e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2006

Commission File Number: 333-116292

CINEMARK, INC.

(Exact name of registrant as specified in its charter)


Delaware		01-0687923
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

3900 Dallas Parkway
Suite 500
Plano, Texas		75093
(Address of principal executive offices)		(Zip Code)

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

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

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

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

Yes o No þ

As of July 31, 2006, 27,896,316 shares of Class A common stock were outstanding.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	June 30,			December 31,
	2006			2005
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	139,381		$	182,199
Inventories		5,030			4,546
Accounts receivable		22,852			15,405
Prepaid expenses and other		3,751			4,538

Total current assets		171,014			206,688

THEATRE PROPERTIES AND EQUIPMENT		1,431,876			1,398,798
Less accumulated depreciation and amortization		635,266			608,232

Theatre properties and equipment — net		796,610			790,566

OTHER ASSETS
Goodwill		43,241			42,107
Intangible assets — net		8,927			9,958
Investments in and advances to affiliates		7,176			8,593
Deferred charges and other assets — net		53,927			54,376

Total other assets		113,271			115,034


TOTAL ASSETS	$	1,080,895		$	1,112,288


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

CURRENT LIABILITIES
Current portion of long-term debt	$	5,361		$	6,871
Income tax payable		4,093			13,144
Accounts payable and accrued expenses		129,151			140,052

Total current liabilities		138,605			160,067

LONG-TERM LIABILITIES
Senior credit agreements		258,020			260,076
Senior subordinated notes		756,453			777,308
Deferred income taxes		9,795			15,591
Deferred lease expenses		30,083			29,518
Deferred gain on sale leasebacks		3,092			3,275
Deferred revenues and other long-term liabilities		6,578			8,513

Total long-term liabilities		1,064,021			1,094,281

COMMITMENTS AND CONTINGENCIES		—			—

MINORITY INTERESTS IN SUBSIDIARIES		16,237			16,422

STOCKHOLDERS’ EQUITY (DEFICIENCY)
Class A common stock, $0.001 par value: 40,000,000 shares authorized and 27,896,316 shares issued and outstanding		28			28
Additional paid-in-capital		605,875			604,443
Retained deficit		(681,675	)		(702,768	)
Accumulated other comprehensive loss		(62,196	)		(60,185	)

Total stockholders’ equity (deficiency)		(137,968	)		(158,482	)


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	1,080,895		$	1,112,288

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

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, unaudited)


	Three months ended June 30,						Six months ended June 30,
	2006			2005			2006			2005
REVENUES
Admissions	$	182,862		$	157,749		$	336,530		$	308,909
Concession		91,901			80,335			169,973			154,103
Other		20,342			14,943			34,591			27,696

Total revenues		295,105			253,027			541,094			490,708

COSTS AND EXPENSES
Cost of operations (excludes depreciation and amortization):
Film rentals and advertising		100,298			88,348			179,246			167,249
Concession supplies		14,807			12,650			26,847			24,395
Salaries and wages		26,959			25,442			51,486			49,725
Facility lease expense		36,623			32,945			72,450			65,836
Utilities and other		33,337			29,683			65,457			58,862

Total cost of operations		212,024			189,068			395,486			366,067

General and administrative expenses		15,428			12,241			29,510			24,558
Depreciation and amortization		20,011			19,667			40,180			37,921
Impairment of long-lived assets		647			—			923			226
Loss on sale of assets and other		815			150			1,543			838

Total costs and expenses		248,925			221,126			467,642			429,610


OPERATING INCOME		46,180			31,901			73,452			61,098

OTHER INCOME (EXPENSE)
Interest expense		(21,880	)		(20,476	)		(43,911	)		(40,364	)
Amortization of debt issue costs		(1,024	)		(986	)		(2,056	)		(1,963	)
Interest income		1,580			1,194			3,474			2,024
Foreign currency exchange gain (loss)		695			(878	)		755			(960	)
Loss on early retirement of debt		(3,315	)		—			(3,315	)		—
Equity in income (loss) of affiliates		(79	)		28			(1,268	)		122
Minority interests in income of subsidiaries		(885	)		(340	)		(1,157	)		(440	)

Total other expenses		(24,908	)		(21,458	)		(47,478	)		(41,581	)


INCOME BEFORE INCOME TAXES		21,272			10,443			25,974			19,517

Income taxes		7,349			2,304			4,881			5,479


NET INCOME	$	13,923		$	8,139		$	21,093		$	14,038

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

CINEMARK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)


	Six months ended June 30,
	2006			2005
OPERATING ACTIVITIES
Net income	$	21,093		$	14,038

Noncash items in net income:
Depreciation		39,047			36,219
Amortization of intangible and other assets		1,133			1,702
Amortization of foreign advanced rents		582			699
Amortization of debt issue costs		2,056			1,963
Amortization of gain on sale leasebacks		(183	)		(183	)
Amortization of debt premium		(782	)		(782	)
Amortization of deferred revenues		(188	)		(154	)
Impairment of long-lived assets		923			226
Stock option compensation expense		1,432			—
Loss on sale of assets and other		1,543			838
Write-off unamortized debt issue costs related to early retirement of debt		1,183			—
Accretion of interest on senior discount notes		20,258			18,843
Deferred lease expenses		565			681
Deferred income tax expenses		(5,796	)		(2,300	)
Equity in (income) loss of affiliates		1,268			(122	)
Minority interests in income of subsidiaries		1,157			440

Changes in assets and liabilities:
Inventories		(484	)		(598	)
Accounts receivable		(7,447	)		(4,026	)
Prepaid expenses and other		787			(39	)
Other assets		(4,613	)		(11,986	)
Advances with affiliates		(122	)		(160	)
Accounts payable and accrued expenses		(7,653	)		(4,387	)
Other long-term liabilities		404			294
Income tax receivable/payable		(9,051	)		13,836

Net cash provided by operating activities		57,112			65,042

INVESTING ACTIVITIES
Additions to theatre properties and equipment		(55,064	)		(27,849	)
Proceeds from sale of theatre properties and equipment		178			1,249
Return of capital from affiliates		271			284

Net cash used for investing activities		(54,615	)		(26,316	)

FINANCING ACTIVITIES
Retirement of senior discount notes		(30,331	)		—
Retirement of senior subordinated notes		(10,000	)		—
Proceeds from long-term debt		963			—
Repayments of long-term debt		(3,570	)		(3,238	)
Other		(1,601	)		186

Net cash used for financing activities		(44,539	)		(3,052	)

Effect of exchange rate changes on cash and cash equivalents		(776	)		2,910


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(42,818	)		38,584

CASH AND CASH EQUIVALENTS:
Beginning of period		182,199			100,248

End of period	$	139,381		$	138,832

SUPPLEMENTAL INFORMATION (See Note 10)

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

CINEMARK, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. The Company and Basis of Presentation

Cinemark, Inc. and subsidiaries (the “Company”) are one of the leaders in the motion picture exhibition industry in terms of both revenues and the number of screens in operation, with theatres in the United States (“U.S.”), Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Colombia. The Company also managed additional theatres in the U.S., Canada, Brazil, Colombia and Taiwan during the six months ended June 30, 2006.

On May 16, 2002, Cinemark, Inc. was formed as the Delaware holding company of Cinemark USA, Inc.

The condensed consolidated financial statements have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these interim financial statements reflect all adjustments necessary to state fairly the financial position and results of operations as of, and for, the periods indicated. Majority-owned subsidiaries that the Company controls are consolidated while those subsidiaries of which the Company owns between 20% and 50% and does not control are accounted for as affiliates under the equity method. Those subsidiaries of which the Company owns less than 20% are accounted for as affiliates under the cost method. The results of these subsidiaries and affiliates are included in the condensed consolidated financial statements effective with their formation or from their dates of acquisition. Significant intercompany balances and transactions are eliminated in consolidation.

These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2005, included in the Annual Report filed March 28, 2006, on Form 10-K by the Company under the Securities Exchange Act of 1934. Operating results for the six months ended June 30, 2006, are not necessarily indicative of the results to be achieved for the full year.

2. New Accounting Pronouncements and Tax Regulations

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting and reporting for income taxes recognized in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company is currently evaluating the impact of FIN 48. The Company will adopt FIN 48 in the first quarter of 2007.

On May 18, 2006, the State of Texas passed a bill to replace the current franchise tax with a new margin tax to be effective January 1, 2008. The Company estimates the new margin tax will not have a significant impact on tax expense or deferred tax assets and liabilities.

3. Investment in National CineMedia

On July 15, 2005, Cinemark Media, Inc., a wholly-owned subsidiary of the Company, purchased a 20.7% interest in National CineMedia LLC (“National CineMedia”) for approximately $7,329. National CineMedia is a joint venture between Regal Entertainment Group, AMC Entertainment Inc. and the Company. National CineMedia provides marketing, sales and distribution of cinema advertising and promotional products; business communications and training services; and the distribution of digital alternative content. As part of the transaction, the Company and National CineMedia entered into an exhibitor services agreement, pursuant to which National CineMedia provides advertising, promotion and event services to the Company’s theatres, and a software license agreement in connection with the licensing of certain software and related rights.

The Company is accounting for its investment in National CineMedia under the equity method of accounting. The Company’s investment in National CineMedia is included in investments in and advances to affiliates on the Company’s condensed consolidated balance sheets. During the six months ended June 30, 2006, the Company received a $271 return of its capital investment from National CineMedia and recorded an equity loss of $1,299. As of June 30, 2006, the Company’s investment in National CineMedia was approximately $5,759. The Company recorded $10,444 and $0 of other revenue from National CineMedia during the six months ended June 30, 2006 and June 30, 2005, respectively, related to screen advertising and other ancillary streams of revenue. The Company had a

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

receivable recorded in the amount of $8,421 and $58 due from National CineMedia related to screen advertising and other ancillary streams of revenue as of June 30, 2006 and December 31, 2005, respectively.

Under the terms of its agreement with National CineMedia, the Company installed digital distribution technology in certain of its domestic theatres. The Company has spent approximately $21,000 for digital projectors and related equipment necessary to show various digital media to meet the requirements of this agreement.

