-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTLEfQMZmQ1eueNtJsujzWFffYvzge0gxryD7xBrtyhNXY4SHDC8cL32qaR8j419 Ln+m9tJzHnD6id8GR00uwQ== 0000950144-96-001373.txt : 19960401 0000950144-96-001373.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950144-96-001373 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARMIKE CINEMAS INC CENTRAL INDEX KEY: 0000799088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 581469127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-11604 FILM NUMBER: 96541795 BUSINESS ADDRESS: STREET 1: 1301 FIRST AVE CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 4045763400 MAIL ADDRESS: STREET 1: P O BOX 391 CITY: COLUMBUS STATE: GA ZIP: 31994 10-K405 1 CARMIKE CINEMAS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended DECEMBER 31, 1995 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 0-14993 CARMIKE CINEMAS, INC. (Exact name of registrant as specified in its charter) Delaware 58-1469127 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1301 First Avenue, Columbus, Georgia 31901 (Address of principal Executive Offices) (Zip Code) (706) 576-3400 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ------------------------------------------ Class A Common Stock, par value $.03 per share New York Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X] As of March 18, 1996, 9,745,101 shares of Class A Common Stock, par value $.03 per share, were outstanding and the aggregate market value of the shares of the Class A Common Stock held by non-affiliates of the registrant was approximately $207,508,000. As of March 18, 1996, 1,420,700 shares of Class B Common Stock, par value $.03 per share, were outstanding, all of which shares are held by affiliates of the registrant. DOCUMENTS INCORPORATED BY REFERENCE (1) Specified portions of Carmike Cinemas, Inc.'s Annual Report to Shareholders for the fiscal year ended December 31, 1995 are incorporated by reference into Part II and Part IV. (2) Specified portions of Carmike Cinemas, Inc.'s Proxy Statement relating to the 1996 Annual Meeting of Shareholders are incorporated by reference into Part III. 2 PART I Item 1. Business (a) General Development of Business Carmike Cinemas, Inc. (herein referred to as the "Company" or "Carmike"), a corporation organized under the laws of the State of Delaware, is engaged in the motion picture exhibition business. The Company was incorporated in April 1982 in connection with the leveraged buy-out of the Company's predecessor, the Martin Theatres circuit, by present management of the Company. The principal executive offices of the Company are located at 1301 First Avenue, Columbus, Georgia 31901-2109, and its telephone number at that location is (706) 576-3400. The following are several of the more significant events which have taken place since December 31, 1994: (i) Acquisitions during 1995 In separate transactions during 1995, the Company acquired certain assets and businesses as follows:
Number of Approximate -------------------- Seller Purchase Price Theatres Screens Effective Date ------ -------------- -------- ------- -------------- (in thousands) Carolina Cinema Corp. $ 750 2 7 February 10, 1995 Theatre Developers, Inc. 1,200 1 8 February 24, 1995 Floyd Theatres, Inc. and affiliates 11,300 21 83 March 17, 1995 Rocky Mountain Cinema Partners 1,585 5 11 May 5, 1995 Plitt Theatres, Inc. 22,000 28 145 June 2, 1995 Midcontinent Theatres, Inc. 19,000 14 67 October 13, 1995 Cinemark, USA 8,000 10 46 November 10, 1995 Theatre Consulting and Management 650 2 10 November 10, 1995 ------------- ----- ----- $ 64,485 83 377 ============= ===== =====
The excess of purchase prices over net assets of businesses acquired, approximately $16.7 million in 1995, has been recorded as an intangible asset. 2 3 (ii) Acquisitions in 1996 to date Effective January 5, 1996, the Company purchased certain assets consisting of 2 theatres (18 screens) and assumed certain contractual liabilities of Maxi Saver Cinemas, Inc. for a cash purchase price of approximately $3,975,000. This acquisition has been accounted for using the purchase method and accordingly the purchase price has been preliminarily allocated to the tangible and intangible assets acquired based on their estimated fair value at the date of acquisition. The excess of purchase price over the net assets acquired (approximately $1,500,000) has been recorded as an intangible asset. Effective February 16, 1996, the Company purchased certain assets consisting of 12 theatres (61 screens) and assumed certain contractual liabilities of Fox Theatres Corp. for a cash purchase price of approximately $19,100,000. This acquisition has been accounted for using the purchase method and accordingly the purchase price has been preliminarily allocated to the tangible and intangible assets acquired based on their estimated fair value at the date of acquisition. The excess of purchase price over the net assets acquired (approximately $8,000,000) has been recorded as an intangible asset. 3 4 (iii) New Theatre Openings and Additions to Existing Theatres During 1995, the Company opened or expanded the following theatres:
THEATRE LOCATION SCREENS ------- -------- ------- NEW COMPLEXES ------------- Carmike 10 Longview, TX 10 Carmike 10 Ft. Collins, CO 10 Wynnsong 10 Chattanooga, TN 10 Carmike 10 Colorado Springs, CO 10 Carmike 8 Dublin, GA 8 Carmike 10 Pensacola, FL 10 Wynnsong 10 Nashville, TN 10 Wynnsong 10 Little Rock, AR 10 Carmike 10 Panama City, FL 10 Carmike 12 Salt Lake City, UT 12 ---- Total 100 ADDITIONS TO EXISTING COMPLEXES ------------------------------- Carmike 7 Greenville, SC 3 Carmike 6 Uniontown, PA 2 College Square 9 Morristown, TN 3 Carmike 11 Des Moines, IA 5 ---- Total 13 ---- Total New Screens 113 ====
(b) Narrative Description of Business (i) Theatre Operations The Company is the largest motion picture exhibitor in the United States in terms of number of theatres and screens operated. As of December 31, 1995, the Company operated 519 theatres with an aggregate of 2,383 screens located in 32 states. The Company's screens are located principally in communities where the Company is the sole or leading exhibitor. For the year ended December 31, 1995, aggregate attendance at the Company's theatres was approximately 65.0 million people. 4 5 The Company's theatres are located in the following states:
STATE THEATRES SCREENS ----- -------- ------- Alabama 29 160 Arkansas 3 25 Colorado 14 71 Florida 33 158 Georgia 39 208 Idaho 11 26 Illinois 3 8 Iowa 22 118 Kentucky 10 43 Louisiana 4 20 Maryland 1 3 Michigan 1 5 Minnesota 16 63 Montana 15 59 Nebraska 5 17 New Mexico 1 2 North Carolina 75 299 North Dakota 9 45 New York 1 8 Ohio 9 45 Oklahoma 16 65 Pennsylvania 35 156 South Carolina 26 121 South Dakota 6 39 Tennessee 48 259 Texas 30 120 Utah 12 48 Virginia 15 73 Washington 3 3 Wisconsin 13 60 West Virginia 6 33 Wyoming 8 23 ---- ------ 519 2,383 ==== ======
The Company's theatre operations are under the supervision of its Vice President - General Manager and are divided into four geographic divisions, each of which is headed by a division manager. The division managers are responsible for implementing Company operating policies and supervising the Company's seventeen operating districts. Each operating district has a district manager who is responsible for overseeing the day-to-day operations of the Company's theatres. 5 6 Corporate policy development, strategic planning, site selection and lease negotiation, theatre design and construction, concession purchasing, film licensing, advertising, and financial and accounting activities are centralized at the corporate headquarters of the Company. See "Film Licensing" with respect to the Company's film licensing operations. Nearly all of the Company's 2,383 screens are located in multi-screen theatres, with over 90% of the Company's screens being located in theatres having three or more screens. The Company's average number of screens per theatre is 4.6, and the Company intends to increase this ratio through the construction of larger multi-screen theatres. Multi-screen theatres enable the Company to present a variety of films appealing to several segments of the movie-going public while serving patrons from common support facilities (such as the box office, concession areas, restrooms and lobby). This strategy enhances attendance, utilization of theatre capacity and operating efficiencies (relating to theatre staffing, performance scheduling and space and equipment utilization), and thereby enhances revenues and profitability. Staggered scheduling of starting times minimizes staffing requirements for crowd control, box office and concession services while reducing congestion at the concession area. The Company's theatres are housed predominantly in modern facilities equipped with quality projection and sound equipment. From time to time, the Company converts marginally profitable theatres to "Discount Theatres" for the exhibition of films that have previously been shown on a first-run basis. Increased attendance at these theatres following these conversions, combined with a lower film rental cost, has improved such theatres' operating profitability. The Company also operates certain theatres for the exhibtion of first-run films at a reduced admission price. These theatres are typically in a smaller market where the Company is the only exhibitor in the market. At present, the Company operates 113 of its theatres (344 screens) as Discount Theatres. The Company also sells gift certificates and offers a discount ticket plan to attract groups of patrons to its theatres. The Company's revenues are generated primarily from box office receipts and concession sales. Additional revenues, which are not material, are generated from electronic video games installed in the lobbies of some of the Company's theatres and on-screen advertising. 6 7 The Company relies upon advertisements and movie schedules published in newspapers to inform its patrons of film selections and show times. Newspaper advertisements are typically displayed in a single group for all the Company's theatres located in the newspaper's circulation area. In addition, the Company utilizes radio spots and promotions to further market its films. Major distributors frequently share the cost of newspaper and radio advertising. The Company also exhibits in its theatres previews of coming attractions and films presently playing on the Company's other screens in the same market area. The Company's proprietary computer system, I.Q. Zero, which is presently installed in approximately 89% of its theatres (representing approximately 94% of its screens), allows Carmike to centralize most theatre-level administrative functions at its corporate headquarters, creating significant operating leverage. The Company is in the process of installing I.Q. Zero in its recently acquired theatres and plans to have the system in virtually all of its theatres. I.Q. Zero allows corporate management to monitor ticket and concession sales and box office and concession staffing on a daily basis. The Company's integrated MIS, centered around I.Q. Zero, also coordinates payroll, tracks theatre invoices and generates operating reports analyzing film performance and theatre profitability. Accordingly, there is active communication between the theatres and corporate headquarters, which allows senior management to react to vital profit and staffing information on a daily basis and perform the majority of the theatre-level administrative functions, thereby enabling the theatre manager to focus on the day-to-day operations of the theatre. (ii) Film Licensing Carmike obtains licenses to exhibit films by directly negotiating with or, in rare circumstances, submitting bids to film distributors. The Company licenses films through its booking office located in Columbus, Georgia. The Company's Vice President - Film, in consultation with the Company's President, directs the Company's motion picture bookings. 