THIS DOCUMENT IS A COPY OF THE ANNUAL REPORT ON FORM 10K FILED ON APRIL 1, 1997
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------

For the Fiscal Year Ended December 31, 1996 Commission File Nos. 33-47040
333-11895
CINEMARK USA, INC.
(Exact Name of registrant as Specified in its Charter)

Texas 75-2206284

(State or Other Jurisdiction of incorporation or (I.R.S. Employer Identification No.)
Organization)

7502 Greenville Avenue
Suite 800
Dallas, Texas 75231-3830
(Address of principal executive offices) (Zip Code)

<FN>
Registrant's Telephone Number, including area code: (214)696-1644

Securities Registered pursuant to Section 12(b) of the Act:

None
(Title of Class)

Securities Registered pursuant to Section 12(g) of the Act:

None
(Title of Class)
</FN>

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 X No ____.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

[ X ] [ ________ ]

As of March 27, 1997, 1,500 shares of Class A Common Stock and 184,589
shares of Class B Common Stock (including options to acquire 6,645 shares of
Class B Common Stock exercisable within 60 days of such date) were outstanding.

Index

Page

PART I........................................................................................................... 1
Item 1: Business..................................................................................... 1
(a)General Development of Business................................................................ 1
(b)Financial Information About Industry Segments.................................................. 4
(c)Narrative Description of Business.............................................................. 5
Item 2: Properties................................................................................... 11
Item 3: Legal Proceedings............................................................................ 11
Item 4: Submission of Matters to a Vote of Security Holders.......................................... 11

PART II.......................................................................................................... 11
Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters.......................................................................... 11
Item 6: Selected Financial Data...................................................................... 12
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operation........................................................... 14
Item 8: Financial Statements and Supplementary Data.................................................. 21
Item 9: Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................................................................... 21

PART III......................................................................................................... 22
Item 10:Directors and Executive Officers of the Registrant.................................................. 22
Item 11:Executive Compensation.............................................................................. 25
Item 12:Security Ownership of Certain Beneficial Owners and
Management............................................................................................ 28
Item 13:Certain Relationships and Related Transactions...................................................... 30

PART IV.......................................................................................................... 33
Item 14:Exhibits, Financial Statement Schedules, and Reports
on Form 8-K........................................................................................... 33
(a)Documents filed as part of this Report......................................................... 33
(b)Reports on Form 8-K............................................................................ 33
(c)Exhibits....................................................................................... E-1
(d)Financial Statement Schedules.................................................................. S-1

PART I

Item 1: Business.

(a) General Development of Business.

Continued Expansion

Cinemark USA, Inc., a Texas corporation (the "Company"), is the fourth
largest motion picture exhibitor in North America in terms of the number of
screens in operation. The Company was organized in December 1987 to consolidate
theatre operations then controlled by its shareholders. Since its formation, the
Company has increased the number of screens it operates by approximately 369%
from 337 to 1,583 at March 27, 1997 through internal development and
acquisitions. The Company's 1,583 screens are in 180 theatres located in 29
states, Canada, Chile and Mexico, consisting of 1,195 screens in 128 "first run"
theatres and 388 screens in 52 "discount" theatres. Of the Company's 1,583
screens, 1,057 (or 65%) were built by the Company during the 1990's, and, as a
result, the Company believes it operates one of the most modern theatre circuits
in the industry. The Company's revenues have increased from $43.3 million in
1988 to $341.7 million in 1996. Of the screens operated by the Company, 1,242
were built by the Company and 341 were acquired. The Company anticipates that
most of its future growth will come primarily through the development of new
theatres and the addition of screens to existing facilities.

The Company maintains its principal executive offices at 7502 Greenville
Avenue, Suite 800, Dallas, Texas 75231. Its telephone
number at such address is (214) 696-1644.

Senior Subordinated Notes Offering and Senior Note Repurchase

On August 15, 1996, the Company issued $200 million aggregate principal
amount of 9-5/8% Series A Senior Subordinated Notes (the "Series A Notes")
pursuant to Rule 144A (the "Offering"). The net proceeds of the Offering were
used by the Company to (i) repurchase an aggregate $123,370,000 of the Company's
12% Senior Notes due 2001 (the "Senior Notes") and pay premium and consent fees
related thereto pursuant to an Offer to Purchase and Consent Solicitation to
repurchase all of the Company's $125 million principal amount of Senior Notes
and (ii) reduce the Company's indebtedness under the then existing credit
facility. The Company exchanged the Series A Notes in October 1996 for 9-5/8%
Series B Senior Subordinated Notes (the "Senior Subordinated Notes"), which
Senior Subordinated Notes have been registered under the Securities Act of 1933,
as amended.

New Credit Facility

On December 12, 1996, the Company replaced its existing credit facility
with a reducing revolving credit agreement (the "Credit Facility") through a
group of banks for which Bank of America National Trust and Savings Association
acts as administrative agent (the "Administrative Agent"). The Credit Facility
provides for loans to the Company of up to $225.0 million in the aggregate. The
Credit Facility is a reducing revolving credit facility; therefore, at the end
of each quarter during the calendar year 2000, 2001, 2002 and 2003, the
aggregate commitment shall automatically be reduced by $8,437,500, $11,250,000,
$14,062,500 and $22,500,000 respectively. The Company is required to prepay all
loans outstanding in excess of the aggregate commitment as reduced pursuant to
the terms of the Credit Facility. Borrowings under the Credit Facility are
secured by a pledge of a majority of the issued and outstanding capital stock of
the Company.

Pursuant to the terms of the Credit Facility, funds borrowed currently bear
interest at a rate per annum equal to the Offshore Rate (as defined in the
Credit Facility) or the Base Rate (as defined in the Credit Facility, as the
case may be), plus the Applicable Margin (as defined in the Credit Facility). As
of March 27, 1997, the interest rate was 6.6%.

Covenants and provisions contained in the Credit Facility restrict, with
certain exceptions, among other things, the Company's or any Restricted
Subsidiary's ability (i) to create or incur any additional liens on any assets,
(ii) to sell assets of the business in excess of $2.0 million in a single
transaction or related series of transactions, or in excess of $5.0 million in
any 12-month period, (iii) to engage in mergers, consolidations or conveyances
of all or substantially all of its assets, (iv) to make any direct or indirect
advance, loan or other extension of credit or capital contribution to other
persons or entitles, (v) to incur additional indebtedness, (vi) to enter into
certain transactions with affiliates, (vii) to invest in margin stock, (viii) to
enter into capital leases, (ix) to declare or pay dividends or make other
distributions, (x) to prepay the Senior Notes or Senior Subordinated Notes, (xi)
to engage in a material line of business substantially different from the line
of business currently conducted, (xii) to make significant changes in accounting
treatment or reporting practices or change the Company's or any consolidated
Restricted Subsidiary's fiscal year, (xiii) to restrict the ability of any
Restricted Subsidiary to make payments to the Company, or (xiv) to restrict the
ability of the Company to create or assume a lien in favor of the Bank upon its
property or

assets. The Credit Facility also requires the Company to maintain
specified financial ratios.

Events of default under the Credit Facility include, among other things:
(i) any failure of the Company to pay principal thereunder when due, or to pay
interest or any other amount due within two business days after the due date,
(ii) material inaccuracy of any representation or warranty given by the Company
in the Credit Facility, (iii) breach of certain covenants and agreements in the
Credit Facility by the Company, (iv) the continuance of a default by the Company
in the performance of or compliance with specific terms or covenants in the
Credit Facility for a period of three days or other terms or covenants in the
Credit Facility or other loan documents for twenty days after notice thereof,
(v) default by the Company or its Restricted Subsidiaries under any other
indebtedness (other than the Indenture, the Senior Subordinated Note Indenture
or Swap Contracts (as defined in the Credit Facility)) in the aggregate
principal amount of $1.0 million, (vi) a default under the Indenture or the
Senior Subordinated Note Indenture or the Senior Subordinated Note Indenture and
(vii) certain changes of control and acts of bankruptcy, insolvency or
dissolution.

Sale of 2 Day Video

On October 17, 1996, the Company entered into a Stock Purchase Agreement
(the "Purchase Agreement") pursuant to which the Company sold all of the shares
of Class A Common Stock of 2 Day Video, Inc. owned by the Company for an
aggregate purchase price of $10.1 million. The net proceeds from the sale of the
stock of 2 Day Video, Inc. were used to continue the Company's expansion program
and for general corporate purposes.

Foreign Developments

General

The motion picture exhibition business has become increasingly global, and
rising box office receipts from international markets indicate that some
international markets are poised for rapid growth. The Company believes that its
experience in developing and operating multiplex theatres provides it with a
significant advantage in developing multiplex facilities in international
markets. In 1992, the Company formed Cinemark International, Inc. (f/k/a
Cinemark II, Inc.) ("Cinemark International") to develop and acquire theatres in
international markets. All of the Company's operations outside of the United
States and Canada will be

conducted through Cinemark International, an unrestricted subsidiary under the
Company's Indenture governing the Senior Subordinated Notes, and its
subsidiaries.

Cinemark International is introducing state-of-the-art multiplex theatres
to the significantly "under-screened" Latin American markets. Currently,
Cinemark International operates thirteen first-run theatres (127 screens) in
Mexico and Chile with an aggregate of twenty-two theatres (221 screens)
scheduled to open or begin construction in these two countries as well as in
Brazil, Argentina, Peru and Ecuador during the remainder of 1997. Additionally,
Cinemark International operates two discount theatres (24 screens) in Alberta,
Canada. Due to the enormous potential of the international market, Cinemark
International is expanding beyond the Latin American market into Asia. In March
1997, Cinemark International entered into a strategic joint venture with a
Japanese motion picture company to build state-of-the-art multiplex theatres
throughout Japan and surrounding Asian markets. Cinemark International's
strategy will be to continue to form strategic partnerships or joint ventures
with local partners, thereby sharing risk and obtaining valuable market insight.

Mexico

In 1993, Cinemark Mexico (USA), Inc. ("Cinemark Mexico") was formed as an
indirect subsidiary of the Company to pursue new development opportunities in
Mexico through its wholly owned subsidiary, Cinemark de Mexico, S.A. de C.V.
("Cinemark de Mexico"). As of March 27, 1997, Cinemark International and New
Wave Investments AVV, an unaffiliated Aruba corporation owned by Mexican
citizens ("New Wave"), own 95.6% (95.0% on a fully diluted basis, including the
exercise of outstanding warrants) and 4.4% (4.4% on a fully diluted basis,
including the exercise of outstanding warrants), respectively, of the common
stock of Cinemark Mexico. As of March 27, 1997, warrants to purchase 22,222
shares of common stock of Cinemark Mexico are issued and outstanding.

Cinemark International, through its subsidiary Cinemark Mexico, is
developing state-of-the-art multiplex theatres. Cinemark Mexico's operations are
conducted through its subsidiary Cinemark de Mexico. Cinemark Mexico currently
operates eleven theatres (114 screens), with three theatres (35 screens) under
commitment with executed leases.

In September 1996, Cinemark Mexico completed an Exchange Offer and Consent
Solicitation (the "Exchange Offer") to restructure the outstanding Cinemark
Mexico Notes (as hereinafter defined) and to

issue New Mexico Notes (as hereinafter defined) in exchange for outstanding
warrants to purchase common stock of Cinemark Mexico. In connection with the
Exchange Offer, Cinemark International also amended certain terms of the Mexico
Senior Credit Facility. See "Management's Discussion and Analysis of Financial
Conditions and Results of Operation--Liquidity and Capital Resources."

Chile

In November of 1992, Cinemark International entered into a joint venture
agreement with Conate, S.A., a Chilean movie theatre operator ("Conate"), to
develop state-of-the-art multiplex theatres in Chile. The joint venture provides
for the development of multiplex theatres and provides for the licensing of the
Company's technology, trademark and name. The joint venture conducts its
business through Cinemark Chile, which is 50% owned by Inversiones Cinemark,
S.A., a subsidiary of Cinemark International, and 50% owned by Conate. Cinemark
Chile, which is based in Santiago, Chile, currently operates two theatres (13
screens) and plans to begin construction on three theatres (32 screens) during
the remainder of 1997.

Canada

Cinemark International, through its wholly owned subsidiary Cinemark
Holdings Canada, Inc., owns a 50% interest in Cinemark Theatres Alberta, Inc.
("Cinemark Alberta") which currently operates two discount theatres (24 screens)
managed by the Company pursuant to a management agreement.

Argentina

In December 1995, Cinemark International entered into a joint venture
agreement with D'Alimenti S.A., an Argentinean corporation ("DASA"), and
Prodecine S.A., an Argentinean corporation ("Procine"), to develop
state-of-the-art multiplex theatres in Argentina. The joint venture agreement
also provides for the licensing of the Company's technology, trademark and name.
The joint venture's business is conducted through Cinemark Argentina, S.A.,
which is 50% owned by Cinemark Argentina Holdings, S.A. The remaining 50% is
owned equally by DASA and Procine. Cinemark International and Conate each own
50% of Cinemark Argentina Holdings, S.A. Cinemark Argentina plans to open its
first theatre (8 screens) in April 1997 and begin construction on three theatres
(27 screens) during 1997.

Brazil

In 1996, Cinemark Brazil was organized as an indirect subsidiary of
Cinemark International. Cinemark Brazil will develop state-of- the-art multiplex
theatres comparable to theatres developed by the Company in the U.S. Cinemark
Brazil expects to open its first theatre (12 screens) in May 1997. Additionally,
Cinemark Brazil expects to begin construction on six theatres (64 screens)
during 1997.

Peru

In December 1996, Cinemark International and Conate entered into a joint
venture agreement to develop state-of the-art multiplex theatres in Peru. The
joint venture provides for the licensing of the Company's technology, trademark
and name. The joint venture conducts its business through Cinemark del Peru,
S.A., which is 50% owned by Cinemark International and 50% owned by Conate.
Cinemark del Peru, S.A. expects to open one theatre (12 screens) during 1997.

Ecuador

In September 1996, Cinemark International entered into a joint venture
agreement with The Wright Group, a group of prominent Ecuadorian individuals and
companies, to develop state-of-the-art multiplex theatres in Ecuador. The joint
venture agreement provides for the licensing of the Company's technology,
trademark and name. The joint venture conducts its business through Cinemark del
Ecuador, S.A. ("Cinemark Ecuador") which is 60% owned by Cinemark International
and 40% owned by The Wright Group. Cinemark Ecuador expects to open two theatres
(16 screens) during 1997.

Japan

In March 1997, Cinemark International entered into a joint venture
agreement with Shochiku Co., Ltd., a Japanese distributor, exhibitor and
producer of movies ("Shochiku") to develop state-of- the-art multiplex theatres
in Japan. The joint venture will conduct its business through Shochiku Cinemark
Theatres, which is 26.7% owned by Cinemark International, 26.7% owned by
Shochiku, and the remaining 46.6% owned by a consortium of prominent Japanese
companies. Shochiku Cinemark Theatres plans to open its first theatre (7
screens) in March 1997 and plans to begin construction on an additional theatre
(12 screens) during 1997.

(b) Financial Information About Industry Segments.

The Company is a unitary business as described above and as a result does
not break out its business into industry segments.

General

The Company

The Company is the fourth largest motion picture exhibitor in North America
in terms of the number of screens in operation. At March 27, 1997, the Company
operated 1,583 screens in 180 theatres located in 29 states, Canada, Chile and
Mexico, consisting of 1,195 screens in 128 first run theatres and 388 screens in
52 "discount" theatres. Of the Company's 1,583 screens, 1,057 (or 65%) were
built by the Company during the 1990's, and, as a result, the Company believes
it operates one of the most modern theatre circuits in the industry. All of the
Company's theatres are multiplex facilities with approximately 92% of the
Company's screens located in theatres of six or more screens. The Company
believes that its ratio of screens to theatres (8.8 to 1 at March 27, 1997) is
the highest of the five largest theatre circuits in the U.S. and is
approximately 75% higher than the industry average (approximately 5 to 1). From
its fiscal year ended December 31, 1991 through the fiscal year ended December
31, 1996, the Company has increased consolidated revenues approximately 108%
from $164.4 million to $341.7 million and has increased EBITDA approximately
134.2% from $26.0 million to $60.9 million.

The Company is an industry leader in new theatre construction and operation
and, according to industry sources, has constructed more screens than any other
exhibitor during the 1990s. The Company believes that the attractiveness,
comfort and viewing experience provided by its modern facilities result in the
Company's theatres more often being the preferred destination for moviegoers in
its markets.

The Company is actively participating in the ongoing trend toward the
development of larger multiplexes, commonly referred to as "the rescreening of
America." The Company's management experience and financial flexibility permit
it to introduce larger multiplex theatre facilities into areas previously served
by smaller theatres, thereby capturing moviegoers who seek more attractive
surroundings, wider variety of films, better customer service, shorter lines,
more convenient parking and a greater choice of seating to view popular movies.
The Company's larger multiplex

facilities increase per screen revenues and operating margins and enhance its
operating efficiencies. Such theatres enable the Company to present films
appealing to several segments of the movie going public while serving patrons
from common support facilities (such as box office, concession areas, rest rooms
and lobby). In addition, larger multiplex facilities provide the Company with
greater flexibility in staffing, movie scheduling and equipment utilization
while reducing congestion throughout the theatre. Larger multiplex facilities
also provide increased flexibility in determining the length of time that a film
will run. The Company can lengthen the run of a film by switching it to a
smaller auditorium after peak demand has subsided and has the potential to
generate higher profits as film license agreements typically provide for a lower
film rent to be paid later in a film's run.

Revenues for the Company are generated primarily from box office admissions
and theatre concession sales, which accounted for 62% and 34%, respectively, of
fiscal 1996 revenues. The balances of the Company's revenues consist of revenue
collected from video games located in the lobbies of the theatres and on-screen
advertising.

Business Strategy

The Company intends to continue to grow through new theatre development by
applying the same techniques it has implemented since it was founded. The
Company believes that it is unique among major theatre exhibitors in the
development and execution of the following four-part business strategy:

Continue to build in underserved mid-sized markets. The Company intends to
continue to build first run theatres in undeserved mid-sized markets and suburbs
of major metropolitan areas with populations of 50,000 to 200,000 where the
Company frequently will be the sole or leading exhibitor in terms of first run
screens operated. The Company believes it gains maximum access to film product,
and thereby realizes a competitive advantage, by locating its modern multiplex
theatres in new and existing film zones where little or no competition for film
product exists.

Capitalize on popularity of "megaplex" concept. The Company intends to
continue focusing on multiplex theatres which enable maximum utilization of
theatre facilities and enhance operating efficiencies, thereby maximizing profit
per square foot. The Company believes a well-designed and operated theatre
represents a natural setting for more than a movie exhibition site, but rather a
family entertainment complex. The Company intends to expand its construction of
larger "megaplex" entertainment centers in major

metropolitan areas. In December 1992, the Company opened its first megaplex,
Hollywood USA , a 15-screen, 52,000 square-foot complex containing a large video
arcade and a pizzeria. The Company subsequently opened two additional megaplexes
styled after the original Hollywood USA . Based upon the success of these
complexes, which consistently rank among the Company's top grossing facilities
on a per screen basis, the Company expanded the megaplex concept. In the last
twelve months, the Company has developed eight megaplexes, each exceeding 80,000
square feet and featuring 16 or more screens with 75 foot screens in the largest
auditoriums, stadium seating, digital sound, a pizzeria, a coffee bar and a
large video arcade room.

Continue to expand discount theatre niche. The Company intends to continue
to build discount theatres (admission of $1 to $2 per ticket) primarily in major
metropolitan markets to serve patrons who miss a film during its first run
exhibition or who may not be able to afford to attend first run theatres on a
frequent basis. The Company believes that its discount theatres allow it to
serve these segments of the total moviegoing population, increasing the number
of potential customers beyond traditional first run moviegoers. The Company
develops its multiplex discount theatres with many of the same amenities as its
first run theatres, including wall-to-wall screens, comfortable seating with
cupholder armrests, digital sound, multiple concession stands and a video game
room. The Company's discount theatres generally have higher attendance, lower
film costs and a greater proportion of concession revenues than its first run
theatres. As of March 27, 1997, approximately 24% of the Company's screens were
discount screens.

Develop modern American-style theatres in underserved international
markets. The Company intends to continue to develop multiplex theatres directly
or through joint venture arrangements with local partners in underserved
international markets. The Company's activities to date in international markets
have been directed toward Latin America, which the Company believes is severely
underscreened and is still typically served by one- and two-screen theatres
which are often antiquated and/or run-down. In March 1997, the Company expanded
its international focus with Cinemark International entering into a joint
venture agreement with a prominent Japanese motion picture company to develop
and operate multiplex theatres in Japan and surrounding Asian markets. The
Company believes that the same economic factors giving rise to the multiplex
rescreening trend in the U.S. are similarly applicable to international markets.
The Company believes that it was the first U.S. circuit to open American-style
modern multiplex theatres in Chile and Mexico, and currently has theatres under
construction in Brazil, Argentina, Ecuador and Peru.

