-------------- --------------
Theatre properties and equipment -- net................. 950,134,720 866,406,417
Other assets
Goodwill -- net........................................... 16,826,740 15,124,954
Investments in and advances to affiliates................. 6,932,208 4,447,003
Deferred tax asset........................................ -- 3,716,206
Deferred charges and other -- net......................... 49,807,442 37,592,644
-------------- --------------
Total other assets...................................... 73,566,390 60,880,807
-------------- --------------
Total....................................................... $1,060,576,470 $ 996,543,750
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt......................... $ 32,767,581 $ 21,853,742
Accounts payable.......................................... 28,438,827 31,109,661
Accrued film rentals...................................... 24,597,474 23,581,478
Accrued interest.......................................... 19,856,463 16,167,137
Accrued payroll........................................... 10,597,640 13,142,023
Accrued property taxes.................................... 15,219,543 14,028,991
Accrued other current liabilities......................... 17,778,916 19,472,236
-------------- --------------
Total current liabilities............................... 149,256,444 139,355,268
Long-term liabilities
Long-term debt, less current portion...................... 777,555,162 759,102,424
Deferred income taxes..................................... 14,831,678 --
Deferred lease expenses................................... 20,475,247 22,832,388
Deferred gain on sale leasebacks.......................... 5,104,461 4,738,540
Deferred revenues and other long-term liabilities......... 16,752,114 9,824,212
-------------- --------------
Total long-term liabilities............................. 834,718,662 796,497,564
Commitments and contingencies (Note 10)
Minority interests in subsidiaries.......................... 27,691,527 35,353,662
Stockholders' equity (as restated, see Note 17)
Class A Common Stock, $.001 par value: 350,000,000 shares
authorized, 18,438,860 and 19,563,280 shares issued and
outstanding, respectively............................... 18,439 19,563
Class B Common Stock, $.001 par value: 150,000,000 shares
authorized, 20,949,280 shares issued and outstanding.... 20,949 20,949
Additional paid-in-capital................................ 38,464,668 40,367,749
Unearned compensation -- stock options.................... (1,956,944) (4,226,004)
Retained earnings......................................... 48,717,567 44,696,299
Accumulated other comprehensive loss...................... (36,354,842) (55,541,300)
-------------- --------------
Total stockholders' equity.............................. 48,909,837 25,337,256
-------------- --------------
Total....................................................... $1,060,576,470 $ 996,543,750
============== ==============

See notes to consolidated financial statements
F-3

CINEMARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

1999 2000 2001
------------ ------------ ------------

Revenues
Admissions....................................... $459,334,408 $511,305,524 $548,920,177
Concession....................................... 221,083,945 235,691,321 257,603,165
Other............................................ 32,185,843 39,267,012 47,135,126
------------ ------------ ------------
Total.................................... 712,604,196 786,263,857 853,658,468
Costs and expenses
Cost of operations:
Film rentals and advertising.................. 246,393,817 271,048,793 288,110,760
Concession supplies........................... 38,180,316 41,993,761 44,924,307
Salaries and wages............................ 82,870,409 86,680,128 90,808,558
Facility leases............................... 89,808,343 108,488,605 114,736,525
Utilities and other........................... 96,228,905 104,796,196 108,125,244
------------ ------------ ------------
Total cost of operations................. 553,481,790 613,007,483 646,705,394
General and administrative expenses.............. 34,833,403 39,012,924 42,689,638
Depreciation and amortization.................... 53,268,575 66,110,555 73,543,846
Asset impairment loss............................ 3,720,390 3,872,126 20,723,274
Loss on sale of assets and other................. 2,419,511 912,298 12,407,696
------------ ------------ ------------
Total.................................... 647,723,669 722,915,386 796,069,848
Operating income................................... 64,880,527 63,348,471 57,588,620
Other income (expense)
Interest expense................................. (58,836,739) (72,977,272) (68,368,292)
Amortization of debt issue cost and debt
discount...................................... (1,030,339) (1,059,949) (2,562,328)
Interest income.................................. 1,980,743 1,044,835 1,492,492
Foreign currency exchange loss................... (186,077) (467,154) (1,976,979)
Equity in income (loss) of affiliates............ 241,218 (7,493) (4,471,983)
Minority interests in (income) loss of
subsidiaries.................................. 662,456 (52,802) 162,573
------------ ------------ ------------
Total.................................... (57,168,738) (73,519,835) (75,724,517)
------------ ------------ ------------
Income (loss) before income taxes and cumulative
effect of an accounting change................... 7,711,789 (10,171,364) (18,135,897)
Income taxes (benefit)............................. 3,707,717 251,721 (14,114,629)
------------ ------------ ------------
Income (loss) before cumulative effect of an
accounting change................................ 4,004,072 (10,423,085) (4,021,268)
Cumulative effect of a change in accounting
principle, net of tax benefit of $417,570..... (2,968,637) -- --
------------ ------------ ------------
Net income (loss).................................. $ 1,035,435 $(10,423,085) $ (4,021,268)
============ ============ ============
Earnings (loss) per share -- Basic
Income (loss) before accounting change........... $ 0.10 $ (0.27) $ (0.10)
Cumulative effect of a change in accounting
principle..................................... (0.07) -- --
------------ ------------ ------------
Net income (loss)................................ $ 0.03 $ (0.27) $ (0.10)
============ ============ ============
Earnings (loss) per share -- Diluted
Income (loss) before accounting change........... $ 0.09 $ (0.27) $ (0.10)
Cumulative effect of a change in accounting
principle..................................... (0.07) -- --
------------ ------------ ------------
Net income (loss)................................ $ 0.02 $ (0.27) $ (0.10)
============ ============ ============

See notes to consolidated financial statements
F-4

CINEMARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

CLASS A CLASS B
COMMON STOCK COMMON STOCK
-------------------- --------------------- ADDITIONAL UNEARNED
SHARES SHARES PAID-IN COMPENSATION RETAINED
ISSUED AMOUNT ISSUED AMOUNT CAPITAL STOCK OPTIONS EARNINGS
---------- ------- ----------- ------- ----------- ------------- -----------

Balance January 1, 1999................. 18,282,880 $18,283 20,949,280 $20,949 $39,073,191 $(4,221,326) $58,105,217
Net income............................. 1,035,435
Unearned compensation from stock
options granted...................... 17,040 (17,040)
Unearned compensation from stock
options forfeited.................... (57,510) 52,718
Amortization of unearned
compensation......................... 1,053,968
Foreign currency translation
adjustment...........................
---------- ------- ----------- ------- ----------- ----------- -----------
Balance December 31, 1999............... 18,282,880 $18,283 20,949,280 $20,949 $39,032,721 $(3,131,680) $59,140,652
Net loss............................... (10,423,085)
Unearned compensation from stock
options forfeited.................... (362,298) 168,482
Amortization of unearned
compensation......................... 1,006,254
Shares repurchased by stockholder...... 103,584
Repurchase of options.................. (67,575)
Repurchase of stock.................... (34,000)
Stock options exercised, including tax
benefit.............................. 155,980 156 (207,764)
Foreign currency translation
adjustment...........................
---------- ------- ----------- ------- ----------- ----------- -----------
Balance December 31, 2000............... 18,438,860 $18,439 20,949,280 $20,949 $38,464,668 $(1,956,944) $48,717,567
Net loss............................... (4,021,268)
Unearned compensation from stock
options granted (as restated, see
Note 17)............................. 3,423,107 (3,423,107)
Unearned compensation from stock
options forfeited.................... (143,392) 143,392
Amortization of unearned
compensation......................... 1,010,655
Stock options exercised, including tax
benefit.............................. 1,124,420 1,124 (1,376,634)
Foreign currency translation
adjustment...........................
---------- ------- ----------- ------- ----------- ----------- -----------
Balance December 31, 2001 (as restated,
see Note 17)........................... 19,563,280 $19,563 20,949,280 $20,949 $40,367,749 $(4,226,004) $44,696,299
========== ======= =========== ======= =========== =========== ===========

ACCUMULATED
OTHER COMPREHENSIVE
COMPREHENSIVE INCOME
LOSS TOTAL (LOSS)
------------- ------------ -------------

Balance January 1, 1999................. $(17,196,698) $ 75,799,616
Net income............................. 1,035,435 $ 1,035,435
Unearned compensation from stock
options granted...................... --
Unearned compensation from stock
options forfeited.................... (4,792)
Amortization of unearned
compensation......................... 1,053,968
Foreign currency translation
adjustment........................... (14,033,681) (14,033,681) (14,033,681)
------------ ------------ ------------
Balance December 31, 1999............... $(31,230,379) $ 63,850,546 $(12,998,246)
============
Net loss............................... (10,423,085) (10,423,085)
Unearned compensation from stock
options forfeited.................... (193,816)
Amortization of unearned
compensation......................... 1,006,254
Shares repurchased by stockholder...... 103,584
Repurchase of options.................. (67,575)
Repurchase of stock.................... (34,000)
Stock options exercised, including tax
benefit.............................. (207,608)
Foreign currency translation
adjustment........................... (5,124,463) (5,124,463) (5,124,463)
------------ ------------ ------------
Balance December 31, 2000............... $(36,354,842) $ 48,909,837 $(15,547,548)
============
Net loss............................... (4,021,268) (4,021,268)
Unearned compensation from stock
options granted (as restated, see
Note 17)............................. --
Unearned compensation from stock
options forfeited.................... --
Amortization of unearned
compensation......................... 1,010,655
Stock options exercised, including tax
benefit.............................. (1,375,510)
Foreign currency translation
adjustment........................... (19,186,458) (19,186,458) (19,186,458)
------------ ------------ ------------
Balance December 31, 2001 (as restated,
see Note 17)........................... $(55,541,300) $ 25,337,256 $(23,207,726)
============ ============ ============

See notes to consolidated financial statements
F-5

CINEMARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

1999 2000 2001
------------- ------------- -------------

Operating activities
Net income (loss).............................. $ 1,035,435 $ (10,423,085) $ (4,021,268)
Noncash items in net income (loss):
Depreciation................................ 51,960,793 63,943,131 70,978,308
Amortization of goodwill and other assets... 2,163,621 3,052,873 2,565,538
Amortization of gain on sale leasebacks..... (218,920) (365,920) (365,921)
Amortization of foreign advanced rents...... 1,275,689 2,523,076 2,345,095
Amortization of debt discount and premium... (28,508) (28,507) (28,508)
Amortization of debt issue costs............ 855,839 885,449 2,387,828
Amortized compensation -- stock options..... 1,049,176 916,022 1,010,655
Loss on impairment of assets................ 3,720,390 3,872,126 20,723,274
Loss on sale of assets and other............ 2,419,511 912,298 12,407,696
Deferred lease expenses..................... 1,610,053 4,286,447 2,357,141
Deferred income tax expenses................ 1,973,662 (3,256,326) (18,547,884)
Equity in (income) loss of affiliates....... (241,218) 7,493 4,471,983
Minority interests in income (loss) of
subsidiaries.............................. (662,456) 52,802 (162,573)
Common Stock issued for options exercised,
including tax benefit..................... -- (207,608) (1,375,510)
Cumulative effect of an accounting change... 3,386,207 -- --
Change in assets and liabilities:
Inventories................................. (1,142,815) 999,565 412,923
Accounts receivable......................... 346,817 3,821,447 (2,803,624)
Prepaid expenses and other.................. (5,050,770) 3,917,056 344,837
Other assets................................ (13,986,786) 1,905,257 4,746,176
Advances with affiliates.................... 7,691,402 430,185 (1,671,098)
Accounts payable............................ 24,790,961 (24,647,978) 2,670,834
Accrued liabilities......................... 8,157,069 1,626,445 (11,347,641)
Income tax receivable....................... 996,496 573,425 23,927
------------- ------------- -------------
Net cash provided by operating
activities............................. 92,101,648 54,795,673 87,122,188
Investing activities
Additions to theatre properties and
equipment................................... (248,370,598) (113,080,618) (40,351,680)
Sale of theatre properties and equipment....... 23,867,262 23,275,239 6,867,953
Investment in affiliates....................... (47,017) (5,233,333) (379,373)
Dividends/capital returned from affiliates..... 1,506,377 153,000 63,693
------------- ------------- -------------
Net cash used for investing activities.... (223,043,976) (94,885,712) (33,799,407)
Financing activities
Increase in long-term debt..................... 180,750,458 210,453,907 93,236,439
Reductions of long-term debt................... (51,676,027) (178,515,735) (122,574,508)
Costs of debt financing........................ (375,000) (4,607,226) --
Increase in deferred revenues.................. 1,250,000 26,224,423 --
Increase in minority investment in
subsidiaries................................ 9,584,770 2,500,102 11,429,373
Decrease in minority investment in
subsidiaries................................ (24,606,921) (4,673,720) (3,604,665)
Repurchase of options.......................... -- (67,575) --
Repurchase of stock............................ -- (34,000) --
------------- ------------- -------------
Net cash provided by (used for) financing
activities............................. 114,927,280 51,280,176 (21,513,361)
Effect of exchange rate changes on cash and cash
equivalents.................................... (758,663) (222,300) (1,450,191)
------------- ------------- -------------
Increase (decrease) in cash and cash
equivalents.................................... (16,773,711) 10,967,837 30,359,229
Cash and cash equivalents:
Beginning of period............................ 25,645,868 8,872,157 19,839,994
------------- ------------- -------------
End of period.................................. $ 8,872,157 $ 19,839,994 $ 50,199,223
============= ============= =============
Supplemental information (Note 5)

See notes to consolidated financial statements
F-6

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization -- On May 16, 2002, Cinemark, Inc. was formed as the Delaware
holding company of Cinemark USA, Inc. Each outstanding share, and each
outstanding option to purchase shares, of Cinemark USA, Inc. were exchanged for
shares, and options to purchase shares, of Cinemark, Inc. The accompanying
financial statements have been revised to reflect the historical financial data
of Cinemark USA, Inc. as though it were the financial data of Cinemark, Inc. All
share and per share amounts have been adjusted to retroactively reflect the
share exchange and reverse stock split in June 2002 for the periods presented.

Business -- Cinemark, Inc. and its subsidiaries (the "Company") is a leader
in the motion picture exhibition industry that owns or leases and operates 276
motion picture theatres (3,000 screens) in 33 states, Canada, Mexico, Argentina,
Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica and
Colombia as of December 31, 2001. The Company also manages an additional four
theatres (27 screens) in the United States ("U.S.") and provides management
services for one theatre (13 screens) in Taiwan at December 31, 2001.

Principles of Consolidation -- The consolidated financial statements
include the accounts of Cinemark, Inc. and its subsidiaries. Majority-owned
subsidiaries that the Company has control of are consolidated while those
subsidiaries of which the Company owns between 20% and 50% and does not control
are accounted for as affiliates under the equity method. The results of these
subsidiaries and affiliates are included in the financial statements effective
with their formation or from their dates of acquisition. Significant
intercompany balances and transactions are eliminated in consolidation. Certain
reclassifications have been made to December 31, 1999 and 2000 amounts to
conform to the 2001 presentation.

Inventories -- Concession and theatre supplies inventories are stated at
the lower of cost (first-in, first-out method) or market.

Theatre Properties and Equipment -- Theatre properties and equipment are
stated at cost less accumulated depreciation and amortization. Property
additions include $4,312,499, $613,614 and $215,704 of interest incurred during
the development and construction of theatres capitalized in 1999, 2000 and 2001,
respectively. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets as follows: buildings -- 18 to 40 years;
theatre furniture and equipment -- 5 to 15 years. Amortization of leasehold
interests and improvements is provided using the straight-line method over the
lesser of the lease period or the estimated useful lives of the leasehold
interests and improvements.

Goodwill -- The excess of cost over the fair values of the net assets of
theatre businesses acquired, less accumulated amortization ($4,582,726 and
$6,284,512 at December 31, 2000 and 2001, respectively) is recorded as goodwill.
For financial reporting purposes through December 31, 2001, these amounts were
being amortized primarily over 10 to 20 year periods, which approximates the
remaining lease terms of the businesses acquired. In accordance with Statement
of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and other
Intangible Assets", beginning January 1, 2002, goodwill will no longer be
amortized, but instead be tested for impairment at least annually. See note 2
for disclosure of the impact in 2002 upon adoption of this new accounting
pronouncement.

Deferred Charges and Other -- Deferred charges and other primarily consist
of debt issue costs, foreign advanced rents, capitalized licensing fees,
construction advances and other deposits, equipment to be placed in service, an
interest rate cap agreement and other intangible assets. Debt issue costs are
amortized using the straight-line method over the primary financing terms ending
February 2003 to July 2008. Capitalized licensing fees are amortized using the
straight-line method over fifteen years reflecting the estimated economic life
of the asset being licensed. Foreign advanced rents represent advance payments
of long-term foreign leases which are expensed to facility lease expense
generally over 10 to 20 years as leased facilities are utilized. For financial
reporting purposes through December 31, 2001, other intangible assets have been
amortized over the respective lives of the trademarks, noncompete agreements or
other intangible asset

F-7

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

agreements. In accordance with SFAS No. 142, "Goodwill and other Intangible
Assets", beginning January 1, 2002, other intangible assets with indefinite
useful lives will no longer be amortized, but instead be tested for impairment
at least annually. See note 2 for disclosure of the impact in 2002 upon adoption
of this new accounting pronouncement.

Deferred Revenues -- Advances collected on long-term screen advertising and
concession contracts are recorded as deferred revenues. The advances collected
on screen advertising contracts are recognized as other revenues when earned
based primarily on the Company's attendance counts or screening depending on the
agreements. The advances collected on concession contracts are recognized as a
reduction to concession supplies expense when earned.