7 8 Prior to negotiating or bidding for a film license, the Company's Vice President - Film and film booking personnel evaluate the prospects for upcoming films. The criteria considered for each film include cast, director, plot, performance of similar films, estimated film rental costs and expected MPAA rating. Successful licensing depends greatly upon the availability of commercially popular motion pictures, knowledge of the tastes of residents in markets served by each theatre and insight into the trends in those tastes. The Company maintains a database that includes revenue information on films previously exhibited in its markets. This historical information is then utilized by the Company to match new films with particular markets so as to maximize revenues. Film licenses typically specify rental fees based on the higher of a gross box office receipts formula or an adjusted gross box office receipts formula. Under a gross box office receipts formula, the distributor receives a specified percentage of box office receipts, with the percentage declining over the term of the run. The Company's film rental fees typically begin at 60% of admission revenues and gradually decline to as low as 30% over a period of four to eight weeks. Under an adjusted gross box office receipts formula (commonly known as a "90/10" clause), the distributor receives a specified percentage (i.e., 90%) of the excess of box office receipts over a negotiated amount for house expenses. In addition, the Company is occasionally required to pay non-refundable guarantees of film rentals, to make advance payments of film rentals, or both, in order to obtain a license for a film. Although not specifically contemplated by the provisions of film licenses, the terms of film licenses generally are adjusted or re-negotiated subsequent to exhibition of the film in relation to its success. Film licensing zones are geographic areas (generally encompassing a radius of three to five miles) established by film distributors where any given film is allocated to only one theatre within that area. In film licensing zones where the Company has little or no competition, the Company obtains film licenses by selecting a film from among those offered and negotiating directly with the distributor. In competitive film licensing zones, a distributor will either require the exhibitors in the zone to bid for a film or will allocate its films among the exhibitors in the zone. When films are licensed under the allocation process, a distributor will choose which exhibitor is offered a movie and then that exhibitor will negotiate film rental terms directly with the distributor for the 8 9 film. Over the past several years, distributors have generally used the allocation rather than the bidding process to license their films. When films are licensed through a bidding process, exhibitors compete for licenses based upon economic terms. The Company currently does not bid for films in any of its film licensing zones. The Company predominantly licenses "first-run" films. If a film has substantial remaining potential following its first-run, the Company may license it for a subsequent run (a "sub-run"). Although average daily sub-run attendance is often less than average daily first-run attendance, sub-run film cost is generally less than first-run film cost. Additionally, sub-runs enable the Company to exhibit a variety of films during periods in which there are few new releases. The Company's business is dependent upon the availability of marketable pictures and its relationships with distributors. While there are numerous distributors which provide quality first-run movies to the motion picture exhibition industry, seven major distributors accounted for approximately 80% of industry admission revenues during 1994 and 43 of the top 50 grossing films according to data published by the National Association of Theatre Owners. No single distributor dominates the market. Disruption in the production of motion pictures by the major studios and/or independent producers or poor performance of motion pictures could have an adverse effect on the business of the Company. The Company licenses films from a number of distributors and believes that its relationships with distributors generally are satisfactory. (iii) Competition The Company's operations are subject to varying degrees of competition with respect to licensing films, attracting patrons, obtaining new theatre sites or acquiring theatre circuits. In markets where it is not the sole exhibitor, the Company competes against regional and independent operators as well as the larger theatre circuit operators. The Company believes that the principal competitive factors with respect to film licensing include licensing terms, seating capacity, location and prestige of an exhibitor's theatres, quality of projection and sound at the theatres and the exhibitor's ability and willingness to promote the films. The competition for patrons is dependent upon factors such as the availability of popular films, location of the theatres, patron comfort, quality of projection and sound and the ticket prices. The 9 10 Company believes that its admission prices are competitive with admission prices of competing theatres. The Company's theatres face competition from a number of motion picture exhibition delivery systems, such as pay television, pay-per-view and home video systems. The impact of such delivery systems on the motion picture exhibition industry is difficult to determine precisely, and there can be no assurance that existing or future delivery systems will not have an adverse impact on attendance. The Company believes that its strongest competition is from other forms of entertainment competing for the public's outside-the-home leisure time and disposable income. (iv) Seasonality The major film distributors generally release during the summer and holiday seasons, primarily Thanksgiving and Christmas, those films which they anticipate to be the most successful. Consequently, the Company has historically generated higher revenues during such periods. (v) Restaurants The Company, through its wholly-owned subsidiary Wooden Nickel Pub, Inc., operates two restaurants, one of which is adjacent to a theatre. These restaurants, which were opened by the Company's predecessor, offer light fare as well as beer and wine. These restaurants are not material to the Company's consolidated operations. The Company does not currently anticipate opening additional restaurant facilities. (vi) Regulatory Environment The distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. Certain consent decrees resulting from such cases bind certain major motion picture distributors and require the motion pictures of such distributors to be offered and licensed to exhibitors, including the Company, on a theatre-by-theatre basis. Consequently, exhibitors such as the Company cannot assure themselves of a supply of motion pictures by entering into long-term arrangements with major distributors but must compete for licenses on a film-by-film and theatre-by-theatre basis. The Federal Americans With Disabilities Act (the "Disabilities Act") prohibits discrimination on the basis of disability in public accommodations and employment. The 10 11 Disabilities Act became effective as to public accommodations in January 1992 and as to employment in July 1992. Because of the recent effectiveness of the Disabilities Act and the absence of comprehensive regulations thereunder, the Company is unable to predict precisely the extent to which the Disabilities Act will impact the Company. However, the Company currently constructs new theatres to be accessible to the disabled and believes that it is otherwise in substantial compliance with all current applicable regulations relating to accommodations for the disabled. The Company intends to comply with future regulations relating to accommodating the needs of the disabled, and the Company does not currently anticipate that such compliance will require the Company to expend substantial funds. (vii) Employees At December 31, 1995, the Company had approximately 10,082 employees. Ninety-one of the Company's employees are covered by collective bargaining agreements. The Company considers its relations with its employees to be good. Item 2. Properties At December 31, 1995, of the Company's 519 theatres, 72 were owned by the Company, 357 were leased pursuant to building leases, 83 were leased pursuant to ground leases, and 7 were subject to shared ownership or shared leasehold interests with various unrelated third parties. The Company's leases are generally entered into on a long-term basis. See Note F of Notes to Consolidated Financial Statements incorporated by reference in Item 8 herein for information with respect to the Company's lease commitments. The Company owns its headquarters building in Columbus, Georgia. The Company occupies all of this modern five-story office building, which has approximately 48,500 square feet. The Company's interest in the building is encumbered by a Deed to Secure Debt and Security Agreement in favor of the Downtown Development Authority of Columbus, Georgia. The Company also owns and occupies a four-story building in Columbus, Georgia that has approximately 48,000 square feet. The Company uses this building for storage and refurbishment of surplus theatre equipment. 11 12 Item 3. Legal Proceedings From time to time, the Company is involved in routine litigation and legal proceedings in the ordinary course of its business, such as personal injury claims, employment matters and contractual disputes. Currently, the Company does not have pending any litigation or proceedings that management believes will have a material adverse effect, either individually or in the aggregate, upon the Company. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the last quarter of the year ended December 31, 1995. 12 13 Executive Officers of the Registrant [Included pursuant to Regulation S-K, Item 401(b), Instruction 3] The following sets forth certain information regarding the executive officers of the Company. For purposes of this section, references to the Company include the Company's predecessor, Martin Theatres, Inc. C. L. Patrick, age 77, who has served as Chairman of the Board of Directors of the Company since April 1982, joined the Company in 1945, became its General Manager in 1948 and served as President of the Company from 1969 to 1970. He served as President of Fuqua Industries, Inc. ("Fuqua") from 1970 to 1978, and as Vice Chairman of the Board of Directors of Fuqua from 1978 to 1982. Mr. Patrick is a director emeritus of Columbus Bank & Trust Company. Michael W. Patrick, age 45, has served as President of the Company since October 1981, a director of the Company since April 1982 and Chief Executive Officer since March 29, 1989. He joined the Company in 1970 and served in a number of operational and film booking and buying capacities prior to becoming President. Mr. Patrick is the son of Mr. C. L. Patrick. Mr. Patrick is a director of Columbus Bank & Trust Company. He also serves as a director of the Will Rogers Institute and Welcome Home, Inc. John O. Barwick, III, age 46, joined the Company as Controller in July 1977 and was elected Treasurer and Chief Financial Officer in August 1981. In August 1982, he became Vice President - Finance of the Company. Prior to joining the Company, Mr. Barwick was a certified public accountant with Ernst & Ernst, a predecessor of the accounting firm of Ernst & Young LLP, from 1973 to 1977. Anthony J. Rhead, age 54, joined the Company in June 1981 as manager of the booking office in Charlotte, North Carolina. Since July 1983, Mr. Rhead has been Vice President - Film of the Company. Prior to joining the Company, he worked as a film booker for Plitt Theatres, Inc. from 1973 to 1981. 13 14 Larry M. Adams, age 52, joined the Company as Data Processing Manager in July 1973. In August 1982, he became Vice President - Informational Systems and in August 1988 he became Secretary of the Company. Fred W. Van Noy, age 39, joined the Company in 1975. He served as a District Manager from 1984 to 1985 and as Western Division Manager from 1985 to 1988, when he was elected to his present position as Vice President - General Manager. Prentiss Lamar Fields, age 41, joined the Company in January 1983 as Director of Real Estate. He served in this position until 1985 when he was elected to his present position as Vice President - Development. H. Madison Shirley, age 44, joined the Company in 1976 as a theatre manager. He served as a District Manager from 1983 to 1987 and as Director of Concessions from 1987 until 1990. He was elected to his present position as Vice President - Concessions in 1990. Marilyn Grant, age 48, joined the Company in 1975 as a bookkeeper. She served as the Advertising Coordinator from 1984 to 1985 and became the Director of Advertising in 1985. In August 1990, she was elected to her present position as Vice President - Advertising. James R. Davis, age 57, joined the Company in 1990 as Technical Director. He served in this position until December 1995, when he was elected to his present position as Vice President-Technical. 