As part of the joint venture, the Company, Regal Entertainment Group, AMC Entertainment Inc. and National CineMedia signed a promissory note under which the Company, Regal Entertainment Group and AMC Entertainment Inc. were obligated to make loans to National CineMedia on a revolving basis as needed. The maximum amount that National CineMedia could borrow under the note was $11,000 for which the Company’s obligation was approximately $2,300. Amounts borrowed by National CineMedia were due in full upon the earlier of March 31, 2007 or an event of default as defined in the promissory note. During March 2006, National CineMedia secured a $20,000 revolving credit facility with various lenders. The Company is not a party to nor has any obligation under this credit facility. As of June 30, 2006, all amounts due under the promissory note were repaid in full by National CineMedia and the Company no longer has any obligation to make loans to National CineMedia.

4. Stock Option Accounting

During September 2004, the Company’s Board of Directors approved the 2004 Long Term Incentive Plan (the “Plan”) under which 3,074,991 shares of the Company’s Class A common stock are available for issuance to selected employees, directors and consultants of the Company. The Plan provides for restricted share grants, incentive option grants and nonqualified option grants.

On September 30, 2004, the Company granted options to purchase 2,361,590 shares under the Plan at an exercise price of $22.58 per option (equal to the market value at the date of grant). Options to purchase 234,219 shares vested immediately and the remaining options granted in 2004 vest daily over the period ending April 1, 2009 and expire ten years from the grant date. On January 28, 2005, the Company granted options to purchase 4,075 shares under the Plan at an exercise price of $22.58 per option (equal to the market value at the date of grant). The options granted during January

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

2005 vest daily over five years and the options expire ten years from the grant date. There were no grants under the Plan during the six months ended June 30, 2006 nor were there any options exercised.

For each 2004 and 2005 grant, the fair values of the options were estimated on the dates of grant using the Black-Scholes option-pricing model with the following assumptions:


	September 30, 2004			January 28, 2005
	Grant			Grant
Expected life	6.5 years			6.5 years
Expected volatility¹		39	%		44	%
Risk-free interest rate		3.79	%		3.93	%
Dividend yield		0	%		0	%


¹		Expected volatility is based on historical volatility of the common stock price of comparable public companies.

Below is a summary of activity under the Plan for the six months ended June 30, 2006:


	Number of			Weighted Average
	Options			Exercise Price
Outstanding at 12/31/05		2,365,665		$	22.58
Granted		—		$	—
Exercised		—		$	—
Forfeited		(3,075	)	$	22.58

Outstanding at 6/30/06		2,362,590		$	22.58

In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which established accounting standards for all transactions in which an entity exchanges its equity instruments for goods and services. SFAS No. 123(R) eliminated the intrinsic value measurement objective in Accounting Principles Board (“APB”) Opinion No. 25 and generally requires a Company to measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. The standard requires grant date fair value to be estimated using either an option-pricing model, which is consistent with the terms of the award, or a market observed price, if such a price exists. Such costs must be recognized over the period during which an employee is required to provide service in exchange for the award (which is usually the vesting period). The standard also requires a Company to estimate the number of instruments that will ultimately be issued, rather than accounting for forfeitures as they occur.

The Company applied SFAS No. 123(R) using the “modified prospective method’’, under which it recognized compensation cost for all awards granted, modified or settled on or after January 1, 2006 and for the unvested portion of previously granted awards that were outstanding on January 1, 2006. The Company had approximately 1,538,062 unvested options outstanding on January 1, 2006 and recorded compensation expense of $1,432 and a tax benefit of approximately $502 during the six months ended June 30, 2006 related to these outstanding options. As of June 30, 2006, the unrecognized compensation cost related to these unvested options was $7,876. The weighted average period over which these remaining compensation costs will be recognized is approximately 2.75 years.

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The Company applied APB Opinion No. 25 and related interpretations in accounting for stock option plans prior to the adoption of SFAS 123(R). Had compensation costs been determined based on the fair value at the date of grant for awards under the plans, consistent with the method of SFAS No. 123, “Accounting for Stock-Based Compensation” and SFAS No. 148, “Accounting for Stock-Based Compensation Transition and Disclosure”, the Company’s net income for the three and six months ended June 30, 2005 would have been reduced to the pro-forma amounts indicated below:


	Three Months Ended			Six Months Ended
	June 30, 2005			June 30, 2005
Net income as reported	$	8,139		$	14,038
Compensation expense included in reported net income, net of tax		—			—
Compensation expense under fair value method, net of tax		(741	)		(1,482	)

Pro-forma net income	$	7,398		$	12,556

5. Early Retirement of Long-Term Debt

During May 2006, as part of three open market purchases, the Company repurchased $10,000 aggregate principal amount of its 9% senior subordinated notes for approximately $10,977, including accrued and unpaid interest. The transactions were funded by the Company with available cash from operations. As a result of the transactions, the Company recorded a loss on early retirement of debt of $941 during the six months ended June 30, 2006, which included premiums paid and the write-off of unamortized debt issue costs related to the retired senior subordinated notes. As of June 30, 2006, the Company had outstanding $332,250 aggregate principal amount of its 9% senior subordinated notes.

During May 2006, as part of four open market purchases, the Company repurchased $39,775 aggregate principal amount at maturity of its 9 ³/4% senior discount notes for approximately $31,745. The Company funded these transactions upon receipt of a $31,745 dividend from Cinemark USA, Inc. that was paid with available cash from its operations. As a result of the transactions, the Company recorded a loss on early retirement of debt of $2,375 during the six months ended June 30, 2006, which included premiums paid and the write-off of unamortized debt issue costs related to the retired senior discount notes. As of June 30, 2006, the Company has outstanding $535,558 aggregate principal amount at maturity of its 9 ³/4% senior discount notes.

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

6. Goodwill and Other Intangible Assets

The Company’s goodwill was as follows:


			Tax Impact of			Foreign Currency
	Balance at		Tax Deductible			Translation			Balance at
	December 31, 2005		Goodwill			Adjustment			June 30, 2006
United States	$	4,265	$	—		$	—		$	4,265
Brazil		29,730		(63	)		1,656			31,323
Mexico		1,830		—			(113	)		1,717
Argentina		231		—			(4	)		227
Chile		3,490		—			(360	)		3,130
Peru		2,561		—			18			2,579

Total	$	42,107	$	(63	)	$	1,197		$	43,241

Intangible assets consisted of the following:


							Foreign Currency
	Balance at						Translation			Balance at
	December 31, 2005			Additions			Adjustment			June 30, 2006
*Intangible assets with finite lives:*

Capitalized licensing fees:
Gross carrying amount	$	8,250		$	—		$	—		$	8,250
Accumulated amortization		(2,591	)		(276	)		—			(2,867	)

Net carrying amount	$	5,659		$	(276	)	$	—		$	5,383


Vendor contracts:
Gross carrying amount		3,217			—			68			3,285
Accumulated amortization		(1,703	)		(682	)		—			(2,385	)

Net carrying amount	$	1,514		$	(682	)	$	68		$	900


Net favorable leases:
Gross carrying amount		1,392			—			42			1,434
Accumulated amortization		(232	)		(86	)		—			(318	)

Net carrying amount	$	1,160		$	(86	)	$	42		$	1,116


Other intangible assets:
Gross carrying amount		429			—			(3	)		426
Accumulated amortization		(79	)		(16	)		—			(95	)

Net carrying amount	$	350		$	(16	)	$	(3	)	$	331

Total net intangible assets with finite lives	$	8,683		$	(1,060	)	$	107		$	7,730

*Intangible assets with indefinite lives:*
Tradename		1,259			—			(78	)		1,181
Other unamortized intangible assets		16			—			—			16

Total intangible assets — net	$	9,958		$	(1,060	)	$	29		$	8,927

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Aggregate amortization expense of $1,133 for the six months ended June 30, 2006 consisted of $1,060 of amortization of intangible assets and $73 of amortization of other assets. Estimated aggregate future amortization expense for intangible assets is as follows:


For the six months ended December 31, 2006	$	608
For the twelve months ended December 31, 2007		1,203
For the twelve months ended December 31, 2008		953
For the twelve months ended December 31, 2009		724
For the twelve months ended December 31, 2010		692
Thereafter		3,550

Total	$	7,730

7. Impairment of Long-Lived Assets

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company reviews long-lived assets for impairment on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.

The Company considers actual theatre level cash flows, future years budgeted theatre level cash flows, theatre property and equipment carrying values, goodwill carrying values, the age of a recently built theatre, competitive theatres in the marketplace, the sharing of a market with other Company theatres, changes in foreign currency exchange rates, the impact of recent ticket price changes, available lease renewal options and other factors in its assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis or a group basis if the group of theatres shares the same marketplace, which the Company believes is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the useful life correlates with the available remaining lease period for leased properties, which includes the probability of renewal periods, and a period of twenty years for fee owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset with its estimated fair value. Fair value is determined based on a multiple of cash flows, which was seven times for the evaluation performed during the three month and six month periods ended June 30, 2006. When estimated fair value is determined to be lower than the carrying value of the long-lived asset, the asset is written down to its estimated fair value and the impairment loss is recognized in the Company’s condensed consolidated statements of income. During the six months ended June 30, 2006, the Company recorded asset impairment charges of $923 to write-down six United States theatres to their estimated fair values.

8. Foreign Currency Translation

The accumulated other comprehensive loss account in stockholders’ equity of $62,196 and $60,185 at June 30, 2006 and December 31, 2005, respectively, primarily relates to the cumulative foreign currency adjustments from translating the financial statements of Cinemark Argentina, S.A., Cinemark Brasil S.A., Cinemark de Mexico, S.A. de C.V. and Cinemark Chile S.A. into U.S. dollars.

In 2006 and 2005, all foreign countries where the Company has operations, including Argentina, Brazil, Mexico and Chile were deemed non-highly inflationary. Thus, any fluctuation in the currency results in a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account recorded as an increase in, or reduction of, stockholders’ equity.

On June 30, 2006, the exchange rate for the Brazilian real was 2.22 reais to the U.S. dollar (the exchange rate was 2.34 reais to the U.S. dollar at December 31, 2005). As a result, the effect of translating the June 30, 2006 Brazilian financial statements into U.S. dollars is reflected as a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account as an increase in stockholders’ equity of $4,688. At June 30, 2006, the total assets of the Company’s Brazilian subsidiaries were U.S. $110,197.

