Cinemark Usa 10-Q 2010 Q3 Quarterly report

CINEMARK USA, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTION (H)(1)(A) AND (B) OF FORM 10-Q AND THEREFORE IS FILING THIS FORM
WITH THE REDUCED DISCLOSURE FORMAT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

Commission File Number: 033-47040

CINEMARK USA, INC.

(Exact name of registrant as specified in its charter)

Texas (State or other jurisdiction of incorporation or organization)	75-2206284 (I.R.S. Employer Identification No.)
3900 Dallas Parkway Suite 500 Plano, Texas (Address of principal executive offices)	75093 (Zip Code)

Registrant’s telephone number, including area code: (972) 665-1000

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ     No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o     No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o  Non-accelerated filer þ
(Do not check if a smaller reporting company) Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o     No þ

     As of October 31, 2010, 1,500 shares of Class A common stock and 182,648 shares of Class B common stock were issued and outstanding.

CINEMARK USA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 (unaudited)		4
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2010 and 2009 (unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited)		6
	Notes to Condensed Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		33
Item 4.	Controls and Procedures		41
PART II.	OTHER INFORMATION`
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 5.	Other Information		42
Item 6.	Exhibits		46
SIGNATURES			47
EX-31.1
EX-31.2
EX-32.1
EX-32.2

2

Cautionary Statement Regarding Forward-Looking Statements

Certain matters within this Quarterly Report on Form 10Q include “forward—looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this Form 10Q, other than statements of historical fact, may constitute forward-looking statements. Forward-looking statements can be identified 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. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. For a description of the risk factors, please review the “Risk Factors” section or other sections in the Company’s Annual Report on Form 10-K filed March 12, 2010 and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such risk factors. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)

	September 30,			December 31,
	2010			2009
Assets
Current assets
Cash and cash equivalents	$	430,347		$	437,737
Inventories		9,594			9,854
Accounts receivable		38,807			32,793
Income tax receivable		13,731			13,025
Current deferred tax asset		3,344			3,321
Prepaid expenses and other		11,013			10,051
Accounts receivable from parent		8,443			7,656
Total current assets		515,279			514,437
Theatre properties and equipment		1,996,860			1,936,535
Less accumulated depreciation and amortization		807,669			716,947
Theatre properties and equipment — net		1,189,191			1,219,588
Other assets
Goodwill		1,120,866			1,116,302
Intangible assets — net		332,770			342,998
Investment in NCM		65,638			34,232
Investment in DCIP		9,875			640
Investment in Real D		15,994			—
Investments in and advances to affiliates		2,918			2,889
Deferred charges and other assets — net		68,103			52,502
Total other assets		1,616,164			1,549,563
Total assets	$	3,320,634		$	3,283,588
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	10,836		$	12,227
Current portion of capital lease obligations		7,280			7,340
Current liability for uncertain tax positions		2,528			13,229
Accounts payable and accrued expenses		195,303			247,938
Total current liabilities		215,947			280,734
Long-term liabilities
Long-term debt, less current portion		1,524,293			1,531,478
Capital lease obligations, less current portion		129,991			133,028
Deferred tax liability		111,704			124,823
Liability for uncertain tax positions		17,322			18,432
Deferred lease expenses		30,530			27,698
Deferred revenue — NCM		231,393			203,006
Other long-term liabilities		55,004			42,248
Total long-term liabilities		2,100,237			2,080,713
Commitments and contingencies (see Note 20)
Equity
Cinemark USA, Inc.’s stockholder’s equity:
Class A common stock, $0.01 par value: 10,000,000 shares authorized, 1,500 shares issued and outstanding		—			—
Class B common stock, no par value: 1,000,000 shares authorized, 239,893 shares issued and 182,648 shares outstanding		49,543			49,543
Treasury stock, 57,245 Class B shares at cost		(24,233	)		(24,233	)
Additional paid-in-capital		1,164,645			1,151,166
Retained deficit		(207,255	)		(261,672	)
Accumulated other comprehensive income (loss)		9,752			(7,459	)
Total Cinemark USA, Inc.’s stockholder’s equity		992,452			907,345
Noncontrolling interests		11,998			14,796
Total equity		1,004,450			922,141
Total liabilities and equity	$	3,320,634		$	3,283,588

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010				2009
Revenues
Admissions	$	367,662		$	322,915		$	1,063,737		��	$	941,886
Concession		170,130			152,938			488,464				441,895
Other		22,443			20,972			64,034				56,352
Total revenues		560,235			496,825			1,616,235				1,440,133
Cost of operations
Film rentals and advertising		200,495			175,993			582,864				513,945
Concession supplies		26,565			23,485			73,465				67,229
Salaries and wages		56,823			52,675			165,615				149,095
Facility lease expense		66,587			61,545			191,292				176,478
Utilities and other		64,310			61,341			177,179				164,237
General and administrative expenses		27,682			23,109			77,134				67,767
Depreciation and amortization		34,805			38,207			103,395				111,875
Amortization of favorable/unfavorable leases		179			301			595				970
Impairment of long-lived assets		1,022			3,146			6,057				8,115
Loss on sale of assets and other		7,548			944			11,906				2,402
Total cost of operations		486,016			440,746			1,389,502				1,262,113
Operating income		74,219			56,079			226,733				178,020
Other income (expense)
Interest expense		(28,938	)		(25,571	)		(83,553	)			(56,110	)
Interest income		1,807			1,036			4,239				3,646
Foreign currency exchange gain		682			383			762				921
Distributions from NCM		4,263			4,162			15,541				15,768
Equity in loss of affiliates		(1,842	)		(35	)		(4,997	)			(1,055	)
Total other expense		(24,028	)		(20,025	)		(68,008	)			(36,830	)
Income before income taxes		50,191			36,054			158,725				141,190
Income taxes		16,037			12,289			46,462				48,940
Net income	$	34,154		$	23,765		$	112,263			$	92,250
Less: Net income attributable to noncontrolling interests		551			1,044			3,246				2,967
Net income attributable to Cinemark USA, Inc.	$	33,603		$	22,721		$	109,017			$	89,283

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

	Nine months ended September 30,
	2010			2009
Operating activities
Net income	$	112,263		$	92,250
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		100,246			108,782
Amortization of intangible and other assets and unfavorable leases		3,744			4,063
Amortization of long-term prepaid rents		1,247			1,074
Amortization of debt issue costs		3,533			2,902
Amortization of deferred revenues, deferred lease incentives and other		(4,844	)		(3,479	)
Amortization of accumulated other comprehensive loss related to interest rate swap agreement		3,475			3,475
Amortization of bond discount		578			180
Impairment of long-lived assets		6,057			8,115
Share based awards compensation expense		4,622			3,045
Loss on sale of assets and other		9,873			2,402
Loss on contribution and sale of digital projection systems to DCIP		2,033			—
Deferred lease expenses		2,776			3,189
Deferred income tax expenses		(13,005	)		(13,967	)
Equity in loss of affiliates		4,997			1,055
Tax benefit related to stock option exercises		1,904			—
Increase in deferred revenue related to new U.S. beverage agreement		—			6,550
Distributions from equity investees		3,292			1,725
Changes in assets and liabilities		(89,349	)		(2,861	)
Net cash provided by operating activities		153,442			218,500
Investing activities
Additions to theatre properties and equipment		(88,256	)		(85,603	)
Proceeds from sale of theatre properties and equipment		3,994			721
Acquisition of theatres in the U.S.		—			(48,950	)
Acquisition of theatres in Brazil		—			(9,061	)
Investment in joint venture — DCIP, net of cash distributions		(1,510	)		(2,500	)
Net cash used for investing activities		(85,772	)		(145,393	)
Financing activities
Capital contributions from parent		—			19,650
Dividends paid to parent		(54,600	)		(491,025	)
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings		(416	)		—
Proceeds from issuance of senior notes		—			458,532
Payment of debt issue costs		(8,849	)		(12,601	)
Repayments of long-term debt		(9,144	)		(9,436	)
Payments on capital leases		(5,422	)		(4,410	)
Other		(387	)		(874	)
Net cash used for financing activities		(78,818	)		(40,164	)
Effect of exchange rate changes on cash and cash equivalents		3,758			12,642
Increase (decrease) in cash and cash equivalents		(7,390	)		45,585
Cash and cash equivalents:
Beginning of period		437,737			313,238
End of period	$	430,347		$	358,823

Supplemental information (See Note 16)

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

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

1. The Company and Basis of Presentation

     Cinemark USA, Inc. and subsidiaries (the “Company”) is a leader in the motion picture exhibition industry, with theatres in the United States (“U.S.”), Canada, Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The Company also managed additional theatres in the U.S., Brazil, and Colombia during the nine months ended September 30, 2010.

     The condensed consolidated financial statements have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these interim financial statements reflect all adjustments of a recurring nature necessary to state fairly the financial position and results of operations as of, and for, the periods indicated. Majority-owned subsidiaries that the Company has control of are consolidated while those affiliates of which the Company owns between 20% and 50% and does not control are accounted for under the equity method. Those affiliates of which the Company owns less than 20% are generally accounted for under the cost method, unless the Company is deemed to have the ability to exercise significant influence over the affiliate, in which case the Company would account for its investment under the equity method. The results of these subsidiaries and affiliates are included in the condensed consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.

     These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2009, included in the Annual Report on Form 10-K filed March 12, 2010 by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Operating results for the nine months ended September 30, 2010 are not necessarily indicative of the results to be achieved for the full year.

2. New Accounting Pronouncements

     In December 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-17,“Consolidations (Topic 810) — Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities”(“ASU No. 2009-17”).ASU No. 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. ASU No. 2009-17 requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity is required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. ASU No. 2009-17 is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. The Company adopted ASU No. 2009-17 as of January 1, 2010, and its application had no impact on the Company’s condensed consolidated financial statements.

     In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements”(“ASU No. 2010-06”), which amends FASB ASC Topic 820-10, “Fair Value Measurements and Disclosures”. The update requires additional disclosures for transfers in and out of Levels 1 and 2 and for activity in Level 3 and clarifies certain other existing disclosure requirements. The Company adopted ASU No. 2010-06 beginning January 1, 2010. This update did not have a significant impact on the Company’s disclosures.

     In August 2010, the FASB issued ASU No. 2010-21, “Accounting for Technical Amendments to Various SEC Rules and Schedules” (“ASU No. 2010-21”). This update amends various SEC paragraphs in the FASB Accounting Standards Codification pursuant to SEC Final Rule, “Technical Amendments to Rules Forms, Schedules and Codification of Financial Reporting Policies”. The adoption of ASU No. 2010-21 did not affect the Company’s condensed consolidated financial statements.

     In August 2010, the FASB issued ASU No. 2010-22, “Accounting for Various Topics”(“ASU No. 2010-22”), which amends various SEC paragraphs based on external comments received and the issuance of SAB 112. SAB 112 was issued to bring existing SEC guidance into conformity with ASC Topic 805, “Business Combination” and ASC

7

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

Topic 810 “Consolidation”. The adoption of ASU No. 2010-22 did not affect the Company’s condensed consolidated financial statements.

3. Buyout of Colombia Noncontrolling Interest

     During April 2010, the Company’s partners in Colombia (the “Colombian Partners”) exercised an option available to them under an Exchange Option Agreement dated April 9, 2007 between Cinemark Holdings, Inc. and the Colombian Partners (the “Exchange Option Agreement”). Under this option, which was contingent upon completion of an initial public offering of common stock by Cinemark Holdings, Inc., the Colombian Partners were entitled to exchange their shares in Cinemark Colombia S.A. for shares of Cinemark Holdings, Inc.’s common stock (the “Colombia Share Exchange”). The number of shares to be exchanged was determined based on Cinemark Holdings, Inc.’s equity value and the equity value of the Colombian Partners’ interest in Cinemark Colombia S.A., both of which are defined in the Exchange Option Agreement. As a result of the Colombia Share Exchange, on June 14, 2010, Cinemark Holdings, Inc. issued 1,112,723 shares of its common stock to the Colombian Partners. Simultaneously, Cinemark Holdings, Inc. contributed the shares it received in Cinemark Colombia S.A. to the Company. The increase in the Company’s ownership interest in its Colombian subsidiary was accounted for as an equity transaction. The Company recorded an increase in additional-paid-in-capital of approximately $6,951, which represented the book value of the Colombian partners’ noncontrolling interest account of approximately $5,865 plus the Colombian partners’ share of accumulated other comprehensive loss of approximately $1,086. As a result of this transaction, the Company owns 100% of the shares in Cinemark Colombia S.A.