14 15 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information regarding the market for the Company's common equity and related stockholder matters is incorporated by reference to the inside back cover of the Company's 1995 Annual Report to Shareholders. Item 6. Selected Financial Data Selected financial data for the five years ended December 31, 1995 is incorporated by reference to page 28 of the Company's 1995 Annual Report to Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations of the Company is incorporated by reference to pages 26 and 27 of the Company's 1995 Annual Report to Shareholders. Item 8. Financial Statements and Supplementary Data The information required by this item is incorporated by reference to pages 11 through 25 of the Company's 1995 Annual Report to Shareholders. Information as to quarterly results of operations for the year ended December 31, 1995 is incorporated by reference to page 25 of the Company's 1995 Annual Report to Shareholders. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable 15 16 PART III Item 10. Directors and Executive Officers of the Registrant Information regarding the directors of the Company is incorporated by reference to the section entitled "Election of Directors" in the Proxy Statement relating to the 1996 Annual Meeting of Shareholders of the Company (hereinafter, the "1996 Proxy Statement"). Information regarding the executive officers of the Company is set forth in Part I of this Report on Form 10-K pursuant to General Instruction G(3) of Form 10-K. Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference to the section entitled "Executive Compensation and Other Information" contained in the 1996 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this item is incorporated by reference to the sections entitled "Security Ownership of Certain Beneficial Holders" and "Security Ownership of Management" contained in the 1996 Proxy Statement. Item 13. Certain Relationships and Related Transactions Information regarding certain relationships and related transactions is incorporated by reference to the section entitled "Certain Relationships and Related Transactions" contained in the 1996 Proxy Statement. 16 17 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a)(1) and (2) Financial Statements and Financial Statement Schedules The following consolidated financial statements of Carmike Cinemas, Inc. included in the Company's 1995 Annual Report to Shareholders are incorporated by reference in Item 8: Report of Independent Auditors Consolidated balance sheets--December 31, 1995 and 1994 Consolidated statements of income--Years ended December 3l, 1995, 1994 and 1993 Consolidated statements of shareholders' equity--Years ended December 3l, 1995, 1994 and 1993 Consolidated statements of cash flows--Years ended December 31, 1995, 1994 and 1993 Notes to consolidated financial statements--December 31, 1995 Financial statement schedules are omitted because they are not applicable or not required under the related instructions, or because the required information is shown either in the consolidated financial statements or in the notes thereto. 17 18 (a)(3) Listing of Exhibits Exhibit Number - ------ 2(a) Purchase Contract dated May 20, 1992, by and between American Multi-Cinema, Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(a) to the Company's Form 10-K for the fiscal year ended December 31, 1992 (the "1992 Form 10-K"), and incorporated herein by reference). 2(b) Asset Purchase Agreement dated May 12, 1992 by and between Plitt Theatres, Inc., Plitt Southern Theatres, Inc. and Plitt Cine Theatres, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(b) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(c) Asset Purchase Agreement dated May 21, 1992 by and between Resources Financial and Carmike Cinemas, Inc.(filed as Exhibit 2(c) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(d) Purchase Contract dated as of November 18, 1992 by and between Cinamerica Theatres, L.P. and Carmike Cinemas, Inc.(filed as Exhibit 2(d) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(e) Asset Purchase Agreement dated November 19, 1993 by and between Manos Enterprises, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(e) to the Company's Form 10-K for the fiscal year ended December 31, 1993 (the "1993 Form 10-K") and incorporated herein by reference). 2(f) Asset Purchase Agreement dated January 21, 1994 by and between General Cinema Corp. of Georgia, General Cinema Corp. of Virginia, General Cinema Corp. of West Virginia and Carmike Cinemas, Inc.(filed as Exhibit 2(f) to the Company's 1993 Form 10-K and incorporated herein by reference). 2(g) Asset Purchase Agreement dated May 18, 1994 by and between Cinema World, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(a) to the Company's Form 8-K filed on June 6, 1994 and incorporated herein by reference). 2(h) Agreement dated as of March 17, 1995 by and between Floyd Theatres, Inc., Tallahassee Theatres, Inc., Floyd Theatres of Georgia, Inc., MasTec, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(h) to the Company's Form 10-K for the fiscal year ended December 31, 1994 (the "1994 Form 10-K") and incorporated herein by reference). 18 19 (a)(3)(Continued) Exhibit Number - ------ 2(i) Agreement dated as of June 2, 1995 by and between Carmike Cinemas, Inc. and Plitt Theatres, Inc. (filed as Exhibit 12 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995 and incorporated herein by reference). 2(j) Agreement dated as of September 8, 1995 by and between Midcontinent Theatre Company of Minnesota, Midcontinent Theatre Company of South Dakota, Midcontinent Theatre Company of North Dakota and Carmike Cinemas, Inc. (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(k) Agreement dated as of October 19, 1995 by and between Cinemark USA, Inc., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 5 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(l) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox Theatres Corporation, Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. 3(a)(i) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation (filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter ended June 30, 1995, and incorporated herein by reference). 3(b) By-laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the fiscal year ended December 31, 1987 (the "1987 Form 10-K"), and incorporated herein by reference). 4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to 10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1990, and incorporated herein by reference). 4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to 7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's Form l0-K for the year ended December 31, 1991, and incorporated herein by reference). 19 20 (a)(3)(Continued) Exhibit Number - ------ 4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to 7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's Form l0-Q for the fiscal quarter ended March 31, 1993, and incorporated herein by reference). 4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated herein by reference). 4(e) Credit Agreement dated as of May 4, 1994 among Carmike Cinemas, Inc., various banks and Wachovia Bank of Georgia, N.A., as Agent (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended March 31, 1994, and incorporated herein by reference). 10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended, together with form of Stock Option Agreement (filed as Exhibit 10(a) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985 (filed as Exhibit 10(d) to Amendment No. 1 to the Company's Registration Statement on Form S-1, No. 33-8007 on October 10, 1986, and incorporated herein by reference). 10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick and the Company, as amended on October 31, 1986 and January 1, 1990 (filed as Exhibit 10(e) to the Company's Registration Statement on Form S-1, Commission File No. 33-33558, and incorporated herein by reference). 10(d) Employment Agreement dated January 1, 1993 by and between Michael W. Patrick and the Company (filed as Exhibit 10(e) to the Company's 1992 Form 10-K and incorporated herein by reference). 10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and between C.L.P. Equipment and the Company (filed as Exhibit 10(h) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(f) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Kingsport, Tennessee) (filed as Exhibit 10(i) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 20 21 (a)(3)(Continued) Exhibit Number - ------ 10(g) Equipment Lease Agreement dated January 29, 1983 by and between Michael W. Patrick and the Company (Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(h) Equipment Lease Agreement dated November 23, 1983 by and between Michael W. Patrick and the Company (Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W. Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L. Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(l) Summary of Extensions of Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit 10(o) to the 1987 Form 10-K and incorporated herein by reference). 10(m) Summary of Extensions of the Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) as extended as shown in Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(o) Amended and Restated Credit Agreement dated as of September 28, 1990 by and between Carmike Cinemas, Inc. and Carmike Midwest, Inc. as borrower and The First National Bank of Atlanta (filed as Exhibit 6 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1990, and incorporated herein by reference). 21 22 (a)(3)(Continued) Exhibit Number - ------ 10(p) Carmike Cinemas, Inc. Deferred Compensation Agreement and Trust Agreement dated as of January 1, 1990 (filed as Exhibit 10(u) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 11 Statement re: Computation of Earnings per share. 13 1995 Annual Report to Shareholders of Carmike Cinemas, Inc. (with the exception of the information expressly incorporated by reference in Items 5, 6, 7 and 8, this Annual Report is not to be deemed "filed" with the Securities and Exchange Commission or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934). 21 List of Subsidiaries. 23 Consent of Ernst & Young LLP 27 Financial Data Schedule 22 23 (b) Reports on Form 8-K During the fiscal quarter ended December 31, 1995, the Company did not file any reports on Form 8-K. (c) Exhibits The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statements Schedules None. 23 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARMIKE CINEMAS, INC. Date: March 28, 1996 By: /s/ Michael W. Patrick ----------------------------- Michael W. Patrick President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ C. L. Patrick Chairman of the Board March 28, 1996 - ------------------------------ C. L. Patrick /s/ Michael W. Patrick President and Chief March 28, 1996 - ------------------------------ Executive Officer, Director Michael W. Patrick /s/ John O. Barwick, III Vice President-Finance, Treasurer March 28, 1996 - ------------------------------ (Chief Financial Officer, John O. Barwick, III Chief Accounting Officer) /s/ Carl L. Patrick, Jr. Director March 28, 1996 - ------------------------------ Carl L. Patrick, Jr. /s/ Carl E. Sanders Director March 28, 1996 - ------------------------------ Carl E. Sanders /s/ John W. Jordan, II Director March 28, 1996 - ------------------------------ John W. Jordan, II /s/ David W. Zalaznick Director March 28, 1996 - ------------------------------ David W. Zalaznick
24 25 CARMIKE CINEMAS, INC. EXHIBIT INDEX Report on Form 10-K for the fiscal year Ended December 31, 1995
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 2(a) Purchase Contract dated May 20, 1992, by and between American Multi-Cinema, Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(a) to the company's Form 10-K for the fiscal year ended December 31, 1992 (the "1992 Form 10-K"), and incorporated herein by reference). 2(b) Asset Purchase Agreement dated May 12, 1992 by and between Plitt Theatres, Inc., Plitt Southern Theatres, Inc. and Plitt Cine Theatres, Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(b) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(c) Asset Purchase Agreement dated May 21, 1992 by and between Resources Financial and Carmike Cinemas, Inc.(filed as Exhibit 2(c) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(d) Purchase Contract dated as of November 18, 1992 by and between Cinamerica Theatres, L.P. and Carmike Cinemas, Inc.(filed as Exhibit 2(d) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(e) Asset Purchase Agreement dated November 19, 1993 by and between Manos Enterprises, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(e) to the Company's Form 10K for the fiscal year ended December 31, 1993 (the "1993 Form 10-K") and incorporated herein by reference). 2(f) Asset Purchase Agreement dated January 21, 1994 by and between General Cinema Corp. of Georgia, General Cinema Corp. of Virginia, General Cinema Corp. of West Virginia and Carmike Cinemas, Inc. (filed as Exhibit 2(f) to the Company's 1993 Form 10-K and incorporated herein by reference).
