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, 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 835 shares of common stock exercisable within
60 days of such date) as of August 11, 1997.
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
Index
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statements of Income
(unaudited) for the three and six month periods
ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the six month periods ended
June 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
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,362,074 $ 10,362,911
Inventories 281,902 109,055
Value added tax refunds and other receivables 3,133,535 2,186,814
Prepaid expenses and other 357,519 644,250
-----------------------------
Total current assets 10,135,030 13,303,030
THEATRE PROPERTIES AND EQUIPMENT 34,852,836 28,868,387
Less accumulated depreciation and amortization (2,964,421) (2,429,362)
-----------------------------
Theatre properties and equipment - net 31,888,415 26,439,025
OTHER ASSETS:
Advanced Rents 2,412,061 2,537,374
Deferred taxes and other 3,074,679 853,915
-----------------------------
Total other assets 5,486,740 3,391,289
-----------------------------
TOTAL $ 47,510,185 $ 43,133,344
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,759,091 $ 2,802,727
Accrued interest 1,452,706 771,327
Income taxes payable 1,178,042
-----------------------------
Total current liabilities 6,389,839 3,574,054
LONG-TERM LIABILITIES:
Senior secured credit notes - Cinemark International, Inc. 11,249,255 10,919,761
12% senior subordinated notes, due 2003 26,821,300 25,710,900
Deferred lease expense 495,227 332,042
-----------------------------
Total long-term liabilities 38,565,782 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 (35,467) (37,658)
Accumulated deficit (9,871,429) (9,586,624)
Cumulative foreign currency translation adjustment (11,130,455) (11,130,455)
-----------------------------
Total shareholders' equity 2,353,835 2,395,858
-----------------------------
TOTAL $ 47,510,185 $ 43,133,344
=============================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
3
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDING JUNE 30, SIX MONTHS ENDED JUNE 30,
1997 1996 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Admissions $ 4,994,231 $ 3,298,198 $ 9,189,227 $ 5,882,484
Concessions 2,518,985 1,796,731 4,773,110 3,129,973
Other 413,726 44,771 669,652 87,957
--------------------------------------------------------------
7,926,942 5,139,700 14,631,989 9,100,414
COSTS AND EXPENSES:
Cost of operations:
Film rentals 2,284,111 1,457,348 4,160,226 2,685,013
Concession supplies 820,068 614,427 1,622,052 1,051,972
Salaries and wages 835,601 638,050 1,519,029 1,171,799
Facility leases 846,084 483,850 1,652,812 1,065,804
Advertising 179,226 129,795 282,727 199,454
Utilities and other 937,127 802,956 1,871,249 1,314,248
-------------------------------------------------------------
Total 5,902,217 4,126,426 11,108,095 7,488,290
General and administrative expenses 706,168 530,047 1,183,278 936,623
Depreciation 264,269 250,121 535,155 498,810
-------------------------------------------------------------
Total 6,872,654 4,906,594 12,826,528 8,923,723
-------------------------------------------------------------
OPERATING INCOME 1,054,288 233,106 1,805,461 176,691
OTHER INCOME (EXPENSE):
Interest expense (1,052,859) (902,942) (2,413,889) (1,706,811)
Amortization of debt issue cost (26,732) (24,810) (53,463) (49,621)
Amortization of debt discount -- (46,039) -- (91,124)
Foreign currency exchange gain (loss) (9,519) (34,466) 22,364 (48,840)
Interest income 175,391 23,529 364,551 51,238
-------------------------------------------------------------
Total (913,719) (984,728) (2,080,437) (1,845,158)
NET INCOME (LOSS) BEFORE INCOME TAXES 140,569 (751,622) (274,976) (1,668,467)
INCOME TAXES -- 49,973 9,829 108,507
-------------------------------------------------------------
NET INCOME (LOSS) $ 140,569 $ (801,595) $ (284,805) $ (1,776,974)
=============================================================
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
4
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
-----------------------------
OPERATIONS:
<S> <C> <C>
Net loss $ (284,805) $ (1,776,974)
Noncash items in net loss:
Depreciation 535,155 498,810
Amortization 53,463 140,745
Deferred lease expense 163,185 38,620
