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 September 30, 1997
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:
4,109,299 shares of Common Stock (including options to acquire 1,670
shares of common stock exercisable within 60 days of such date) as of
November 7, 1997.
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
Index
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of September 30, 1997 (unaudited)
and December 31, 1996 3
Condensed Consolidated Statements of Income
(unaudited) for the three and nine month periods
ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the nine month periods ended
September 30, 1997 and 1996 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
-----------------------------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ............................. $ 4,975,255 $ 10,362,911
Inventories ........................................... 205,365 109,055
Value added tax refunds and other receivables ......... 3,934,596 2,186,814
Prepaid expenses and other ............................ 461,480 644,250
-----------------------------
Total current assets ............................... 9,576,696 13,303,030
THEATRE PROPERTIES AND EQUIPMENT:
Theatre Properties and Equipment ...................... 35,539,400 28,868,387
Less accumulated depreciation and amortization ........ (4,028,404) (2,429,362)
-----------------------------
Theatre properties and equipment - net .............. 31,510,996 26,439,025
OTHER ASSETS:
Advanced Rents ........................................ 4,069,577 2,537,374
Deferred taxes and other .............................. 3,287,354 853,915
-----------------------------
Total other assets ................................. 7,356,931 3,391,289
-----------------------------
TOTAL .............................................. $ 48,444,623 $ 43,133,344
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ................. $ 3,944,532 $ 2,802,727
Accrued interest ...................................... 618,821 771,327
Income taxes payable .................................. 1,145,346 --
-----------------------------
Total current liabilities .......................... 5,708,699 3,574,054
LONG-TERM LIABILITIES:
Senior secured credit notes - Cinemark Int'l, Inc. .... 11,617,882 10,919,761
12% senior subordinated notes, due 2003 ............... 28,561,000 25,710,900
Deferred lease expense ................................ 576,820 332,042
----------------------------
Total long-term liabilities ........................ 40,755,702 36,962,703
COMMON STOCK WARRANTS .................................... 200,729 200,729
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value, 100,000,000
shares authorized 4,108,464 and 4,044,432
shares issued and outstanding, respectively .......... 4,108 4,044
Additional paid-in capital ............................ 23,387,078 23,146,551
Unearned compensation - stock options ................. (33,196) (37,658)
Accumulated deficit ................................... (10,448,042) (9,586,624)
Cumulative foreign currency translation adjustment .... (11,130,455) (11,130,455)
-----------------------------
Total shareholders' equity ......................... 1,779,493 2,395,858
-----------------------------
TOTAL .............................................. $ 48,444,623 $ 43,133,344
=============================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
-----------------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Admissions ........................ $ 7,183,003 $ 5,095,092 $ 16,372,230 $ 10,977,576
Concessions ....................... 3,651,850 2,635,002 8,424,960 5,764,975
Other ............................. 201,121 74,433 870,773 162,390
-----------------------------------------------------------
11,035,974 7,804,527 25,667,963 16,904,941
COSTS AND EXPENSES:
Cost of operations:
Film rentals ...................... 3,292,935 2,127,257 7,453,161 4,812,270
Concession supplies ............... 1,193,357 903,774 2,815,409 1,955,746
Salaries and wages ................ 1,058,099 878,252 2,577,128 2,050,051
Facility leases ................... 1,044,825 1,019,560 2,697,637 2,085,364
Advertising ....................... 188,069 127,385 470,796 326,839
Utilities and other ............... 1,159,905 907,473 3,031,154 2,221,721
-----------------------------------------------------------
Total ............................... 7,937,190 5,963,701 19,045,285 13,451,991
General and administrative expenses . 780,169 718,591 1,963,447 1,655,214
Depreciation ........................ 1,059,606 741,696 1,594,761 1,240,506
-----------------------------------------------------------
Total ............................ 9,776,965 7,423,988 22,603,493 16,347,711
-----------------------------------------------------------
OPERATING INCOME ....................... 1,259,009 380,539 3,064,470 557,230
OTHER INCOME (EXPENSE):
Interest expense .................... (1,300,758) (1,123,587) (3,714,647) (2,830,398)
Amortization of debt issue cost ..... (27,869) (26,763) (81,332) (76,384)
Amortization of debt discount ....... -- (48,081) -- (139,205)
Other losses ........................ (307,852) -- (307,852) --
Foreign currency exchange gain (loss) (91,267) 45,619 (68,903) (3,221)
Interest income ..................... (140,573) 115,103 223,978 166,341
-----------------------------------------------------------
Total ............................. (1,868,319) (1,037,709) (3,948,756) (2,882,867)
-----------------------------------------------------------
NET LOSS BEFORE INCOME TAXES ........... (609,310) (657,170) (884,286) (2,325,637)
INCOME TAXES ........................... (32,697) (5,085) (22,868) 103,422
