Edgar Filing: CINEMARK INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 2002

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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. [ ]
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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. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM
TITLE OF SHARES TO BE REGISTERED AGGREGATE OFFERING PRICE(1)(2) AMOUNT OF REGISTRATION FEE
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Class A Common Stock, par value $0.001 per
share......................................... $230,000,000 $21,160
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended.

(2) Includes shares that the underwriters have the option to purchase solely to
cover over-allotments, if any.
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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 MAY 17, 2002

PROSPECTUS

[CINEMARK LOGO]

CINEMARK, INC.

CLASS A COMMON STOCK
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This is our initial public offering of our Class A common stock. We are offering
shares. No public market for our Class A common stock currently
exists.

We anticipate that the initial public offering price will be between $ and
$ per share. We intend to apply to list our Class A common stock on the New
York Stock Exchange under the symbol " ".

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 % 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 % 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
additional shares of 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............................................. 17
Capitalization.............................................. 18
Dilution.................................................... 20
Selected Consolidated Financial Data........................ 21
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 24
Business.................................................... 40
Management.................................................. 52
Principal Stockholders...................................... 59
Certain Relationships and Related Party Transactions........ 61
Description of Capital Stock................................ 63
Material U.S. Federal Income Tax Considerations To Non-U.S.
Holders................................................... 67
Shares Eligible for Future Sale............................. 69
Underwriting................................................ 71
Legal Matters............................................... 74
Experts..................................................... 75
Where You Can Find More Information......................... 75
Index to Consolidated Financial Statements.................. F-1

You should rely only on the information contained in this document or 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.

In connection with this offering, on May 16, 2002, we were 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, respectively, of our common stock. 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. Specifically, all share and per share amounts have been adjusted to
retroactively reflect the share exchange for the periods presented.

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 the notes to Summary Consolidated Financial and
Operating Data, and other financial information to help us describe our
operating and financial performance.

CINEMARK, INC.

We are one of the world's 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 twelve months ended March 31, 2002, we
had revenues of $884.3 million and EBITDA of $184.9 million, representing a
20.9% EBITDA margin, and generated $67.6 million of free cash flow. 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.

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. Our geographic
diversity within North America and internationally has allowed us to maintain
consistent revenue and EBITDA growth. 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.

COMPETITIVE STRENGTHS

We believe the following strengths differentiate us from our competitors:

FOCUSED PHILOSOPHY RESULTING IN INDUSTRY LEADING FINANCIAL
PERFORMANCE. Our operating philosophy is to generate the highest returns for
our stockholders. 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. We also produced an EBITDA per
screen of approximately $61,339 for the twelve months ended March 31, 2002,
which we believe to be among the highest in the industry.

SUPERIOR 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 superior performance
and has navigated our organization through many industry cycles. Between 1999
and 2001, we were the only one of the five largest motion picture exhibitors in
the U.S. that did not file for bankruptcy protection or require a significant
equity investment to meet financial covenants. We believe this 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. We also decreased our ratio of net debt to EBITDA from
6.0x as of December 31, 1999 to 3.9x as of March 31, 2002.

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 the
predominant Pan American motion picture exhibition company.

STRONG BALANCE SHEET WITH SIGNIFICANT CASH FLOW. We believe that we will
have a conservative capital structure. As of March 31, 2002, on a pro forma
basis giving effect to this offering, we had $ million of total debt
outstanding and $ million in cash and cash equivalents, resulting in a ratio of
net debt to EBITDA of . Our high EBITDA margin and capital structure allowed
us to generate $67.6 million of free cash flow (EBITDA after interest expense,
taxes paid, capital expenditures and changes in working capital) during the
twelve months ended March 31, 2002. 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 % 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 were the only one of the five largest motion
picture exhibitors in the U.S. that did not file for bankruptcy protection or
require a significant equity investment in recent years.

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 national, regional
or local coverage in a variety of formats to reach our patrons, which numbered
approximately 159 million during the twelve months ended March 31, 2002. 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 five films grossing over $100 million 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 the primary factor 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 increased
from 4.5x to 5.3x between 1991 and 2001. Additionally, the teenage segment,
defined as 12-17 year olds, represented 19% of admissions in 2001, up from 14%
in 1997. During 2001, 51% of teenagers attended movies 12x per year or more,
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 leverage their fixed cost base
throughout the year.

CONVENIENT AND AFFORDABLE FORM OF OUT-OF-HOME ENTERTAINMENT. Moviegoing
continues to be the most convenient and affordable form 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
$18.86 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. You should refer to the
section entitled "Risk Factors" for an explanation of the material 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....................... shares

Common stock to be outstanding
after the offering

Class A..................... shares

Class B..................... 25,710,480 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 additional
shares of Class A common stock to cover over-
allotments.

Proposed New York Stock
Exchange symbol............... " ".

The outstanding share information is based upon 24,009,480 shares of our
Class A common stock and 25,710,480 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:

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

- approximately 994,410 to 1,988,820 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.;

- 1,732,050 shares of Class A common stock issuable upon the exercise of
outstanding stock options; and

- an aggregate of 1,074,330 shares of Class A common stock reserved for
future issuance under our Long Term Incentive Plan as of March 31, 2002.

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 financial statements and related notes appearing elsewhere
in this prospectus and our unaudited interim financial statements and related
notes.

TWELVE
MONTHS THREE MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, MARCH 31, MARCH 31,
------------------------------------------------------- ----------- -------------------
1997 1998 1999 2000 2001 2002 (2) 2001 2002
--------- --------- --------- -------- -------- ----------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
(1)
Revenues................ $ 434,598 $ 571,219 $ 712,604 $786,264 $853,658 $884,290 $196,070 $226,702
Theatre operating
costs................. 283,727 371,979 463,673 504,519 531,967 546,323 123,747 138,103
Facility lease
expense............... 38,735 61,281 89,808 108,489 114,737 115,096 28,791 29,150
General and
administrative
expenses.............. 27,598 32,947 34,833 39,013 42,690 43,323 9,843 10,476
Depreciation and
amortization.......... 25,373 37,197 53,269 66,111 73,544 74,102 16,609 17,167
Asset impairment loss... 2,214 9,950 3,720 3,872 20,723 20,831 450 558
(Gain) loss on sale of
assets and other...... (189) (2,266) 2,420 912 12,408 12,836 111 539
--------- --------- --------- -------- -------- -------- -------- --------
Total expenses.......... 377,458 511,088 647,723 722,916 796,069 812,511 179,551 195,993
--------- --------- --------- -------- -------- -------- -------- --------
Operating income........ 57,140 60,131 64,881 63,348 57,589 71,779 16,519 30,709
Interest expense (3).... 33,487 43,014 59,867 74,037 70,931 66,401 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) 8,974 (2,663) 10,332
Net income (loss) (4)... $ 14,705 $ 11,009 $ 1,035 $(10,423) $ (4,021) $ 5,584 $ (2,663) $ 6,942
========= ========= ========= ======== ======== ======== ======== ========
Income (loss) per share
before extraordinary
items and cumulative
effect of an
accounting change:
Basic................. $ 0.31 $ 0.23 $ 0.08 $ (0.22) $ (0.08) $ 0.18 $ (0.06) $ 0.21
Diluted............... 0.30 0.22 0.08 (0.22) (0.08) 0.18 (0.06) 0.21
Net income (loss) per
share:
Basic................. 0.31 0.23 0.02 (0.22) (0.08) 0.11 (0.06) 0.14
Diluted............... 0.29 0.22 0.02 (0.22) (0.08) 0.11 (0.06) 0.14
Weighted average shares
outstanding:
Basic................. 48,201 48,148 48,158 48,268 48,473 48,814 48,340 49,720
Diluted............... 50,407 50,365 51,773 48,268 48,473 50,043 48,340 50,166

TWELVE
MONTHS THREE MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, MARCH 31, MARCH 31,
------------------------------------------------------- --------- -------------------
1997 1998 1999 2000 2001 2002 (2) 2001 2002
--------- --------- --------- -------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

OTHER FINANCIAL DATA
(CONSOLIDATED): (1)
EBITDA (5)............... $ 87,313 $ 107,457 $ 128,233 $141,978 $169,980 $184,877 $ 35,139 $ 50,036
EBITDA margin............ 20.1% 18.8% 18.0% 18.1% 19.9% 20.9% 17.9% 22.1%
Cash flow from (used
for):
Operating activities... $ 61,577 $ 66,570 $ 97,541 $ 51,575 $ 81,659 $115,066 $(25,433) $ 7,974
Investment
activities........... (229,302) (248,543) (228,484) (91,665) (28,337) (30,116) 562 (1,217)
Financing activities... 185,424 175,907 114,927 51,280 (21,513) (48,803) 30,105 2,815
Capital expenditures..... 200,272 387,906 248,371 113,081 40,352 42,405 6,604 8,657
Total debt/EBITDA........ 5.3x 5.9x 6.1x 5.7x 4.6x 4.2x
Net debt/EBITDA (6)...... 4.9 5.6 6.0 5.6 4.3 3.9
EBITDA/interest
expense................ 2.6 2.5 2.1 1.9 2.4 2.8

AS OF MARCH 31, 2002
--------------------
PRO FORMA
FOR THIS
ACTUAL OFFERING
-------- ---------
(IN THOUSANDS)

BALANCE SHEET DATA (CONSOLIDATED): (1)
Cash and cash equivalents................................... $ 59,438
Total assets................................................ 978,029
Total long-term debt, including current portion............. 783,551
Stockholders' equity........................................ 22,459

TWELVE
MONTHS THREE MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, MARCH 31, MARCH 31,
---------------------------------------------- ----------- ---------------
1997 1998 1999 2000 2001 2002 (2) 2001 2002
------ ------- ------- ------- ------- ----------- ------ ------
(ATTENDANCE IN THOUSANDS)