Amortization of prepaid leases and stock option compensation 236,805 1,722
Debt issued for accrued interest 1,857,389 --
Cash from (used for) operating working capital:
Inventories (172,847) (44,610)
Value added tax refund and other receivables (659,990) (573,969)
Accounts payable and accrued expenses 956,364 869,734
Accrued interest 263,884 362,811
Income taxes payable 1,178,042 108,507
-----------------------------
Net cash from (used for) operations 4,126,645 (374,604)
INVESTING ACTIVITIES:
Additions to theatre properties (5,984,545) (5,733,152)
Increase in other assets (2,383,528) (685,196)
-----------------------------
Net cash used for investing activities (8,368,073) (6,418,348)
FINANCING ACTIVITIES:
Increase in long-term debt -- 6,450,000
Sale of common stock 240,591 --
-----------------------------
Net cash from financing activities 240,591 6,450,000
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- 83,220
-----------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (4,000,837) (259,732)
CASH AND CASH EQUIVALENTS:
Beginning of period 10,362,911 1,423,029
-----------------------------
End of period $ 6,362,074 $ 1,163,297
=============================
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 431,348 $ 1,344,000
=============================
</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 six months ended June 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 six months ended June 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
------ ------ ------ ------
Revenues:
Admissions 63.0 64.2 62.8 64.6
Concessions 31.8 35.0 32.6 34.4
Other 5.2 .8 4.6 1.0
--------------------------------------
Total revenues 100.0 100.0 100.0 100.0
Cost of operations 74.5 80.3 75.9 82.3
General and
administrative expenses 8.9 10.3 8.1 10.3
Depreciation and
amortization 3.3 4.9 3.7 5.5
Operating income (loss) 13.3 4.5 12.3 1.9
Interest expense 13.6 19.0 16.9 20.3
Income before income taxes 1.8 (14.6) (1.9) (18.3)
Net loss 1.8 (15.6) (1.9) (19.5)
7
<PAGE>
REVENUES
Revenues for the quarter ended June 30, 1997 increased 54.2% to $7.9
million from $5.1 million in the second quarter of 1996. Revenues for the six
month period ended June 30, 1997 (the "1997 Period") increased 60.8% to $14.6
million from $9.1 million in the six month period ended June 30, 1996 (the
"1996 Period"). The increase in revenues for the quarter and six month period
is attributed in part to a 35.6% increase in attendance during the first six
months of 1997, resulting from both strong industry performance and the 22
screens opened during the second quarter of 1996. Revenues have also been
affected by a combined increase of 14.3% in admission and concession revenues
per patron.
COST OF OPERATIONS
Costs of operations as a percentage of revenues were 74.5% for the second
quarter of 1997 versus 80.3% for the second quarter of 1996. The decrease as a
percentage of revenues resulted primarily from decreases in concessions
supplies as a percentage of concession revenues to 32.6% from 34.2% in 1996, a
decrease in salaries and wages as a percentage of revenues to 10.5% from 12.4%
in 1996 and a decrease in utilities and other as a percentage of revenues to
11.8% from 15.6% in 1996, partially offset by an increase in film expense as a
percentage of admission revenues to 45.7% from 44.2% in 1996 and an increase in
facility lease expense to 10.7% from 9.4% in 1996.
Costs of operations as a percentage of revenues were 75.9% for the 1997
Period versus 82.3% 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 10.4% from 12.9% in the 1996 Period and a decrease in
utilities as a percentage of revenues to 12.8% from 14.4% 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 second quarter of 1997 decreased as a percentage of revenues to 8.9%
from 10.3% in the second quarter of 1996. Similarly, general and administrative
expenses decreased as a percentage of revenues to 8.1% for the 1997 Period from
10.3% for the 1996 Period. In absolute terms, general and administrative
expenses increased to $.7 million for the second quarter of 1997 from $.5
million for the second quarter of 1996, and increased to $1.2 million for the
1997 Period from $.9 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 second quarter of 1997
and the 1997 Period, paid to Cinemark USA (5% of revenues). The increase was
offset by a decrease in costs incurred by the Mexico City office for travel
expenses, legal fees and consulting fees.