-----------------------------------------------------------
NET LOSS ............................... $ (576,613) $ (652,085) $ (861,418) $ (2,429,059)
===========================================================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
-------------------------------
OPERATIONS:
<S> <C> <C>
Net loss .............................................................................. $ (861,418) $ (2,429,059)
Noncash items in net loss: ............................................................ -- --
Depreciation ....................................................................... 1,594,761 1,240,506
Amortization ....................................................................... 81,332 215,589
Deferred lease expense ............................................................. 244,778 97,595
Amortization of prepaid lease and stock option compensation ........................ 521,792 2,583
Debt issued for accrued interest ................................................... 4,172,891 1,971,500
Other losses ....................................................................... 307,852 --
Cash from (used for) operating working capital:
Inventories ........................................................................ (96,310) (32,645)
Value added tax refund and other receivables ....................................... (1,565,012) (711,961)
Accounts payable and accrued expenses .............................................. 1,141,805 542,626
Accrued interest ................................................................... (777,176) (486,482)
Accounts payable affiliates ........................................................ -- 843,208
Income taxes payable ............................................................... 1,145,346 --
-------------------------------
Net cash from operations ........................................................ 5,910,641 1,253,460
INVESTING ACTIVITIES:
Additions to theatre properties .................................................... (6,666,732) (8,204,710)
Increase in other assets ........................................................... (4,872,156) (169,473)
-------------------------------
Net cash used for investing activities .......................................... (11,538,888) (8,374,183)
FINANCING ACTIVITIES:
Capital contributions .............................................................. -- 10,000,000
Increase in long-term debt ......................................................... -- 6,434,979
Sale of common stock ............................................................... 240,591 --
-------------------------------
Net cash from financing activities .............................................. 240,591 16,434,979
FOREIGN CURRENCY TRANSLATION ADJUSTMENT ............................................... -- 344,916
-------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................................... (5,387,656) 9,659,172
CASH AND CASH EQUIVALENTS:
Beginning of period ................................................................ 10,362,911 1,423,029
-------------------------------
End of period ...................................................................... $ 4,975,255 $ 11,082,201
===============================
SUPPLEMENTAL INFORMATION:
Cash paid for interest .............................................................. $ 435,213 $ 1,345,380
===============================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
5
<PAGE>
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,
results of operations and cash flows as of and for the periods indicated.
The consolidated financial statements are prepared in U.S. dollars under
generally accepted accounting principles in the United States. In preparing the
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of
the financial statements and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
These financial statements should be read in conjunction with the audited
annual financial statements and the notes thereto for the year ended December
31, 1996 included in the Annual Report filed on Form 10-K by the Company under
the Securities Exchange Act of 1934 on March 31, 1997.
Operating results for the three and nine months ended September 30, 1997
are not necessarily indicative of the results to be achieved for the full year.
2. FAS 52 - Highly Inflationary Economies
Beginning in 1997, generally accepted accounting principals require that
the U.S. dollar be used as the functional currency of the Company's Mexican
subsidiary for U.S. reporting purposes. This change will cause fluctuations in
the peso during 1997 affecting the Company's investment in Mexico to be charged
to exchange gain or loss rather than to the cumulative adjustment account.
3. FAS 128 - Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share", which will be effective for the Company for the quarter and annual
period ended December 31, 1997. SFAS No. 128 requires expanded disclosure of
earnings per share, including presentation of basic and diluted earnings per
share computations for income from continuing operations. The Company's
computations of primary and fully diluted earnings per share under APB Opinion
No. 15 for the three and nine months ended September 30, 1997 and 1996
approximate the computation of diluted earnings per share under SFAS No. 128.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
Cinemark Mexico (USA), Inc. (the "Company"), a Texas Corporation, was
formed in July 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 in September 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.