OPERATING DATA:
North America (7)
Theatres operated (at period
end)............................ 155 173 185 190 188 188 190 188
Screens operated (at period
end)............................ 1,437 1,813 2,102 2,217 2,217 2,215 2,217 2,215
Average screens per theatre....... 9.3 10.5 11.4 11.7 11.8 11.8 11.7 11.8
Total attendance.................. 74,592 85,693 90,996 92,425 100,022 102,942 22,779 25,699
International (8)
Theatres operated (at period
end)............................ 18 38 69 80 88 90 83 90
Screens operated (at period
end)............................ 187 367 606 695 783 799 721 799
Average screens per theatre....... 10.4 9.7 8.8 8.7 8.9 8.9 8.7 8.9
Total attendance.................. 11,668 20,875 39,938 46,152 53,853 56,214 13,055 15,416
Worldwide
Theatres operated (at period
end)............................ 173 211 254 270 276 278 273 278
Screens operated (at period
end)............................ 1,624 2,180 2,708 2,912 3,000 3,014 2,938 3,014
Average screens per theatre....... 9.4 10.3 10.7 10.8 10.9 10.8 10.8 10.8
Total attendance.................. 86,260 106,568 130,934 138,577 153,875 159,156 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,
2002 are derived from our unaudited consolidated financial statements that
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) The consolidated statement of operations data and other financial data for
the twelve months ended March 31, 2002 is derived by adding the information
for the twelve months ended December 31, 2001 with the information for the
three months ended March 31, 2002, and subtracting the information for the
three months ended March 31, 2001, except for per share data and weighted
average outstanding shares data which were recalculated based on that twelve
month period.

(3) 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.

(4) 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.

(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 cash flow 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) Represents long-term debt, including current portion, less cash and cash
equivalents divided by EBITDA.

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

(8) 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

WE DEPEND UPON MOTION PICTURE PRODUCTION AND PERFORMANCE.

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.

WE DEPEND ON OUR RELATIONSHIPS WITH DISTRIBUTORS OF 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 AFFECT THE PERFORMANCE OF SOME OF OUR THEATRES.

Since 1999, several major theatre exhibition companies, including Regal
Cinemas, Loews Cineplex Entertainment and United Artists have 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, many 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 have defaulted under their loan agreements. This oversupply of
screens may affect the performance of some of our theatres.

OUR SUBSTANTIAL LEASE AND DEBT OBLIGATIONS COULD IMPAIR OUR FINANCIAL CONDITION.

We have substantial lease and debt obligations. For the twelve months ended
March 31, 2002, our facility lease expense and interest expense were
approximately $115.1 million and $66.4 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 in the following ways:

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

- require 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;

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

- make 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.

In December 2000, Moody's Investor Services lowered the rating on our three
series of senior subordinated notes due 2008 from B2 to Caa2 and in August 2000,
Standard and Poor's lowered the rating on those notes due 2008 from B to B-.

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 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.

Although we believe that our positions in these litigations are 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, according to many industry analysts, too
aggressive. 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. Since theatres have limited uses, 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. Many analysts believe that the U.S. is
still overscreened, which may continue to affect some of our theatres. We also
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.

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.

UNCERTAINTIES RELATED TO DIGITAL CINEMA.

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
11

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.

UNCERTAINTIES RELATING TO FUTURE EXPANSION PLANS.

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.

Our 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, 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
12

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

WE HAVE SIGNIFICANT STOCKHOLDERS WITH THE ABILITY TO INFLUENCE OUR ACTIONS.

We are controlled by the Mitchell Group and Cypress. The Mitchell Group
beneficially owns 25,710,480 shares of Class B common stock or % of the total
voting power after the offering. Cypress beneficially owns 24,009,480 shares of
Class A common stock, or approximately % of the total voting power after the
offering. In addition, 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. Holders of our Class B common stock are entitled to ten votes per share.
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 $ per share, based upon an assumed
initial offering price of $ 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, covenants
in our indentures, the credit facility agreements and other contracts and our
status as a holding company may restrict our ability to declare and pay
dividends. 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.

WE HAVE PROVISIONS IN OUR CORPORATE DOCUMENTS AND CERTAIN AGREEMENTS THAT 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 % of the combined voting
power of our 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
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 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 shares of our Class A common stock authorized but
unissued and not reserved for specific purposes. 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 shares of our Class A
common stock outstanding and 25,710,480 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 2,644,380 shares of our Class A common stock for issuance
under our Long Term Incentive Plan, of which 1,570,050 shares of Class A common
stock are issuable upon exercise of options granted as of March 31, 2002,
including options to purchase 704,430 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 162,000 shares of Class A common stock under our
director option agreements. 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 994,410 to 1,988,820
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
$ million, or $ million if the underwriters exercise their
over-allotment option in full, assuming an initial public offering price of
$ per share and after deducting underwriting discounts and commissions and
estimated offering expenses. We intend to use the net proceeds as follows:

- approximately $ 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.

We are negotiating a new credit facility, which we expect will be arranged
by Lehman Brothers Inc. and will permit borrowings of up to $250 million through
a combination of revolving credit and term loans. We anticipate that borrowings
under this new facility will be secured by pledges of certain of our assets and
will bear interest at a floating rate based upon LIBOR or a specified base rate,
plus a margin to be negotiated. This facility will contain customary restrictive
covenants. 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.

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. We currently
intend to retain future earnings, if any, to finance operations and the
expansion of our business. 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; and

- on a pro forma basis to reflect our receipt of the estimated net proceeds
from the sale of shares of Class A common stock by us in this
offering at an estimated initial public offering price of $ per
share, after deducting the estimated underwriting discount and estimated
offering expenses.

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
------------------------
PRO FORMA
FOR THIS
ACTUAL OFFERING (1)
-------- -------------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)

Cash and cash equivalents................................... $ 59,438 $
======== ========
Long-term debt, including current maturities:
Credit Facility (2)....................................... $263,000 $
Cinemark Mexico (USA) Credit Facility..................... 29,000
9 5/8% Series B Senior Subordinated Notes due 2008 (3).... 199,528
9 5/8% Series D Senior Subordinated Notes due 2008 (4).... 76,286
8 1/2% Series B Senior Subordinated Notes due 2008 (5).... 104,367
Cinema Properties Facility................................ 77,000
Other indebtedness........................................ 34,370
-------- --------
Total long-term debt.............................. 783,551
Minority interest in subsidiaries........................... 36,443
Stockholders' equity:
Class A common stock, $0.001 par value, authorized
350,000,000 shares, 24,009,480 actual and proforma
issued and outstanding.................................
Class B common stock, $0.001 par value, authorized
150,000,000 shares, 25,710,480 actual and proforma
issued and outstanding.................................
Additional paid-in capital................................
Unearned compensation -- stock options....................
Accumulated other comprehensive loss......................
Retained earnings.........................................
-------- --------
Total stockholders' equity........................... 22,459
======== --------
Total capitalization.............................. $842,453 $
======== ========

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

(1) Pro forma information does not include shares of Class A common stock
issuable upon exercise of the underwriters' over-allotment option,
approximately 994,410 to 1,988,820 shares of Class A common stock issuable
to our partners in our Brazilian operations upon exchange of their shares of
Cinemark Brasil S.A., 1,732,050 shares of Class A common stock issuable upon
the exercise of outstanding stock options at a weighted average exercise
price of approximately $4.44 per share and an aggregate of 1,074,330 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%. As of March 31, 2002, after giving
effect to the offering, the amount outstanding under our credit facility
would have been $ million. We are negotiating a new credit
facility, which we expect will be arranged by Lehman Brothers Inc. and will
permit borrowings of up to $250 million through a combination of revolving
credit and term loans. 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.

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 $0.06 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
Class A shares of common stock in this offering at an assumed initial
public offering price of $ 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 $ million, or $ per share. This represents an immediate
increase in net tangible book value of $ per share of common stock to
existing stockholders and an immediate dilution of $ per share to purchasers
of Class A common stock in this offering.

Assumed initial public offering price per share of Class A
common stock.............................................. $
Net tangible book value per share as of March 31, 2002.... $0.06
Increase per share attributable to new investors.......... $
Pro forma net tangible book value per share after the
offering.................................................. $
Net tangible book value dilution per share to new
investors................................................. $

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 $ per share.

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

Existing stockholders................ % $ % $
New investors........................
------- ------ -------- ------
Total........................... 100.0% $ 100.0%
======= ====== ======== ======

As of March 31, 2002, there were outstanding options to purchase a total of
1,732,050 shares of Class A common stock at a weighted average exercise price of
approximately $4.44 per share which includes 1,570,050 shares issuable under our
Long Term Incentive Plan and 162,000 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 Brazil S.A. for approximately
994,410 to 1,988,820 shares of our Class A common stock. To the extent that this
option is exercised, there will be further dilution to new investors.

We have granted the underwriters an option to purchase up to
additional shares of our Class A common stock to cover over-allotments.
The exercise of this option will further dilute your investment in our Class A
common stock and adversely affect our common stock price.

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 financial statements and the
related notes appearing elsewhere in this prospectus.