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

On June 30, 2006, the exchange rate for the Mexican peso was 11.41 pesos to the U.S. dollar (the exchange rate was 10.71 pesos to the U.S. dollar at December 31, 2005). As a result, the effect of translating the June 30, 2006 Mexican financial statements into U.S. dollars is reflected as a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account as a reduction in stockholders’ equity of $4,894. At June 30, 2006, the total assets of the Company’s Mexican subsidiaries were U.S. $86,965.

On June 30, 2006, the exchange rate for the Argentine peso was 3.09 pesos to the U.S. dollar (the exchange rate was 3.03 pesos to the U.S. dollar at December 31, 2005). As a result, the effect of translating the June 30, 2006 Argentine financial statements into U.S. dollars is reflected as a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account as a reduction in stockholders’ equity of $289. At June 30, 2006, the total assets of the Company’s Argentine subsidiaries were U.S. $17,222.

On June 30, 2006, the exchange rate for the Chilean peso was 573.27 pesos to the U.S. dollar (the exchange rate was 514.21 pesos to the U.S. dollar at December 31, 2005). As a result, the effect of translating the June 30, 2006 Chilean financial statements into U.S. dollars is reflected as a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account as a reduction in stockholders’ equity of $1,241. At June 30, 2006, the total assets of the Company’s Chilean subsidiaries were U.S. $23,388.

9. Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the condensed consolidated financial statements. The Company’s comprehensive income was as follows:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006			2005		2006			2005
Net income	$	13,923		$	8,139	$	21,093		$	14,038
Foreign currency translation adjustment		(4,466	)		15,955		(2,011	)		15,225

Comprehensive income	$	9,457		$	24,094	$	19,082		$	29,263

10. Supplemental Cash Flow Information

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


	Six months ended
	June 30,
	2006			2005
Cash paid for interest	$	26,196		$	21,892
Net cash paid (refunds received) for income taxes	$	19,567		$	(6,056	)

Noncash investing and financing activities:
Change in construction lease obligations related to construction of theatres	$	(2,151	)	$	8,315

Changes in accounts payable and accrued expenses for the acquisition of theatre properties and equipment	$	(2,356	)	$	2,081

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

11. Financial Information About Geographic Areas

The Company operates in one business segment as a motion picture exhibitor. The Company has operations in the U.S., Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Colombia, which are reflected in the condensed consolidated financial statements. Below is a breakdown of select financial information by geographic area:


	Six months ended
	June 30,
Revenues	2006			2005
U.S. and Canada	$	396,996		$	367,616
Brazil		64,417			51,084
Mexico		36,295			36,049
Other foreign countries		44,250			36,719
Eliminations		(864	)		(760	)

Total	$	541,094		$	490,708


	June 30,		December 31,
Theatre Properties and Equipment-net	2006		2005
U.S. and Canada	$	645,985	$	634,938
Brazil		52,591		52,371
Mexico		51,015		55,366
Other foreign countries		47,019		47,891

Total	$	796,610	$	790,566

12. Related Party Transactions

The Company manages one theatre for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25% of the limited partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenues up to $50,000 and 3% of annual theatre revenues in excess of $50,000. The Company recorded $106 of management fee revenues and received $300 in dividends from Laredo during the six months ended June 30, 2006. All such amounts are included in the Company’s condensed consolidated financial statements with the intercompany amounts eliminated in consolidation.

The Company leases one theatre from Plitt Plaza Joint Venture (“Plitt Plaza”). Plitt Plaza is indirectly owned by Lee Roy Mitchell. Annual rent is approximately $118 plus certain taxes, maintenance expenses and insurance. The Company recorded $70 of facility lease expense payable to Plitt Plaza joint venture during the six months ended June 30, 2006.

The Company entered into an amended and restated profit participation agreement on March 12, 2004 with its President, Alan Stock, which became effective on April 2, 2004, and amends a profit participation agreement with Mr. Stock in effect since May 2002. Under the agreement, Mr. Stock receives a profit interest in two theatres once the Company has recovered its capital investment in these theatres plus its borrowing costs. During the six months ended June 30, 2006, the Company recorded $267 in profit participation expense payable to Mr. Stock, which is included in general and administrative expenses on the Company’s condensed consolidated statements of income. As of June 30, 2006, the amount owed to Mr. Stock under this agreement was approximately $165. In the event that Mr. Stock’s employment is terminated without cause, profits will be distributed according to a formula set forth in the profit participation agreement.

CINEMARK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

13. Litigation

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

14. Subsequent Event

On August 2, 2006, Cinemark Holdings Inc. (“Cinemark Holdings”) was formed to be the Delaware holding company of Cinemark, Inc.

On August 7, 2006, Cinemark USA, Inc. announced it has entered into a definitive purchase agreement in which it will acquire all of the outstanding stock of Century Theatres, Inc. The equity purchase price is approximately $681,000 in addition to the assumption of debt. To finance the acquisition, Cinemark USA, Inc. plans to refinance its existing senior secured credit facility of $254,150 and Century’s senior credit facility of $360,000 with a new $1,120,000 senior secured term loan and will issue to the Century shareholders $150,000 of common stock in Cinemark Holdings. Cinemark USA, Inc. will utilize approximately $50,000 of its current cash to fund the payment of transaction expenses and the balance of the cash purchase price. Cinemark USA, Inc. also plans to increase its senior secured revolving credit line capacity to $150,000 with no amount drawn at closing.

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

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

We are one of the leaders in the motion picture exhibition industry, in terms of both revenues and the number of screens in operation, with theatres in the U.S., Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Colombia. We generate revenues primarily from box office receipts and concession sales with additional revenues from screen advertising sales and other revenue streams, such as vendor marketing programs, pay phones, ATM machines and electronic video games located in some of our theatres. We expect our recent investment in National CineMedia to assist us in expanding our offerings to advertisers, exploring ancillary revenue sources such as digital video monitor advertising, third party branding, and the use of theatres for non-film events. In addition, we are able to use theatres during non-peak hours for concerts, sporting events, and other cultural events. Highly successful films released during the six months ended June 30, 2006 included Ice Age 2: The Meltdown, The Da Vinci Code, X Men 3, Cars and Superman Returns. Film releases scheduled for the remainder of 2006 include high profile films such as Pirates of the Carribean: Dead Man’s Chest, Talladega Nights, Casino Royal and Happy Feet. Our revenues are affected by changes in attendance and average admissions and concession revenues per patron. Attendance is primarily affected by the quality and quantity of films released by motion picture studios.

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

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

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

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

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

Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies, which we believe are the most critical to aid in fully understanding and evaluating our reported condensed consolidated financial results, include the following:

Revenue and Expense Recognition

Revenues are recognized when admissions and concession sales are received at the box office. We record proceeds from the sale of gift cards and other advanced sale-type certificates in current liabilities and recognize admissions and concession revenue when a holder redeems the card or certificate. We recognize unredeemed gift cards and other advanced sale-type certificates as revenue only after such a period of time indicates, based on historical experience, the likelihood of redemption is remote, and based on applicable laws and regulations. In evaluating the likelihood of redemption, we consider the period outstanding, the level and frequency of activity, and the period of inactivity. Other revenues primarily consist of screen advertising. Screen advertising revenues are recognized over the period that the related advertising is delivered on-screen or in-theatre pursuant to the specific terms of the agreements with the advertisers.

Film rental costs are accrued based on the applicable box office receipts and either the mutually agreed upon firm terms established prior to the opening of the picture or estimates of the final mutually agreed upon settlement, which occurs at the conclusion of the picture run, subject to the film licensing arrangement. Estimates are based on the expected success of a film over the length of its run in theatres. The success of a film can typically be determined a few weeks after a film is released when initial box office performance of the film is known. Accordingly, final settlements typically approximate estimates since box office receipts are known at the time the estimate is made and the expected success of a film over the length of its run in theatres can typically be estimated early in the film’s run. The final film settlement amount is negotiated at the conclusion of the film’s run based upon how a film actually performs. If actual settlements are higher than those estimated, additional film rental costs are recorded at that time. We recognize advertising costs and any sharing arrangements with film distributors in the same accounting period. Our advertising costs are expensed as incurred.

Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain of our leases are subject to monthly percentage rent only, which is accrued each month based on actual revenues. Certain of our other theatres require payment of percentage rent in addition to fixed monthly rent if a target annual revenue level is achieved. Percentage rent expense is recorded for these theatres on a monthly basis if the theatre’s historical performance or forecasted performance indicates that the annual target will be reached. The estimate of percentage rent expense recorded during the year is based on a trailing twelve months of revenues. Once annual revenues are known, which is generally at the end of the year, the percentage rent expense is adjusted based on actual revenues.

Theatre properties and equipment are depreciated using the straight-line method over their estimated useful lives. In estimating the useful lives of our theatre properties and equipment, we have relied upon our experience with such assets and our historical replacement period. We periodically evaluate these estimates and assumptions and adjust them as necessary. Adjustments to the expected lives of assets are accounted for on a prospective basis through depreciation expense.

Impairment of Long-Lived Assets

We review long-lived assets for impairment on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. We assess many factors including the following to determine whether to impair individual theatre assets:

	•		actual theatre level cash flows;

	•		future years budgeted theatre level cash flows;

	•		theatre property and equipment carrying values;

	•		goodwill carrying values;

	•		the age of a recently built theatre;

	•		competitive theatres in the marketplace;

	•		the sharing of a marketplace with our other theatres;

	•		changes in foreign currency exchange rates;

	•		the impact of recent ticket price changes;

	•		available lease renewal options; and

	•		other factors considered relevant in our assessment of impairment of individual theatre assets.

Long-lived assets are evaluated for impairment on an individual theatre basis or a group basis if the group of theatres shares the same marketplace, which we believe is the lowest applicable level for which there are identifiable cash flows. The evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the useful life correlates with the available remaining lease period, which includes the possibility of renewal periods, for leased properties and a period of twenty years for fee owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, we then compare the carrying value of the asset with its estimated fair value. Fair values are determined based on a multiple of cash flows, which was seven times for the evaluation performed during the three month and six month periods ended June 30, 2006. When estimated fair value is determined to be lower than the carrying value of the long-lived asset, the asset is written down to its estimated fair value.