Operations

The Company's corporate office, which employed approximately 160
individuals as of March 27, 1997, is responsible for theatre development and
site selection, lease negotiation, theatre design and construction, film
licensing and settlements, concession vendor negotiations and financial and
accounting activities. The Company's theatre operations are divided into six
geographic divisions, each of which is headed by a regional leader. The
Company's regional leaders have an average of over 10 years experience in the
movie theatre industry and each is responsible for supervising approximately 15%
of the Company's theatre managers. Theatre managers are responsible for the
day-to-day operations of the Company's theatres including optimizing staffing,
developing innovative theatre promotions, preparing movie schedules, purchasing
concession inventory, maintaining a clean and functioning facility and training
theatre staff.

To maintain quality and consistency within the Company's theatres, the
Company conducts regular inspections of each theatre and operates a program
which involves unannounced visits by unidentified customers who report on the
quality of service, film presentation and cleanliness of the theatre.

Theatre Development

The Company continually evaluates existing and new markets for potential
theatre locations. The Company generally seeks to develop theatres in markets
that are underscreened as a result of changing demographic trends or that are
served by aging theatre facilities. Some of the factors the Company considers in
determining whether to develop a theatre in a particular location are the
market's population and average household income, the proximity to retail
corridors, convenient roadway access, the proximity to competing theatres and
the effect on the Company's existing theatres in the market, if any.

The Company designs its multiplex theatres with bright colors, neon, tile
and marble and state-of-the-art technology, to create a festive and memorable
experience for the customer. The Company has designed several prototype
theatres, each of which can be adapted to suit the size requirements of a
particular location and the availability of parking, and to respond to
competitive factors or specific area demographics. The Company believes the
fully designed prototypes result in significant construction and operating cost
savings. More importantly, the Company believes that construction and operation
of high quality theatres provides significant competitive advantages as theatre
patrons, and therefore film

distributors, seek clean, conveniently located, modern facilities with
state-of-the-art equipment.

The Company's theatres typically contain auditoriums consisting of 100 to
400 seats each and feature wall-to-wall screens, high back rocking chairs with
cupholder armrests, digital sound, multiple concession stands and video game
rooms. The Company's megaplex facilities typically will exceed 80,000 square
feet, feature 16 or more screens with 75 foot screens in the largest
auditoriums, stadium seating, digital sound, a pizzeria, a coffee bar and a
large video arcade room. The Company believes that, in particular, stadium style
auditoriums with digital sound provide an entertainment experience which is
superior to that available at a conventional theatre. Jurassic Park, released in
the summer of 1993, was the first major motion picture to utilize digital sound.
The Company estimates that at least a majority of the films produced in 1997
will have digital soundtracks available as an alternative to the standard stereo
soundtrack. More than 65% of the Company's first run theatres have one or more
auditoriums with digital sound capabilities, and the Company is continuing to
add digital sound capabilities.

Film Licensing

Films are typically licensed from film distributors owned by major film
production companies and from independent film distributors that distribute
films for smaller production companies. For first run films, film distributors
typically establish geographic zones and offer each available film to all
theatres in a zone. The size of a film zone is generally determined by the
population density, demographics and box office potential of a particular market
or region, and can range from a radius of three to five miles in major
metropolitan and suburban areas to up to 15 miles in small towns. The Company
currently operates theatres in approximately 102 first run film zones. Each
film, regardless of the distributor, is generally licensed to only one theatre
in each zone. New film releases are licensed at the discretion of the film
distributors on an allocation or previewed bid basis. In film zones where the
Company has little or no competition, the Company selects those pictures it
believes will be most successful. In film zones where the Company faces
competition, the Company usually licenses films on an allocation basis. Under an
allocation process, a particular distributor will rotate films among exhibitors,
typically providing movies to competing exhibitors solely based on the order of
their release. For second run films, film distributors establish availability on
a market-by-market basis after the completion of exhibition at first run
theatres, and permit each

theatre within a market to exhibit such films without regard to film zones.

The Company licenses films through its booking office located at the
Company's corporate headquarters in Dallas, Texas. All of the major motion
picture studios and distributors also maintain offices in Dallas. The Company's
film bookers have significant experience in the theatre industry and have
developed long-standing relationships with the film distributors. Each film
booker is responsible for a geographic region and maintains relationships with
representatives of each of the major motion picture studios and distributors
having responsibility for their respective geographic regions. The Company
licenses films from all of the major distributors and is not dependent on any
one studio for motion picture product.

Prior to negotiating for a film license, the Company's booking personnel
evaluate the prospects for the film. The criteria considered for each film
include cast, director, plot, performance of similar films, estimated film
rental costs, expected MPAA rating and the outlook for other upcoming films.
Successful licensing depends upon knowledge of the tastes of local residents.

A film license typically specifies a rental fee to be paid to the
distributor based on the higher result of either a gross receipts formula or a
theatre admissions revenue sharing formula. Under a gross receipts formula, the
distributor receives a specified percentage of box office receipts, with the
percentage generally declining over the term of the run. First run film rental
percentages usually begin at 70% of box office receipts and gradually decline to
as low as 30% over a period of four to seven weeks. Second run film rental
percentages typically begin at 35% of box office receipts and often decline to
30% after the first week. Under the theatre admissions revenue sharing formula
(commonly known as the "90/10" clause), the distributor receives a specified
percentage (i.e., 90%) of the excess of box office receipts over a negotiated
reimbursement for theatre expenses. In general, most distributors follow an
industry practice of adjusting or renegotiating the terms of a film license
subsequent to exhibition based upon the film's success.

Competition

The Company's theatres compete against both local and national exhibitors.
In film zones where the Company has little or no direct competition
(approximately 75% of the Company's theatres), the Company selects those
pictures it believes will be most successful in its markets from among those
offered to it by distributors.

Where the Company faces competition, it usually licenses films based on an
allocation process. The Company currently operates in approximately 102 first
run film zones in the U.S. The Company believes that no individual film zone is
material to the Company. The Company believes that the principal competitive
factors with respect to film licensing include capacity and location of an
exhibitor's theatre, theatre comfort, quality of projection and sound equipment,
level of customer service and licensing terms. The competition for customers is
dependent upon factors such as the availability of popular films, the location
of theatres, the comfort and quality of theatres and ticket prices. The Company
believes its admission prices at its first run and discount theatres are
competitive with admission prices of respective competing theatres.

The Company's theatres face competition from a number of other motion
picture exhibition delivery systems, such as network, syndicated and pay
television, pay-per-view and home video systems. The impact of such delivery
systems on the motion picture exhibition industry is difficult to determine, and
there can be no assurance that existing or future alternative delivery systems
will not have an adverse impact on attendance. The Company's theatres also face
competition from other forms of entertainment competing for the public's leisure
time and disposable income.

Employees

As of March 27, 1997, the Company had approximately 6,500 employees in the
U.S., approximately 20% of whom are full time employees and 80% of whom are part
time employees. The Company is a party to collective bargaining agreements with
five unions of which approximately ten full-time employees are members. The
Company considers its relations with its employees to be satisfactory.

Regulation

The Company is subject to various general regulations applicable to its
operations, including the Americans with Disabilities Act (the "ADA"). The
Company has established a program to review and evaluate the Company's existing
theatres and its specifications for new theatres and to make any changes to such
theatres and specifications required by the ADA. The Company develops new
theatres to be accessible to the disabled and believes that it is otherwise in
substantial compliance when readily achievable with current regulations relating
to accommodating the disabled. Management believes that the cost of complying
with the ADA will not be material.

MAP

Item 2: Properties.

Of the 1,432 screens operated by the Company in the U.S. at March 27, 1997,
27 theatres (322 screens) were owned, 132 theatres (1,042 screens) were leased
pursuant to building leases, 2 theatres (14 screens) were leased pursuant to
ground leases and 4 theatres (54 screens) were managed. The Company's leases are
generally entered into on a long term basis with terms (including options)
generally ranging from 20 to 40 years. Approximately 33 of the Company's theatre
leases (covering 164 screens) have remaining terms (including renewal periods)
of less than 5 years and approximately 38 of the Company's theatre leases
(covering 386 screens) have remaining terms (including renewal periods) more
than 15 years. Rent is typically calculated as a percentage of box office
receipts or total theatre revenues, subject to an annual minimum. The Company
leases office space in Dallas, Texas for its corporate office which expires on
June 30, 1998. See note 9 of the Company's Notes to the Consolidated Financial
Statements for information with respect to the Company's lease commitments.

As of March 27, 1997, the Company operated 15 theatres (151 screens)
outside of the U.S. with 11 theatres (120 screens) under commitment with
executed leases. Of the 15 theatres operated outside of the U.S., 14 theatres
(139 screens) were leased pursuant to ground or building leases and one theatre
(12 screens) was fee owned. The leases generally provide for contingent rental
based upon operating results (subject to an annual minimum). Generally, these
leases will include renewal options for various periods at stipulated rates. The
Company attempts to obtain lease terms that provide for build-to-suit
construction obligations of the landlord.

Item 3: Legal Proceedings.

Tinseltown Litigation

Effective April 19, 1996, the Company entered into a Settlement Agreement
and Release ending litigation that the Company filed against the City of Dallas
for rejecting the development plan of a proposed theatre. The City of Dallas
paid the Company $5 million in monetary damages, and the Company agreed to
dismiss all claims against the defendants. An Agreed Final Order of the District
Court was issued on April 23, 1996, dismissing the litigation with prejudice.

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 and contractual disputes. The Company believes
that its potential

liability with respect to proceedings currently pending is not material in the
aggregate to the Company's consolidated financial position or results of
operations.

Item 4: Submission of Matters to a Vote of Security Holders.

There have not been any matters submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this report through the
solicitation of proxies or otherwise.

PART II

Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters.

There is no established public trading market for the Company's Common
Stock. As of March 27, 1997, there were 27 holders of record of the Company's
Common Stock. The Company has not paid dividends on its Common Stock and does
not expect to pay dividends on its Common Stock in the foreseeable future. The
Subordinated Notes Indenture and the Credit Facility contain restrictions on the
Company's ability to pay dividends on its Common Stock.

Item 6: Selected Financial Data.

The following tables set forth selected consolidated financial data for the
Company for the periods and at the dates indicated for each of the five most
recent fiscal years ended December 31, 1996. This information should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Company's Consolidated Financial Statements,
including the notes thereto, included elsewhere in this report.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following tables set forth selected consolidated financial data for the
Company for the periods and at the dates indicated for each of the five most
recent fiscal years ended December 31, 1996.

Year Ended December 31,

1992 1993 1994 1995 1996
(In thousands, except theatres, screen and ratio data)

Income Statement Data (Consolidated):
Revenues $194,652 $239,659 $283,077 $298,559 $341,731
Theatre operating costs 154,825 185,100 218,748 227,719 262,138
General and administrative expenses 10,119 12,162 17,095 19,555 23,486
Depreciation and amortization 9,830 10,939 15,121 15,925 21,799
Operating income 19,878 31,458 32,113 35,361 34,308
Interest expense(1) 12,258 17,102 18,917 19,374 20,376
Income before extraordinary items 5,726 9,720 7,006 13,155 14,616
Net income 5,829 9,720 7,006 13,155 5,230
Earnings per share:
Before extraordinary items 31.93 60.15 43.21 80.32 79.93
Net income 32.51 60.15 43.21 80.32 28.60
Shares outstanding 179 162 162 164 183

Other Financial Data (Consolidated):
Cash flow from (used for)
Operations $23,376 $27,181 $32,665 $36,090 $58,754
Investing activities (35,432) (35,560) (62,876) (80,268) (177,423)
Financing activities 35,509 25,051 13,273 32,031 119,690
Theatre level cash flow(2) 39,827 54,559 64,329 70,840 79,593
EBITDA(3) 32,117 45,508 50,851 55,708 60,902
Ratio of earnings to fixed charges(4) 1.43x 1.61x 1.46x 1.69x 1.65x
Operating Data:
United States (Restricted Group)
Theatres owned (at period end)(5) 147 153 154 150 158
Screens owned (at period end)(5) 1,010 1,084 1,121 1,155 1,339
Total attendance 51,087 59,632 63,401 61,006 63,774
Outside United States (Unrestricted Group)
Theatres owned (at period end)(6) -- -- 4 9 11
Screens owned (at period end)(6) -- -- 42 92 114
Total attendance -- -- 1,407 4,210 8,675
Balance Sheet Data (Consolidated):
Cash and temporary cash investments $29,368 $44,454 $31,056 $13,925 $14,383
Theatre properties and equipment-net 93,952 117,017 155,798 224,482 377,421
Total assets 147,661 189,361 217,185 267,747 432,905
Total long-term debt, including
current portion 130,662 152,787 167,374 198,145 297,206
Shareholders' equity (deficiency) (11,094) (760) 2,732 11,345 57,363
<FN>
- -------------------
</FN>

(1) Includes amortization of debt issue cost and debt discount and excludes
capitalized interest of $0.6 million, $1.7 million and $3.9 million in
1994, 1995 and 1996, respectively.

(2) Revenues less theatre operating costs (which is not a measure
of financial performance under generally accepted accounting
principles) ("GAAP"). Theatre level cash flow is a financial
measure commonly used in the Company's industry and should not
be construed as an alternative to cash flow from operations
(as determined in accordance with GAAP) as an indicator of
operating performance or as a measure of liquidity.

(3) Represents net income before depreciation and amortization,
interest expense, changes in deferred lease expense, accrued
and unpaid compensation expense relating to any stock
appreciation and stock option plans, equity in income (loss)
of affiliates, gain (loss) of affiliates, gain (loss) on sale
of assets, minority interests, provision for income taxes and
extraordinary items. EBITDA is a financial measure commonly
used in the Company's industry and should not be construed as
an alternative to cash flows from operating activities (as
determined in accordance with GAAP), as an indicator of
operating performance or as a measure of liquidity.

(4) For the purpose of calculating the ratio of earnings to fixed
charges, (i) earnings consist of income (loss) before income
taxes and extraordinary items plus fixed charges excluding
capitalized interest and (ii) fixed charges consist of
interest expense, capitalized interest, amortization of debt
issue and debt discount and the portion of rental expense
which is deemed to be representative of the interest factor.

(5) The data as of period end 1992, 1993, 1994, 1995 and 1996 exclude two
theatres (23 screens), two theatres (23 screens), three theatres (33
screens), four theatres (54 screens), and four theatres (54 screens),
respectively, operated by the Company pursuant to management
agreements.

(6) The data as of period end 1993, 1994, 1995 and 1996 exclude two
theatres (18 screens), two theatres (18 screens), three theatres (25
screens) and four theatres (37 screens), respectively, operated through
affiliates of the Company in Canada and Chile.

Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Overview

The following is an analysis of the financial condition and results of
operations of the Company. This analysis should be read in conjunction with the
Company's Consolidated Financial Statements, including the notes thereto,
appearing elsewhere in this report.

The Company's revenues are generated primarily from box office receipts
and concession sales. The Company's revenues are affected by changes in
attendance and average admission and concession revenues per patron. Attendance
is primarily affected by the commercial appeal of the films released during the
period or year reported. Since the Company's formation, attendance has grown
principally from the development and acquisition of theatres. The Company has
generally experienced increases in average admission and concession revenues per
patron from ticket and concession price increases as well as the development of
theatres in markets that can support higher ticket and concession prices.
Additional revenues related to theatre operations are generated by electronic
video games installed in video arcades located in some of the Company's
theatres.

Film rentals, concession supplies and salaries and wages vary directly
with changes in revenues. These expenses have historically represented
approximately 65% of all theatre operating expenses and approximately 50% of
revenues. Film rental costs are based on a percentage of admissions revenues as
determined by film license agreements. The Company purchases concession supplies
to replace units sold. Although salaries and wages include a fixed component of
cost (i.e., the minimum staffing cost to operate a theatre facility during
non-peak periods), salaries and wages move in relation to revenues as theatre
staffing is adjusted to handle attendance volume.

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

proportion of fee owned properties in the future should result in a decrease in
facility lease expense as a percentage of revenues and an increase in the level
of depreciation expense.

Additionally, advertising cost is primarily fixed at the theatre level as
daily movie directories placed in newspapers represent the largest component of
advertising costs. The monthly cost of these ads is based on the size of the
directory. However, advertising costs have remained relatively constant when
expressed as a percentage of revenues as screen growth results in the addition
of new or larger directory ads.

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

The results of operations of acquired theatres are included in the Company's
Consolidated Financial Statements from their date of acquisition. Fiscal years
ended December 31, 1994, 1995 and 1996 are not directly comparable due to the
effects of new theatre openings, acquired theatres and the impact of the debt
service associated with certain financings undertaken. Theatre closings have had
no significant effect on the operations of the Company. See notes 1 and 3 of the
Company's Notes to the Consolidated Financial Statements.

Results of Operations

Set forth below is a summary of operating revenues and expenses, certain
income statement items expressed as a percentage of revenues, average screen
count and revenues per average screen count for the three most recent fiscal
years in the period ended December 31, 1996.

Year Ended December 31,
------------------------------------------
1994 1995 1996
---- ---- ----
Operating Data (In millions)

Revenues
Admissions $ 174.5 $ 183.1 $ 211.6
Concessions 95.2 102.1 116.9
Other 13.4 13.4 13.2
---- ---- ----
Total revenues $ 283.1 $ 298.6 $ 341.7
======= ======= =======
Cost of operations
Film rentals $84.0 $89.0 $104.1
Concession supplies 17.5 17.3 18.4
Salaries and wages 39.5 40.6 46.9
Facility leases 29.6 30.9 34.4
Advertising 7.2 7.6 8.5
Utilities and other 40.9 42.3 49.8
---- ---- ----
Total cost of operations $218.7 $227.7 $262.1
====== ====== ======
Operating data as a percentage of total revenues(1):
Revenues
Admissions 61.6% 61.3% 61.9%
Concessions 33.6 34.2 34.2
Other 4.8 4.5 3.9
--- --- ---
Total revenues 100.0 100.0 100.0
Cost of operations
Film rentals(1) 48.1 48.6 49.2
Concession supplies(1) 18.4 16.9 15.8
Salaries and wages 14.0 13.6 13.7
Facility leases 10.5 10.3 10.1
Advertising 2.5 2.5 2.5
Utilities and other 14.4 14.2 14.6
Total cost of operations 77.3 76.3 76.7
General and administrative expenses 6.0 6.6 6.9
Depreciation and amortization 5.3 5.3 6.4
Operating income 11.4 11.8 10.0
Interest expense 6.7 6.4 6.0
Income before income taxes and extraordinary items 5.0 7.8 7.9
Net income 2.5 4.4 1.5

Average screen count (month end
average) 1,131 1,195 1,322
===== ===== =====
Revenues per average screen count $250,289 $249,840 $258,495
======== ======== ========
<FN>

(1) All costs are expressed as a percentage of total revenues, except film
rentals, which are expressed as a percentage of admissions revenues, and
concession supplies, which are expressed as a percentage of concessions
revenues.
</FN>

Comparison of Years Ended December 31, 1996 and December 31, 1995

Revenues. Revenues in 1996 increased to $341.7 million from $298.6 million,
a 14.5% increase. The increase in revenues is primarily attributable to a 11.1%
increase in attendance resulting from strong industry performance, the first
full year of operations of 130 screens opened in 1995 and the net addition of
206 screens since 1995. The contribution from the new screens opened in 1996 is
not fully reflected in the Company's operations as a majority of the new screens
were not opened until late 1996. Revenues were also positively affected by an
increase in admission and concession revenues per patron of 6.2%. The strong
industry performance and new screen openings contributed to an increase of 3.5%
in the revenues per average screen to $258,495 for 1996 from $249,840 for 1995.

Cost of Operations. Cost of operations, as a percentage of revenue,
increased slightly to 76.7% in 1996 from 76.3% in 1995. The increase as
percentage of revenues resulted from increases during the period in film rentals
as a percentage of admission revenues to 49.2% in 1996 from 48.6% in 1995 and an
increase in utilities and other as a percentage of revenues to 14.6% in 1996
from 14.2% in 1995. This increase was partially offset by a decrease in
concession supplies as a percentage of concession revenues to 15.8% in 1996 from
16.9% in 1995.

General and Administrative Expenses. General and administrative expenses,
as a percentage of revenues, increased to 6.9% in 1996 from 6.6% in 1995.
General and administrative expenses in absolute terms increased to $23.5 million
in 1996 from $19.6 million in 1995. The increase as a percentage of revenues and
in absolute terms is primarily the result of a $1.8 million special bonus
payment paid to key employees during the second quarter of 1996 to provide for
the estimated taxes due on the exercise of non-qualified stock options and
increases in salaries and wages, travel, and miscellaneous expenses associated
with the Company's international expansion.