Results of Operations
The following table presents certain income statement items as a percentage
of revenues.
% of Revenues
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------ ------ ------ ------
Revenues:
Admissions ........... 65.1 65.3 63.8 64.9
Concessions .......... 33.1 33.8 32.8 34.1
Other ................ 1.8 0.9 3.4 1.0
------- ------- ------- -------
Total revenues ......... 100.0 100.0 100.0 100.0
Cost of operations ..... 71.9 76.4 74.2 79.6
General and
administrative expenses 7.1 9.2 7.7 9.8
Depreciation and
amortization .......... 9.6 9.5 6.2 7.3
Operating income ....... 11.4 4.9 11.9 3.3
Interest expense ....... 12.0 15.4 14.8 18.0
Loss before income taxes (5.5) (8.4) (3.4) (13.8)
Net loss ............... (5.2) (8.4) (3.4) (14.4)
Revenues
Revenues for the quarter ended September 30, 1997 increased 41.4% to $11.0
million from $7.8 million in the third quarter of 1996. Revenues for the nine
month period ended September 30, 1997 (the "1997 Period") increased 51.8% to
$25.7 million from $16.9 million in the nine month period ended September 30,
1996 (the "1996 Period"). The increase in revenues for the quarter and nine
month period is attributed in part to a 12.1% increase in
7
<PAGE>
attendance for the third quarter and a 25.1% increase in attendance during the
nine month period, resulting from strengthening of the economy in Mexico and
the opening of 15 screens in July of 1997. Revenues have also been affected by
a combined increase in admission and concession revenues per patron of 26.3%
for the quarter and 18.3% for the nine month period.
Cost of Operations
Costs of operations as a percentage of revenues were 71.9% for the third
quarter of 1997 versus 76.4% for the third quarter of 1996. The decrease as a
percentage of revenues resulted primarily from decreases in concessions
supplies as a percentage of concession revenues to 32.7% from 34.3% in 1996, a
decrease in salaries and wages as a percentage of revenues to 9.6% from 11.3%
in 1996 and a decrease in facility leases to 9.5% from 11.3% in 1996, partially
offset by an increase in film expense as a percentage of admission revenues to
45.8% from 41.8% in 1996.
Costs of operations as a percentage of revenues were 74.2% for the 1997
Period versus 79.6% for the 1996 Period. The decrease as a percentage of
revenues resulted primarily from a decrease in salaries and wages as a
percentage in revenues to 10.0% from 12.1% in the 1996 Period, a decrease in
facility leases as a percentage of revenues to 10.5% from 12.3% in the 1996
Period and a decrease in utilities as a percentage of revenues to 11.8% from
13.1% in the 1996 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 third quarter of 1997 decreased as a percentage of revenues to 7.1%
from 9.2% in the third quarter of 1996. Similarly, general and administrative
expenses decreased as a percentage of revenues to 7.7% for the 1997 Period from
9.8% for the 1996 Period. In absolute terms, general and administrative
expenses increased to $.8 million for the third quarter of 1997 from $.7
million for the third quarter of 1996 and increased to $2.0 million for the
1997 Period from $1.7 million for the 1996 Period. The increase in general and
administrative expenses is attributable to an increase in the management fee,
resulting from the increase in total revenues during the third quarter of 1997
and the 1997 Period, paid to Cinemark USA (5% of revenues). The increase 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 third quarter of 1997 increased to $1.3 million from $1.2
million for third quarter of 1996. Total interest costs incurred for the 1997
Period increased to $3.8 million from $3.0 million for the 1996 Period. The
increase is primarily the result of additional borrowing under the Company's
senior debt facility and issuance of additional debt for interest payments.
8
<PAGE>
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 has been recorded primarily related to the income and losses
attributable to Cinemark Mexico (USA). The tax benefit of the loss generated by
Cinemark de Mexico, which files a separate tax return in 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 $48.7 million in Cinemark de Mexico
to fund development. Due to the devaluation of the Mexican currency, pesos,
that began in December 1994, the Company has recognized a $11.1 million
unrealized cumulative translation loss adjustment in equity at September 30,
1997. 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. In 1997, generally accepted accounting
principles require that the US dollar be used as the functional currency of the
Company's foreign subsidiary for U.S. reporting purposes. Thus, fluctuations in
the peso during 1997 that affect the Company's investment will be charged to
exchange gain or loss rather than to the cumulative adjustment account. The
exchange rate during 1997 through September 30, 1997 remained stable at
approximately N$7.8 to $1. As of November 7, 1997 the exchange rate is
approximately N$8.4 to $1.
