<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission file number 33-77444
CINEMARK MEXICO (USA), INC.
---------------------------
CINEMARK de MEXICO, S.A. de C.V.
--------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-2493459
----- ----------
Mexico (N/A)
------ -----
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7502 Greenville Ave., Suite 800, LB-9, Dallas, Texas 75231
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(214) 696-1644
(Registrant's telephone number including area code)
-------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The Registrant became subject to the filing requirements of the Securities
Exchange Act of 1934 on March 28, 1994.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
1,382,982 shares of Common Stock as of August 13, 1996
<PAGE> 2
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
Index
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as
of June 30, 1996 (unaudited) and December 31, 1995 3
Condensed Consolidated Statements of Income
(unaudited) for the three and six month periods
ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the six month periods ended
June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 5. Other Information 12
Item 6(b). Reports on Form 8-K 12
SIGNATURES 16
</TABLE>
<PAGE> 3
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,163,297 $ 1,423,029
Inventories 109,421 64,811
Taxes and other receivables 1,576,763 957,257
Prepaid expenses and others 5,619 51,156
----------------------------
Total current assets 2,855,100 2,496,253
THEATRE PROPERTIES AND EQUIPMENT 24,891,860 19,161,801
Less accumulated depreciation and
amortization (1,256,180) (760,463)
----------------------------
Theatre property and equipment - net 23,635,680 18,401,338
OTHER ASSETS:
Deferred charges and other 3,037,531 2,660,697
Theatre development advance 1,892,421 1,633,680
----------------------------
Total other assets 4,929,952 4,294,377
----------------------------
TOTAL $ 31,420,732 $ 25,191,968
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,134,350 $ 1,750,543
Accounts payable affiliates
(primarily due Cinemark USA, Inc.) 1,121,016 635,089
Accrued interest 1,503,359 1,120,000
Accrued income taxes 108,507
----------------------------
Total current liabilities 4,867,232 3,505,632
LONG-TERM LIABILITIES:
12% senior subordinated notes, due 2003
(less unamortized discount of $1,759,627
based on imputed interest rate of 13.85%) 20,640,373 20,549,249
Note payable - Cinemark II, Inc. 8,950,000 2,520,548
Deferred lease expense 240,535 201,915
----------------------------
Total long-term liabilities 29,830,908 23,271,712
COMMON STOCK WARRANTS WITH
REDEMPTION REQUIREMENTS 3,424,132 3,424,132
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value, 100,000,000
authorized, 1,382,982 issued and outstanding 1,383 1,383
Additional paid-in capital 12,350,824 12,350,824
Unearned compensation - stock options (11,200) (12,922)
Accumulated deficit (8,564,363) (6,787,389)
Cumulative foreign currency
translation adjustment (10,478,184) (10,561,404)
----------------------------
Total shareholders' equity (6,701,540) (5,009,508)
----------------------------
TOTAL $ 31,420,732 $ 25,191,968
============================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
<PAGE> 4
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Admissions $ 3,298,198 $ 1,715,316 $ 5,882,484 $ 2,930,120
Concessions 1,796,731 770,181 3,129,973 1,405,190
Other 44,771 25,219 87,957 52,754
------------------------------------------------------------
Total $ 5,139,700 $ 2,510,716 $ 9,100,414 $ 4,388,064
COSTS AND EXPENSES:
Cost of operations:
Film rentals $ 1,457,348 $ 786,492 $ 2,685,013 $ 1,300,863
Concession supplies 614,427 313,163 1,051,972 35,189
Salaries and wages 638,050 334,052 1,171,799 558,499
Facility leases 483,850 419,541 1,065,804 779,095
Advertising 129,795 66,136 199,454 101,871
Utilities and other 802,956 350,872 1,314,428 755,954
------------------------------------------------------------
Total $ 4,126,426 $ 2,270,256 $ 7,488,290 $ 4,031,471
General and administrative
expenses $ 530,047 $ 477,297 $ 936,623 $ 745,289
Depreciation 250,121 144,864 498,810 249,383
------------------------------------------------------------
Total $ 4,906,594 $ 2,892,417 $ 8,923,723 $ 5,026,143
------------------------------------------------------------