8
<PAGE>
INTEREST EXPENSE
Total interest costs incurred (including amortization of debt issue costs
and discount) for the second quarter of 1997 increased to $1.1 million from
$1.0 million for second quarter of 1996. Total interest costs incurred for the
1997 Period increased to $2.5 million from $1.8 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.
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 $43 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 June 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. 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 reduction in the rate of expansion initially
anticipated by the Company. 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 August 1997 has remained stable at approximately N$7.8
to $1.
9
<PAGE>
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 (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 August 11,
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)
10
<PAGE>
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.
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 August 11, 1997, the Company has paid $.9 million of
interest due under the Senior Credit Facility by issuing new debt to Cinemark
International.
At August 11, 1997, Cinemark de Mexico was operating twelve theatres (129
screens), had one theatre (12 screens) under construction and two theatres (20
screens) under commitment with executed leases. The construction of these
theatres will require additional capital expenditures by the Company of
approximately $11.3 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 June 30, 1997
Condensed Consolidating Statement of
Income (unaudited) for the six months
ended June 30, 1997
Condensed Consolidating Statement of
Cash Flow (unaudited) for the six months
ended June 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>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
-------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,885,058 $ 1,477,016 $ -- $ 6,362,074
Inventories -- 281,902 -- 281,902
Value added tax refunds and other 155,772 2,977,763 -- 3,133,535
Prepaid expenses and other -- 357,519 -- 357,519
-------------------------------------------------------------
Total current assets 5,040,830 5,094,200 -- 10,135,030
THEATRE PROPERTIES AND EQUIPMENT -- 34,852,836 -- 34,852,836
Less accumulated depreciation and amortization -- (2,964,421) -- (2,964,421)
--------------------------------------------------------------
Theatre properties and equipment - net -- 31,888,415 -- 31,888,415
OTHER ASSETS:
Investment in and advances to affiliate (6,944,961) -- 6,944,961 --
Deferred charges and other 2,085,142 3,401,598 -- 5,486,740
Advances and notes 43,089,657 -- (43,089,657) --
-------------------------------------------------------------
Total other assets 38,229,838 3,401,598 (36,144,696) 5,486,740
-------------------------------------------------------------
TOTAL $ 43,270,668 $ 40,384,213 $(36,144,696) $ 47,510,185
=============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 14,801 $ 3,744,290 $ -- $ 3,759,091
Accrued interest 1,452,706 -- -- 1,452,706
Income taxes payable 1,178,042 -- -- 1,178,042
-------------------------------------------------------------
Total current liabilities 2,645,549 3,744,290 -- 6,389,839
LONG-TERM LIABILITIES:
Senior secured notes 11,249,255 -- -- 11,249,255
12% senior subordinated notes 26,821,300 -- -- 26,821,300
Intercompany advances -- 43,089,657 (43,089,657) --
Deferred lease expense -- 495,227 -- 495,227
-------------------------------------------------------------
38,070,555 43,584,884 (43,089,657) 38,565,782
COMMON STOCK WARRANTS 200,729 -- -- 200,729
SHAREHOLDERS' EQUITY:
Common stock 4,108 -- -- 4,108
Additional paid-in capital 23,387,078 12,250,000 (12,250,000) 23,387,078
Unearned compensation - stock options (35,467) -- -- (35,467)
Accumulated deficit (9,871,429) (19,867,409) 19,867,409 (9,871,429)
Cumulative foreign currency translation adjustment (11,130,455) 672,448 (672,448) (11,130,455)
-------------------------------------------------------------
Total shareholders' equity 2,353,835 (6,944,961) 6,944,961 2,353,835
-------------------------------------------------------------
TOTAL $ 43,270,668 $ 40,384,213 $(36,144,696) $ 47,510,185
=============================================================
</TABLE>
13
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
-------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Admissions $ -- $ 9,189,227 $ -- $ 9,189,227