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Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 2(g) Asset Purchase Agreement dated May 18, 1994 by and between Cinema World, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(a) to the Company's Form 8-K filed on June 6, 1994 and incorporated herein by reference). 2(h) Agreement dated as of March 17, 1995 by and between Floyd Theatres, Inc., Tallahassee Theatres, Inc., Floyd Theatres of Georgia, Inc., MasTec, Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(h) to the Company's Form 10-K for fiscal year ended December 31, 1994 (the "1994 Form 10-K") and incorporated herein by reference). 2(i) Agreement dated as of June 2, 1995 by and between Carmike Cinemas, Inc. and Plitt Theatres, Inc. (filed as Exhibit 12 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 2(j) Agreement dated as of September 8, 1995 by and between Midcontinent Theatre Company of Minnesota, Midcontinent Theatre Company of South Dakota, Midcontinent Theatre Company of North Dakota and Carmike Cinemas, Inc. (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(k) Agreement dated as of October 19, 1995 by and between Cinemark USA, Inc., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 5 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(l) Agreement dated as of January 5, 1996 by and between Maxi-Saver Cinemas, Inc., Pennsylvania Theatre Company, Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. 2(m) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox Theatres Corp., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc.
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Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 3(a)(i) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation (filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter ended June 30, 1995, and incorporated herein by reference). 3(b) By-Laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the fiscal year ended December 31, 1987 (the "1987 Form 10-K"), and incorporated herein by reference). 4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to 10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1990, and incorporated herein by reference). 4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to 7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's Form l0-K for the year ended December 31, 1991, and incorporated herein by reference). 4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to 7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended March 31, 1993, and incorporated herein by reference). 4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated herein by reference).
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Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 4(e) Credit Agreement dated as of May 4, 1994 among Carmike Cinemas, Inc., various banks and Wachovia Bank of Georgia, N.A., as Agent (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended March 31, 1994, and incorporated herein by reference). 10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended, together with form of Stock Option Agreement (filed as Exhibit 10(a) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985 (filed as Exhibit 10(d) to Amendment No. 1 to the Company's Registration Statement on Form S-1, No. 33-8007 on October 10, 1986, and incorporated herein by reference). 10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick and the Company, as amended on October 31, 1986 and January 1, 1990 (filed as Exhibit 10(e) to the Company's Registration Statement on Form S-1, Commission File No. 33-33558, and incorporated herein by reference). 10(d) Employment Agreement dated January 1, 1993 by and between Michael W. Patrick and the Company, (filed as Exhibit 10(e) to the Company's 1992 Form 10-K and incorporated herein by reference). 10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and between C.L.P. Equipment and the Company (filed as Exhibit 10(h) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
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Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 10(f) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Kingsport, Tennessee) (filed as Exhibit 10(i) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(g) Equipment Lease Agreement dated January 29, 1983 by and between Michael W. Patrick and the Company (Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(h) Equipment Lease Agreement dated November 23, 1983 by and between Michael W. Patrick and the Company (Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W. Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L. Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
30
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 10(l) Summary of Extensions of Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit 10(o) to the 1987 Form 10-K and incorporated herein by reference). 10(m) Summary of Extensions of the Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i) and 10(k) as extended as shown in Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(o) Amended and Restated Credit Agreement dated as of September 28, 1990 by and between Carmike Cinemas, Inc. and Carmike Midwest, Inc. as borrower and The First National Bank of Atlanta (filed as Exhibit 6 to the Company's Form 10-Q or the fiscal quarter ended September 30, 1990, and incorporated herein by reference). 10(p) Carmike Cinemas, Inc. Deferred Compensation Agreement and Trust Agreement dated as of January 1, 1990 (filed as Exhibit 10(u) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 11 Statement re: Computation of Earnings per share. 13 1995 Annual Report to Shareholders of Carmike Cinemas, Inc. (with the exception of the information expressly incorporated by reference in Items 5, 6, 7 and 8, this Annual Report is not to be deemed "filed" with the Securities and Exchange Commission or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934). 21 List of Subsidiaries.
31
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 23 Consent of Ernst & Young LLP 27 Financial Data Schedule
EX-2.L 2 ASSET PURCHASE AGREEMENT 1 EXHIBIT 2(l) ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT, dated as of the ____ day of __________, 1996, by and between FOX THEATRES CORPORATION, a Pennsylvania corporation (hereinafter "Seller"), and CARMIKE CINEMAS, INC., a Delaware corporation, and EASTWYNN THEATRES, INC., an Alabama Corporation (hereinafter collectively "Buyer"). W I T N E S S E T H : WHEREAS, Seller operates certain theatres for the exhibition of motion pictures; and WHEREAS, the Boards of Directors of Seller and the Board of Directors of Buyer deem it appropriate to effect the sale and transfer of certain of Seller's assets and liabilities pursuant to the agreement set forth hereinafter. NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, and for other consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the parties hereto have agreed, and do hereby agree, as follows: ARTICLE I DEFINITIONS The following terms used in this Agreement shall have the meanings set forth below: 1.01. "AFFILIATE" - Any person, firm, corporation, partnership or association controlling, controlled by, or under common control with another person, firm, corporation, partnership or association. 1.02. "AGREEMENT" - This Agreement, including the Exhibits attached hereto, and the Schedules delivered pursuant hereto. 1.03. "CLOSING" - The Closing referred to in Section 2.05 hereof. 1.04. "CLOSING DATE" - The date referred to in Section 2.05 hereof. 1.05. "CONTINUING CONTRACTS" - The agreements relating to the operation and maintenance of the Property (excluding film exhibition agreements), which are described on Exhibit "A" attached hereto, together with any contracts in the nature thereof executed 1 2 by Seller after the date hereof, as herein permitted and approved in writing by Buyer, except any contract which is terminable with thirty (30) days notice without penalty. 1.06. "ERISA" - The Employee Retirement Income Security Act of 1974, as amended. 1.07. "EXCLUDED PROPERTY" - That Property set forth on Schedule 1.07. 1.08. "EXHIBITS" - Those Exhibits referenced in this Agreement and incorporated herein by such reference. 1.09. "GUARANTEED FILM CONTRACTS" - Those film contracts which require Seller to pay a guaranteed minimum film rental amount, notwithstanding that the film may not have earned same. 1.10. "IMPOSITIONS" - All real estate taxes, special and benefit assessments, sewer rents, water rates, personal property taxes, and all other taxes, assessments and charges of every kind, which may affect the Property or any part thereof by virtue of any present or future law of any governmental authority. 1.11. "INTANGIBLE PROPERTY" - All intangible property now or on the Closing Date owned by Seller pertaining solely to the Property, including all assignable business licenses, warranties, the Continuing Contracts (to the extent assignable), trademarks, trade names, telephone exchange numbers to the extent assignable, plans and specifications, blueprints, engineering information and reports, and governmental approvals. 1.12. "LANDLORD'S CONSENT" - Consent of the Landlords referred to in Section 2.07 (e) to the transfer and assignment of the leases described in Schedule 3.09 (a). 1.13. "LEASEHOLD IMPROVEMENTS" - All right, title and interest of Seller in leasehold improvements of any kind and description now, or on the Closing Date, located on or which are a part of the Leased Premises. 1.14. "LEASEHOLD INTERESTS" - All and singular the interests, estates, rights, privileges, titles, easements, options and appurtenances belonging or in any way appurtaining to the Seller as tenant under the Leases. 1.15. "LEASES" - The leases for the Theatres and all amendments and modifications thereof, all of which are described on Exhibit "C" attached hereto. 1.16. "LEASED PREMISES" - The premises demised by the Leases. 1.17. "LICENSE" - Rights to use certain trade names, trademarks and logos pursuant to the terms and conditions set forth on Schedule 1.17 attached hereto. 2 3 1.18. "PERMITTED LIENS" - (i) Liens and taxes due and payable and which are prorated pursuant to Section 2.04 hereof; (ii) liens that shall be discharged prior to or at Closing; and (iii) Permitted Title Exceptions. 1.19. "PERMITTED TITLE EXCEPTIONS" - With respect to the Leased Premises those preprinted exceptions in a standard form ALTA extended coverage policy of title insurance and those encumbrances set forth on Schedule 1.19, and in any event, zoning restrictions, easements, licenses or other restrictions on the use of the Leased Premises so long as same do not impair the use, value or marketability of such Leased Premises in any material respect. 