Revenue and Expense Recognition -- Revenues are recognized when admissions
and concession sales are received at the box office and screen advertising is
shown at the theatres. Film rental costs are accrued based on the applicable box
office receipts and either the mutually agreed upon firm terms or estimates of
the final settlement depending upon the film licensing arrangement. Estimates
are made based on the expected success of a film over the length of its run. The
success of a film can typically be determined a few weeks after a film is
released when initial box office performance of the film is known. Accordingly,
final settlements typically approximate estimates since box office receipts are
known at the time the estimate is made and the expected success of a film over
the length of its run can typically be estimated early in the film's run. The
final film settlement amount is negotiated at the conclusion of the film's run
based upon how a film actually performs. If actual settlements are higher than
those estimated, additional film rental costs are recorded at the time of
settlement. Advertising costs are expensed as incurred. Advertising expenses for
the years ended December 31, 1999, 2000, and 2001 totaled $18,374,600,
$17,931,796 and $14,622,336, respectively.

Statement of Cash Flows -- For purposes of reporting cash flows, cash and
cash equivalents consist of operating funds held in financial institutions,
petty cash held by the theatres and highly liquid investments with remaining
maturities of three months or less when purchased.

Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates, judgements and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates.

Fair Values of Financial Instruments -- Fair values of financial
instruments are estimated by the Company using available market information and
other valuation methods. The estimated fair value amounts for specific groups of
financial instruments are presented in note 8. Values are based on available
market quotes or estimates using a discounted cash flow approach based on the
interest rates currently available for similar debt. The fair value of financial
instruments for which estimated fair value amounts are not specifically
presented is estimated to approximate the related recorded value.

Start-Up Activities and Organization Costs -- On January 1, 1999, the
Company adopted Statement of Position (SOP) 98-5 requiring start-up activities
and organization costs to be expensed as incurred. The Company's practice had
been to capitalize organization costs associated with the organization of new
entities as well as costs associated with forming international joint ventures
as deferred charges and amortize them over the anticipated life of the
respective entity or venture. The adoption of this new accounting pronouncement
resulted in the aggregate write-off of the unamortized organization costs of
$3,386,207 on

F-8

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

January 1, 1999. This charge was recorded as a cumulative effect of a change in
accounting principle as a one-time non cash charge to income of $2,968,637 (net
of tax benefit) in the first quarter of 1999 as follows:

U.S. operations............................................. $ 152,966
Argentina operations........................................ 603,166
Brazil operations........................................... 552,488
Other foreign operations.................................... 1,660,017
----------
$2,968,637
==========

2. NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which, as amended, is effective for fiscal
years beginning after June 15, 2000. Therefore, the Company adopted SFAS No. 133
for its fiscal year beginning January 1, 2001. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments that require every
derivative to be recorded on the balance sheet as an asset or liability measured
at its fair value. The statement also defines the accounting for the change in
the fair value of derivatives depending on their intended use. The Company's
derivative activity primarily relates to an interest rate cap agreement as
described in note 8 that has not been designated as a hedge and therefore does
not qualify for hedge accounting. The Company previously recorded the fair value
of the interest rate cap agreement as an asset when acquired in December 2000.
Therefore, no transition adjustment was necessary upon adoption of SFAS No. 133.
The decrease in the fair value of the interest rate cap agreement during 2001 of
approximately $0.6 million has been recorded in the statement of operations as
interest expense.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets". This statement requires that goodwill
and other intangible assets with indefinite useful lives no longer be amortized,
but instead be tested for impairment at least annually. This statement is
effective for all fiscal years beginning after December 15, 2001. The statement
became effective for the Company on January 1, 2002.

The Company's goodwill at December 31, 2001 is as follows:

GROSS CARRYING ACCUMULATED NET GOODWILL
AMOUNT AMORTIZATION AMOUNT
-------------- ------------ ------------

Goodwill
U.S. operations............................ $ 9,313,165 $(4,004,427) $ 5,308,738
Argentina operations....................... 5,162,418 (893,308) 4,269,110
Chile operations........................... 3,663,883 (732,777) 2,931,106
Peru operations............................ 3,270,000 (654,000) 2,616,000
----------- ----------- -----------
$21,409,466 $(6,284,512) $15,124,954
=========== =========== ===========

The Company has recorded amortization expense on goodwill of $1,322,869,
$1,792,975 and $1,701,786 in 1999, 2000 and 2001, respectively.

F-9

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The amount of amortization expense that would have been recorded in future
years if SFAS No. 142 was not adopted on January 1, 2002 is as follows:

2002........................................................ $ 1,402,275
2003........................................................ 1,402,275
2004........................................................ 1,402,275
2005........................................................ 1,353,148
2006........................................................ 1,328,703
2007........................................................ 1,328,703
2008........................................................ 1,328,703
2009........................................................ 1,282,873
2010........................................................ 1,069,955
2011........................................................ 1,069,955
2012........................................................ 1,069,955
2013........................................................ 946,960
2014........................................................ 139,174
-----------
$15,124,954
===========

The adoption of this accounting pronouncement will result in the aggregate
write down of goodwill to fair value as a cumulative effect of a change in
accounting principle on January 1, 2002 as follows:

U.S. operations............................................. $ 27,226
Argentina operations........................................ 3,298,385
----------
$3,325,611
==========

The Company's intangible assets (included in deferred charges and other)
are $87,858 at December 31, 2001. The adoption of this accounting pronouncement
will result in a $64,168 write down of intangible assets with indefinite useful
lives to fair value as a cumulative effect of a change in accounting principle
on January 1, 2002.

Had we adopted SFAS No. 142 in previous years, the impact on net income
(loss) and earnings (loss) per share would have been as follows:

1999 2000 2001
---------- ------------ -----------

Reported net income (loss).................... $1,035,435 $(10,423,085) $(4,021,268)
Add back: Goodwill amortization............... 1,322,869 1,792,975 1,701,786
Add back: Other intangible asset
amortization................................ 42,097 33,527 33,528
---------- ------------ -----------
Adjusted net income (loss).................... $2,400,401 $ (8,596,583) $(2,285,954)
========== ============ ===========
Basic earnings (loss) per share:
Reported net income (loss).................... $ 0.03 $ (0.27) $ (0.10)
Add back: Goodwill amortization............... 0.03 0.05 0.04
Add back: Other intangible asset
amortization................................ -- -- --
---------- ------------ -----------
Adjusted net income (loss).................... $ 0.06 $ (0.22) $ (0.06)
========== ============ ===========

F-10

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1999 2000 2001
---------- ------------ -----------

Diluted earnings (loss) per share:
Reported net income (loss).................... $ 0.02 $ (0.27) $ (0.10)
Add back: Goodwill amortization............... 0.04 0.05 0.04
Add back: Other intangible asset
amortization................................ -- -- --
---------- ------------ -----------
Adjusted net income (loss).................... $ 0.06 $ (0.22) $ (0.06)
========== ============ ===========

In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations". This statement requires the
establishment of a liability for an asset retirement obligation. This statement
is effective for financial statements issued for fiscal years beginning after
June 15, 2002. The Company is currently considering the impact, if any, that
this statement will have on the consolidated financial statements.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long Lived Assets", which
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
of Long-Lived Assets to be Disposed Of", and portions of APB No. 30, "Reporting
the Results of Operations -- Reporting the Effects of Disposal of a Segment of
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", and amends Accounting Research Bulletin No. 51, "Consolidated
Financial Statements". This statement generally conforms, among other things,
impairment accounting for assets to be disposed of including those in
discontinued operations and eliminates the exception to consolidation for which
control is likely to be temporary. This statement became effective for the
Company on January 1, 2002. The adoption of this statement did not have a
material effect on the consolidated financial statements.

3. EARNINGS (LOSS) PER SHARE

Earnings (loss) per share are computed using the weighted average number of
shares of Class A and Class B Common Stock outstanding during each period. The
following table sets forth the computation of basic and diluted earnings per
share:

1999 2000 2001
------- -------- -------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)

Net income (loss)....................................... $ 1,035 $(10,423) $(4,021)
======= ======== =======
Basic:
Weighted average Common shares outstanding............ 39,240 39,329 39,497
======= ======== =======
Earnings (loss) per Common share...................... $ 0.03 $ (0.27) $ (0.10)
======= ======== =======
Diluted:
Weighted average Common shares outstanding............ 39,240 39,329 39,497
Common equivalent shares for stock options............ 2,946 -- --
------- -------- -------
Weighted average shares outstanding................... 42,186 39,329 39,497
======= ======== =======
Earnings (loss) per Common and Common equivalent
share................................................. $ 0.02 $ (0.27) $ (0.10)
======= ======== =======

Basic net income (loss) per share is computed by dividing the net income
(loss) by the weighted average number of shares of Common Stock of all classes
outstanding during the period. Diluted net income (loss) per share is computed
by dividing the net income (loss) by the weighted average number of shares of
Common Stock and potential issuable Common Stock using the treasury stock
method. The dilutive effect of

F-11

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the options to purchase Common Stock are excluded from the computation of
diluted net income (loss) per share if their effect is antidilutive. At December
31, 2000 and 2001, 2,747,800 and 2,338,600 options to purchase Common Stock
(calculated on a weighted average for the year basis) have been excluded from
the diluted net income (loss) per share calculation, respectively, as their
effect would have been antidilutive. See note 12 for additional disclosures
regarding the Company's capital stock and related stock option plans.

4. FOREIGN CURRENCY TRANSLATION

The accumulated other comprehensive loss account in stockholders' equity of
$36,354,842 and $55,541,300 at December 31, 2000 and 2001, respectively,
primarily relates to the cumulative foreign currency adjustments from
translating the financial statements of Cinemark Argentina, S.A., Cinemark
Brasil S.A., Cinemark de Mexico, S.A. de C.V. and Cinemark Chile, S.A. into U.S.
dollars.

In 1999 and a portion of 2000, the Company was required to utilize the U.S.
dollar as the functional currency of Cinemark del Ecuador, S.A. for U.S.
reporting purposes in place of the sucre due to the highly inflationary economy
of Ecuador. Devaluations in the sucre during 1999 and a portion of 2000 that
affected the Company's investment were charged to foreign currency exchange gain
(loss) rather than to the accumulated other comprehensive loss account as a
reduction of stockholders' equity. A foreign currency exchange gain of $74,078
and $32,300 was recognized in 1999 and 2000, respectively, and is included in
other income (expense). In September 2000, the country of Ecuador officially
switched to the U.S. dollar as its official currency, thereby eliminating any
foreign currency exchange gain (loss) from operations in Ecuador on a going
forward basis. At December 31, 2001, the total assets of Cinemark del Ecuador,
S.A. were approximately U.S.$4 million.

In 1999, 2000 and for the majority of 2001, the country of Argentina
utilized the peso as its functional currency with it pegged at a rate of 1.0
peso to the U.S. dollar. As a result of economic turmoil which began in December
2001, the Argentine government announced several restrictions on currency
conversions and transfers of funds abroad in early January 2002. The Argentine
government ended the peso-dollar parity regime and established a dual exchange
rate system, with a "commercial rate" and a "market rate". The commercial rate
of 1.4 pesos to the U.S. dollar was to be utilized to settle all exports and
certain essential imports. The market rate traded for the first time on January
11, 2002 and closed at a rate of 1.7 pesos to the U.S. dollar. As a result, the
effect of translating the December 31, 2001 peso balances for assets as of
January 11, 2002 (1.7 pesos to the U.S. dollar) is reflected as a cumulative
foreign currency translation adjustment to the accumulated other comprehensive
loss account as a reduction of shareholders' equity in the amount of $19.1
million at December 31, 2001. Income and expense accounts from January through
November 2001 were converted into U.S. dollars at the exchange rate of 1.0 peso
to the U.S. dollar and income and expense accounts in December 2001 were
converted into U.S. dollars at the exchange rate of 1.7 pesos to the U.S.
dollar. On January 14, 2002, the Argentine government unified the commercial
rate and the market rate into one floating rate which is presently in use.

In 1999, 2000 and 2001, the remaining countries where the Company operates
were deemed non-highly inflationary. Any fluctuation in the currency results in
the Company recording a cumulative foreign currency

F-12

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

translation adjustment to the accumulated other comprehensive loss account as a
reduction of stockholders' equity.

5. SUPPLEMENTAL CASH FLOW INFORMATION

The following is provided as supplemental information to the consolidated
statement of cash flows:

1999 2000 2001
----------- ----------- -----------

Interest paid................................. $61,253,543 $71,569,114 $71,359,828
=========== =========== ===========
Income taxes paid (net of refunds)............ $ 3,170,041 $ 2,462,369 $ 3,287,018
=========== =========== ===========
Noncash investing and financing activities:
Issued note payable in Argentine
acquisition................................. $11,000,000
===========

6. INVESTMENTS IN AND ADVANCES TO AFFILIATES

The Company has the following investments in and advances to affiliates at
December 31:

2000 2001
---------- ----------

Entertainment Amusement Enterprises, Inc. -- investment, at
equity.................................................... $1,051,065 $1,052,279
Brainerd Ltd. -- investment, at equity...................... 407,264 312,289
Cinemark Theatres Alberta, Inc. -- investment, at equity.... 285,266 267,136
Fandango, Inc. -- investment, at equity..................... 4,233,333 171,000
Cinemark -- Core Pacific, Ltd. (Taiwan) -- investment, at
equity.................................................... -- 697,082
Other....................................................... 955,280 1,947,217
---------- ----------
Total............................................. $6,932,208 $4,447,003
========== ==========

The Company recorded a write-down in its investment in Fandango, Inc. of
$4,062,333 in 2001 as the investment was written down to estimated market value.
At December 31, 2000 the Company owned approximately 300,000 shares of Fandango,
Inc. (a privately held on-line movie ticketing company with no public market for
its stock) at a value of $4,233,333. In 2001, an independent third party capital
injection was made to Fandango, Inc. that was valued at $0.57 per share. Based
on this third party capital injection, the Company's stock in Fandango was
determined to have a value of $171,000 (300,000 shares X $.57 per share), which
was considered to be an impairment that was other than temporary. As a result,
the Company recorded a write-down of $4,062,333 in its investment.

F-13

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. DEFERRED CHARGES AND OTHER

Deferred charges and other at December 31 consist of the following:

2000 2001
----------- -----------

Debt issue costs........................................... $12,649,373 $12,649,373
Capitalized licensing fees................................. 4,500,000 9,000,000
Other intangible assets.................................... 389,438 389,438
----------- -----------
Total............................................ 17,538,811 22,038,811
Less accumulated amortization.............................. 3,751,855 6,504,447
----------- -----------
Net.............................................. 13,786,956 15,534,364
Foreign advanced rents..................................... 23,261,266 13,512,149
Construction advances and other deposits................... 5,124,088 1,645,613
Equipment to be placed in service.......................... 2,712,016 1,699,339
Interest rate cap agreement................................ 1,694,000 1,136,457
Other...................................................... 3,229,116 4,064,722
----------- -----------
Total............................................ $49,807,442 $37,592,644
=========== ===========

8. LONG-TERM DEBT

Long-term debt at December 31 consists of the following:

2000 2001
------------ ------------

Series B Senior Subordinated Notes due 2008, discussed
below.................................................. $199,435,042 $199,509,542
Series D Senior Subordinated Notes due 2008, discussed
below.................................................. 76,539,473 76,336,465
Series B Senior Subordinated Notes due 2008, discussed
below.................................................. 104,241,667 104,341,667
Cinemark USA, Inc. Revolving credit line of $350,000,000,
discussed below........................................ 260,000,000 258,000,000
Cinemark Investments Corporation, Revolving credit line
of $20,000,000, discussed below........................ 20,000,000 --
Cinemark Mexico (USA), Revolving credit line of
$30,000,000, discussed below........................... 30,000,000 29,000,000
Cinema Properties, Inc. Note Payable with Lehman Brothers
Bank, FSB, discussed below............................. 77,000,000 77,000,000
Cinemark Chile, S.A. Notes Payable with Bank, discussed
below.................................................. 15,293,556 10,763,393
Cinemark Brasil S.A. Notes Payable with Bank, discussed
below.................................................. 13,352,486 14,202,549
Other long-term debt..................................... 14,460,519 11,802,550
------------ ------------
Total long-term debt..................................... 810,322,743 780,956,166
Less current portion..................................... 32,767,581 21,853,742
------------ ------------
Long-term debt, less current portion..................... $777,555,162 $759,102,424
============ ============

In August 1996, the Company issued $200 million principal amount of 9 5/8%
Series A Senior Subordinated Notes (the "Series A Notes") to qualified
institutional buyers in reliance on Rule 144A of the Securities Act of 1933, as
amended (the "Securities Act"). The Series A Notes were issued at 99.553% of the
principal face amount (a discount of $4.47 per $1,000 principal amount). The net
proceeds to the Company from the issuance of the Series A Notes (net of
discount, fees and expenses) were approximately

F-14

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$193.2 million. In November 1996, the Company completed an offer to exchange
$200 million principal amount of 9 5/8% Series B Senior Subordinated Notes (the
"Series B Notes") due 2008 which were registered under the Securities Act for a
like principal amount of the Series A Notes. Interest on the Series B Notes is
payable semi-annually on February 1 and August 1 of each year.

In June 1997, the Company issued $75 million principal amount of 9 5/8%
Series C Senior Subordinated Notes (the "Series C Notes") to qualified
institutional buyers in reliance on Rule 144A of the Securities Act. The Series
C Notes were issued at 103% of the principal face amount. The net proceeds to
the Company from the issuance of the Series C Notes (net of fees and expenses)
were approximately $77.1 million. In October 1997, the Company completed an
offer to exchange $75 million principal amount of 9 5/8% Series D Senior
Subordinated Notes (the "Series D Notes") due 2008 which were registered under
the Securities Act for a like principal amount of the Series C Notes. Interest
on the Series D Notes is payable semi-annually on February 1 and August 1 of
each year.