OTHER FINANCIAL DATA
(CONSOLIDATED): (1)
EBITDA (5).............. $ 87,313 $ 107,457 $ 128,233 $141,978 $169,980 $184,877 $ 35,139 $ 50,036
EBITDA margin........... 20.1% 18.8% 18.0% 18.1% 19.9% 20.9% 17.9% 22.1%
Cash flow from (used
for):
Operating
activities.......... $ 61,577 $ 66,570 $ 97,541 $ 51,575 $ 81,659 $115,066 $(25,433) $ 7,974
Investment
activities.......... (229,302) (248,543) (228,484) (91,665) (28,337) (30,116) 562 (1,217)
Financing
activities.......... 185,424 175,907 114,927 51,280 (21,513) (48,803) 30,105 2,815
Capital expenditures.... 200,272 387,906 248,371 113,081 40,352 42,405 6,604 8,657
Total debt/EBITDA....... 5.3x 5.9x 6.1x 5.7x 4.6x 4.2x
Net debt/EBITDA (6)..... 4.9 5.6 6.0 5.6 4.3 3.9
EBITDA/interest
expense............... 2.6 2.5 2.1 1.9 2.4 2.8

AS OF MARCH 31, 2002
--------------------
PRO FORMA
FOR THIS
ACTUAL OFFERING
-------- ---------
(IN THOUSANDS)

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

(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 cash flow 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) Represents long-term debt, including current portion, less cash and cash
equivalents divided by EBITDA.

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

(8) 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. 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 estimates of the final settlement pursuant to
the film license agreements. 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 the size of the directory. 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 estimates of
the final settlement pursuant to the film license agreements. If actual
settlements are higher than those estimated, additional film rental costs would
be required in the future. 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 which 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;

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

- the age of a recently built theatre.

Assets are evaluated for impairment on an individual theatre basis or a
group of theatres that share the same marketplace, which we believe is the
lowest applicable level for which there are identifiable cash flows. The
impairment evaluation is based on the estimated cash flows from continuing use
through the remainder of the theatre's useful life. The remainder of the useful
life correlates with the available remaining lease period 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 4.6
Depreciation and amortization..................... 7.5 8.4 8.6 8.5 7.6
Asset impairment loss............................. 0.5 0.5 2.4 0.2 0.3
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) 4.6
Net income (loss)................................. 0.1 (1.3) (0.5) (1.4) 3.1

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 4.6% 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 $10.5
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 $4.5 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 30.4% 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 $10.3
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 3.4% 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.

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
30

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 $97.5
million, $51.6 million and $81.7 million in 1999, 2000 and 2001, respectively,
and $(25.4) million and $8.0 million for the three month periods ended March 31,
2001 and 2002, respectively.

Investing Activities. Our investing activities have been principally in
connection with 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 $(228.5)
million, $(91.7) million and $(28.3) million in 1999, 2000 and 2001,
respectively, and $0.6 million and $(1.2) 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
31

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 94 screens and closed one theatre with six
screens. 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 will be used to pay down
a portion of 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
34

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 will 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.

PROPOSED NEW CREDIT FACILITY

We are negotiating a new credit facility, which we expect will be arranged
by Lehman Brothers Inc. and will permit borrowings of up to $250 million through
a combination of revolving credit and term loans. We anticipate that borrowings
under this new facility will be secured by pledges of certain of our assets and
will bear interest at a floating rate based upon LIBOR or a specified base rate,
plus a margin to be negotiated. This facility will contain customary restrictive
covenants. We intend to use borrowings under this facility to repay the unpaid
the balance of amounts borrowed under our existing credit facility that are not
repaid with the proceeds of the offering.

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

Reported net income (loss)............................... $ 6,942,174 $(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)............................... $10,331,953 $(2,295,090)
=========== ===========
Basic earnings (loss) per share:
Reported net income (loss)............................... $ 37.70 $ (14.87)
Add back: Cumulative effect of an accounting change...... 18.41 --
Add back: Goodwill amortization.......................... -- 2.01
Add back: Other intangible asset amortization............ -- 0.04
----------- -----------
Adjusted net income (loss)............................... $ 56.11 $ (12.82)
=========== ===========
Diluted earnings (loss) per share:
Reported net income (loss)............................... $ 37.37 $ (14.87)
Add back: Cumulative effect of an accounting change...... 18.24 --
Add back: Goodwill amortization.......................... -- 2.01
Add back: Other intangible asset amortization............ -- 0.04
----------- -----------
Adjusted net income (loss)............................... $ 55.61 $ (12.82)
=========== ===========

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

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, 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 greatly 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 extremely 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 increased
from 4.5x to 5.3x, between 1991 and 2001. Additionally, the teenage segment,
defined 12-17 year olds, represented 19% of admissions in 2001, up from 14% in
1997. During 2001 51% of teenagers attended movies 12x per year or more,
compared with only 42% in 1997.

COMPETITIVE STRENGTHS

We believe the following strengths differentiate us from our competitors:

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.

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 the predominant Pan American motion picture
exhibition company.

STRONG BALANCE SHEET WITH SIGNIFICANT CASH FLOW. We believe that we will
have a conservative capital structure. As of March 31, 2002, on a pro forma
basis giving effect to this offering, we had $ million of total debt
outstanding and $ million in cash and cash equivalents, resulting in a ratio of
net debt to EBITDA of . Our high EBITDA margin and capital structure
allowed us to generate $67.6 million of free cash flow (EBITDA after interest
expense, taxes paid, capital expenditures and changes in working capital) during
the twelve months ended March 31, 2002. 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 the
predominant Pan American exhibition company 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
43

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 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 a 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

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

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.

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. Each region leader is
responsible for supervising approximately 9% of the theatre managers.

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 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.

A film license typically specifies a rental fee to be paid to the
distributor based on the higher result of either a gross receipts formula or a
theatre admissions revenue sharing formula. The distributor receives a specified
percentage of box office receipts with the percentage generally declining over
the term of the run when using a gross receipts formula. In the U.S., new
release films rental percentages usually begin at 70% of box office receipts and
gradually decline to as low as 30% over a period of four to seven weeks.
Alternatively, under the theatre admissions revenue sharing formula, commonly
known as the "90/10" clause, the distributor receives a specified percentage,
i.e. 90%, of the excess of box office receipts over a negotiated reimbursement
for theatre expenses. In international markets, beginning film rental
percentages can vary between 35% and 60% of box office revenues and gradually
decline over a similar period 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.

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.
46

- 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 159
million patrons during the twelve months ended March 31, 2002. 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 even 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 relating to newspaper directory advertisements. Patrons
are now able to purchase advance tickets from 69 of our North American theatres,
with 980 screens, and print tickets at home for ten theatres by
47

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 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 largest motion picture exhibitors worldwide 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. Our international operations typically 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 building 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. 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 24 screens. 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. Although we are unable to predict the outcome of this litigation, 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. 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.

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.
Although we are unable to predict the outcome of this litigation, 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.

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. Although we are
unable to predict the outcome of this litigation, 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.

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.

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 Vice Chairman of the Board; Executive Vice President;
Director
Alan Stock.............. 41 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 and Secretary
John Lundin............. 52 Vice President -- Film Licensing
Walter Hebert........... 56 Vice President -- Purchasing
Don Harton.............. 44 Vice President -- Construction
Margaret Richards....... 43 Vice President -- Real Estate
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 its inception in 1987. Mr.
Mitchell was Vice Chairman of the Board of Directors from March 1993 to March
1996 and was President from its inception in 1987 until March 1993. From 1985 to
1987, Mr. Mitchell served as President and Chief Executive Officer of a
predecessor corporation. 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 Vice Chairman of the Board since March 1996,
as a Director since April 1992 and as Executive Vice President since October
1989. Mrs. Mitchell served as the 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.

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 its 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 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 its 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 April 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 April 1995.

James Stern has served as a Director since March 1996. 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 May 17, 2002, Cypress had
the right to designate two board members.

Our certificate of incorporation authorizes there to be between six and
twelve 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 -- -- 12,450 (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
President -- Cinemark 2000 277,640 64,715 (11) -- 7,875 (10)
International 1999 252,400 -- -- 7,500 (10)
Robert Copple................ 2001 267,500 145,235 (5) 189,000 (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
$10,500 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 128,250 shares of Class A Common Stock over the

$0.0037 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 162,000 shares of Class A Common Stock over the $0.0037 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 67,500 shares of Class A Common Stock over the $0.0037 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 the Company's 401(k) savings
plan, $131,532 of compensation relating to the value of stock options
exercised for 108,000 shares of Class A Common Stock over the $0.0037 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 November and December 2001 we granted Mr. Copple options to purchase an
aggregate of 67,500 shares of Class A Common Stock under the Cinemark 1991
nonqualified stock option plan at an exercise price of $0.0037 per share.
On the date of grant, the Class A Common Stock had a market value of $1.22
per share. These options were immediately vested and such options were
exercised by Mr. Copple. See Footnote 8. On December 31, 2001, we granted
Mr. Copple options to purchase 121,500 shares of Class A Common Stock at an
exercise price of $1.22 per share. On the date of grant, the Class A Common
Stock had a market value of $1.22 per share. 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).... 67,500 25.24% $0.0037 n/a 133,890 213,345
121,500 14.02% $1.22 12/2011 93,221 236,240
Robert Carmony....... -- -- n/a n/a -- --

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

(1) During 2001, we granted Mr. Copple options to purchase 189,000 shares of
Class A common stock comprised of the following: options to purchase 67,500
shares of Class A common stock with an exercise price of $0.0037 per share
under our stock option plan and options to purchase 121,500 shares of Class
A common stock with an exercise price of $1.22 per share under our Long Term
Incentive Plan. In December 2001, we accelerated the vesting of all options
under our 1991 nonqualified stock option plan, and Mr. Copple exercised his
options thereunder and received 67,500 shares of Class A common stock.

(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
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- --------- ----------- ------------- ----------- -------------

Lee Roy Mitchell..... -- -- -- --
Alan Stock........... 128,250 $ 156,194 48,600 32,400
Tim Warner........... 162,000 197,298 48,600 32,400
Robert Copple........ 67,500 82,208 -- 121,500
Robert Carmony....... 108,000 131,532 48,600 32,400

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

(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 $ per share.

EMPLOYMENT AGREEMENTS

We intend to enter into term employment agreements with certain of our
executive officers. The employment agreements will provide for base salary,
bonuses, benefits and severance payments payable upon the occurrence of certain
events.