4. Equity

     Below is a summary of changes in stockholder’s equity attributable to Cinemark USA, Inc., noncontrolling interests and total equity for the nine months ended September 30, 2010 and 2009:

	Cinemark
	USA, Inc.
	Stockholder’s			Noncontrolling			Total
	Equity			Interests			Equity
Balance at January 1, 2010	$	907,345		$	14,796		$	922,141
Colombia Share Exchange (see Note 3)		5,865			(5,865	)		—
Share based awards compensation expense		4,622			—			4,622
Dividends paid to parent		(54,600	)		—			(54,600	)
Tax benefit related to stock option exercises		1,904			—			1,904
Dividends paid to noncontrolling interests		—			(387	)		(387	)
Comprehensive income:
Net income		109,017			3,246			112,263
Fair value adjustments on interest rate swap agreements, net of taxes of $137		(226	)		—			(226	)
Amortization of accumulated other comprehensive loss on terminated swap agreement		3,475			—			3,475
Fair value adjustments on available-for-sale securities		1,356			—			1,356
Foreign currency translation adjustment		13,694			208			13,902
Balance at September 30, 2010	$	992,452		$	11,998		$	1,004,450

8

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

	Cinemark
	USA, Inc.
	Stockholder’s			Noncontrolling			Total
	Equity			Interests			Equity
Balance at January 1, 2009	$	1,142,920		$	12,971		$	1,155,891
Share based awards compensation expense		3,045			—			3,045
Dividends paid to parent		(491,025	)		—			(491,025	)
Capital contributions from parent		69,325			—			69,325
Dividends paid to noncontrolling interests		—			(780	)		(780	)
Purchase of noncontrolling interest share of an Argentina subsidiary		23			(117	)		(94	)
Comprehensive income:
Net income		89,283			2,967			92,250
Fair value adjustments on interest rate swap agreements, net of taxes of $1,672		2,762			—			2,762
Amortization of accumulated other comprehensive loss on terminated swap agreement		3,475			—			3,475
Foreign currency translation adjustment		47,148			1,061			48,209
Balance at September 30, 2009	$	866,956		$	16,102		$	883,058

5. Acquisition of U.S. Theatres

     On March 18, 2009, the Company acquired four theatres with 82 screens from Muvico Entertainment L.L.C. in an asset purchase for $48,950 in cash. The acquisition resulted in an expansion of the Company’s U.S. theatre base, as three of the theatres are located in Florida and one theatre is located in Maryland. The Company incurred approximately $113 in transaction costs, which are reflected in general and administrative expenses on the condensed consolidated statement of income for the nine months ended September 30, 2009.

     The transaction was accounted for by applying the acquisition method. The following table represents the identifiable assets acquired and liabilities assumed that have been recognized by the Company in its condensed consolidated balance sheet as of the date of acquisition:

Theatre properties and equipment	$	25,575
Brandname		3,500
Noncompete agreement		1,630
Goodwill		44,565
Unfavorable lease		(3,600	)
Capital lease liability (for one theatre)		(22,720	)
Total	$	48,950

     The brandname and noncompete agreement are presented as intangible assets and the unfavorable lease is presented as other long-term liabilities on the Company’s condensed consolidated balance sheets. The weighted average remaining amortization period for these intangible assets and the unfavorable lease are 8.1 years and 8.5 years, respectively. Goodwill represents excess of the costs of acquiring these theatres over amounts assigned to assets acquired, including intangible assets, and liabilities assumed. The goodwill recorded is fully deductible for tax purposes.

9

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

6. Investment in National CineMedia

     Below is a summary of activity with NCM included in the Company’s condensed consolidated financial statements:

	Investment			Deferred			Distributions			Equity			Other			Cash
	in NCM			Revenue			from NCM			Earnings			Revenue			Received
Balance as of December 31, 2009	$	34,232		$	(203,006	)
Receipt of common units due to annual common unit adjustment		30,683			(30,683	)	$	—		$	—		$	—		$	—
Change of interest gain due to 2010 extraordinary common unit adjustment		271			—			—			—			—			—
Revenues earned under exhibitor services agreement		—			—			—			—			(3,666	)		3,666
Receipt of excess cash distributions		(2,686	)					(12,474	)		—			—			15,160
Receipt under tax receivable agreement		(477	)		—			(3,067	)		—			—			3,544
Equity in earnings		3,615						—			(3,615	)		—			—
Amortization of deferred revenue		—			2,296			—			—			(2,296	)		—
Balance as of and for the period ended September 30, 2010	$	65,638		$	(231,393	)	$	(15,541	)	$	(3,615	)	$	(5,962	)	$	22,370

     During March 2010, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 1,757,548 common units of NCM, each of which is convertible into one share of NCM, Inc. common stock. The Company recorded the additional common units received at fair value as an investment with a corresponding adjustment to deferred revenue of $30,683. The common unit adjustment resulted in a change in the Company’s ownership percentage in NCM from approximately 15.0% to 16.3%. Subsequent to the annual common unit adjustment discussed above, in May 2010, one of NCM’s other founding members completed an acquisition of another theatre circuit that required an extraordinary common unit adjustment calculation by NCM in accordance with the Common Unit Adjustment Agreement. As a result of this extraordinary common unit adjustment, the founding member was granted additional common units of NCM, which resulted in dilution of the Company’s ownership interest in NCM from 16.3% to 15.4%. The Company recognized a change of interest gain of approximately $271 during the nine months ended September 30, 2010 as a result of this extraordinary common unit adjustment, which is reflected net of other losses in loss on sale of assets and other on the condensed consolidated statement of income.

     As of September 30, 2010, the Company owned a total of 16,946,503 common units of NCM. The Company continues to account for its investment in NCM under the equity method of accounting. During the nine months ended September 30, 2010 and September 30, 2009, the Company recorded equity earnings of approximately $3,615 and $1,387, respectively.

     Pursuant to the terms of the Exhibitor Services Agreement, the Company recorded other revenues, excluding the amortization of deferred revenue, of approximately $3,666 and $4,336 during the nine months ended September 30, 2010 and 2009, respectively. These amounts include the per patron and per digital advertising screen theatre access fee and theatre rental revenue, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire of $7,806 and $7,168, respectively.

     Below is summary financial information for NCM for the three and nine months ended September 30, 2010:

	Three Months		Nine Months
	Ended		Ended
	September 30, 2010		September 30, 2010
Gross revenues	$	125,717	$	309,373
Operating income	$	67,081	$	136,791
Net earnings	$	52,530	$	92,723

10

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

7. Investment in Digital Cinema Implementation Partners

     On February 12, 2007, the Company, AMC Entertainment Inc. and Regal Entertainment Group entered into a joint venture known as Digital Cinema Implementation Partners LLC (“DCIP”) to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema.

     During January 2010, the Company contributed $500 to DCIP. On March 12, 2010, the Company signed a master equipment lease agreement and other related agreements (collectively the “agreements”) with Kasima LLC (“Kasima”), which is an indirect subsidiary of DCIP and a related party to the Company. Upon signing the agreements, the Company contributed cash of $1,201 and digital projection systems at a fair value of $16,380 to DCIP (collectively the “contributions”), which DCIP then contributed to Kasima. The net book value of the contributed equipment was approximately $18,090, and as a result, the Company recorded a loss of approximately $1,710, which is reflected in loss on sale of assets and other on the condensed consolidated statement of income for the nine months ended September 30, 2010. On April 24, 2010, the Company sold digital projection systems with a net book value of approximately $1,520 to Kasima for approximately $1,197, resulting in an additional loss of approximately $323, which is reflected in loss on sale of assets and other on the condensed consolidated statement of income for the nine months ended September 30, 2010. The Company has made subsequent cash capital contributions of $866 and received distributions of $1,068 from DCIP since the date of the agreements. As of September 30, 2010, the Company continues to have a 33% voting interest in DCIP and has a 24.3% economic interest in DCIP.

     The Company has a variable interest in Kasima through the terms of its master equipment lease agreement; however, the Company has determined that it is not the primary beneficiary of Kasima, as the Company does not have the ability to direct the activities of Kasima that most significantly impact Kasima’s economic performance. The Company accounts for its investment in DCIP and its subsidiaries under the equity method of accounting. During the nine months ended September 30, 2010 and 2009, the Company recorded equity losses of $8,644 and $2,508, respectively, relating to this investment. Below is a summary of activity with DCIP for the nine months ended September 30, 2010:

	Investment in
	DCIP
Balance as of December 31, 2009	$	640
Cash contributions to DCIP		2,567
Equipment contributions to DCIP, at fair value		16,380
Distributions received from DCIP		(1,068	)
Equity in losses		(8,644	)
Balance as of September 30, 2010	$	9,875

     As a result of these agreements, the Company will continue to roll out digital projection systems to a majority of its first run U.S. theatres. The digital projection systems will be leased from Kasima under an operating lease with an initial term of twelve years that contains ten one-year fair value renewal options. The equipment lease agreement also contains a fair value purchase option. Under the equipment lease agreement, the Company pays minimum annual rent of one thousand dollars per digital projection system for the first six and a half years from the effective date of the agreement and minimum annual rent of three thousand dollars per digital projection system beginning at six and a half years from the effective date through the end of the lease term. The Company may also be subject to various types of other rent if such digital projection systems do not meet minimum performance requirements as outlined in the agreements. Certain of the other rent payments are subject to either a monthly or an annual maximum. As of September 30, 2010, the Company had 998 digital projection systems being leased under the master equipment lease agreement with Kasima. The Company recorded equipment lease expense of approximately $434 and $685 during the three and nine months ended September 30, 2010, respectively, which is included in utilities and other costs on the condensed consolidated statement of income.

11

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

     The digital projection systems leased from Kasima will replace a majority of the Company’s existing 35 millimeter projection systems in its U.S. theatres. Therefore, upon signing the agreements, the Company began accelerating the depreciation of these existing 35 millimeter projection systems, based on the estimated two year replacement timeframe. The Company recorded depreciation expense of approximately $5,981 on its domestic 35 millimeter projectors during the nine months ended September 30, 2010. The net book value of the existing 35 millimeter projection systems to be replaced was approximately $13,391 as of September 30, 2010.

8. Investment in Real D

     Under its license agreement with Real D, the Company earns options to purchase shares of common stock once it has installed a certain number of 3-D systems as outlined in the license agreement. During June 2010, the Company reached the first target level and vested in 407,593 options to purchase shares of common stock in Real D, which have an exercise price of $0.00667 (“Real D Options”). Upon vesting in these options, the Company recorded an investment in Real D of approximately $6,521, which represents the estimated fair value of the options, with an offset to deferred lease incentive liability. The fair value of the options was determined using Real D’s initial public offering price, which falls under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. The deferred lease incentive liability, which is reflected in other long-term liabilities on the condensed consolidated balance sheet as of September 30, 2010, is being amortized over the remaining term of the license agreement, which is approximately seven and one-half years.

     During September 2010, the Company vested in an additional 499,708 Real D options by reaching the second target level and a pro-rata portion of the third target level, as outlined in the license agreement. Upon vesting in these additional 499,708 options, the Company increased its investment in Real D and its deferred lease incentive by approximately $8,117, which represented the estimated fair value of the Real D options. The fair value measurements were based upon Real D’s closing stock prices on the dates of vesting, discounted to reflect the impact of the lock-up period to which the Company is subject until January 2011. The discount applied was based on the volatility of closing stock prices for Real D’s peer group for a similar duration as the remaining lock-up period. These fair value measurements fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35.

     Prior to the completion of Real D’s initial public offering, the Company accounted for its investment in Real D as a cost method investment. Subsequent to the completion of Real D’s initial public offering, which occurred during July 2010, the Company is accounting for its investment in Real D as a marketable security. The Company has determined that its Real D options are available for sale securities in accordance with ASC Topic 320-10-35-1, therefore unrealized holding gains and losses are reported as a component of accumulated other comprehensive income (loss) until realized.

     As of September 30, 2010, the Company had vested in a total of 907,301 Real D options, with an estimated fair value of $15,994. The fair value of the Real D options as of September 30, 2010 was determined based upon the closing price of Real D’s common stock on that date, discounted to reflect the lock-up period to which the Company is subject until January 2011, which falls under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. During the three and nine months ended September 30, 2010, the Company recorded an unrealized holding gain of approximately $1,356 as a component of accumulated other comprehensive income (loss).

     Under the license agreement, the Company can earn up to an additional 315,478 Real D options as it meets additional 3-D system installation targets as outlined in the license agreement.