Goodwill

Our recorded goodwill was $43.2 million at June 30, 2006. We evaluate goodwill for impairment annually at fiscal year-end and any time events or circumstances indicate the carrying amount of the goodwill may not be fully recoverable. We evaluate goodwill for impairment on an individual theatre basis, which is the lowest level of identifiable cash flows and the level at which goodwill is recorded. The evaluation is a two-step approach requiring us to compute the fair value of a theatre and compare it with its carrying value. If the carrying value exceeds fair value, a second step would be performed to measure the potential goodwill impairment. Fair value is determined based on a multiple of cash flows, which was seven times for the most recent evaluation performed during the year ended December 31, 2005. When estimated fair value is determined to be lower than the carrying value of the asset, the asset is written down to its estimated fair value.

Acquisitions

We account for acquisitions under the purchase method of accounting. The purchase method requires that we estimate the fair value of the assets and liabilities acquired and allocate consideration paid accordingly. For significant acquisitions, we obtain independent third party valuation studies for certain of the assets and liabilities acquired to assist us in determining fair value. The estimation of the fair values of the assets and liabilities acquired involves a number of estimates and assumptions that could differ materially from the actual amounts.

Income Taxes

We use an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes are provided when tax laws and financial accounting standards differ with respect to the amount of income for a year and the bases of assets and liabilities. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets unless it is more likely than not those assets will be realized. Income taxes are provided on unremitted earnings from foreign subsidiaries unless such earnings are expected to be indefinitely reinvested. Income taxes have also been provided for potential tax assessments. The related tax accruals are recorded in accordance with SFAS No. 5, “Accounting for Contingencies”. To the extent contingencies are probable and estimable, an accrual is recorded within current liabilities in the condensed consolidated balance sheet. To the extent tax accruals differ from actual payments or assessments, the accruals will be adjusted.

Results of Operations

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


	% of Revenues
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues
Admissions		62.0	%		62.3	%		62.2	%		63.0	%
Concession		31.1	%		31.7	%		31.4	%		31.4	%
Other		6.9	%		6.0	%		6.4	%		5.6	%

Total revenues		100.0	%		100.0	%		100.0	%		100.0	%


Cost of operations ¹		71.8	%		74.7	%		73.1	%		74.6	%
General and administrative expenses		5.2	%		4.8	%		5.4	%		5.0	%
Depreciation and amortization		6.8	%		7.8	%		7.4	%		7.8	%
Impairment of long-lived assets		0.2	%		0.0	%		0.2	%		0.0	%
Loss on sale of assets and other		0.3	%		0.1	%		0.3	%		0.2	%

Total costs and expenses		84.3	%		87.4	%		86.4	%		87.6	%

Operating income		15.7	%		12.6	%		13.6	%		12.4	%


¹		Excludes depreciation and amortization.

Three months ended June 30, 2006 and 2005

Revenues. Total revenues for the three months ended June 30, 2006 (“second quarter of 2006”) increased to $295.1 million from $253.0 million for the three months ended June 30, 2005 (“second quarter of 2005”), representing a 16.6% increase. The table below summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.


	Three Months Ended
	June 30,
	2006		2005		% Change
Admissions revenues (in millions)	$	182.9	$	157.7		16.0	%
Concession revenues (in millions)	$	91.9	$	80.3		14.4	%
Other revenues (in millions)	$	20.3	$	15.0		35.3	%
Total revenues (in millions)	$	295.1	$	253.0		16.6	%

Attendance (in millions)		44.9		40.4		11.3	%
Average ticket price	$	4.07	$	3.91		4.2	%
Concession revenues per patron	$	2.05	$	1.99		2.8	%
Revenues per screen	$	87,225	$	78,849		10.6	%

The increase in admissions revenues was attributable to an 11.3% increase in attendance from 40.4 million patrons for the second quarter of 2005 to 44.9 million patrons for the second quarter of 2006 and a 4.2% increase in average ticket price, which increased from $3.91 for the second quarter of 2005 to $4.07 for the second quarter of 2006. The increase in concession revenues was attributable to the 11.3% increase in attendance and a 2.8% increase in concession revenues per patron, which increased from $1.99 for the second quarter of 2005 to $2.05 for the second quarter of 2006. The increase in attendance was attributable to the solid slate of films released during the second quarter of 2006 and new theatre openings. The increases in average ticket prices and concession revenues per patron were primarily due to price increases successfully implemented during the fourth quarter of 2005 and also due to favorable exchange rates in certain countries in which we operate. The 35.3% increase in other revenues was primarily attributable to the incremental screen advertising

revenues resulting from the Company’s participation in the joint venture with National CineMedia.

Cost of Operations. Cost of operations was $212.0 million, or 71.8% of revenues, for the second quarter of 2006 compared to $189.1 million, or 74.7% of revenues, for the second quarter of 2005. The decrease, as a percentage of revenues, was primarily due to the 16.6% increase in revenues and the fixed nature of some of our theatre operating costs, such as components of salaries and wages, facility lease expense, and utilities and other costs.

Film rentals and advertising costs were $100.3 million, or 54.8% of admissions revenues, for the second quarter of 2006 compared to $88.3 million, or 56.0% of admissions revenues, for the second quarter of 2005. The decrease in film rentals and advertising costs as a percentage of admissions revenues was due to a more favorable mix of films resulting in lower average film rental rates in the second quarter of 2006 compared with the second quarter of 2005 which had certain films with higher than average film rental rates. Concession supplies expense was $14.8 million, or 16.1% of concession revenues, for the second quarter of 2006 period compared to $12.7 million, or 15.7% of concession revenues, for the second quarter of 2005. The increase in concession supplies expense as a percentage of concession revenues was primarily due to increased costs of certain concession products sold.

Salaries and wages increased to $27.0 million for the second quarter of 2006 from $25.4 million for the second quarter of 2005 primarily due to the 11.3% increase in attendance and new theatre openings. Facility lease expense increased to $36.6 million for the second quarter of 2006 from $32.9 million for the second quarter of 2005 primarily due to new theatre openings. Utilities and other costs increased to $33.3 million for the second quarter of 2006 from $29.7 million for the second quarter of 2005 primarily due to higher utility and janitorial supplies costs and new theatre openings.

General and Administrative Expenses. General and administrative expenses increased to $15.4 million for the second quarter of 2006 from $12.2 million for the second quarter of 2005. The increase was primarily due to increased incentive compensation expense and stock option compensation expense related to the adoption of SFAS No. 123 (R). See Note 4 to the condensed consolidated financial statements.

Depreciation and Amortization. Depreciation and amortization expense was $20.0 million for the second quarter of 2006 compared to $19.7 million for the second quarter of 2005. The increase is primarily due to new theatre openings.

Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $0.6 million for the second quarter of 2006. Impairment charges included the write-down of three theatres in the United States to their fair values.

Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $0.8 million during the second quarter of 2006 compared to $0.2 million during the second quarter of 2005.

Interest Expense. Interest costs incurred, including amortization of debt issue costs, was $22.9 million for the second quarter of 2006 compared to $21.5 million for the second quarter of 2005. The increase was due to increased interest rates on our variable rate debt outstanding.

Loss on Early Retirement of Debt. During the second quarter of 2006, we recorded a loss on early retirement of debt of $3.3 million as a result of the repurchase of $10.0 million aggregate principal amount of our 9% senior subordinated notes and the repurchase of $39.8 million aggregate principal amount at maturity of our 9 3/4% senior discount notes. See Note 5 to the condensed consolidated financial statements.

Income Taxes. Income tax expense of $7.3 million was recorded for the second quarter of 2006 compared to $2.3 million recorded for the second quarter of 2005. The effective tax rate was 34.5% for the second quarter of 2006 versus 22.1% for the second quarter of 2005. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effect of significant infrequent or unusual items occurring during the interim period. As a result of the full inclusion in the interim rate calculation of these items, the interim rate may vary significantly from the normalized annual rate.

Six months ended June 30, 2006 and 2005

Revenues. Total revenues for the six months ended June 30, 2006 (“the 2006 period”) increased to $541.1 million from $490.7 million for the six months ended June 30, 2005 (“the 2005 period”), representing a 10.3% increase. The table below summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.


	Six Months Ended
	June 30,
	2006		2005		% Change
Admissions revenues (in millions)	$	336.5	$	308.9		8.9	%
Concession revenues (in millions)	$	170.0	$	154.1		10.3	%
Other revenues (in millions)	$	34.6	$	27.7		24.9	%
Total revenues (in millions)	$	541.1	$	490.7		10.3	%

Attendance (in millions)		83.4		80.4		3.8	%
Average ticket price	$	4.03	$	3.84		5.0	%
Concession revenues per patron	$	2.04	$	1.92		6.3	%
Revenues per screen	$	161,026	$	153,442		4.9	%

The increase in admissions revenues was attributable to a 3.8% increase in attendance from 80.4 million patrons for the 2005 period to 83.4 million patrons for the 2006 period and a 5.0% increase in average ticket price, which increased from $3.84 for the 2005 period to $4.03 for the 2006 period. The increase in concession revenues was attributable to the 3.8% increase in attendance and a 6.3% increase in concession revenues per patron, which increased from $1.92 for the 2005 period to $2.04 for the 2006 period. The increase in attendance was attributable to the solid slate of films released during the 2006 period and new theatre openings. The increases in average ticket price and concession revenues per patron were primarily due to price increases successfully implemented during the fourth quarter of 2005 and also due to favorable exchange rates in certain countries in which we operate. The 24.9% increase in other revenues was primarily attributable to the incremental screen advertising revenues resulting from the Company’s participation in the joint venture with National CineMedia.

Cost of Operations. Cost of operations was $395.5 million, or 73.1% of revenues, for the 2006 period compared to $366.1 million, or 74.6% of revenues, for the 2005 period. The decrease, as a percentage of revenues, was primarily due to the 10.3% increase in revenues and the fixed nature of some of our theatre operating costs, such as components of salaries and wages, facility lease expense, and utilities and other costs.