OPERATING INCOME (LOSS) $ 233,106 $ (381,701) $ 176,691 $ (638,079)
OTHER INCOME (EXPENSE):
Interest expense $ (902,942) $ (632,735) $ (1,706,811) $ (1,243,602)
Amortization of debt issue cost (24,810) (24,810) (49,621) (4,621)
Amortization of debt discount (46,039) (40,213) (91,124) (79,593)
Foreign currency exchange loss (34,466) 323,405 (48,840) 50,459
Interest Income 23,529 100,782 51,238 350,493
------------------------------------------------------------
Total (984,728) (273,571) (1,845,158) (971,864)
------------------------------------------------------------
INCOME BEFORE INCOME TAXES (751,622) (655,272) (1,668,467) (1,609,943)
INCOME TAX (BENEFIT) 49,973 100 108,507 (36,109)
------------------------------------------------------------
NET LOSS $ (801,595) $ (655,372) $ (1,776,974) $ (1,573,834)
============================================================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
<PAGE> 5
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net loss $ (1,776,974) $ (1,573,834)
Noncash items in net loss:
Amortization 140,745 129,214
Depreciation 498,810 249,383
Deferred lease expense 38,620 96,061
Amortized compensation - stock options 1,722 18,330
Cash from (used for) operating working capital:
Inventories (44,610) 2,975
Interest and other receivables (573,969) (898,714)
Income taxes receivable 0 (26,162)
Accounts payable and accrued expenses 383,807 469,116
Accrued interest 362,811
Other accrueds 485,927
Income taxes payable 108,507
----------------------------
Net cash used for operations (374,604) (1,533,631)
INVESTING ACTIVITIES:
Additions to theatre properties (5,733,152) (4,953,355)
Decrease in temporary cash investments 0 1,242,383
(Increase) decrease in other assets (685,196) (6,634)
----------------------------
Net cash used for investing activities (6,418,348) (3,717,606)
FINANCING ACTIVITIES:
Capital contributions 302,625
Increase in long-term debt 6,450,000
----------------------------
Net cash from financing activities 6,450,000 302,625
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 83,220 (1,615,363)
----------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (259,732) (6,563,975)
CASH AND CASH EQUIVALENTS:
Beginning of period 1,423,029 10,927,143
----------------------------
End of period $ 1,163,297 $ 4,363,168
============================
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 1,344,000 $ 1,344,000
============================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
<PAGE> 6
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared by the Company, without audit, according to the rules and regulations
of the Securities and Exchange Commission. In the opinion of management, these
interim financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary to state fairly the financial position and
results of operations as of and for the periods indicated.
These financial statements should be read in conjunction with the audited
annual financial statements and the notes thereto for the year ended December
31, 1995 included in the Annual Report filed on Form 10-K by the Company under
the Securities Exchange Act of 1934 on March 31, 1996.
Operating results for the three and six months ended June 30, 1996 are not
necessarily indicative of the results to be achieved for the full year.
2. SUBSEQUENT EVENTS
The Company has entered an agreement with the holder of the majority of
its notes in principle to renegotiate certain terms of its Senior Subordinated
Notes - see Liquidity and Capital Resources.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The following table presents certain income statement items as a percentage of
revenues.
<TABLE>
<CAPTION>
% OF REVENUES
-------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Admissions 64.2 68.3 64.6 66.8
Concessions 35.0 30.7 34.4 32.0
Other .8 1.0 1.0 1.2
Total revenues 100.0 100.0 100.0 100.0
Cost of operations 80.3 90.4 82.3 91.9
General and
administrative expenses 10.3 19.0 10.3 17.0
Depreciation and
amortization 4.9 5.8 5.5 5.7
Operating income 4.5 (15.2) 1.9 (14.6)
Interest expense 19.0 27.8 20.3 31.3
Income before income taxes (14.6) (26.1) (18.3) (36.7)
Net income (15.6) (26.1) (19.5) (35.9)
</TABLE>
OVERVIEW
Cinemark Mexico (USA), Inc. (the "Company"), a Texas Corporation, was
formed on July 28, 1993, as a subsidiary of Cinemark International, Inc.