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

9. Share Based Awards

     Stock Options —A summary of activity and related information for Cinemark Holdings, Inc. stock options that are held by the Company’s employees for the nine months ended September 30, 2010 is as follows:

						Weighted
				Weighted		Average		Aggregate
	Number of			Average		Grant Date		Intrinsic
	Options			Exercise Price		Fair Value		Value
Outstanding at December 31, 2009		1,231,892		$	7.63	$	3.51
Exercised		(782,824	)	$	7.63	$	3.51
Outstanding at September 30, 2010		449,068		$	7.63	$	3.51	$	3,804
Options exercisable at September 30, 2010		449,068		$	7.63	$	3.51	$	3,804

     The total intrinsic value of options exercised during the nine month period ended September 30, 2010 was $6,634. The Company recognized a tax benefit of approximately $1,904 related to the options exercised during the nine months ended September 30, 2010.

     As of September 30, 2010, there was no remaining unrecognized compensation expense related to outstanding stock options and all outstanding options fully vested on April 2, 2009. Options outstanding at September 30, 2010 have an average remaining contractual life of approximately four years.

     Restricted Stock— During the nine months ended September 30, 2010, Cinemark Holdings, Inc. granted 679,308 shares of restricted stock to directors of Cinemark Holdings, Inc. and employees of the Company. The fair value of the restricted stock granted was determined based on the market value of Cinemark Holdings, Inc.’s stock on the dates of grant, which ranged from $13.15 to $18.47 per share. The Company assumed forfeiture rates ranging from zero to 5% for the restricted stock awards. The restricted stock granted to directors vests over periods ranging from six months to one year and the restricted stock granted to employees vest over four years based on continued service.

     Below is a summary of restricted stock activity for the nine months ended September 30, 2010:

				Weighted
	Shares of			Average
	Restricted			Grant Date
	Stock			Fair Value
Outstanding at December 31, 2009		764,078		$	11.10
Granted		679,308		$	17.94
Forfeited		(2,719	)	$	11.03
Vested		(189,885	)	$	12.64
Outstanding at September 30, 2010		1,250,782		$	14.58
Unvested restricted stock at September 30, 2010		1,250,782		$	14.58

     The Company recorded compensation expense of $2,951 and Cinemark Holdings, Inc. recorded an additional $556 related to these restricted stock awards during the nine months ended September 30, 2010. As of September 30, 2010, the remaining unrecognized compensation expense related to restricted stock awards was $13,823. Approximately $13,323 of this remaining unrecognized compensation expense will be recognized by the Company and the additional $500 will be recognized by Cinemark Holdings, Inc. The weighted average period over which this remaining compensation expense will be recognized is approximately three years. Upon vesting, the Company receives an income tax deduction. The total fair value of shares that vested during the nine months ended September 30, 2010 was $3,260. The Company recognized a tax benefit of approximately $1,229 related to these vested shares. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however the sale and transfer of the restricted shares is prohibited during the restriction period.

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

     Restricted Stock Units— During the nine months ended September 30, 2010, Cinemark Holdings, Inc. granted restricted stock units to employees of the Company representing 396,432 hypothetical shares of common stock under the Restated Incentive Plan. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the three fiscal year period ending December 31, 2012 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments (as defined in the restricted stock unit award agreement). The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity. If the IRR for the three year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the three year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the three year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. All payouts of restricted stock units that vest will be subject to an additional service requirement and will be paid in the form of common stock if the participant continues to provide services through March 31, 2014, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards are paid out.

     Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the nine months ended September 30, 2010 at each of the three target levels of financial performance (excluding forfeiture assumptions):

	Number of
	Shares		Value at
	Vesting		Grant
at IRR of at least 8.5%		132,144	$	2,423
at IRR of at least 10.5%		264,288	$	4,847
at IRR of at least 12.5%		396,432	$	7,271

     Due to the fact that the IRR for the three year performance period could not be determined at the time of grant, the Company estimated that the most likely outcome is the achievement of the mid-point IRR level. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the three year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.

     During the nine months ended September 30, 2010, the Compensation Committee of Cinemark Holdings, Inc.’s board of directors approved a modification of restricted stock unit awards granted to employees during 2008. Cinemark Holdings, Inc.’s Compensation Committee also approved the cancellation and replacement of restricted stock unit awards granted to the Company’s top five executive officers during 2008. Both the modification and the cancellation and replacement were accounted for as modifications of share based awards. As a result of these modifications, the Company recorded incremental compensation expense of approximately $435 during the nine months ended September 30, 2010, which represents the difference between the grant date fair value and the modification date fair value of these awards for the portion of the service period that has been satisfied. The service period for the modified awards did not change. The Company will record additional incremental compensation expense of $261 over the remaining service period.

     No restricted stock unit awards have vested. There were no forfeitures of restricted stock unit awards during the nine months ended September 30, 2010. The Company recorded compensation expense of $1,672 related to these restricted stock unit awards during the nine months ended September 30, 2010, including the aforementioned $435 related to the modification of the 2008 restricted stock unit awards. As of September 30, 2010, the Company had restricted stock units outstanding that represented a total of 884,042 hypothetical shares of common stock, net of actual cumulative forfeitures of 19,919 units, assuming the maximum IRR of at least 12.5% is achieved for all of the grants. As of September 30, 2010, the remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $6,071, which assumes the mid-point IRR level will be achieved for all of the restricted stock units outstanding. The weighted average period over which this remaining compensation expense will be recognized is approximately three years.

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

10. Long-Term Debt Activity

     Senior Notes

     On June 29, 2009, Cinemark USA, Inc. issued $470,000 aggregate principal amount of 8.625% senior notes due 2019 with an original issue discount of $11,468, resulting in proceeds of approximately $458,532. The proceeds were primarily used to fund the repurchase of the remaining $419,403 aggregate principal amount at maturity of Cinemark, Inc.’s 9³/4% senior discount notes discussed below. Interest is payable on June 15 and December 15 of each year beginning December 15, 2009. The senior notes mature on June 15, 2019. As of September 30, 2010, the carrying value of the senior notes was $459,475.

     Cash Tender Offer and Subsequent Call of Cinemark, Inc.’s 9³/4% Senior Discount Notes due 2014

     On June 15, 2009, Cinemark, Inc. commenced a cash tender offer for any and all of its 9³/4% senior discount notes due 2014, of which $419,403 aggregate principal amount at maturity remained outstanding. In connection with the tender offer, Cinemark, Inc. solicited consents to adopt proposed amendments to the indenture to eliminate substantially all restrictive covenants and certain events of default provisions. On June 29, 2009, approximately $402,459 aggregate principal amount at maturity of the 9³/4% senior discount notes were tendered and repurchased by Cinemark, Inc. for approximately $433,415, including accrued interest of $11,336 and tender premiums paid of $19,620. The Company funded the repurchase with a dividend paid to Cinemark, Inc. utilizing the proceeds from the issuance of its senior notes discussed above. On August 3, 2009, the Company delivered to the Bank of New York Trust Company N.A., as trustee, a notice to redeem the $16,944 aggregate principal amount at maturity of the Company’s 9³/4% senior discount notes remaining outstanding. The notice specified September 8, 2009 as the redemption date, at which time Cinemark, Inc. paid approximately $18,564, consisting of a redemption price of 104.875% of the face amount of the discount notes remaining outstanding plus accrued and unpaid interest to, but not including, the redemption date. The Company funded the redemption with a dividend paid to Cinemark, Inc. utilizing proceeds from the issuance its senior notes discussed above.

     Amendment and Extension of Senior Secured Credit Facility

     On March 2, 2010, the Company completed an amendment and extension to its existing senior secured credit facility to primarily extend the maturities of the facility and make certain other modifications. Approximately $924,375 of the Company’s then remaining outstanding $1,083,600 term loan debt was extended from an original maturity date of October 2013 to a maturity date of April 2016. The remaining term loan debt of $159,225 that was not extended matures on the original maturity date of October 2013. Payments on the extended amount are due in equal quarterly installments of $2,311 through March 31, 2016 with the remaining principal amount of $866,602 due April 30, 2016. Payments on the original amount that was not extended are due in equal quarterly installments of approximately $398 beginning March 31, 2010 through September 30, 2012 and increase to approximately $37,418 each calendar quarter from December 31, 2012 to June 30, 2013 with one final payment of approximately $42,593 at maturity on October 5, 2013. The amendment also imposed a 1.0% prepayment premium for one year on certain prepayments of the extended portion of the term loan debt. As of September 30, 2010, there was $1,075,473 outstanding under the term loan. The interest rate on the original term loan debt that was not extended accrues interest, at Cinemark USA, Inc.’s option, at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50% (the “base rate”), plus a margin that ranges from 0.50% to 0.75% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.50% to 1.75%, per annum. The margin of the original term loan debt that was not extended is determined by the applicable corporate credit rating. The interest rate on the extended portion of the term loan debt accrues interest, at Cinemark USA, Inc.’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a 2.25% margin per annum, or (B) a “eurodollar rate” plus a 3.25% margin per annum.

     In addition, the maturity date of $73,500 of Cinemark USA, Inc.’s $150,000 revolving credit line has been extended from October 2012 to March 2015. The maturity date of the remaining $76,500 of Cinemark USA, Inc.’s revolving credit line did not change and remains October 2012. As of September 30, 2010, the Company had no borrowings outstanding under the revolving credit line. The interest rate on the original revolving credit line accrues interest, at Cinemark USA, Inc.’s option, at: (A) a base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5 and (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.50% to 1.00% per annum, or (B) a “eurodollar rate” plus a margin that ranges

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

from 1.50% to 2.00% per annum. The interest rate on the extended revolving credit line accrues interest, at Cinemark USA, Inc.’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 1.75% to 2.0% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 2.75% to 3.0% per annum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the credit agreement.

     The Company incurred debt issue costs of approximately $8,849 during the nine months ended September 30, 2010 related to the amendment and extension of its senior secured credit facility. These costs will be amortized over the remaining term of the facility.

     Fair Value of Long-Term Debt

     The Company estimates the fair value of its long-term debt primarily using quoted market prices, which fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35. The carrying value of the Company’s long-term debt was $1,535,129 and $1,543,705 as of September 30, 2010 and December 31, 2009, respectively. The fair value of the Company’s long-term debt was $1,568,593 and $1,513,838 as of September 30, 2010 and December 31, 2009, respectively.

11. Interest Rate Swap Agreements

     As of September 30, 2010, the Company had two interest rate swap agreements that cover $300,000 of variable rate debt, both of which qualify for cash flow hedge accounting.The fair values of the interest rate swaps are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive income (loss) and the ineffective portion reported in earnings. The evaluation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. The Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period, no transfers in or out of Level 3 and no gains or losses included in earnings that were attributable to the change in unrealized gains or losses related to the interest rate swap agreements.

     As of September 30, 2010, the aggregate fair values of the two interest rate swap agreements was a liability of approximately $18,887 which has been recorded as a component of other long-term liabilities. A corresponding cumulative amount of $11,593, which is net of deferred taxes of $7,294, has been recorded as a decrease in accumulated other comprehensive income on the Company’s condensed consolidated balance sheet as of September 30, 2010. The interest rate swaps exhibited no ineffectiveness during the nine months ended September 30, 2010.

     Below is a reconciliation of our interest rate swap values from January 1 to September 30:

	2010		2009
Beginning liability balance — January 1	$	18,524	$	24,781
Total (gain) loss included in accumulated other comprehensive income (loss)		363		(4,434	)
Ending liability balance — September 30	$	18,887	$	20,347

     The Company amortized approximately $3,475 to interest expense during each of the nine months ended September 30, 2009 and 2010, related to a previously terminated interest rate swap agreement. The Company will amortize approximately $4,634 to interest expense for this terminated interest rate swap agreement over the next twelve months.

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

12. Goodwill and Other Intangible Assets

     The Company’s goodwill was as follows:

	U.S.		International
	Operating		Operating
	Segment		Segment		Total
Balance at December 31, 2009(1)	$	948,026	$	168,276	$	1,116,302
Foreign currency translation adjustments		—		4,564		4,564
Balance at September 30, 2010(1)	$	948,026	$	172,840	$	1,120,866

⁽¹⁾ Balances are presented net of accumulated impairment losses of $214,031 for the U.S. operating segment and $27,622 for the international operating segment.

     The Company evaluates goodwill for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill might exceed its estimated fair value.

     The Company evaluates goodwill for impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. The Company considers the reporting unit to be each of its sixteen regions in the U.S. and each of its eight countries internationally (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit). Goodwill impairment is evaluated using a two-step approach requiring the Company to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of the reporting unit exceeds the estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was six and a half times for the evaluation performed during the fourth quarter of 2009. No events or changes in circumstances occurred during the nine months ended September 30, 2010, that indicated that the carrying value of goodwill might exceed its estimated fair value.