Concessions -- 4,773,110 -- 4,773,110
Other -- 669,652 -- 669,652
-------------------------------------------------------------
Total -- 14,631,989 -- 14,631,989
COSTS AND EXPENSES:
Cost of operations:
Film rentals -- 4,160,226 -- 4,160,226
Concession supplies -- 1,622,052 -- 1,622,052
Salaries and wages -- 1,519,029 -- 1,519,029
Facility leases -- 1,652,812 -- 1,652,812
Advertising -- 282,727 -- 282,727
Utilities and other -- 1,871,249 -- 1,871,249
-------------------------------------------------------------
Total -- 11,108,095 -- 11,108,095
General and administrative expenses 6,916 1,176,362 -- 1,183,278
Depreciation -- 535,155 -- 535,155
-------------------------------------------------------------
Total 6,916 12,819,612 -- 12,826,528
-------------------------------------------------------------
OPERATING INCOME (LOSS) (6,916) 1,812,377 -- 1,805,461
OTHER INCOME (EXPENSE):
Interest expense (2,537,601) (2,266,830) 2,390,542 (2,413,889)
Amortization of debt issue cost (53,463) -- -- (53,463)
Foreign currency exchange gain -- 22,364 -- 22,364
Interest income 2,566,375 188,718 (2,390,542) 364,551
Equity in loss of subsidiary (243,371) -- 243,371
-------------------------------------------------------------
Total (268,060) (2,055,748) 243,371 (2,080,437)
-------------------------------------------------------------
LOSS BEFORE INCOME TAXES (274,976) (243,371) 243,371 (274,976)
INCOME TAXES 9,829 -- -- 9,829
-------------------------------------------------------------
NET LOSS $ (284,805) $ (243,371) $ 243,371 $ (284,805)
=============================================================
</TABLE>
14
<PAGE>
CINEMARK MEXICO (USA), INC. AND SUBSIDIARY
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Cinemark Mexico Cinemark
USA, Inc. de Mexico Eliminations TOTAL
-------------------------------------------------------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net loss $ (284,805) $ (243,371) $ 243,371 $ (284,805)
Noncash items in net loss:
Depreciation -- 535,155 -- 535,155
Amortization 53,463 -- -- 53,463
Deferred lease expense -- 163,185 -- 163,185
Amortization of prepaid leases and stock options 122,523 114,282 -- 236,805
Debt issued for accrued interest 1,857,389 -- -- 1,857,389
Equity in loss of subsidiary 243,371 -- (243,371) --
Cash from (used for) operating working capital:
Inventories -- (172,847) -- (172,847)
Value added tax and other 239,934 (899,924) -- (659,990)
Accounts payable and accrued expenses (18,799) 975,163 -- 956,364
Accrued interest expense 263,884 -- -- 263,884
Income taxes payable 1,178,042 -- -- 1,178,042
-------------------------------------------------------------
Net cash from operations 3,655,002 471,643 -- 4,126,645
INVESTING ACTIVITIES:
Additions to theatre properties -- (5,984,545) -- (5,984,545)
Increase in other assets (4,302,600) (830,928) 2,750,000 (2,383,528)
Intercompany advances (3,381,517) -- 3,381,517 --
-------------------------------------------------------------
Net cash used for investing activities (7,684,117) (6,815,473) 6,131,517 (8,368,073)
FINANCING ACTIVITIES:
Capital contributions -- 2,750,000 (2,750,000) --
Sale of common stock 240,591 -- -- 240,591
Intercompany advances -- 3,381,517 (3,381,517) --
-------------------------------------------------------------
Net cash from financing activities 240,591 6,131,517 (6,131,517) 240,591
INCREASE (DECREASE) IN CASH (3,788,524) (212,313) -- (4,000,837)
CASH:
Beginning of period 8,673,582 1,689,329 -- 10,362,911
-------------------------------------------------------------
End of period $ 4,885,058 $ 1,477,016 -- $ 6,362,074
=============================================================
</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: August 11, 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 SIX MONTHS
ENDING JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,362,074
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 281,902
<CURRENT-ASSETS> 10,135,030
<PP&E> 34,852,836
<DEPRECIATION> 2,964,421
<TOTAL-ASSETS> 47,510,185
<CURRENT-LIABILITIES> 6,389,839
<BONDS> 26,821,300
0
0
<COMMON> 4,108
<OTHER-SE> 2,349,727
<TOTAL-LIABILITY-AND-EQUITY> 47,510,185
<SALES> 14,631,989
<TOTAL-REVENUES> 14,631,989
<CGS> 0
<TOTAL-COSTS> 11,108,095
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,467,352
<INCOME-PRETAX> (274,976)
<INCOME-TAX> 9,829
<INCOME-CONTINUING> (284,805)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (284,805)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