("Cinemark International", f/k/a Cinemark II, Inc.), which is wholly owned by
Cinemark USA, Inc. ("Cinemark USA"). The Company was established to serve as a
holding company to facilitate future investments in Mexico by Cinemark USA. The
Company's operations are conducted by Cinemark de Mexico S.A. de C.V.
("Cinemark de Mexico"), which was formed on September 10, 1992, as a 99.99%
owned subsidiary of Cinemark International, to own or lease and operate movie
theatres in Mexico. In July 1993, Cinemark International contributed its entire
interest in Cinemark de Mexico to the Company.
<PAGE> 8
RESULTS OF OPERATIONS
REVENUES
Revenues for the quarter ended June 30, 1996 increased 104.7% to $5.1
million from $2.5 million in the second quarter of 1995. Revenues for the six
month period ended June 30, 1996 (the "1996 Period") increased 107.4% to $9.1
million from $4.4 million in the six month period ended June 30, 1995 (the 1995
Period"). The increase in revenues for the quarter and Period is primarily
attributed to a 141.4% increase in attendance during the first six months of
1996, resulting from the addition of 60 screens since the second quarter of
1995 for a total of 114 screens operated during the second quarter of 1996.
Revenues have also been affected by a 6.1% increase in admission and concession
prices which partially offset a 23.6% devaluation of the Mexican peso during
the 1996 Period compared to the 1995 Period.
COST OF OPERATIONS
Costs of operations as a percentage of revenues were 80.3% for the second
quarter of 1996 versus 90.4% for the second quarter of 1995. The decrease as a
percentage of revenues resulted primarily from a decrease in concession costs,
as a percentage of concession revenues, to 34.2% from 40.7% in 1995 and a
decrease in facility lease expense as a percentage of revenues to 9.4% from
16.7% in 1995, partially offset by an increase in utilities and other costs as
a percentage of revenues to 15.6% from 14.0% in 1995.
Costs of operations as a percentage of revenues were 82.3% for the 1996
Period versus 91.9% for the 1995 Period. The decrease as a percentage of
revenues resulted primarily from a decrease in concession costs, as a
percentage of concession revenues, to 33.6% from 38.1% in the 1995 Period, a
decrease in facility lease expense as a percentage of revenues to 11.7% from
17.8% in the 1995 Period and a decrease in utilities and other costs as a
percentage of revenues to 14.4% from 17.2% in the 1995 Period.
GENERAL AND ADMINISTRATIVE EXPENSES
Cinemark de Mexico conducts its real estate and administrative operations
from its Mexico City office. General and administrative expenses incurred
during the second quarter of 1996 decreased as a percentage of revenues to
10.3% from 19.0% in the second quarter of 1995. Similarily, general and
administrative costs decreased, as a percentage of revenues to 10.3% for the
1996 Period from 17.0% for the 1995 Period. In absolute terms, general and
administrative expenses remained relatively constant at $.5 million for the
quarter and increased to $.9 million for the 1996 Period from $.7 million for
the 1995 Period. The increase in total general and administrative expenses is
attributable to an increase in the management fee, resulting from the increase
in total revenues during the second quarter of 1996 and the 1996 Period, paid
to Cinemark USA (5% of revenues) which was partially offset by a decrease in
costs incurred by the Mexico City office for travel expenses, legal fees and
consulting fees.
INTEREST EXPENSE
Total interest costs incurred (including amortization of debt issue costs
and discount) for the second quarter of 1996 increased to $1.0 million from $.7
million for second quarter of 1995. Total interest costs incurred for the 1996
<PAGE> 9
Period increased to $1.8 million from $1.4 million for the 1995 Period. The
increase is primarily a result of the incurrence of an additional $9.0 million
in borrowings under the Company's senior debt facility.