     Intangible assets consisted of the following:

							Foreign
							Currency
	Balance at						Translation			Balance at
	December 31,						Adjustments			September 30,
	2009			Amortization			& Other			2010
Intangible assets with finite lives:
Vendor contracts:
Gross carrying amount	$	56,474		$	—		$	(10,043	)	$	46,431
Accumulated amortization		(29,870	)		(2,282	)		4,395			(27,757	)
Net carrying amount		26,604			(2,282	)		(5,648	)		18,674
Other intangible assets:
Gross carrying amount		26,510			—			(1,865	)		24,645
Accumulated amortization		(20,596	)		(1,658	)		726			(21,528	)
Net carrying amount		5,914			(1,658	)		(1,139	)		3,117
Total net intangible assets with finite lives		32,518			(3,940	)		(6,787	)		21,791
Intangible assets with indefinite lives:
Tradename		310,480			—			499			310,979
Total intangible assets — net	$	342,998		$	(3,940	)	$	(6,288	)	$	332,770

17

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

     Estimated aggregate future amortization expense for intangible assets is as follows:

For the three months ended December 31, 2010	$	677
For the twelve months ended December 31, 2011		4,372
For the twelve months ended December 31, 2012		4,216
For the twelve months ended December 31, 2013		3,470
For the twelve months ended December 31, 2014		2,924
Thereafter		6,132
Total	$	21,791

13. Impairment of Long-Lived Assets

     The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.

     The Company considers actual theatre level cash flows, future years budgeted theatre level cash flows, theatre property and equipment carrying values, amortizing intangible asset carrying values, the age of a recently built theatre, competitive theatres in the marketplace, changes in foreign currency exchange rates, the impact of recent ticket price changes, available lease renewal options and other factors considered relevant in its assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis, which the Company believes is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the useful life correlates with the available remaining lease period, which includes the probability of renewal periods for leased properties and a period of twenty years for fee owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre) is written down to its estimated fair value. As of September 30, 2010, the estimated aggregate fair value of the long-lived assets impaired during the nine months ended September 30, 2010 was approximately $4,739.

     Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was six and a half times for the evaluations performed during the nine months ended September 30, 2009 and 2010.

     The long-lived asset impairment charges recorded during each of the periods presented are specific to theatres that were directly and individually impacted by increased competition, or adverse changes in market demographics.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
United States theatre properties	$	424	$	2,817	$	3,265	$	7,482
International theatre properties		598		42		1,661		275
Subtotal	$	1,022	$	2,859		4,926	$	7,757
Intangible assets		—		287		1,131		358
Impairment of long-lived assets	$	1,022	$	3,146	$	6,057	$	8,115

14. Fair Value Measurements

     The Company determines fair value measurements in accordance with FASB ASC Topic 820, which establishes a fair value hierarchy under which an asset or liability is categorized based on the lowest level of input significant to its fair value measurement. The levels of input defined by FASB ASC Topic 820 are as follows:

Level 1 — quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date;

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

Level 2 — other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 — unobservable and should be used to measure fair value to the extent that observable inputs are not available.

     Below is a summary of assets and liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of September 30, 2010:

	Carrying			Fair Value
Description	Value			Level 1		Level 2			Level 3
Debt (see Note 10)	$	(1,535,129	)	$	—	$	(1,568,593	)	$	—
Interest Rate Swaps (see Note 11)	$	(18,887	)	$	—	$	—		$	(18,887	)
Investment in Real D (see Note 8)	$	15,994		$	—	$	15,994		$	—

     Below is a summary of assets and liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of December 31, 2009:

	Carrying			Fair Value
Description	Value			Level 1		Level 2			Level 3
Debt	$	(1,543,705	)	$	—	$	(1,513,838	)	$	—
Interest Rate Swaps	$	(18,524	)	$	—	$	—		$	(18,524	)

     Below is a reconciliation of the beginning and ending balance for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	2010		2009
Beginning liability balance — January 1	$	18,524	$	24,781
Total (gain) loss included in accumulated other comprehensive income (loss)		363		(4,434	)
Ending liability balance — September 30	$	18,887	$	20,347

     There were no changes in valuation techniques during the period. There were no transfers in or out of Level 3 and no gains or losses included in the earnings that were attributable to the change in unrealized gains or losses related to the interest rate swap agreements.

15. Foreign Currency Translation

     The accumulated other comprehensive income (loss) account in stockholder’s equity of ($7,459) and $9,752 at December 31, 2009 and September 30, 2010, respectively, includes the cumulative foreign currency adjustments of $16,070 and $28,678, respectively, from translating the financial statements of the Company’s international subsidiaries, and also includes the change in fair values of the Company’s interest rate swap agreements.

     In 2009 and 2010, all foreign countries where the Company has operations were deemed non-highly inflationary and the local currency is the same as the functional currency in all of the locations. Thus, any fluctuation in the currency results in a cumulative foreign currency translation adjustment recorded to accumulated other comprehensive income (loss).

     On September 30, 2010, the exchange rate for the Brazilian real was 1.71 reais to the U.S. dollar (the exchange rate was 1.75 reais to the U.S. dollar at December 31, 2009). As a result, the effect of translating the September 30, 2010 Brazilian financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income (loss) account as an increase in stockholder’s equity of $5,051. At September 30, 2010, the total assets of the Company’s Brazilian subsidiaries were U.S. $299,595.

19

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

     On September 30, 2010, the exchange rate for the Mexican peso was 12.49 pesos to the U.S. dollar (the exchange rate was 13.04 pesos to the U.S. dollar at December 31, 2009). As a result, the effect of translating the September 30, 2010 Mexican financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income (loss) account as an increase in stockholder’s equity of $3,962. At September 30, 2010, the total assets of the Company’s Mexican subsidiaries were U.S. $123,937.

     On September 30, 2010, the exchange rate for the Colombian peso was 1,814.77 pesos to the U.S. dollar (the exchange rate was 2,064.63 pesos to the U.S. dollar at December 31, 2009). As a result, the effect of translating the September 30, 2010 Colombian financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income (loss) account as an increase in stockholder’s equity of $2,539. At September 30, 2010, the total assets of the Company’s Colombian subsidiaries were U.S. $25,421.

     On September 30, 2010, the exchange rate for the Chilean peso was 489.46 pesos to the U.S. dollar (the exchange rate was 519.30 pesos to the U.S. dollar at December 31, 2009). As a result, the effect of translating the September 30, 2010 Chilean financial statements into U.S. dollars is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income (loss) account as an increase in stockholder’s equity of $1,426. At September 30, 2010, the total assets of the Company’s Chilean subsidiaries were U.S. $36,274.

     The effect of translating the September 30, 2010 financial statements of the Company’s other international subsidiaries, with local currencies other than the U.S. dollar, is reflected as a foreign currency translation adjustment to the accumulated other comprehensive income (loss) account as an increase in stockholder’s equity of $716.

     During June 2010, the Company’s ownership in its Colombian subsidiary increased from 50.1% to 100%, as a result of the Colombia Share Exchange. As part of this transaction, the Company recorded the amount of accumulated other comprehensive loss previously allocated to the noncontrolling interest of $1,086 to accumulated other comprehensive income (loss) with an offsetting credit to additional paid-in-capital. See Note 3.

20

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

16. Supplemental Cash Flow Information

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

	Nine Months Ended
	September 30,
	2010			2009
Cash paid for interest	$	66,857		$	39,513
Cash paid for income taxes, net of refunds received	$	70,762		$	35,277
Noncash investing and financing activities:
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment(1)	$	1,748		$	(4,568	)
Theatre properties acquired under capital lease(2)	$	2,191		$	20,400
Change in fair market values of interest rate swap agreements, net of taxes	$	(226	)	$	—
Investment in NCM — receipt of common units (see Note 6)	$	30,683		$	15,536
Investment in NCM — change of interest gain (see Note 6)	$	271		$	—
Equipment contributed to DCIP (see Note 7)	$	18,090		$	—
Investment in Real D (see Note 8)	$	14,638		$	—
Change in fair market value of available-for-sale securities (see Note 8)	$	1,356		$	—
Capital contribution from former parent, Cinemark, Inc., primarily related to income taxes	$	—		$	49,675
Capital contribution from Cinemark Holdings, Inc. as a result of Colombia Share Exchange (see Note 3)	$	6,951		$	—

(1)	Additions to theatre properties and equipment included in accounts payable as of December 31, 2009 and September 30, 2010 were $7,823 and $9,571, respectively.
(2)	Amount recorded during the nine months ended September 30, 2009 was a result of the acquisition of theatres in the U.S. as discussed in Note 5.

17. Segments

     The Company manages its international market and its U.S. market as separate reportable operating segments. The international segment consists of operations in Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The U.S. segment includes U.S. and Canada operations. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenues, primarily screen advertising. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance of or allocate resources between segments.

21

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

     Below is a breakdown of selected financial information by reportable operating segment:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues
U.S.	$	400,277		$	378,046		$	1,199,856		$	1,139,065
International		161,492			119,866			420,404			304,024
Eliminations		(1,534	)		(1,087	)		(4,025	)		(2,956	)
Total revenues	$	560,235		$	496,825		$	1,616,235		$	1,440,133
Adjusted EBITDA
U.S.	$	88,033		$	78,189		$	274,629		$	261,041
International		37,299			26,932			98,243			63,417
Total Adjusted EBITDA	$	125,332		$	105,121		$	372,872		$	324,458
Capital expenditures
U.S.	$	11,564		$	15,429		$	47,571		$	58,851
International		19,733			9,256			40,685			26,752
Total capital expenditures	$	31,297		$	24,685		$	88,256		$	85,603

The following table sets forth a reconciliation of net income to Adjusted EBITDA:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Net income	$	34,154		$	23,765		$	112,263		$	92,250
Add (deduct):
Income taxes		16,037			12,289			46,462			48,940
Interest expense(1)		28,938			25,571			83,553			56,110
Other income(2)		(647	)		(1,384	)		(4	)		(3,512	)
Depreciation and amortization		34,805			38,207			103,395			111,875
Amortization of favorable/unfavorable leases		179			301			595			970
Impairment of long-lived assets		1,022			3,146			6,057			8,115
Loss on sale of assets and other		7,548			944			11,906			2,402
Deferred lease expenses		1,079			1,067			2,776			3,189
Amortization of long-term prepaid rents		468			323			1,247			1,074
Share based awards compensation expense		1,749			892			4,622			3,045
Adjusted EBITDA	$	125,332		$	105,121		$	372,872		$	324,458

(1)	Includes amortization of debt issue costs.
(2)	Includes interest income, foreign currency exchange gain, and equity in loss of affiliates and excludes distributions from NCM. Distributions from NCM are reported entirely within the U.S. operating segment.

     Financial Information About Geographic Areas

  ��  The Company has operations in the U.S., Canada, Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala, which are reflected in the condensed consolidated financial statements. Below is a breakdown of selected financial information by geographic area:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Revenues	2010			2009			2010			2009
U.S. and Canada	$	400,277		$	378,046		$	1,199,856		$	1,139,065
Brazil		87,339			61,132			226,556			153,713
Mexico		20,213			18,666			55,310			48,195
Other foreign countries		53,940			40,068			138,538			102,116
Eliminations		(1,534	)		(1,087	)		(4,025	)		(2,956	)
Total	$	560,235		$	496,825		$	1,616,235		$	1,440,133

22

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

	September 30,		December 31,
Theatre Properties and Equipment-net	2010		2009
U.S. and Canada	$	983,700	$	1,040,395
Brazil		105,993		91,996
Mexico		41,251		39,371
Other foreign countries		58,247		47,826
Total	$	1,189,191	$	1,219,588

18. Related Party Transactions

     The Company leased one theatre from Plitt Plaza Joint Venture (“Plitt Plaza”) on a month-to-month basis. Plitt Plaza is indirectly owned by Lee Roy Mitchell, Cinemark Holdings, Inc.’s Chairman of the Board, who owns approximately 12% of Cinemark Holdings, Inc.’s issued and outstanding shares of common stock. The Company closed this theatre during March 2010. The Company recorded $89 and $30 of facility lease and other operating expenses payable to Plitt Plaza joint venture during the nine months ended September 30, 2009 and 2010, respectively. During the nine months ended September 30, 2010, the Company recorded approximately $111 related to the termination of the lease, which is reflected in loss on sale of assets and other on the condensed consolidated statements of income.

     The Company manages one theatre for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25% of the limited partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenues up to $50,000 and 3% of annual theatre revenues in excess of $50,000. The Company recorded $81 and $82 of management fee revenues during the nine months ended September 30, 2009 and 2010, respectively. All such amounts are included in the Company’s condensed consolidated financial statements with the intercompany amounts eliminated in consolidation.