Film rentals and advertising costs were $179.2 million, or 53.3% of admissions revenues, for the 2006 period compared to $167.2 million, or 54.1% of admissions revenues, for the 2005 period. The decrease in film rentals and advertising costs as a percentage of admissions revenues was due to a more favorable mix of films resulting in lower average film rental rates in the 2006 period compared with the 2005 period which had certain films with higher than average film rental rates. Concession supplies expense was $26.8 million, or 15.8% of concession revenues, for the 2006 period compared to $24.4 million, or 15.8% of concession revenues, for the 2005 period.

Salaries and wages increased to $51.5 million for the 2006 period from $49.7 million for the 2005 period primarily due to the 3.8% increase in attendance and new theatre openings. Facility lease expense increased to $72.5 million for the 2006 period from $65.8 million for the 2005 period primarily due to new theatre openings. Utilities and other costs increased to $65.5 million for the 2006 period from $58.9 million for the 2005 period primarily due to higher utility and janitorial supplies costs and new theatre openings.

General and Administrative Expenses. General and administrative expenses increased to $29.5 million for the 2006 period from $24.6 million for the 2005 period. The increase was primarily due to increased incentive compensation expense and stock option compensation expense related to the adoption of SFAS No. 123 (R). See Note 4 to the condensed consolidated financial statements.

Depreciation and Amortization. Depreciation and amortization expense was $40.2 million for the 2006 period

compared to $37.9 million for the 2005 period. The increase is primarily due to new theatre openings.

Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $0.9 million for the 2006 period compared to $0.2 million for the 2005 period. Impairment charges for 2006 included the write-down of six theatres in the United States to their fair values. Impairment charges for 2005 included the write-down of two theatres in the United States to their fair values.

Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $1.5 million during the 2006 period compared to $0.8 million during the 2005 period.

Interest Expense. Interest costs incurred, including amortization of debt issue costs, was $46.0 million for the 2006 period compared to $42.3 million for the 2005 period. The increase was due to increased interest rates on our variable rate debt outstanding.

Loss on Early Retirement of Debt. During the 2006 period, we recorded a loss on early retirement of debt of $3.3 million as a result of the repurchase of $10.0 million aggregate principal amount of our 9% senior subordinated notes and the repurchase of $39.8 million aggregate principal amount at maturity of our 9 3/4% senior discount notes. See Note 5 to the condensed consolidated financial statements.

Income Taxes. Income tax expense of $4.9 million was recorded for the 2006 period compared to $5.5 million recorded for the 2005 period. The effective tax rate was 18.8% for the 2006 period versus 28.1% for the 2005 period. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effect of significant infrequent or unusual items occurring during the interim period. As a result of the full inclusion in the interim rate calculation of these items, the interim rate may vary significantly from the normalized annual rate. The interim tax rate for the 2006 period reflects the release of the valuation allowance on our Brazilian deferred tax assets.

Liquidity and Capital Resources

Operating Activities

We primarily collect our revenues in cash, mainly through box office receipts and the sale of concession supplies. We also continue to expand the number of theatres that provide the patron a choice of using a credit card, in place of cash, which we convert to cash in approximately three to four days. Because our revenues are received in cash prior to the payment of related expenses, we have an operating “float” and historically have not required traditional working capital financing. Cash provided by operating activities, as reflected in the condensed consolidated statements of cash flows, amounted to $57.1 million for the six months ended June 30, 2006 compared to $65.0 million for the six months ended June 30, 2005.

Investing Activities

Our investing activities have been principally related to the development and acquisition of additional theatres. New theatre openings and acquisitions historically have been financed with internally generated cash and by debt financing, including borrowings under our amended senior secured credit facility. Cash used for investing activities, as reflected in the condensed consolidated statements of cash flows, amounted to $54.6 million for the six months ended June 30, 2006 compared to $26.3 million for the six months ended June 30, 2005. The increase in cash used for investing activities in 2006 was primarily related to increased capital expenditures. Capital expenditures for the six months ended June 30, 2006 included capital expenditures for new theatres of $33.7 million and capital expenditures for existing theatres of $21.4 million.

We continue to expand our U.S. theatre circuit. We opened nine new theatres with 106 screens during the six months ended June 30, 2006. At June 30, 2006, our total domestic screen count was 2,469 screens (12 of which are in Canada). At June 30, 2006, we had signed commitments to open five new theatres with 73 screens in domestic markets by the end of 2006 and open six new theatres with 88 screens subsequent to 2006. We estimate the remaining capital expenditures for

the development of these 161 screens will be approximately $30 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.

We also continue to expand our international theatre circuit. We opened three new theatres with 20 screens during the six months ended June 30, 2006, bringing our total international screen count to 932 screens. At June 30, 2006, we had signed commitments to open four new theatres with 33 screens in international markets by the end of 2006 and open five new theatres with 42 screens subsequent to 2006. We estimate the remaining capital expenditures for the development of these 75 screens in international markets will be approximately $35 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.

We plan to fund capital expenditures for our continued development with cash flow from operations, borrowings under our amended senior secured credit facility, subordinated note borrowings, proceeds from sale-leaseback transactions and/or sales of excess real estate.

Financing Activities

Cash used for financing activities, as reflected in the condensed consolidated statements of cash flows, amounted to $44.5 million for the six months ended June 30, 2006 compared to $3.0 million for the six months ended June 30, 2005. The increase in cash used for financing activities in 2006 was primarily related to the early retirement of long term debt in May 2006. The Company repurchased $10.0 million aggregate principal amount of its 9% senior subordinated notes and repurchased $39.8 million aggregate principal amount at maturity of its 9 3/4% senior discount notes (see Note 5).

We may from time to time, subject to compliance with our debt instruments, purchase on the open market our debt securities depending upon the availability and prices of such securities.

As of June 30, 2006, our long-term debt obligations, scheduled interest payments on long-term debt, future minimum lease obligations under non-cancelable operating leases, outstanding letters of credit, obligations under employment agreements and purchase commitments for each period indicated are summarized as follows:


	Payments Due by Period
	(in millions)
			Less Than						After
Contractual Obligations	Total		One Year		1 - 3 Years		4 - 5 Years		5 Years
Long-term debt¹	$	1,141.5	$	5.4	$	9.9	$	248.1	$	878.1
Scheduled interest payments on long-term debt²		562.1		48.0		109.9		185.5		218.7
Lease obligations		1,534.7		125.5		258.4		243.4		907.4
Letters of credit		0.1		0.1		—		—		—
Employment agreements		9.3		3.1		6.2		—		—
Purchase commitments³		71.4		26.7		42.9		1.2		0.6

Total obligations	$	3,319.1	$	208.8	$	427.3	$	678.2	$	2,004.8


¹		Includes the 9 3/4% senior discount notes in the principal amount at maturity of $535.6 million.

²		Amounts include scheduled interest payments on fixed rate and variable rate debt agreements. Estimates for the variable rate interest payments were based on interest rates in effect on June 30, 2006.

³		Includes estimated capital expenditures associated with the construction of new theatres to which we were committed as of June 30, 2006.

As of June 30, 2006, we were in full compliance with all agreements governing our outstanding debt.

Recent Developments

On August 2, 2006, Cinemark Holdings, Inc. (“Cinemark Holdings”) was formed to be the Delaware holding company of Cinemark, Inc.

On August 7, 2006, Cinemark USA, Inc. announced it has entered into a definitive purchase agreement in which it will acquire all of the outstanding stock of Century Theatres, Inc. The equity purchase price is approximately $681.0 million in addition to the assumption of debt. To finance the acquisition, Cinemark USA, Inc. plans to refinance its existing senior secured credit facility of $254.2 million and Century’s senior credit facility of $360.0 million with a new $1,120.0 million senior secured term loan and will issue to the Century shareholders $150.0 million of common stock in Cinemark Holdings. Cinemark USA, Inc. will utilize approximately $50.0 million of its current cash to fund the payment of transaction expenses and the balance of the cash purchase price. Cinemark USA, Inc. also plans to increase its senior secured revolving credit line capacity to $150.0 million with no amount drawn at closing.

Senior Discount Notes

On March 31, 2004, we issued approximately $577.2 million aggregate principal amount at maturity of 9 ³/4% senior discount notes due 2014. The gross proceeds at issuance of approximately $360.0 million were used to fund in part the merger between us and a subsidiary of Madison Dearborn Partners, LLC that occurred on April 2, 2004. Interest on the notes accretes until March 15, 2009, up to their aggregate principal amount. Cash interest will accrue and be payable semi-annually in arrears on March 15 and September 15, commencing on September 15, 2009. Due to our holding company status, payments of principal and interest under these notes will be dependent on loans, dividends and other payments from our subsidiaries.

On September 22, 2005, we repurchased $1.8 million aggregate principal amount at maturity of our 9 ³/4% senior discount notes as part of an open market purchase for approximately $1.3 million, including accreted interest.

During May 2006, as part of four open market purchases, we repurchased $39.8 million aggregate principal amount at maturity of our 9 ³/4% senior discount notes for approximately $31.7 million. We funded these transactions upon receipt of a $31.7 million dividend from Cinemark USA, Inc. that was paid with available cash from its operations. As a result of these transactions, we recorded a loss on early retirement of debt of approximately $2.4 million during the six months ended June 30, 2006, which included premiums paid and the write-off of unamortized debt issue costs related to the retired senior discount notes.

As of June 30, 2006, the accreted principal balance of the notes was approximately $413.9 million and the aggregate principal amount at maturity will be approximately $535.6 million.

The indenture governing the senior discount notes contain covenants that limit, among other things, dividends, transactions with affiliates, investments, sale of assets, mergers, repurchases of our capital stock, liens and additional indebtedness. Upon a change of control of Cinemark, Inc., we would be required to make an offer to repurchase all of the 9 ³/4% senior discount notes at a price equal to 101% of the accreted value of the notes plus accrued and unpaid interest, if any, through the date of purchase. We have no obligation, contingent or otherwise, to pay the amounts due under the 9 ³/4% senior discount notes or to make funds available to pay those amounts. The 9 ³/4% senior discount notes are general, unsecured senior obligations of ours that are effectively subordinated to the indebtedness and other liabilities of our subsidiaries.

Senior Subordinated Notes

As of June 30, 2006, Cinemark USA, Inc. had outstanding approximately $332.3 million aggregate principal amount of 9% senior subordinated notes due 2013. Interest is payable on February 1 and August 1 of each year. Cinemark USA, Inc. may redeem all or part of the existing 9% notes on or after February 1, 2008.