1.20. "PERSONAL PROPERTY" - All tangible personal property now or on the Closing Date owned by Seller and used in the operation of the Leased Premises, including, but not limited to, all supplies, service and concession equipment, heating, ventilating and cooling equipment, fixtures, inventory, cleaning equipment and supplies, alarm systems, screens, projection equipment, theatre seats, cash registers, display cases, acoustical wall panels, sound systems, speakers, computers, office equipment and desks, popcorn poppers and storage bins, linoleum, carpets, drapes, laundry tubs and trays, washers, dryers, ice boxes, refrigerators, heating units, stoves, ovens, water heaters, incinerators, furniture and furnishings, and communication systems, now or on the Closing Date affixed or attached to or placed upon and used in connection with the operation of the Theatres or any of them (without limiting the generality of the foregoing, the personal property listed on Exhibit "B" attached hereto shall be included in Personal Property); provided, however, Personal Property shall not include (a) accounts receivable as of the Closing Date, and (b) cash and cash equivalents (including certificates of deposit, commercial paper, and investments in securities on hand or in banks as of the Closing Date, (c) proprietary items including, but not limited to, uniforms, and film transfer stock, (d) the Excluded Property. 1.21. "PETTY CASH" - Sums of cash left in the Theatres by Seller on the Closing Date and reimbursed to Seller by Buyer at Closing. 1.22. "PROPERTY" - The Leasehold Interests, Leasehold Improvements, Personal Property and Intangible Property, less and excepting the Excluded Property. 1.23. "PURCHASE PRICE" - The Purchase Price for the Property is NINETEEN MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($19,100,000.00), payable as set forth in paragraph 2.02 hereof. 1.24. "SCHEDULES" - Those Schedules referred to in this Agreement, and incorporated herein by reference. 3 4 1.25. "THEATRES" - The twelve (12) locations consisting of sixty-one (61) screens for the exhibition of motion pictures as specifically set forth on Exhibit "D". 1.26. "THEATRE LEVEL EMPLOYEE" - Any employee who actually works at a Theatre location. The definitions of this section shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term "person" includes individuals, partnerships, corporations, trusts and other associations. The words "include", "includes" and "including" shall be deemed to be followed the phrase "without limitation". The words "herein", "hereof", "hereunder" and similar terms shall refer to this contract, unless the context otherwise requires. Attached to this contract and incorporated herein by reference are the following: EXHIBIT A - CONTINUING CONTRACTS EXHIBIT B - PERSONAL PROPERTY EXHIBIT C - LEASES EXHIBIT D - THEATRES EXHIBIT E - FORM OF BILL OF SALE EXHIBIT F - FORM OF COVENANT NOT TO COMPETE AGREEMENT EXHIBIT G - FORM OF LANDLORD'S CONSENT AND ESTOPPEL EXHIBIT H - SELLER'S REQUIRED INSURANCE EXHIBIT I - FORM OF ASSIGNMENT EXHIBIT J - AUTHORIZATION AND RELEASE NOTICE EXHIBIT K - MANAGEMENT AGREEMENT EXHIBIT L - LEASE AND CONTINUING CONTRACTS ACCEPTANCE AND ASSUMPTION AGREEMENT EXHIBIT M - UNCONDITIONAL GUARANTY AND REIMBURSEMENT AGREEMENT SCHEDULE 1.07 - EXCLUDED PROPERTY SCHEDULE 1.17 - LICENSE SCHEDULE 1.19 - PERMITTED TITLE EXCEPTIONS SCHEDULE 2.02(a) - WIRING INSTRUCTIONS SCHEDULE 2.03 - PURCHASE PRICE ALLOCATION SCHEDULE 2.06(a) - CLOSING STATEMENT SCHEDULE 3.02(a) - CASH FLOW INFORMATION SCHEDULE 3.02(c) - 90/10 AMOUNTS SCHEDULE 3.02(d) - SEATS BY AUDITORIUM SCHEDULE 3.03(a) - TRANSACTIONS NOT IN ORDINARY COURSE SCHEDULE 3.03(f) - AMENDMENTS OR TERMINATIONS SCHEDULE 3.04 - TAX RETURNS SCHEDULE 3.06 - GOVERNMENTAL NOTIFICATIONS AND CONSENTS SCHEDULE 3.07 - COMPLIANCE WITH OTHER INSTRUMENTS SCHEDULE 3.09(a) - DESCRIPTION OF REAL PROPERTY LEASED TO SELLER 4 5 SCHEDULE 3.10 - LICENSES, PERMITS AND TRADEMARKS SCHEDULE 3.11 - INSURANCE SCHEDULE 3.12 - DEFAULTS SCHEDULE 3.13 - LITIGATION SCHEDULE 3.14 - COMPLIANCE WITH LAWS SCHEDULE 3.16(a) - LABOR MATTERS SCHEDULE 3.16(c) - FAILURE TO COMPLY WITH LAWS REGARDING EMPLOYMENT OF THEATRE LEVEL EMPLOYEES SCHEDULE 3.17 - CONTRACTS AND COMMITMENTS SCHEDULE 3.19(a) - EMPLOYEE BENEFIT PLANS SCHEDULE 3.19(b) - WELFARE PLANS SCHEDULE 3.23 - ENVIRONMENTAL MATTERS SCHEDULE 3.24 - DISCOUNTS AND GIFT CERTIFICATES SCHEDULE 3.25 - ROOF WARRANTIES SCHEDULE 7.03 - GOVERNMENTAL NOTIFICATIONS AND CONSENTS REQUIRED BY BUYER ARTICLE II PURCHASE AND SALE OF PROPERTY 2.01. Agreement to Sell. Pursuant to the terms and conditions of this Agreement, at Closing Seller agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase from Seller all of the Property owned and used by Seller in the operation of its motion picture exhibition business in the Theatres. 2.02. Purchase Price. The Purchase Price for the Property will be paid to the Seller as follows: (a) At Closing, Buyer shall pay and deliver by wire transfer to Seller, pursuant to wiring instructions set forth on Schedule 2.02 (a), the Purchase Price. 2.03. Purchase Price Allocation. The Purchase Price will be allocated to the Property as shown on Schedule 2.03, and each of the parties agree to report this transaction for Federal income tax purposes in accordance with the allocation shown on said schedule. 2.04. Closing Adjustments. (a) The following items affecting the Property shall be apportioned, adjusted or otherwise accounted for between Seller and Buyer as of the Closing Date: (i) Subject to paragraph (d) of this Section, rent, additional rent, common area maintenance, payments to merchants' associations or similar business promotion organizations, and all other charges payable by Seller as tenant under the Leases as follows: (1) any charge payable on a monthly basis which is subject to year end adjustment shall be prorated for 5 6 the month in which the Closing Date shall occur and any year end adjustment thereof shall be paid by, or the refund from the lessor paid to, Seller and Buyer in proportion to their respective payments thereof (i.e., Seller to make all such payments prior to the Closing Date and Buyer to make all such payments after the Closing Date), and (2) Impositions under the Leases not payable monthly but payable in full after the Closing at the end of a lease year or tax fiscal year, as provided in the respective Leases, shall be prorated as of the Closing Date but Seller will pay Buyer its share thereof within 30 days after Buyer furnishes Seller the billing and substantiation thereof received from each respective lessor; (ii) Buyer shall pay Seller on the Closing Date for any security deposits held by lessors under the Leases, and the Seller's petty cash at each theatre; (iii) Reduced admission tickets, group tickets or so-called other "discount tickets" (collectively "Discount Tickets") issued by Seller prior to the Closing Date and presented by customers for admission to the Theatres on or after the Closing Date shall be honored by Buyer but may be redeemed by Buyer from Seller for the amount shown on the Discount Ticket as the cost paid to Seller for such Ticket. Seller shall also reimburse Buyer in the amount of any gift certificates issued by Seller prior to the Closing Date and used at the Theatres subsequent to the Closing Date, when, as and in the amount said gift certificates are redeemed, provided, however, Buyer shall not be obligated to honor any such gift certificate or Discount Ticket after one (1) year immediately following the Closing Date. Buyer shall (and hereby covenants and agrees to) be bound by all free admission passes distributed prior to the Closing Date by Seller or Seller's authorized agents to third parties. Any monies which Seller shall owe Buyer for reimbursement for Discount Tickets that are presented for payment to Seller within a calendar month in the manner required herein shall be paid to Buyer by the 30th day of the next following calendar month. (b) General real property taxes and other Impositions imposed upon or assessed against the Property (and not otherwise payable by Seller as tenant under the Leases directly to the lessors thereunder or payable by such lessors without any obligation of payment on the part of Seller) shall be remitted to the collecting authorities by Seller if the same are due and payable on or before the Closing Date, and by Buyer if due and payable thereafter; provided, however, such real property taxes and other Impositions imposed upon or assessed against the Property for the current tax fiscal year in which the Closing Date occurs ("Proration Period") shall be apportioned and prorated between Seller and Buyer on and as of the Closing Date with Buyer bearing only the expense of that proportion of such Impositions that the number of days in the Proration Period following and including the Closing Date bears to 365. If the amount of any such taxes, assessments and other Impositions to be borne by the parties hereto, as above provided, is not ascertainable on the Closing 6 7 Date, Seller shall pay to Buyer its share of the amount of such taxes, assessments or other Impositions within 15 days after receipt by Seller of the appropriate tax bill(s) evidencing the amount thereof. (c) Seller shall pay all utility costs in respect of the Leased Premises (except to the extent the lessors are liable therefor under the Leases or such costs are a part of a lease charge to be prorated pursuant to clause (i) of paragraph (a) of this Section) incurred prior to the Closing Date, and those incurred thereafter shall be paid by Buyer. If the utility charges for the last utility period cannot be ascertained on the Closing Date, then at such subsequent date as all utility bills for such utility period have been obtained, the parties shall promptly pay their respective prorated amounts. Any deposits of Seller held by utility companies shall be returned to Seller, and Buyer shall be responsible for making its own deposits with the utility companies. (d) With respect to any percentage rent (as defined in the respective leases) payable under the Leases for the applicable lease years thereunder during which the lease assignments occur, the percentage rent (taking into account any applicable credits or adjustments) shall be prorated between the Buyer and Seller such that each party shall pay when due that percent of the total percentage rent payable which equals such party's respective gross receipts (as defined in the respective leases) divided by the total gross receipts for such lease year. (e) Seller and Buyer shall also make such other adjustments or apportionments with respect to the Property as may be necessary to carry out the intention of the parties hereto so that Buyer shall not be liable for matters accruing or occurring prior to the Closing Date and that Seller shall not be liable for matters accruing or occurring from and after the Closing Date and that Seller shall bear all of the expenses and burdens, and shall be entitled to all of the benefits and income, of and from ownership of the Property prior to the Closing Date and Buyer shall bear all such expenses and burdens and shall be entitled to all such benefits and income from and after the Closing Date. (f) The foregoing adjustments shall be determined and payment made from one party to the other (as the case may be) on the Closing Date to the extent they are known and agreed to by both parties; otherwise, such adjustments shall be determined as soon as possible after the Closing Date and the adjustments, if any, shall be determined and payment made by the party owing the adjustment to the other within 30 days after the adjustment is determined. 