In January 1998, the Company issued $105 million principal amount of 8 1/2%
Series A Senior Subordinated Notes (the "Series A Notes") to qualified
institutional buyers in reliance on Rule 144A of the Securities Act. The Series
A Notes were issued at 99.0% of the principal face amount. The net proceeds to
the Company from the issuance of the Series A Notes (net of discount, fees and
expenses) were approximately $103.8 million. In March 1998, the Company
completed an offer to exchange $105 million principal amount of 8 1/2% Series B
Senior Subordinated Notes (the "Series B Notes") due 2008 which were registered
under the Securities Act for a like principal amount of the Series A Notes.
Interest on the Series B Notes is payable semi-annually on February 1 and August
1 of each year.

In February 1998, the Company replaced its existing credit facility with a
reducing, revolving credit agreement (the "Credit Facility") through a group of
banks for which Bank of America National Trust and Savings Association acts as
Administrative Agent. The Credit Facility provides for loans to the Company of
up to $350 million in the aggregate. The Credit Facility is a reducing revolving
credit facility, with commitments automatically reduced each calendar quarter by
2.5%, 3.75%, 5.0%, 6.25% and 6.25% of the aggregate $350 million in calendar
year 2001, 2002, 2003, 2004 and 2005, respectively, until the Credit Facility
matures in 2006. As of December 31, 2001, the aggregate commitment available to
the Company is $315.0 million. The Company is required to prepay all loans
outstanding under the Credit Facility in excess of the aggregate commitment as
reduced pursuant to the terms of the Credit Facility. Borrowings are secured by
a pledge of a majority of the issued and outstanding capital stock of the
Company. The Credit Facility requires the Company to maintain certain financial
ratios; restricts the payment of dividends, payment of subordinated debt prior
to maturity and issuance of preferred stock and other indebtedness; and contains
other restrictive covenants typical for agreements of this type. Funds borrowed
pursuant to the Credit Facility currently bear interest at a rate per annum
equal to the Offshore Rate (as defined in the Credit Facility) or the Base Rate
(as defined in the Credit Facility), as the case may be, plus the Applicable
Margin (as defined in the Credit Facility). The effective interest rate on such
borrowing as of December 31, 2001 is 4.5% per annum.

In September 1998, Cinemark Investments Corporation borrowed $20 million
under the Cinemark Investments Credit Agreement, the proceeds of which were used
to purchase fixed rate notes issued by Cinemark Brasil S.A. which currently bear
interest at 14.0%. In September 2001, Cinemark Investments Corporation repaid
the $20 million Cinemark Investments Credit Agreement at maturity.

In November 1998, Cinemark Mexico executed a credit agreement with Bank of
America National Trust and Savings Association (the "Cinemark Mexico Credit
Agreement"). The Cinemark Mexico Credit Agreement is a revolving credit facility
and provides for a loan to Cinemark Mexico of up to $30 million in the
aggregate. The Cinemark Mexico Credit Agreement is secured by a pledge of 65% of
the stock of Cinemark de Mexico, S.A. de C.V. and an unconditional guaranty by
the Company. Pursuant to the terms of the Cinemark Mexico Credit Agreement,
funds borrowed bear interest at a rate per annum equal to the
F-15

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Offshore Rate (as defined in the Cinemark Mexico Credit Agreement) or the Base
Rate (as defined in the Cinemark Mexico Credit Agreement), as the case may be,
plus the Applicable Margin (as defined in the Cinemark Mexico Credit Agreement).
Cinemark Mexico borrowed $30 million under the Cinemark Mexico Credit Agreement,
the proceeds of which were used to repay an intercompany loan of Cinemark Mexico
from Cinemark International. Cinemark International used the proceeds of such
repayment to repay all outstanding indebtedness under its then existing credit
facility. In September 2000, Cinemark Mexico and the banks party to the Cinemark
Mexico Credit Agreement executed an amendment which, among other things,
extended the maturity date of the Cinemark Mexico Credit Agreement and increased
the rate of interest paid on borrowings thereunder. Pursuant to the amendment,
Cinemark Mexico is required to make principal payments of $1.5 million per
quarter in 2002 with the remaining principal outstanding of $23.0 million due in
January 2003. The effective interest rate on such borrowing as of December 31,
2001 is 4.6% per annum.

In December 2000, Cinema Properties, Inc., a wholly-owned Unrestricted
Subsidiary (as those terms are defined in the Credit Facility and the Senior
Subordinated Note Indentures), completed a $77 million loan transaction with
Lehman Brothers Bank, FSB (the "Cinema Properties Facility"). The Cinema
Properties Facility is a term loan maturing on December 31, 2003. Cinema
Properties, Inc. has the unilateral ability to extend the maturity date two
times for one year each by paying extension fees of 1.5% and 3.0% of the
outstanding borrowing, respectively. At the lender's discretion, Cinema
Properties, Inc. may be required to make principal payments of $1.5 million in
the third and fourth quarters of 2002 with the remaining principal outstanding
in December 2003. Funds borrowed pursuant to the Cinema Properties Credit
Facility currently bear interest at a rate per annum equal to LIBOR (as defined
in the Cinema Properties Facility) plus 5.75%. Borrowings are secured by, among
other things, a mortgage placed on six of Cinema Properties, Inc.'s theatres and
certain equipment leases. The Cinema Properties Facility requires Cinema
Properties, Inc. to comply with certain interest coverage ratios and contains
other restrictive covenants typical of agreements of this type. The net proceeds
from the loan (net of fees and expenses) were $70.9 million. The proceeds were
distributed to the Company, and the Company used such funds to complete the
Company's domestic construction program and to reduce outstanding debt under the
Company's existing Credit Facility. Cinema Properties, Inc. has a separate legal
existence, separate assets, separate creditors and separate financial
statements. The assets of Cinema Properties, Inc. are not available to satisfy
the debts of any of the other entities consolidated with the Company. Cinema
Properties, Inc. purchased from Lehman Brothers Derivative Products, Inc. an
Interest Rate Cap Agreement with a notional amount equal to $77 million with a
five year term and a strike rate equal to the excess of three month LIBOR over
the strike price of 6.58% (See note 2). Three month LIBOR as of the date of
closing was 6.58%. The interest rate cap agreement is recorded at its fair value
of approximately $1.1 million at December 31, 2001. The effective interest rate
on such borrowing as of December 31, 2001 is 7.6% per annum.

Cinemark Chile, S.A. executed four senior note payable agreements with a
local bank for the U.S. dollar equivalent of $6.0 million, $3.0 million, $4.5
million and $3.5 million in December 1997, July 1998, November 1998 and December
1998, respectively. These notes were each in Chilean pesos, adjusted for
inflation, at the respective borrowing dates. Interest is assessed for three
notes at the 90-day TAB rate (Chile's Central Bank interbank rate) plus 1.5% per
annum, adjusted for inflation, and for the other note (December 1998) at the
180-day TAB rate plus 1.5% per annum, adjusted for inflation, and is paid
quarterly for three of the notes and semi-annually for the December 1998 note.
The term on all four notes is five years with a two-year grace period on
principal. Cinemark International directly or indirectly guarantees all four
notes. The effective interest rate on the four notes as of December 31, 2001 is
approximately 7.7% per annum.

Cinemark Brasil S.A. currently has the following outstanding types of
loans: 1) BNDES automatic (a government sourced loan issued through local banks
for development financing) in the amount of U.S.$5.9 million maturing at the end
of 2006 at a BNDES basket rate (which is a multiple currency rate based on the
rate at which the bank borrows) amounting to 11.2%, 2) Import financings
executed through five local and international banks in the amount of U.S.$6.8
million maturing on the basis of 360 or 365 days at

F-16

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interest rates varying from 6.8% to 11.8%, 3) Project developer financing
executed between September 2000 through December 2000 in the amount of U.S.$1.6
million, maturing December 2005 at a rate of 10% based on a spread over the
"TJLP", a locally issued bank rate. Each of these sources have varying
guarantees including comfort letters from Cinemark International, promissory
notes, a revenue reserve account and equipment collateral. The effective
interest rate on these notes at December 31, 2001 is approximately 12.9% per
annum.

Long-term debt at December 31, 2001, matures as follows: $21,853,742 in
2002; $173,305,029 in 2003; $91,381,073 in 2004; $95,600,833 in 2005;
$18,365,940 in 2006 and $380,449,549 thereafter.

The estimated fair value of the Company's long-term debt of $781.0 million
at December 31, 2001, was approximately $800 million. Such amounts do not
include prepayment penalties which would be incurred upon the early
extinguishment of certain debt issues.

Debt Issue Costs -- Debt issue costs of $12,649,373 and $12,649,373, net of
accumulated amortization of $3,346,706 and $5,636,201 at December 31, 2000 and
2001, respectively, related to the Subordinated Notes, the Credit Facility, the
Cinemark Investments Credit Agreement, the Cinemark Mexico Credit Agreement, the
Note Payable with Lehman Brothers Bank, FSB and other debt agreements are
included in deferred charges and other.

9. INCOME TAXES

Income tax expense (benefit) below includes benefits from the cumulative
effect of a change in accounting principle in 1999 of $417,570 and consists of
the following:

1999 2000 2001
----------- ------------ ------------

Income (loss) before income taxes and
cumulative effect of an accounting change:
U.S. ...................................... $ 1,650,202 $(19,346,190) $(19,205,463)
Foreign.................................... 6,061,587 9,174,826 1,069,566
----------- ------------ ------------
Total................................. 7,711,789 (10,171,364) (18,135,897)
=========== ============ ============
Current:
Federal.................................... (1,173,611) (195,831) (2,958,614)
Foreign income taxes....................... 2,274,967 3,798,679 4,568,671
State...................................... 215,129 (94,801) 59,860
----------- ------------ ------------
Total current expense................. 1,316,485 3,508,047 1,669,917
Deferred:
Temporary differences
Federal................................. (1,314,858) (5,630,239) (2,638,940)
Foreign................................. 3,586,790 2,439,635 (11,298,230)
State................................... (298,270) (65,722) (1,847,376)
----------- ------------ ------------
Total deferred expense................ 1,973,662 (3,256,326) (15,784,546)
----------- ------------ ------------
Income tax expense (benefit)....... $ 3,290,147 $ 251,721 $(14,114,629)
=========== ============ ============

F-17

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation between income tax expense (benefit) and taxes computed by
applying the applicable statutory federal income tax rate to income before
income taxes follows:

1999 2000 2001
----------- ----------- ------------

Computed normal tax expense................... $ 2,699,126 $(3,559,977) $ (6,347,564)
Goodwill amortization, not deductible for tax
purposes.................................... 353,069 284,389 375,616
Foreign inflation adjustments -- depreciation,
exchange gain/loss, interest................ (796,699) (24,208) (242,526)
Inflation adjustment of foreign assets........ -- -- (10,339,018)
State and local income taxes, net of federal
income tax benefit.......................... 89,940 (185,248) (1,787,517)
Undistributed foreign earnings................ 33,243 -- --
Adoption of APB 23 on prior undistributed
earnings.................................... (2,167,642) -- --
Foreign subsidiaries losses not benefited..... 1,858,930 1,201,608 2,963,052
Foreign tax rate differential................. 1,366,220 1,091,943 1,812,838
Jobs tax credits.............................. (56,569) 23,441 46,467
Other -- net.................................. (89,471) 1,419,773 (595,977)
----------- ----------- ------------
Income tax expense (benefit)........ $ 3,290,147 $ 251,721 $(14,114,629)
=========== =========== ============

Deferred income taxes are provided in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109. Taxes are provided under the
liability method for temporary differences between revenue and expenses that are
recognized for tax return and financial reporting purposes. The tax effects of
significant temporary differences and tax loss and tax credit carryforwards
comprising the net long-term deferred income tax (asset) liability at December
31, 2000 and 2001, consist of the following:

2000 2001
----------- ------------

Deferred liabilities:
Fixed assets............................................ $46,694,060 $ 37,409,581
Basis difference of assets acquired..................... 84,835 84,835
FAS 52 adjustment....................................... 2,803,678 2,803,678
Other................................................... 3,536,756 2,197,431
----------- ------------
Total........................................... 53,119,329 42,495,525
----------- ------------

F-18

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2000 2001
----------- ------------

Deferred assets:
Deferred lease expenses................................. 6,292,645 8,501,387
Section 263(a) inventory adjustment..................... 2,722,495 3,091,756
Amortization of unearned compensation................... 2,311,818 845,025
Self-insurance accruals................................. 645,615 757,793
Asset impairment loss................................... 7,105,860 14,377,386
Sale/leasebacks gain.................................... 2,545,710 2,405,746
Deferred screen advertising............................. 4,715,733 2,859,497
Foreign tax loss carryforward........................... 6,416,083 11,111,559
Federal tax loss carryforward........................... 3,901,180 7,111,399
AMT credit carryforward................................. 6,027,625 4,383,646
Other expenses, not currently deductible for tax
purposes............................................. 1,852,238 2,588,026
----------- ------------
Total........................................... 44,537,002 58,033,220
----------- ------------
Net long-term deferred income tax (asset) liability before
valuation allowance..................................... 8,582,327 (15,537,695)
Valuation allowance....................................... 6,249,351 11,821,489
----------- ------------
Net long-term deferred income tax (asset) liability....... $14,831,678 $ (3,716,206)
=========== ============

In 2001, the Company recorded $2,763,338 of income tax benefit as a
cumulative foreign currency translation adjustment to the accumulated other
comprehensive loss account as a reduction of stockholders' equity.

In 2001, management concluded the operations of Mexico would continue to be
profitable for the Company. As a result, the Company reviewed its deferred tax
assets and liabilities for amounts that would have previously been subject to a
valuation allowance and thus not reflected within its inventory of deferred tax
assets and liabilities. Mexico requires the tax basis of non-monetary assets be
annually adjusted for inflation. Accordingly, the Mexican tax basis of
non-monetary assets has been adjusted for inflation and the valuation allowance
associated with the deferred tax asset has been removed. These revisions
resulted in a 2001 benefit to income taxes of $10,339,018.

The Company's AMT credit carryforward may be carried forward indefinitely.
The foreign net operating losses will expire beginning in 2002; however, some
losses may be carried forward indefinitely. The federal net operating loss will
expire in 2020.

In March 2002, the Job Creation and Worker Assistance Act (the "Act") was
signed into law. Among the many provisions of this Act, the Company will be
allowed to carryback the tax loss incurred in 2001 to 1996 to recover regular
taxes paid. The impact of this Act has not been reflected in the calculation of
deferred taxes.

Beginning January 1, 1999, management plans to reinvest the undistributed
earnings of its foreign subsidiaries located in Mexico, Peru, Argentina and
Honduras. As a result, for years beginning after 1998, deferred U.S. federal
income taxes are not provided on the undistributed earnings of these foreign
subsidiaries in accordance with Accounting Principles Board Opinion No. 23.

The cumulative amount of undistributed earnings of these foreign
subsidiaries on which the Company has not recognized income taxes is
approximately $26 million.

F-19

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's valuation allowance increased from $6,249,351 at December 31,
2000 to $11,821,489 at December 31, 2001. This change was primarily due to
foreign tax loss carryforwards and unearned compensation that was previously
recognized for U.S. GAAP purposes that the Company does not believe they have a
more likely than not opportunity to utilize.

10. COMMITMENTS AND CONTINGENCIES

Leases -- The Company conducts a significant part of its theatre operations
in leased premises under noncancelable operating leases with terms of 5 to 30
years. In addition to the minimum annual lease payments, most of these leases
provide for contingent rentals based on operating results and require the
payment of taxes, insurance and other costs applicable to the property.
Generally, these leases include renewal options for various periods at
stipulated rates. Some leases also provide for escalating rent payments
throughout the lease term. Deferred lease expenses of $20,475,247 and
$22,832,388 at December 31, 2000 and 2001, respectively, have been provided to
account for lease expenses on a straight-line basis, where lease payments are
not made on such basis. Rent expense for the years ended December 31 is as
follows:

1999 2000 2001
----------- ------------ ------------

Fixed rent expense.......................... $74,191,987 $ 86,226,132 $ 91,095,537
Contingent rent expense..................... 15,616,356 22,262,473 23,640,988
----------- ------------ ------------
Facility lease expense...................... $89,808,343 $108,488,605 $114,736,525
Corporate office rent expense............... 122,681 1,410,087 1,400,166
----------- ------------ ------------
Total rent expense.......................... $89,931,024 $109,898,692 $116,136,691
=========== ============ ============

In February 1998, the Company completed a sale leaseback transaction with
affiliates of Primus Capital, L.L.C. (the "Sale Leaseback"). Pursuant to the
Sale Leaseback, the Company sold the land, buildings and site improvements of
twelve theatre properties to third party special purpose entities formed by
Primus Capital, L.L.C. for an aggregate purchase price equal to approximately
$131.5 million resulting in a gain on disposal of the properties of $3,790,759.
In October 1998, the Company completed a second sale leaseback transaction with
affiliates of Primus Capital, L.L.C. (the "Second Sale Leaseback"). Pursuant to
the Second Sale Leaseback, the Company sold the land, building and site
improvements of one theatre property to a third party special purpose entity for
an aggregate purchase price equal to approximately $13.9 million resulting in a
gain on disposal of the property of $700,000. In December 1999, the Company
completed a third sale leaseback transaction (the "Third Sale Leaseback")
pursuant to which the Company sold the land, building and site improvements of
its corporate office to a third party special purpose entity for an aggregate
purchase price equal to approximately $20.3 million resulting in a gain on
disposal of the property of $1,470,000. The Company deferred the entire gain of
$5,960,759 from all three sale leaseback transactions and is recognizing them
evenly over the lives of the leases (ranging from 10 to 20 years). As of
December 31, 2001, $1,222,219 of the deferred gain has been recognized leaving
an aggregate deferred gain of $4,738,540 remaining to be amortized. Future
minimum payments under these leases are due as follows: $16,175,438 in 2002,
$16,175,438 in 2003, $16,175,438 in 2004, $16,175,438 in 2005, $16,175,438 in
2006 and $171,534,940 thereafter.