Depreciation and Amortization. Depreciation and amortization
increased $5.9 million in 1996 to $21.8 million. in 1995. The
increase includes a $2.4 million charge pursuant to Statement of
Financial Accounting Standards No. 121 (FASB 121). In accordance
with FASB 121, the Company wrote down the assets of certain
theatres to their realizable value which exceeded their carrying
value. Depreciation and amortization before the affect of FASB 121

increased $3.5 million for 1996. The increase is a result of the net addition of
$163.3 million in theatre property and equipment during 1996, a 56.8% increase
over 1995. The difference in the percentage increase in depreciation and
amortization compared to the increase in theatre property and equipment is a
result of the timing of when the additions were placed in service during the
period.

Interest Expense. Interest costs incurred, including amortization of debt
issue cost and debt discount, increased 15.1% to $24.3 million (including the
capitalization of $3.9 million of interest to properties under construction)
from $21.1 million in 1995 (including capitalized interest of $1.7 million) .
The increase in interest costs incurred during 1996 was due principally to an
increase in average debt outstanding resulting from borrowings under the Credit
Facility and the Senior Subordinated Indenture.

Income Taxes. Income taxes increased to $12.3 million in 1996 compared to
$10.1 million in 1995, a 22.2% increase, resulting primarily from the increase
in income before taxes and permanent differences associated with the sale of
certain assets. The Company's effective rate for 1996 increased to 45.8% from
43.4% in 1995. The effective tax rates reflect the full reserve of the potential
tax benefit associated with the loss incurred by Cinemark Mexico.

Other Gains and Losses. Other gains and losses for 1996 of $11.1 million is
primarily attributable to a gain from the settlement of litigation and the sale
of 2 Day Video, Inc., an 82% subsidiary of the Company.

Extraordinary Items. In the third quarter of 1996, the Company issued $200
million aggregate principle of 9-5/8% Senior Subordinated Notes, a portion of
the proceeds of $193.2 million (net of discount, fees and expenses) were used to
repurchase 98.7% of the Company's $125 million 12% Senior Notes at a price of
$1,098.33 per $1,000 principal amount. As a result, an extraordinary loss of
$9.0 million (net of related tax benefit) was recognized in connection with the
premium paid and the write-off of the unamortized debt issue costs associated
with the Senior Notes repurchased. The remaining loss is attributable to the
refinancing of the Company's bank line of credit during 1996.

Net Income. Net income before extraordinary items of $14.6 million for 1996
and net income of $13.2 million for 1995 included the consolidated losses of
Cinemark Mexico of $2.6 million (net of minority interest) and $2.7 million (net
of minority interest), respectively.

Comparison of Years Ended December 31, 1995 and December 31, 1994

Revenues. Revenues in 1995 increased to $298.6 million from $283.1 million
in 1994, a 5.5% increase. The increase is primarily attributable to a combined
increase of 5.1% in admission and concession revenues per patron. Attendance
remained constant despite the addition of 130 screens. The contribution from
these new screens is not fully reflected in the Company's operations, as a
majority of the new screens were not opened until late 1995. The contribution to
revenues from admission and concession price increases was partially offset by a
decrease in per patron revenues in Mexico as a result of the devaluation of the
Mexican peso that began in late December 1994. Revenues per average screen
remained constant at approximately $250,000 per screen despite average admission
and concession price increases and improved revenues per screen from new U.S.
screen openings as revenues per screen for the 92 screens the Company operated
in Mexico declined significantly as a result of the Mexican peso devaluation.

Cost of Operations. Cost of operations, as a percentage of revenues,
decreased to 76.3% in 1995 from 77.3% in 1994. The decrease resulted primarily
from a decrease in concession costs as a percentage of concession revenue to
16.9% in 1995 from 18.4% in 1994 associated with an increase in concession
pricing which was partially offset by an increase in film rental expense as a
percentage of admission revenues to 48.6% in 1995 from 48.1% in 1994. Other
operating costs as a percentage of revenues remained relatively constant between
the two periods.

General and Administrative Expenses. General and administrative expenses,
as a percentage of revenues, increased to 6.6% in 1995 from 6% in 1994. General
and administrative expenses increased to $19.6 million in 1995 from $17.1
million in 1994, primarily from increases in salaries and wages, travel, and
miscellaneous expenses associated with the Company's domestic and international
expansion and increased amortized compensation expense resulting from the grant
of stock options at less than fair market value.

Depreciation and Amortization. Depreciation and amortization increased 5.3%
in 1995 to $15.9 million from $15.1 million in 1994. The increase is a result of
the net addition of $79.5 million in theatre property and equipment during 1995,
a 38.2% increase over 1994. Depreciation and amortization expense did not
increase in direct proportion with the increase in theatre property and
equipment as $43.7 million of the additions were either placed in service in
late 1995 or will be placed in service in 1996.

Interest Expense. Interest costs incurred, including amortization of debt
issue cost and debt discount, increased 2.4% during 1995 to $21.1 million
(including the capitalization of $1.7 million of interest to fee properties
under construction) from $19.5 million of interest costs in 1994 (including $.6
million of capitalized interest). The increase in interest costs incurred for
1995 was due principally to an increase in average debt outstanding resulting
from borrowings under the Company's bank line of credit.

Other Gains and Losses. In 1995, the Company recorded a gain on the sale of
10 theatre properties (46 screens) of $5.5 million and losses of $.6 million
relating to the disposition of an interest in Funtime Pizza International, L.C.
and the write-off of costs, principally professional fees, relating to merger
negotiations with another theatre circuit which were terminated in May 1995.

Income Taxes. Income taxes increased to $10.1 million in 1995 compared to
$7.1 million in 1994, a 42.9% increase, resulting from the increase in income
before taxes. The Company's effective tax rate for 1995 was 43.4% compared to
50.2% for 1994. The decrease in the effective tax rate was primarily a result of
reduction in the relative level of goodwill and foreign losses as a result of
the increase in total earnings. The effective tax rates reflect the full reserve
of the potential tax benefit associated with the loss incurred by Cinemark
Mexico.

Net Income. Net income of $13.2 million in 1995 and $7.0 million in 1994
included the consolidated losses of Cinemark Mexico of $2.7 million (net of
minority interest) and $2.5 million (net of minority interest), respectively.

Inflation and Foreign Currency

The Mexican currency has experienced a significant devaluation since
December 1994. Cinemark Mexico's debt and certain of Cinemark Mexico's theatre
lease rents are denominated in U.S. dollars while its revenues are denominated
in Mexican pesos. As a result of the devaluation, certain costs of Cinemark
Mexico have almost doubled in relation to Cinemark Mexico's revenues.
Additionally, the majority of the equipment and interior finish material of
Cinemark Mexico's theatres have been imported from the U.S. As a result of the
devaluation, Cinemark Mexico has recognized a $11.1 million cumulative
unrealized currency translation loss adjustment in shareholders' equity as of
December 31, 1996. The devaluation has significantly and adversely affected the
Mexican economy and will impact the short term profitability of Cinemark
Mexico's theatres. Additionally, there is a reduced level of available capital
in the Mexican financial markets due to a significant rise in Mexican interest
rates. This in turn has resulted in the reduced availability of developer
financing for future projects. Such events have caused a reduction in the rate
of expansion initially anticipated by Cinemark Mexico. As of March 27, 1997, the
value of the Mexican peso has depreciated slightly (1%) since the end of 1996.
In 1997, generally accepted accounting principles will require that the U.S.
dollar be used as the functional currency of the Company's Mexican subsidiary
for U.S. reporting purposes. This change will cause devaluations in the peso
during 1997 affecting the Company's investment in Mexico to be charged to
exchange loss rather than to the cumulative adjustment account.

Liquidity and Capital Resources

The Company's revenues are collected in cash, primarily through box office
receipts and the sale of concession items. Because its revenues are received in
cash prior to the payment of related expenses, the Company has an operating
"float" and, as a result, historically has not required traditional working
capital financing. Primarily due to the lack of significant inventory and
accounts receivable, the Company has typically operated with a negative working
capital position for its ongoing theatre operations. The major film distributors
generally release during the summer and holiday seasons those films which they
anticipate will be the most successful. Consequently, the Company typically
generates higher revenues during such periods. The Company's cash flow from
operations was $58.8 million in 1996 compared to $36.1 million in 1995 and $32.7
million in 1994.

The Company's theatres are typically equipped with modern projection and
sound equipment, with approximately 65% of the screens operated by the Company
having been built in the 1990's. Maintenance capital expenditures for all
theatres operated by the Company for 1996 were $6.0 million or approximately
1.8% of revenues. The Company believes that future annual maintenance capital
expenditures will not significantly change as a percentage of revenues. The
Company's investing activities have been principally in connection with new
theatre openings and acquisitions of existing theatres and theatre circuits and
have amounted to $177.4 million, $80.3 million and $62.9 million in 1996, 1995,
and 1994, respectively. New theatre openings and acquisitions historically have
been financed with internally generated cash and by debt financing, including
borrowings under the Company's bank line of credit. Cash flow from financing
activities amounted to $119.7 million, $32 million and $13.3 million in 1996,
1995, and 1994, respectively. During 1996, the Company opened 17 theatres (237
screens) in the U.S. and Mexico. In addition, as of March 27, 1997, the Company
expects to open 17 theatres (219 screens) in the U.S. during 1997 of which it
has already opened 4 theatres (43 screens) and has 9 theatres (134 screens)
under construction, with another 4 theatres (42 screens) scheduled to begin
construction within the next 90 days. Certain of these theatres will be
megaplexes which may cost in excess of $15 million per theatre. The Company
currently estimates that its capital expenditures for the development of these
screens in 1997 will be approximately $110 million. As of March 27, 1997, the
Company had expended approximately $15.8 million toward the development of these
screens. Actual expenditures for theatre development and acquisitions during
1997 are subject to change based upon the availability of attractive
opportunities for expansion of the Company's theatre circuit.

On August 15, 1996, the Company issued $200 million of Senior Subordinated
Notes due 2008 (the "Subordinated Notes"). The Subordinated Notes bear interest
at the rate of 9-5/8% per annum, payable semi-annually on February 1 and August
1 of each year. The Subordinated Notes were issued at 99.553% of the principal
face amount (a discount of $4.47 per $1,000 principal amount). The net proceeds
to the Company from the issuance of the Subordinated Notes (net of discount,
fees and expenses) were approximately $193.2 million. The proceeds from the
Subordinated Notes were used to repurchase 98.7% of the Company's $125 million
12% Senior Notes due

2002 ("Senior Notes") pursuant to a tender offer which expired on August 15,
1996. The Senior Notes were purchased at a premium of the $1,098.33 (including a
consent fee of $25) per $1,000 principal amount, plus accrued and unpaid
interest up to the date of repurchase. Excess proceeds were utilized to reduce
borrowings under the Company's Credit Facility and for general corporate
purposes.

On December 12, 1996, the Company replaced its existing credit facility
with the Credit Facility through a group of banks for which Bank of America
National Trust and Savings Association acts as Administrative Agent. The Credit
Facility provides for loans to the Company of up to $225.0 million in the
aggregate. The Credit Facility is a reducing revolving credit facility at the
end of each quarter during the calendar year 2000, 2001, 2002 and 2003,
requiring reductions in the aggregate commitment in the amount of $8,437,500,
$11,250,000, $14,062,500 and $22,500,000, respectively. The Company is required
to prepay all loans outstanding in excess of the aggregate commitment as reduced
pursuant to the terms of the Credit Facility. Borrowings under the Credit
Facility are secured by a pledge of a majority of the issued and outstanding
capital stock of the Company. As of March 27, 1997, the Company had borrowed
$105 million under the Credit Facility. Pursuant to the terms of the Credit
Facility, funds borrowed currently bear interest at a rate per annum equal to
the Offshore Rate (as defined in the Credit Facility) or the Base Rate (as
defined in the Credit Facility, as the case may be), plus the Applicable Margin
(as defined in the Credit Facility). As of March 27, 1997, the interest rate was
6.6%.

In 1992, the Company formed Cinemark International to explore theatre
development opportunities outside the United States. As of March 27, 1997, the
Company has contributed $46.0 million to the capital of Cinemark International
to fund theatre development principally in Latin America. Cinemark International
plans to invest up to an additional $50 million in international ventures,
principally in Latin America, over the next two to three years. The Company
anticipates that investments in excess of Cinemark International's available
cash will be funded by the Company or by debt or equity financing to be provided
by third parties directly to Cinemark International or its subsidiaries.

In 1993, the Company incorporated Cinemark de Mexico, S.A. de C.V.
("Cinemark de Mexico") as an indirect subsidiary of Cinemark International to
pursue new development opportunities in Mexico. At March 27, 1997, Cinemark
International owned 95.6% (95.0% on a fully diluted basis including the exercise
of the warrants) of the common stock of Cinemark Mexico. The remaining 4.4% was
owned by a corporation controlled by Mexican citizens. At March 27, 1997, the
Company operated eleven theatres (114 screens) and had three theatres (35
screens) under commitment with executed leases which will begin construction
during the remainder of 1997. In 1993 and 1994, Cinemark Mexico, which is the
direct parent of Cinemark de Mexico, issued $22.4 million principal amount of
12% Senior Subordinated Notes due 2003 (the "Cinemark Mexico Old Notes") with
detachable warrants.

Cinemark International entered into a joint venture agreement in November
1992 with a Chilean theatre operator. Cinemark Chile, S.A. ("Cinemark Chile")
currently operates two theatres (13 screens), and as of March 27, 1997, plans to
begin construction on three theatres (32 screens) during the remainder of 1997.
In December 1995, Cinemark entered into a joint venture agreement with Argentine
theatre operators to develop state-of-the-art multiplex theatres in Argentina.
The joint venture's business is conducted through Cinemark Argentina, S.A.,
which is 50% owned by Cinemark Argentina Holdings, S.A. Cinemark International
owns 50% of Cinemark Argentina Holdings, S.A. Cinemark Argentina plans to open
its first theatre (8 screens) in April 1997 and begin construction on three
theatres (27 screens) during 1997. In January 1997, Cinemark International and
its Chilean partner entered into a joint venture agreement to develop state-of
the-art multiplex theatres in Peru. The joint venture conducts its business
through Cinemark del Peru, S.A., which is 50% owned by Cinemark International
and 50% owned by Cinemark's Chilean partner. Cinemark del Peru, S.A. expects to
open one theatre (12 screens) during 1997.

In 1996, Cinemark LTDA, a Brazilian company ("Cinemark Brazil"), was
organized as an indirect subsidiary of Cinemark International. Cinemark Brazil
will develop modern multiplex theatres in Brazil. Cinemark Brazil plans to open
its first theatre (12 screens) in the second quarter of 1997. Additionally,
Cinemark Brazil expects to begin construction on six theatres (64 screens)
during 1997.

In September 1996, Cinemark International entered into a joint venture
agreement with a prominent Ecuadorian company to develop state-of-the-art
multiplex theatres in Ecuador. The joint venture conducts its business through
Cinemark del Ecuador, S.A. ("Cinemark Ecuador") which is 60% owned by Cinemark
International. Cinemark Ecuador expects to open two theatres (16 screens) during
1997.

Cinemark Mexico Exchange Offer

As of September 30, 1996, Cinemark Mexico had outstanding (i) $22.4
million aggregate principal amount of Cinemark Mexico Notes and (ii) warrants to
purchase 379,073 shares of common stock of the Company (the "Warrants"). On
September 30, 1996, Cinemark Mexico completed the Exchange Offer pursuant to
which Cinemark Mexico and the holders of all of the Cinemark Mexico Notes
exchanged all of the Cinemark Mexico Notes for a new issuance of the New Mexico
Notes. The form and terms of the New Mexico Notes are identical in all material
respects to the Cinemark Mexico Notes except that interest on the New Mexico
Notes may, on each interest payment date from February 1, 1997 through and
including February 1, 2000, be paid at the option of Cinemark Mexico in cash or
through the issuance of additional notes of the same series (the "Additional
Notes"). If the Company elects to pay accrued interest in Additional Notes in
lieu of cash, interest during the relevant interest period shall accrue at the
rate of 13% per annum. Holders of Warrants to purchase 22,222 shares of Common
Stock of Cinemark Mexico elected not to participate in the Exchange Offer. The
purpose of the Exchange Offer was to exchange New Securities for all outstanding
Cinemark Mexico Notes in order to improve Cinemark Mexico's and Cinemark de
Mexico's financial and operating

flexibility. The Company exercised its option to pay Additional
Notes for the interest period ended February 1, 1997.

In connection with the Exchange Offer, the Company obtained the consent of
the holders of the Cinemark Mexico Notes to amend the Indenture. The Company
executed that certain Third Supplemental Indenture dated September 30, 1996 (the
"Third Supplemental Indenture") which, among other things, (i) provided for the
issuance of the New Mexico Notes and the Additional Notes and (ii) amended
certain restrictions relating to financial ratios with which the Company must
comply. The Indenture requires Cinemark Mexico to maintain a Cash Flow Coverage
Ratio (as defined in the Indenture) of 2.0 to 1.0 beginning after December 31,
1999.

Simultaneously with the completion of the Exchange Offer, Cinemark
International acquired an additional 2,661,450 shares of Common Stock of
Cinemark Mexico for $10.0 million. On January 9, 1997, New Wave also acquired an
additional 64,032 shares of common stock of Cinemark Mexico for $240,591.

On December 4, 1995, Cinemark International, Cinemark Mexico and Cinemark
de Mexico, S.A. de C.V., entered into that certain Senior Secured Credit
Facility (the "Mexico Senior Credit Facility"). The Mexico Senior Credit
Facility provides for loans by Cinemark II to Cinemark Mexico of up to $10.0
million in the aggregate at an interest rate of 12% per annum. Any amounts
borrowed by Cinemark Mexico under the Mexico Senior Credit Facility will be
borrowed on a term loan basis. The loans are payable as follows: (i) all accrued
and unpaid interest shall be payable on the first anniversary of the initial
loan and quarterly thereafter on January 15, April 15, July 15 and October 15
and (ii) on December 31, 2001, all unpaid principal, accrued, unpaid interest
and fees on the loan shall be paid. Borrowing under the Mexico Senior Credit
Facility is secured by a pledge of all of the assets of Cinemark Mexico.

Simultaneously with the closing of the Exchange Offer, Cinemark
International and Cinemark Mexico agreed to amend the terms of the Mexico Senior
Credit Facility. The amendment (i) provides that if Cinemark Mexico exercises
its options to pay accrued and unpaid interest on the New Mexico Notes through
the issuance of Additional Notes, Cinemark will add accrued and unpaid
indebtedness under the Mexico Senior Credit Facility to principal at the next
two consecutive interest payment dates and (ii) amended certain

restrictions relating to financial ratios with which the Company
must comply.

Sale of Stock

On March 12, 1996, the Company issued and sold to Cypress shares of common
stock for a total purchase price of $41 million. The net proceeds from the sale
of common stock to Cypress have been used to fund the Company's growth and
pursue its business plan.

Item 8: Financial Statements and Supplementary Data.

The financial statements and supplementary data are listed on the Index
at F-1. Such financial statements and supplementary data are included herein
beginning on page F-3.

Item 9: Changes in and Disagreements on Accounting and Financial
Disclosure.

None.

PART III

Item 10: Directors and Executive Officers of the Registrant.

The directors and executive officers of the Company are:

Name Age Position

Lee Roy Mitchell* 60 Chairman of the Board; Chief Executive Officer; Director
Tandy Mitchell 46 Vice Chairman of the Board; Executive Vice President;
Secretary; Director
Alan W. Stock+ 36 President; Chief Operating Officer; Director
Jeffrey J. Stedman 34 Vice President; Treasurer; Chief Financial Officer; Assistant
Secretary; Director
Gary R. Gibbs 52 Vice President-General Counsel; Assistant Secretary; Director
Margaret E. Richards 38 Vice President-Real Estate; Assistant Secretary
Rob Carmony 39 Vice President-Director of Operations
Jerry Brand 51 Vice President-Film Licensing
W. Bryce Anderson*+ 54 Director
Sheldon I. Stein*+ 43 Director
Heriberto Guerra, Jr.+ 47 Director
James A. Stern 46 Director
James L. Singleton+ 41 Director
<FN>
- --------------------------
* Member Audit Committee
+ Member Compensation Committee
</FN>

The Shareholders' Agreement (as defined herein) contains a voting agreement
pursuant to which Mr. Mitchell agreed to vote his share of common stock of the
Company to elect designees of CALP to the Board of Directors of the Company. As
of June 30, 1996, CALP had the right to designate two board members.
Additionally, the Shareholders' Agreement provides that the Company must obtain
the written consent of CALP for certain corporate acts.