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 finish out, 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 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
9
<PAGE>
(with interest) through rent abatements. Management has in the past and may in
the 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 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 "Old Notes") with detachable warrants (the
"Warrants"). The Old Notes were bearing interest at 12% per annum payable
semi-annually on August 1 and February 1 of each year commencing February 1,
1994. The Company was required to make a sinking fund payment of $6,667,000 on
each of August 1, 2001 and August 1, 2002, which amounts were to be utilized on
such respective dates to retire a like face amount of the outstanding Old
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.
On September 30, 1996, the Company exchanged new notes (New Notes) in
exchange for the Cinemark Mexico Old Notes (which included the $2 million
issued in May of 1994). The New Notes are Senior Subordinated Notes due 2003
with an annual stated interest rate of 12% payable semiannually on February 1
and August 1. The Company has the ability to issue additional notes, subject to
the same terms as the New Notes, in payment of interest due on any of the
semiannual interest payment dates through February 1, 2000. If the Company
elects to exercise this option, the interest rate for the applicable semiannual
period for which the additional bonds are issued is accruable at 13% rather
than 12%. The election is at the discretion of the Company and applies to all
outstanding bonds for the relevant semiannual interest period. As of November
7, 1997, the Company has paid $2.9 million of interest due under the New Notes
by issuing additional bonds. The Indenture governing the New Notes is the same
as the old Indenture with certain modifications. The Indenture requires
Cinemark Mexico to maintain a Cash Flow Coverage Ratio (as defined in the new
Indenture) of 2.0 to 1.0 beginning after December 31, 1999. Sinking fund
payments as previously described are required under the new Indenture.
As part of the exchange agreement, the note holders agreed to receive
additional notes in payment of the accrued interest due on the Old Notes for
the period February 1 1996 through the date of the exchange. The interest for
this period was paid at the rate of 13% per annum ($2.0 million of New Notes
were issued). Additionally, the Company repurchased the majority of its
outstanding warrants (94.1%) for the issuance of $1.3 million of additional New
Notes. Also, Cinemark International contributed an additional $10 million of
equity to Cinemark Mexico pursuant to the exchange. On January 9, 1997, New
Wave Investment also acquired an additional 64,032 shares of common stock of
the Company for $.3 million.
10
<PAGE>
The indenture for the Old and New 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. 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. The Company has fully drawn the $10.0
million available under the Mexico Senior Credit Facility. As part of the
exchange agreement with the Senior Subordinated Note holders, Cinemark
International agreed to amend the Senior Credit Facility to permit the Company
to issue additional Senior debt to Cinemark International in payment of
interest. If the Company elects this option, the interest rate for the
applicable period for which the additional debt is issued is accruable at 13%
rather than 12%. As of November 7, 1997, the Company has paid $1.7 million of
interest due under the Senior Credit Facility by issuing new debt to Cinemark
International.
As of November 7, 1997, Cinemark de Mexico was operating thirteen theatres
(141 screens), has one theatre (10 screens) under construction and plans to
begin construction on one theatre (10 screens) by the end of 1997. The
construction of these theatres will require additional capital expenditures by
the Company of approximately $9.4 million which will be funded with cash
currently available and cash flow from operations. Funding beyond these sources
required to construct these and additional theatres is subject to Cinemark de
Mexico achieving sufficient levels of cash flow from operations or raising
additional equity.
11
<PAGE>
PART II. Other Information
Item 5. Other Information
Supplemental Schedules specified by the
Senior Notes indenture:
Condensed Consolidating Balance Sheet
(unaudited) as of September 30, 1997
Condensed Consolidating Statement of
Income (unaudited) for the nine months
ended September 30, 1997
Condensed Consolidating Statement of Cash Flow (unaudited)
for the nine months ended September 30, 1997
Item 6(b). Reports on Form 8-K
No reports have been filed by Registrant during the quarter
for which this report is filed.