F-20

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum payments under noncancelable capital leases (recorded in
accrued other current liabilities) and operating leases (including leases under
the aforementioned sale leaseback transactions) with initial or remaining terms
in excess of one year at December 31, 2001, are due as follows:

CAPITAL OPERATING
LEASES LEASES TOTALS
-------- -------------- --------------

2002....................................... $243,007 $ 102,479,712 $ 102,722,719
2003....................................... 220,401 105,040,090 105,260,491
2004....................................... -- 104,934,013 104,934,013
2005....................................... -- 105,326,588 105,326,588
2006....................................... -- 104,835,470 104,835,470
Thereafter................................. -- 1,044,733,379 1,044,733,379
-------- -------------- --------------
Total...................................... $463,408 $1,567,349,252 $1,567,812,660
======== ============== ==============

Employment Agreements -- Pursuant to the terms of the agreements, the
Company's two employment agreements with a principal officer and a stockholder
expired on December 31, 2001. The principal officer and that stockholder
continue to be employed by the Company.

Retirement Savings Plan -- The Company has a 401(k) profit sharing plan for
the benefit of all employees and makes contributions as determined annually by
the Board of Directors. Contribution payments of $935,666 and $697,848 were made
in 2000 (for plan year 1999) and 2001 (for plan year 2000), respectively. A
liability of $1,067,671 has been recorded at December 31, 2001 for contribution
payments to be made in 2002 (for plan year 2001).

Letters of Credit and Collateral -- The Company had outstanding letters of
credit of $996,438 and $448,888 in connection with property and liability
insurance coverage, sales tax and other environmental matters at December 31,
2000 and 2001, respectively.

Litigation and Litigation Settlements -- The Company currently is a
defendant in certain litigation proceedings alleging certain violations of the
Americans with Disabilities Act of 1990 (the "ADA") relating to accessibility of
movie theatres for handicapped and deaf patrons.

In March 1999, the Department of Justice filed suit in the U.S. District
Court, Northern District of Ohio, Eastern Division, against the Company alleging
certain violations of the ADA relating to the Company's wheelchair seating
arrangements and seeking remedial action. An Order granting Summary Judgment to
the Company was issued in November 2001. The Department of Justice has filed a
Notice of Appeal with the Sixth Circuit Court of Appeals. If the Company loses
this litigation, its financial position, results of operations and cash flows
may be materially and adversely affected. The Company is unable to predict the
outcome of this litigation or the range of potential loss, however, management
believes that based upon current precedent the Company's potential liability
with respect to such proceeding is not material in the aggregate to the
Company's financial position, results of operations and cash flows. Accordingly,
the Company has not established a reserve for loss in connection with this
proceeding.

In February 2000, Barbara Cornilles, Edwin Cornilles, Dorothy Johnson,
Damara Paris, Stephen Purvis, George Scheler, Susan Teague and Jackie Woltring
filed suit in the U.S. District Court for the District of Oregon against the
Company, Regal Cinemas, Inc., Century Theatres, Inc., and Carmike Cinemas, Inc.
alleging certain violations of the ADA relating to accessibility of movie
theatres for deaf patrons. An Order granting Summary Judgement to the Company
was issued by a federal magistrate judge in December 2001 which was ratified by
the federal district judge in March 2002. In April 2002, the plaintiffs agreed
not to appeal the summary judgement ruling.

F-21

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In August 2001, David Wittie, Rona Schnall, Ron Cranston, Jennifer McPhail,
Peggy Garaffa and ADAPT of Texas filed suit in the 201st Judicial District Court
of Travis County, Texas alleging certain violations of the Human Resources Code,
the Texas Architectural Barriers Act, the Texas Accessibility Standards and the
Deceptive Trade Practices Act relating to accessibility of movie theatres for
patrons using wheelchairs at two theatres located in the Austin, Texas market.
The plaintiffs are seeking remedial action and unspecified damages. The Company
has filed an answer denying the allegations and is vigorously defending this
suit. The Company is unable to predict the outcome of this litigation or the
range of potential loss, however, management believes that based upon current
precedent the Company's potential liability with respect to such proceeding is
not material in the aggregate to the Company's financial position, results of
operations and cash flows. Accordingly, the Company has not established a
reserve for loss in connection with this proceeding.

In July 2001, Sonia-Rivera-Garcia and Valley Association for Independent
Living filed suit in the 93rd Judicial District Court of Hidalgo County, Texas
alleging certain violations of the Human Resources Code, the Texas Architectural
Barriers Act, the Texas Accessibility Standards and the Deceptive Trade
Practices Act relating to accessibility of movie theatres for patrons using
wheelchairs at one theatre located in the Mission, Texas market. The plaintiffs
are seeking remedial action and unspecified damages. The Company has filed an
answer denying the allegations and is vigorously defending this suit. The
Company is unable to predict the outcome of this litigation or the range of
potential loss, however, management believes that based upon current precedent
the Company's potential liability with respect to such proceeding is not
material in the aggregate to the Company's financial position, results of
operations and cash flows. Accordingly, the Company has not established a
reserve for loss in connection with this proceeding.

From time to time, the Company is involved in other various legal
proceedings arising from the ordinary course of its business operations, such as
personal injury claims, employment matters and contractual disputes, most of
which are covered by insurance. The Company believes its potential liability
with respect to proceedings currently pending is not material in the aggregate
to the Company's financial position, results of operations and cash flows.

11. MINORITY INTERESTS IN SUBSIDIARIES

Common Stockholders' Equity -- Minority ownership interests in subsidiaries
of the Company are as follows at December 31:

2000 2001
----------- -----------

Cinemark Brasil S.A. -- 47.2% interest..................... $16,625,590 $23,014,621
Cinemark Partners II -- 49.2% interest..................... 5,822,593 5,954,244
Cinemark Equity Holdings Corp. (Central America) -- 49.9%
interest................................................. 2,490,476 2,627,419
Cinemark Colombia, S.A. -- 49.0% interest.................. 1,551,712 1,343,431
Cinemark del Ecuador, S.A. -- 40.0% interest............... 605,924 685,872
Cinemark de Mexico, S.A. de C.V. -- 5.0% interest.......... 17,880 1,188,022
Others..................................................... 577,352 540,053
----------- -----------
Total............................................ $27,691,527 $35,353,662
=========== ===========

12. CAPITAL STOCK

Common and Preferred Stocks -- Our Class A and Class B common stockholders
are entitled to vote together as a class on all matters submitted to a vote of
our stockholders, except that the holders of Class A common stock are entitled
to one vote for each share held and the holders of Class B common stock are
entitled to ten votes for each share held. Other than these voting rights, the
holders of Class A common stock

F-22

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and Class B common stock have identical rights and privileges in every respect.
Each share of Class B common stock is convertible into one share of Class A
common stock at the option of the holder or automatically upon a transfer of the
holder's Class B common stock, other than to certain transferees. Our common
stockholders do not have cumulative voting rights. Subject to the rights of
holders of any then outstanding shares of our preferred stock, our common
stockholders are entitled to any dividends that may be declared by our board of
directors. Holders of our common stock are entitled to share ratably in our net
assets upon our dissolution or liquidation after payment or provision for all
liabilities and any preferential liquidation rights of our preferred stock then
outstanding. Other than the Mitchell Group and Cypress to whom we have granted
preemptive rights under the Stockholders' Agreement, our common stockholders
have no preemptive rights to purchase shares of our stock. The shares of our
common stock are not subject to any redemption provisions and, other than the
Class B common stock, are not convertible into any other shares of our capital
stock. All outstanding shares of our common stock are, and the shares of common
stock to be issued in the offering will be, upon payment therefor, fully paid
and nonassessable. The rights, preferences and privileges of holders of our
common stock will be subject to those of the holders of any shares of our
preferred stock we may issue in the future.

The Company has 50,000,000 shares of preferred stock, $0.001 par value,
authorized with none issued or outstanding. The rights and preferences of
preferred stock will be determined by the Board of Directors at the time of
issuance.

Our ability to pay dividends is effectively limited by the Company's status
as a holding company and the terms of our indentures and certain of our other
debt instruments, which significantly restrict the ability of certain of the
Company's subsidiaries to pay dividends directly or indirectly to the Company.
Furthermore, certain of the Company's foreign subsidiaries currently have a
deficit in retained earnings which prevents the Company from declaring and
paying dividends from those subsidiaries.

Employee Stock Option Plan -- Under terms of the Company's 1991
Nonqualified Stock Option Plan, nonqualified options to purchase up to 2,350,700
shares of the Company's Class A Common Stock may be granted to key employees.
All options vest and are exercisable over a period of five years from the date
of grant and expire ten years from the date of grant. A summary of the Company's
1991 Nonqualified Stock Option Plan activity and related information for the
years ended December 31, 1999, 2000 and 2001 is as follows:

1999 2000 2001
-------------------------- -------------------------- ---------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- -------------- --------- -------------- ---------- --------------

Outstanding at
January 1.......... 1,566,620 $0.0045 1,566,620 $0.0045 1,350,360 $0.0045
Granted............ -- -- -- -- 56,760 0.0045
Forfeited.......... -- -- (25,300) 0.0045 (326,700) 0.0045
Exercised.......... -- -- (155,980) 0.0045 (1,080,420) 0.0045
Repurchased........ -- -- (34,980) 0.0045 -- --
--------- ------- --------- ------- ---------- -------
Outstanding at
December 31........ 1,566,620 $0.0045 1,350,360 $0.0045 -- $ --
========= ======= ========= ======= ========== =======
Options exercisable
at December 31..... 1,418,780.. $0.0045 1,272,040 $0.0045 -- $ --
========= ======= ========= ======= ========== =======

The Company repurchased options to purchase 34,980 shares of Class A Common
Stock held by an employee in February 2000. The aggregate purchase price for
such options was $266,166, of which $198,432

F-23

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

is included in salaries and wages expense. The Company believes that the market
value of a share of Class A Common Stock on the date of grant for the 56,760
shares granted in October 2001 exceeded the option price by approximately $1.50.
These options were immediately vested and exercised which resulted in $84,882 of
compensation expense being recorded at that time. In October 2001, all remaining
unvested options under this Plan were vested with additional compensation
expense of approximately $185,000 recorded for this accelerated vesting.

Independent Director Stock Options -- The Company has granted the
unaffiliated directors of the Company options to purchase up to an aggregate of
176,000 shares of the Company's Class A Common Stock at an exercise price of
$0.0045 per share (the "Director Options"). The options vest five years from the
date of grant and expire ten years from the date of grant. A director's options
are forfeited if the director resigns or is removed from the Board of Directors
of the Company.

A summary of the Company's Independent Directors Stock Options activity and
related information for the years ended December 31, 1999, 2000 and 2001 is as
follows:

1999 2000 2001
------------------------ ------------------------ ------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------- -------------- ------- -------------- ------- --------------

Outstanding at January
1..................... 176,000 $0.0045 176,000 $0.0045 176,000 $0.0045
Granted............... -- -- -- -- -- --
Forfeited............. -- -- -- -- -- --
Exercised............. -- -- -- -- (44,000) $0.0045
------- ------- ------- ------- ------- -------
Outstanding at December
31.................... 176,000 $0.0045 176,000 $0.0045 132,000 $0.0045
======= ======= ======= ======= ======= =======
Options exercisable at
December 31........... 132,000 $0.0045 132,000 $0.0045 88,000 $0.0045
======= ======= ======= ======= ======= =======

The weighted average remaining contractual life of the 132,000 options
outstanding at December 31, 2001 is three years.

Long-Term Incentive Plan -- In November 1998, the Board approved a
Long-Term Incentive Plan (the "Long Term Incentive Plan") under which the
Compensation Committee of the Board of Directors, in its sole discretion, may
grant employees incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock awards, performance units, performance
shares or phantom stock up to an aggregate of 2,154,680 shares of the Company's
Class A Common Stock. The Compensation Committee has the discretion to set the
exercise price and the term (up to ten years) of the options. All awards under
the Long Term Incentive Plan vest at the rate of one-fifth of the total award
per year beginning one year from the date of grant, subject to acceleration by
the Compensation Committee. An employee's award under the Long Term Incentive
Plan is forfeited if the employee is terminated for cause. Upon termination of
the employee's employment with the Company, the Company has the option to
repurchase the award at the fair market value of the shares of Class A Common
Stock vested under such award as determined in accordance with the Long Term
Incentive Plan.

F-24

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the Company's Long Term Incentive Plan activity and related
information for the years ended December 31, 1999, 2000 and 2001 is as follows:

1999 2000 2001
-------------------------- -------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- -------------- --------- -------------- --------- --------------

Outstanding at
January 1.......... 1,199,000 $7.61 1,180,300 $7.61 1,059,300 $7.61
Granted............ 8,800 7.61 11,000 7.61 335,500 1.50
Forfeited.......... (27,500) 7.61 (132,000) 7.61 (115,500) 7.61
Exercised.......... -- -- -- -- -- --
--------- ----- --------- ----- --------- -----
Outstanding at
December 31........ 1,180,300 $7.61 1,059,300 $7.61 1,279,300 $6.01
========= ===== ========= ===== ========= =====
Options exercisable
at December 31..... 179,520 $7.61 421,520 $7.61 570,020 $7.61
========= ===== ========= ===== ========= =====

The weighted average remaining contractual life of the 1,279,300 options
outstanding at December 31, 2001 is seven years.

The Company believes that the market value of a share of Class A Common
Stock on the date of grant for the 8,800 options granted in January 1999
exceeded the option price by approximately $1.94. As a result, the Company
accrued $17,040 for unearned compensation and has been amortizing this non-cash
expense at a rate of $3,408 per year during the five year vesting period for the
options granted. The Company believes the market value of a share of Class A
Common Stock on the date of grant for the 11,000 options granted in January 2000
did not exceed the option price of $7.61 and thus no compensation expense was
recorded. The Company believed the market value on the date of grant of the
options granted in December 2001 did not exceed the option price of $1.50 per
share and thus no compensation expense was recorded. As discussed in Note 17,
the Company restated its 2001 financial statements to recognize additional
unearned compensation related to options granted in December 2001. In connection
with the Company's initial public offering of Class A common stock and Staff
Accounting Bulletin Topic 4.D., the Company revised the market value per share
for the 335,500 options granted in December 2001 to $11.45 per share which
exceeded the option price of $1.50 by $9.95 per share. As a result, the Company
accrued $3,338,225 for additional unearned compensation and will begin
amortizing this noncash expense in January 2002 at a rate of $667,645 per year
during the five year vesting period of the options granted. The long-term
incentive options expire ten years from the date of grant.

For all options, the excess of the estimated fair market value of the stock
at the dates of the grant over the exercise price is accounted for as additional
paid-in-capital and as unearned compensation, which is amortized to operations
over the vesting period. As a result of the above grants, unearned compensation
of $17,040, $0 and $3,423,107 was recorded in 1999, 2000 and 2001, respectively.
Compensation expense under these stock option plans was $1,049,176, $1,114,454
and $1,010,655 in 1999, 2000 and 2001, respectively, of which, $198,432 of the
compensation expense recorded in 2000 reflected actual compensation expense (as
opposed to non-cash amortization) paid out to an employee upon the repurchase of
options by the Company.

The Company applies APB Opinion 25 and related interpretations in
accounting for the Company's stock option plans. Had compensation costs for the
Company's stock option plans been determined based on the fair value at the date
of grant for awards under the plans consistent with the method of Statement of

F-25

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Financial Accounting Standards ("SFAS") No. 123, the Company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:

1999 2000 2001
---------- ------------ -----------

Net income (loss) As reported............. $1,035,435 $(10,423,085) $(4,021,268)
Pro forma............... 635,505 (10,823,866) (4,422,475)
Earnings (loss) per
share:
Basic As reported............. $ 0.03 $ (0.27) $ (0.10)
Pro forma............... 0.02 (0.28) (0.11)
Diluted As reported............. $ 0.02 $ (0.27) $ (0.10)
Pro forma............... 0.02 (0.28) (0.11)

The weighted average fair value per share of these stock options granted in
1999, 2000 and 2001 was $4.63 (all of which had exercise prices less than market
value at the date of grant), $2.69 (all of which had an exercise price that
equaled the market value at the date of grant) and $10.55 (all of which had
exercise prices less than market value at the date of grant), respectively. The
following assumptions were used in the calculation of fair value: dividend yield
of 0 percent; an expected life of 10 years; expected volatility of 45 percent;
and risk-free interest rates of 4.4 percent.

During 2000 and 2001, we experienced actual tax deductible compensation
that was less than the compensation amounts recorded for book purposes. The
income tax effect of this difference was recorded as a reduction of
stockholders' equity only to the extent of previous increases in accordance with
paragraph 17 of APB No. 25 as follows:

2000........................................................ $ 207,764
==========
2001........................................................ $1,376,634
==========

13. OTHER RELATED PARTY TRANSACTIONS

In addition to transactions discussed in other notes to the financial
statements, the following transactions with related companies are included in
the Company's financial statements:

1999 2000 2001
---------- ---------- ----------

Facility lease expense -- theatre and equipment
leases with stockholder affiliates............. $ 295,171 $ 268,101 $ 272,341
Video game machine revenues -- a subsidiary of an
affiliate...................................... 2,679,490 2,714,817 2,558,693
Management fee revenues for property and theatre
management:
Equity investees............................... 184,781 136,926 148,798
Other related parties.......................... -- 27,955 50,714

The Company manages one theatre with 12 screens for Laredo Theatre, Ltd.
Lone Star Theatres, Inc. owns 25% of the limited partnership interests in
Laredo. The Company is the sole general partner and owns the remaining limited
partnership interests. Lone Star Theatres, Inc. is owned 100% by Mr. David
Roberts, who is Mr. Mitchell's son-in-law. Under the agreement, management fees
are paid by Laredo to the Company at a rate of 5% of theatre revenues in each
year up to $50,000,000 and 3% of theater revenues in each year in excess of
$50,000,000. The Company received $180,366 of management fee revenues and
dividends of $487,500 from Laredo in 2001. In 2001, Laredo distributed dividends
of $162,500 to Lone Star Theatres in

F-26

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accordance with the terms of the limited partnership agreement. All such amounts
are included in the Company's consolidated financial statements with the
intercompany amounts eliminated in consolidation.