During May 2006, as part of three open market purchases, Cinemark USA, Inc. repurchased $10.0 million aggregate principal amount of its 9% senior subordinated notes for approximately $11.0 million, including accrued and unpaid interest. The transactions were funded by Cinemark USA, Inc. with available cash from operations. As a result of the transactions, Cinemark USA, Inc. recorded a loss on early retirement of debt of $0.9 million during the six months ended June 30, 2006, which included premiums paid and the write-off of unamortized debt issue costs related to the retired senior subordinated notes.

The senior subordinated notes are general, unsecured obligations and are subordinated in right of payment to the amended senior secured credit facility or other senior indebtedness. The notes are guaranteed by certain of Cinemark USA, Inc.’s domestic subsidiaries. The guarantees are subordinated to the senior debt of the subsidiary guarantors and rank pari passu with the senior subordinated debt of its guarantor subsidiaries. The notes are effectively subordinated to the indebtedness and other liabilities of Cinemark USA, Inc.’s non-guarantor subsidiaries.

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

Senior Secured Credit Facility

At June 30, 2006, there was approximately $254.2 million outstanding under Cinemark USA, Inc.’s amended term loan and no borrowings outstanding under the amended revolving credit line. Approximately $99.9 million was available for borrowing under the amended revolving credit line, giving effect to a $0.1 million letter of credit outstanding. The average interest rate on outstanding borrowings under the amended senior secured credit facility at June 30, 2006 was 6.9% per annum.

On July 7, 2006, Cinemark USA, Inc.’s amended senior secured credit facility was amended again with an effective date of June 30, 2006. Certain debt covenant ratios and the restricted payment provision of the agreement, among other things, were amended at this time.

Under the amended term loan, principal payments of approximately $0.7 million are due each calendar quarter through March 31, 2010 and increase to $61.1 million each calendar quarter from June 30, 2010 to maturity at March 31, 2011. The amended term loan bears interest, at Cinemark USA, Inc.’s option, at: (A) the base rate equal to the higher of (i) the prime lending rate as set forth on the British Banking Association Telerate page 5 or (ii) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.75% to 1.00% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.75% to 2.00% per annum, both of which will be adjusted based upon our achieving certain performance targets.

Borrowings under the amended revolving credit line bear interest, at Cinemark USA, Inc.’s option, at: (A) a base rate equal to the higher of (i) the prime lending rate as set forth on the British Banking Association Telerate page 5 or (ii) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 1.00% to 1.50% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 2.00% to 2.50% per annum, both of which will be adjusted based upon our achieving certain performance targets. We are required to pay a commitment fee calculated at the rate of 0.50% per annum on the average daily unused portion of the amended revolving credit line, payable quarterly in arrears.

Cinemark USA, Inc.’s obligations under the amended senior secured credit facility are guaranteed by us and certain of our subsidiaries and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA, Inc.’s domestic personal and intangible property, including without limitation, pledges of all of the capital stock of Cinemark USA, Inc., all of the capital stock of CNMK Holding, Inc. and certain of Cinemark USA, Inc.’s domestic subsidiaries and 65% of the voting stock of certain of its foreign subsidiaries.

Cinemark Chile Note Payable

On March 26, 2002, Cinemark Chile S.A. entered into a Debt Acknowledgment, Rescheduling and Joint Guarantee and Co-Debt Agreement with Scotiabank Sud Americano and three local banks. Under this agreement, Cinemark Chile S.A. borrowed the U.S. dollar equivalent of approximately $10.6 million in Chilean pesos (adjusted for inflation pursuant to the Unidades de Fomento). On September 29, 2004, Cinemark Chile S.A. refinanced the outstanding debt under an amended debt agreement with two of the original local banks, Corpbanca and Banco Security. The amended agreement requires 24 equal quarterly installments of principal plus accrued and unpaid interest, which commenced December 31, 2004. The agreement requires Cinemark Chile S.A. to maintain certain financial ratios and contains other restrictive covenants typical for agreements of this type such as a limitation on dividends. Funds borrowed under this agreement bear interest at the 90 day TAB Banking rate as published by the Association of Banks and Financial Institutions Act plus 1.5%. At June 30, 2006, approximately US$5.3 million was outstanding and the average interest rate on outstanding borrowings was 7.4% under this agreement.

Seasonality

Our revenues have historically been seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, the most successful motion pictures have been released during the summer, extending from Memorial Day to Labor Day, and during the holiday season, extending from Thanksgiving through year-end. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing of such film releases

can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or for the same period in the following year.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” based on our current expectations, assumptions, estimates, and projections about our and our subsidiaries’ business and industry. We intend that this quarterly report be governed by the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995 (the “PSLR Act”) with respect to statements that may be deemed to be forward-looking statements under the PSLR Act. They include statements relating to:

	•		future revenues, expenses and profitability;

	•		the future development and expected growth of our business;

	•		projected capital expenditures;

	•		attendance at movies generally, or in any of the markets in which we operate;

	•		the number or diversity of popular movies released;

	•		our ability to successfully license and exhibit popular films;

	•		competition from other exhibitors; and

	•		determinations in lawsuits in which we are a defendant.

You can identify forward-looking statements by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions which are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In evaluating these forward-looking statements, you should carefully consider the risks and uncertainties described in this report. These forward-looking statements reflect our view only as of the date of this report. Actual results could differ materially from those indicated by such forward-looking statements due to a number of factors. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. We undertake no current obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have exposure to financial market risks, including changes in interest rates, foreign currency exchange rates and other relevant market prices.

Interest Rate Risk

An increase or decrease in interest rates would affect interest costs relating to our variable rate debt facilities. Our subsidiaries are currently parties to variable rate debt facilities. At June 30, 2006, there was an aggregate of approximately $263.3 million of variable rate debt outstanding under these facilities. Based on the interest rate levels in effect on the variable rate debt outstanding at June 30, 2006, a 100 basis point increase in market interest rates would not increase our annual interest expense or fair value by a material amount. Changes in interest rates do not have a direct impact on interest expense relating to the remaining fixed rate debt facilities.

The tables below provide information about our fixed rate and variable rate long-term debt agreements as of June 30, 2006 and December 31, 2005:

Expected Maturity as of June 30, 2006
(in millions)


																	Average
	June 30,														Fair		Interest
	2007		2008		2009		2010		2011		Thereafter		Total		Value		Rate
Fixed rate	$	0.1	$	—	$	—	$	—	$	—	$	878.1	$	878.2	$	769.4		9.5	%
Variable rate		5.3		5.7		4.2		64.5		183.6		—		263.3		265.2		6.9	%

Total debt	$	5.4	$	5.7	$	4.2	$	64.5	$	183.6	$	878.1	$	1,141.5	$	1,034.6

Expected Maturity as of December 31, 2005
(in millions)


																	Average
	December 31,														Fair		Interest
	2006		2007		2008		2009		2010		Thereafter		Total		Value		Rate
Fixed rate	$	0.1	$	—	$	—	$	—	$	—	$	928.7	$	928.8	$	792.8		9.5	%
Variable rate		6.8		5.5		4.3		4.1		185.1		61.1		266.9		268.4		6.6	%

Total debt	$	6.9	$	5.5	$	4.3	$	4.1	$	185.1	$	989.8	$	1,195.7	$	1,061.2

Foreign Currency Exchange Rate Risk

We are also exposed to market risk arising from changes in foreign currency exchange rates as a result of our international operations. Generally, we export from the U.S. certain of the equipment and construction interior finish items and other operating supplies used by our international subsidiaries. Principally all the revenues and operating expenses of our international subsidiaries are transacted in the country’s local currency. Generally accepted accounting principles in the U.S. require that our subsidiaries use the currency of the primary economic environment in which they operate as their functional currency. If our subsidiaries operate in a highly inflationary economy, generally accepted accounting principles in the U.S. require that the U.S. dollar be used as the functional currency for the subsidiary. Currency fluctuations result in us reporting exchange gains (losses) or foreign currency translation adjustments relating to our international subsidiaries depending on the inflationary environment of the country in which we operate. Based upon our equity ownership in our international subsidiaries as of June 30, 2006, holding everything else constant, a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we are exposed would decrease the net fair value of our investments in our international subsidiaries by approximately $17 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established a system of controls and other procedures designed to ensure that information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These disclosure controls and procedures have been evaluated under the direction of our Chief Executive Officer and Chief Financial Officer for the period covered by this report. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective in alerting them in a timely basis to material information relating to the Company and its consolidated subsidiaries required to be included in our reports filed or submitted under the Exchange Act.

Changes in Internal Controls

There have been no significant changes in our system of internal controls or in other factors that could significantly affect internal controls within the period covered by this report or subsequent to the evaluation by the Chief Executive Officer and Chief Financial Officer.

CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF JUNE 30, 2006
(In thousands, unaudited)


	Restricted			Unrestricted
	Group			Group		Eliminations			Consolidated
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	139,373		$	8	$	—		$	139,381
Other current assets		31,632			1		—			31,633

Total current assets		171,005			9		—			171,014

THEATRE PROPERTIES AND EQUIPMENT — net		796,610			—		—			796,610

OTHER ASSETS		115,737			5,759		(8,225	)		113,271


TOTAL ASSETS	$	1,083,352		$	5,768	$	(8,225	)	$	1,080,895


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

CURRENT LIABILITIES
Current portion of long-term debt	$	5,361		$	—	$	—		$	5,361
Income tax payable		4,093			—		—			4,093
Accounts payable and accrued expenses		129,151			—		—			129,151

Total current liabilities		138,605			—		—			138,605

LONG-TERM LIABILITIES
Long-term debt, excluding current portion		1,014,473			—		—			1,014,473
Other long-term liabilities		49,548			—		—			49,548

Total long-term liabilities		1,064,021			—		—			1,064,021

COMMITMENTS AND CONTINGENCIES		—			—		—			—

MINORITY INTERESTS IN SUBSIDIARIES		16,237			—		—			16,237

STOCKHOLDERS’ EQUITY (DEFICIENCY)		(135,511	)		5,768		(8,225	)		(137,968	)


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	1,083,352		$	5,768	$	(8,225	)	$	1,080,895


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

CINEMARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(In thousands, unaudited)


	Restricted			Unrestricted
	Group			Group			Eliminations			Consolidated
OPERATING ACTIVITIES
Net income (loss)	$	23,550		$	(1,290	)	$	(1,167	)	$	21,093
Noncash items in net income (loss)		62,899			1,299			—			64,198
Changes in assets and liabilities		(28,441	)		262			—			(28,179	)

Net cash provided by operating activities		58,008			271			(1,167	)		57,112

INVESTING ACTIVITIES
Additions to theatre properties and equipment		(55,064	)		—			—			(55,064	)
Proceeds from sale of theatre properties and equipment		178			—			—			178
Net transactions with affiliates		(633	)		271			633			271

Net cash provided by (used for) investing activities		(55,519	)		271			633			(54,615	)

FINANCING ACTIVITIES
Capital contribution from parent		—			633			(633	)		—
Retirement of senior discount notes		(30,331	)		—			—			(30,331	)
Retirement of senior subordinated notes		(10,000	)		—			—			(10,000	)
Proceeds from long-term debt		963			—			—			963
Repayments of long-term debt		(3,570	)		—			—			(3,570	)
Other		(1,601	)		(1,167	)		1,167			(1,601	)

Net cash used for financing activities		(44,539	)		(534	)		534			(44,539	)

Effect of exchange rate changes on cash and cash equivalents		(776	)		—			—			(776	)


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(42,826	)		8			—			(42,818	)

CASH AND CASH EQUIVALENTS:
Beginning of period		182,199			—			—			182,199

End of period	$	139,373		$	8		$	—		$	139,381


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

Item 6. Exhibits


2.1		Agreement and Plan of Merger dated March 12, 2004, by and between Cinemark, Inc. and Popcorn Merger Corp. (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

2.2		Stock Purchase Agreement dated as of March 12, 2004 by and between Cinemark, Inc. and Madison Dearborn Capital Partners IV, L.P. (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

3.1		Second Amended and Restated Certificate of Incorporation of Cinemark, Inc. filed with the Delaware Secretary of State on April 2, 2004 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

3.2		Amended and Restated Bylaws of Cinemark, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.1		Exchange and Registration Rights Agreement dated March 31, 2004 among Cinemark, Inc., certain subsidiary guarantors party thereto and the initial purchasers named therein (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(a)		Indenture dated as of March 31, 2004 between Cinemark, Inc. and The Bank of New York Trust Company, N.A. governing the 9 3/4% senior discount notes issued thereunder (incorporated by reference to Exhibit 4.2(a) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(b)		Form of 9 3/4% senior discount notes (contained in the indenture listed as Exhibit 4.2(a) above) (incorporated by reference to Exhibit 4.2(b) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(c)		Indenture dated February 11, 2003 between Cinemark USA, Inc. and The Bank of New York Trust Company of Florida, N.A. governing the 9% Senior Subordinated Notes issued thereunder (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 19, 2003).

4.2(d)		First Supplemental Indenture dated as of May 7, 2003 between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(i) to Cinemark USA, Inc.’s Registration Statement on Form S-4 (File No. 333-104940) filed May 28, 2003).

4.2(e)		Second Supplemental Indenture dated as of November 11, 2004 between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-047040) filed March 28, 2005).

4.2(d)		Form of 9% Note (contained in the Indenture listed as Exhibit 4.2(h) above) (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File 033-47040) filed March 19, 2003).

10.1(a)		Management Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.1(a) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed May 17, 2002).

10.1(b)		Management Agreement, dated as of September 10, 2002, between Cinemark USA, Inc. and Cinemark de Mexico (incorporated by reference to Exhibit 10.8 to Cinemark Mexico (USA)’s Registration Statement on Form S-4 (File No. 033-72114) filed on November 24, 1994).

10.1(c)		Management Agreement, dated December 10, 1993, between Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1994).

10.1(d)		First Amendment to Management Agreement of Laredo Theatre, Ltd. effective as of December 10, 2003 between CNMK Texas Properties, Ltd. (successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd. (incorporated by reference to Exhibit 10.1(d) to Cinemark, Inc.’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.1(e)		Management Agreement, dated September 1, 1994, between Cinemark Partners II, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.4(i) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 29, 1995).

10.1(f)		First Amendment to Management Agreement of Cinemark Partners II, Ltd. dated as of January 5, 1998 by and between Cinemark USA, Inc. and Cinemark Partners II, Ltd. (incorporated by reference to Exhibit 10.1(f) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.1(g)		Management Services Agreement dated April 10, 2003 between Greeley Partners L.P. and CNMK Texas Properties, Ltd. (incorporated by reference to Exhibit 10.1(g) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.1(h)		Second Amendment to Credit Agreement dated July 7, 2006, to the Amended and Restated Credit Agreement dated as of April 2, 2004 (as amended by the First Amendment dated as of August 18, 2004) by and among Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc. and the several banks and other financial institutions or entities thereto, and Lehman Commercial Paper, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 to the Cinemark USA, Inc. Form 8-K filed on July 7, 2006).


10.2		Amended and Restated Agreement to Participate in Profits and Losses, dated as of March 12, 2004, between Cinemark USA, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.3(a)		License Agreement, dated December 10, 1993, between Laredo Joint Venture and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1994).

10.3(b)		License Agreement, dated September 1, 1994, between Cinemark Partners II, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.10(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 29, 1995).

10.4(a)		Tax Sharing Agreement, between Cinemark USA, Inc. and Cinemark International, L.L.C. (f/k/a Cinemark II, Inc. ), dated as of June 10, 1992 (incorporated by reference to Exhibit 10.22 to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1993).

10.4(b)		Tax Sharing Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.10 to Cinemark Mexico (USA)’s Registration Statement on Form S-4 (File No. 033-72114) filed on November 24, 1993).

10.5		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.6(a)		Senior Secured Credit Agreement dated December 4, 1995 among Cinemark International, L.L.C. (f/k/a Cinemark II, Inc., Cinemark Mexico (USA) and Cinemark de Mexico (incorporated by reference to Exhibit 10.18 to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed April 1, 1996).

10.6(b)		First Amendment to Senior Secured Credit Agreement, dated as of September 30, 1996, by and among Cinemark II, Inc., Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V. (incorporated by reference to Exhibit 10.11(b) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.6(c)		Second Amendment to Senior Secured Credit Agreement, dated as of September 28, 2000, by and among Cinemark II, Inc., Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V. (incorporated by reference to Exhibit 10.11(c) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.7(a)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Lee Roy Mitchell (incorporated by reference to Exhibit 10.14(a) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(b)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Alan Stock (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(c)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tim Warner (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(d)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Robert Copple (incorporated by reference to Exhibit 10.14(d) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(e)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.14(e) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(f)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tandy Mitchell (incorporated by reference to Exhibit 10.14(f) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.8(a)		Amended and Restated Credit Agreement, dated April 2, 2004, among Cinemark, Inc., CNMK Holdings, Inc., Cinemark USA, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc. and Goldman Sachs Credit Partners LP, as Joint Legal Arrangers, Goldman Sachs Credit Partners LP, as Syndication Agent, Deutsche Bank Securities, Inc., The Bank of New York, General Electric Capital Corporation and CIBC Inc. as Documentation Agents and Lehman Commercial Paper Inc. as Administrative Agent (incorporated by reference to Exhibit 10.15 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.8(b)		First Amendment to the Amended and Restated Credit Agreement, dated August 18, 2004, among Cinemark, Inc., CNMK Holdings, Inc., Cinemark USA, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc. and Goldman Sachs Credit Partners LP, as Joint Lead Arrangers, Goldman Sachs Credit Partners LP, as Syndication Agent, Deutsche Bank Securities, Inc., The Bank of New York, General Electric Capital Corporation and CIBC Inc. as Documentation Agents and Lehman Commercial Paper Inc. as Administrative Agent (incorporated by reference to Exhibit 10.15(b) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed November 10, 2004).


10.9		Amended and Restated Guaranty and Collateral Agreement, dated April 2, 2004, among Cinemark, Inc., CNMK Holdings Inc., Cinemark USA, Inc. and certain of it subsidiaries in favor of Lehman Commercial Paper, Inc., as administrative agent (incorporated by reference to Exhibit 10.16 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.10(a)		Cinemark, Inc. Stockholders Agreement dated as of March 12, 2004, among Madison Dearborn Capital Partners IV, L.P., each of the investors listed on the Schedule of Mitchell Investors and each of the executives listed on the Schedule of Executives (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.10(b)		Amended and Restated Stockholders Agreement dated as of December 30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP, Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners, A LP and the other stockholders party thereto (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 333-116292) filed January 4, 2005).

10.11(a)		Registration Agreement dated as of March 12, 2004 among the Company, Madison Dearborn Capital Partners IV, L.P., Lee Roy Mitchell and The Mitchell Special Trust (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.11(b)		First Amendment to Registration Agreement dated as of December 30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP, Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners, A LP and the other stockholders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 333-116292) filed January 4, 2005).

10.12(a)		Cinemark, Inc. Long Term Incentive Plan Document, dated September 30, 2004 (incorporated by reference to Exhibit 10.19(a) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.12(b)		Form of Stock Option Agreement (incorporated by reference to Exhibit 10.19(b) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.13(a)		Stock Purchase Agreement dated as of August 18, 2004, among Cinemark Empreendimentos e Participacoes, Ltda, Venture II Equity Holdings Corporation, Inc. and Kristal Holdings Limited (incorporated by reference to Exhibit 10.20(a) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.13(b)		Stock Purchase Agreement dated as of August 18, 2004, among Cinemark Empreendimentos e Participacoes, Ltda, Prona Global Ltd., Messrs. Edgar Gleich, Riccardo Arduini, Moises Pinsky, Eduardo Alalou, and Robert Luis Leme Klabin (incorporated by reference to Exhibit 10.20(b) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

*31.1		Certification of Chief Executive Officer of Cinemark, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2		Certification of Chief Financial Officer of Cinemark, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Certification of the Chief Executive Officer of Cinemark, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Certification of the Chief Financial Officer of Cinemark, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		filed herewith.