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 seven 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 2,884,950 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.

During 2001, we granted options to purchase 69,660 shares with an exercise
price of $0.0037 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 $1.22.
As a result, we accrued $84,882 for unearned compensation and began amortizing
this noncash expense at a rate of $16,976 per year during the five year vesting
period for the options granted. In December 2001, vested and all unvested
options under the plan, including the 69,660 issued in 2001, were immediately
vested and exercised. We recognized unearned compensation in the amount of
$272,075 on the date of exercise. During 2001, there were 1,325,970 options
exercised and 400,950 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 B 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 216,000 shares of our Class A common stock at an exercise price of $0.0037
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 54,000 director options exercised and no options
granted or forfeited. As of March 31, 2002, there were outstanding options to
purchase 162,000 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 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. Up to an aggregate of 2,644,380 shares of our Class A
common stock have been reserved for issuance under the plan. The Compensation
Committee has the discretion to set the exercise price 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.

In December 2001, we granted options to purchase 411,750 shares of Class A
common stock with an exercise price of $1.22 per share. We believe that the
market value of a share of Class A common stock on the date of grant did not
exceed the option price of $1.22 and thus no compensation expense was recorded.
During 2001, there were no options exercised and 141,750 options were forfeited
under the Long Term Incentive Plan. As of March 31, 2002, there were outstanding
options to purchase 1,570,050 shares of our Class A common stock under the Long
Term Incentive Plan.

An employee's award under the Long Term Incentive Plan is forfeited if the
employee is terminated for cause. Upon termination of an employee's employment,
we have the option to repurchase the award at the fair market value of the share
or Class A common stock vested under such award as determined in accordance with
the Long Term Incentive Plan.

PRINCIPAL STOCKHOLDERS

The following table presents information regarding beneficial ownership of
our common stock as of March 31, 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 24,009,480 shares of our
Class A common stock and 25,710,480 shares of our Class B common stock
outstanding on March 31, 2002 and shares of our Class A common stock and
25,710,480 shares of our Class B common stock outstanding immediately after this
offering.

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)........... -- -- -- 25,710,480 100.0% 100.0% 91.5%
Tandy Mitchell (4)............. -- -- -- 21,407,490 83.3% 83.3% 76.2%
James Stern (5)................ 22,287,960 92.8% -- -- -- 7.9%
Alan W. Stock (6).............. 176,850 0.7% * -- -- -- * *
Robert Copple.................. 94,500 0.4% * -- -- -- * *
Robert Carmony (7)............. 156,600 0.7% * -- -- -- * *
Tim Warner (8)................. 210,600 0.9% * -- -- -- * *
All directors and executive
officers as a group (15
persons) (4)(5)(9)........... 23,352,030 97.2% 25,710,480 100% 100% 99.8%
FIVE PERCENT STOCKHOLDERS
Cypress Merchant Banking
Partners L.L.C. (5).......... 22,287,960 92.8% 7.9%
CGI Equities, Ltd. (10)........ -- -- -- 9,045,000 35.2% 35.2% 32.2%
Mitchell Special Trust (11).... -- -- -- 3,960,090 15.4% 15.4% 14.1%

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

* 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 9,045,000 shares of Class B common stock held by CGI Equities,
Ltd., and 3,960,090 shares of Class B common stock held by the Mitchell
Special Trust, 342,900 shares of Class B common stock held in trust for the
benefit of certain of Lee Roy Mitchell's grandchildren, 12,335,490 shares
of

Class B common stock owned by Lee Roy Mitchell and 27,000 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 12,335,490 shares of Class B common stock that he owns of record.

(4) Includes 9,045,000 shares of Class B common stock owned by CGI Equities,
Ltd.; 12,335,490 shares of Class B common stock owned by Lee Roy Mitchell
and 27,000 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
27,000 shares of Class B common stock that she owns of record.

(5) Shares shown as beneficially owned by Cypress Merchant Banking Partners
L.L.C. are owned of record by Cypress Merchant Banking Partners L.P.
Cypress Merchant Banking Partners L.L.C. is the general partner of Cypress
Associates L.P., which is the general partner of Cypress Merchant Banking
Partners L.P. James Stern is a member of Cypress Merchant Banking Partners
L.L.C. Mr. Stern disclaims beneficial ownership of the shares owned by
Cypress. The address of Cypress Merchant Banking Partners 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 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

(6) Includes 48,600 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 48,600 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 48,600 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 338,850 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.

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. We recorded $29,325 of management fee revenues from Westward in 2001.
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. We recorded $21,389
of management fee revenues from Mitchell Theatres in 2001.

PROFIT PARTICIPATION

In 2001 we entered into a profit participation agreement 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. 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 with the Mitchell Group and
Cypress in May 2002. 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
61

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, the Mitchell
Group propose 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, he 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 shares of Class A common stock
issued and outstanding, 25,710,480 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. 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, of which will be unissued, 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, 2,644,380
shares have been reserved for issuance under our Long Term Incentive Plan.

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 2,644,380 shares of our Class A common stock for issuance
under our Long Term Incentive Plan, of which 1,570,050 shares of Class A common
stock are issuable upon exercise of options granted as of March 31, 2002,
including options to purchase 704,430 shares exercisable as of March 31, 2002 or
that will become exercisable within 60 days after March 31, 2002. We have
reserved 162,000 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; Removal. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
elected by the stockholders 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 will retain a transfer agent and registrar for our Class A common stock
prior to the closing of this offering.

LISTING

We intend to apply to list our Class A common stock on the New York Stock
Exchange under the trading symbol " ".

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 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 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 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 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 the common stock
should consult their tax advisors.

As used herein, a Non-U.S. Holder of 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 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 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 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 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 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.

If we are or become a U.S. real property holding corporation, then assuming
the 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 ending on the date of disposition and the Non-U.S. Holder's
holding period for the common stock) more than 5% of the Class A common stock
will be subject to U.S. federal income tax on the disposition of the common
stock under these rules.

U.S. ESTATE TAX

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 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 common stock or the availability of shares of our common stock for sale will
have on the market price of our common stock prevailing from time to time.
Nevertheless, sales of substantial amounts of our common stock in the public
market could adversely affect the market price of our 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 shares of our Class
A common stock and 25,710,480 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 officers, directors and substantially all of our stockholders, have
agreed not to sell or otherwise dispose of any shares of our 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.

We have granted our partners in our Brazilian operations an option to
exchange all of their shares in Cinemark Brazil S.A. into shares of our Class A
common stock upon completion of this offering. We have granted them piggyback
registration rights with respect to those shares of Class A common stock.

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.
69

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 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. ..................................
--------
Total.......................................................
========

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 $ in filing fees, $
in professional fees and expenses and $ for other fees and expenses,
excluding underwriting discounts and commissions, will be approximately $
million.

OVER-ALLOTMENT OPTION

We have granted to the underwriters an option to purchase up to an
aggregate of 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 and directors and stockholders, holding in the aggregate
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 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 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

We intend to apply to list our Class A common shares on the New York Stock
Exchange under the symbol " ." 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 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 a price of $ per share. All of the persons
purchasing the reserved shares must commit to purchase no later than the close
of business on the day following 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. We expect that Lehman Brothers Inc. will be the
arranger for the new 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 an explanatory paragraph referring to 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 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..... 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................................... 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

SUPPLEMENTAL SCHEDULES REQUIRED BY THE INDENTURES (SECTION 4.02)

FOR THE SENIOR SUBORDINATED NOTES

SCHEDULE
--------

A Consolidating Balance Sheet Information, December 31,
2001........................................................ F-28
B Consolidating Statement of Operations Information for the
Year Ended December 31, 2001................................ F-29
C Consolidating Statement of Cash Flows Information for the
Year Ended December 31, 2001................................ F-30

CINEMARK, INC. AND SUBSIDIARIES

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

SUPPLEMENTAL SCHEDULES REQUIRED BY THE INDENTURES (SECTION 4.02)

FOR THE SENIOR SUBORDINATED NOTES

SCHEDULE
--------

A Condensed Consolidating Balance Sheet Information, March 31,
2002 (unaudited)............................................ F-42
B Condensed Consolidating Statement of Operations Information
for the Three Months Ended March 31, 2002 (unaudited)....... F-43
C Condensed Consolidating Statement of Cash Flows Information
for the Three Months Ended March 31, 2002 (unaudited)....... F-44

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 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.