INCOME TAXES
The Company has provided income taxes under FASB 109. The Company will
file a consolidated U.S. federal income tax return with Cinemark USA. Income
tax expense primarily related to the income attributable to Cinemark Mexico
(USA). The tax benefit of the loss generated by Cinemark de Mexico has been
fully reserved and will be realized in future periods as Cinemark de Mexico
begins generating a profit from operations.
INFLATION AND FOREIGN CURRENCY
The Company has invested approximately $40.5 million in Cinemark de
Mexico. Due to the devaluation of the Mexican currency, pesos, that began in
December 1994, the Company has recognized a $10.5 million unrealized cumulative
translation loss adjustment in equity at June 30, 1996 based on an exchange
rate of N$7.6 per $1. Additionally, as a result of certain operating
transactions being denominated in dollars the Company has realized an exchange
loss on the income statement. The Company's debt and certain of its current
theatre lease rent is denominated in U.S. dollars while revenues are in Mexican
pesos. Additionally, almost all of the equipment and interior finish materials
of the Company's new theatres have been imported from the U.S. As a result of
the devaluation, certain costs of the Company (principally equipment, interest
and lease expenses) have almost doubled in relation to the Company's revenues.
The Company plans to raise prices over time in an attempt to compensate for the
devaluation. Currently, however, management does not believe that it can raise
prices sufficiently to offset the devaluation without dramatically reducing
patronage and concession consumption. The devaluation has significantly
impacted the Mexican economy and will affect the short term profitability of
the theatres. Additionally, the lack of available capital in the Mexican market
as a result of a significant rise in the interest rates has reduced the
availability of developer financing on future projects resulting in a delay of
current projects and a reduction in the rate of expansion initially anticipated
by the Company.
LIQUIDITY AND CAPITAL RESOURCES
Cinemark de Mexico's revenues are collected in cash, primarily through box
office admissions and the sale of concession items.
The Company's strategy is to enter into leases with terms of 15 to 20
years plus renewal options for the development of theatre facilities instead of
purchasing them due to the lower capital requirements for developing a
leasehold theatre. A typical leasehold theatre requires a capital outlay of
approximately $100,000 to $200,000 per screen, representing the costs of
equipment and interior finishout, whereas, the development of a fee owned or
ground lease theatre is estimated to range between $4.0 million and $10.0
million, per theatre. The Company attempts to obtain lease terms that are
typically built-to-suit construction obligations with Cinemark de Mexico being
responsible for theatre equipment. However, due to the inability of landlords to
obtain financing in Mexico, many landlords have requested Cinemark de Mexico to
contribute to the cost of construction and recapture such contributions (with
interest) through rent abatements. Management has in the past and may in the
<PAGE> 10
future make, such contributions to construction in markets it deems
appropriate. The Company will also consider a desirable location on a fee or
ground lease basis if there is no developer willing to construct the theatre on
the site on terms acceptable to the Company. In such events, the Company may
consider alternative financing sources allowed under the indenture governing
the Company's 12% Senior Subordinated Notes (the "Indenture"), such as
additional borrowings, sales of equity or entering into joint ventures.
On August 3, 1993, the Company issued $20.4 million of 12% Senior
Subordinated Notes due 2003 (the "Notes") with detachable warrants (the
"Warrants"). The Notes bear interest at 12% per annum payable semi-annually on
August 1 and February 1 of each year commencing February 1, 1994. The Company
is required to make a sinking fund payment of $6,667,000 on each of August 1,
2001 and August 1, 2002, which amounts are to be utilized on such respective
dates to retire a like face amount of the outstanding Notes.
On May 6, 1994, the Company issued, at a discount of $55.00 per $1,000
note, an additional $2.0 million of 12% Senior Subordinated Notes due 2003 with
the terms governed by the Indenture from the initial offering of Senior
Subordinated Notes.