The directors of the Company are elected each year by the shareholders to
serve for a one-year term and until their successors are elected and qualified.
Directors of the Company are reimbursed for expenses actually incurred for each
Board meeting which they attend. In addition, Directors who are not employees of
the Company receive a fee of $1,000 for each meeting of the Board of Directors
attended by such person. The executive officers of the Company are elected by
the Board of Directors to serve at the discretion of the Board.

The following is a brief description of the business experience
of the directors and executive officers of the Company for at least

the past five years. All compensation of directors and officers is
paid by the Company.

Lee Roy Mitchell has served as Chairman of the Board since March 1996, as
Director and Chief Executive Officer of the Company since its inception in 1987
and Vice Chairman of the Board of Directors from March 1993 to March 1996. Mr.
Mitchell was President of the Company from its inception in 1987 until March
1993. From 1985 to 1987, Mr. Mitchell served as President and Chief Executive
Officer of a predecessor corporation. Mr. Mitchell has served on the Board of
Directors of the National Association of Theatre Owners since 1991. Mr. Mitchell
has been engaged in the motion picture exhibition business for more than 35
years.

Tandy Mitchell has served as Vice Chairman of the Board since March 1996,
as Director of the Company since April 1992, as Executive Vice President of the
Company since October 1989 and as Secretary of the Company since its inception
in 1987. Mrs. Mitchell was General Manager of the theatre division of a
predecessor corporation from 1985 to 1987. From 1978 to 1985, Mrs. Mitchell was
employed by Southwest Cinemas Corporation, most recently as director of
operations. Mrs. Mitchell is the wife of Lee Roy Mitchell.

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

Jeffrey J. Stedman was elected Director of the Company in March 1996 and
has served as Vice President, Treasurer and Chief Financial Officer of the
Company since April 1993. From December 1989 to April 1993, Mr. Stedman was
Director of Finance of the Company. Prior to joining the Company in December
1989, Mr. Stedman was a Manager in the tax department of Deloitte & Touche,
where he was employed from December 1984 to December 1989. Mr.
Stedman is a certified public accountant.

Gary R. Gibbs has served as a Director of the Company since July 1995 and
has served as General Counsel to the Company since January 1990. Prior to
joining the Company, Mr. Gibbs spent the previous 17 years in the private
practice of law in Hot Springs, Arkansas, where he was the senior partner at the
law firm of Gibbs & Farnell.

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

Robert F. Carmony has served as Director of Operations of the Company since
June 1988. He was owner of O.C. Enterprises, a software development firm, from
1986 to 1988. Prior to forming his own software company, Mr. Carmony worked for
Plitt-Cineplex Odeon theatres from 1985 to 1986. He worked as a Systems Analyst
for Electronic Data Systems (EDS) from 1984 to 1985. Mr. Carmony was elected a
Vice President-Director of Operations in March 1996.

Jerry Brand has served as Vice President-Film Licensing since March 1996.
Mr. Brand has over 27 years of experience in the theatre industry, beginning his
career with Paramount Pictures in 1968. Prior to joining the Company, Mr. Brand
served as Vice President and Head Film Buyer with Cobbs Theatres where he was
employed from 1983 to March 1996.

W. Bryce Anderson has served as a Director of the Company since June 1992.
Mr. Anderson has been Chairman of the Board of Directors of Ennis Steel
Industries, Inc., a steel fabricator, since 1980 and Chairman of the Board of
Directors of Reflex Glass Bead Co., Inc., a manufacturer of glass beads, since
September 1990. Mr. Anderson was Chairman of the Board of Centerline Industries,
Inc., an industrial paint manufacturer, from January 1989 to December 1992. From
1976 to 1989, Mr. Anderson was Chairman of the Board of Directors and Chief
Executive Officer of Ennis Paint Manufacturing, Inc., an industrial paint
manufacturer.

Sheldon I. Stein has served as a Director of the Company since
June 1992. Mr. Stein is a Senior Managing Director of Bear,
Stearns & Co. Inc., an investment banking firm, and is in charge of
its Southwest Corporate Finance Department. Mr. Stein is a

director of Tandycrafts, Inc., Fresh America Corporation, The Men's
Wearhouse, Inc., FirstPlus Financial Group, Inc. and Cellstar
Corporation.

Heriberto Guerra, Jr. has served as a Director of the Company
since December 1993. Mr. Guerra has been Managing Director-
Corporate Development for Southwestern Bell Telephone since 1995.
From September 1985 to January 1987, he was Area Manager-Marketing
Operations for Southwestern Bell, and from 1987 to 1995, he was
Executive Director-Government Relations for Southwestern Bell.
Prior to that, he served in an owner or manager capacity for
various hotel, restaurant and movie theatre businesses in Texas.
Mr. Guerra is also a director of Cinemark Mexico (USA), Inc. and
Play by Play Toys and Novelties.

James A. Stern was elected Director of the Company in March 1996.
Mr. Stern has been Chairman of The Cypress Group L.L.C. ("Cypress
Group") since its formation in April 1994. Prior to joining
Cypress Group, Mr. Stern spent his entire career with Lehman
Brothers, an investment banking firm, most recently as head of the
Merchant Banking Group. He served as head of Lehman's High Yield
and Primary Capital Markets Groups, and was co-head of Investment
Banking. In addition, Mr. Stern was a member of the firm's
Operating Committee. Mr. Stern is a director of Noel Group, Inc.,
Lear Corporation, R.P. Scherer Corporation and K&F Industries.

James L. Singleton was elected Director of the Company in March
1996. Mr. Singleton has been Vice Chairman of Cypress since its
formation in April 1994. Prior to joining Cypress Group, Mr.
Singleton was a Managing Director with Lehman Brothers, an
investment banking firm, where he worked in the Merchant Banking
Group, focusing much of his attention on media/communications
related investments. Mr. Singleton is a director of Able Body
Corporation, and L.P. Thebault Company.

Item 11: Executive Compensation.

Summary Compensation Table

Annual Compensation Long Term
Compensation
Awards

Securities
Underlying All Other
Salary (A) Bonus Options/SARs Compensation
Name and Principal Position Year ($) ($) (#) ($)
--------------------------- ---- ----- ----- ---- ----

Lee Roy Mitchell, Chairman of the Board 1996 $294,632 $1,703,357 $120,794(B)
and Chief Executive Officer 1995 267,852 1,733,976 - 120,828(C)
1994 243,513 1,715,290 - 121,086(D)

Alan Stock, President and Chief Operating 1996 $192,500 $83,739 $921,623(F)
Officer 1995 175,000 80,043 - 6,930(E)
1994 125,070 71,729 - 5,541(E)

Jeffrey J. Stedman, Vice President, 1996 $125,000 $102,160 $221,311(G)
Treasurer and Chief Financial Officer 1995 110,000 46,809 - 6,930(E)
1994 82,500 44,461 100 6,746(E)

Margaret E. Richards, Vice President-Real 1996 $100,000 $23,000 - $238,640(H)
Estate and Assistant Secretary 1995 70,000 23,700 - 2,063(E)
1994 60,000 2,971 1,791(E)

Gary R. Gibbs, Vice President 1996 $110,000 $24,136 $264,188(I)
and General Counsel 1995 100,000 26,153 600 6,930(E)
1994 75,000 1,531 5,649(E)

- ------------------------------------------ --------------------------------- ------------ ---------------
<FN>
- ---------------------------
(A) Amounts shown include cash and non-cash compensation earned and
received by executive officers as well as amounts earned but deferred
at the election of those officers.
(B) Represents $98,844 of life insurance premiums paid by the Company for
the benefit of Mr. Mitchell, a $1,950 annual contribution to the
Company's 401(k) savings plan and $20,000 representing the value of the
use of a Company vehicle for one year.
(C) Represents $98,844 of life insurance premiums paid by the Company for
the benefit of Mr. Mitchell, a $1,984 annual contribution to the
Company's 401(k) savings plan and $20,000 representing the value of the
use of a Company vehicle for one year.
(D) Represents $98,844 of life insurance premiums paid by the Company for
the benefit of Mr. Mitchell, a $2,242 annual contribution to the
Company's 401(k) savings plan and $20,000 representing the value of the
use of a Company vehicle for one year.
(E) Represents the Company's annual contribution to the Company's 401(k)
savings plan.
(F) Represents a $6,930 annual contribution by the Company to the Company's
401(k) savings plan, $535,402 of compensation relating to the value of
stock options exercised over the exercise price of $1.00 per share, and
$379,291 reimbursement

for estimated tax obligations incurred upon exercise of stock
options.
(G) Represents a $6,930 annual contribution by the Company to the Company's
401(k) savings plan, $125,485 of compensation relating to the value of
stock options exercised over the exercise price of $1.00 per share, and
$88,896 reimbursement for estimated tax obligations incurred upon
exercise of stock options.
(H) Represents a $7,108 annual contribution by the Company to the Company's
401(k) savings plan, $135,524 of compensation relating to the value of
stock options exercised over the exercise price of $1.00 per share, and
$96,008 reimbursement for estimated tax obligations incurred upon
exercise of stock options.
(I) Represents a $6,930 annual contribution by the Company to the Company's
401(k) savings plan, $150,582 of compensation relating to the value of
stock options exercised over the exercise price of $1.00 per share and
$106,676 reimbursement for estimated tax obligations incurred upon
exercise of stock options.
</FN>

Options/SAR Grants in Last Fiscal Year

There were no Options/SAR grants to the named Executive Officers for
fiscal year ended December 31, 1996.

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

Number of Securities
Underlying Value of Unexercised
Unexercised In-The-Money
Name Shares Acquired on Value Realized ($) Options/SARs at Options/SARs at
Exercise (#) FY-End (#) FY-End ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable

Lee Roy Mitchell -- -- -- --
Alan Stock 320 $535,722 1817/0 (A)
Jeffrey J. Stedman 75 125,560 305/120 (A)
Margaret E. Richards 81 135,605 453/0 (A)
Gary R. Gibbs 90 150,672 510/0 (A)

<FN>
- -------------------------------------------------
(A) The Company has the right to call the shares issuable upon exercise of
the options for terminating employees. The call price increases over
the five year vesting period of the options.
</FN>

401(k) Pension Plan

The Company sponsors a defined contribution savings plan (the "401(k)
Plan") whereby certain employees of the Company or its subsidiaries may (under
current administrative rules) elect to contribute, in whole percentages between
1% and 15% of such employee's compensation, provided no employee's elective
contribution shall exceed the amount permitted under Section 402(g) of the
Internal Revenue Code of 1986, as amended ($9,500 in 1996). A discretionary
matching contribution is made by the Company annually ($613,213 in 1996). The
Company's matching contribution is subject to vesting and forfeitures. The
Company's contributions vest at the rate of twenty percent (20%) per year
beginning two years from the date of employment. After an employee has worked
for seven years, employees have full and immediate vesting rights to all of the
Company's matching contributions. The Company's contributions to the accounts of
the named Executive Officers are included in the Summary Compensation Table.

Employment Agreements

Mr. and Mrs. Mitchell each have an employment agreement with the
Company which contains the terms described below.

Lee Roy Mitchell's 1996 base salary was $294,632 and will increase
thereafter at the rate of 10% per year. In addition, Mr. Mitchell (i) is
entitled to receive an annual bonus, subject to approval by the Board of
Directors, in an amount not exceeding 10% of the aggregate amount of
consolidated theatre level cash flow of the Company in excess of $25 million for
each year (which together with base salary may not exceed $2 million), which
bonus was approximately $1,703,357 for the year ended December 31, 1996, (ii) is
reimbursed for expenses incurred by him in connection with his duties, and (iii)
receives the use of an automobile of his choice to be replaced at his election
every three years, a club membership of his choice, a whole life insurance
policy in the amount of $3,300,000 insuring his life during the period of his
employment and any other benefits generally available to the executives of the
Company. The maximum base salary and bonus which Mr. Mitchell is entitled to
receive for any calendar year is limited to $2 million and the payment of any
bonus requires board approval. The employment agreement terminates on the
earlier of (i) Mr. Mitchell's death or permanent disability (except with respect
to amounts payable as described in the following sentence) or (ii) December 31,
2001. In the event of Mr. Mitchell's permanent disability, he will be entitled
to receive $10,000 per month for a period of 60 months.

Tandy Mitchell's 1996 base salary was $131,769 and will increase thereafter
at the rate of 10% per year. In addition, Mrs. Mitchell (i) is reimbursed for
expenses incurred by her in connection with her duties and (ii) receives the use
of an automobile of her choice to be replaced at her election every three years,
a whole life insurance policy in the amount of $1,000,000 insuring her life
during the period of her employment and any other benefits generally available
to the executives of the Company. The employment agreement terminates on the
earlier of (i) Mrs. Mitchell's death or permanent disability or (ii) December
31, 2001.

The employment agreements of Mr. and Mrs. Mitchell provide that their
employment may be terminated by the unanimous decision of the Board of Directors
of the Company (other than the terminated party) for cause if the terminated
party is convicted of a felony and incarcerated or willfully refuses to perform
any of the duties required under the employment agreement for a period of 60
days after notice from the Board of Directors.

The employment of Mr. and Mrs. Mitchell will be deemed to be constructively
terminated if, among other things, there is a change of control (as defined in
Item 6(c) under Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended) of the Company, a merger or consolidation of the Company, a
sale of all or substantially all of the assets of the Company, or if certain
changes related to their respective status or compensation by the Company occur.
In the event of termination of employment by the Company without cause, Mr. and
Mrs. Mitchell will be entitled to receive the amounts that would otherwise be
paid under their respective employment agreements for the remaining term of such
agreements.

The employment agreements of Mr. and Mrs. Mitchell further
provide that they will be indemnified against certain liabilities
that may arise by reason of their status or service as executive
officers of the Company. The employment agreements of Mr. and Mrs.
Mitchell do not prohibit their engaging in activities competitive
with those of the Company, including the acquisition of theatres
(subject to fiduciary duties to the Company imposed by applicable
law or contractual obligation imposed upon Mr. Mitchell by the
Shareholders' Agreement). See "Certain Transactions--Competing
Businesses Owned by Mr. Mitchell" and "--Cypress Investment."

Stock Options

Employee Stock Option Plan

The Company has established a Nonqualified Stock Option Plan (the "Plan")
under which the Chief Executive Officer of the Company, in his sole discretion,
may grant employees of the Company options to purchase up to an aggregate of
10,685 shares of the Company's Class B Common Stock. The Chief Executive Officer
of the Company has the ability to set the exercise price and the term (of up to
ten years) of the options. All options vest at the rate of one-fifth of the
total options granted per year generally beginning one year from the date of
grant, subject to acceleration by the Chief Executive Officer of the Company. An
employee's options are forfeited if the employee is terminated for cause. Upon
termination of an employee's employment with the Company and provided that no
public market exists for any class of common stock of the Company at such time,
the Company has the option to repurchase any shares of capital stock of the
Company that were acquired by the employee pursuant to the Plan at a specified
formula price based on theatre cash flow. As of March 27, 1997, there were
outstanding options to purchase 7,842 shares of the Company's Class B Common
Stock.

In April 1996, employees exercised options to purchase 1,509 shares of
Class B Common Stock of the Company. The Company incurred compensation expense
of $1.8 million resulting from the payment of a cash bonus to key employees to
reimburse them for the taxes due upon the exercise of nonqualified stock
options. The Company received a current tax benefit equal to the total cash
bonus paid, as a result of being allowed a tax deduction for the value of the
bonus and the difference between the value and exercise price of the
nonqualified options. For GAAP purposes, the Company will recognize the tax
benefit for the deduction arising from the differences in value between the
option and its exercise price as additional paid-in capital(rather than as a
reduction of tax expense).

Independent Director Stock Options

The Company has granted the unaffiliated directors of the Company options
to purchase up to an aggregate of 900 shares of the Company's Class B Common
Stock at an exercise price of $833.34 per share (the "Director Options").
Effective April 1995, the Company amended the Director Options to reduce the
aggregate number of shares of Common Stock issuable pursuant to the Director
Options from 900 to 600 shares and to reduce the exercise price of the Director
Options from $833.34 per share to $1.00 per share. The

options vest on June 1, 1997, subject to acceleration in certain circumstances.
The options expire ten years from the date of grant. A director's options are
forfeited if the director resigns or is removed from the Board of Directors of
the Company.

Compensation Committee Interlocks and Insider Participation

In January 1995, the Board of Directors established a Compensation
Committee of the Board to study senior management compensation and make
recommendations to the Board of Directors as a whole relating to said
compensation. Messrs. Stock, Stein, Anderson, Guerra and Singleton currently
serve as members of the Compensation Committee, with Mr. Stock being the only
member who is an officer or employee of the Company or any of its subsidiaries.

Item 12: Security Ownership of Certain Beneficial Owners and
Management.

The following table and the accompanying footnotes set forth, as of March
27, 1997, the beneficial ownership of the Company's Common Stock by (i) each
person who is known to the Company to own beneficially more than 5% of either
class of its outstanding Common Stock, (ii) each director and named executive
officer, and (iii) all officers and directors as a group:

Number Combined
of Percent
Shares Percent of
Names and Addresses(1) Title of Class (2) of Class Classes
- --------------------------------- --------------------------- ------------ ------------ -------------

Lee Roy Mitchell(3) Class A Common Stock 1,500 100.0%
7502 Greenville Ave.
Suite 800
Dallas, TX 75231
Class B Common Stock 77,687 42.1% 42.6%

Cypress Merchant Banking Class A Common Stock -- --
Partners, L.P.
65 East 55th St.
New York, NY 10022
Class B Common Stock 78,469 42.5% 42.2%
Cypress Pictures Ltd. Class A Common Stock -- --
c/o W.S. Walker Co.
Second Floor
Caledonian House
Mary St., P.O. Box 265
George Town, Grand Cayman
Cayman Islands
Class B Common Stock 4,079 2.2% *2.2%

The Mitchell Special Class A Common Stock -- --
Trust
7502 Greenville Ave.
Suite 800
Dallas, TX 75231
Class B Common Stock 14,667 8% 7.9%
Tandy Mitchell(4) Class A Common Stock -- --
Class B Common Stock -- -- --
Alan W. Stock(5) Class A Common Stock -- --
Class B Common Stock 2,137 0 *
Jeffrey J. Stedman(6) Class A Common Stock -- --
Class B Common Stock 380 0 *

Gary R. Gibbs(7) Class A Common Stock -- --
Class B Common Stock 600 0 *
Margaret E. Richards(8) Class A Common Stock -- --
Class B Common Stock 534 0 *
W. Bryce Anderson Class A Common Stock -- --
Class B Common Stock -- -- --
Sheldon I. Stein Class A Common Stock -- --
Class B Common Stock -- -- --
Heriberto Guerra, Jr. Class A Common Stock -- --
Class B Common Stock -- -- --
James A. Stern Class A Common Stock -- -- --
Class B Common Stock -- --
James L. Singleton Class A Common Stock -- -- --
Class B Common Stock -- --
Directors and Officers as Class A Common Stock 1,500 100.0%
a Group (13 persons) (9)
Class B Common Stock 81,778 44.3% 43.9
<FN>

- ---------------------
* Less than 1%.
(1) Unless otherwise indicated, the Company believes the beneficial owner has
both sole voting and investment powers over such shares.
(2) As of March 27, 1997, 1,500 shares of Class A Common Stock and 184,589
shares of Class B Common Stock were issued and outstanding. Includes 6,645
shares of Class B Common Stock issuable upon the exercise of options that
may be exercised within 60 days of the date of this Report.
(3) Does not include 15,937 shares of Class B Common Stock held in trust for
the benefit of certain of Mr. Mitchell's grandchildren, as to which Mr.
Mitchell disclaims beneficial ownership. Mr. Mitchell is the co-trustee of
such trusts.
(4) Excludes any shares owned by Mr. Mitchell that Mrs. Mitchell may be deemed
to own as a result of community property laws.
(5) Includes 1,817 shares of Class B Common Stock issuable upon the exercise of
options that may be exercised within 60 days of the date of this Report.
(6) Includes 305 shares of Class B Common Stock issuable upon the exercise of
options that may be exercised within 60 days of the date of this Report.
(7) Includes 510 shares of Class B Common Stock issuable upon the exercise of
options that may be exercised within 60 days of the date of this Report.
(8) Includes 453 shares of Class B Common Stock issuable upon the exercise of
options that may be exercised within 60 days of the date of this Report.
(9) Includes 3,525 shares of Class B Common Stock issuable upon the exercise of
options that may be exercised within 60 days of the date of this Report.
</FN>

Item 13: Certain Relationships and Related Transactions.