2.05. Closing Date and Place. The Closing of the transactions contemplated by this Agreement shall take place at the offices of Choate, Hall & Stewart, Boston, MA, at 12:00 Noon on February 23, 1996, or on such other date prior thereto as may be agreed by the parties hereto (the Closing Date). 7 8 2.06. Buyer's Performance at Closing. At Closing, Buyer shall: (a) Pay and deliver by wire transfer the Purchase Price as shown on the Closing Statement to be attached hereto as Schedule 2.06 (a) at Closing. (b) Deliver to Seller a Certificate of the Secretary of Buyer stating that this Agreement and other instruments and documents executed in connection herewith have been duly authorized by the Board of Directors of Buyer and setting forth the names, titles, signatures and attesting to the incumbency of those persons authorized to execute this Agreement and the instruments and documents executed in connection herewith. Copies of all resolutions pertaining to such authorization shall be attached to the certificate. (c) Pay and deliver by wire transfer the amount representing Seller's cost for the concession inventory (if known) located in the Theatres, the amount of security deposits and prepaid expenses (if known at Closing) for which Buyer shall benefit after Closing, and the amount of Petty Cash in the Theatres. In the event Seller's cost for the concession inventory and the amount of any prepaid expenses is not known at Closing, same shall be paid as soon as determined. (d) Deliver to Seller the Lease and Continuing Contracts Acceptance and Assumption Agreement whereby Buyer assumes Seller's obligations under the Leases and Continuing Contracts, in form and substance substantially as set forth on Exhibit L attached hereto. 2.07. Seller's Performance at Closing. At Closing, Seller will deliver to Buyer: (a) All bills of sale for the Personal Property, substantially in form attached hereto as Exhibit "E"; (b) Assignments (to the extent assignable), substantially in form attached hereto as Exhibit "I", of licenses and permits, executory contracts, leases, easements and rights of way accompanied by certain covenants and endorsements as are necessary in order to effectively vest in Buyer good, indefeasible and marketable title to the Property free and clear of all encroachments, leases, tenancies, liens, encumbrances, mortgages, conditional sales and other title retention agreements, pledges, covenants, restrictions, reservations, easements and options except for the Permitted Liens; (c) Actual possession and operating control of the Property; (d) A certificate of Seller, executed by an officer, certifying that the persons executing this Agreement and 8 9 other documents consummating transactions contemplated by this Agreement have been duly and validly authorized by its Board of Directors so to do, and that except as set forth on Schedule 2.07(d), no consent or approval of any other person is necessary. Such certificate shall set forth the names, titles, and signatures and attest to the incumbency of those persons authorized to execute this Agreement and all Agreements, instruments and documents in connection herewith. Copies of all resolutions pertaining to such authorization shall be attached to the certificate; (e) Any and all consents of third parties necessary for the transfer and assignment of the Property, including, but not limited to, any required Landlords' Consents to the assignment of all Leases for the Theatres with no changes in the terms and conditions thereof. (f) The Authorization and Release Notice in form attached hereto as Exhibit "J" transferring all of Seller's right, title and interest in and to the telephone numbers shown thereon. (g) The License. (h) The Unconditional Guaranty and Reimbursement Agreement regarding Asset Purchase Agreement of Donald M. Fox in form and substance substantially attached hereto as Exhibit "M". 2.08. Seller's Performance At and After Closing. Seller hereby covenants and agrees that at or after the Closing, as required, Seller shall: (a) At the request of Buyer, take all action reasonably necessary to put Buyer in actual possession of the Property, and execute and deliver such further instruments of conveyance, sale, transfer and assignment, and take such other action as may be reasonably necessary to transfer to Buyer any of the Property and confirm the title of Buyer to the Property. Further, after Closing, should Seller be a necessary party in order for Buyer to exercise its rights with respect to the Property, Seller will take reasonable efforts, at Buyer's expense, to assist Buyer therein; (b) Pay any governmental taxes or other governmental charges which may arise out of the transfer of the Property, including without limitation any transfer, documentary stamp tax, surtax, gross receipts, excise, title, and sales and use tax. The parties agree to cooperate in taking such steps as may be necessary or appropriate in order to take advantage of any exemptions from any such governmental taxes, or other charges which may be available with respect to the transfer of the Property; (c) For a period of two (2) years following the Closing Date, provide Buyer access to any operating records, accounting records, correspondence, memoranda, and other records and data relating to the ownership or operation of the Property, which are in Seller's possession, and assist Buyer in the 9 10 preparation of any financial statements and/or completion of any audit of financial statements that may be required to meet SEC Regulations; (d) At the request of Buyer, prosecute or otherwise enforce in Seller's name for the benefit of Buyer, any claims, rights or benefits that are being transferred to Buyer under this Agreement, and that require prosecution or enforcement in Seller's name. Any such prosecution or enforcement shall be at Buyer's expense, unless such prosecution or enforcement is made necessary by a material breach of this Agreement by the Seller, in which case such prosecution or enforcement shall be at Seller's sole expense; (e) Hold Buyer harmless from all charges or liabilities incurred by the Seller prior to the Closing Date relating to the Property; and (f) Transfer or deliver to Buyer any and all cash remittances or property Seller may receive in respect of the Property relating to the periods after the Closing Date. 2.09. Buyer's Assumption of Certain of Seller's Liabilities and Obligations. Seller, at Closing, will transfer all of the Property to Buyer free and clear of any and all claims, liens, mortgages, options, charges, security interests, assignments, restrictions, easements, actions or demands or encumbrances whatsoever, except for: (a) Obligations arising after the Closing Date with respect to Continuing Contracts and Leases included in the Property as described on Schedule 3.09 (a), (b) Permitted Liens, and (c) The post-closing prorated items included in Section 2.04. Except as expressly set forth herein, or in any law applicable hereto, Buyer is not assuming any obligations or liabilities of Seller or of Seller's business or any liabilities attendant to any of the Property, whether known or unknown, liquidated or contingent. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER As a material inducement for Buyer's performance hereunder, Seller hereby makes the following representations and warranties, each of which (as qualified by all Exhibits and Schedules to this Agreement) is true and correct on the date of this Agreement, shall be true and correct on the Closing Date, except as otherwise disclosed by Seller to Buyer in a Schedule or Exhibit attached hereto, and shall survive the Closing and the transactions, 10 11 contemplated by this Agreement for a period of eighteen (18) months from the Closing Date, and shall be deemed to be independently relied upon by Buyer. 3.01. Legal Status. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Pennsylvania. Seller has all requisite corporate power and authority to own its properties, to carry on its business, as now being owned and operated by it, to enter into this Agreement, and to perform its obligations hereunder. 3.02. Financial Data. (a) Schedule 3.02 (a) contains (i) the Theatre Operating Cash Flow Statement for twelve (12) months ended 7/27/95, (ii) the four (4) quarters ended 12/29/94; and (iii) statements dated October 26, 1995 and 1994 for the ten (10) months then ended. (b) The financial information is prepared from and in accordance with the books and records of Seller, in accordance with generally accepted accounting principles consistently applied, and except as stated therein present fairly the results of operations of the Theatres for the respective periods indicated. (c) Schedule 3.02 (c) contains the 90/10 amounts for each screen included in the Theatres. (d) Schedule 3.02 (d) lists by auditorium for each of the Theatres the number of seats in each auditorium. 3.03. Absence of Specified Changes. Since 10/26/95, there has not been any, except as otherwise provided below: (a) Transaction by Seller with respect to the Property except in the ordinary course of business as conducted on that date, except as set forth on Schedule 3.03 (a). (b) Debt, obligation or liability (whether absolute or contingent) incurred by Seller which will not be discharged at or before Closing (whether or not presently outstanding), which creates a lien upon or otherwise encumbers the Property; (c) Mortgage, pledge or other encumbrance of any of the Property, except for Permitted Liens; (d) Sale, lease, abandonment or other disposition of any of the Property, excluding concession inventory; (e) Labor dispute, strike, work stoppage, or any other occurrence, event or condition of a similar nature which impacts the Property which materially impacts Buyer's ability to operate the Property; (f) Except as set forth on Schedule 3.03 (f), amendment or termination of any contract, Lease, agreement or 11 12 license included in the Property to be assigned to Buyer in which Seller is a party; (g) Agreement, other than this Agreement, by Seller to do any of the acts described in this Section 3.03; or (h) Except as set forth on Schedule 3.24, arrangement for discount, promotional or prepaid tickets, admission passes, gift certificates or other similar arrangement not in the ordinary course of business of Seller, or for which Seller shall reimburse Buyer. 3.04. Tax Returns. Except with respect to real and personal property taxes payable after the date hereof, and except as set out on Schedule 3.04, all known taxes, including without limitation, income, property, ad valorem, sales, use, franchise, gross receipts, added value, employees income withholding and social security taxes imposed by the United States, by any state, municipality, other local government or other subdivision or instrumentality of the United States, or by any other taxing authority, that are due or payable by the Seller prior to the Closing, and all interest and penalties thereon, whether disputed or not, which would result in the imposition of a lien, claim or encumbrance on the Property or against the Buyer have been paid in full, all tax returns required to be filed in connection therewith have been accurately prepared and duly and timely filed, and all deposits required by law to be made by Seller with respect to employees withholding taxes have been duly made. Seller is not delinquent in the payment of any tax, assessment, or governmental charge or deposits which would result in the imposition of a lien, claim or encumbrance on the Property or against the Buyer, and has no tax, deficiency or claim outstanding, proposed or assessed against it, and there is no basis for any such deficiency or claim, which would result in the imposition or any lien, claim or encumbrance on the Property or against the Buyer. 