EXHIBIT INDEX


2.1		Agreement and Plan of Merger dated March 12, 2004, by and between Cinemark, Inc. and Popcorn Merger Corp. (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

2.2		Stock Purchase Agreement dated as of March 12, 2004 by and between Cinemark, Inc. and Madison Dearborn Capital Partners IV, L.P. (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

3.1		Second Amended and Restated Certificate of Incorporation of Cinemark, Inc. filed with the Delaware Secretary of State on April 2, 2004 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

3.2		Amended and Restated Bylaws of Cinemark, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.1		Exchange and Registration Rights Agreement dated March 31, 2004 among Cinemark, Inc., certain subsidiary guarantors party thereto and the initial purchasers named therein (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(a)		Indenture dated as of March 31, 2004 between Cinemark, Inc. and The Bank of New York Trust Company, N.A. governing the 9 3/4% senior discount notes issued thereunder (incorporated by reference to Exhibit 4.2(a) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(b)		Form of 9 3/4% senior discount notes (contained in the indenture listed as Exhibit 4.2(a) above) (incorporated by reference to Exhibit 4.2(b) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

4.2(c)		Indenture dated February 11, 2003 between Cinemark USA, Inc. and The Bank of New York Trust Company of Florida, N.A. governing the 9% Senior Subordinated Notes issued thereunder (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 19, 2003).

4.2(d)		First Supplemental Indenture dated as of May 7, 2003 between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(i) to Cinemark USA, Inc.’s Registration Statement on Form S-4 (File No. 333-104940) filed May 28, 2003).

4.2(e)		Second Supplemental Indenture dated as of November 11, 2004 between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-047040) filed March 28, 2005).

4.2(d)		Form of 9% Note (contained in the Indenture listed as Exhibit 4.2(h) above) (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File 033-47040) filed March 19, 2003).

10.1(a)		Management Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.1(a) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed May 17, 2002).

10.1(b)		Management Agreement, dated as of September 10, 2002, between Cinemark USA, Inc. and Cinemark de Mexico (incorporated by reference to Exhibit 10.8 to Cinemark Mexico (USA)’s Registration Statement on Form S-4 (File No. 033-72114) filed on November 24, 1994).

10.1(c)		Management Agreement, dated December 10, 1993, between Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1994).

10.1(d)		First Amendment to Management Agreement of Laredo Theatre, Ltd. effective as of December 10, 2003 between CNMK Texas Properties, Ltd. (successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd. (incorporated by reference to Exhibit 10.1(d) to Cinemark, Inc.’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.1(e)		Management Agreement, dated September 1, 1994, between Cinemark Partners II, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.4(i) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 29, 1995).

10.1(f)		First Amendment to Management Agreement of Cinemark Partners II, Ltd. dated as of January 5, 1998 by and between Cinemark USA, Inc. and Cinemark Partners II, Ltd. (incorporated by reference to Exhibit 10.1(f) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.1(g)		Management Services Agreement dated April 10, 2003 between Greeley Partners L.P. and CNMK Texas Properties, Ltd. (incorporated by reference to Exhibit 10.1(g) to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).
10.1(h)		Second Amendment to Credit Agreement dated July 7, 2006, to be effective as of June 30, 2006, to the Amended and Restated Credit Agreement dated as of April 2, 2004 (as amended by the First Amendment dated as of August 18, 2004) by and among Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc. and the several banks and other financial institutions or entities thereto, and Lehman Commercial Paper, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 to the Cinemark USA, Inc. Form 8-K filed on July 7, 2006).


10.2		Amended and Restated Agreement to Participate in Profits and Losses, dated as of March 12, 2004, between Cinemark USA, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.3(a)		License Agreement, dated December 10, 1993, between Laredo Joint Venture and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1994).

10.3(b)		License Agreement, dated September 1, 1994, between Cinemark Partners II, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.10(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 29, 1995).

10.4(a)		Tax Sharing Agreement, between Cinemark USA, Inc. and Cinemark International, L.L.C. (f/k/a Cinemark II, Inc. ), dated as of June 10, 1992 (incorporated by reference to Exhibit 10.22 to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed March 31, 1993).

10.4(b)		Tax Sharing Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.10 to Cinemark Mexico (USA)’s Registration Statement on Form S-4 (File No. 033-72114) filed on November 24, 1993).

10.5		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.6(a)		Senior Secured Credit Agreement dated December 4, 1995 among Cinemark International, L.L.C. (f/k/a Cinemark II, Inc., Cinemark Mexico (USA) and Cinemark de Mexico (incorporated by reference to Exhibit 10.18 to Cinemark USA, Inc.’s Annual Report on Form 10-K (File No. 033-47040) filed April 1, 1996).

10.6(b)		First Amendment to Senior Secured Credit Agreement, dated as of September 30, 1996, by and among Cinemark II, Inc., Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V. (incorporated by reference to Exhibit 10.11(b) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.6(c)		Second Amendment to Senior Secured Credit Agreement, dated as of September 28, 2000, by and among Cinemark II, Inc., Cinemark Mexico (USA), Inc. and Cinemark de Mexico, S.A. de C.V. (incorporated by reference to Exhibit 10.11(c) to Cinemark, Inc.’s Registration Statement on Form S-1 (File No. 333-88618) filed on May 17, 2002).

10.7(a)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Lee Roy Mitchell (incorporated by reference to Exhibit 10.14(a) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(b)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Alan Stock (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(c)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tim Warner (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(d)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Robert Copple (incorporated by reference to Exhibit 10.14(d) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(e)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.14(e) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.7(f)		Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tandy Mitchell (incorporated by reference to Exhibit 10.14(f) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.8(a)		Amended and Restated Credit Agreement, dated April 2, 2004, among Cinemark, Inc., CNMK Holdings, Inc., Cinemark USA, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc. and Goldman Sachs Credit Partners LP, as Joint Legal Arrangers, Goldman Sachs Credit Partners LP, as Syndication Agent, Deutsche Bank Securities, Inc., The Bank of New York, General Electric Capital Corporation and CIBC Inc. as Documentation Agents and Lehman Commercial Paper Inc. as Administrative Agent (incorporated by reference to Exhibit 10.15 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.8(b)		First Amendment to the Amended and Restated Credit Agreement, dated August 18, 2004, among Cinemark, Inc., CNMK Holdings, Inc., Cinemark USA, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc. and Goldman Sachs Credit Partners LP, as Joint Lead Arrangers, Goldman Sachs Credit Partners LP, as Syndication Agent, Deutsche Bank Securities, Inc., The Bank of New York, General Electric Capital Corporation and CIBC Inc. as Documentation Agents and Lehman Commercial Paper Inc. as Administrative Agent (incorporated by reference to Exhibit 10.15(b) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed November 10, 2004).


10.9		Amended and Restated Guaranty and Collateral Agreement, dated April 2, 2004, among Cinemark, Inc., CNMK Holdings Inc., Cinemark USA, Inc. and certain of it subsidiaries in favor of Lehman Commercial Paper, Inc., as administrative agent (incorporated by reference to Exhibit 10.16 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q (File No. 033-47040) filed May 14, 2004).

10.10(a)		Cinemark, Inc. Stockholders Agreement dated as of March 12, 2004, among Madison Dearborn Capital Partners IV, L.P., each of the investors listed on the Schedule of Mitchell Investors and each of the executives listed on the Schedule of Executives (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.10(b)		Amended and Restated Stockholders Agreement dated as of December 30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP, Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners, A LP and the other stockholders party thereto (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 333-116292) filed January 4, 2005).

10.11(a)		Registration Agreement dated as of March 12, 2004 among the Company, Madison Dearborn Capital Partners IV, L.P., Lee Roy Mitchell and The Mitchell Special Trust (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004).

10.11(b)		First Amendment to Registration Agreement dated as of December 30, 2004 among Cinemark, Inc., Madison Dearborn Partners IV, LP, Lee Roy Mitchell, The Mitchell Special Trust, Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners, A LP and the other stockholders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 333-116292) filed January 4, 2005).

10.12(a)		Cinemark, Inc. Long Term Incentive Plan Document, dated September 30, 2004 (incorporated by reference to Exhibit 10.19(a) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.12(b)		Form of Stock Option Agreement (incorporated by reference to Exhibit 10.19(b) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.13(a)		Stock Purchase Agreement dated as of August 18, 2004, among Cinemark Empreendimentos e Participacoes, Ltda, Venture II Equity Holdings Corporation, Inc. and Kristal Holdings Limited (incorporated by reference to Exhibit 10.20(a) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

10.13(b)		Stock Purchase Agreement dated as of August 18, 2004, among Cinemark Empreendimentos e Participacoes, Ltda, Prona Global Ltd., Messrs. Edgar Gleich, Riccardo Arduini, Moises Pinsky, Eduardo Alalou, and Robert Luis Leme Klabin (incorporated by reference to Exhibit 10.20(b) to the Company’s Quarterly Report on Form 10-Q (File No. 333-116292) filed November 10, 2004).

*31.1		Certification of Chief Executive Officer of Cinemark, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2		Certification of Chief Financial Officer of Cinemark, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Certification of the Chief Executive Officer of Cinemark, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Certification of the Chief Financial Officer of Cinemark, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		filed herewith


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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005		3

Condensed Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2006 and 2005		4

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2006 and 2005		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3. Quantitative and Qualitative Disclosures About Market Risk		25

Item 4. Controls and Procedures		26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		27

Item 1A. Risk Factors		27

Item 5. Other Information		27

Item 6. Exhibits		31

SIGNATURES		34
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906


	Page
Condensed Consolidating Balance Sheet Information (unaudited) as of June 30, 2006		28

Condensed Consolidating Statement of Income Information (unaudited) for the six months ended June 30, 2006		29

Condensed Consolidating Statement of Cash Flows Information (unaudited) for the six months ended June 30, 2006		30


		CINEMARK, INC. Registrant
DATE: August 14, 2006

		/s/ Alan W. Stock

		Alan W. Stock President

		/s/ Robert Copple

		Robert Copple Chief Financial Officer

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	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


CINEMARK, INC.

By:		/s/ Lee Roy Mitchell Lee Roy Mitchell Chief Executive Officer


CINEMARK, INC.

By:		/s/ Robert Copple Robert Copple Chief Financial Officer

	(i)		the Form 10-Q fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

	(ii)		the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.