Movie Theatre Investors

The Company manages three theatres (33 screens) for Movie Theatre
Investors, Ltd. Mr. Mitchell is the sole shareholder of one of the
general partners of Movie Theatre Investors. In addition, Mr.
Mitchell owns 10.1%, Mrs. Mitchell and affiliates own 7.4% and the
Company owns 1.1% of the limited partnership interests in Movie
Theatre Investors. The Company received $257,360 in management
fees from Movie Theatre Investors in 1996. See "Business -
Management Agreements."

Pursuant to the terms of a trademark license agreement, the Company has
granted Movie Theatre Investors the right, on a royalty

free basis, to use the Cinemark name and logos in connection with the theatres
for so long as the Company manages the theatres owned by Movie Theatre
Investors.

Movie Theatre Investors has granted the Company a right of first refusal to
match third party offers for the sale of one or more of the theatres owned by
Movie Theatre Investors. The Company has granted Movie Theatre Investors a right
of first refusal to invest in any theatres to be constructed by the Company
within five miles of any theatres owned by Movie Theatre Investors.

Laredo Joint Venture

Effective December 10, 1993, Cinemark II entered into a joint venture
agreement with Lone Star Theatres, Inc., a Texas corporation owned 100% by Mr.
David Roberts, for the purpose of owning, operating and managing "Movies 12", a
12-plex movie theatre located in Laredo, Texas ("Laredo Joint Venture"). Mr.
Roberts is Mr. Mitchell's son-in-law. Effective September 12, 1994, Cinemark II
and Lone Star Theatres, Inc. converted Laredo Joint Venture into a Texas limited
partnership ("Laredo Theatre, Ltd."). Cinemark II was the sole general partner
and owner of 75% of the limited partnership interests in Laredo Theatre, Ltd.
Lone Star Theatres, Inc. owns 25% of the limited partnership interests in Laredo
Theatre, Ltd. On September 13, 1994, Cinemark II transferred its general
partnership interest and limited partnership interests to the Company. The
Company manages the theatre for Laredo Theatre, Ltd. The Company received
$179,821 in management fees from Laredo Theatre, Ltd. in 1996.

Pursuant to the terms of a trademark license agreement, the Company has
granted Laredo Theatre, Ltd. the right, on a royalty fee basis, to use the
Cinemark name and logos in connection with the theatres for so long as the
Company manages the theatres owned by Laredo Theatre, Ltd.

Laredo Theatre, Ltd. has the opportunity to participate in the
development of new theatres or the acquisition of existing theatres
within ten miles of the existing 12-plex owned and operated by
Laredo Theatre, Ltd.

Cinemark Partners II

The Company manages one theatre (17 screens) for Cinemark
Partners II, Ltd. ("Cinemark Partners II"). Cinemark Partners I,

Inc., a wholly owned subsidiary of the Company, is the sole general
partner of Cinemark Partners II. Mr. Mitchell owns 10.1% and
Cinemark Partners I, Inc. owns 1% of the limited partnership
interests in Cinemark Partners II. The Company received $59,467 in
management fees from Cinemark Partners II in 1996. See "Business--
Management Agreements."

Pursuant to the terms of a trademark license agreement, the Company has
granted Cinemark Partners II the right, on a royalty free basis, to use the
Cinemark name and logos in connection with the theatre for so long as the
Company manages the theatre owned by Cinemark Partners II.

Cinemark Partners II has granted the Company a right of first refusal to
match third party offers for the sale of the theatre owned by Cinemark Partners
II.

Cinemark Alberta

The Company manages two discount theatres (24 screens) for
Cinemark Alberta. Cinemark Holdings Canada, Inc., a wholly owned
subsidiary of Cinemark International, runs 50% of Cinemark Alberta.
The Company received $97,073 in management fees from Cinemark
Alberta in 1996. See "Business-Management Agreements."

Starplex Cinemas, Inc.

On June 21, 1994, the Company executed a ground lease on property
located in Lewisville, Texas. The Company constructed and equipped
an eight screen multiplex theatre. The Company leases the theatre
and the equipment to Starplex Cinemas, Inc. ("Starplex"). The
Company has recorded only $450,000 of rental income since the
inception of this lease as the theatre is performing below
expectations and Starplex is delinquent in making its required rent
payments. Starplex Cinemas, Inc. is 100% owned by Mr. Mitchell's
brother.

Shareholders' Agreement

The Company entered into the Shareholders' Agreement dated March 12,
1996 with Mr. Mitchell, his affiliates and Cypress (the "Shareholders'
Agreement"). Among other things, the Shareholders' Agreement provides that,
subject to certain conditions, the Company must obtain (with certain exceptions)
the consent of CALP for certain corporate acts including, but not limited to,
amendments to

the Articles of Incorporation of the Company, approval of annual budgets under
certain circumstances, asset dispositions or acquisitions in excess of specified
amounts, merger or consolidation of the Company, incurrence of indebtedness over
specified amounts, certain stock redemptions or dividends, transactions with
affiliates over specified amounts, certain management changes or new
compensation plans, financing theatres through limited partnerships, settlements
of litigation over specified amounts and issuance of common stock under certain
conditions. The Shareholders' Agreement also provides that Cypress may not
convert its Class B Common Stock to Class A Common Stock unless certain events
occur such as a Change of Control (as defined in the Shareholders' Agreement) or
the consummation of a public offering of the Company's common stock. The
above-described provisions terminate on the earlier of (i) the public owning 25%
or more of the common stock of the Company, (ii) the merger of the Company with
and into any publicly traded company or (iii) ten years after the date of the
Shareholders' Agreement. The Shareholders' Agreement also contains a voting
agreement pursuant to which Mr. Mitchell agrees to vote his shares of common
stock to elect certain designees of CALP to the Board of Directors of the
Company.

Mr. Mitchell also agreed that in the event any corporate opportunity is
presented to Mr. Mitchell or any of his affiliates to acquire or enter into any
business transaction involving the motion picture exhibition business that would
be significant to the Company, he would submit such opportunity to the Board of
Directors of the Company before taking any action.

The Shareholders' Agreement further provides that the shareholders agree to
form a new corporation as the parent

corporation of the Company and to contribute their respective shares for like
shares of this new corporation. The Company is pursuing plans to create such a
holding company.

Investment Banking Services

During 1996, Bear, Stearns & Co. Inc. ("Bear, Stearns") provided
investment banking services to the Company and its subsidiaries.
Sheldon Stein, who is a director of the Company, is the Managing
Director of the Dallas, Texas office of Bear, Stearns.

Indemnification of Directors

The Company has adopted provisions in its Articles of Incorporation and
Bylaws which provide for indemnification of its officers and directors to the
maximum extent permitted under the Texas Business Corporation Act. In addition,
the Company has entered into separate indemnification agreements with each of
its directors which requires the Company, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors to the maximum extent permitted under the Texas Business
Corporation Act. The Company has obtained an insurance policy providing for
indemnification of officers and directors of the Company and certain other
persons against liabilities and expenses incurred by any of them in certain
stated proceedings and under certain stated conditions.

PART IV

Item 14: Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.

(a) Documents filed as part of this Report.

1. The financial statements listed in the accompanying Index
beginning on F-1 are filed as a part of this report.

2. The financial statement schedules and related data listed in the
accompanying Index beginning on S-1 are filed as a part of this report.

3. The exhibits listed in the accompanying Index beginning on E-1 are filed
as a part of this report, which exhibits are bound separately.

(b) Reports on Form 8-K.

The following reports on Form 8-K have been filed during the last quarter
of the period covered by this Report:

1. None.

See the accompanying Index beginning on page E-1, which exhibits are bound
separately.

(d) Financial Statement Schedules.

See the accompanying Index beginning on page S-1.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 27, 1997 CINEMARK USA, INC.

BY: /s/ Alan W. Stock

Alan W. Stock, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Name Title Date
---- -----

/s/ Lee Roy Mitchell Chairman of the Board of Directors March 27, 1997
----------------------------------------
and Chief Executive Officer
Lee Roy Mitchell

/s/ Tandy Mitchell Director March 27, 1997

Tandy Mitchell

/s/ Alan W. Stock Director March 27, 1997
----------------------------------------

Alan W. Stock

/s/ Jeffrey J. Stedman Director; Vice President and March 27, 1997
- -----------------------------------------
Treasurer (Chief Financial and
Jeffrey J. Stedman Accounting Officer)

/s/ Gary R. Gibbs Director March 27, 1997
----------------------------------------

Gary R. Gibbs

/s/ W. Bryce Anderson Director March 27, 1997
----------------------------------------

W. Bryce Anderson

/s/ Sheldon I. Stein Director March 27, 1997
- -----------------------------------------

Sheldon I. Stein

/s/ Heriberto Guerra, Jr. Director March 27, 1997
----------------------------------------

Heriberto Guerra, Jr.

/s/ James A. Stern Director March 27, 1997
----------------------------------------

James A. Stern

/s/ James L. Singleton Director March 27, 1997
- -----------------------------------------

James L. Singleton

Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants which Have Not Registered Securities Pursuant to
Section 12 of the Act.

No annual report or proxy material has been sent to the Company's
shareholders. An annual report and proxy material may be sent to the Company's
shareholders subsequent to the filing of this Form 10-K. The Company shall
furnish to the Securities and Exchange Commission copies of any annual report or
proxy material that is sent to the Company's shareholders.

CINEMARK USA, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS
(ITEMS 8 AND 14 OF FORM 10-K) AND SUPPLEMENTAL SCHEDULES
- ------------------------------------------------------------------------------------------------------------------------------------

Page

INDEPENDENT AUDITORS' REPORT.............................................................................................. F-2

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES:

Consolidated Balance Sheets, December 31, 1995 and 1996................................................................... F-3

Consolidated Statements of Income for the Years Ended
December 31, 1994, 1995 and 1996................................................................................... F-5

Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1994, 1995 and 1996................................................................................... F-6

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995 and 1996................................................................................... F-7

Notes to Consolidated Financial Statements................................................................................ F-8

SUPPLEMENTAL SCHEDULES REQUIRED BY THE INDENTURE
(SECTION 4.02) FOR THE SENIOR SUBORDINATED NOTES:

Schedule

A Consolidating Balance Sheet Information, December 31, 1996................................................... S-1

B Consolidating Statement of Operations Information for the Year Ended
December 31, 1996............................................................................................ S-2

C Consolidating Statement of Cash Flows Information for the Year Ended
December 31, 1996............................................................................................ S-3

[THIS PAGE INTENTIONALLY LEFT BLANK]

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Cinemark USA, Inc.:

We have audited the accompanying consolidated balance sheets of Cinemark
USA, Inc. and subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Cinemark USA, Inc. and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

At January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," as discussed in Note 1.

Our audits were conducted for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The supplemental
schedules of certain consolidating information listed in the index on page F-1
are presented for the purpose of additional analysis of the basic consolidated
financial statements rather than to present the financial position, results of
operations and cash flows of the individual companies, and are not a required
part of the basic consolidated financial statements. These schedules are the
responsibility of the Company's management. Such schedules have been subjected
to the auditing procedures applied in our audits of the basic consolidated
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic consolidated financial
statements taken as a whole.

DELOITTE & TOUCHE LLP

Dallas, Texas
March 10, 1997

CINEMARK USA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
=========================================================================================================================

ASSETS 1995 1996

CURRENT ASSETS:
Cash and cash equivalents $13,649,724 $14,081,226
Temporary cash investments 275,126 301,408
Inventories 1,061,580 1,296,323
Co-op advertising and other receivables (Note 12) 4,095,819 8,631,462
Prepaid expenses and other 145,660 2,638,991
----------------------------------------

Total current assets 19,227,909 26,949,410

THEATER PROPERTIES AND EQUIPMENT:
Land 14,335,343 39,734,644
Buildings 62,540,849 143,907,477
Leasehold interests and improvements 50,891,524 69,172,660
Theater furniture and equipment 125,172,486 166,596,341
Theaters under construction 29,218,015 31,431,790
Videocassette rental inventory 5,383,873
----------------------------------------

Total 287,542,090 450,842,912

Less accumulated depreciation and amortization 63,059,873 73,421,992
----------------------------------------

Theater properties and equipment - net 224,482,217 377,420,920

OTHER ASSETS:
Certificates of deposit (Note 9) 1,822,954 1,525,852
Investments in and advances to affiliates (Note 12) 4,275,602 6,049,992
Intangible assets - net (Note 3) 7,718,292 5,417,049
Deferred charges and other - net (Note 4) 10,220,127 15,542,244
----------------------------------------

Total other assets 24,036,975 28,535,137
----------------------------------------

TOTAL $267,747,101 $432,905,467
========================================
<FN>

(Continued)
</FN>

F - 3

CINEMARK USA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
=========================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1996

CURRENT LIABILITIES:
Current portion of long-term liabilities (Note 5) $377,737 $1,002,313
Accounts payable 14,213,239 24,831,236
Accrued film rentals 6,463,548 9,753,208
Accrued interest 2,826,262 8,267,591
Accrued payrolls 2,139,721 3,094,472
Accrued property taxes and other liabilities 10,522,260 13,022,916
Notes payable to related parties (Note 6) 2,051,642
Income taxes payable (Note 10) 1,648,629
----------------------------------------

Total current liabilities 40,243,038 59,971,736

LONG-TERM LIABILITIES:
Long-term debt, less current portion (Note 5) 196,139,904 296,553,642
Deferred lease expenses 9,811,038 11,580,629
Theater development advance, less current portion 1,125,703 769,657
Deferred income taxes (Note 10) 4,296,211 5,926,609
----------------------------------------

Total long-term liabilities 211,372,856 314,830,537

COMMITMENTS AND CONTINGENCIES (Note 9)

MINORITY INTERESTS IN SUBSIDIARIES (Note 8):
Common shareholders' equity 1,362,033 539,853
Common stock warrants with mandatory redemption
requirements 3,424,132 200,729

SHAREHOLDERS' EQUITY:
Class A common stock, $.01 par value; 10,000,000 shares authorized, 3,000 and
1,500 shares issued and
outstanding, respectively 30 15
Class B common stock, no par value; 1,000,000 shares
authorized, 205,570 and 233,176 shares issued, respectively 10,967,419 49,536,710
Additional paid-in capital 6,604,037 9,182,880
Unearned compensation - stock options (2,848,738) (2,434,717)
Retained earnings 27,161,692 32,391,591
Treasury stock, 54,791 and 54,965 Class B shares
at cost, respectively (20,000,000) (20,184,416)
Cumulative foreign currency translation adjustment (10,539,398) (11,129,451)
----------------------------------------

Total shareholders' equity 11,345,042 57,362,612
----------------------------------------

TOTAL $267,747,101 $432,905,467
========================================
<FN>

See notes to consolidated financial statements.
(Concluded)
</FN>

F - 4

CINEMARK USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
=======================================================================================================================

1994 1995 1996

REVENUES:
Admissions $174,470,503 $183,100,626 $211,581,569
Concessions 95,159,610 102,077,542 116,943,658
Other (Note 11) 13,446,676 13,380,589 13,205,703
---------------- ----------------- -----------------

Total 283,076,789 298,558,757 341,730,930

COSTS AND EXPENSES:
Cost of operations (Note 11):

Film rentals 83,978,465 88,978,423 104,156,508
Concession supplies 17,562,650 17,277,411 18,431,926
Salaries and wages 39,548,147 40,653,338 46,868,814
Facility leases 29,599,702 30,873,208 34,406,046
Advertising 7,189,436 7,623,475 8,500,631
Utilities and other 40,869,506 42,312,878 49,774,114

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

Total cost of operations 218,747,906 227,718,733 262,138,039

General and administrative expenses 17,094,964 19,554,615 23,486,530
Depreciation and amortization 15,121,120 15,924,794 21,798,673
---------------- ----------------- -----------------

Total 250,963,990 263,198,142 307,423,242
---------------- ----------------- -----------------

OPERATING INCOME 32,112,799 35,360,615 34,307,688

OTHER INCOME (EXPENSE):
Interest expense (Note 11) (18,133,438) (18,549,833) (19,551,655)
Amortization of debt issue cost and discount (783,515) (824,014) (824,743)
Interest Income (Note 11) 1,415,026 1,779,339 1,393,441
Gain (loss) on sale of assets and other (Notes 3 and 9) (512,329) 4,796,727 11,130,996
Equity in income of affiliates (Note 12) 2,709 693,415 362,443
Minority interests in (income) loss of subsidiaries (Note 8) (27,306) 288 144,291
---------------- ----------------- -----------------

Total (18,038,853) (12,104,078) (7,345,227)
---------------- ----------------- -----------------

INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS 14,073,946 23,256,537 26,962,461

INCOME TAXES (Note 10) 7,068,275 10,101,405 12,346,451
---------------- ----------------- -----------------

INCOME BEFORE EXTRAORDINARY ITEMS 7,005,671 13,155,132 14,616,010

EXTRAORDINARY ITEMS (Note 5):
Losses on early extinguishments of debt, net of
income tax benefit of $6,057,922 (9,386,111)
---------------- ----------------- -----------------

NET INCOME $ 7,005,671 $ 13,155,132 $ 5,229,899
================ ================= =================

EARNINGS PER SHARE:
Before extraordinary item $ 43.21 $ 80.32 $ 79.93
================ ================= =================

Net income $ 43.21 $ 80.32 $ 28.60
================ ================= =================

WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 162,113 163,776 182,866
================ ================= =================
<FN>

See notes to consolidated financial statements.
</FN>

F - 5

CINEMARK USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Class A Class B
Common Stock Common Stock
------------------------------- ------------------------------

Additional
Shares Shares Paid-In
Issued Amount Issued Amount Capital

BALANCE JANUARY 1, 1994 3,000 $ 30 205,570 $ 10,967,419 $ 3,205,887

Net income
Unearned compensation from stock
options granted 1,120,000
Amortization of unearned compensation
Foreign currency translation adjustment
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1994 3,000 30 205,570 10,967,419 4,325,887

Net income
Unearned compensation from stock
options granted 2,278,150
Amortization of unearned compensation
Foreign currency translation adjustment
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1995 3,000 30 205,570 10,967,419 6,604,037

Net income
Issuance of common stock to Cypress (1,500) (15) 25,393 38,567,078
Unearned compensation from stock options
granted 1,127,117
Unearned compensation from stock options
forfeited (216,282)
Amortization of unearned compensation
Stock options exercised, including tax
benefit 2,213 2,213 897,800
Net effect of exchange of Cinemark Mexico
Senior Notes and conversion of warrants to
Senior Notes, including tax benefit 770,208
Foreign currency translation adjustment
Purchase of treasury stock, 174 Class B
shares,
at cost
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1996 1,500 $ 15 233,176 $ 49,536,710 $ 9,182,880
=============== ============== ============== ============== ==============
(continued)
F - 6

Unearned Cumulative
Compensation Retained Treasury Translation
Stock Options Earnings Stock Adjustment Total

BALANCE JANUARY 1, 1994 $ (1,877,691) $ 7,000,889 $ (20,000,000) $ (56,080) $ (759,546)

Net income 7,005,671 7,005,671
Unearned compensation from stock
options granted (1,120,000) --
Amortization of unearned compensation 836,081 836,081
Foreign currency translation adjustment (4,349,900) (4,349,900)
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1994 (2,161,610) 14,006,560 (20,000,000) (4,405,980) 2,732,306

Net income 13,155,132 13,155,132
Unearned compensation from stock
options granted (2,278,150) --
Amortization of unearned compensation 1,591,022 1,591,022
Foreign currency translation adjustment (6,133,418) (6,133,418)
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1995 (2,848,738) 27,161,692 (20,000,000) (10,539,398) 11,345,042

Net income 5,229,899 5,229,899
Issuance of common stock to Cypress 38,567,063
Unearned compensation from stock options
granted (1,127,117)
Unearned compensation from stock options
forfeited 151,810 (64,472)
Amortization of unearned compensation 1,389,328 1,389,328
Stock options exercised, including tax
benefit 900,013
Net effect of exchange of Cinemark Mexico
Senior Notes and conversion of warrants to
Senior Notes, including tax benefit 770,208
Foreign currency translation adjustment (590,053) (590,053)
Purchase of treasury stock, 174 Class B
shares,
at cost (184,416) (184,416)
--------------- -------------- -------------- -------------- --------------

BALANCE DECEMBER 31, 1996 $ (2,434,717) $ 32,391,591 $ (20,184,416) $ (11,129,451) $ 57,362,612
=============== ============== ============== ============== ==============

<FN>
See notes to consolidated financial statements.
</FN>

F - 6 (continued)

CINEMARK USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
- ------------------------------------------------------------------- ----------------- ----------------- ----------------