Our audits were conducted for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The supplemental
schedules of certain consolidating information listed on pages F-28 through F-30
are presented for the purpose of additional analysis of the basic consolidated
financial statements rather than to present the financial position, results of
operations, and cash flows of the individual companies, and are not a required
part of the basic consolidated financial statements. These schedules are the
responsibility of the Company's management. Such schedules have been subjected
to the auditing procedures applied in our audits of the basic 2001 consolidated
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic 2001 consolidated financial
statements taken as a whole.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas
February 8, 2002 (May 17, 2002, as to the effects of the stock exchange
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
Co-op advertising and other receivables................... 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
Class A Common Stock, $.001 par value: 350,000,000 shares
authorized, 22,629,510 and 24,009,480 shares issued and
outstanding, respectively............................... 22,630 24,010
Class B Common Stock, $.001 par value: 150,000,000 shares
authorized, 25,710,480 shares issued and outstanding.... 25,710 25,710
Additional paid-in-capital................................ 38,455,716 37,020,316
Unearned compensation -- stock options.................... (1,956,944) (887,779)
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........... $ 0.08 $ (0.22) $ (0.08)
Cumulative effect of a change in accounting
principle..................................... (0.06) -- --
------------ ------------ ------------
Net income (loss)................................ $ 0.02 $ (0.22) $ (0.08)
============ ============ ============
Earnings (loss) per share -- Diluted
Income (loss) before accounting change........... $ 0.08 $ (0.22) $ (0.08)
Cumulative effect of a change in accounting
principle..................................... (0.06) -- --
------------ ------------ ------------
Net income (loss)................................ $ 0.02 $ (0.22) $ (0.08)
============ ============ ============

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................. 22,438,080 $22,439 25,710,480 $25,710 $39,064,274 $(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............... 22,438,080 $22,439 25,710,480 $25,710 $39,023,804 $(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.............................. 191,430 191 (207,799)
Foreign currency translation
adjustment...........................
---------- ------- ----------- ------- ----------- ----------- -----------
Balance December 31, 2000............... 22,629,510 $22,630 25,710,480 $25,710 $38,455,716 $(1,956,944) $48,717,567
Net loss............................... (4,021,268)
Unearned compensation from stock
options granted...................... 84,882 (84,882)
Unearned compensation from stock
options forfeited.................... (143,392) 143,392
Amortization of unearned
compensation......................... 1,010,655
Stock options exercised, including tax
benefit.............................. 1,379,970 1,380 (1,376,890)
Foreign currency translation
adjustment...........................
---------- ------- ----------- ------- ----------- ----------- -----------
Balance December 31, 2001............... 24,009,480 $24,010 25,710,480 $25,710 $37,020,316 $ (887,779) $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...................... --
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............... $(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)
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 -- --
Cash provided by (used for) operating working
capital:
Inventories................................. (1,142,815) 999,565 412,923
Co-op advertising and other receivables..... 346,817 3,821,447 (2,803,624)
Prepaid expenses and other.................. (5,050,770) 3,917,056 344,837
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............................. 97,541,193 51,574,782 81,659,282
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
Decrease (increase) in investments in and
advances to affiliates...................... 9,150,762 (4,650,148) (1,986,778)
Decrease (increase) in other assets............ (13,130,947) 2,790,706 7,134,004
------------- ------------- -------------
Net cash used for investing activities.... (228,483,521) (91,664,821) (28,336,501)
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 --
Minority investment in subsidiaries, net....... (15,022,151) (2,173,618) 7,824,708
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 for the periods presented.

Business -- Cinemark, Inc. and its subsidiaries (the "Company") is a world
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. 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 agreements. In accordance with
SFAS No. 142, "Goodwill and other Intangible
F-7

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.
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 estimates of the final settlement pursuant to the film
license agreements. Advertising costs are expensed as incurred.

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 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

F-8

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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
===========

F-9

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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 will be effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The Company is currently considering the impact, if any, that this statement
will have 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............ 48,158 48,268 48,473
======= ======== =======
Earnings (loss) per Common share...................... $ 0.02 $ (0.22) $ (0.08)
======= ======== =======
Diluted:
Weighted average Common shares outstanding............ 48,158 48,268 48,473
Common equivalent shares for stock options............ 3,615 -- --
------- -------- -------
Weighted average shares outstanding................... 51,773 48,268 48,473
======= ======== =======
Earnings (loss) per Common and Common equivalent
share................................................. $ 0.02 $ (0.22) $ (0.08)
======= ======== =======

F-10

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 Common Stock outstanding using the treasury stock
method. The dilutive effect of 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, 3,372,300 and 2,870,100 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 a 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 in
early January 2002 as part of a "Public Emergency Bill and Amendment of
Convertibility Law" ("Convertibility Law"). The Convertibility Law set forth a
dual exchange rate system, with a "commercial rate" of 1.4 pesos to the U.S.
dollar. This commercial rate is to be utilized to settle all exports and certain
essential imports. The second rate, 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. By
February 2002, the market rate was 2.1 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 $19,159,961
at December 31, 2001. Income and expense accounts from January through November
2001 were converted into U.S. dollars at the exchange rate of

F-11

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

In 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 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.

F-12

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-13

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-14

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 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 interest rates varying from
6.8% to 11.8%, 3) Project developer financing executed between September 2000
F-15

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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-16

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-17

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-18

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, 1999, 2000
and 2001 totaled $89,931,024, $109,898,692 and $116,136,691, respectively.

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.

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
======== ============== ==============

F-19

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 patrons using wheelchairs. An Order
granting Summary Judgment to the Company was filed in November 2001. The
Department of Justice has filed a Notice of Appeal with the Sixth Circuit Court
of Appeals. Although the Company is unable to predict the outcome of this
litigation, management believes 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.

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. The Company anticipates the plaintiffs
may appeal the current ruling. Although the Company is unable to predict the
outcome of this litigation, management believes 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.

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
handicapped patrons. The Company has filed an answer denying the allegations and
is vigorously defending this suit. Although the Company is unable to predict the
outcome of this litigation, management believes 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.

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 handicapped
patrons. The Company has filed an answer denying the allegations and is
vigorously defending this suit. Although the Company is unable to predict the
outcome of this litigation, management believes 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.
F-20

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company is also involved in the following other legal proceedings:

Jerry Galow and Watson, Bishop, London & Galow, P.C., both Individually and
on behalf of all others similarly situated v. Cinemark USA, Inc. and American
Blast Fax, Inc., Cause No. GN003299, in the 98th Judicial District Court of
Travis County, Texas. In November 2000, Plaintiffs Jerry Galow and Watson,
Bishop, London & Galow, P.C. (the "plaintiffs") brought this alleged class
action on behalf of themselves and purportedly on behalf of all others similarly
situated. The plaintiffs are an individual and his law firm who allege that they
were sent unsolicited facsimile advertisements on behalf of the Company in
violation of federal and state law. The plaintiffs seek certification of the
case as a class action and the right to recover on their own behalf and on
behalf of the alleged class $500 per alleged violation, three times the damages
available for knowing and/or willful violations of those statutes, or
alternatively, punitive damages, and unspecified damages for the alleged
negligence per se of the Company. The Company was successful in having this case
moved to Collin County, Texas. The Company is vigorously defending this suit.
Although the Company is unable to predict the outcome of this litigation,
management believes 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.

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. 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.

F-21

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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. 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.

Employee Stock Option Plan -- Under terms of the Company's 1991
Nonqualified Stock Option Plan, nonqualified options to purchase up to 2,884,950
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

F-22

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.......... 1,922,670 $0.0037 1,922,670 $0.0037 1,657,260 $0.0037
Granted............ -- -- -- -- 69,660 0.0037
Forfeited.......... -- -- (31,050) 0.0037 (400,950) 0.0037
Exercised.......... -- -- (191,430) 0.0037 (1,325,970) 0.0037
Repurchased........ -- -- (42,930) 0.0037 -- --
--------- ------- --------- ------- ---------- -------
Outstanding at
December 31........ 1,922,670 $0.0037 1,657,260 $0.0037 -- $ --
========= ======= ========= ======= ========== =======
Options exercisable
at December 31..... 1,741,230.. $0.0037 1,561,140 $0.0037 -- $ --
========= ======= ========= ======= ========== =======

The Company repurchased options to purchase 42,930 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 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 69,660 shares granted in November and
December 2001 exceeded the option price by approximately $1.22. As a result, the
Company accrued $84,882 for unearned compensation and began amortizing this
noncash expense at a rate of $16,976 per year during the five year vesting
period for the options granted. In December 2001, all remaining unvested options
under this Plan, including the 69,660 options issued in 2001, were immediately
vested and exercised with any unearned compensation recorded at that time.

Independent Director Stock Options -- The Company has granted the
unaffiliated directors of the Company options to purchase up to an aggregate of
216,000 shares of the Company's Class A Common Stock at an exercise price of
$0.0037 per share (the "Director Options"). The options vest five years from
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..................... 216,000 $0.0037 216,000 $0.0037 216,000 $0.0037
Granted............... -- -- -- -- -- --
Forfeited............. -- -- -- -- -- --
Exercised............. -- -- -- -- (54,000) $0.0037
------- ------- ------- ------- ------- -------
Outstanding at December
31.................... 216,000 $0.0037 216,000 $0.0037 162,000 $0.0037
======= ======= ======= ======= ======= =======
Options exercisable at
December 31........... 162,000 $0.0037 162,000 $0.0037 108,000 $0.0037
======= ======= ======= ======= ======= =======

F-23

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The weighted average remaining contractual life of the 162,000 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 2,644,380 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.

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.......... 1,471,500 $6.20 1,448,550 $6.20 1,300,050 $6.20
Granted............ 10,800 6.20 13,500 6.20 411,750 1.22
Forfeited.......... (33,750) 6.20 (162,000) 6.20 (141,750) 6.20
Exercised.......... -- -- -- -- -- --
--------- ----- --------- ----- --------- -----
Outstanding at
December 31........ 1,448,550 $6.20 1,300,050 $6.20 1,570,050 $4.90
========= ===== ========= ===== ========= =====
Options exercisable
at December 31..... 220,320 $6.20 517,320 $6.20 699,570 $6.20
========= ===== ========= ===== ========= =====

The weighted average remaining contractual life of the 1,570,050 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 10,800 options granted in January 1999
exceeded the option price by approximately $1.58. 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 13,500 options granted in January 2000
did not exceed the option price of $6.20 and thus no compensation expense was
recorded. The Company believes the market value of a share of Class A Common
Stock on the date of grant for the 411,750 options granted in December 2001 did
not exceed the option price of $1.22 and thus no compensation expense was
recorded. The long-term incentive options expire ten years from the date of
grant.

For all three option plans, 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 $84,882 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,

F-24

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, as described below. 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 Financial Accounting Standards ("SFAS") No. 123,
utilizing the Black-Scholes option pricing model, the effect on income and
earnings per share would not have changed significantly from the amounts
presented in the financial statements.

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..................................... 81,794 164,884 199,512

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.

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.