The Company managed two theatres with 11 screens for Westward Ltd. in 2001.
Westward is a Texas limited partnership of which Cinemark of Utah, Inc. is the
general partner and owns a 1% interest in Westward. Cinemark of Utah, Inc. is
100% owned by Mr. Mitchell. Mr. Mitchell also owns a 48.425% limited partner
interest in Westward. Under the agreement, management fees are paid to us by
Westward at a rate of 3% of theatre revenues. The Company recorded $29,325 of
management fee revenues from Westward in 2001. The term ends in November 2002.
However, we have the option to renew for one or more five-year periods. One of
the two theatres managed by the Company was closed by Westward in February 2002.

The Company managed one theatre with eight screens for Mitchell Theatres.
Mitchell Theatres is 100% owned by members of Mr. Mitchell's family. Under the
agreement, management fees are paid to us by Mitchell Theatres at a rate of 5%
of theatre revenues. The Company recorded $21,389 of management fee revenues
from Mitchell Theatres in 2001. The term ends in November 2003. However, we have
the option to renew for one or more five-year periods.

The Company leases one theatre with 7 screens from Plitt Plaza joint
venture. Plitt Plaza is indirectly owned by Lee Roy Mitchell. The term of the
lease expires in July 2003, however we have 2 five-year renewal options. The
annual rent is approximately $264,000 plus certain taxes, maintenance expenses,
insurance, and a percentage of gross admission and concession receipts in excess
of certain amounts. The Company recorded $272,341 of facility lease expense
payable to Plitt Plaza joint venture during 2001.

During 2001, Cinemark Brasil S.A. received additional capital from its
Brazilian shareholders in an aggregate amount equal to approximately $11.0
million (US dollar equivalent) in exchange for shares of common stock of
Cinemark Brasil S.A. The contributions were made in July in the aggregate amount
of $5.0 million (US dollar equivalent) and in November in the aggregate amount
of $6.0 million (US dollar equivalent). The additional capital will be used to
fund development in Brazil and to reduce Cinemark Brasil S.A.'s outstanding
indebtedness. After giving effect to the additional issuance of common stock,
Cinemark International's ownership interest was diluted to approximately 53%. As
part of the additional capitalization, the Company agreed to give the Brazilian
partners an option to exchange shares they own in Cinemark Brasil S.A. for
shares of the class of the Company's common stock which is registered in an
initial public offering under the Securities Act of 1933, as amended, occurring
at any time prior to December 31, 2007. If the Brazilian partners exercise their
exchange option, the Company will obtain appraisals from independent investment
banks of the fair market value of the Company and of Cinemark Brasil S.A. The
number of shares to be issued will be determined by multiplying the number of
shares of common stock owned by each Brazilian partner by a fraction, the
numerator of which is equal to the appraised value per share of Cinemark Brasil
S.A. and the denominator of which is equal to the appraised value per share of
the Company's common stock.

The Company entered into a profit participation agreement with its
President, Alan Stock, pursuant to which Mr. Stock receives a profit interest in
two recently built theatres after the Company recovered its capital investment
in these theatres plus its borrowing costs. Under this agreement, operating
losses and disposition losses for any year are allocated 100% to the Company.
Operating profits and disposition profits for these theatres for any fiscal year
are allocated first to the Company to the extent of total operating losses and
losses from any disposition of these theatres. Thereafter, net cash from
operations from these theatres or from any disposition of these theatres is paid
first to the Company until such payments equal the Company's investment in these
theatres, plus interest, and then 51% to the Company and 49% to Mr. Stock. In
the event that Mr. Stock's employment is terminated without cause, profits will
be distributed according to this formula without first allowing the Company to
recoup our investment plus interest thereon. No amounts have been paid to Mr.
Stock to date pursuant to the profit participation agreement. Upon completion of
this offering, the Company will have the option to purchase Mr. Stock's interest
in the theatres for a price equal to the fair market value of the profit
interest, as determined by an independent appraiser. The Company does not

F-27

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

anticipate exercising this option in connection with this offering. The Company
does not intend to enter into similar arrangements with its executive officers
in the future.

The Company entered into the Stockholders' Agreement dated May 17, 2002
with the Mitchell Group and Cypress. Among other things, the Stockholders'
Agreement provides that, subject to certain conditions and exceptions, the
Company must obtain the consent of Cypress for certain corporate acts including,
but not limited to, amendments to the Company's certificate of incorporation,
approval of annual budgets under certain circumstances, asset dispositions or
acquisitions in excess of specified amounts, merger, sale of substantially all
assets or consolidation, incurrence of indebtedness over specified amounts,
certain stock redemptions or non pro rata dividends, transactions with
affiliates over specified amounts, certain management changes or new
compensation plans, financing theatres through limited partnerships, settlements
of litigation over specified amounts and issuance of common stock by private
placement. The above-described provisions terminate on the earlier of (1) the
public owning 25% or more of the Company's common stock, (2) a merger with and
into any publicly traded company or (3) four years after the date of the
Stockholders' Agreement. The Stockholders' Agreement also provides that Cypress
will have the right to exchange their shares of the Company's Class A common
stock for an equal number of shares of the Company's Class B common stock. The
Stockholders' Agreement also contains a voting agreement pursuant to which the
Mitchell Group agrees to vote their shares of common stock to elect certain
designees of Cypress to the Company's board of directors.

14. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

The Company operates in a single business segment as a motion picture
exhibitor. The Company is a multinational corporation with consolidated
operations in the U.S., Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru,
Honduras, El Salvador, Nicaragua, Costa Rica and Colombia as of December 31,
2001. Revenues in the U.S. and Canada, Mexico, Brazil and other foreign
countries for the years ended December 31 are as follows:

REVENUES 1999 2000 2001
-------- ------------ ------------ ------------

U.S. and Canada............................ $556,592,053 $597,913,928 $644,095,881
Mexico..................................... 56,123,717 61,907,651 77,266,984
Brazil..................................... 39,971,020 60,740,586 62,188,321
Other foreign countries.................... 60,601,933 66,593,322 71,101,287
Eliminations............................... (684,527) (891,630) (994,005)
------------ ------------ ------------
Total............................ $712,604,196 $786,263,857 $853,658,468
============ ============ ============

Long-lived assets in the U.S. and Canada, Mexico, Brazil and other foreign
countries as of December 31 are as follows:

LONG-LIVED ASSETS 1999 2000 2001
----------------- ------------ ------------ ------------

U.S. and Canada............................ $746,317,091 $735,698,077 $667,881,369
Mexico..................................... 61,202,181 69,110,248 78,036,408
Brazil..................................... 60,792,003 68,294,098 62,080,875
Other foreign countries.................... 65,647,784 77,032,297 58,407,765
------------ ------------ ------------
Total............................ $933,959,059 $950,134,720 $866,406,417
============ ============ ============

15. ASSET IMPAIRMENT LOSS

The Company reviews long-lived assets, including goodwill, for impairment
in conjunction with the preparation of the Company's quarterly consolidated
financial statements and 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 flow, future years budgeted theatre level
cash flow, theatre property and equipment values, goodwill values, competitive
theatres in the marketplace, theatre operating cash flows

F-28

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

compared to annual long-term lease payments, the sharing of a market with other
Company theatres, the age of a recently built theatre and other factors in its
assessment of impairment of individual theatre assets. The impairment evaluation
is based on the estimated cash flows from theatres 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 for leased properties and a
period of twenty years for fee owned properties.

The Company wrote down the assets of certain properties to be held and used
to their fair value by recording impairment charges of $3,720,390, $3,872,126
and $20,723,274 in 1999, 2000 and 2001, respectively. The impairment charges
were recognized in the third and fourth quarters of 1999, the first, second,
third, and fourth quarters of 2000 and the first and fourth quarters of 2001,
respectively. All of the impairment charges recorded were in the U.S. except for
an impairment charge of $1,712,750 recorded in Brazil in the fourth quarter of
2001.

16. LOSS ON SALE OF ASSETS AND OTHER

The Company recorded a loss on sale of assets and other in the amount of
$2,419,511, $912,298 and $12,407,696 in 1999, 2000, and 2001, respectively.
Included in loss on sale of assets and other in 2001 is a charge of $7,217,975
to write down one property to be disposed of in the U.S. to fair value and a
charge of $1,471,947 to write down one property to be disposed of in Argentina
to fair value.

17. RESTATEMENT

Subsequent to the issuance of the Company's 2001 consolidated financial
statements, the Company's management determined that it should revise the fair
value of employee stock options granted during December 2001. This determination
was based in part on the timing between the original valuation and the proposed
initial public offering of the Company's Class A common stock. The Company's
management believed that on the date of grant the common stock had a fair value
of $1.50 per share. In connection with the Company's public offering of common
stock and Staff Accounting Bulletin Topic 4.D., the Company revised this fair
value to $11.45 per share. As a result, the 2001 financial statements have been
restated from amounts previously reported to record additional unearned
compensation of $3,338,225 as of December 31, 2001.

The amounts shown below as previously reported give effect to the reverse
stock split discussed in Note 1. A summary of the significant effects of the
restatement, including the effect of the reverse stock split, is as follows:

AS OF DECEMBER 31, 2001
---------------------------
AS PREVIOUSLY
REPORTED AS RESTATED
------------- -----------

Balance Sheet Data:
Additional paid-in-capital................................ $37,029,524 $40,367,749
Unearned compensation -- stock options.................... (887,779) (4,226,004)

F-29

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

2001
------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER(1) YEAR
------------ ------------ ------------ ------------ ------------

Revenues............... $196,070,072 $202,358,859 $240,020,565 $215,208,972 $853,658,468
Operating income....... 16,518,623 16,778,470 29,030,293 (4,738,766) 57,588,620
Net income (loss)...... (2,662,518) (2,326,525) 5,567,970 (4,600,195) (4,021,268)
Net income (loss) per
share:
Basic................ $ (0.07) $ (0.06) $ 0.15 $ (0.11) $ (0.10)
Diluted.............. (0.07) (0.06) 0.14 (0.11) (0.10)

2000
------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
------------ ------------ ------------ ------------ ------------

Revenues............... $174,865,578 $187,978,703 $220,079,923 $203,339,653 $786,263,857
Operating income....... 9,544,274 13,617,913 25,764,363 14,421,921 63,348,471
Net income (loss)...... (5,561,686) (3,850,413) 4,324,925 (5,335,911) (10,423,085)
Net income (loss) per
share:
Basic................ $ (0.15) $ (0.10) $ 0.11 $ (0.14) $ (0.27)
Diluted.............. (0.15) (0.10) 0.10 (0.14) (0.27)

---------------

(1) During the fourth quarter of 2001, the Company recorded approximately $20
million of impairment charges as described in Note 15 and approximately $8
million of loss on sale of assets and other as described in Note 16.

F-30

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

MARCH 31, DECEMBER 31,
2002 2001
-------------- --------------

ASSETS
Current assets
Cash and cash equivalents................................. $ 59,437,502 $ 50,199,223
Inventories............................................... 3,433,246 3,322,032
Accounts receivable....................................... 10,886,318 11,049,648
Income tax receivable..................................... 7,890,977 1,438,794
Prepaid expenses and other................................ 3,224,980 3,246,829
-------------- --------------
Total current assets.................................... 84,873,023 69,256,526
Theatre properties and equipment............................ 1,196,315,287 1,201,334,337
Less accumulated depreciation and amortization............ (349,849,591) (334,927,920)
-------------- --------------
Theatre properties and equipment -- net................. 846,465,696 866,406,417
Other assets
Goodwill -- net........................................... 11,240,945 15,124,954
Investments in and advances to affiliates................. 3,210,382 4,447,003
Deferred tax asset........................................ -- 3,716,206
Deferred charges and other -- net......................... 32,239,269 37,592,644
-------------- --------------
Total other assets...................................... 46,690,596 60,880,807
-------------- --------------
Total....................................................... $ 978,029,315 $ 996,543,750
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (AS RESTATED, SEE NOTE 12)
Current liabilities
Current portion of long-term debt......................... $ 59,126,699 $ 21,853,742
Accounts payable and accrued expenses..................... 92,064,347 117,501,526
-------------- --------------
Total current liabilities............................... 151,191,046 139,355,268
Long-term liabilities
Senior credit agreements.................................. 344,244,081 378,914,750
Senior subordinated notes................................. 380,180,547 380,187,674
Deferred lease expenses................................... 23,286,590 22,832,388
Deferred gain on sale leasebacks.......................... 4,647,060 4,738,540
Deferred income taxes..................................... 6,634,491 --
Deferred revenues and other long-term liabilities......... 8,877,575 9,824,212
-------------- --------------
Total long-term liabilities............................. 767,870,344 796,497,564

Minority interests in subsidiaries.......................... 36,442,960 35,353,662

Stockholders' equity
Class A Common Stock, $.001 par value: 350,000,000 shares
authorized, 19,563,280 shares issued and outstanding.... 19,563 19,563
Class B Common Stock, $.001 par value: 150,000,000 shares
authorized, 20,949,280 shares issued and outstanding.... 20,949 20,949
Additional paid-in-capital................................ 40,367,749 40,367,749
Unearned compensation -- stock options.................... (3,948,724) (4,226,004)
Retained earnings......................................... 51,537,242 44,696,299
Accumulated other comprehensive loss...................... (65,471,814) (55,541,300)
-------------- --------------
Total stockholders' equity.............................. 22,524,965 25,337,256
-------------- --------------
Total....................................................... $ 978,029,315 $ 996,543,750
============== ==============

See Notes to Condensed Consolidated Financial Statements
F-31

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
----------------------------
2002 2001
------------- ------------
(AS RESTATED,
SEE NOTE 12)

Revenues
Admissions................................................ $146,411,564 $127,838,738
Concession................................................ 69,286,218 57,843,747
Other..................................................... 11,004,324 10,387,587
------------ ------------
Total............................................. 226,702,106 196,070,072
Costs and expenses
Cost of operations:
Film rentals and advertising........................... 74,962,492 65,308,423
Concession supplies.................................... 11,981,820 10,272,880
Salaries and wages..................................... 22,550,434 21,478,604
Facility leases........................................ 29,149,610 28,791,406
Utilities and other.................................... 28,607,876 26,687,718
------------ ------------
Total cost of operations.......................... 167,252,232 152,539,031
General and administrative expenses....................... 10,643,017 9,842,940
Depreciation and amortization............................. 17,166,781 16,608,564
Asset impairment loss..................................... 558,398 450,000
Loss on sale of assets and other.......................... 539,192 110,914
------------ ------------
Total............................................. 196,159,620 179,551,449
Operating income............................................ 30,542,486 16,518,623
Other income (expense)
Interest expense.......................................... (14,740,312) (19,262,230)
Amortization of debt issue cost and debt discount......... (634,795) (643,128)
Interest income........................................... 483,339 369,644
Foreign currency exchange loss............................ (220,997) (1,152,129)
Equity in income (loss) of affiliates..................... 116,741 (37,678)
Minority interests in (income) loss of subsidiaries....... (876,471) 119,890
------------ ------------
Total............................................. (15,872,495) (20,605,631)
------------ ------------
Income (loss) before income taxes and cumulative effect of
an accounting change...................................... 14,669,991 (4,087,008)
Income taxes (benefit)...................................... 4,439,269 (1,424,490)
------------ ------------
Income (loss) before cumulative effect of an accounting
change.................................................... 10,230,722 (2,662,518)
Cumulative effect of a change in accounting principle, net
of income tax benefit of $0............................... (3,389,779) --
------------ ------------
Net income (loss)........................................... $ 6,840,943 $ (2,662,518)
============ ============
Earnings (loss) per share:
Basic:
Income (loss) before accounting change................. $ 0.25 $ (0.07)
Cumulative effect of an accounting change.............. (0.08) --
------------ ------------
Net income (loss)...................................... $ 0.17 $ (0.07)
============ ============
Diluted:
Income (loss) before accounting change................. $ 0.25 $ (0.07)
Cumulative effect of an accounting change.............. (0.08) --
------------ ------------
Net income (loss)...................................... $ 0.17 $ (0.07)
============ ============

See Notes to Condensed Consolidated Financial Statements
F-32

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
----------------------------
2002 2001
------------- ------------
(AS RESTATED,
SEE NOTE 12)

Operating activities
Net income (loss)......................................... $ 6,840,943 $ (2,662,518)
Noncash items in net income (loss):
Depreciation........................................... 16,957,553 15,918,706
Amortization of goodwill and other assets.............. 209,228 689,858
Amortization of foreign advanced rents................. 497,963 690,048
Amortized compensation -- stock options................ 277,280 206,860
Amortization of gain on sale leasebacks................ (91,480) (91,481)
Amortization of debt discount and premium.............. (7,127) (7,127)
Amortization of debt issue costs....................... 591,170 599,503
Loss on impairment of assets........................... 558,398 450,000
Loss on sale of assets and other....................... 539,192 110,914
Deferred lease expenses................................ 454,202 554,281
Deferred income tax expenses........................... 10,350,697 (2,139,418)
Equity in (income) loss of affiliates.................. (116,741) 37,678
Minority interests in income (loss) of subsidiaries.... 876,471 (119,890)
Cumulative effect of an accounting change.............. 3,389,779 --
Change in assets and liabilities:
Inventories............................................ (111,214) 287,591
Accounts receivable.................................... 163,330 (1,988,336)
Prepaid expenses and other............................. 21,849 134,048
Other assets........................................... 3,990,846 3,001,396
Advances with affiliates............................... 853,362 405,539
Accounts payable and accrued expenses.................. (26,383,816) (37,280,920)
Income tax receivable/payable.......................... (6,452,183) (223,595)
------------ ------------
Net cash provided by (used for) operating
activities.......................................... 13,409,702 (21,426,863)
Investing activities
Additions to theatre properties and equipment............. (8,656,770) (6,604,114)
Sale of theatre properties and equipment.................. 1,504,441 3,159,517
Dividends/capital returned from affiliates................ 500,000 --
------------ ------------
Net cash used for investing activities............... (6,652,329) (3,444,597)
Financing activities
Increase in long-term debt................................ 17,772,828 34,192,808
Decrease in long-term debt................................ (15,170,540) (2,220,484)
Increase in minority investment in subsidiaries........... 421,855 226,117
Decrease in minority investment in subsidiaries........... (209,028) (2,093,286)
------------ ------------
Net cash provided by financing activities............ 2,815,115 30,105,155
Effect of exchange rate changes on cash and cash
equivalents............................................... (334,209) (151,653)
------------ ------------
Increase in cash and cash equivalents....................... 9,238,279 5,082,042
Cash and cash equivalents:
Beginning of period....................................... 50,199,223 19,839,994
------------ ------------
End of period............................................. $ 59,437,502 $ 24,922,036
============ ============

See Notes to Condensed Consolidated Financial Statements
F-33

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. THE COMPANY AND BASIS OF PRESENTATION

On May 16, 2002, Cinemark, Inc. was formed as the Delaware holding company
of Cinemark USA, Inc. Each outstanding share, and each outstanding option to
purchase shares, of Cinemark USA, Inc. were exchanged for shares, and options to
purchase shares, of Cinemark, Inc. The accompanying financial statements have
been revised to reflect the historical financial data of Cinemark USA, Inc. as
though it were the financial data of Cinemark, Inc. All share and per share
amounts have been adjusted to retroactively reflect the share exchange and
reverse stock split in June 2002 for the periods presented.