     The Company leases 21 theatres and one parking facility from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy. Raymond Syufy is one of Cinemark Holdings, Inc.’s directors and is an officer of the general partner of Syufy. Of these 22 leases, 18 have fixed minimum annual rent in an aggregate amount of approximately $21,029. The four leases without minimum annual rent have rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For the nine months ended September 30, 2009 and 2010, the Company paid approximately $1,257 and $1,046, respectively, in percentage rent for these four leases.

     The Company has paid certain fees and expenses on behalf of its parent, Cinemark Holdings, Inc. and Cinemark Holdings, Inc. has paid income taxes on behalf of the Company. The net receivable from Cinemark Holdings, Inc. as of September 30, 2010 and December 31, 2009 was $8,443 and $7,656, respectively.

19. Income Taxes

     During the nine months ended September 30, 2010, the Company had a reduction in its liabilities for uncertain tax positions, of which approximately $14,230 was due to settlements and closures of various tax years. These settlements and closures also resulted in a reduction in income tax expense of approximately $8,655 for the nine months ended September 30, 2010.

20. Commitments and Contingencies

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

21. Subsequent Event — Interest Rate Swap Agreements

     During October 2010, the Company entered into an interest rate swap agreement with an effective date of December 2010 and an approximate five year term. The interest rate swap agreement has been designated to hedge

23

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

approximately $175,000 of the Company’s variable rate debt obligations under its senior secured credit facility for approximately five years. Under the terms of the agreement, the Company will pay a fixed rate of 1.3975% on $175,000 of variable rate debt and will receive interest from the counterparty to the agreement at a variable rate based on the 1-month LIBOR. The 1-month LIBOR on each reset date will determine the variable portion of the interest rate swap for the one-month period following the reset date. No premium or discount was incurred upon the Company entering into the interest rate swap agreement because the pay and receive rates on the interest rate swap agreement represented prevailing rates for each counterparty at the time the interest rate swap agreement was consummated.

     During November 2010, the Company entered into an interest rate swap agreement with an effective date of December 2010 and an approximate five year term. The interest rate swap agreement has been designated to hedge approximately $175,000 of the Company’s variable rate debt obligations under its senior secured credit facility for approximately five years. Under the terms of the agreement, the Company will pay a fixed rate of 1.40% on $175,000 of variable rate debt and will receive interest from the counterparty to the agreement at a variable rate based on the 1-month LIBOR. The 1-month LIBOR on each reset date will determine the variable portion of the interest rate swap for the one-month period following the reset date. No premium or discount was incurred upon the Company entering into the interest rate swap agreement because the pay and receive rates on the interest rate swap agreement represented prevailing rates for each counterparty at the time the interest rate swap agreement was consummated.

22. Condensed Consolidating Financial Information of Subsidiary Guarantors

     As of September 30, 2010, the Company had outstanding $470,000 aggregate principal amount of 8.625% senior notes due 2019. These senior notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the following subsidiaries of Cinemark USA, Inc.:

     Cinemark, L.L.C., Sunnymead Cinema Corp., Cinemark Properties, Inc., Greeley Holdings, Inc., Trans Texas Cinema, Inc., Cinemark Mexico (USA), Inc., Brasil Holdings, LLC, Cinemark Leasing Company, Cinemark Partners I, Inc., Multiplex Properties, Inc., Multiplex Services, Inc., CNMK Investments, Inc., CNMK Texas Properties, LLC., Cinemark Concessions LLC, Laredo Theatres, Ltd, Century Theatres, Inc., Marin Theatre Management, LLC, Century Theatres NG, LLC, Cinearts LLC, Cinearts Sacramento, LLC, Corte Madera Theatres, LLC, Novato Theatres, LLC, San Rafael Theatres, LLC, Northbay Theatres, LLC, Century Theatres Summit Sierra, LLC and Century Theatres Seattle, LLC.

     The following supplemental condensed consolidating financial information presents:

1. Condensed consolidating balance sheet information as of December 31, 2009 and September 30, 2010, condensed consolidating statements of income information for each of the three and nine months ended September 30, 2009 and 2010, and condensed consolidating statements of cash flows information for each of the nine months ended September 30, 2009 and 2010.

2. Cinemark USA, Inc. (the “Parent” and “Issuer”), combined Guarantor Subsidiaries and combined Non-Guarantor Subsidiaries with their investments in subsidiaries accounted for using the equity method of accounting and therefore, the Parent column reflects the equity income (loss) of its Guarantor Subsidiaries and Non-Guarantor Subsidiaries, which are also separately reflected in the stand-alone Guarantor Subsidiaries and Non-Guarantor Subsidiaries column. Additionally, the Guarantor Subsidiaries column reflects the equity income (loss) of its Non-Guarantor Subsidiaries, which are also separately reflected in the stand-alone Non-Guarantor Subsidiaries column.

3. Elimination entries necessary to consolidate the Parent and all of its Subsidiaries.

24

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
SEPTEMBER 30, 2010

	Parent			Subsidiary		Subsidiary
	Company			Guarantors		Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	46,088		$	191,829	$	192,430		$	—		$	430,347
Other current assets		51,888			32,348		28,234			(35,981	)		76,489
Accounts receivable from (payable to) parent		(237,738	)		290,363		(44,182	)		—			8,443
Total current assets		(139,762	)		514,540		176,482			(35,981	)		515,279
Theatre properties and equipment — net		303,147			661,803		224,241			—			1,189,191
Other assets		2,811,957			679,170		366,886			(2,241,849	)		1,616,164
Total assets	$	2,975,342		$	1,855,513	$	767,609		$	(2,277,830	)	$	3,320,634
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	10,836		$	—	$	—		$	—		$	10,836
Current portion of capital lease obligations		1,499			5,124		657			—			7,280
Accounts payable and accrued expenses		91,066			58,919		78,731			(30,885	)		197,831
Total current liabilities		103,401			64,043		79,388			(30,885	)		215,947
Long-term liabilities
Long-term debt, less current portion		1,565,141			—		31,762			(72,610	)		1,524,293
Capital lease obligations, less current portion		27,339			96,101		6,551			—			129,991
Other long-term liabilities and deferrals		287,009			168,844		59,587			(69,487	)		445,953
Total long-term liabilities		1,879,489			264,945		97,900			(142,097	)		2,100,237
Commitments and contingencies
Equity
Cinemark USA, Inc.’s stockholder’s equity:
Common stock		49,543			457,372		167,766			(625,138	)		49,543
Other stockholder’s equity		942,909			1,068,775		410,935			(1,479,710	)		942,909
Total Cinemark USA, Inc. stockholder’s equity		992,452			1,526,147		578,701			(2,104,848	)		992,452
Noncontrolling interests		—			378		11,620			—			11,998
Total equity		992,452			1,526,525		590,321			(2,104,848	)		1,004,450
Total liabilities and equity	$	2,975,342		$	1,855,513	$	767,609		$	(2,277,830	)	$	3,320,634

25

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2009

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

26

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2010

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Revenues	$	150,467		$	265,351		$	166,910		$	(22,493	)	$	560,235
Cost of operations		—			—			—			—
Theatre operating expenses		138,275			176,913			122,085			(22,493	)		414,780
General and administrative expenses		4,731			14,575			8,376			—			27,682
Depreciation and amortization		7,547			19,493			7,944			—			34,984
Impairment of long-lived assets		424			—			598			—			1,022
Loss on sale of assets and other		266			482			6,800			—			7,548
Total cost of operations		151,243			211,463			145,803			(22,493	)		486,016
Operating income (loss)		(776	)		53,888			21,107			—			74,219
Other income (expense)
Interest expense		(26,790	)		(2,804	)		(738	)		1,394			(28,938	)
Distributions from NCM		—			—			4,263			—			4,263
Equity in income (loss) of affiliates		50,016			14,995			(1,864	)		(64,989	)		(1,842	)
Other income		72			1,492			2,319			(1,394	)		2,489
Total other income (expense)		23,298			13,683			3,980			(64,989	)		(24,028	)
Income before income taxes		22,522			67,571			25,087			(64,989	)		50,191
Income taxes		(11,081	)		19,990			7,128			—			16,037
Net income		33,603			47,581			17,959			(64,989	)		34,154
Less: Net income (loss) attributable to noncontrolling interests		—			(5	)		556			—			551
Net income attributable to Cinemark USA, Inc.	$	33,603		$	47,586		$	17,403		$	(64,989	)	$	33,603

27

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2009

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands, unaudited)
Revenues	$	141,163		$	250,820		$	125,316		$	(20,474	)	$	496,825
Cost of operations
Theatre operating costs		131,014			170,717			93,782			(20,474	)		375,039
General and administrative expenses		4,240			13,218			5,651			—			23,109
Depreciation and amortization		6,587			24,258			7,663			—			38,508
Impairment of long-lived assets		2,938			166			42			—			3,146
Loss on sale of assets and other		235			609			100			—			944
Total cost of operations		145,014			208,968			107,238			(20,474	)		440,746
Operating income (loss)		(3,851	)		41,852			18,078			—			56,079
Other income (expense)
Interest expense		(23,269	)		(3,027	)		(892	)		1,617			(25,571	)
Distributions from NCM		—			—			4,162			—			4,162
Equity in income (loss) of affiliates		39,778			6,685			(60	)		(46,438	)		(35	)
Other income		199			1,515			1,322			(1,617	)		1,419
Total other income		16,708			5,173			4,532			(46,438	)		(20,025	)
Income before income taxes		12,857			47,025			22,610			(46,438	)		36,054
Income taxes		(9,864	)		10,897			11,256			—			12,289
Net income		22,721			36,128			11,354			(46,438	)		23,765
Less: Net income attributable to noncontrolling interests		—			60			984			—			1,044
Net income attributable to Cinemark USA, Inc.	$	22,721		$	36,068		$	10,370		$	(46,438	)	$	22,721

28

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2010

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Revenues	$	450,769		$	790,636		$	435,304		$	(60,474	)	$	1,616,235
Cost of operations
Theatre operating expenses		407,127			524,585			319,177			(60,474	)		1,190,415
General and administrative expenses		13,741			42,346			21,047			—			77,134
Depreciation and amortization		21,872			58,033			24,085			—			103,990
Impairment of long-lived assets		937			2,358			2,762			—			6,057
Loss on sale of assets and other		894			2,071			8,941			—			11,906
Total cost of operations		444,571			629,393			376,012			(60,474	)		1,389,502
Operating income		6,198			161,243			59,292			—			226,733
Other income (expense)
Interest expense		(76,039	)		(8,610	)		(2,218	)		3,314			(83,553	)
Distributions from NCM		980			—			14,561			—			15,541
Equity in income (loss) of affiliates		146,349			36,997			(5,031	)		(183,312	)		(4,997	)
Other income		287			3,345			4,683			(3,314	)		5,001
Total other income (expense)		71,577			31,732			11,995			(183,312	)		(68,008	)
Income before income taxes		77,775			192,975			71,287			(183,312	)		158,725
Income taxes		(31,242	)		59,287			18,417			—			46,462
Net income		109,017			133,688			52,870			(183,312	)		112,263
Less: Net income attributable to noncontrolling interests		—			26			3,220			—			3,246
Net income attributable to Cinemark USA, Inc.	$	109,017		$	133,662		$	49,650		$	(183,312	)	$	109,017

29

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2009

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands, unaudited)
Revenues	$	414,500		$	761,208		$	320,017		$	(55,592	)	$	1,440,133
Cost of operations
Theatre operating costs		375,970			507,897			242,709			(55,592	)		1,070,984
General and administrative expenses		11,971			40,084			15,712			—			67,767
Depreciation and amortization		18,648			72,953			21,244			—			112,845
Impairment of long-lived assets		3,919			3,850			346			—			8,115
Loss on sale of assets and other		443			1,951			8			—			2,402
Total cost of operations		410,951			626,735			280,019			(55,592	)		1,262,113
Operating income		3,549			134,473			39,998			—			178,020
Other income (expense)
Interest expense		(48,250	)		(9,249	)		(2,392	)		3,781			(56,110	)
Distributions from NCM		960			—			14,808			—			15,768
Equity in income (loss) of affiliates		117,643			24,063			(1,133	)		(141,628	)		(1,055	)
Other income		698			3,650			4,000			(3,781	)		4,567
Total other income (expense)		71,051			18,464			15,283			(141,628	)		(36,830	)
Income before income taxes		74,600			152,937			55,281			(141,628	)		141,190
Income taxes		(14,683	)		49,487			14,136			—			48,940
Net income		89,283			103,450			41,145			(141,628	)		92,250
Less: Net income attributable to noncontrolling interests		—			83			2,884			—			2,967
Net income attributable to Cinemark USA, Inc.	$	89,283		$	103,367		$	38,261		$	(141,628	)	$	89,283