F-25

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, 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. Assets are evaluated for
impairment on an individual theatre basis or a group of theatres that share the
same marketplace, which the Company's management believes is the lowest
applicable level for which there are identifiable cash flows. The impairment
evaluation is based on the estimated cash flows from continuing use through the
remainder of the theatre's useful life. The remainder of the useful life
correlates with the available remaining lease period for leased properties and a
period of twenty years for fee owned properties.

The Company wrote down the assets of certain properties 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.

F-26

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. 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................ $ (.06) $ (.05) $ .12 $ (.09) $ (.08)
Diluted.............. (.06) (.05) .11 (.09) (.08)

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................ $ (.12) $ (.08) $ .09 $ (.11) $ (.22)
Diluted.............. (.12) (.08) .08 (.11) (.22)

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

(1) During the fourth quarter of 2001, the Company recorded approximately $20
million of impairment charges as described in Note 15.

F-27

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE A
CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2001

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS CONSOLIDATED
------------ ------------ ------------- ------------

ASSETS

Current assets
Cash and cash equivalents................... $ 19,186,456 $ 31,012,767 $ -- $ 50,199,223
Inventories................................. 2,620,952 701,080 3,322,032
Co-op advertising and other receivables..... 5,345,112 6,754,509 (1,049,973) 11,049,648
Income tax receivable....................... (774,891) 2,213,685 1,438,794
Prepaid expenses and other.................. 2,550,982 695,847 3,246,829
------------ ------------ ------------- ------------
Total current assets...................... 28,928,611 41,377,888 (1,049,973) 69,256,526

Theatre properties and equipment -- net....... 676,224,772 190,181,645 866,406,417
Other assets
Goodwill -- net............................. 7,924,738 7,200,216 15,124,954
Investments in and advances to affiliates... 166,938,389 2,677,677 (165,169,063) 4,447,003
Deferred tax asset.......................... 3,716,206 -- 3,716,206
Deferred charges and other -- net........... 28,862,726 8,729,918 37,592,644
------------ ------------ ------------- ------------
Total other assets........................ 207,442,059 18,607,811 (165,169,063) 60,880,807
------------ ------------ ------------- ------------
Total......................................... $912,595,442 $250,167,344 $(166,219,036) $996,543,750
============ ============ ============= ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Current portion of long-term debt........... $ 6,240,871 $ 15,612,871 $ -- $ 21,853,742
Current income tax payable.................. (182,298) 182,298 --
Accounts payable............................ 21,852,828 9,256,833 31,109,661
Accrued film rentals........................ 18,889,758 4,691,720 23,581,478
Accrued interest............................ 15,443,772 723,365 16,167,137
Accrued payroll............................. 11,999,760 1,142,263 13,142,023
Accrued property taxes...................... 12,364,648 1,664,343 14,028,991
Accrued other current liabilities........... 14,324,848 6,197,361 (1,049,973) 19,472,236
------------ ------------ ------------- ------------
Total current liabilities................. 100,934,187 39,471,054 (1,049,973) 139,355,268
Long-term liabilities
Long-term debt, less current portion........ 667,976,248 91,126,176 759,102,424
Deferred income taxes....................... (715,314) 715,314 --
Deferred lease expenses..................... 22,386,425 445,963 22,832,388
Deferred gain on sale leasebacks............ 4,738,540 -- 4,738,540
Deferred revenues and other long-term
liabilities............................... 7,682,349 2,141,863 9,824,212
------------ ------------ ------------- ------------
Total long-term liabilities............... 702,068,248 94,429,316 -- 796,497,564
Commitments and contingencies (Note 10)....... --
Minority interests in subsidiaries............ 7,638,384 27,715,278 35,353,662
Stockholders' equity
Class A Common Stock........................ 24,010 14,308,000 (14,308,000) 24,010
Class B Common Stock........................ 25,710 -- -- 25,710
Additional paid-in-capital.................. 37,020,316 150,861,063 (150,861,063) 37,020,316
Unearned compensation -- stock options...... (887,779) -- (887,779)
Retained earnings (deficit)................. 92,144,624 (47,448,325) 44,696,299
Accumulated other comprehensive loss........ (26,372,258) (29,169,042) (55,541,300)
------------ ------------ ------------- ------------
Total stockholders' equity................ 101,954,623 88,551,696 (165,169,063) 25,337,256
------------ ------------ ------------- ------------
Total......................................... $912,595,442 $250,167,344 $(166,219,036) $996,543,750
============ ============ ============= ============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes.

F-28

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE B
CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2001

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------

Revenues............................. $703,711,233 $161,548,658 $(11,601,423) $853,658,468
Costs and expenses
Cost of operations................. 530,305,723 128,001,094 (11,601,423) 646,705,394
General and administrative
expenses........................ 34,766,091 7,923,547 42,689,638
Depreciation and amortization...... 58,847,346 14,696,500 73,543,846
Asset impairment loss.............. 19,010,524 1,712,750 20,723,274
Loss on sale of assets and other... 6,877,899 5,529,797 12,407,696
------------ ------------ ------------ ------------
Total........................... 649,807,583 157,863,688 (11,601,423) 796,069,848
Operating income..................... 53,903,650 3,684,970 -- 57,588,620
Other income (expense)
Interest expense................... (55,598,945) (12,769,347) -- (68,368,292)
Amortization of debt issue cost and
debt discount................... (1,024,475) (1,537,853) (2,562,328)
Interest income.................... 500,584 991,908 -- 1,492,492
Foreign currency exchange gain
(loss).......................... 379,598 (2,356,577) -- (1,976,979)
Equity in loss of affiliates....... (4,415,744) (56,239) (4,471,983)
Minority interests in (income) loss
of subsidiaries................. (1,456,088) 1,618,661 162,573
------------ ------------ ------------ ------------
Total........................... (61,615,070) (14,109,447) -- (75,724,517)
------------ ------------ ------------ ------------
Loss before income taxes............. (7,711,420) (10,424,477) -- (18,135,897)
Income tax benefit................... (13,917,594) (197,035) -- (14,114,629)
------------ ------------ ------------ ------------
Net income (loss).................... $ 6,206,174 $(10,227,442) $ -- $ (4,021,268)
============ ============ ============ ============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes.

F-29

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE C
CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
YEAR ENDED DECEMBER 31, 2001

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------

Operating activities
Net income (loss)....................... $ 6,206,174 $(10,227,442) $ -- $ (4,021,268)
Noncash items in net income (loss):
Depreciation......................... 56,595,579 14,382,729 70,978,308
Amortization of goodwill and other
assets............................. 2,251,767 313,771 2,565,538
Amortization of gain on sale
leasebacks......................... (365,921) -- (365,921)
Amortization of foreign advanced
rents.............................. 1,539,678 805,417 2,345,095
Amortization of debt discount and
premium............................ (28,508) (28,508)
Amortized compensation -- stock
options............................ 1,010,655 -- 1,010,655
Loss on impairment of assets......... 19,010,524 1,712,750 20,723,274
Loss on sale of assets and other..... 6,877,899 5,529,797 12,407,696
Deferred lease expenses.............. 2,377,275 (20,134) 2,357,141
Deferred income tax expenses......... (19,308,811) 760,927 (18,547,884)
Equity in (income) loss of
affiliates......................... 4,415,744 56,239 4,471,983
Minority interests in income (loss)
of subsidiaries.................... 1,456,088 (1,618,661) (162,573)
Common Stock issued for options
exercised, including tax benefit... (1,375,510) -- (1,375,510)
Cash provided by (used for) operating
working capital...................... (18,991,736) 8,292,992 (10,698,744)
------------- ------------ ------- -------------
Net cash provided by operating
activities.................... 61,670,897 19,988,385 -- 81,659,282
Investing activities
Additions to theatre properties and
equipment............................ (24,980,586) (15,371,094) (40,351,680)
Sale of theatre properties and
equipment............................ 6,613,942 254,011 6,867,953
Decrease (increase) in other assets,
investments in and advances to
affiliates........................... (2,134,785) 7,282,011 5,147,226
------------- ------------ ------- -------------
Net cash used for investing
activities.................... (20,501,429) (7,835,072) -- (28,336,501)
Financing activities
Increase in long-term debt.............. 84,522,270 8,714,169 93,236,439
Reductions of long-term debt............ (107,791,392) (14,783,116) (122,574,508)
Minority investment in subsidiaries,
net.................................. 91,722 7,732,986 7,824,708
------------- ------------ ------- -------------
Net cash provided by (used for)
financing activities.......... (23,177,400) 1,664,039 -- (21,513,361)
Effect of exchange rate changes on cash
and cash equivalents.................... (441,960) (1,008,231) (1,450,191)
------------- ------------ ------- -------------
Increase in cash and cash equivalents..... 17,550,108 12,809,121 -- 30,359,229
Cash and cash equivalents:
Beginning of period..................... 1,636,348 18,203,646 19,839,994
------------- ------------ ------- -------------
End of period........................... $ 19,186,456 $ 31,012,767 $ -- $ 50,199,223
============= ============ ======= =============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes.