3.05. Authorization. The execution and delivery of this Agreement by Seller, and the consummation by Seller of the transactions contemplated by this Agreement have been or will be duly and validly authorized, and no further corporate authorization is necessary on the part of Seller. 3.06. Governmental Notifications and Consents. Except as set forth on Schedule 3.06, no material notification, consent, authorization, order of approval of, or filing or registration with any governmental commission, board or other regulatory body, is required for or in connection with the execution and delivery of this Agreement by Seller, and the consummation by Seller of the transactions contemplated hereby. 3.07. Compliance with Other Instruments. Except as specifically disclosed in Schedule 3.07 to this Agreement, and except such instruments as will be discharged or in respect of which consents or waivers will be obtained at or before Closing, the execution and delivery of this Agreement, and the consummation 12 13 of the transactions of the Seller contemplated by this Agreement will not result in or constitute any of the following: (i) an event that would permit any party to terminate any agreement, or to accelerate the maturity of any indebtedness, or other obligation by which any of the Property may be bound or affected, or (ii) a breach, violation, or default, or an event that with notice or lapse of time, or both, would constitute a breach, violation or default under the Articles of Incorporation or By-Laws of Seller, or any Lease, assignable license, Continuing Contract, or (iii) a violation of any order, writ, injunction or decree of any court, administrative agency or governmental body, or (iv) an event which would result in the creation or imposition of any lien, charge or encumbrance on any of the Property. 3.08. Personal Property. The Seller has good and marketable title to all Personal Property included in the Property, free and clear of all liens, claims, charges, security interests, and other encumbrances of any kind or nature, except for the Permitted Liens. All of the Seller's machinery, furniture and equipment included in the Property is located on the premises of the Theatres, and is set forth on Exhibit "B". 3.09. Real Property. (a) The documents described in Schedule 3.09 (a) contain a true and correct description of all real property leased to the Seller included in the Property, including, to best of Seller's knowledge, the correct name, street address and telephone number of the Landlord, and the Theatres. Each of the leases included in the Property disclosed in said Schedule is in full force and effect, and, except as set forth on said Schedule, Seller has received no written notice of any existing defaults or events of default, real or claimed, or events which with notice or lapse of time, or both, would constitute defaults, the consequences of which, severally or in the aggregate, would have a material adverse affect on the business or operations of the Seller relating to or being carried on at the real property in question. Except for the requirement that the Seller obtain those valid and binding consents pursuant to Sections 2.07 (e) and 4.08, the continuation, validity and effectiveness of those leases will in no way be affected by the transactions contemplated by this Agreement. Seller shall retain its option and any other right to acquire the Demised Premises referred to as "The Theatre Complex" under The Theatre Complex Lease, dated May 6, 1993, between J. P. Development Company and Seller. (b) To the best of Seller's knowledge, the improvements on the real estate, leased to or used by the Seller conform in all material respects to all applicable federal, state and local laws, zoning and building ordinances, and health and safety ordinances, and the property is zoned for the various purposes for which the real estate and improvements thereon are presently being used. 13 14 3.10. Licenses, Permits and Trademarks. Schedule 3.10 lists all trade names used by the Seller exclusively in the operation of the Property. The Seller has all governmental permits, licenses, and similar authorities presently issued or granted to or used by the Seller and which are material to the conduct of its business in the Theatres. The Seller has not received written notice that its use of any such trade names violates or infringes upon any rights claimed therein by third parties. 3.11. Insurance. Schedule 3.11 contains a list and brief description of the policies of fire, liability, and other forms of insurance (except title insurance) owned or held by the Seller, regarding the Property. The properties and business of the Seller, consisting of the Theatres, of an insurable nature are insured to the extent and against such risks customarily insured against by corporations of similar size and in similar businesses, as required by the terms of the Leases of the Theatres to which the Seller is a party. All policies listed on Schedule 3.11 will be outstanding and duly in force on the Closing Date. The Seller is not now, and on the Closing Date will not be in default regarding the provisions of any such policies, and has not and shall not have failed to give any notice or present any claim thereunder in due and timely fashion. 3.12. Defaults. Except as set forth on Schedule 3.12, there is no default or claim of purported or alleged default, or state of facts (including any facts which will exist as a result of the consummation of and performance under this Agreement), which, with notice or lapse of time, or both, would constitute a default in any obligation on the part of the Seller to be performed under any Continuing Contract or agreement which materially affects the operation of the Property, and those contracts or agreements set out on Schedule 3.17. The Seller has in all material respects performed, and on the Closing Date shall have performed, all obligations required to be performed by it under any such material contract or agreement, and Seller has not waived any right under any such material contract or agreement. 3.13. Litigation. Except as set forth on Schedule 3.13, Seller has received no written notice of any actions, suits, investigations or proceedings (whether or not purportedly on behalf of the Seller) to which the Seller is a party, and which any of the Property is or may be subject, or which are pending, or to the best of Seller's knowledge threatened against or affecting the Seller, or any of the Property, at law, in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. 3.14. Compliance with Laws. Except to the extent disclosed in Schedule 3.14, (i) the Seller has not been notified that it has failed to comply in any respect with, or is in default in any respect under any laws, ordinances, requirements, regulations or orders applicable to its operation of the Theatres; 14 15 (ii) the Seller is not subject to any judgment, order, writ,injunction or decree that adversely affects, or might in the future reasonably be expected to adversely affect its operation of the Theatres; (iii) the Seller is not now, and on the Closing Date will not be in default concerning any order, writ, injunction or decree of any federal, state, municipal court or any other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign with respect to the Theatres, and there is no investigation pending or, to the best of Seller's knowledge, threatened against or affecting the Seller by any state or federal governmental agency, and Seller has not received written notice of any investigation pending or threatened against or affecting the Seller by any state or federal governmental agency, department or instrumentality that would adversely affect Buyer's operation of the Theatres after the Closing Date. 3.15. Brokers and Finders. Except for Seller's engagement of Wilson Capital Corporation which shall be paid by Seller, neither Seller nor any of its officers, directors or employees have employed any broker, agent or finder, or incurred any liability for any brokerage fees, agent's commissions or finder's fees concerning the transactions contemplated hereby. 3.16. Labor Matters. (a) The Seller is not a party to and has no obligations under any agreement, collective bargaining or otherwise, with any party regarding the rates of pay or working conditions of any of the Theatre Level Employees of the Seller, nor is obligated under any agreement to recognize or bargain with any labor organization or union on behalf of any of said employees regarding the operation of the Theatres, other than as shown on Schedule 3.16 (a); (b) Regarding Seller's operation of the Theatres, to the best of Seller's knowledge, there is no organization activity among any of the Seller's employees, and neither the Seller nor any of its officers, directors, employees or agents has currently been charged or notified of or to the best of Seller's knowledge threatened with the charge of any unfair labor practice; (c) Regarding the Seller's operation of the Theatres, the Seller has not been notified that it has failed to comply with any applicable federal and state laws and regulations concerning the employer/employee relationship, and with any of its agreements relating to the employment of its Theatre Level Employees including, without limitation, regulations or agreement provisions relating to wages, bonuses, employment practices, hours of work, and the payment of Social Security taxes, other than as shown on Schedule 3.16 (c). Regarding the Seller's operation of the Theatres, to the best of Seller's knowledge, the Seller is not liable, except in the ordinary course of business, for any unpaid wages, bonuses or commissions or any tax, penalty, assessment or forfeiture for failure to comply with any of the foregoing; and 15 16 (d) The Buyer shall not be liable to Seller or Seller's employees for any contractually or legally required severance payments or accrued and unpaid employee benefits, to which Seller's employees are entitled based on services rendered to Seller prior to the Closing, including, but not limited to, pension and profit sharing plans, vacation pay, sick pay, longevity bonuses, commissions or merit bonuses, and Seller shall indemnify and hold Buyer harmless from any and all damages, costs and expenses (including attorneys fees) associated with such payments or benefits which accrue prior to Closing. 