1994 1995 1996

OPERATING ACTIVITIES:
Net Income 7,005,671 13,155,132 5,229,899
Loss on early extinguishment of debt 15,444,033
Noncash items in net income :
Depreciation 10,860,816 12,716,099 18,633,707
Amortization - intangibles and other assets 4,900,756 3,868,241 3,819,462
Deferred lease expenses 1,366,135 1,051,774 2,199,854
Deferred income tax expense 1,514,177 1,213,034 1,630,398
Debt issued for accrued interest 314,756 184,134 2,006,371
Amortization of debt discount 143,063 164,468 170,247
Amortized compensation - stock options 836,081 1,591,022 1,324,856
(Gain) loss on sale of assets 301,915 (5,196,922) (7,760,774)
Equity in income of affiliates (2,709) (693,415) (362,443)
Minority interest in income (loss) of subsidiaries 27,306 (288) (144,291)

Cash from (used for) operating working capital:
Inventories (16,831) (176,881) (234,743)
Co-op advertising and other receivables (771,681) (1,000,649) (3,902,355)
Prepaid expenses and other (1,007,532) 1,356,167 (2,493,331)
Accounts payable 3,289,736 5,111,906 12,111,884
Accrued liabilities 3,677,829 1,451,003 12,729,888
Income taxes payable 225,205 1,295,074 (1,648,629)
----------------- ----------------- ----------------

Net cash from operating activities 32,664,693 36,089,899 58,754,033

INVESTING ACTIVITIES:
Additions to theater properties and equipment (53,862,918) (89,287,667) (177,953,281)
Sale of theater properties and equipment 10,500 8,022,500 206,537
Proceeds from 2 Day Video Inc. sale 9,439,466
Proceeds from affiliate sale 800,000 781,300
Decrease (increase) in certificates of deposit 797,933 (323,034) 297,102
Decrease (increase) in temporary cash investments (3,981,970) 4,207,280 (26,282)
Increase in investments in and advances to affiliates (3,914,574) (828,065) (1,715,364)
Increase in other assets (1,924,649) (2,859,127) (8,452,094)
----------------- ----------------- ----------------

Net cash used for investing activities (62,875,678) (80,268,113) (177,422,616)

FINANCING ACTIVITIES:
Issuance of Senior Subordinated Notes 199,106,000
Retirement of Senior Notes (123,370,000)
Repurchase premium on retired Senior Notes (12,371,954)
Increase in long-term debt 15,890,000 46,000,000 97,510,000
Reductions of long-term debt (233,184) (15,025,359) (77,530,536)
Payment on notes payable to related parties (2,061,556) (2,086,513)
Decrease in theater development advance (321,858) (370,808) (356,046)
Minority investment in subsidiaries, net 102,625 (677,889)
Issuance of common stock to Cypress 38,567,063
Common stock issued for options exercised 900,013
Issuance of subsidiary common stock warrants 1,324,132
----------------- ----------------- ----------------

Net cash from financing activities 13,273,402 32,030,590 119,690,138

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (441,887) (776,726) (590,053)
----------------- ----------------- ----------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,379,470) (12,924,350) 431,502

CASH AND CASH EQUIVALENTS:
Beginning of period 43,953,544 26,574,074 13,649,724
----------------- ----------------- ----------------

End of period $ 26,574,074 $ 13,649,724 $ 14,081,226
================= ================= ================
<FN>

SUPPLEMENTAL INFORMATION (Note 13):

See notes to consolidated financial statements.
</FN>

F - 7

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Business - Cinemark USA, Inc. (the Company) and its subsidiaries own or
lease and operate motion picture theatres in 29 states and in Mexico at December
31, 1996. The following summarizes theatre transactions during 1994, 1995 and
1996:

Theatres Screens

Active at January 1, 1994 153 1,084
Acquisitions 2 9
Openings 7 82
Closings/Sales (4) (12)
--------------- --------------
Active at December 31, 1994 158 1,163
Openings 11 130
Sales (10) (46)
--------------- --------------
Active at December 31, 1995 159 1,247
Openings 17 237
Closings/Sales (7) (31)
--------------- --------------
Active at December 31, 1996 169 1,453
=============== ==============

At December 31, 1996, the Company also manages three theatres (37 screens)
for Movie Theatre Investors, Ltd.; one theatre (17 screens) for Cinemark
Partners II; and two theatres (24 screens) for Cinemark Theatres Alberta, Inc.,
a Canadian corporation, all related parties (Notes 11 and 12).

Consolidated Financial Statements include the accounts of Cinemark USA,
Inc. and its wholly owned subsidiaries, which include Cinemark International,
Inc. (f/k/a Cinemark II, Inc.) and ENT Holdings, Inc. Cinemark International,
Inc. ("Cinemark International") owns 97.1% of Cinemark Mexico (USA), Inc.
(Cinemark Mexico), which owns 99.9% of Cinemark de Mexico S.A. de C.V. (Cinemark
de Mexico), a Mexican corporation. Cinemark de Mexico includes the operations of
Cinemark del Norte S.A. de C.V. and Servicio Cinemark S.A. de C.V. Cinemark
International owns 100% of Cinemark Empreendimentos e Participacoes, LTDA, a
Brazilian corporation, whose subsidiary will operate in Brazil beginning in
1997. Cinemark International also owns 50% interests in affiliates operating in
Chile, Canada, Argentina and Peru and a 60% interest in an affiliate operating
in Ecuador. ENT Holdings, Inc. ("ENT") owns 100% of Funtime Entertainment, Inc.
The consolidated financial statements also include 2 Day Video, Inc. (2 Day) and
subsidiary, a video rental "superstore" chain through the date of its sale in
October 1996, Entertainment Amusements, Inc., a 50%-owned holding company whose
subsidiary provides video game machines to many of the Company's theatres, and a
50% interest in Brainerd, Ltd, a theatre joint venture. Majority-owned companies
are consolidated; 50% owned companies and minority investments are accounted for
under the equity method (Note 12). The results of all of these subsidiaries and
affiliates are included in the financial statements effective with their
formation or from their dates of acquisition. Significant intercompany balances
and transactions are eliminated in the consolidation.

Basis of Presentation - In preparing the financial statements, management
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial statements and
revenues and expenses for the period. Actual results could differ significantly
from those estimates. The estimates most susceptible to significant change are
those used in determining the valuation of certain accrued liabilities

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

and the valuation of the investments in operations located in foreign countries.
Although some variability is inherent in these estimates, management believes
the amounts provided are adequate. The devaluation of the Mexican peso and the
resultant economic uncertainties in Mexico create certain business risks for the
Company's investment in Mexico.

Revenues are recognized when admissions and concessions sales are received
at the theatres. Film rental costs are accrued based on the applicable box
office receipts and the terms of the film licenses.

Cash and Cash Equivalents consist of operating funds held in financial
institutions, petty cash held by the theatres and highly liquid investments with
original maturities of three months or less when purchased.

Temporary Cash Investments consist primarily of time deposits and
government securities which are classified as available for sale and are stated
at amortized cost which approximates market.

Inventories of concession products are stated at the lower of cost
(first-in, first-out method) or market.

Theatre Properties and Equipment are stated at cost less accumulated
depreciation and amortization. Property additions include $1,745,721 and
$3,928,454 of interest incurred during development and construction and
capitalized in 1995 and 1996, respectively. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets as follows:
buildings - 18 to 40 years, theatre furniture and equipment - 5 to 15 years.
Leasehold interests and improvements are amortized using the straight-line
method over the lesser of the lease period or the estimated useful lives of the
leasehold improvements. On January 1, 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The adoption of
SFAS No. 121 did not have a material effect on the Company's financial
statements. During the third quarter of 1996 the Company determined that an
impairment charge of $2,381,998 was required for certain theatres.

Intangible Assets represent primarily the excess of cost over the fair
values of the net assets of theatre businesses acquired, less accumulated
amortization ($8,853,793 and $8,616,821 at December 31, 1995 and 1996,
respectively). For financial reporting purposes, these goodwill amounts are
being amortized primarily over 10 to 20 years, which approximate the remaining
lease terms of the businesses acquired.

Deferred Charges and Other Assets, as applicable, are amortized using the
straight-line method over the primary financing terms ended June 2000 to August
2003 for debt issue costs and over the three to eight year terms of the
noncompete agreements.

Deferred Income Taxes are provided under the liability method for
temporary differences between revenue and expenses that are recognized for tax
return and financial reporting purposes.

Earnings Per Share are computed using the weighted average number of
shares of Class A common stock and common stock equivalents outstanding during
each period, including, when applicable, the Class B common shares and options
for Class B common shares (Note 7).

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Fair Values of Financial Instruments are estimated by the Company using
available market information and other valuation methodologies in accordance
with Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures
About Fair Value of Financial Instruments." The estimated fair value amounts for
specific groups

of financial instruments are presented in Note 5. Values are based on available
market quotes or estimates using a discounted cash flow approach based on the
interest rates currently available for similar debt. The fair value of financial
instruments for which estimated fair value amounts are not specifically
presented are estimated to approximate the related recorded value.

Reclassifications have been made to certain 1994 and 1995 amounts to
conform to 1996 presentation.

2. FOREIGN CURRENCY TRANSLATION

The cumulative foreign currency translation adjustment in shareholders'
equity of $10,539,398 and $11,129,451 at December 31, 1995 and 1996,
respectively, primarily relates to the unrealized adjustments resulting from
translating the financial statements of Cinemark de Mexico. The functional
currency of Cinemark de Mexico is the peso. Accordingly, assets and liabilities
of Cinemark de Mexico are translated to U.S. dollars at year-end exchange rates.
Income and expense items are translated at the average rates prevailing during
the year. Changes in exchange rates which affect cash flows and the related
payables are recognized as realized transaction gains and losses in the
determination of net income. At December 31, 1996, the total assets of Cinemark
de Mexico were $33,357,719. The Company's other consolidated foreign
subsidiaries were in the development stage and had insignificant translation
adjustments. In 1997, the Company will be required to utilize the U.S. dollar as
the functional currency of Cinemark de Mexico for U.S. reporting purposes due to
Mexico's highly inflationary economy. Thus devaluations in the peso during 1997
that will affect the Company's investment will be charged to exchange loss
rather than to the cumulative adjustment account.

3. ACQUISITIONS AND INVESTMENT ACTIVITY

In September 1996, Cinemark Holdings Canada, Inc., a 100% subsidiary of
Cinemark International and 50% owner of Cinemark Theatres Alberta, Inc.,
contributed an additional $400,000 to assist in funding the construction of an
additional 12 screen theatre in Alberta, Canada. The other 50% owner of Cinemark
Theatres Alberta, Inc. contributed an equal amount.

Cinemark International acquired an additional 2,661,450 shares of common
stock of Cinemark Mexico for $10.0 million for a cumulative interest of 97.1%
(96.5% on a fully diluted basis). Cinemark International sold its 50%
partnership interest in Beaumont Cinema Ventures, Ltd., which operated two
theatres in Texas, for $781,300, resulting in a gain of $547,750 in September
1996. Cinemark International also contributed funding of $1,200,000 to its 100%
owned Brazilian subsidiary, $600,000 to its Argentine affiliate, and $100,000 to
its Peruvian affiliate.

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

In May 1995, ENT sold its 50% ownership in Funtime International, Inc., an
international pizza and video arcade restaurant developer, to the other
shareholders of Funtime International, Inc. In connection with this sale, a
$2,000,000 note and related interest due to ENT were canceled; a $500,000 note
payable by ENT was canceled; and Funtime International, Inc. paid $800,000 cash
and issued notes payable of $200,000 and $600,000 to ENT. Also in connection
with the sale, ENT granted Funtime International, Inc. a 12-month option to
purchase the assets of the Company's remaining Funtime Pizza restaurant and
other related equipment for $400,000. As a result of this transaction, ENT
incurred a loss of approximately $294,000. In May 1996, Funtime International
exercised this option, issuing a note payable to ENT from Entertainment
Technologies, Inc. (parent company of Funtime International) for $400,000; this
resulted in a gain of $48,464 for ENT.

In 1994 and 1995, the Company wrote off as amortization expense $1,507,217
and $323,249, respectively, of goodwill and $351,361 and $92,389, respectively,
of noncompete agreements related to the closing of certain Funtime Pizza
restaurants acquired in 1992. In October 1996, the Company invested $571,633 in
Brainerd, Ltd., a limited partnership, which will own and operate a theatre.

In August 1995, Cinemark Inversiones, Inc., a 100%-owned subsidiary of
Cinemark International and 50% owner of Cinemark Chile, contributed an
additional $500,000 to Cinemark Chile to fund theatre construction.
The other 50% owner of Cinemark Chile contributed an equal amount.

In October 1996, the Company sold its entire interest in 2 Day (Class A
common stock) for cash of $9,439,466 and a receivable of $633,288, resulting in
a gain of $7 million.

4. DEFERRED CHARGES AND OTHER ASSETS

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

1995 1996
---- ----

Debt issue costs $ 6,149,523 $ 9,741,136
Noncompete agreements 835,564 758,145
---------------------- ---------------------
Total 6,985,087 10,499,281
Less accumulated amortization 2,662,939 3,345,867
---------------------- ---------------------
Net 4,322,148 7,153,414
Equipment, lease and other deposits 1,067,756 1,064,123
Funtime International, Inc.:
Note receivable, 10% interest, paid in 1996 200,000
$600,000 convertible note receivable - net, due 2005 445,224 445,224
Entertainment Technologies, Inc:
Note receivable, 10% interest, due June 2000 358,269
Construction advances and other 4,184,999 6,521,214
---------------------- ---------------------
Total $ 10,220,127 $ 15,542,244

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

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

The $600,000 convertible note receivable from Funtime International, Inc.,
discounted to $445,224 for imputed interest, is non-interest-bearing through May
2000 and bears interest at 10% from June 2000 through its maturity date at May
2005. Funtime International, Inc. has granted ENT the option anytime after May
16, 2000, to convert the entire unpaid principal of this note receivable and any
unpaid interest into a 15% interest in Funtime International, Inc. (Note 3).

5. LONG-TERM DEBT AND THEATRE DEVELOPMENT ADVANCE

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

1995 1996
---- ----

Senior Notes due 2002, discussed below $ 125,000,000 $ 1,630,000
Senior Subordinated Notes due 2008, discussed below 199,137,042
Senior Subordinated Notes of Cinemark Mexico due 2003,
less unamortized discount of $2,015,751 at 20,549,249 25,710,900
December 31, 1995, discussed below
Revolving credit line of $225,000,000, discussed below 50,000,000 70,000,000
Other notes payable 618,392 728,013
--------------------------- ---------------------------
Total long-term debt 196,167,641 297,205,955
Less current portion 27,737 652,313
--------------------------- ---------------------------
Long-term debt, less current portion $ 196,139,904 $ 296,553,642
=========================== ===========================

Senior Notes - In June 1992, the Company completed a public offering of
$125,000,000 senior notes payable ("Senior Notes"). The Senior Notes bear
interest at the rate of 12% per annum, payable semiannually on June 1 and
December 1 of each year. In August 1996, the Company utilized proceeds from a
$200 million issuance of Senior Subordinated Notes, due 2008, to repurchase
$123,370,000 of the Senior Notes at a premium of $1,098.33 per $1,000.00
principal amount. This resulted in a net outstanding balance of $1,630,000 in
Senior Notes at December 31, 1996. An extraordinary loss of $9.0 million, net of
related tax benefit, was recognized in connection with the premium paid and the
write-off of the unamortized debt issue costs ($2,463,560) associated with the
repurchased Senior Notes (Notes 4). The remaining Senior Notes are redeemable at
the option of the Company, in whole or in part, beginning June 1, 1997, ranging
in redemption price from 106% in 1997 to 100% in 2000 and thereafter.

Senior Subordinated Notes - In August 1996, the Company issued
$200,000,000 of Senior Subordinated Notes due 2008 (the "Subordinated Notes").
The Subordinated Notes bear interest at the rate of 9-5/8% per annum, payable
semi-annually on February 1 and August 1 of each year. The Subordinated Notes
were issued at 99.553% of the principal face amount (a discount of $4.47 per
$1,000 principal amount) for an aggregate discount of $894,000. The net proceeds
to the Company from the issuance of the Subordinated Notes (net of

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

discount, fees and expenses) were approximately $193.2 million. The Subordinated
Notes require the Company to maintain a specified interest expense coverage
ratio; restricts the payment of dividends, payment of subordinated debt prior to
maturity and issuance of preferred stock and other indebtedness; and other
restrictive covenants. The Subordinated Notes are redeemable at the option of
the Company, beginning August 2001, ranging in redemption price from 104.8% in
2001 to 100% in 2003 and thereafter. Any outstanding Subordinated Note are due
August 1, 2008.

Senior Subordinated Notes, Mexico - In 1993, Cinemark Mexico issued
$20,400,000 of 12% Senior Subordinated Notes due 2003 (the "Mexican Subordinated
Notes") with detachable warrants (the Warrants) (Note 8). Cinemark de Mexico
guarantees the notes on a senior subordinated basis. The Mexican Subordinated
Notes were issued at a discount of $102.94 per $1,000 note, totaling $2,100,000,
and bear interest at 12% per annum payable semiannually on August 1 and February
1. In 1994, Cinemark Mexico issued an additional $2,000,000 of Mexican
Subordinated Notes due 2003 with the terms governed by the indenture from the
initial

offering of Mexican Subordinated Notes. These notes were issued at a discount of
$55 per $1,000 note, totaling $110,000, and bear interest at 12% per annum
payable semiannually on August 1 and February 1.

The entire $22,400,000 in Mexican Subordinated Notes and $1,971,500 of
accrued interest were exchanged in September 1996 for new senior subordinated
notes (the "New Mexican Notes"). The form and terms are identical in all
material respects to the previous notes except that interest on the New Mexican
Notes may be paid through the issuance of additional notes of the same series at
the option of Cinemark Mexico through and including February 1, 2000. If the
Company elects to pay accrued interest in the form of additional notes, interest
will accrue at 13% during that period. In connection with the exchange, Warrants
(Note 8) for 356,851 shares of common stock were exchanged for $1,339,400 in New
Mexican Notes. As a result of the note exchange and retirement of the Warrants,
a net benefit of $.8 million, including tax benefit, was credited to additional
paid in capital.

The indenture for the New Mexican Notes requires a sinking fund payment of
$6,667,000 on each of August 1, 2001, and August 1, 2002; the amounts are to be
utilized on such respective dates to retire a like face amount of the
outstanding New Mexican Notes. The indenture governing the New Mexican Notes
restricts the ability of Cinemark Mexico and Cinemark de Mexico to, among other
things, pay dividends; make investments; incur additional indebtedness; redeem
stock; use proceeds of asset disposals; create liens; engage in transactions
with affiliates; and to merge, consolidate or sell all or substantially all the
assets of the companies.

Reducing, Revolving Credit Facility - In December 1996, the Company
amended its revolving credit line with a reducing, revolving credit facility
(the "Credit Facility") with a group of banks. The Credit Facility provides for
loans of up to $225,000,000 in the aggregate and bears interest at a defined
floating rate, adjusted in accordance with certain financial ratios. The
weighted average interest rate and current interest rate at December 31, 1996,
was 6.75% and 6.53%, respectively.

The Credit Facility is a reducing revolving credit facility, with
commitments automatically reduced each calendar quarter by $8,437,500,
$11,250,000, $14,062,500 and $22,500,000 in calendar year 2000, 2001, 2002 and
2003, respectively. The Company is required to prepay all loans outstanding in
excess of the aggregate commitment as reduced pursuant to the terms of the
Credit Facility. Borrowings are secured by a pledge of a majority of the issued
and outstanding capital stock of the Company, and the credit agreement requires
that the Company maintains certain financial ratios; restricts the payment of
dividends, payment of subordinated debt

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

prior to maturity and issuance of preferred stock and other indebtedness; and
other restrictive covenants. This credit facility amended a new revolving credit
line of $175,000,000 that the Company had entered into on February 1996. The
$175,000,000 credit facility replaced the Company's previous credit facility. An
extraordinary loss of $.4 million, net of related tax benefit, was recognized in
connection with the write-off of debt issue costs related to the Company's
previous credit facility.

Long-term debt at December 31, 1996, matures as follows: $652,313 in 1997;
$6,126 in 1998; $5,895 in 1999; $3,477 in 2000; $6,670,880 in 2001; and
$289,867,264 thereafter.

The estimated fair value of the Company's long-term debt of $296.6 million
at December 31, 1996, was approximately $300.5 million. Such amounts do not
include prepayment penalties which would be incurred upon the early
extinguishment of certain debt issues.

Debt Issue Costs - Debt issue costs of $6,149,523 and $9,741,136, net of
accumulated amortization of $2,010,268 and $2,664,766, related to the
Subordinated Notes, the New Mexican Notes and the Reducing, Revolving Credit
Facility, are included in deferred charges at December 31, 1995 and 1996,
respectively. The 1996 period includes an extraordinary loss recognized in
connection with the writeoff of debt issue costs relating to the Company's prior
bank line of credit and repurchase of Senior Notes.