12
<PAGE>
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(Unaudited)
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
-----------------------------------------------------------------
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents ..................................... $ 2,929,519 $ 2,045,736 $ -- $ 4,975,255
Inventories ................................................... -- 205,365 -- 205,365
Value added tax refunds and other ............................. 155,772 3,778,824 -- 3,934,596
Prepaid expenses and other .................................... -- 461,480 -- 461,480
-------------------------------------------------------------
Total current assets ....................................... 3,085,291 6,491,405 -- 9,576,696
THEATRE PROPERTIES AND EQUIPMENT ................................. -- 35,539,400 -- 35,539,400
Less accumulated depreciation and amortization ................ -- (4,028,404) -- (4,028,404)
-------------------------------------------------------------
Theatre properties and equipment - net ..................... -- 31,510,996 -- 31,510,996
OTHER ASSETS:
Investment in and advances to affiliate ....................... (5,520,540) -- 5,520,540 --
Deferred charges and other .................................... 2,057,273 5,299,658 -- 7,356,931
Advances and notes ............................................ 44,318,447 -- (44,318,447) --
-------------------------------------------------------------
Total other assets ......................................... 40,855,180 5,299,658 (38,797,907) 7,356,931
--------------------------------------------------------------
TOTAL ...................................................... $ 43,940,471 $ 43,302,059 $(38,797,907) $ 48,444,623
==============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ......................... $ 17,200 $ 3,927,332 $ -- $ 3,944,532
Accrued interest .............................................. 618,821 -- -- 618,821
Income taxes payable .......................................... 1,145,346 -- -- 1,145,346
-------------------------------------------------------------
Total current liabilities .................................. 1,781,367 3,927,332 -- 5,708,699
LONG-TERM LIABILITIES:
Senior secured notes .......................................... 11,617,882 -- -- 11,617,882
12% senior subordinated notes ................................. 28,561,000 -- -- 28,561,000
Intercompany advances ......................................... -- 44,318,447 (44,318,447) --
Deferred lease expense ........................................ -- 576,820 -- 576,820
------------------------------------------------------------
40,178,882 44,895,267 (44,318,447) 40,755,702
COMMON STOCK WARRANTS ............................................ 200,729 -- -- 200,729
SHAREHOLDERS' EQUITY:
Common stock .................................................. 4,108 -- -- 4,108
Additional paid-in capital .................................... 23,387,078 14,250,000 (14,250,000) 23,387,078
Unearned compensation - stock options ......................... (33,196) -- -- (33,196)
Accumulated deficit ........................................... (10,448,042) (20,442,988) 20,442,988 (10,448,042)
Cumulative foreign currency translation adjustment ............ (11,130,455) 672,448 (672,448) (11,130,455)
--------------------------------------------------------------
Total shareholders' equity ................................. 1,779,493 (5,520,540) 5,520,540 1,779,493
--------------------------------------------------------------
TOTAL ...................................................... $ 43,940,471 $ 43,302,059 ($38,797,907) $ 48,444,623
=============================================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
------------------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Admissions ......................... $ $ 16,372,230 $ $ 16,372,230
Concessions ........................ -- 8,424,960 -- 8,424,960
Other .............................. -- 870,773 -- 870,773
------------------------------------------------------------
Total ............................ -- 25,667,963 -- 25,667,963
COSTS AND EXPENSES:
Cost of operations:
Film rentals ..................... -- 7,453,161 -- 7,453,161
Concession supplies .............. -- 2,815,409 -- 2,815,409
Salaries and wages ............... -- 2,577,128 -- 2,577,128
Facility leases .................. -- 2,697,637 -- 2,697,637
Advertising ...................... -- 470,796 -- 470,796
Utilities and other .............. -- 3,031,154 -- 3,031,154
------------------------------------------------------------
Total ........................... -- 19,045,285 -- 19,045,285
General and administrative expenses 11,587 1,951,860 -- 1,963,447