In December of 1994, Cinemark International contributed an additional $5.0
million of capital to Cinemark Mexico (USA), Inc. New Wave Investments made an
additional $.3 million contribution on June 1, 1995 and the majority of warrant
holders purchased an additional $1.3 million of warrants in September 1995.
In July 1996, the Company reached a non-binding agreement in principle
with the institutional holder (the "Majority Holder") of $22.0 million of the
Notes pursuant to which the Company and the Majority Holder agreed to the
exchange of all the Notes owned by the Majority Holder, and accrued unpaid
interest from February 1, 1996 to the date of such exchange, for a new series
of notes (the "New Notes"). The New Notes provide that, at Cinemark Mexico's
option, all accrued and unpaid interest for each interest period through and
including February 1, 2000 may be paid by issuing additional notes of the same
series on each interest payment date or may be paid in cash. During such period
the New Notes will bear interest at a rate of 13% per annum for each interest
payment paid-in-kind or at a rate of 12% per annum if paid in cash. The
agreement in principle also provided that the Company will issue approximately
$1.3 million of a new series of notes, on substantially similar terms as the
New Notes, in exchange for all of the issued and outstanding warrants to
purchase shares of common stock of the Company owned by the Majority Holder.
The Company and the Majority Holder elected to pursue the exchange of the
Notes for the New Notes in order to provide for additional cash liquidity to
fund capital investments in the Company's business and to take full advantage
of the opportunities the Company currently believes exists in the Mexican
motion picture industry. In this connection, Cinemark International has agreed
to make an additional $10 million investment in common stock of the Company
when the New Notes are issued.
As a result of these negotiations the Majority Holder has agreed to
postpone the approximately $1.3 million cash interest payment on the Notes
otherwise due on August 1, 1996 until the earlier of the exchange of the Notes
and New Notes or September 30, 1996. The Company and the Majority Holder are
currently negotiating definitive documentation to effectuate the terms of the
non-binding agreement in principle. However, there can be no assurance that any
such
<PAGE> 11
documentation will be successfully negotiated, approved or executed. In
such event, and if the Company fails to make the interest payment, an Event of
Default under the Indenture could result, which Event of Default would have a
material adverse effect on the Company if the maturity of the Notes is
accelerated. The Company has the resources available to pay such interest if
the negotiations were to terminate. The Company intends to negotiate with the
holders of the remaining $400,000 principal amount of the Notes to effectuate
an exchange offer on similar terms to the agreement in principle reached with
the Majority Holder.
At August 13, 1996, Cinemark de Mexico was operating eleven theatres (114
screens) and had two theatres (25 screens) under commitment with executed
leases. The construction of these theatres will require additional capital
expenditures by the Company of approximately $8.5 million.
The indenture for the Senior Subordinated Notes allows for the incurrence
of $10.0 million of senior debt. On December 4, 1995, the Company entered into
the Mexico Senior Credit Facility allowing for the borrowing of $10 million of
senior secured debt from Cinemark International to fund Cinemark de Mexico's
capital needs for theatre construction contemplated during 1996. The Mexico
Senior Credit Facility permits the Company to relend to Cinemark de Mexico any
funds borrowed to finance construction of uncompleted locations, the
acquisition and installation of furniture, fixtures and equipment of such
locations and for general corporate purposes and working capital. As of August
13, 1996, Cinemark de Mexico has borrowed $9.0 million under the Mexico Senior
Credit Facility. Any funding beyond this source necessary to complete current
construction and construct future theatres is subject to Cinemark de Mexico
achieving sufficient levels of cash flow from operations to permit additional
debt financing or will require Cinemark de Mexico to raise additional financing
through equity issuances.