Theatre Development Advance - The current portion of long-term liabilities
also includes $350,000 at December 31, 1995 and 1996, for the estimated amount
to be payable in the following year on a theatre development advance. The
remaining long-term portion of this advance of $769,657 at December 31, 1996,
will be repayable based on the future operations of a theatre opened in 1992.

6. NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties at December 31 consist of the following:

1995 1996
---- ----

Note payable to The Peble Corp. (a former shareholder,
bearing interest at 8.5% $ 1,041,147 $ -

Note payable to an officer and shareholder, bearing
interest at 8.5% 1,010,495
----------------------------- --------------------------
$ 2,051,642 $ -
============================= ==========================

In March 1996, the Company paid the note payable to The Peble Corp. and
the note payable to an officer and shareholder.

7. CAPITAL STOCK

Common and Preferred Stocks - Class A common shareholders have exclusive
voting rights. Class B common shareholders have no voting rights except upon any
proposed amendments to the articles of incorporation. However they may convert
at their option to Class A common stock. In the event of any

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

liquidation, the Class A and Class B shareholders will be entitled to their pro
rata share of assets remaining after any preferred shareholders have received
their preferential amounts based on their respective shares held.

In February 1996, the Company entered into a Securities Purchase Agreement
(the "Purchase Agreement") pursuant to which the Company issued to Cypress
Merchant Banking Partners L.P. and Cypress Pictures Ltd. (collectively,
"Cypress") an aggregate 23,893 shares of Class B Common Stock for an aggregate
purchase price of $41.0 million. As part of the Purchase Agreement, existing
shareholders sold an additional 58,655 of Class B Common Stock, including 1,500
shares of Class A Common stock that were exchanged for Class B Common Stock, to
Cypress for a total purchase price of approximately $98.2 million. The closing
of the issuance and sale of common stock of the Company to Cypress occurred in
March 1996. The net proceeds from the issuance of stock by the Company were
$38,567,063.

At December 31, 1996, the Company has reserved Class A common stock in the
amount of 178,211 shares for potential conversions of outstanding Class B common
stock and 8,442 shares for potential conversions of Class B common stock
issuable under the stock option plan. The Company has 1,000,000 shares of
preferred stock, $1.00 par value, authorized with none issued or outstanding.

Stock Option Plan - Under terms of the Company's stock option plan,
nonquailifed options to purchase up to 10,685 shares of the Company's Class B
common stock may be granted to key employees. At January 1, 1994, 7,608 options
with an exercise price of $1.00 per share were outstanding.

The total options granted in 1994, 1995 and 1996 were 896, 1,381 and 600
shares, respectively, of the Class B common stock at an exercise price of $1.00
per share. All options vest and are exercisable over a period of five years from
the date of grant and expire ten years from date of grant. During 1996, 2213
vested options were exercised and an additional 430 options were forfeited,
accounting for a reduction of 1996 compensation expense of $64,472. At December
31, 1996, 6,110 options were exercisable out of a total of 7,842 outstanding.

Independent Director Stock Options - In 1993, the Company granted the
unaffiliated directors of the Company options to purchase up to an aggregate of
900 shares of the Company's Class B Common Stock at an exercise price of $833.34
per share (the "Director Options"). In 1995, the Company amended the Director
Options to reduce the aggregate number of shares of Common Stock issuable
pursuant to the Director Options from 900 to 600 shares and to reduce the
exercise price of the Director Options from $833.34 per share to $1.00 per
share. The options vest on June 1, 1997, subject to acceleration in certain
circumstances. The options expire ten years from the date of grant. A director's
options are forfeited if the director resigns or is removed from the Board of
Directors of the Company. Compensation expense of $414,000 was immediately
recognized upon this exchange, with unearned compensation expense of $276,000 to
be recognized over the remaining vesting period of 15 months.

The excess of the estimated fair market value of the stock at the dates of
the grant over the exercise price of the options are accounted for as additional
paid-in capital and as unearned compensation, which is amortized to operations
over the vesting period. As a result of the above grants unearned compensation
of $1,120,000, $2,278,150 and $1,127,117 was recorded in 1994, 1995 and 1996,
respectively. Compensation expense under this stock option plan was $836,081,
$1,591,022 and $1,324,856 in 1994, 1995 and 1996, respectively.

The Company applies APB Opinion 25 and related interpretations in
accounting for the Company's stock

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

option plan and Cinemark Mexico's stock option plan, as described below. Had
compensation costs for the Company's stock option plan been determined based on
the fair value at the date of grant for awards under the plan consistent with
the method of Statement of Financial Accounting Standards (SFAS) No. 123,
utilizing the Black-Scholes option pricing model, the effect on income and
earnings per share would not have changed from the amounts presented in the
financial statements. The results are substantially the same pursuant to SFAS
No. 123 as a result of the value of the underlying stock at the date of grant
being significantly higher than the exercise price of the options.

In November 1996, the Company repurchased 174 shares of Class B common
stock as treasury stock.

8. MINORITY INTERESTS IN SUBSIDIARIES

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

1995 1996
---- ----

Cinemark Mexico - 2.93% interest $ 405,634 $ 187,103
Laredo Theatres, Ltd. - 25% interest (owned by a relative
of the majority shareholder) 574,448 362,176
2 Day Video - 16.9% interest (Note 3) 381,951
Cinemark del Ecuador, S.A. - 40% interest (9,426)
-------------------------- -----------------------
Total $ 1,362,033 $ 539,853
========================== =======================

Common Stock Warrants - In connection with the issuance of the
Subordinated Notes (Note 5), Cinemark Mexico issued Warrants for $2.1 million
which were exercisable into 226,662 shares of Cinemark Mexico's common stock. In
August 1995, Cinemark Mexico sold additional Warrants for $1,324,132 exercisable
into 152,411 shares, which when aggregated with the previously purchased
Warrants convert to 20% of the ownership on a fully diluted basis at December
31, 1995, of Cinemark Mexico's common stock. In September 1996, 356,851 Warrants
were exchanged for $1,339,400 in New Mexican Notes resulting in a remaining
balance of $200,729 for 22,222 Warrants outstanding (1% of fully diluted
ownership) (Note 5). The remaining Warrants are exercisable at $.001 per share
subject to the following terms and expire on August 1, 2003. At any time after
January 31, 1998, Cinemark Mexico may redeem the Warrants in whole or in part at
their appraised value. If the Warrants have not been redeemed by August 1, 1998,
the Company must offer to purchase one-third of the Warrants on each of July 31,
1998, 1999, and 2000, utilizing the appraised value on such dates. At December
31, 1996, Cinemark Mexico has reserved 22,222 shares of common stock for the
potential conversion of the Warrants.

Stock Option Plan - Cinemark Mexico has a nonqualified stock option plan
under which key employees may be granted options to purchase up to 100,000
shares of Cinemark Mexico's common stock. The exercise price and terms of the
options are discretionary and determined when the options are granted. In 1994
and 1996, Cinemark Mexico granted options to purchase 16,704 and 7,500 shares of
common stock, respectively, at an exercise price of $.10 per share to certain
employees, resulting in unearned compensation of $183,292 and $28,180 in 1994
and 1996 respectively. In 1995, 12,528 of the options granted in 1994 were
canceled. The outstanding options vest over a period of six years from the date
of grant and expire ten years from the date of grant. At December 31, 1996, 835
options were exercisable.

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

9. COMMITMENTS AND CONTINGENCIES

Leases - The Company conducts a significant part of its theatre operations
in leased premises under noncancelable operating leases with terms of 5 to 30
years. In addition to the minimum annual lease payment, most of these leases
provide for contingent rentals based on operating results and require the
payment of taxes, insurance and other costs applicable to the property.
Generally, these leases include renewal options for various periods at
stipulated rates. Some leases also provide for escalating rent payments
throughout the lease term. Deferred lease expenses of $9,811,038 and $11,580,629
at December 31, 1995 and 1996, respectively, have been provided to account for
lease expenses on a straight-line basis, where lease payments are not made on
such basis. Rent expense for the years ended December 31, 1994, 1995 and 1996,
totaled $29,916,187, $31,273,367 and $34,841,041 respectively.

Future minimum payments under noncancelable operating leases with initial
or remaining terms in excess of one year at December 31, 1996, are due as
follows:

1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,012,608
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,226,975
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,908,418
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,061,124
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,167,331
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,542,424
-----------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 502,918,880
=======================

After December 31, 1996, the Company entered into other lease agreements
that are contingent on the lessors' obtaining financing and completing
construction of theatre facilities. Upon satisfaction of the contingency, the
agreements will require future minimum lease payments over 15 to 25 years
estimated to be $139 million for nine theatre facilities in the United States,
three theatres in Mexico and four theatres in Brazil.

Employment Agreements - As of December 31, 1996, the Company has
employment agreements with certain principal officers and a shareholder
providing for total minimum future annual payments as follows:

1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 469,061
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515,967
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567,564
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624,320
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686,752
--------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,863,664
====================

These employment agreements terminate on the earlier of death, permanent
disability or December 31, 2001.

Retirement Savings Plan - The Company has a 401(k) profit sharing plan for
the benefit of all employees

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

and makes contributions as determined annually by the Board of Directors.
Contributions of $427,963, $415,121 and $613,213 were made in 1994, 1995 and
1996, respectively.

Letters of Credit and Collateral - At December 31, 1996, the Company has
outstanding letters of credit of $1,525,852 in connection with property and
liability insurance coverage and certain lease matters. Certificates of deposit
of $1,525,852 are pledged as collateral on the letters of credit.

Litigation Settlement - In April 1996, the Company entered into a
settlement agreement regarding litigation on the development of a proposed
theatre. The Company recognized a gain of $3,667,646 net of expenses, as a
result of the settlement.

10. INCOME TAXES

Income tax expense includes a benefit from the extraordinary loss on early
extinguishment of debt of $6,057,922 and consists of the following:

1994 1995 1996
---- ---- ----

Current:
Federal - before utilization of credits $ 5,543,239 $ 8,927,814 $ 3,909,114
Utilization of tax credits (987,000) (1,908,821)
State 997,859 1,869,378 749,017
--------------------- ----------------------- ----------------------
Total current expense 5,554,098 8,888,371 4,658,131

Deferred:
Temporary differences 787,177 (466,356) 1,630,398
Reestablished from utilization of
tax credits 727,000 1,679,390
--------------------- ----------------------- ----------------------
Total deferred expense 1,514,177 1,213,034 1,630,398
--------------------- ----------------------- ----------------------
Income tax expense $ 7,068,275 $ 10,101,405 $ 6,288,529
===================== ======================= ======================

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

1994 1995 1996
---- ---- ----

Computed normal tax expense $ 4,925,882 $ 8,139,788 $ 4,031,450
Goodwill amortization, not deductible
for tax purposes 934,044 361,647 363,044
State and local income taxes, net of federal
income tax benefit 711,226 1,151,411 501,887
Foreign subsidiaries losses not utilized
currently 445,872 874,897 997,056
Benefit of net operating loss carryforwards
Computed normal tax expense utilized currently $ (165,329)
Jobs tax credits (260,000) (127,267)
Other - net 476,580 (299,071) 395,092
-------------------- ---------------------- --------------------
$ 7,068,275 $ 10,101,405 $ 6,288,529
==================== ====================== ====================

The tax effects of significant temporary differences and carryforwards
comprising the net long-term deferred income tax liability at December 31, 1995
and 1996, consist of the following:

1995 1996
---- ----

Deferred liabilities:
Accelerated tax depreciation $ 11,293,935 $ 15,165,608
Basis difference of assets acquired 324,878 220,610
Other 944,740 473,371
---------------------- --------------------------
Total 12,563,553 15,859,589
Deferred assets:
Deferred lease expense 3,799,182 4,404,794
Section 263(a) inventory adjustment 715,632 1,191,173
Amortization of unearned compensation 1,372,454 1,461,548
Self-insurance accruals 1,118,393 1,233,432
Asset Impairment loss 737,578
Original issue discount 321,429
Deferred gain on sale of interest rate swap 117,909
Tax operating loss carryforward for foreign subsidiaries 1,320,769 2,317,825
Valuation allowance - operating loss carryforward (1,320,769) (2,317,825)
Other expenses, not currently deductible for tax purposes 1,143,772 583,026
---------------------- --------------------------
Total 8,267,342 9,932,980
---------------------- --------------------------
Net long-term deferred income tax liability $ 4,296,211 $ 5,926,609
====================== ==========================

11. OTHER RELATED PARTY TRANSACTIONS

Transactions with related companies are included in the Company's financial
statements as follows:

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

1994 1995 1996
---- ---- ----

Facility lease expense - theatre and equipment
leases with shareholder affiliates $ 347,917 $ 306,937 $ 306,238
Interest expense - The Peble Corp. (Note 6) 118,094 83,989 17,457
Interest expense - an officer and shareholder
of the Company (Note 6) 115,149 81,515 17,414
Video game machine income - a subsidiary
of Entertainment Amusements, Inc.(Note 12) 1,157,105 1,394,467 1,745,731
Management fees - Movie Theatre Investors, Ltd. (Note 12)
for property and theatre management services 274,304 300,662 257,360
Management fees - Cinemark Theatres Alberta, Inc. (Note 12)
for property and theatre management services 64,426 74,928 97,073
Management fees - Cinemark Partners II, Ltd. (Note 12)
for property and theatre management services 171,500 59,467
Rental revenue - theatre lease with shareholder affiliate 200,000 250,000

The majority shareholder and certain employees of the Company own a
minority portion of both Cinemark Partners II, Ltd. and Movie Theatre Investors,
Ltd.

The Company leases a theatre facility to a relative of the Company's
majority shareholder.

12. INVESTMENTS IN AND ADVANCES TO AFFILIATES

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

1995 1996
---- ----

Cinemark Chile, S.A. - investment, at equity (Note 3) $ 1,775,435 $ 2,225,518
Entertainment Amusements, Inc. - investment,
at equity 831,381 521,926
Cinemark Theatres Alberta, Inc. - investment,
at equity (Note 3) 1,408,228 1,848,316
Brainerd, Ltd. - partnership interest (Note 3) 571,633
Cinemark Argentina, S.A. (Note 3) 606,144
Cinemark del Peru, S.A. (Note 3) 137,586
Movie Theatre Investors, Ltd. - partnership interest 55,869 55,869
Cinemark Partners II, Ltd - partnership interest 83,000 83,000
Other 121,689
--------------------- ------------------------
Total $ 4,275,602 $ 6,049,992
===================== ========================

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Other receivables at December 31 include amounts due from the following:

1995 1996
---- ----

A subsidiary of Entertainment Amusements, Inc. $ 155,137 $ 264,633
Movie Theatre Investors, Ltd. 394,345 1,090,771
Cinemark Chile, S.A. 62,549 46,654
Cinemark Partners II, Ltd. 614,620 724,404
Related party rent receivable (Note 11) 199,967 449,940

13. SUPPLEMENTAL CASH FLOW INFORMATION

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

1994 1995 1996
---- ---- ----

Interest paid $ 17,477,121 $ 19,864,594 $ 17,928,251
================= ==================== ====================

Income taxes paid $ 5,520,885 $ 7,195,765 $ 4,974,320
================= ==================== ====================

Noncash investing and financing activities:
Note issued for stock of Funtime
Entertainment, Inc. $ 500,000
Canceled note payable and accrued interest
due to former owners for Funtime
Pizza (Notes 3 and 6) $ 552,192
Canceled investment, note receivable and
accrued interest due from Funtime
International, Inc. (Notes 3 and 4) 2,291,837
Issued note receivable due from Funtime
International, Inc. (Notes 3 and 4) 445,224
Issued note receivable for sale of Funtime
Pizza Two, Inc. stock and related assets $ 400,000
Issued receivable due from sale of 2 Day Video, Inc. stock 633,288
Issued note payable for purchase of treasury
stock, less related taxes 130,156
Retirement of Cinemark Mexico senior subordinated
notes and issuance of new senior subordinated
notes (Note 5) 22,400,000
Issuance of Cinemark Mexico senior subordinated
notes for redeemed warrants (Notes 5 and 8) 1,339,400
Net effect of exchange of Cinemark Mexico senior
subordinated notes and conversion of warrants to
senior subordinated notes on additional paid-in
capital (Notes 5 and 8) 172,456

14. JAPANESE JOINT VENTURE

In March 1997, Cinemark International invested $6.5 million into a joint
venture with Shochiku Co., Ltd., a Japanese distributor, exhibitor and producer
of movies ("Shochiku") to develop state-of-the-art multiplex theatres in Japan.
The joint venture will conduct its business through Shochiku Cinemark Theatres,
which is 26.7% owned by Cinemark International, 26.7% owned by Shochiku, and
46.6% owned by a consortium of prominent Japanese companies. Shochiku Cinemark
Theatres opened its first theatre (7 screens) in March 1997 and plans to begin
construction of an additional theatre (12 screens) during 1997.

CINEMARK USA, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE A
CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------

Restricted Cinemark Int'l
Group Group
ASSETS Eliminations Consolidated

CURRENT ASSETS:
Cash and cash equivalents $ 3,056,375 $ 11,024,851 $ - $ 14,081,226
Temporary cash investments 301,408 301,408
Inventories 1,187,268 109,055 1,296,323
Other current assets 12,147,847 3,312,533 (4,189,927) 11,270,453
-------------- -------------------------------------------

Total current assets 16,391,490 14,747,847 (4,189,927) 26,949,410

THEATRE PROPERTIES AND EQUIPMENT - Net 350,549,600 26,871,320 377,420,920

OTHER ASSETS:
Certificates of deposit 1,525,852 1,525,852
Investments in and advances to affiliates 14,838,634 4,817,563 (13,606,205) 6,049,992
Intangible assets - net 7,732,399 (2,315,350) 5,417,049
Deferred charges and other - net 11,767,041 3,775,203 15,542,244
-------------- -------------------------------------------

Total other assets 35,863,926 8,592,766 (15,921,555) 28,535,137
-------------- -------------------------------------------

TOTAL $ 402,805,016 $ 50,211,933$ (20,111,482)$ 432,905,467
============== ===========================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term liabilities $ 1,002,313 $ - $ - $ 1,002,313
Accounts payable, accrued expenses and other
current liabilities 55,135,724 7,768,671 (3,934,972) 58,969,423
-------------- -------------------------------------------

Total current liabilities 56,138,037 7,768,671 (3,934,972) 59,971,736

LONG-TERM LIABILITIES:
Long term debt, less current portion 270,842,742 25,710,900 296,553,642
Deferred lease expenses 11,248,587 332,042 11,580,629
Other long-term liabilities 769,657 769,657
Deferred income taxes 6,081,205 100,359 (254,955) 5,926,609
-------------- -------------------------------------------

Total long-term liabilities 288,942,191 26,143,301 (254,955) 314,830,537

MINORITY INTERESTS IN SUBSIDIARIES 362,176 378,406 740,582

SHAREHOLDERS' EQUITY:
Common stock 49,536,725 1,000 (1,000) 49,536,725
Additional paid-in capital 9,182,880 31,014,208 (31,014,208) 9,182,880
Unearned compensation - stock options (2,434,717) (2,434,717)
Retained earnings (deficit) 32,391,591 (3,937,978) 3,937,978 32,391,591
Treasury stock (20,184,416) (20,184,416)
Cumulative foreign currency
translation adjustment (11,129,451) (11,155,675) 11,155,675 (11,129,451)
-------------- -------------------------------------------

Total shareholders' equity 57,362,612 15,921,555 (15,921,555) 57,362,612
-------------- -------------------------------------------

TOTAL $ 402,805,016 $ 50,211,933$ (20,111,482)$ 432,905,467
============== ===========================================
<FN>

Note: "Restricted Group" and "Cinemark International Group" are defined in the Indenture (Section 4.02) for the
Senior Notes dated June 10, 1992.
</FN>

S - 1

CINEMARK USA, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE B
CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 1996

Restricted Cinemark Int'l
Group Group
Eliminations Consolidated

REVENUES $320,132,158 $22,376,485 ($777,713) $341,730,930

COSTS AND EXPENSES:
Cost of operations 243,847,698 18,290,341 262,138,039
General and administrative expenses 20,631,921 3,632,322 (777,713) 23,486,530
Depreciation and amortization 20,185,109 1,750,432 (136,868) 21,798,673
----------------- ------------------- ------------------ -----------------

Total 284,664,728 23,673,095 (914,581) 307,423,242
----------------- ------------------- ------------------ -----------------