30

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2010

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Operating activities
Net income	$	109,017		$	133,688		$	52,870		$	(183,312	)	$	112,263
Adjustments to reconcile net income to cash provided by (used for) operating activities		(141,333	)		43,010			45,539			183,312			130,528
Changes in assets and liabilities		134,824			(200,947	)		(23,226	)		—			(89,349	)
Net cash provided by (used for) operating activities		102,508			(24,249	)		75,183			—			153,442
Investing activities
Additions to theatre properties and equipment		(25,065	)		(22,281	)		(40,910	)		—			(88,256	)
Proceeds from sale of theatre properties and equipment		1,561			765			1,668			—			3,994
Investment in joint venture — DCIP, net of cash distributions		—			—			(1,510	)		—			(1,510	)
Net transactions with affiliates		281			4,175			—			(4,456	)		—
Net cash used for investing activities		(23,223	)		(17,341	)		(40,752	)		(4,456	)		(85,772	)
Financing activities
Dividends paid to parent		(54,600	)		—			(287	)		287			(54,600	)
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings		(416	)		—			—			—			(416	)
Payment of debt issue costs		(8,849	)		—			—			—			(8,849	)
Repayments of other long-term debt		(8,127	)		—			(1,017	)		—			(9,144	)
Net changes in intercompany notes		—			—			(4,169	)		4,169			—
Payments on capital leases		(966	)		(4,121	)		(335	)		—			(5,422	)
Other		—			—			(387	)		—			(387	)
Net cash used for financing activities		(72,958	)		(4,121	)		(6,195	)		4,456			(78,818	)
Effect of exchange rate changes on cash and cash equivalents		—			—			3,758			—			3,758
Increase (decrease) in cash and cash equivalents		6,327			(45,711	)		31,994			—			(7,390	)
Cash and cash equivalents:
Beginning of year		39,761			237,540			160,436			—			437,737
End of year	$	46,088		$	191,829		$	192,430		$	—		$	430,347

31

CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009

	Parent			Subsidiary			Subsidiary
	Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands, unaudited)
Operating activities
Net income	$	89,283		$	103,450		$	41,145		$	(141,628	)	$	92,250
Adjustments to reconcile net income to cash provided by operating activities		(97,565	)		67,047			18,001			141,628			129,111
Changes in assets and liabilities		118,014			(140,685	)		19,810			—			(2,861	)
Net cash provided by operating activities		109,732			29,812			78,956			—			218,500
Investing activities
Additions to theatre properties and equipment		(34,960	)		(23,486	)		(27,157	)		—			(85,603	)
Proceeds from sale of theatre properties and equipment		400			97			224			—			721
Acquisition of theatres		(48,950	)		—			(9,061	)		—			(58,011	)
Net transactions with affiliates		7,148			14,735			—			(21,883	)		—
Other		—			—			(2,500	)		—			(2,500	)
Net cash used for investing activities		(76,362	)		(8,654	)		(38,494	)		(21,883	)		(145,393	)
Financing activities
Capital contributions from parent		19,650			—			—			—			19,650
Dividends paid to parent		(491,025	)		(150	)		(7,001	)		7,151			(491,025	)
Proceeds from issuance of senior notes		458,532			—			—			—			458,532
Payment of debt issue costs		(12,601	)		—			—			—			(12,601	)
Repayments of long-term debt		(8,400	)		—			(1,036	)		—			(9,436	)
Net changes in intercompany notes		—			—			(14,732	)		14,732			—
Payments on capital leases		(680	)		(3,455	)		(275	)		—			(4,410	)
Other		—			—			(874	)		—			(874	)
Net cash used for financing activities		(34,524	)		(3,605	)		(23,918	)		21,883			(40,164	)
Effect of exchange rate changes on cash and cash equivalents		—			—			12,642			—			12,642
Increase (decrease) in cash and cash equivalents		(1,154	)		17,553			29,186			—			45,585
Cash and cash equivalents:
Beginning of year		39,039			163,007			111,192			—			313,238
End of year	$	37,885		$	180,560		$	140,378		$	—		$	358,823

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes and schedules included elsewhere in this report.

     We are a leader in the motion picture exhibition industry, with theatres in the U.S., Canada, Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. As of September 30, 2010, we managed our business under two reportable operating segments — U.S. markets and international markets, in accordance with FASB ASC Topic 280,Segment Reporting. See Note 17 to our condensed consolidated financial statements.

     We generate revenues primarily from box office receipts and concession sales with additional revenues from screen advertising sales and other revenue streams, such as vendor marketing programs, pay phones, ATM machines and electronic video games located in some of our theatres. Our contracts with NCM have assisted us in expanding our offerings to advertisers and broadening ancillary revenue sources such as digital video monitor advertising, third party branding, and the use of theatres for alternative content events, such as concerts, sporting events, and other cultural events. Films driving the box office during the nine months ended September 30, 2010 included the carryover ofAvatar, which grossed over $450 million in U.S. box office revenues during the period and new releases such asAlice in Wonderland, How to Train Your Dragon, Clash of the Titans, Iron Man 2, Shrek Forever After, The Karate Kid, Toy Story 3, The Twilight Saga: Eclipse,Inception, Despicable Me, Grown Ups, The Other Guys, The ExpendablesandSalt.Our revenues are affected by changes in attendance and average admissions and concession revenues per patron. Attendance is primarily affected by the quality and quantity of films released by motion picture studios. Films scheduled for release during the remainder of 2010 includeJackass 3D, Due Date, Megamind, Little Fockers, Tron: Legacy, Tangled, Yogi Bear, Gulliver’s Travels, Chronicles of Narnia: The Voyage of the Dawn Treaderand another installment of theHarry Potterfranchise, among other films.

     Film rental costs are variable in nature and fluctuate with our admissions revenues. Film rental costs as a percentage of revenues are generally higher for periods in which more blockbuster films are released. Film rental costs can also vary based on the length of a film’s run. Film rental rates are generally negotiated on a film-by-film and theatre-by-theatre basis. Advertising costs, which are expensed as incurred, are primarily fixed at the theatre level as daily movie directories placed in newspapers represent the largest component of advertising costs. The monthly cost of these advertisements is based on, among other things, the size of the directory and the frequency and size of the newspaper’s circulation.

     Concession supplies expense is variable in nature and fluctuates with our concession revenues. We purchase concession supplies to replace units sold. We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates.

     Although salaries and wages include a fixed cost component (i.e. the minimum staffing costs to operate a theatre facility during non-peak periods), salaries and wages move in relation to revenues as theatre staffing is adjusted to respond to changes in attendance.

     Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain of our leases are subject to percentage rent only while others are subject to percentage rent in addition to their fixed monthly rent if a target annual revenue level is achieved. Facility lease expense as a percentage of revenues is also affected by the number of theatres under operating leases, the number of theatres under capital leases and the number of fee-owned theatres.

     Utilities and other costs include certain costs that have both fixed and variable components such as utilities, property taxes, janitorial costs, repairs and maintenance and security services.

Recent Developments

     On October 14, 2010, we redeemed all of our remaining outstanding 9% senior subordinated notes for approximately $0.2 million, including accrued interest and premiums.

33

Results of Operations

     The following table sets forth, for the periods indicated, certain operating data and, the percentage of revenues represented by certain items reflected in our condensed consolidated statements of income:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Operating data (in millions):
Revenues
Admissions	$	367.6		$	322.9		$	1,063.7		$	941.9
Concession		170.2			153.0			488.5			441.9
Other		22.4			20.9			64.0			56.3
Total revenues		560.2			496.8			1,616.2			1,440.1
Cost of operations
Film rentals and advertising		200.5			175.9			582.8			513.9
Concession supplies		26.6			23.5			73.5			67.2
Salaries and wages		56.8			52.7			165.6			149.1
Facility lease expense		66.6			61.6			191.3			176.5
Utilities and other		64.3			61.4			177.2			164.3
General and administrative expenses		27.7			23.1			77.2			67.8
Depreciation and amortization		35.0			38.5			104.0			112.8
Impairment of long-lived assets		1.0			3.1			6.0			8.1
Loss on sale of assets and other		7.5			0.9			11.9			2.4
Total cost of operations		486.0			440.7			1,389.5			1,262.1
Operating income	$	74.2		$	56.1		$	226.7		$	178.0
Operating data as a percentage of total revenues:
Revenues
Admissions		65.6	%		65.0	%		65.8	%		65.4	%
Concession		30.4	%		30.8	%		30.2	%		30.7	%
Other		4.0	%		4.2	%		4.0	%		3.9	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of operations(1)
Film rentals and advertising		54.5	%		54.5	%		54.8	%		54.6	%
Concession supplies		15.6	%		15.4	%		15.0	%		15.2	%
Salaries and wages		10.1	%		10.6	%		10.2	%		10.4	%
Facility lease expense		11.9	%		12.4	%		11.8	%		12.3	%
Utilities and other		11.5	%		12.3	%		11.0	%		11.4	%
General and administrative expenses		4.9	%		4.6	%		4.8	%		4.7	%
Depreciation and amortization		6.2	%		7.8	%		6.4	%		7.9	%
Impairment of long-lived assets		0.2	%		0.7	%		0.4	%		0.6	%
Loss on sale of assets and other		1.3	%		0.2	%		0.7	%		0.2	%
Total cost of operations		86.8	%		88.7	%		86.0	%		87.6	%
Operating income		13.2	%		11.3	%		14.0	%		12.4	%
Average screen count (month end average)		4,922			4,901			4,905			4,849
Revenues per average screen (dollars)	$	113,817		$	101,367		$	329,528		$	296,978

⁽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.

34

Three months ended September 30, 2010 and 2009

     Revenues.Total revenues increased $63.4 million to $560.2 million for the three months ended September 30, 2010 (“third quarter of 2010”) from $496.8 million for the three months ended September 30, 2009 (“third quarter of 2009”), representing a 12.8% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.

								International Operating
	U.S. Operating Segment									Segment					Consolidated
	Three Months Ended							Three Months Ended							Three Months Ended
	September 30,							September 30,							September 30,
					%							%							%
	2010		2009		Change			2010		2009		Change			2010		2009		Change
Admissions revenues(1)	$	262.5	$	246.9		6.3	%	$	105.1	$	76.0		38.3	%	$	367.6	$	322.9		13.8	%
Concession revenues(1)	$	125.0	$	119.8		4.3	%	$	45.2	$	33.2		36.1	%	$	170.2	$	153.0		11.2	%
Other revenues(1) (2)	$	11.2	$	10.3		8.7	%	$	11.2	$	10.6		5.7	%	$	22.4	$	20.9		7.2	%
Total revenues(1) (2)	$	398.7	$	377.0		5.8	%	$	161.5	$	119.8		34.8	%	$	560.2	$	496.8		12.8	%
Attendance(1)		42.2		41.0		2.9	%		23.5		19.4		21.1	%		65.7		60.4		8.8	%
Revenues per average screen(2)	$	103,704	$	98,115		5.7	%	$	149,911	$	113,161		32.5	%	$	113,817	$	101,367		12.3	%

(1)	Amounts in millions.
(2)	U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 17 of our condensed consolidated financial statements.

• Consolidated. The increase in admissions revenues of $44.7 million was primarily attributable to an 8.8% increase in attendance and a 4.7% increase in average ticket price from $5.35 for the third quarter of 2009 to $5.60 for the third quarter of 2010. The increase in concession revenues of $17.2 million was primarily attributable to the 8.8% increase in attendance and a 2.4% increase in concession revenues per patron from $2.53 for the third quarter of 2009 to $2.59 for the third quarter of 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 7.2% increase in other revenues was primarily due to increases in ancillary revenue and the favorable impact of exchange rates in certain countries in which we operate.

• U.S. The increase in admissions revenues of $15.6 million was primarily attributable to a 2.9% increase in attendance and a 3.3% increase in average ticket price from $6.02 for the third quarter of 2009 to $6.22 for the third quarter of 2010. The increase in concession revenues of $5.2 million was primarily attributable to the 2.9% increase in attendance and a 1.4% increase in concession revenues per patron from $2.92 for the third quarter of 2009 to $2.96 for the third quarter of 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the increase in concession revenues per patron was primarily due to price increases. The 8.7% increase in other revenues was primarily due to increases in ancillary revenue.

• International. The increase in admissions revenues of $29.1 million was primarily attributable to a 21.1% increase in attendance and a 14.0% increase in average ticket price from $3.92 for the third quarter of 2009 to $4.47 for the third quarter of 2010. The increase in concession revenues of $12.0 million was primarily attributable to the 21.1% increase in attendance and a 12.3% increase in concession revenues per patron from $1.71 for the third quarter of 2009 to $1.92 for the third quarter of 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 5.7% increase in other revenues was primarily due to increases in ancillary revenue and the favorable impact of exchange rates in certain countries in which we operate.