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Supplemental Schedules specified by the Senior Notes indenture:
Condensed Consolidating Balance Sheet (unaudited) as of
June 30, 1996
Condensed Consolidating Statement of Income (unaudited)
for the six months ended June 30, 1996
Condensed Consolidating Statement of Cash Flow (unaudited)
for the six months ended June 30, 1996
ITEM 6(A) Exhibits
27 - Financial Data Schedule
(B) REPORTS ON FORM 8-K
No reports have been filed by Registrant during the quarter for
which this report is filed.
<PAGE> 13
CINEMARK MEXICO(USA),INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
--------------- ------------ ------------ ------------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 92,062 $ 1,071,235 $ -- $ 1,163,297
Inventories 109,421 109,421
Taxes and other receivables 3,793,428 1,576,763 (3,793,428) 1,576,763
Prepaids and other 5,619 5,619
---------------------------------------------------------------
Total current assets 3,885,490 2,763,038 (3,793,428) 2,855,100
THEATRE PROPERTIES AND EQUIPMENT 24,891,860 24,891,860
Less accumulated depreciation
and amortization (1,256,180) (1,256,180)
---------------------------------------------------------------
Theatre properties and
equipment - net 23,635,680 23,635,680
OTHER ASSETS:
Investment in and advances
to affiliate (10,156,743) 0 10,156,743
Deferred charges and other 733,420 4,196,532 4,929,952
Advances and notes 33,477,974 (33,477,974)
---------------------------------------------------------------
Total other assets 24,054,651 4,196,532 (23,321,231) 4,929,952
---------------------------------------------------------------
TOTAL $ 27,940,141 $ 30,595,250 $(27,114,659) $ 31,420,732
===============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 15,310 $ 2,119,040 $ 2,134,350
Accounts payable - affiliates 0 1,121,016 1,121,016
Accrued interest 1,503,359 3,793,428 (3,793,428) 1,503,359
Income taxes payable 108,507 108,507
---------------------------------------------------------------
Total current liabilities 1,627,176 7,033,484 (3,793,428) 4,867,232
LONG-TERM LIABILITIES:
12% senior subordinated notes,
due 2003(less unamortized
discount of $1,759,627 based
on imputed interest
rate of 13.85%) 20,640,373 20,640,373
Notes payable - affiliates 8,950,000 33,477,974 (33,477,974) 8,950,000
Deferred lease expense 240,535 240,535
---------------------------------------------------------------
29,590,373 33,718,509 (33,477,974) 29,830,908
COMMON STOCK WARRANTS WITH
REDEMPTION REQUIREMENTS 3,424,132 3,424,132
SHAREHOLDERS' EQUITY:
Common stock 1,383 1,383
Additional paid-in capital 12,350,824 7,000,000 (7,000,000) 12,350,824
Unearned compensation -
stock options (11,200) (11,200)
Accumulated deficit (8,564,363) (17,164,583) 17,164,583 (8,564,363)
Cumulative foreign currency
translation adjustment (10,478,184) 7,840 (7,840) (10,478,184)
---------------------------------------------------------------
Total shareholders' equity (6,701,540) (10,156,743) 10,156,743 (6,701,540)
---------------------------------------------------------------
TOTAL $ 27,940,141 $ 30,595,250 $(27,114,659) $ 31,420,732
===============================================================
</TABLE>
<PAGE> 14
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Admissions $ 5,882,484 $ 5,882,484
Concessions 3,129,973 3,129,973
Other 87,957 87,957
-----------------------------------------------------------
Total 9,100,414 9,100,414
COSTS AND EXPENSES:
Cost of operations:
Film rentals 2,685,013 2,685,013
Concession supplies 1,051,972 1,051,972
Salaries and wages 1,171,799 1,171,799
Facility leases 1,065,804 1,065,804
Advertising 199,454 199,454
Utilities and other 1,314,248 1,314,248
-----------------------------------------------------------
Total 7,488,290 7,488,290
General and administrative expenses 1,872 934,751 936,623
Depreciation 498,810 498,810