Cinemark, Inc. and its subsidiaries (the "Company") is a leader in the
motion picture exhibition industry and owns or leases and operates motion
picture theatres in 33 states, Canada, Mexico, Argentina, Brazil, Chile,
Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Colombia and the
United Kingdom. The Company operates 3,014 screens in 278 theatres and manages
an additional 7 theatres (58 screens) at March 31, 2002.

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 (which, except for the cumulative effect of
an accounting change include only normal recurring adjustments) necessary to
state fairly the financial position and results of operations as of and for the
periods indicated. The condensed consolidated financial statements include the
accounts of Cinemark, Inc. and its subsidiaries. Majority-owned subsidiaries
that the Company controls are consolidated while those subsidiaries of which the
Company owns between 20% and 50% and does not control are accounted for as
affiliates under the equity method. The results of these subsidiaries and
affiliates are included in the financial statements effective with their
formation or from their dates of acquisition. Significant intercompany balances
and transactions are eliminated in the consolidation. Certain reclassifications
have been made to March 31, 2001 and December 31, 2001 amounts to conform to the
March 31, 2002 presentation.

These financial statements should be read in conjunction with the audited
annual financial statements and the notes thereto for the year ended December
31, 2001, included on pages F-3 through F-30 of this Registration Statement on
Form S-1. Operating results for the three month period ended March 31, 2002 are
not necessarily indicative of the results to be achieved for the full year.

F-34

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. EARNINGS (LOSS) PER SHARE

THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
----------- -----------

Income (loss) before cumulative effect of an accounting
change................................................... $10,230,722 $(2,662,518)
=========== ===========
Basic:
Weighted average Common shares outstanding............... 40,512,560 39,388,140
=========== ===========
Income (loss) before cumulative effect of an accounting
change per Common share.................................. $ 0.25 $ (0.07)
=========== ===========
Diluted:
Weighted average Common shares outstanding............... 40,512,560 39,388,140
Common equivalent shares for stock options............... 740,300 --
----------- -----------
Weighted average Common and Common equivalent shares
outstanding........................................... 41,252,860 39,388,140
=========== ===========
Income (loss) before cumulative effect of an accounting
change per Common and Common equivalent share............ $ 0.25 $ (0.07)
=========== ===========

Basic income (loss) per share is computed by dividing the income (loss) by
the weighted average number of shares of Common Stock of all classes outstanding
during the period. Diluted income (loss) per share is computed by dividing the
income (loss) by the weighted average number of shares of Common Stock and
potential issuable Common Stock using the treasury stock method. The dilutive
effect of the options to purchase Common Stock is excluded from the computation
of diluted income (loss) per share if their effect is antidilutive. At March 31,
2001, 2,585,660 options to purchase Common Stock have been excluded from the
diluted income (loss) per share calculation as their effect would have been
antidilutive.

3. COMPREHENSIVE INCOME (LOSS)

Statement of Financial Accounting Standards (SFAS) No. 130 establishes
standards for reporting and display of comprehensive income (loss) and its
components in the financial statements. The following components are reflected
in the Company's comprehensive income (loss):

THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
----------- -----------

Net income (loss).......................................... $ 6,840,943 $(2,662,518)
Foreign currency translation adjustment.................... (9,930,514) (3,063,383)
----------- -----------
Comprehensive loss......................................... $(3,089,571) $(5,725,901)
=========== ===========

4. FOREIGN CURRENCY TRANSLATION

The accumulated other comprehensive loss in stockholders' equity of
$65,471,814 and $55,541,300 at March 31, 2002 and December 31, 2001,
respectively, primarily relates to the unrealized adjustments from translating
the financial statements of Cinemark Argentina, S.A., Cinemark Brasil S.A.,
Cinemark Chile, S.A. and Cinemark de Mexico, S.A. de C.V. into U.S. dollars.

F-35

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For the majority of 2001, the country of Argentina utilized the peso as its
functional currency with it pegged at a rate of 1.0 peso to the U.S. dollar. As
a result of economic turmoil which began in December 2001, the Argentine
government announced several restrictions on currency conversions and transfers
of funds abroad in early January 2002. The Argentine government ended the
peso-dollar parity regime and established a dual exchange rate system, with a
"commercial rate" and a "market rate". The commercial rate of 1.4 pesos to the
U.S. dollar was to be utilized to settle all exports and certain essential
imports. The market rate traded for the first time on January 11, 2002 and
closed at a rate of 1.7 pesos to the U.S. dollar. As a result, the effect of
translating the December 31, 2001 peso balances for assets and liabilities into
U.S. dollars at the first known free-floating market rate as of January 11, 2002
(1.7 pesos to the U.S. dollar) is reflected as a cumulative foreign currency
translation adjustment to the accumulated other comprehensive loss account as a
reduction of stockholders' equity in the amount of $19.1 million at December 31,
2001. Income and expense accounts from January through November 2001 were
converted into U.S. dollars at the exchange rate of 1.0 peso to the U.S. dollar
and income and expense accounts in December 2001 were converted into U.S.
dollars at the exchange rate of 1.7 pesos to the U.S. dollar. On January 14,
2002, the Argentine government unified the commercial rate and the market rate
into one floating rate which is presently in use. At March 31, 2002, the
floating rate was 3.0 pesos to the U.S. dollar. As a result, the effect of
translating the March 31, 2002 peso balances for assets and liabilities into
U.S. dollars is reflected as a cumulative foreign currency translation
adjustment to the accumulated other comprehensive loss account as an additional
reduction of stockholder's equity in the amount of $11.1 million at March 31,
2002. Income and expense accounts from January through March 2002 were converted
into U.S. dollars at the prevailing average floating rate for each of those
three months.

In 2001 and 2002, all foreign countries where the Company has operations,
including Argentina, were deemed non-highly inflationary. Thus, any fluctuation
in the currency results in the Company recording a cumulative foreign currency
translation adjustment to the accumulated other comprehensive loss account as an
increase or reduction to stockholders' equity.

5. SUPPLEMENTAL CASH FLOW INFORMATION

The following is provided as supplemental information to the condensed
consolidated statements of cash flows:

THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
----------- -----------

Cash paid for interest..................................... $23,270,639 $28,295,479
Cash paid for income taxes................................. 764,884 796,030

F-36

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

The Company operates in a single business segment as a motion picture
exhibitor. The Company is a multinational corporation with consolidated
operations in the United States, Canada, Mexico, Argentina, Brazil, Chile,
Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Colombia and the
United Kingdom. Revenues in the United States and Canada, Mexico, Brazil and
other foreign countries for the three months ended March 31 are as follows:

THREE MONTHS ENDED
MARCH 31,
---------------------------
2002 2001
------------ ------------

Revenues
U.S. and Canada........................................ $169,061,159 $143,422,703
Mexico................................................. 22,051,762 16,750,662
Brazil................................................. 19,328,049 17,550,195
Other foreign countries................................ 16,547,126 18,560,844
Eliminations........................................... (285,990) (214,332)
------------ ------------
Total.................................................. $226,702,106 $196,070,072
============ ============

Long-lived assets in the United States and Canada, Mexico, Brazil and other
foreign countries as of March 31 are as follows:

MARCH 31,
---------------------------
2002 2001
------------ ------------

Long-Lived Assets
U.S. and Canada........................................ $656,610,712 $723,090,096
Mexico................................................. 77,439,104 70,836,242
Brazil................................................. 63,085,245 62,468,150
Other foreign countries................................ 49,330,635 77,793,479
------------ ------------
Total.................................................. $846,465,696 $934,187,967
============ ============

7. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company's condensed consolidated balance sheets as of March 31, 2002
and December 31, 2001 include an interest rate cap agreement recorded at its
fair value of $0.9 million and $1.1 million, respectively. This derivative asset
is recorded as a component of deferred charges and other on the Company's
condensed consolidated balance sheets. For the three month periods ended March
31, 2002 and 2001, a loss of $0.2 million and $0.7 million, respectively, has
been recorded as a component of interest expense in the condensed consolidated
statements of operations to recognize the decrease in the fair value of the
derivative asset.

8. ACCOUNTING FOR AMORTIZATION OF GOODWILL AND OTHER INTANGIBLE ASSETS

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". This statement
requires that goodwill and other intangible assets with indefinite useful lives
no longer be amortized, but instead be tested for impairment at least annually.

F-37

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's goodwill at December 31, 2001 was as follows:

GROSS CARRYING ACCUMULATED NET GOODWILL
GOODWILL AMOUNT AMORTIZATION AMOUNT
-------- -------------- ------------ ------------

The adoption of this accounting pronouncement resulted in the aggregate
write down of goodwill to fair value as a cumulative effect of a change in
accounting principle on January 1, 2002 as follows:

U.S. operations............................................. $ 27,226
Argentina operations........................................ 3,298,385
----------
$3,325,611
==========

The Company has recorded an additional impairment of goodwill in the amount
of $558,398 in the three month period ended March 31, 2002 (recorded as a
component of asset impairment loss in the condensed consolidated statement of
operations). The additional impairment of goodwill relates to a further
write-down of goodwill to fair value associated with the Company's Argentina
operations which continue to be impacted by the economic turmoil in the country.
Fair value for this goodwill reporting unit was estimated based on a multiple of
estimated cash flows for each of the individual Argentina properties. No
additional goodwill was acquired in the three month period ended March 31, 2002.

The Company's other intangible assets (included in deferred charges and
other on the Company's condensed consolidated balance sheet) at December 31,
2001 were as follows:

GROSS CARRYING ACCUMULATED NET INTANGIBLE
OTHER INTANGIBLE ASSETS AMOUNT AMORTIZATION ASSET AMOUNT
----------------------- -------------- ------------ --------------

Capitalized licensing fees................... $9,000,000 $ (566,666) $8,433,334
Trademarks................................... 147,919 (83,751) 64,168
Non-compete fee.............................. 72,403 (64,876) 7,527
Other intangible assets...................... 40,406 (24,243) 16,163
---------- ----------- ----------
$9,260,728 $ (739,536) $8,521,192
========== =========== ==========

Trademarks.................................................. $64,168
-------
$64,168
=======

The Company's other intangible assets have indefinite useful lives
remaining but were not written down on January 1, 2002 since they are presently
recorded at or below their fair value. The Company's capitalized licensing fees
have a definite useful life and thus are continuing to be amortized over the
remaining useful life period. The Company's non-compete fee has a definite
useful life and thus is continuing to be amortized over the remaining useful
life period.

F-38

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's other intangible assets at March 31, 2002 are as follows:

GROSS CARRYING ACCUMULATED NET INTANGIBLE
AMOUNT AMORTIZATION ASSET AMOUNT
-------------- ------------ --------------

Other Intangible Assets
Amortized Intangible Assets:
Capitalized licensing fees............... $9,000,000 $(691,666) $8,308,334
Non-compete fee.......................... 72,403 (68,103) 4,300
---------- --------- ----------
$9,072,403 $(759,769) $8,312,634
========== ========= ==========
Unamortized Intangible Assets:
Trademarks............................... $ 147,919 $(147,919) $ --
Other intangible assets.................. 40,406 (24,243) 16,163
---------- --------- ----------
$ 188,325 $(172,162) $ 16,163
========== ========= ==========
Aggregate Amortization Expense:
For the three month period ended March 31,
2002..................................... $ 209,228
=========

Estimated Amortization Expense:
For the year ended December 31, 2002...................... $507,527
For the year ended December 31, 2003...................... 500,000
For the year ended December 31, 2004...................... 500,000
For the year ended December 31, 2005...................... 500,000
For the year ended December 31, 2006...................... 500,000

The Company's non-compete fee will be fully amortized by December 31, 2002.

F-39

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The impact on net income (loss) and earnings (loss) per share related to
the adoption of this accounting pronouncement is as follows:

THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
----------- -----------

Reported net income (loss)............................... $ 6,840,943 $(2,662,518)
Add back: Cumulative effect of an accounting change...... 3,389,779 --
Add back: Goodwill amortization.......................... -- 359,046
Add back: Other intangible asset amortization............ -- 8,382
----------- -----------
Adjusted net income (loss)............................... $10,230,722 $(2,295,090)
=========== ===========
Basic earnings (loss) per share:
Reported net income (loss)............................... $ 0.17 $ (0.07)
Add back: Cumulative effect of an accounting change...... 0.08 --
Add back: Goodwill amortization.......................... -- 0.01
Add back: Other intangible asset amortization............ -- --
----------- -----------
Adjusted net income (loss)............................... $ .25 $ (0.06)
=========== ===========
Diluted earnings (loss) per share:
Reported net income (loss)............................... $ 0.17 $ (0.07)
Add back: Cumulative effect of an accounting change...... 0.08 --
Add back: Goodwill amortization.......................... -- 0.01
Add back: Other intangible asset amortization............ -- --
----------- -----------
Adjusted net income (loss)............................... $ 0.25 $ (0.06)
=========== ===========

9. NEW ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". This statement requires the establishment of a
liability for an asset retirement obligation. This statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company is currently considering the impact, if any, that this statement will
have on the consolidated financial statements.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long Lived Assets", which
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
of Long-Lived Assets to be Disposed Of", and portions of APB No. 30, "Reporting
the Results of Operations -- Reporting the Effects of Disposal of a Segment of
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", and amends Accounting Research Bulletin No. 51, "Consolidated
Financial Statements". This statement generally conforms, among other things,
impairment accounting for assets to be disposed of including those in
discontinued operations and eliminates the exception to consolidation for which
control is likely to be temporary. This statement became effective for the
Company on January 1, 2002. The adoption of this statement did not have a
material effect on the consolidated financial statements.

F-40

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In April 2002, the Financial Accounting Standards Board issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections". This statement requires, among
other things, that gains and losses on the early extinguishment of debt be
classified as extraordinary only if they meet the criteria for extraordinary
treatment set forth in Accounting Principles Board Opinion No. 30. The
provisions of this statement related to classification of gains and losses on
the early extinguishment of debt are effective for fiscal years beginning after
May 15, 2002. The Company is currently considering the impact, if any, that this
statement will have on the consolidated financial statements.

10. RELATED PARTY TRANSACTIONS

11. LITIGATION AND LITIGATION SETTLEMENTS

The Company currently is a defendant in certain litigation proceedings
alleging certain violations of the Americans with Disabilities Act of 1990 (the
"ADA") relating to accessibility of movie theatres for handicapped and deaf
patrons.

In March 1999, the Department of Justice filed suit in the U.S. District
Court, Northern District of Ohio, Eastern Division, against the Company alleging
certain violations of the ADA relating to the Company's wheelchair seating
arrangements and seeking remedial action. An Order granting Summary Judgment to
the Company was issued November 2001. The Department of Justice has filed a
Notice of Appeal with the Sixth Circuit Court of Appeals. If the Company loses
this litigation, its financial position, results of operations and cash flows
may be materially and adversely affected. The Company is unable to predict the
outcome of this litigation or the range of potential loss, however, management
believes that based upon current precedent the Company's potential liability
with respect to such proceeding is not material in the aggregate to the
Company's financial position, results of operations and cash flows. Accordingly,
the Company has not established a reserve for loss in connection with this
proceeding.