OPERATING INCOME (LOSS) 35,467,430 (1,296,610) 136,868 34,307,688

OTHER INCOME (EXPENSE):
Interest expense (16,570,723) (2,980,932) (19,551,655)
Amortization of debt issue cost and discount (583,270) (241,473) (824,743)
Equity in income (loss) of affiliates (2,391,464) 599,228 2,154,679 362,443
Other income, net 10,942,743 1,581,694 12,524,437
Minority interests in subsidiaries (83,666) 227,957 144,291
----------------- ------------------- ------------------ -----------------

Total (8,686,380) (813,526) 2,154,679 (7,345,227)
----------------- ------------------- ------------------ -----------------

INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 26,781,050 (2,110,136) 2,291,547 26,962,461

INCOME TAXES 12,165,040 181,411 12,346,451
----------------- ------------------- ------------------ -----------------

INCOME (LOSS) BEFORE 14,616,010 (2,291,547) 2,291,547 14,616,010
EXTRAORDINARY ITEMS

EXTRAORDINARY ITEMS:
Loss on early extinguishments of debt, net
of income tax benefit of $6,057,922
(9,386,111) (9,386,111)
----------------- ------------------- ------------------ -----------------

NET INCOME (LOSS) $5,229,899 ($2,291,547) $2,291,547 $5,229,899
================= =================== ================== =================
<FN>

Note: "Restricted Group" and "Cinemark International Group" are defined in the Indenture (Section 4.02) for the Senior Notes
dated June 10, 1992.
</FN>

S - 2

CINEMARK USA, INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULE C
CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION

YEAR ENDED DECEMBER 31, 1996
================================================================================================================================

Restricted Cinemark Int'l
Group Group Eliminations Consolidated

OPERATIONS:
Net income (loss) $5,229,899 ($2,839,297) $2,839,297 $5,229,899
Loss on early extinguishment of debt 15,444,033 15,444,033
Noncash items in net income (loss):
Depreciation 16,887,679 1,746,028 18,633,707
Amortization - intangibles and other assets 3,849,658 106,672 (136,868) 3,819,462
Deferred lease expenses 2,069,727 130,127 2,199,854
Deferred income tax expense 1,530,039 100,359 1,630,398
Debt issued for accrued interest 34,871 1,971,500 2,006,371
Amortization of debt discount 31,042 139,205 170,247
Amortized compensation - stock options 1,324,856 1,324,856
Gain on sale of assets (7,527,224) (233,550) (7,760,774)
Equity in (income) loss of affiliates 3,076,082 (599,228) (2,839,297) (362,443)
Minority interest in income (loss) of subsidiaries 83,666 (227,957) (144,291)
Cash used for operating working capital 14,037,692 3,163,176 (638,154) 16,562,714
---------------- ---------------- ---------------------------------

Net cash from operations 56,072,020 3,457,035 (775,022) 58,754,033

INVESTING ACTIVITIES:
Additions to theatre properties and equipment (167,788,339) (10,164,942) (177,953,281)
Sale of theater properties and equipment 206,537 206,537
Proceeds from 2 Day Video Inc. sale 9,439,466 9,439,466
Proceeds from affiliate sale 781,300 781,300
Decrease in certificates of deposit 297,102 297,102
Increase in temporary cash investments (26,282) (26,282)
Increase in investments in and advances to affiliate (10,802,381) (912,983) 10,000,000 (1,715,364)
Decrease (increase) in other assets (9,022,874) 433,912 136,868 (8,452,094)
---------------- ---------------- ---------------------------------

Net cash used for investing activities (177,670,489) (9,888,995) 10,136,868 (177,422,616)

FINANCING ACTIVITIES:
Issuance of Senior Subordinated Notes 199,106,000 199,106,000
Retirement of Senior Notes (123,370,000) (123,370,000)
Repurchase premium on retired Senior Notes (12,371,954) (12,371,954)
Increase in long-term debt 97,510,000 97,510,000
Reductions of long-term debt (77,530,536) (77,530,536)
Payment on notes payable to related parties (2,086,513) (638,154) 638,154 (2,086,513)
Decrease in theater developement advance (356,046) (356,046)
Minority investment in subsidiaries, net (677,889) (677,889)
Issuance of common stock to Cypress 38,567,063 38,567,063
Common stock issued for options exercised 900,013 900,013
Cinemark USA investment in Cinemark International 10,000,000 (10,000,000)
---------------- ---------------- ---------------------------------

Net cash from financing activities 119,690,138 9,361,846 (9,361,846) 119,690,138

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (590,053) (590,053)
---------------- ---------------- ---------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,908,331) 2,339,833 0 431,502

CASH AND CASH EQUIVALENTS:
Beginning of period 4,964,706 8,685,018 13,649,724
---------------- ---------------- ---------------------------------

End of period $3,056,375 $11,024,851 $14,081,226
================ ================ =================================
<FN>

Note: "Restricted Group" and "Cinemark International Group" are defined in the
Indenture (Section 4.02) for the Senior Notes dated June 10, 1992.
</FN>

S - 3

EXHIBITS

FORM 10-K

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

FOR

CINEMARK USA, INC.

FOR FISCAL YEAR ENDED
DECEMBER 31, 1996

Exhibit Index

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------

3.1(a) Amended and Restated Articles of Incorporation of the Company Exhibit 3.1(a) to the
filed with the Texas Secretary of State on June 3, 1992 Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1993
3.1(b) Articles of Merger filed with the Texas Secretary of State on Exhibit 3.1(b) to the
June 27, 1988 merging Gulf Drive-In Theatres, Inc. and Company's
Cinemark of Louisiana, Inc. into the Company Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992
3.1(c) Articles of Merger filed with the Texas Secretary of State Exhibit 3.1(d) to the
dated October 27, 1989 merging Premiere Cinemas Corp. into Company's
the Company Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992
3.1(d) Articles of Merger filed with the Texas Secretary of State Exhibit 3.1(e) to the
dated October 27, 1989 merging Tri-State Entertainment Company's
Incorporated into the Company Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992
3.1(e) Articles of Merger filed with the Texas Secretary of State on Exhibit 3.1(f) to the
December 27, 1990 merging Cinema 4, Inc. into the Company Company's
Registration
Statement (file 33-
47040) on form S-1
filed on April 9,
1992
3.1(f) Articles of Merger filed with the Texas Secretary of State on Exhibit 3.1(f) to the
December 27, 1990 merging Cinema 4, Inc. into the Company Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1993
3.2(a) Bylaws of the Company, as amended Exhibit 3.2 to the
Company's
Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992
3.2(b) Amendment to Bylaws of the Company dated March 12, 1996 Exhibit 3.2(b) to the
Company's
Registration
Statement (file 333-
11895) on Form S-4
filed September 13,
1996.
4.2 Indenture dated August 15, 1996 between the Company and U.S. Exhibit 4.2 to the
Trust Company of Texas, N.A. governing the Subordinated Company's
Notes, with a form of Subordinated Note attached Registration

Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.

E-1

Page Number or
Exhibit Incorporation by
Number Description Reference to
4.3(a) Indenture for Senior Notes, with form of Senior Note Exhibit 4.1 to the
attached. Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1993.
4.3(b) First Supplemental Indenture dated August 9, 1996 to Page ____
Indenture for Senior Notes
10.1(a) Stock Pledge Agreement. Exhibit 4.1(b) to the

Company's
Annual
Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.1(b) Amendment to Stock Pledge Agreement dated June 28, 1993 in Exhibit 4.1(c) to the
favor of the Trustee pledging the shares of capital stock of Company's Annual
ENT Holdings, Inc. Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.1(c) Amendment to Stock Pledge Agreement dated July 12, 1993 in Exhibit 4.1(d) to the
favor of Trustee pledging the shares of capital stock of 2 Company's Annual
Day Video, Inc. Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.1(d) Amendment to Stock Pledge Agreement dated October 14, 1993 in Exhibit 4.1(e) to the
favor of Trustee pledging the shares of capital stock of Company's Annual
Cinema Management Group, Inc. Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.1(e) Amendment to Stock Pledge Agreement dated September 13, 1993 Exhibit 4.1(f) to the
in favor of Trustee pledging the limited partnership Company's Annual
interests of Tinseltown Equities, Inc. Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.1(f) Amendment to Stock Pledge Agreement dated February 8, 1994 in Exhibit 4.1(g) to the
favor of Trustee pledging the shares of capital stock of Company's Annual
Sunnymead Cinema Corp. Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.1(g) Amendment to Stock Pledge Agreement dated February 8, 1994 in Exhibit 4.1(h) to the
favor of Trustee pledging shares of the capital stock of Company's Annual
Sunnymead Cinema Corp. Report (file 33-
47040) on Form 10-K
filed March 29, 1995
10.1(h) Amendment to Stock Pledge Agreement dated July 26, 1994 in Exhibit 4.1(i) to the
favor of Trustee pledging shares of the capital stock of Company's Annual
Cinemark Partners I, Inc. Report (file 33-
47040) on Form 10-K
filed March 29, 1995
10.1(i) Amendment to Stock Pledge Agreement dated August 4, 1994 in Exhibit 4.1(j) to the
favor of Trustee pledging shares of the capital stock of 2 Company's Annual
Day Video, Inc. Report (file 33-
47040) on Form 10-K
filed March 29, 1995
10.1(j) Amendment to Stock Pledge Agreement dated September 12, 1994 Exhibit 4.1(k) to the
in favor of Trustee pledging the general and limited Company's Annual
partnership interests in Laredo Theatre, Ltd. Report (file 33-
47040) on Form 10-K
filed March 29, 1995

E-2

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------
10.2 Promissory Note dated September 4, 1987 executed by The Exhibit 10.5 to the
Pebble Group, Ltd. in the original principal amount of Company's
$700,000 payable to Citizens Savings and Loan, and assumed by Registration
the Company. Statement (file 33-
47040) on Form S-1
filed on April 9,
1992.
10.3 Management Agreement dated as of March 1, 1991 between Movie Exhibit 10.6(a) to
Theatre Investors, Ltd. and the Company. the Company's

Registration
Statement
(file
33-
47040)
on
Form
S-1
filed
on
April
9,
1992.
10.4(a) Management Agreement dated as of March 1, 1991 between Movie Exhibit 10.6(b) to
Theatre Investors, Ltd. and the Company. the Company's

Registration
Statement
(file
33-
47040)
on
Form
S-1
filed
on
April
9,
1992.
10.4(b) Management Agreement between the Company and Cinemark II, Exhibit 10.6(c) to
Inc. ("Cinemark II") dated as of June 10, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.4(c) First Amendment to Management Agreement effective as of Exhibit 10.6(e) to
December 2, 1991 among the Company, Movie Theatre Holdings, the Company's
Inc. and E. William Savage Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992

10.4(d) Management Agreement, dated as of July 28, 1993, between the Exhibit 10.7 to
Company and Cinemark Mexico (USA). Cinemark Mexico
(USA)'s Registration
Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.4(e) Management Agreement, dated as of September 10, 1992, between Exhibit 10.8 to
the Company and Cinemark de Mexico. Cinemark Mexico

(USA)'s
Registration
Statement
(file
33-
72114)
on
Form
S-4
filed
on
November
24,
1994.
10.4(f) Management Agreement dated December 10, 1993 between Laredo Exhibit 10.14(b) to
Joint Venture and the Company. the Company's Annual

Report
(file
33-
47040)
on
form
10-K
filed
March
31,
1994.
10.4(g) Management Agreement dated September 1, 1994 between Cinemark Exhibit 10.4(i) to
Partners II, Ltd. and the Company. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
29,
1995.
10.5 Agreement Regarding Right of First Refusal dated March 28, Exhibit 10.10 to
1991 between the Company and Movie Theatre Investors, Ltd. CUSA's Registration

Statement
(file
33-
47040)
on
Form
S-1
filed
on
April
9,
1992.

E-3

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------
10.6(a) Employment Agreement dated as of October 17, 1991 between the Exhibit 10.11(a) to
Company and Lee Roy Mitchell. the Company's
Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992.
10.6(b) First Amendment to Employment Agreement dated as of April 7, Exhibit 10.11(b) to
1992 between the Company and Lee Roy Mitchell. the Company's

Registration
Statement
(file
33-
47040)
on
Form
S-1
filed
on
April
9,
1992.
10.6(c) Employment Agreement dated as of October 17, 1991 between the Exhibit 10.11(c) to
Company and Tandy Mitchell. the Company's
Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992.
10.6(d) First Amendment to Employment Agreement dated as of April 7, Exhibit 10.11(d) to
1992 between the Company and Tandy Mitchell. the Company's

Registration
Statement
(file
33-
47040)
on
Form
S-1
filed
on
April
9,
1992.
10.6(e) Second Amendment to Employment Agreement between the Company Exhibit 10.11(e) to
and Lee Roy Mitchell dated as of June 10, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.7(a) 1991 Nonqualified Stock Option Plan of Cinemark USA, Inc. Exhibit 10.14 to the
Company's
Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992.
10.7(b) Cinemark Mexico Nonqualified Stock Option Plan. Exhibit 10.9 to
Cinemark Mexico
(USA)'s Registration
Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.9(a) License Agreement dated as of July 23, 1990 between the Exhibit 10.18(a) to
Company and Movie Theatre Investors, Ltd. the Company's
Registration
Statement (file 33-
47040) on Form S-1
filed on April 9,
1992.
10.9(b) License Agreement dated December 10, 1993 between Laredo Exhibit 10.14(c) to
Joint Venture and the Company. the Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1994
10.9(c) License Agreement dated September 1, 1994 between Cinemark Exhibit 10.10(c) to
Partners II, Ltd. and the Company. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
29,
1995.

E-4

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------
10.10(a) Tax Sharing Agreement between the Company and Cinemark II Exhibit 10.22 to the
dated as of June 10, 1992. Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1993.
10.10(b) Tax Sharing Agreement dated as of July 28, 1993, between the Exhibit 10.10 to
Company and Cinemark Mexico (USA). Cinemark Mexico

(USA)'s
Registration
Statement
(33-72114)
on
Form
S-4
filed
on
November
24,
1994.
10.11(a) Indemnification Agreement between the Company and Lee Roy Exhibit 10.23(a) to
Mitchell dated as of July 13, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.11(b) Indemnification Agreement between the Company and Tandy Exhibit 10.23(b) to
Mitchell dated as of July 13, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.11(c) Indemnification Agreement between the Company and Alan W. Exhibit 10.23(d) to
Stock dated as of July 13, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.11(d) Indemnification Agreement between the Company and W. Bryce Exhibit 10.23(f) to
Anderson dated as of July 13, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.11(e) Indemnification Agreement between the Company and Sheldon I. Exhibit 10.23(g) to
Stein dated as of July 13, 1992. the Company's Annual

Report
(file
33-
47040)
on
Form
10-K
filed
March
31,
1993.
10.11(f) Indemnification Agreement between the Company and Heriberto Exhibit 10.13(f) to
Guerra dated as of December 3, 1993 the Company's

Registration
Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.11(g) Indemnification Agreement between the Company and Gary R. Exhibit 10.13(g) to
Gibbs dated as of July 19, 1995. the Company's

Registration
Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.12(a) Credit Agreement dated as of December 12, 1996 among the Page ______
Company, the Banks and the Agent.
10.12(b) Pledge Agreement dated as of December 12, 1996 executed by Page ______
the pledgors listed on the signature page thereto for the
benefit of the Agent and the Banks.
10.12(c) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $50,000,000 payable to the order
of Bank of America National Trust and Savings Association
10.12(d) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $35,000,000 payable to the order
of NationsBank of Texas, N.A.

E-5

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------
10.12(e) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $20,000,000 payable to the order
of First National Bank of Boston
10.12(f) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $15,000,000 payable to the order
of Fleet Bank, N.A.
10.12(g) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $15,000,000 payable to the order
of The Fuji Bank, Limited
10.12(h) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $25,000,000 payable to the order
of Bank of New York
10.12(i) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $25,000,000 payable to the order
of CIBC Inc.
10.12(j) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $20,000,000 payable to the order
of Bank of Nova Scotia
10.12(k) Note of the Company dated as of December 12, 1996 in the Page ______
original principal amount of $20,000,000 payable to the order
of Comerica Bank-Texas
10.13(a) Letter Agreements with directors of the Company regarding Exhibit 10.15 to the
stock options. Company's Annual
Report (file 33-
47040) on Form 10-K
filed March 31, 1993.
10.13(b) Letter Agreements with directors of the Company amending Exhibit 10.15(b) to
stock options the Company's

Registration
Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.14(a) Indenture, dated as of July 30, 1993, among Cinemark Mexico Exhibit 4.1 to
(USA), Cinemark de Mexico, as Guarantor, and United States Cinemark Mexico
Trust Company of New York, as trustee, relating to the Senior (USA)'s Registration
Subordinated Notes. Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.14(b) First Supplemental Indenture dated May 2, 1994 among Cinemark Exhibit 4.4 to
Mexico (USA), Cinemark de Mexico and United States Trust Cinemark Mexico
Company of New York, as Trustee. (USA)'s Annual Report
(file 33-72114) on
Form 10-K filed March
31, 1994.
10.14(c) Second Supplemental Indenture dated August 30, 1995 among Exhibit 10.16(c) to
Cinemark Mexico (USA), Cinemark de Mexico and United States the Company's
Trust Company of New York, as Trustee Registration

Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.14(d) Third Supplemental Indenture dated September 30, 1996 among Page ______
Cinemark Mexico (USA), Cinemark de Mexico and United States
Trust Company of New York, as Trustee

E-6

Page Number or
Exhibit Incorporation by
Number Description Reference to
10.14(e) Purchase Agreement, dated as of July 30, 1993, among Cinemark Exhibit 4.2 to
Mexico (USA), Cinemark de Mexico and each of the purchasers Cinemark Mexico
of the Series A Notes named on the signature pages thereof (USA)'s Registration
(the "Purchasers"). Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.14(f) Registration Rights Agreement, dated as of July 30, 1993, Exhibit 4.3 to
among Cinemark Mexico (USA), Cinemark de Mexico and the Cinemark Mexico
Purchasers of the Series A Notes. (USA)'s Registration

Statement
(file
33-
72114)
on
Form
S-4
filed
on
November
24,
1994.
10.14(g) Warrant Registration Rights Agreement, dated as of July 30, Exhibit 10.1 to
1993, among Cinemark Mexico (USA), Cinemark II, New Wave Cinemark Mexico
Investments A.V.V. ("New Wave") and the purchasers of the (USA)'s Registration
warrants named on the signature pages thereof. Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.14(h) Warrant Certificates. Exhibit 10.2 to
Cinemark Mexico
(USA)'s Registration
Statement (file 33-
72114) on Form S-4
filed on November 24,
1994.
10.14(i) Purchase Agreement dated May 6, 1994 among Cinemark Mexico Exhibit 4.5 to
(USA), Cinemark de Mexico and each of the purchasers of the Cinemark Mexico
Series C Notes named on the registration pages thereto. (USA)'s Annual Report
(file 33-72114) on
Form 10-K filed on
March 31, 1995
10.14(j) Subscription Agreement dated as of December 31, 1994 between Exhibit 10.4(a) to
the Company and Cinemark International. Cinemark Mexico
(USA)'s Annual Report
(file 33-72114) on
Form 10-K filed March
31, 1995
10.14(k) Subscription Agreement dated June 1, 1995 among Cinemark Exhibit 10.16(j) to
Mexico (USA) and Cinemark International the Company's

Registration
Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.14(l) Purchase Agreement dated August 30, 1995 among Cinemark Exhibit 10.16(k) to
Mexico (USA) and the purchasers thereto the Company's

Registration
Statement
(file
333-
11895)
on
Form
S-4
filed
September
13,
1996.
10.14(m) Warrant Certificates Exhibit 10.16(l) to
the Company's
Registration
Statement (file 333-
11895) on Form S-4
filed September 13,
1996.

E-7

Page Number or
Exhibit Incorporation by
Number Description Reference to
- ------ ----------- ------------
10.15 Senior Secured Credit Agreement dated December 4, 1995 among Exhibit 10.18 to the
Cinemark II, Cinemark Mexico (USA) and Cinemark de Mexico Company's Annual
Report (file 33-
47040) on Form 10-K
filed April 1, 1996
10.16 Shareholders' Agreement dated March 12, 1996 among the Exhibit 10.19(b) to
Company, Mr. Mitchell, Cypress Merchant Banking Partners the Company's Annual
L.P., Cypress Pictures Ltd. and Mr. Mitchell and Mr. Don Hart Report (file 33-
as Co-Trustees of certain trusts signatory thereto 47040) on Form 10-K
filed April 1, 1996
10.17 Joint Venture Agreement dated December 31, 1995 among Exhibit 10.20 to the
Cinemark II, Inc., D'Alimenti S.A. and Prodecine S.A. Company's Annual
Report (file 33-
47040) on Form 10-K
filed April 1, 1996
12 Calculation of Earnings to Fixed Charges. Page ______
21 Subsidiaries of the Registrant Page ______

E-8