Depreciation ...................... -- 1,594,761 -- 1,594,761
------------------------------------------------------------
Total ........................... 11,587 22,591,906 -- 22,603,493
------------------------------------------------------------
OPERATING INCOME (LOSS) ............... (11,587) 3,076,057 -- 3,064,470
OTHER INCOME (EXPENSE):
Interest expense ................... (3,815,727) (3,518,252) 3,619,332 (3,714,647)
Amortization of debt issue cost .... (81,332) -- -- (81,332)
Other losses ....................... -- (307,852) -- (307,852)
Foreign currency exchange gain ..... -- (68,903) -- (68,903)
Interest income .................... 3,843,310 -- (3,619,332) 223,978
Equity in loss of subsidiary ....... (818,950) -- 818,950 --
------------------------------------------------------------
Total ........................... (872,699) (3,895,007) 818,950 (3,948,756)
------------------------------------------------------------
LOSS BEFORE INCOME TAXES .............. (884,286) (818,950) 818,950 (884,286)
INCOME TAXES .......................... (22,868) -- -- (22,868)
------------------------------------------------------------
NET LOSS .............................. $ (861,418) $ (818,950) $ 818,950 $ (861,418)
============================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
----------------------------------------------------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net loss ...................................... $ (861,418) $ (818,950) $ 818,950 $ (861,418)
Noncash items in net loss:
Depreciation ............................... -- 1,594,761 -- 1,594,761
Amortization ............................... 81,332 -- -- 81,332
Deferred lease expense ..................... -- 244,778 -- 244,778
Amortization of prepaid leases
and stock options ........................ 4,462 517,330 -- 521,792
Debt issued for accrued interest ........... 4,172,891 -- -- 4,172,891
Other losses ............................... -- 307,852 -- 307,852
Equity in loss of subsidiary ............... 818,950 -- (818,950) --
Cash from (used for) operating working capital:
Inventories ................................ -- (96,310) -- (96,310)
Value added tax and other .................. 239,934 (1,804,946) -- (1,565,012)
Accounts payable and accrued expenses ...... (16,400) 1,158,205 -- 1,141,805
Accrued interest expense ................... (777,176) -- -- (777,176)
Income taxes payable ....................... 1,145,346 -- -- 1,145,346
----------------------------------------------------------
Net cash from operations ................ 4,807,921 1,102,720 -- 5,910,641
INVESTING ACTIVITIES:
Additions to theatre properties ............ -- (6,666,732) -- (6,666,732)
Increase in other assets ................... (6,182,268) (3,439,888) 4,750,000 (4,872,156)
Intercompany advances ...................... (4,610,307) -- 4,610,307 --
----------------------------------------------------------
Net cash used for investing activities .. (10,792,575) (10,106,620) 9,360,307 (11,538,888)
FINANCING ACTIVITIES:
Capital contributions ...................... -- 4,750,000 (4,750,000) --
Sale of common stock ....................... 240,591 -- -- 240,591
Intercompany advances ...................... -- 4,610,307 (4,610,307) --
----------------------------------------------------------
Net cash from financing activities ...... 240,591 9,360,307 (9,360,307) 240,591
INCREASE (DECREASE) IN CASH ................... (5,744,063) 356,407 -- (5,387,656)
CASH:
Beginning of period ........................ 8,673,582 1,689,329 -- 10,362,911
----------------------------------------------------------
End of period .............................. $ 2,929,519 $ 2,045,736 -- $ 4,975,255
==========================================================
</TABLE>
15
<PAGE>
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: November 7, 1997
/Jeffrey J. Stedman/
--------------------------
Jeffrey J. Stedman
Vice President and
Chief Financial Officer
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY'S FORM 10-Q FOR THE NINE
MONTHS ENDING SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,975,255
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 205,365
<CURRENT-ASSETS> 9,576,696
<PP&E> 35,539,400
<DEPRECIATION> 4,028,404
<TOTAL-ASSETS> 48,444,623
<CURRENT-LIABILITIES> 5,708,699
<BONDS> 28,561,000
0
0
<COMMON> 4,108
<OTHER-SE> 1,775,385
<TOTAL-LIABILITY-AND-EQUITY> 48,444,623
<SALES> 25,667,963
<TOTAL-REVENUES> 25,667,963
<CGS> 0
<TOTAL-COSTS> 19,045,285
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,795,979
<INCOME-PRETAX> (884,286)
<INCOME-TAX> (22,868)
<INCOME-CONTINUING> (861,418)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (861,418)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