35

     Cost of Operations.The table below summarizes certain of our theatre operating costs by reportable operating segment (in millions).

					International Operating
	U.S. Operating Segment				Segment				Consolidated
	Three Months Ended				Three Months Ended				Three Months Ended
	September 30,				September 30,				September 30,
	2010		2009		2010		2009		2010		2009
Film rentals and advertising	$	146.5	$	137.4	$	54.0	$	38.5	$	200.5	$	175.9
Concession supplies		15.5		14.8		11.1		8.7		26.6		23.5
Salaries and wages		44.4		43.3		12.4		9.4		56.8		52.7
Facility lease expense		45.8		45.2		20.8		16.4		66.6		61.6
Utilities and other		44.5		45.1		19.8		16.3		64.3		61.4

•	Consolidated. Film rentals and advertising costs were $200.5 million, or 54.5% of admissions revenues, for the third quarter of 2010 compared to $175.9 million, or 54.5% of admissions revenues, for the third quarter of 2009. The increase in film rentals and advertising costs of $24.6 million was primarily due to a $44.7 million increase in admissions revenues. Concession supplies expense was $26.6 million, or 15.6% of concession revenues, for the third quarter of 2010 compared to $23.5 million, or 15.4% of concession revenues, for the third quarter of 2009. The increase in the concession supplies rate was primarily due to the increased weighting of our international business which typically has a higher concession supplies rate.
	Salaries and wages increased to $56.8 million for the third quarter of 2010 from $52.7 million for the third quarter of 2009 primarily due to increased minimum wages in both our U.S. and international segments, increased staffing levels to support the 8.8% increase in attendance and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $66.6 million for the third quarter of 2010 from $61.6 million for the third quarter of 2009 primarily due to increased percentage rent and the impact of exchange rates in certain countries in which we operate. Utilities and other costs increased to $64.3 million for the third quarter of 2010 from $61.4 million for the third quarter of 2009 primarily due to increased 3-D equipment rental fees, increased utility expenses and the impact of exchange rates in certain countries in which we operate.
•	U.S. Film rentals and advertising costs were $146.5 million, or 55.8% of admissions revenues, for the third quarter of 2010 compared to $137.4 million, or 55.7% of admissions revenues, for the third quarter of 2009. The increase in film rentals and advertising costs of $9.1 million is primarily due to a $15.6 million increase in admissions revenues. Concession supplies expense was $15.5 million, or 12.4% of concession revenues, for the third quarter of 2010 compared to $14.8 million, or 12.4% of concession revenues, for the third quarter of 2009.
	Salaries and wages increased to $44.4 million for the third quarter of 2010 from $43.3 million for the third quarter of 2009 primarily due to increased minimum wages and increased staffing levels to support the 2.9% increase in attendance. Facility lease expense increased to $45.8 million for the third quarter of 2010 from $45.2 million for the third quarter of 2009 primarily due to increased percentage rent. Utilities and other costs decreased to $44.5 million for the third quarter of 2010 from $45.1 million for the third quarter of 2009 primarily due to decreased utility and theatre supplies expenses, partially offset by increased 3-D equipment rental fees.
•	International. Film rentals and advertising costs were $54.0 million, or 51.4% of admissions revenues, for the third quarter of 2010 compared to $38.5 million, or 50.7% of admissions revenues, for the third quarter of 2009. The increase in film rentals and advertising costs of $15.5 million is due to a $29.1 million increase in admissions revenues which contributed $14.7 million and an increase in the film rentals and advertising rate which contributed $0.8 million. Concession supplies expense was $11.1 million, or 24.6% of concession revenues, for the third quarter of 2010 compared to $8.7 million, or 26.2% of concession revenues, for the third quarter of 2009. The increase in concession supplies expense was primarily due to a $12.0 million increase in concession revenues, partially offset by a decrease in the concession supplies rate due to favorable inventory procurement costs and the successful implementation of price increases.
	Salaries and wages increased to $12.4 million for the third quarter of 2010 from $9.4 million for the third quarter of 2009 primarily due to increased staffing levels to support the 21.1% increase in attendance, increased minimum wages and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $20.8 million for the third quarter of 2010 from $16.4 million for the third quarter of 2009 primarily due to increased percentage rent and the impact of exchange rates in certain countries in which we operate. Utilities and

36

other costs increased to $19.8 million for the third quarter of 2010 from $16.3 million for the third quarter of 2009 primarily due to increased 3-D equipment rental fees, increased utility expenses and the impact of exchange rates in certain countries in which we operate.

     General and Administrative Expenses.General and administrative expenses increased to $27.7 million for the third quarter of 2010 from $23.1 million for the third quarter of 2009. The increase was primarily due to increased salaries and incentive compensation expense, increased share based award compensation expense, increased professional fees and increased service charges related to increased credit card activity and the impact of exchange rates in certain countries in which we operate.

     Depreciation and Amortization.Depreciation and amortization expense, including amortization of favorable /unfavorable leases, was $35.0 million for the third quarter of 2010 compared to $38.5 million for the third quarter of 2009. The decrease was primarily related to a reduction in the depreciable basis of certain of our U.S. assets due to a significant amount of the equipment acquired in the Century Acquisition becoming fully depreciated during the fourth quarter of 2009, partially offset by the impact of accelerated depreciation taken on our domestic 35 millimeter projection systems that will be replaced with digital projection systems. We recorded approximately $2.3 million of depreciation expense related to these 35 millimeter projection systems during the third quarter of 2010.

     Impairment of Long-Lived Asset.We recorded asset impairment charges on assets held and used of $1.0 million for the third quarter of 2010 compared to $3.1 million for the third quarter of 2009. Impairment charges for the third quarter of 2010 were related to theatre properties, impacting five of our twenty-four reporting units. Impairment charges for the third quarter of 2009 consisted of $2.8 million of theatre properties, impacting ten of our twenty-four reporting units, and $0.3 million of intangible assets associated with one of our twenty-four reporting units. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, or adverse changes in market demographics. See Notes 12 and 13 to our condensed consolidated financial statements.

     Loss on Sale of Assets and Other.We recorded a loss on sale of assets and other of $7.5 million during the third quarter of 2010 compared to $0.9 million for the third quarter of 2009. The loss recorded during the third quarter of 2010 included approximately $5.8 million for the write-off of an intangible asset associated with a vendor contract in Mexico that was terminated.

     Interest Expense.Interest costs incurred, including amortization of debt issue costs, were $28.9 million for the third quarter of 2010 compared to $25.6 million for the third quarter of 2009. The increase was primarily due to increases in interest rates on our variable rate debt related to the amendment and extension of our senior secured credit facility.

     Distributions from NCM.We recorded distributions from NCM of $4.3 million during the third quarter of 2010 and $4.2 million during the third quarter of 2009, which were in excess of the carrying value of our investment. See Note 6 to our condensed consolidated financial statements.

     Equity in Loss of AffiliatesWe recorded equity in loss of affiliates of $1.8 million during the third quarter of 2010 compared to $0.1 million during the third quarter of 2009. The equity in loss of affiliates recorded during the third quarter of 2010 included a loss of approximately $4.4 million related to our equity investment in DCIP (see Note 7 to the condensed consolidated financial statements) offset by income of approximately $2.6 million related to our equity investment in NCM (see Note 6 to the condensed consolidated financial statements). The equity in loss of affiliates recorded during the third quarter of 2009 included a loss of approximately $1.0 million related to our equity investment in DCIP offset by income of approximately $0.9 million related to our equity investment in NCM.

     Income Taxes.Income tax expense of $16.0 million was recorded for the third quarter of 2010 compared to $12.3 million for the third quarter of 2009. The effective tax rate was 32.0% for the third quarter of 2010 compared to 34.1% for the third quarter of 2009. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

37

Nine months ended September 30, 2010 and 2009

     Revenues.Total revenues increased $176.1 million to $1,616.2 million for the nine months ended September 30, 2010 (“the 2010 period”) from $1,440.1 million for the nine months ended September 30, 2009 (“the 2009 period”), representing a 12.2% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.

	U.S. Operating Segment							International Operating Segment									Consolidated
	Nine Months Ended							Nine Months Ended							Nine Months Ended
	September 30,							September 30,							September 30,
					%							%							%
	2010		2009		Change			2010		2009		Change			2010		2009		Change
Admissions revenues (1)	$	791.0	$	748.6		5.7	%	$	272.7	$	193.3		41.1	%	$	1,063.7	$	941.9		12.9	%
Concession revenues(1)	$	373.1	$	357.0		4.5	%	$	115.4	$	84.9		35.9	%	$	488.5	$	441.9		10.5	%
Other revenues(1) (2)	$	31.7	$	30.5		3.9	%	$	32.3	$	25.8		25.2	%	$	64.0	$	56.3		13.7	%
Total revenues(1) (2)	$	1,195.8	$	1,136.1		5.3	%	$	420.4	$	304.0		38.3	%	$	1,616.2	$	1,440.1		12.2	%
Attendance(1)		123.4		122.2		1.0	%		61.0		53.4		14.2	%		184.4		175.6		5.0	%
Revenues per average screen(2)	$	311,967	$	298,615		4.5	%		392,351	$	291,016		34.8	%	$	329,528	$	296,978		11.0	%

(1)	Amounts in millions.
(2)	U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 17 of our condensed consolidated financial statements.

• Consolidated. The increase in admissions revenues of $121.8 million was primarily attributable to a 5.0% increase in attendance and a 7.6% increase in average ticket price from $5.36 for the 2009 period to $5.77 for the 2010 period. The increase in concession revenues of $46.6 million was primarily attributable to the 5.0% increase in attendance and a 5.2% increase in concession revenues per patron from $2.52 for the 2009 period to $2.65 for the 2010 period. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 13.7% increase in other revenues was primarily due to increases in ancillary revenue and the favorable impact of exchange rates in certain countries in which we operate.

• U.S. The increase in admissions revenues of $42.4 million was primarily attributable to a 4.6% increase in average ticket price from $6.13 for the 2009 period to $6.41 for the 2010 period and a 1.0% increase in attendance. The increase in concession revenues of $16.1 million was primarily attributable to a 3.4% increase in concession revenues per patron from $2.92 for the 2009 period to $3.02 for the 2010 period and the 1.0% increase in attendance. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the increase in concession revenues per patron was primarily due to price increases. The 3.9% increase in other revenues was primarily due to increases in ancillary revenue.

• International. The increase in admissions revenues of $79.4 million was primarily attributable to a 14.2% increase in attendance and a 23.5% increase in average ticket price from $3.62 for the 2009 period to $4.47 for the 2010 period. The increase in concession revenues of $30.5 million was primarily attributable to the 14.2% increase in attendance and an 18.9% increase in concession revenues per patron from $1.59 for the 2009 period to $1.89 for the 2010 period. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 25.2% increase in other revenues was primarily due to increases in ancillary revenue and the favorable impact of exchange rates in certain countries in which we operate.

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     Cost of Operations.The table below summarizes certain of our year-over-year theatre operating costs by reportable operating segment (in millions).

					International Operating
	U.S. Operating Segment				Segment				Consolidated
	Nine Months Ended				Nine Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,
	2010		2009		2010		2009		2010		2009
Film rentals and advertising	$	445.7	$	416.2	$	137.1	$	97.7	$	582.8	$	513.9
Concession supplies		45.0		45.4		28.5		21.8		73.5		67.2
Salaries and wages		131.5		124.4		34.1		24.7		165.6		149.1
Facility lease expense		136.6		132.9		54.7		43.6		191.3		176.5
Utilities and other		124.6		122.7		52.6		41.6		177.2		164.3

• Consolidated. Film rentals and advertising costs were $582.8 million, or 54.8% of admissions revenues, for the 2010 period compared to $513.9 million, or 54.6% of admissions revenues, for the 2009 period. The increase in film rentals and advertising costs of $68.9 million was due to a $121.8 million increase in admissions revenues, which contributed $66.5 million, and an increase in our film rentals and advertising rate, which contributed $2.4 million. The increase in the film rentals and advertising rate was primarily due to higher film rental rates in the U.S. segment due to the increase in the number of blockbuster films released, including the carryover ofAvatar, which generally have higher film rental rates. Concession supplies expense was $73.5 million, or 15.0% of concession revenues, for the 2010 period, compared to $67.2 million, or 15.2% of concession revenues, for the 2009 period. The decrease in the concession supplies rate was primarily due to favorable inventory procurement costs and the successful implementation of price increases.