In February 2000, Barbara Cornilles, Edwin Cornilles, Dorothy Johnson,
Damara Paris, Stephen Purvis, George Scheler, Susan Teague and Jackie Woltring
filed suit in the U.S. District Court for the District of Oregon against the
Company, Regal Cinemas, Inc., Century Theatres, Inc., and Carmike Cinemas, Inc.
alleging certain violations of the ADA relating to accessibility of movie
theatres for deaf patrons. An Order granting Summary Judgment to the Company was
issued by a federal magistrate judge in December 2001 which was ratified by the
federal district judge in March 2002. In April 2002, the plaintiffs agreed not
to appeal the summary judgment ruling.

F-41

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In August 2001, David Wittie, Rona Schnall, Ron Cranston, Jennifer McPhail,
Peggy Garaffa and ADAPT of Texas filed suit in the 201st Judicial District Court
of Travis County, Texas alleging certain violations of the Human Resources Code,
the Texas Architectural Barriers Act, the Texas Accessibility Standards and the
Deceptive Trade Practices Act relating to accessibility of movie theatres for
patrons using wheelchairs at two theatres located in the Austin, Texas market.
The plaintiffs are seeking remedial action and unspecified damages. The Company
has filed an answer denying the allegations and is vigorously defending this
suit. The Company is unable to predict the outcome of this litigation or the
range of potential loss, however, management believes that based upon current
precedent the Company's potential liability with respect to such proceeding is
not material in the aggregate to the Company's financial position, results of
operations and cash flows. Accordingly, the Company has not established a
reserve for loss in connection with this proceeding.

In July 2001, Sonia-Rivera-Garcia and Valley Association for Independent
Living filed suit in the 93rd Judicial District Court of Hidalgo County, Texas
alleging certain violations of the Human Resources Code, the Texas Architectural
Barriers Act, the Texas Accessibility Standards and the Deceptive Trade
Practices Act relating to accessibility of movie theatres for patrons using
wheelchairs at one theatre located in the Mission, Texas market. The plaintiffs
are seeking remedial action and unspecified damages. The Company has filed an
answer denying the allegations and is vigorously defending this suit. The
Company is unable to predict the outcome of this litigation or the range of
potential loss, however, management believes that based upon current precedent
the Company's potential liability with respect to such proceeding is not
material in the aggregate to the Company's financial position, results of
operations and cash flows. Accordingly, the Company has not established a
reserve for loss in connection with this proceeding.

On May 23, 2002, Robert Todd on behalf of Robert Preston Todd, his minor
child, and "all individuals who are deaf or are severely hearing impaired"
brought this case in the United States District Court for the Southern District
of Texas, Houston Division against several movie operators including, AMC
Entertainment, Inc., Regal Entertainment, Inc., the Company and Century Theaters
as well as eight movie production companies. The lawsuit alleges violation of
Title III of the ADA and the First Amendment to the Constitution of the United
States. Plaintiffs seek unspecified injunctive relief, unspecified declaratory
relief, unspecified monetary damages (both actual and punitive) and unspecified
attorneys' fees. The answer is not yet due. The Company plans to deny any
violation of law and to vigorously defend against all claims. The Company is
unable to predict the outcome of this litigation or the range of potential loss,
however, the Company believes that based upon current precedent its potential
liability with respect to such proceeding is not material in the aggregate to
its financial position, results of operations and cash flows. Accordingly, the
Company has not established a reserve for loss in connection with this
proceeding.

12. RESTATEMENT

Subsequent to the issuance of the Company's condensed consolidated
financial statements for the quarter ended March 31, 2002, the Company's
management determined that it should revise the fair value of employee stock
options granted during December 2001. This determination was based in part on
the timing between the original valuation and the proposed initial public
offering of the Company's Class A common stock. The Company's management
believed that on the date of grant the common stock had a fair value of $1.50
per share. In connection with the Company's public offering of common stock and
Staff Accounting Bulletin Topic 4.D., the Company revised this fair value to
$11.45 per share. As a result, the condensed

F-42

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

consolidated balance sheet at December 31, 2001 has been restated from amounts
previously reported to record additional unearned compensation of $3,338,225 at
that date. The unaudited condensed consolidated financial statements as of and
for the three months ended March 31, 2002 have been restated to record unearned
compensation of $3,948,724 as of March 31, 2002 and additional compensation
expense of $166,911 and a related income tax benefit of $65,680 for the three
months ended March 31, 2002.

AS OF
DECEMBER 31, 2001
-------------------------
AS
PREVIOUSLY AS
REPORTED RESTATED
----------- -----------

Balance Sheet Data:
Additional paid-in capital............................... $37,029,524 $40,367,749
Unearned compensation -- stock options................... (887,779) (4,226,004)

AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31, 2002
-------------------------
AS
PREVIOUSLY AS
REPORTED RESTATED
----------- -----------

Balance Sheet Data:
Deferred income taxes liability.......................... $ 6,700,171 $ 6,634,491
Additional paid-in capital............................... 37,029,524 40,367,749
Unearned compensation -- stock options................... (777,410) (3,948,724)
Statement of Operations Data:
Operating income......................................... $30,709,397 $30,542,486
Income taxes............................................. 4,504,949 4,439,269
Net income............................................... 6,942,174 6,840,943
Earnings per share -- basic.............................. 0.17 0.17
Earnings per share -- diluted............................ 0.17 0.17

F-43

[CINEMARK LOGO]

Lo Mejor En Cines

Description of artwork:

Miscellaneous interior and exterior photographs of Cinemark theatres.

11,100,000 SHARES

[CINEMARK LOGO]

CINEMARK, INC.

CLASS A COMMON STOCK

----------------------------

PROSPECTUS
, 2002
----------------------------

LEHMAN BROTHERS

SALOMON SMITH BARNEY

BEAR, STEARNS & CO. INC.

CREDIT SUISSE FIRST BOSTON

GOLDMAN, SACHS & CO.

LOGO

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid by the Registrant in
connection with the issuance and distribution of the shares of common stock
being registered hereby. All amounts are estimates except for the Securities and
Exchange Commission registration fee, the NASD filing fee and the New York Stock
Exchange listing fee.

Securities and Exchange Commission registration fee......... $ 21,160
NASD filing fee............................................. $ 23,500
New York Stock Exchange listing fee......................... $ 275,000
Accounting fees and expenses................................ $ 250,000
Legal fees and expenses..................................... $ 500,000
Printing and engraving expenses............................. $ 300,000
Blue Sky qualification fees and expenses.................... $ 7,500
Transfer agent and registrar fees and expenses.............. $ 1,900
Miscellaneous expenses...................................... $ 120,940
----------
Total....................................................... $1,500,000
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation,
under specified circumstances, to indemnify its directors, officers, employees
or agents against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by them in
connection with any action, suit or proceeding brought by third parties by
reason of the fact that they were or are directors, officers, employees or
agents of the corporation, if such directors, officers, employees or agents
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.

Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director

(1) for any breach of the director's duty of loyalty to the
corporation or its stockholders,

(2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,

(3) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the
Delaware General Corporation Law, or

(4) for any transaction from which the director derived an improper
personal benefit.

II-1

Our certificate of incorporation provides that we shall, to the fullest
extent permitted by Delaware General Corporation Law, indemnify all persons whom
it may indemnify under Delaware law and contains provisions permitted by Section
102(b)(7) of the Delaware General Corporation Law.

Our certificate of incorporation and bylaws provide that:

- we are required to indemnify our directors and officers, subject to very
limited exceptions;

- we may indemnify other employees and agents, subject to very limited
exceptions;

- we are required to advance expenses, as incurred, to our directors and
officers in connection with a legal proceeding, subject to very limited
exceptions; and

- we may advance expenses, as incurred, to our employees and agents in
connection with a legal proceeding.

We have obtained an insurance policy providing for indemnification of
officers and directors and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and conditions.
We have entered into separate indemnification agreements with each of our
directors which may require us, among other things, to indemnify such directors
against certain liabilities that may arise by reason of their status or service
as directors to the maximum extent permitted under applicable law.

The indemnification provisions in our certificate of incorporation and
bylaws and the Indemnity Agreements entered into between us and each of our
directors and officers may be sufficiently broad to permit indemnification of
our directors and officers for liabilities arising under the Securities Act.

Pursuant to the Stockholders' Agreement, we have agreed to indemnify each
of Lee Roy Mitchell, CGI Equities, Inc., Cypress Merchant Banking Partners
L.L.C., Cypress Pictures Ltd., The Mitchell Special Trust, the Mitchell
Grandchildren's Trust for each of Crystal Lee Roberts, Cassie Ann Roberts, Lacey
Marie Lee, Ashley Ann Lee and Skyler Kay Mitchell and each of their directors,
officers, partners (general and limited, and their directors, officers,
affiliates and controlling persons), members, agents and controlling persons to
the extent permitted by law against any losses, claims, damages, liabilities or
expenses to which such person may become subject under the Securities Act of
1933 (or state securities or blue-sky laws, common law or otherwise) that arise
out of any untrue or alleged untrue statement of material fact or any omission
or alleged omission of a material fact required to be contained in a
registration statement, prospectus, application or other documentation to be
filed with the Securities and Exchange Commission.

Reference is also made to the form of Underwriting Agreement, filed with
this Registration Statement, which provides for the indemnification of our
officers, directors and controlling persons against certain liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In connection with this offering on May 17, 2002, Cinemark, Inc. was formed
as a Delaware holding company of Cinemark USA, Inc. Pursuant to a Share Exchange
Agreement, an aggregate of (i) 182,648 shares of Class B common stock, (ii)
1,500 shares of Class A common stock and (iii) options to purchase 6,415 shares
of Class B common stock was exchanged for an aggregate of 19,563,280 shares of
Class A common stock, 20,949,280 shares of Class B common stock and options to
purchase 1,411,300 shares of Class A common stock, respectively.

The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder.
The recipients of securities in each transaction represented their intentions to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the securities issued in such transactions. All recipients had adequate access,
through their relationship with Cinemark, to information about us.

II-2

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following exhibits are filed herewith:

NUMBER EXHIBIT TITLE
------ -------------

*1 Form of Underwriting Agreement.
*2 Share Exchange Agreement, dated as of May 17, 2002, by and
among Cinemark, Inc., Cinemark USA, Inc. and the
shareholders signatory thereto.
*3.1 Amended and Restated Certificate of Incorporation of
Cinemark, Inc. filed with the Delaware Secretary of State on
June 25, 2002.
3.2 Bylaws of Cinemark, Inc. dated May 17, 2002 (incorporated by
reference from Exhibit 3.2 to Cinemark, Inc.'s Registration
Statement on Form S-1 (File No. 333-88618) filed May 17,
2002).
*4.1(a) Form of Class A common stock certificate.
*4.1(b) Form of Class B common stock certificate.
4.2 Indenture dated August 15, 1996 between Cinemark USA, Inc.
and U.S. Trust Company of Texas, N.A. governing the Notes,
with a form of Series B Note attached (incorporated by
reference from Exhibit 4.2 to Cinemark, Inc.'s Registration
Statement on Form S-1 (File No. 333-88618) filed on May 17,
2002).
4.3 Indenture dated June 26, 1997 between Cinemark USA, Inc. and
U.S. Trust Company of Texas, N.A. governing the Notes, with
a form of Series C Note attached (incorporated by reference
from Exhibit 4.1 to Cinemark USA, Inc.'s Registration
Statement on Form S-4 (File No. 333-32949) filed August 6,
1997).
4.4 First Supplemental Indenture dated June 26, 1997 between
Cinemark USA, Inc. and U.S. Trust Company of Texas, N.A.
(incorporated by reference to Exhibit 4.4 to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
4.5 Indenture, dated as of January 14, 1998, between the Company
and U.S. Trust Company of Texas, N.A. governing the Notes,
with a form of Series A Note attached (incorporated by
reference from Exhibit 4.1 to the Company's Registration
Statement on Form S-4 (File No. 333-45417) filed February 2,
1998).
*4.6 Amended and Restated Stockholders' Agreement, dated as of
June 27, 2002, by and among Cinemark, Inc. and certain
stockholders party thereto.
*5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
10.1(a) Management Agreement, dated as of July 28, 1993, between
Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated
by reference to Exhibit 10.1(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.1(b) Management Agreement, dated as of September 10, 1992,
between Cinemark USA, Inc. and Cinemark de Mexico S.A. de
C.V. (incorporated by reference to Exhibit 10.1(b) to
Cinemark, Inc.'s Registration Statement on Form S-1 (File
No. 333-88618) filed on May 17, 2002).
10.1(c) Management Agreement, dated as of December 10, 1993, between
Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.1(c) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.1(d) Management Agreement, dated as of September 1, 1994, between
Cinemark Partners II, Ltd. and Cinemark USA, Inc.
(incorporated by reference to Exhibit 10.1(d) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
10.1(e) Management Services Agreement, dated as of December 15,
2000, between Cinemark USA, Inc. and Cinema Properties, Inc.
(incorporated by reference to Exhibit 10.1(e) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
*10.1(f) Management Services Agreement, effective as of November 23,
1999, between Westward, Ltd. and Cinemark USA, Inc.
*10.1(g) Management Services Agreement, effective as of March 28,
2001, between Mitchell Theatres and Cinemark USA, Inc.
*10.2 Amended and Restated Agreement to Participate in Profits and
Losses, dated as of June 19, 2002, between Cinemark USA,
Inc. and Alan W. Stock.

II-3

NUMBER EXHIBIT TITLE
------ -------------

*10.3 Amended and Restated Cinemark, Inc. Long Term Incentive
Plan, effective May 17, 2002.
10.4(a) License Agreement, dated as of December 10, 1993, between
Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.4(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.4(b) License Agreement, dated as of September 1, 1994, between
Cinemark Partners II, Ltd. and Cinemark USA, Inc.
(incorporated by reference to Exhibit 10.4(b) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
10.5(a) Tax Sharing Agreement, dated as of June 10, 1992, between
Cinemark USA, Inc. and Cinemark II, Inc. (incorporated by
reference to Exhibit 10.5(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.5(b) Tax Sharing Agreement, dated as of July 28, 1993, between
Cinemark USA, Inc. and Cinemark Mexico (USA), Inc.
(incorporated by reference from Exhibit 10.5(b) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
10.6 Form of Indemnification Agreement (incorporated by reference
from Exhibit 10.6 to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.7 Intercompany Subordination Agreement, dated November 16,
1998 (incorporated by reference from Exhibit 10.9(s) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
31, 1999).
10.8(a) Form of Letter Agreement with directors of Cinemark USA,
Inc. regarding stock options (incorporated by reference from
Exhibit 10.8(a) to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.8(b) Form of Letter Agreement with directors of Cinemark USA,
Inc. amending stock options (incorporated by reference from
Exhibit 10.8(b) to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.8(c) Letter Agreement with directors of Cinemark USA, Inc.
regarding stock options (incorporated by reference from
Exhibit 10.10(c) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1999).
10.9(a) Credit Agreement, dated as of November 16, 1998, by and
among Cinemark Mexico (USA), Inc., Bank of America National
Trust and Savings Association, as Administrative Agent, and
the other financial institutions party thereto (incorporated
by reference from Exhibit 10.11(a) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.9(b) Guaranty of Cinemark Mexico (USA) by Cinemark USA, Inc.
(incorporated by reference from Exhibit 10.11(b) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 31,
1999).
10.9(c) Intercompany Subordination Agreement, dated as of November
16, 1998 (incorporated by reference from Exhibit 10.11(c) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
31, 1999).
10.10(d) First Amendment to Credit Agreement, dated as of September
29, 2000, by and among Cinemark Mexico (USA), Inc., Bank of
America, N.A. and the other financial institutions party
thereto (incorporated by reference from Exhibit 10.11(d) to
Cinemark USA Inc.'s Annual Report on Form 10-K, filed March
26, 2001).
10.11(a) Senior Secured Credit Agreement, dated as of December 4,
1995, by and among Cinemark II, Inc., Cinemark Mexico (USA),
Inc. and Cinemark de Mexico, S.A. de C.V. incorporated by
reference from Exhibit 10.11(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.11(b) First Amendment to Senior Secured Credit Agreement, dated as
of September 30, 1996, by and among Cinemark II, Inc.,
Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de
C.V. (incorporated by reference from Exhibit 10.11(b) to
Cinemark, Inc.'s Registration Statement on Form S-1 (File
No. 333-88618) filed on May 17, 2002).
10.11(c) Second Amendment to Senior Secured Credit Agreement, dated
as of September 28, 2000, by and among Cinemark II, Inc.,
Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de
C.V. incorporated by reference as Exhibit 10.11(c) to
Cinemark, Inc.'s Registration Statement on Form S-1 (File
No. 333-88618) filed on May 17, 2002).