-----------------------------------------------------------
Total 1,872 8,921,851 8,923,723
-----------------------------------------------------------
OPERATING LOSS (1,872) 178,563 176,691
-----------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest expense (1,706,811) (2,158,806) 2,158,806 (1,706,811)
Amortization of debt issue cost (49,621) (49,621)
Amortization of bond discount (91,124) (91,124)
Foreign currency exchange loss (516,462) 467,610 12 (48,840)
Interest income 2,159,449 50,607 (2,158,818) 51,238
Equity in loss of subsidiary (1,462,026) 1,462,026
-----------------------------------------------------------
Total (1,666,595) (1,640,589) 1,462,026 (1,845,158)
-----------------------------------------------------------
LOSS BEFORE INCOME TAXES (1,668,467) (1,462,026) 1,462,026 (1,668,467)
INCOME TAXES 108,507 108,507
-----------------------------------------------------------
NET LOSS $(1,776,974) $(1,462,026) $ 1,462,026 $(1,776,974)
===========================================================
</TABLE>
<PAGE> 15
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net loss $(1,776,974) $(1,462,026) $ 1,462,026 $(1,776,974)
Noncash items in net loss:
Depreciation 498,810 498,810
Amortization 49,621 49,621
Deferred lease expense 38,620 38,620
Amortization of debt discount 91,124 91,124
Amortized compensation -
stock options 1,722 1,722
Equity in loss of subsidiary 1,462,026 (1,462,026)
Cash from (used for) operating working capital:
Inventories (44,610) (44,610)
Interest and other receivables (3,793,428) (573,969) 3,793,428 (573,969)
Accounts payable and
accrued expenses (23,190) 406,997 383,807
Accrued interest expense 1,997,421 2,158,818 (3,793,428) 362,811
Accounts payable - affiliate 0 485,927 485,927
Income taxes payable 108,507 108,507
-----------------------------------------------------------
Net cash from (used for) operations (1,883,171) 1,508,567 0 (374,604)
INVESTING ACTIVITIES:
Additions to theatre properties (5,733,152) (5,733,152)
Increase in other assets 0 (685,196) (685,196)
Increase in advances and notes (5,550,000) 5,550,000 0
-----------------------------------------------------------
Net cash used for investing
activities (5,550,000) (6,418,348) 5,550,000 (6,418,348)
FINANCING ACTIVITIES:
Borrowings under senior secured credit
agreement 6,450,000 5,550,000 (5,550,000) 6,450,000
-----------------------------------------------------------
Net cash from financing activities 6,450,000 5,550,000 (5,550,000) 6,450,000
FOREIGN CURRENCY TRANSLATION 516,462 (433,242) 83,220
-----------------------------------------------------------
DECREASE IN CASH (446,709) 206,977 (259,732)
CASH:
Beginning of period 558,771 864,258 1,423,029
-----------------------------------------------------------
End of period $ 92,062 $ 1,071,235 $ 1,163,297
===========================================================
</TABLE>
<PAGE> 16
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
CINEMARK MEXICO (USA), INC.
Registrant
DATE: May 13, 1996
/Jeffrey J. Stedman/
------------------------------------
Jeffrey J. Stedman
Vice President and
Chief Financial Officer
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CINEMARK
MEXICO (USA), INC. AND SUBSIDIARY JUNE 30, 1996, FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,163,297
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 109,421
<CURRENT-ASSETS> 2,855,100
<PP&E> 24,891,860
<DEPRECIATION> 1,256,180
<TOTAL-ASSETS> 31,420,732
<CURRENT-LIABILITIES> 4,867,232
<BONDS> 20,640,373
<COMMON> 1,383
0
0
<OTHER-SE> (6,702,923)
<TOTAL-LIABILITY-AND-EQUITY> 31,420,732
<SALES> 9,100,414
<TOTAL-REVENUES> 9,100,414
<CGS> 0
<TOTAL-COSTS> 7,987,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,847,556
<INCOME-PRETAX> (1,668,467)
<INCOME-TAX> 108,507
<INCOME-CONTINUING> (1,776,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,776,974)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