Salaries and wages increased to $165.6 million for the 2010 period from $149.1 million for the 2009 period primarily due to new theatres, increased minimum wages in both our U.S. and international segments, increased staffing levels to support the 5.0% increase in attendance and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $191.3 million for the 2010 period from $176.5 million for the 2009 period primarily due to new theatres, increased percentage rent and the impact of exchange rates in certain countries in which we operate. Utilities and other costs increased to $177.2 million for the 2010 period from $164.3 million for the 2009 period primarily due to new theatres, increased 3-D equipment rental fees, increased utility expenses and the impact of exchange rates in certain countries in which we operate.

• U.S. Film rentals and advertising costs were $445.7 million, or 56.3% of admissions revenues for the 2010 period compared to $416.2 million, or 55.6% of admissions revenues, for the 2009 period. The increase in film rentals and advertising costs of $29.5 million is due to a $42.4 million increase in admissions revenues, which contributed $23.6 million and an increase in our film rentals and advertising rate, which contributed $5.9 million. The increase in the film rentals and advertising rate was primarily due to the increase in the number of blockbuster films released, including the carryover ofAvatar, which generally have higher film rental rates. Concession supplies expense was $45.0 million, or 12.1% of concession revenues, for the 2010 period, compared to $45.4 million, or 12.7% of concession revenues, for the 2009 period. The decrease in concession supplies expense is primarily due to a decrease in the concession supplies rate due to favorable inventory procurement costs and the successful implementation of price increases.

Salaries and wages increased to $131.5 million for the 2010 period from $124.4 million for the 2009 period primarily due to new theatres and increased minimum wages. Facility lease expense increased to $136.6 million for the 2010 period from $132.9 million for the 2009 period primarily due to new theatres and increased percentage rent. Utilities and other costs increased to $124.6 million for the 2010 period from $122.7 million for the 2009 period primarily due to new theatres and increased 3-D equipment rental fees, partially offset by decreased utility expenses.

• International. Film rentals and advertising costs were $137.1 million, or 50.3% of admissions revenues, for the 2010 period compared to $97.7 million, or 50.5% of admissions revenues, for the 2009 period. The increase in film rentals and advertising costs was primarily due to a $79.4 million increase in admissions revenues, partially offset by a lower film rentals and advertising rate. Concession supplies expense was $28.5 million, or 24.7% of concession revenues, for the 2010 period compared to $21.8 million, or 25.7% of concession revenues, for the 2009 period. The increase in concession supplies expense of $6.7 million was primarily due to a $30.5 million increase in concession revenues, partially offset by a lower concession supplies rate due to favorable inventory procurement costs and the successful implementation of price increases.

39

Salaries and wages increased to $34.1 million for the 2010 period from $24.7 million for the 2009 period primarily due to new theatres, increased staffing levels to support the 14.2% increase in attendance, increased minimum wages and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $54.7 million for the 2010 period from $43.6 million for the 2009 period primarily due to new theatres, increased percentage rent and the impact of exchange rates in certain countries in which we operate. Utilities and other costs increased to $52.6 million for the 2010 period from $41.6 million for the 2009 period primarily due to new theatres, increased 3-D equipment rental fees, increased utility expenses and the impact of exchange rates in certain countries in which we operate.

     General and Administrative Expenses.General and administrative expenses increased to $77.2 million for the 2010 period from $67.8 million for the 2009 period. The increase was primarily due to increased salaries and incentive compensation expense, increased share based award compensation expense, increased professional fees and increased service charges related to increased credit card activity and the impact of exchange rates in certain countries in which we operate.

     Depreciation and Amortization.Depreciation and amortization expense, including amortization of favorable/unfavorable leases, was $104.0 million for the 2010 period compared to $112.8 million for the 2009 period. The decrease was primarily related to a reduction in the depreciable basis of certain of our U.S. assets due to a significant amount of the equipment acquired in the Century Acquisition becoming fully depreciated during the fourth quarter of 2009, partially offset by the impact of accelerated depreciation taken on our domestic 35 millimeter projection systems that will be replaced with digital projection systems. We recorded approximately $6.0 million of depreciation expense related to these 35 millimeter projection systems during the 2010 period.

     Impairment of Long-Lived Assets.We recorded asset impairment charges on assets held and used of $6.0 million for the 2010 period compared to $8.1 million for the 2009 period. Impairment charges for the 2010 period consisted of $4.9 million of theatre properties, impacting sixteen of our twenty-four reporting units, and $1.1 million of intangible assets associated with one of our twenty-four reporting units. Impairment charges for the 2009 period consisted of $7.7 million of theatre properties, impacting sixteen of our twenty-four reporting units, and $0.4 million of intangible assets associated with theatre properties, impacting two of our twenty-four reporting units. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, or adverse changes in market demographics. See Notes 12 and 13 to our condensed consolidated financial statements.

     Loss on Sale of Assets and Other.We recorded a loss on sale of assets and other of $11.9 million during the 2010 period compared to $2.4 million during the 2009 period. The loss recorded during the 2010 period included $5.8 million for the write-off of an intangible asset associated with a vendor contract in Mexico that was terminated, $1.7 million that was recorded upon the contribution of digital projection systems to DCIP and an additional $0.3 million recorded upon the subsequent sale of digital projection systems to DCIP. See Note 7 to the condensed consolidated financial statements for discussion of DCIP.

     Interest Expense.Interest costs incurred, including amortization of debt issue costs, were $83.6 million for the 2010 period compared to $56.1 million for the 2009 period. The increase was primarily due to the issuance of our 8⁵/8% senior notes during June 2009. See Note 10 to our condensed consolidated financial statements for further discussion of our long term debt.

     Distributions from NCM.We recorded distributions from NCM of $15.5 million during the 2010 period and $15.8 million during the 2009 period, which were in excess of the carrying value of our investment. See Note 6 to our condensed consolidated financial statements.

     Equity in Loss of AffiliatesWe recorded equity in loss of affiliates of $5.0 million during the 2010 period compared to $1.1 million during the 2009 period. The equity in loss of affiliates recorded during the 2010 period included a loss of approximately $8.6 million related to our equity investment in DCIP (see Note 7 to the condensed consolidated financial statements) offset by income of approximately $3.6 million related to our equity investment in NCM (see Note 6 to the condensed consolidated financial statements). The equity in loss of affiliates recorded during the 2009 period included a loss of approximately $2.5 million related to our equity investment in DCIP offset by income of approximately $1.4 million related to our equity investment in NCM.

40

     Income Taxes.Income tax expense of $46.5 million was recorded for the 2010 period compared to $48.9 million for the 2009 period. The effective tax rate was 29.3% for the 2010 period compared to 34.7% for the 2009 period. Income tax expense for the 2010 period includes the impact of certain discrete non-recurring items and the reduction of our liabilities for uncertain tax positions due to settlements and closures of various tax years, which resulted in a benefit of approximately $8.7 million. Income tax expense for the 2009 period includes the impact of two discrete items, including an adjustment to our deferred tax liability and an increase to our foreign unrecognized tax benefits in accordance with ASC Topic 740. The net impact of the two items on income tax expense for the 2009 period was a benefit of approximately $4.9 million. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

Item 4. Controls and Procedures

Evaluation of the Effectiveness of Disclosure Controls and Procedures

     As of September 30, 2010, we carried out an evaluation required by the 1934 Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934 Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2010, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Controls Over Financial Reporting

     There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the quarter ended September 30, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

41

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Previously reported under “Business — Legal Proceedings” in the Company’s Annual Report on Form 10-K filed March 12, 2010.

Item 1A. Risk Factors

     There have been no material changes from risk factors previously disclosed in “Risk Factors” in the Company’s Annual Report on Form 10-K filed March 12, 2010.

Item 5. Other Information

     As required by the Indenture governing the Company’s 8⁵/₈% senior notes, the Company has included in this filing, interim financial information for its subsidiaries that have been designated as unrestricted subsidiaries, as defined by the Indenture. As required by the Indenture, the Company has included a condensed consolidating balance sheet and condensed consolidating statements of income and cash flows for the Company and its subsidiaries. These supplementary schedules separately identify the Company’s restricted subsidiaries and unrestricted subsidiaries as required by the Indenture.

     Supplemental Schedules Specified by the Senior Notes Indenture:

	Page
Condensed Consolidating Balance Sheet Information as of September 30, 2010 (unaudited)		43
Condensed Consolidating Statement of Income Information for the nine months ended September 30, 2010 (unaudited)		44
Condensed Consolidating Statement of Cash Flows Information for the nine months ended September 30, 2010 (unaudited)		45

42

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2010
(In thousands, unaudited)

	Restricted		Unrestricted
	Group		Group			Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	380,940	$	49,407		$	—		$	430,347
Other current assets		103,285		(18,353	)		—			84,932
Total current assets		484,225		31,054			—			515,279
Theatre properties and equipment, net		1,189,191		—			—			1,189,191
Other assets		1,567,492		75,691			(27,019	)		1,616,164
Total assets	$	3,240,908	$	106,745		$	(27,019	)	$	3,320,634
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	10,836	$	—		$	—		$	10,836
Current portion of capital lease obligations		7,280		—			—			7,280
Accounts payable and accrued expenses		197,831		—			—			197,831
Total current liabilities		215,947		—			—			215,947
Long-term liabilities
Long-term debt, less current portion		1,524,293		—			—			1,524,293
Capital lease obligations, less current portion		129,991		—			—			129,991
Other long-term liabilities		415,232		30,721			—			445,953
Total long-term liabilities		2,069,516		30,721			—			2,100,237
Commitments and contingencies
Equity		955,445		76,024			(27,019	)		1,004,450
Total liabilities and equity	$	3,240,908	$	106,745		$	(27,019	)	$	3,320,634

Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

43

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2010
(In thousands, unaudited)

	Restricted			Unrestricted
	Group			Group			Eliminations		Consolidated
Revenues	$	1,616,235		$	—		$	—	$	1,616,235
Cost of operations
Theatre operating costs		1,190,415			—			—		1,190,415
General and administrative expenses		77,131			3			—		77,134
Depreciation and amortization		103,990			—			—		103,990
Impairment of long-lived assets		6,057			—			—		6,057
Loss on sale of assets and other		10,960			946			—		11,906
Total cost of operations		1,388,553			949			—		1,389,502
Operating income (loss)		227,682			(949	)		—		226,733
Other income (expense)		(77,628	)		9,620			—		(68,008	)
Income before income taxes		150,054			8,671			—		158,725
Income taxes		43,193			3,269			—		46,462
Net income		106,861			5,402			—		112,263
Less: Net income attributable to noncontrolling interests		3,246			—			—		3,246
Net income attributable to Cinemark USA, Inc.	$	103,615		$	5,402		$	—	$	109,017

Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

44

CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2010
(In thousands, unaudited)

	Restricted			Unrestricted
	Group			Group			Eliminations		Consolidated
Operating activities
Net income	$	106,861		$	5,402		$	—	$	112,263
Adjustments to reconcile net income to cash provided by operating activities and other		121,389			9,139			—		130,528
Changes in assets and liabilities		(92,038	)		2,689			—		(89,349	)
Net cash provided by operating activities		136,212			17,230			—		153,442
Investing activities
Additions to theatre properties and equipment		(88,256	)		—			—		(88,256	)
Proceeds from sale of theatre properties and equipment		2,797			1,197			—		3,994
Investment in joint venture — DCIP, net of cash distributions		—			(1,510	)		—		(1,510	)
Net cash used for investing activities		(85,459	)		(313	)		—		(85,772	)
Financing activities
Dividends paid to parent		(54,600	)		—			—		(54,600	)
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings		(416	)		—			—		(416	)
Payment of debt issue costs		(8,849	)		—			—		(8,849	)
Repayments of other long-term debt		(9,144	)		—			—		(9,144	)
Payments on capital leases		(5,422	)		—			—		(5,422	)
Other		(387	)		—			—		(387	)
Net cash used for financing activities		(78,818	)		—			—		(78,818	)
Effect of exchange rate changes on cash and cash equivalents		3,758			—			—		3,758
Increase (decrease) in cash and cash equivalents		(24,307	)		16,917			—		(7,390	)
Cash and cash equivalents:
Beginning of year		405,247			32,490			—		437,737
End of year	$	380,940		$	49,407		$	—	$	430,347

Note: “Restricted Group” and “Unrestricted Group” are defined in the Indenture for the senior notes.

45

Item 6. Exhibits

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

* filed herewith.

46

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE: November 11, 2010	CINEMARK USA, INC. Registrant
	/s/ Alan W. Stock
	Alan W. Stock
	Chief Executive Officer
	/s/ Robert Copple
	Robert Copple
	Chief Financial Officer

47

EXHIBIT INDEX

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

* filed herewith.