F-30

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, DECEMBER 31,
2002 2001
-------------- --------------
(UNAUDITED)

ASSETS
Current assets
Cash and cash equivalents................................. $ 59,437,502 $ 50,199,223
Inventories............................................... 3,433,246 3,322,032
Co-op advertising and other receivables................... 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
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..................................... 6,700,171 --
Deferred revenues and other long-term liabilities......... 8,877,575 9,824,212
-------------- --------------
Total long-term liabilities............................. 767,936,024 796,497,564

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

Stockholders' equity
Class A Common Stock, $.001 par value: 350,000,000 shares
authorized, 24,009,480 shares issued and outstanding.... 24,010 24,010
Class B Common Stock, $.001 par value: 150,000,000 shares
authorized, 25,710,480 shares issued and outstanding.... 25,710 25,710
Additional paid-in-capital................................ 37,020,316 37,020,316
Unearned compensation -- stock options.................... (777,410) (887,779)
Retained earnings......................................... 51,638,473 44,696,299
Accumulated other comprehensive loss...................... (65,471,814) (55,541,300)
-------------- --------------
Total stockholders' equity.............................. 22,459,285 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

THREE MONTHS ENDED
MARCH 31,
---------------------------
2002 2001
------------ ------------
(UNAUDITED)

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....................... 10,476,106 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............................................. 195,992,709 179,551,449
Operating income............................................ 30,709,397 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...................................... 14,836,902 (4,087,008)
Income taxes (benefit)...................................... 4,504,949 (1,424,490)
------------ ------------
Income (loss) before cumulative effect of an accounting
change.................................................... 10,331,953 (2,662,518)
Cumulative effect of a change in accounting principle, net
of income tax benefit of $0............................... (3,389,779) --
------------ ------------
Net income (loss)........................................... $ 6,942,174 $ (2,662,518)
============ ============
Earnings (loss) per share:
Basic:
Income (loss) before accounting change................. $ 0.21 $ (0.06)
Cumulative effect of an accounting change.............. (0.07) --
------------ ------------
Net income (loss)...................................... $ 0.14 $ (0.06)
============ ============
Diluted:
Income (loss) before accounting change................. $ 0.21 $ (0.06)
Cumulative effect of an accounting change.............. (0.07) --
------------ ------------
Net income (loss)...................................... $ 0.14 $ (0.06)
============ ============

See Notes to Condensed Consolidated Financial Statements
F-32

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
MARCH 31,
---------------------------
2002 2001
------------ ------------
(UNAUDITED)

Operating activities
Net income (loss)......................................... $ 6,942,174 $ (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................ 110,369 206,860
Amortization of gain on sale leasebacks................ (91,480) (91,481)
Amortization of debt discount and premium.............. (7,127) (7,127)
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........................... 10,416,377 (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 --
Cash provided by (used for) operating working capital:
Inventories............................................ (111,214) 287,591
Co-op advertising and other receivables................ 163,330 (1,988,336)
Prepaid expenses and other............................. 21,849 134,048
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.......................................... 7,974,324 (25,433,301)
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
Decrease in investments in and advances to affiliates..... 1,353,362 405,539
Decrease in deferred charges and other.................... 4,582,016 3,600,899
------------ ------------
Net cash provided by (used for) investing
activities.......................................... (1,216,951) 561,841
Financing activities
Increase in long-term debt................................ 17,772,828 34,192,808
Decrease in long-term debt................................ (15,170,540) (2,220,484)
Minority investment in subsidiaries, net.................. 212,827 (1,867,169)
------------ ------------
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 for the
periods presented.

Cinemark, Inc. and its subsidiaries (the "Company") is a world 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 in the Annual Report filed March 27, 2002 on Form 10-K by the
Company under the Securities Exchange Act of 1934. 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................................................... $10,331,953 $(2,662,518)
=========== ===========
Basic:
Weighted average Common shares outstanding............... 49,719,960 48,339,990
=========== ===========
Income (loss) before cumulative effect of an accounting
change per Common share.................................. $ 0.21 $ (0.06)
=========== ===========
Diluted:
Weighted average Common shares outstanding............... 49,719,960 48,339,990
Common equivalent shares for stock options............... 445,770 --
----------- -----------
Weighted average Common and Common equivalent shares
outstanding........................................... 50,165,730 48,339,990
=========== ===========
Income (loss) before cumulative effect of an accounting
change per Common and Common equivalent share............ $ 0.21 $ (0.06)
=========== ===========

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 Common Stock outstanding 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, 3,173,310 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).......................................... $ 6,942,174 $(2,662,518)
Foreign currency translation adjustment.................... (9,930,514) (3,063,383)
----------- -----------
Comprehensive loss......................................... $(2,988,340) $(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)

During 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 in early
January 2002 as part of a "Public Emergency Bill and Amendment of Convertibility
Law" ("Convertibility Law"). The Convertibility Law set forth a dual exchange
rate system with a "commercial rate" and a "market rate" established. 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) was 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 stockholders' 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

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

F-36

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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)............................... $ 6,942,174 $(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)............................... $10,331,953 $(2,295,090)
=========== ===========
Basic earnings (loss) per share:
Reported net income (loss)............................... $ .14 $ (.06)
Add back: Cumulative effect of an accounting change...... .07 --
Add back: Goodwill amortization.......................... -- .01
Add back: Other intangible asset amortization............ -- --
----------- -----------
Adjusted net income (loss)............................... $ .21 $ (.05)
=========== ===========
Diluted earnings (loss) per share:
Reported net income (loss)............................... $ .14 $ (.06)
Add back: Cumulative effect of an accounting change...... .07 --
Add back: Goodwill amortization.......................... -- .01
Add back: Other intangible asset amortization............ -- --
----------- -----------
Adjusted net income (loss)............................... $ .21 $ (.05)
=========== ===========

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

F-41

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE A
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
AS OF MARCH 31, 2002
(UNAUDITED)

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS TOTAL
------------- ------------ ------------- --------------

ASSETS
Current assets
Cash and cash equivalents................. $ 28,109,333 $ 31,328,169 $ -- $ 59,437,502
Inventories............................... 2,845,442 587,804 -- 3,433,246
Co-op advertising and other receivables... 5,615,743 6,459,196 (1,188,621) 10,886,318
Income tax receivable..................... 5,650,745 2,240,232 -- 7,890,977
Prepaid expenses and other................ 2,905,043 1,444,937 (1,125,000) 3,224,980
------------- ------------ ------------- --------------
Total current assets.................... 45,126,306 42,060,338 (2,313,621) 84,873,023
Theatre properties and equipment............ 955,982,483 240,332,804 -- 1,196,315,287
Less accumulated depreciation and
amortization............................ (298,957,930) (50,891,661) -- (349,849,591)
------------- ------------ ------------- --------------
Theatre properties and
equipment -- net...................... 657,024,553 189,441,143 -- 846,465,696
Other assets
Goodwill -- net........................... 7,897,512 3,343,433 -- 11,240,945
Investments in and advances to
affiliates.............................. 169,348,272 1,531,173 (167,669,063) 3,210,382
Deferred tax asset........................ -- -- -- --
Deferred charges and other -- net......... 24,742,443 7,496,826 -- 32,239,269
------------- ------------ ------------- --------------
Total other assets...................... 201,988,227 12,371,432 (167,669,063) 46,690,596
------------- ------------ ------------- --------------
Total....................................... $ 904,139,086 $243,872,913 $(169,982,684) $ 978,029,315
============= ============ ============= ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt......... $ 47,240,871 $ 11,885,828 $ -- $ 59,126,699
Current income taxes payable.............. (102,097) 102,097 -- --
Accounts payable and accrued expenses..... 74,260,612 18,992,356 (1,188,621) 92,064,347
------------- ------------ ------------- --------------
Total current liabilities............... 121,399,386 30,980,281 (1,188,621) 151,191,046
Long-term liabilities
Senior credit agreements.................. 251,743,364 92,500,717 -- 344,244,081
Senior subordinated debt.................. 380,180,547 -- -- 380,180,547
Deferred lease expenses................... 22,848,337 438,253 -- 23,286,590
Deferred gain on sale leasebacks.......... 4,647,060 -- -- 4,647,060
Deferred income taxes..................... 5,984,857 715,314 -- 6,700,171
Deferred revenues and other long-term
liabilities............................. 8,077,158 1,925,417 (1,125,000) 8,877,575
------------- ------------ ------------- --------------
Total long-term liabilities............. 673,481,323 95,579,701 (1,125,000) 767,936,024
Minority interests in subsidiaries.......... 7,925,133 28,517,827 -- 36,442,960
Stockholders' equity
Class A Common Stock...................... 24,010 14,308,000 (14,308,000) 24,010
Class B Common Stock...................... 25,710 -- -- 25,710
Additional paid-in-capital................ 37,020,316 153,361,063 (153,361,063) 37,020,316
Unearned compensation -- stock options.... (777,410) -- -- (777,410)
Retained earnings......................... 101,284,043 (49,645,570) -- 51,638,473
Accumulated other comprehensive loss...... (36,243,425) (29,228,389) -- (65,471,814)
------------- ------------ ------------- --------------
Total stockholders' equity.............. 101,333,244 88,795,104 (167,669,063) 22,459,285
------------- ------------ ------------- --------------
Total....................................... $ 904,139,086 $243,872,913 $(169,982,684) $ 978,029,315
============= ============ ============= ==============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes

F-42

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE B
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED)

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS TOTAL
------------ ------------ ------------ ------------

Revenues............................... $183,318,295 $46,412,371 $(3,028,560) $226,702,106
Costs and expenses
Cost of operations................... 134,847,485 35,433,307 (3,028,560) 167,252,232
General and administrative
expenses.......................... 8,505,346 1,970,760 -- 10,476,106
Depreciation and amortization........ 13,248,226 3,918,555 -- 17,166,781
Asset impairment loss................ -- 558,398 -- 558,398
Loss on sale of assets and other..... 324,779 214,413 -- 539,192
------------ ----------- ----------- ------------
Total........................ 156,925,836 42,095,433 (3,028,560) 195,992,709
Operating income....................... 26,392,459 4,316,938 -- 30,709,397
Other income (expense)
Interest expense..................... (12,091,399) (2,648,913) -- (14,740,312)
Amortization of debt issue cost and
debt discount..................... (256,119) (378,676) -- (634,795)
Interest income...................... 158,088 325,251 -- 483,339
Foreign currency exchange loss....... (60,922) (160,075) -- (220,997)
Equity in income of affiliates....... 1,587 115,154 -- 116,741
Minority interests in income of
subsidiaries...................... (441,703) (434,768) -- (876,471)
------------ ----------- ----------- ------------
Total........................ (12,690,468) (3,182,027) -- (15,872,495)
------------ ----------- ----------- ------------
Income before income taxes and
cumulative effect of an accounting
change............................... 13,701,991 1,134,911 -- 14,836,902
Income taxes........................... 4,497,888 7,061 -- 4,504,949
------------ ----------- ----------- ------------
Income before cumulative effect of an
accounting change.................... 9,204,103 1,127,850 -- 10,331,953
Cumulative effect of a change in
accounting principle, net of income
tax benefit of $0.................... (64,684) (3,325,095) -- (3,389,779)
------------ ----------- ----------- ------------
Net income (loss)...................... $ 9,139,419 $(2,197,245) $ -- $ 6,942,174
============ =========== =========== ============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes

F-43

CINEMARK, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE C
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED)

RESTRICTED UNRESTRICTED
GROUP GROUP ELIMINATIONS TOTAL
------------ ------------ ------------ ------------

Operating activities
Net income (loss)...................... $ 9,139,419 $(2,197,245) $ -- $ 6,942,174
Noncash items in net income (loss):
Depreciation........................ 13,078,041 3,879,512 -- 16,957,553
Amortization of other assets........ 170,185 39,043 -- 209,228
Amortization of foreign advanced
rents............................. 312,630 185,333 -- 497,963
Amortized compensation -- stock
options........................... 110,369 -- -- 110,369
Amortization of gain on sale
leasebacks........................ (91,480) -- -- (91,480)
Amortization of debt discount and
premium........................... (7,127) -- -- (7,127)
Loss on impairment of assets........ -- 558,398 -- 558,398
Loss on sale of assets and other.... 324,779 214,413 -- 539,192
Deferred lease expenses............. 461,912 (7,710) -- 454,202
Deferred income tax expenses........ 10,416,377 -- -- 10,416,377
Equity in income of affiliates...... (1,587) (115,154) -- (116,741)
Minority interests in income of
subsidiaries...................... 441,703 434,768 -- 876,471
Cumulative effect of an accounting
change............................ 64,684 3,325,095 -- 3,389,779
Cash provided by (used for) operating
working capital:
Inventories......................... (224,490) 113,276 -- (111,214)
Co-op advertising and other
receivables....................... (270,631) 433,961 -- 163,330
Prepaid expenses and other.......... (354,061) 375,910 -- 21,849
Accounts payable and accrued
expenses.......................... (20,220,193) (6,163,623) -- (26,383,816)
Income tax receivable/payable....... (6,345,435) (106,748) -- (6,452,183)
------------ ----------- ------- ------------
Net cash provided by operating
activities................... 7,005,095 969,229 -- 7,974,324
Investing activities
Additions to theatre properties and
equipment........................... (5,447,665) (3,209,105) -- (8,656,770)
Sale of theatre properties and
equipment........................... 1,495,840 8,601 -- 1,504,441
Decrease in other assets, investments
in and advances to affiliates....... 1,391,402 4,543,976 -- 5,935,378
------------ ----------- ------- ------------
Net cash provided by (used for)
investing activities......... (2,560,423) 1,343,472 -- (1,216,951)
Financing activities
Increase in long-term debt............. 17,505,311 267,517 -- 17,772,828
Decrease in long-term debt............. (12,550,521) (2,620,019) -- (15,170,540)
Minority investment in subsidiaries,
net................................. (154,954) 367,781 212,827
------------ ----------- ------- ------------
Net cash provided by (used for)
financing activities......... 4,799,836 (1,984,721) -- 2,815,115
Effect of exchange rate changes on cash
and cash equivalents................... (321,631) (12,578) -- (334,209)
------------ ----------- ------- ------------
Increase in cash and cash equivalents.... 8,922,877 315,402 -- 9,238,279
Cash and cash equivalents:
Beginning of period.................... 19,186,456 31,012,767 -- 50,199,223
------------ ----------- ------- ------------
End of period.......................... $ 28,109,333 $31,328,169 $ -- $ 59,437,502
============ =========== ======= ============

Note: "Restricted Group" and "Unrestricted Group" are defined in the Indenture
for the Senior Subordinated Notes

F-44

[CINEMARK LOGO]

Lo Mejor En Cines

Description of artwork:

Miscellaneous interior and exterior photographs of Cinemark theatres.

[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......................... *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Printing and engraving expenses............................. *
Blue Sky qualification fees and expenses.................... *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous expenses...................................... *
---------
Total....................................................... $ *
=========

----------

* To be completed by amendment

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,

II-1

(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.

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 24,036,480 shares of
Class A common stock, 25,710,480 shares of Class B common stock and options to
purchase 1,732,050 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

II-2

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.

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 Certificate of Incorporation of Cinemark, Inc. filed with
the Delaware Secretary of State on May 16, 2002.
*3.2 Bylaws of Cinemark, Inc.
**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.
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.
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 Stockholders' Agreement, dated as of May 17, 2002, by and
among Cinemark, Inc. and certain stockholders party thereto.
**5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
**8.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
regarding tax matters.
*10.1(a) Management Agreement, dated as of July 28, 1993, between
Cinemark USA, Inc. and Cinemark Mexico (USA).
*10.1(b) Management Agreement, dated as of September 10, 1992,
between Cinemark USA, Inc. and Cinemark de Mexico S.A. de
C.V.
*10.1(c) Management Agreement, dated as of December 10, 1993, between
Laredo Theatre, Ltd. and Cinemark USA, Inc.
*10.1(d) Management Agreement, dated as of September 1, 1994, between
Cinemark Partners II, Ltd. and Cinemark USA, Inc.
*10.1(e) Management Services Agreement, dated as of December ,
2000, between Cinemark USA, Inc. and Cinema Properties, Inc.
**10.2 Agreement to Participate in Profits and Losses, dated as of
February 1, 2002, between Cinemark USA, Inc. and Alan W.
Stock.
*10.3 Cinemark USA, Inc. Long Term Incentive Plan, effective as of
December 1, 1998.
*10.4(a) License Agreement, dated as of December 10, 1993, between
Laredo Theatre, Ltd. and Cinemark USA, Inc.
*10.4(b) License Agreement, dated as of September 1, 1994, between
Cinemark Partners II, Ltd. and Cinemark USA, Inc.
*10.5(a) Tax Sharing Agreement, dated as of June 10, 1992, between
Cinemark USA, Inc. and Cinemark II, Inc.

II-3

NUMBER EXHIBIT TITLE
------ -------------

*10.5(b) Tax Sharing Agreement, dated as of July 28, 1993, between
Cinemark USA, Inc. and Cinemark Mexico (USA), Inc.
*10.6 Form of Indemnification Agreement.
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.
*10.8(b) Form of Letter Agreement with directors of the Cinemark USA,
Inc. amending stock options.
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.
*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.
*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.
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).

II-4

NUMBER EXHIBIT TITLE
------ -------------

*10.13(e) Guaranty, dated as of February 12, 1998, by Cinemark
Properties, Inc.
*10.13(f) Supplement to the Guarantee, dated as of November 16, 1998,
by Cinemark Mexico (USA), Inc.
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).
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).

II-5

NUMBER EXHIBIT TITLE
------ -------------

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).
*21 Subsidiaries of the Registrant.
*23.1 Consent of Deloitte & Touche LLP.
**23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(incorporated in Exhibit 5.1 and 8.1).
*24 Power of Attorney (included on the signature page of this
Registration Statement).

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

* Filed herewith.

** To be filed by amendment.

(b) The following financial statement schedule is filed herewith:

Other financial statement schedules are omitted because the information
called for is not required or is shown either in the Registrant's consolidated
financial statements or the notes thereto.

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.

II-6

(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
May 17, 2002.

CINEMARK, INC.

By: /s/ LEE ROY MITCHELL
------------------------------------
Lee Roy Mitchell
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSON BY THESE PRESENTS that each individual whose signature
appears below constitute and appoints Lee Roy Mitchell and Robert Copple, and
each of them, his or her true and lawful attorneys-in-fact and agents with full
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
registration statement for the same offering covered by the Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his, her or their substitute or
substitutes, may lawfully do or cause to be done or by virtue hereof.

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 May 17, 2002
------------------------------------------------ and Chief Executive Officer
Lee Roy Mitchell (principal executive officer)

/s/ TANDY MITCHELL Director May 17, 2002
------------------------------------------------
Tandy Mitchell

/s/ ALAN W. STOCK Director May 17, 2002
------------------------------------------------
Alan W. Stock

/s/ ROBERT COPPLE Senior Vice President; Treasurer and May 17, 2002
------------------------------------------------ Chief Financial Officer; Director
Robert Copple (principal financial and accounting
officer)

/s/ JAMES A. STERN Director May 17, 2002
------------------------------------------------
James A. Stern

/s/ WILLIAM SPIEGEL Director May 17, 2002
------------------------------------------------
William Spiegel

/s/ DENNY RYDBERG Director May 17, 2002
------------------------------------------------
Denny Rydberg

II-8

EXHIBIT INDEX

NUMBER EXHIBIT TITLE
------ -------------

*10.8(a) Form of Letter Agreement with directors of Cinemark USA,
Inc. regarding stock options.
*10.8(b) Form of Letter Agreement with directors of the Cinemark USA,
Inc. amending stock options.
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.
*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.
*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.
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.
*10.13(f) Supplement to the Guarantee, dated as of November 16, 1998,
by Cinemark Mexico (USA), Inc.
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).

NUMBER EXHIBIT TITLE
------ -------------

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).
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).

NUMBER EXHIBIT TITLE
------ -------------

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).
*21 Subsidiaries of the Registrant.
*23.1 Consent of Deloitte & Touche LLP.
**23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(incorporated in Exhibit 5.1 and 8.1).
*24 Power of Attorney (included on the signature page of this
Registration Statement).

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

* Filed herewith.

** To be filed by amendment.