II-4

NUMBER EXHIBIT TITLE
------ -------------

10.12(a) Loan Agreement, dated as of December 15, 2000, between
Cinema Properties, Inc. and Lehman Brothers Bank FSB
(incorporated by reference from Exhibit 10.15(a) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 26,
2001).
10.12(b) Promissory Note of Cinema Properties, Inc., dated December
15, 2000, in the original principal amount of $77,000,000
payable to the order of Lehman Brothers Bank FSB
(incorporated by reference from Exhibit 10.15(b) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 26,
2001).
10.13(a) Second Amended and Restated Credit Agreement, dated as of
February 12, 1998, by and among Cinemark USA, Inc., the
Banks and the Agent (incorporated by reference from Exhibit
10.9(a) to Cinemark USA, Inc.'s Annual Report on Form 10-K,
filed March 31, 1998).
10.13(b) First Amendment to Second Amended and Restated Credit
Agreement, dated as of August 31, 1998, among Cinemark USA,
Inc., the Banks and the Agent (incorporated by reference
from Exhibit 10.9(q) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(c) Second Amendment to Second Amended and Restated Credit
Agreement, dated as of November 16, 1998, among Cinemark
USA, Inc., the Banks and the Agent (incorporated by
reference from Exhibit 10.9(r) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.13(d) Third Amendment to Second Amended and Restated Credit
Agreement, dated as of February 24, 1999, among Cinemark
USA, Inc., the Banks and the Agent (incorporated by
reference from Exhibit 10.9(t) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.13(e) Guaranty, dated as of February 12, 1998, by Cinemark
Properties, Inc. (incorporated by reference from Exhibit
10.13(e) to Cinemark, Inc.'s Registration Statement on Form
S-1 (File No. 333-88618) filed on May 17, 2002).
10.13(f) Supplement to the Guarantee, dated as of November 16, 1998,
by Cinemark Mexico (USA), Inc. (incorporated by reference
from Exhibit 10.13(f) to Cinemark, Inc.'s Registration
Statement on Form S-1 (File No. 333-88618) filed on May 17,
2002).
10.13(g) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $50,000,000 payable to
the order of Bank of America National Trust and Savings
Association (incorporated by reference from Exhibit 10.9(c)
to Cinemark USA's Annual Report on Form 10-K, filed March
31, 1998).
10.13(h) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $50,000,000 payable to
the order of NationsBank of Texas, N.A. (incorporated by
reference from Exhibit 10.9(d) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(i) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of BankBoston, N.A. (incorporated by reference
from Exhibit 10.9(e) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(j) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of Fleet Bank, N.A. (incorporated by reference
from Exhibit 10.9(f) to the Company's Annual Report on Form
10-K, filed March 31, 1998).
10.13(k) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Fuji Bank, Limited (incorporated by
reference from Exhibit 10.9(g) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(l) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Bank of New York (incorporated by reference
from Exhibit 10.9(h) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(m) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of CIBC, Inc. (incorporated by reference from
Exhibit 10.9(I) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1998).
10.13(n) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of The Bank of Nova Scotia (incorporated by
reference from Exhibit 10.9(j) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).

II-5

NUMBER EXHIBIT TITLE
------ -------------

10.13(o) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $25,000,000 payable to
the order of Comerica Bank-Texas (incorporated by reference
from Exhibit 10.9(k) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(p) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of First Hawaiian Bank (incorporated by reference
from Exhibit 10.9(l) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(q) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of Bank of Montreal (incorporated by reference
from Exhibit 10.9(m) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(r) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of PNC Bank (incorporated by reference from
Exhibit 10.9(n) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1998).
10.13(s) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Sumitoto Bank, Limited (incorporated by
reference from Exhibit 10.9(o) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(t) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of Union Bank of California, N.A. (incorporated by
reference from Exhibit 10.9(p) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(u) Pledge Agreement, dated as of February 12, 1998, executed by
the pledgors listed on the signature page thereto for the
benefit of the Agent and the Banks (incorporated by
reference from Exhibit 10.9(b) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(v) Pledge Agreement dated as of January 27, 1999, between
Cinemark Mexico (USA), Inc. and the Banks, with the
acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(u) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(w) First Amendment to Pledge Agreement, dated as of May 30,
2001, between Cinemark Mexico (USA), Inc. and the Banks,
with the acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(v) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(x) Second Amendment to Pledge Agreement, dated as of September
26, 2001, between Cinemark Mexico (USA), Inc. and the Banks,
with the acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(w) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(y) Pledge Agreement, dated as of September 28, 2001, between
Cinemark Mexico (USA), Inc. and the Banks, with the
acknowledgment of Cinemark Holdings Mexico, S. de R.L. de
C.V. (incorporated by reference from Exhibit 10.9(x) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
27, 2002).
*10.14(a) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Lee Roy Mitchell.
*10.14(b) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Alan Stock.
*10.14(c) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Tim Warner.
*10.14(d) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Robert Copple.
*10.14(e) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Robert Carmony.
*10.14(f) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Tandy Mitchell.
*10.15 Exchange Option Agreement, dated as of November 13, 2001,
among Cinemark USA, Inc., NN Participacoes' Ltda, Venture II
Equity Holdings Corporation, Inc. and Kristal Holdings
Limited.

II-6

NUMBER EXHIBIT TITLE
------ -------------

**10.16 Credit Agreement, dated as of [ ], 2002, by and among
Cinemark, Inc., Cinemark USA, Inc., Lehman Brothers Inc., as
arranger and sole bookrunner, [ ], as syndication
agent, Lehman Commercial Paper Inc., as administrative
agent, and the other lenders party thereto.
**10.17 Guarantee and Collateral Agreement, dated as of [ ],
2002, by and among Cinemark, Inc., Cinemark USA, Inc.,
Lehman Brothers Inc., [ ], Lehman Commercial Paper
Inc., and the other subsidiaries of Cinemark, Inc. party
thereto.
21 Subsidiaries of the Registrant (incorporated by reference
from Exhibit 21 to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002.)
*23.1 Consent of Deloitte & Touche LLP and opinion on financial
statement schedule.
*23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(incorporated in Exhibit 5.1).
24 Power of Attorney (incorporated by reference from the
signature page to Cinemark Inc.'s Registration Statement on
Form S-1 (File No. 333-88618) filed May 17, 2002).

---------------

* Filed herewith.

** To be filed by amendment.

(b) The following financial statement schedule is filed herewith:

PAGE NUMBER DESCRIPTION
----------- -----------

S-1 -- Schedule II -- Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plano, State of Texas, on
June 28, 2002.

CINEMARK, INC.

By: /s/ LEE ROY MITCHELL
------------------------------------
Lee Roy Mitchell
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

NAME TITLE DATE
---- ----- ----

/s/ LEE ROY MITCHELL Chairman of the Board of Directors June 28, 2002
------------------------------------------------ and Chief Executive Officer
Lee Roy Mitchell (principal executive officer)

/s/ TANDY MITCHELL* Director June 28, 2002
------------------------------------------------
Tandy Mitchell

/s/ ALAN W. STOCK* Director June 28, 2002
------------------------------------------------
Alan W. Stock

/s/ ROBERT COPPLE Senior Vice President; Treasurer June 28, 2002
------------------------------------------------ and Chief Financial Officer;
Robert Copple Director (principal financial and
accounting officer)

/s/ JAMES A. STERN* Director June 28, 2002
------------------------------------------------
James A. Stern

/s/ WILLIAM SPIEGEL* Director June 28, 2002
------------------------------------------------
William Spiegel

/s/ DENNY RYDBERG* Director June 28, 2002
------------------------------------------------
Denny Rydberg

*By: /s/ ROBERT COPPLE
------------------------------------------
Robert Copple
Attorney-in-fact

II-8

CINEMARK, INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

VALUATION
ALLOWANCE
DEFERRED
TAX ASSETS
-----------

Balance January 1, 1999..................................... $ 3,137,927
Additions................................................. 2,692,250
Deductions................................................ (966,880)
-----------
Balance December 31, 1999................................... $ 4,863,297
Additions................................................. 1,694,048
Deductions................................................ (307,994)
-----------
Balance December 31, 2000................................... $ 6,249,351
Additions................................................. 5,596,219
Deductions................................................ (24,081)
-----------
Balance December 31, 2001................................... $11,821,489
===========

S-1

EXHIBIT INDEX

NUMBER EXHIBIT TITLE
------ -------------

10.4(a) License Agreement, dated as of December 10, 1993, between
Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by
reference to Exhibit 10.4(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.4(b) License Agreement, dated as of September 1, 1994, between
Cinemark Partners II, Ltd. and Cinemark USA, Inc.
(incorporated by reference to Exhibit 10.4(b) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
10.5(a) Tax Sharing Agreement, dated as of June 10, 1992, between
Cinemark USA, Inc. and Cinemark II, Inc. (incorporated by
reference to Exhibit 10.5(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.5(b) Tax Sharing Agreement, dated as of July 28, 1993, between
Cinemark USA, Inc. and Cinemark Mexico (USA), Inc.
(incorporated by reference from Exhibit 10.5(b) to Cinemark,
Inc.'s Registration Statement on Form S-1 (File No.
333-88618) filed on May 17, 2002).
10.6 Form of Indemnification Agreement (incorporated by reference
from Exhibit 10.6 to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.7 Intercompany Subordination Agreement, dated November 16,
1998 (incorporated by reference from Exhibit 10.9(s) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
31, 1999).
10.8(a) Form of Letter Agreement with directors of Cinemark USA,
Inc. regarding stock options (incorporated by reference from
Exhibit 10.8(a) to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.8(b) Form of Letter Agreement with directors of Cinemark USA,
Inc. amending stock options (incorporated by reference from
Exhibit 10.8(b) to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002).
10.8(c) Letter Agreement with directors of Cinemark USA, Inc.
regarding stock options (incorporated by reference from
Exhibit 10.10(c) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1999).
10.9(a) Credit Agreement, dated as of November 16, 1998, by and
among Cinemark Mexico (USA), Inc., Bank of America National
Trust and Savings Association, as Administrative Agent, and
the other financial institutions party thereto (incorporated
by reference from Exhibit 10.11(a) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.9(b) Guaranty of Cinemark Mexico (USA) by Cinemark USA, Inc.
(incorporated by reference from Exhibit 10.11(b) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 31,
1999).
10.9(c) Intercompany Subordination Agreement, dated as of November
16, 1998 (incorporated by reference from Exhibit 10.11(c) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
31, 1999).
10.10(d) First Amendment to Credit Agreement, dated as of September
29, 2000, by and among Cinemark Mexico (USA), Inc., Bank of
America, N.A. and the other financial institutions party
thereto (incorporated by reference from Exhibit 10.11(d) to
Cinemark USA Inc.'s Annual Report on Form 10-K, filed March
26, 2001).
10.11(a) Senior Secured Credit Agreement, dated as of December 4,
1995, by and among Cinemark II, Inc., Cinemark Mexico (USA),
Inc. and Cinemark de Mexico, S.A. de C.V. incorporated by
reference from Exhibit 10.11(a) to Cinemark, Inc.'s
Registration Statement on Form S-1 (File No. 333-88618)
filed on May 17, 2002).
10.11(b) First Amendment to Senior Secured Credit Agreement, dated as
of September 30, 1996, by and among Cinemark II, Inc.,
Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de
C.V. (incorporated by reference from Exhibit 10.11(b) to
Cinemark, Inc.'s Registration Statement on Form S-1 (File
No. 333-88618) filed on May 17, 2002).
10.11(c) Second Amendment to Senior Secured Credit Agreement, dated
as of September 28, 2000, by and among Cinemark II, Inc.,
Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de
C.V. incorporated by reference as Exhibit 10.11(c) to
Cinemark, Inc.'s Registration Statement on Form S-1 (File
No. 333-88618) filed on May 17, 2002).
10.12(a) Loan Agreement, dated as of December 15, 2000, between
Cinema Properties, Inc. and Lehman Brothers Bank FSB
(incorporated by reference from Exhibit 10.15(a) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 26,
2001).

NUMBER EXHIBIT TITLE
------ -------------

10.12(b) Promissory Note of Cinema Properties, Inc., dated December
15, 2000, in the original principal amount of $77,000,000
payable to the order of Lehman Brothers Bank FSB
(incorporated by reference from Exhibit 10.15(b) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 26,
2001).
10.13(a) Second Amended and Restated Credit Agreement, dated as of
February 12, 1998, by and among Cinemark USA, Inc., the
Banks and the Agent (incorporated by reference from Exhibit
10.9(a) to Cinemark USA, Inc.'s Annual Report on Form 10-K,
filed March 31, 1998).
10.13(b) First Amendment to Second Amended and Restated Credit
Agreement, dated as of August 31, 1998, among Cinemark USA,
Inc., the Banks and the Agent (incorporated by reference
from Exhibit 10.9(q) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(c) Second Amendment to Second Amended and Restated Credit
Agreement, dated as of November 16, 1998, among Cinemark
USA, Inc., the Banks and the Agent (incorporated by
reference from Exhibit 10.9(r) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.13(d) Third Amendment to Second Amended and Restated Credit
Agreement, dated as of February 24, 1999, among Cinemark
USA, Inc., the Banks and the Agent (incorporated by
reference from Exhibit 10.9(t) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1999).
10.13(e) Guaranty, dated as of February 12, 1998, by Cinemark
Properties, Inc. (incorporated by reference from Exhibit
10.13(e) to Cinemark, Inc.'s Registration Statement on Form
S-1 (File No. 333-88618) filed on May 17, 2002).
10.13(f) Supplement to the Guarantee, dated as of November 16, 1998,
by Cinemark Mexico (USA), Inc. (incorporated by reference
from Exhibit 10.13(f) to Cinemark, Inc.'s Registration
Statement on Form S-1 (File No. 333-88618) filed on May 17,
2002).
10.13(g) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $50,000,000 payable to
the order of Bank of America National Trust and Savings
Association (incorporated by reference from Exhibit 10.9(c)
to Cinemark USA's Annual Report on Form 10-K, filed March
31, 1998).
10.13(h) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $50,000,000 payable to
the order of NationsBank of Texas, N.A. (incorporated by
reference from Exhibit 10.9(d) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(i) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of BankBoston, N.A. (incorporated by reference
from Exhibit 10.9(e) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(j) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of Fleet Bank, N.A. (incorporated by reference
from Exhibit 10.9(f) to the Company's Annual Report on Form
10-K, filed March 31, 1998).
10.13(k) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Fuji Bank, Limited (incorporated by
reference from Exhibit 10.9(g) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(l) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Bank of New York (incorporated by reference
from Exhibit 10.9(h) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(m) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of CIBC, Inc. (incorporated by reference from
Exhibit 10.9(I) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1998).
10.13(n) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $30,000,000 payable to
the order of The Bank of Nova Scotia (incorporated by
reference from Exhibit 10.9(j) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(o) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $25,000,000 payable to
the order of Comerica Bank-Texas (incorporated by reference
from Exhibit 10.9(k) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(p) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of First Hawaiian Bank (incorporated by reference
from Exhibit 10.9(l) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).

NUMBER EXHIBIT TITLE
------ -------------

10.13(q) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of Bank of Montreal (incorporated by reference
from Exhibit 10.9(m) to Cinemark USA, Inc.'s Annual Report
on Form 10-K, filed March 31, 1998).
10.13(r) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of PNC Bank (incorporated by reference from
Exhibit 10.9(n) to Cinemark USA, Inc.'s Annual Report on
Form 10-K, filed March 31, 1998).
10.13(s) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of The Sumitoto Bank, Limited (incorporated by
reference from Exhibit 10.9(o) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(t) Note of Cinemark USA, Inc., dated as of February 12, 1998,
in the original principal amount of $15,000,000 payable to
the order of Union Bank of California, N.A. (incorporated by
reference from Exhibit 10.9(p) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(u) Pledge Agreement, dated as of February 12, 1998, executed by
the pledgors listed on the signature page thereto for the
benefit of the Agent and the Banks (incorporated by
reference from Exhibit 10.9(b) to Cinemark USA, Inc.'s
Annual Report on Form 10-K, filed March 31, 1998).
10.13(v) Pledge Agreement dated as of January 27, 1999, between
Cinemark Mexico (USA), Inc. and the Banks, with the
acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(u) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(w) First Amendment to Pledge Agreement, dated as of May 30,
2001, between Cinemark Mexico (USA), Inc. and the Banks,
with the acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(v) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(x) Second Amendment to Pledge Agreement, dated as of September
26, 2001, between Cinemark Mexico (USA), Inc. and the Banks,
with the acknowledgment of Cinemark de Mexico, S.A. de C.V.
(incorporated by reference from Exhibit 10.9(w) to Cinemark
USA, Inc.'s Annual Report on Form 10-K, filed March 27,
2002).
10.13(y) Pledge Agreement, dated as of September 28, 2001, between
Cinemark Mexico (USA), Inc. and the Banks, with the
acknowledgment of Cinemark Holdings Mexico, S. de R.L. de
C.V. (incorporated by reference from Exhibit 10.9(x) to
Cinemark USA, Inc.'s Annual Report on Form 10-K, filed March
27, 2002).
*10.14(a) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Lee Roy Mitchell.
*10.14(b) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Alan Stock.
*10.14(c) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Tim Warner.
*10.14(d) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Robert Copple.
*10.14(e) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Robert Carmony.
*10.14(f) Employment Agreement, dated as of June 19, 2002, between
Cinemark, Inc. and Tandy Mitchell.
*10.15 Exchange Option Agreement, dated as of November 13, 2001,
among Cinemark USA, Inc., NN Participacoes' Ltda, Venture II
Equity Holdings Corporation, Inc. and Kristal Holdings
Limited.
**10.16 Credit Agreement, dated as of [ ], 2002, by and among
Cinemark, Inc., Cinemark USA, Inc., Lehman Brothers Inc., as
arranger and sole bookrunner, [ ], as syndication
agent, Lehman Commercial Paper Inc., as administrative
agent, and the other lenders party thereto.
**10.17 Guarantee and Collateral Agreement, dated as of [ ],
2002, by and among Cinemark, Inc., Cinemark USA, Inc.,
Lehman Brothers Inc., [ ], Lehman Commercial Paper
Inc., and the other subsidiaries of Cinemark, Inc. party
thereto.

NUMBER EXHIBIT TITLE
------ -------------

21 Subsidiaries of the Registrant (incorporated by reference
from Exhibit 21 to Cinemark, Inc.'s Registration Statement
on Form S-1 (File No. 333-88618) filed on May 17, 2002.)
*23.1 Consent of Deloitte & Touche LLP and opinion on financial
statement schedule.
*23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(incorporated in Exhibit 5.1).
24 Power of Attorney (incorporated by reference from the
signature page to Cinemark Inc.'s Registration Statement on
Form S-1 (File No. 333-88618) filed May 17, 2002).

---------------

* Filed herewith.

** To be filed by amendment.