3.17. Contracts and Commitments. Schedule 3.17 contains a list of any contracts or commitments regarding the Seller's operation of the Theatres to which the Seller is a party, or by which the Seller benefits, which are not terminable by the Seller at will, without penalty, and which are not listed or described on Exhibit "A". Buyer will not have any liability whatsoever for the contracts and commitments shown on said Schedule 3.17 (a) after Closing. 3.18. Condition of Property. With the exception of the canopy on the Gold Coast Mall Theatre, Ocean City, MD, and the exterior paint on the Howard Theatre, Lebanon, PA, both of which shall be repaired or replaced prior to Closing by Seller, all items of inventory, machinery and equipment, furniture and fixtures, and Leasehold Improvements included in the Property are transferred and sold to Buyer in "AS IS - WHERE IS" condition, with no warranty, either express or implied, as to condition or fitness for a particular purpose. 3.19. Employee Benefit Plans. (a) Except as set forth on Schedule 3.19 (a), there are no Theatre Level Employee benefit plans, (as defined in Section 3 (3) of ERISA, including employee pension benefit plans, as defined in Section 3 (2) of ERISA, maintained by the Seller, or under which the Seller has any present or future obligation or liability, or under which any employee of the Seller has any present or future rights to benefits) for which Buyer will have any liability whatsoever. (b) There are no welfare plans, other than as set forth on Schedule 3.19 (b), as defined in Section 3 (1) of ERISA covering Theatre Level Employees of the Seller for which Buyer will have any liability whatsoever. 3.20. Authority. This Agreement constitutes the valid and binding obligation of the Seller, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, or other laws affecting creditor rights generally, or as may be modified by a court of equity, in an action for specific performance. Except as disclosed on Schedule 3.07, neither the execution and delivery of this Agreement by the Seller, nor the consummation of the transactions contemplated hereby will violate any provisions of the Articles of Incorporation or Bylaws of 16 17 Seller, or any law or any order of any court, or any governmental unit to which Seller is subject, nor will such execution, delivery or consummation conflict with, or result in a breach of, or constitute a default under any indenture, mortgage, lease, agreement or other instrument to which Seller is a party, or by which any of them is bound, or result in the creation of any lien, charge or encumbrance upon Seller's assets or properties, or result in acceleration of the maturity of any payment date of any of Seller's obligations, or increase or materially and adversely affect the obligations of Seller thereunder to which the Property is subject. 3.21. Accuracy of Information. No representation or warranty of, or any information provided to Buyer by Seller in this Agreement, or in any statement, certificate or schedule furnished by the Seller pursuant hereto, or in connection with the transactions contemplated hereby, contains, or on the Closing Date will contain, any untrue statement of a material fact, or omits, or on the Closing Date will omit, to state any material fact necessary in order to make the statements contained therein not misleading, and all such statements, information, representations, warranties, certificates and schedules shall be true and complete on and as of the Closing Date as though made on that date, except to the extent otherwise disclosed by Seller to Buyer on a Schedule or Exhibit attached hereto. To the extent same are in Seller's possession, true copies of all Leases, Continuing Contracts, labor agreements, and other instruments (necessary to the Buyer in operation of the Property) listed on or referred to, or otherwise related to any item referred to in the Schedules, delivered or furnished to the Buyer pursuant to this Agreement have been delivered or have been made available, or will upon request be made available for inspection by the Buyer. Buyer shall be entitled to rely upon the accuracy of all such written information in the preparation of its filings with the Securities and Exchange Commission. The Seller shall immediately notify Buyer of any inaccuracies or omissions in any of such information previously supplied to Buyer. 3.22. Claims. Except for claims arising under or in connection with this Agreement, Seller does not nor on the Closing Date will have, any claims of any nature, whether asserted or unasserted, against Buyer. 3.23. Environmental Matters. To the best of Seller's knowledge, except items such as cleaning supplies normally found in motion picture theatres generally, no Hazardous Waste, Hazardous Substances and Hazardous Materials, as said terms are described under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") (hereinafter "Waste Material"), and all other applicable environmental laws, exist, were stored or disposed of on the Property to be conveyed or assigned hereunder during the period Seller was in possession of said Property to be conveyed or assigned hereunder, other than material which may have been temporarily stored thereon and removed prior to Closing, except as specifically disclosed in Schedule 3.23 to this Agreement. To the best of Seller's knowledge, Seller has no 17 18 knowledge or reason to believe that Waste Material from any source was stored or disposed of on the Property to be conveyed or assigned at any time other than material which may have been temporarily stored thereon and removed prior to Closing. To the best of Seller's knowledge, Seller has at no time generated, stored or disposed of Waste Material, including, but not limited to, asbestos, PCBs, and urea formaldehyde foam insulation, as defined in CERCLA, the Hazardous Material Transportation Act, 49 USC 1801, et. seq., as amended; the Clean Air Act, 42 USC 7401, et. seq., as amended; the Clean Water Act, 33 USC 1251, et. seq., as amended; the Toxic Substances Control Act, 15 USC 2601, et. seq., as amended; the Resource, Conservation and Recovery Act, 42 USC 6901, et. seq., as amended; and the Rivers and Harbor Act, 33 USC 401, et. seq., as amended; or any other federal and/or state environmental statute, except to the extent such Waste Material, and their place of generation, interim or final storage, and site of disposal are identified on Schedule 3.23 to this Agreement. To the best of Seller's knowledge, no aboveground or underground storage tanks are located on any of the Property to be conveyed or assigned hereunder. 3.24. Discounts and Gift Certificates. Except as set forth on Schedule 3.24, there are not outstanding any discount or promotional tickets, gift certificates, prepaid tickets or admission passes or any other arrangements allowing the holder thereof to reduced or free admission to any of the Theatres. 3.25. Roof Warranties. Seller has the roof warranties set forth on Schedule 3.25, and said roof warranties are in full force and effect. ARTICLE IV OBLIGATIONS AND COVENANTS OF SELLER The Seller covenants and agrees with the Buyer that the fulfillment of each of the following covenants and agreements constitutes a condition precedent to the obligations of the Buyer to close hereunder: 4.01. Conduct of the Operation of the Theatres Prior to the Closing Date. Except to the extent that the Buyer shall otherwise consent in writing from the date hereof to the Closing Date, the Seller shall: (a) Operate the Theatres substantially as presently operated, and only in the ordinary course, and use its best efforts to preserve intact its good will and reputation, as regards the Theatres, and to preserve its relationships with persons having business dealings with it, with respect to the Theatres, consistent with prudent business practices; (b) Maintain all of the Theatres in normal operating order and condition, reasonable wear and use excepted; and 18 19 (c) Comply with all laws materially applicable to the operation of the Theatres, the failure of which will result in a material injury to the said operation. 4.02. Access and Information. From the date hereof to the Closing Date, and for two (2) years thereafter, Seller, at Buyer's expense, shall afford to the Buyer, its counsel, accountants and other representatives, upon reasonable notice, free and full access to all the offices, properties, books, contracts, commitments and records of the Seller, as pertains to the Theatres, and furnish such persons with all information, (including financial and operating data) concerning the affairs as they reasonably may request, including copies and extracts of pertinent records, documents and contracts, as pertains to the Theatres. The Seller shall assist the Buyer, its counsel, accountants and representatives in their examination of such Seller's books and records. 4.03. Notification of Changes. Between the date hereof and the Closing Date, Seller shall promptly notify Buyer in writing of any adverse change in the method of conducting the Seller's operations, any damage to or loss of any property, or amount of property used in the operation of the Theatres, or the institution of, or the threat of institution of legal proceedings against the Seller regarding or affecting the operation of the Theatres, or the status or conduct of legal proceedings, including investigations by any governmental agency against the Seller which may affect the operation of the Theatres. 4.04. Certain Acts Prohibited. Between the date hereof and the Closing Date, Seller, without the prior written consent of Buyer, shall not: (a) Encumber or permit the encumbrance of the Property, except for Permitted Liens; (b) Dispose of or contract to dispose of any of the Property; except for replacements or substitutes in the ordinary course of business (but will not sell any of the Theatres). (c) Enter into any agreement regarding the Theatres that is not cancelable by the Seller without penalty upon notice of thirty (30) days or less; (d) Regarding the Theatres, enter into any lease or contract for the purchase, lease or acquisition of real estate, or except in the ordinary course of business contract for the purchase, lease or acquisition of personal property. (e) Grant any increase in rates of pay for Theatre Level Employees. 4.05. Insurance. From and after the date hereof and through the Closing Date, the Seller will maintain all of its insurance policies regarding the Property in effect as of the date 19 20 hereof; and all property shall be used, operated, maintained and repaired in a normal business manner, and in accordance with provisions of such insurance policies relating thereto. 4.06. No Default. The Seller will not at any time after the date hereof and through the Closing Date do any act or omit to do any act, or knowingly permit any act or omission to act, that would cause a breach of any Continuing Contract, lease, employment contract or collective bargaining agreement regarding the Theatres. 4.07. Compliance with Laws. At all times after the date hereof and through the Closing Date, the Seller will comply with all applicable laws, which may be required for the consummation of the transactions contemplated hereby. 4.08. Consent of Others. To the extent that the consummation of the transactions provided for herein requires the consent of a third party, whether to avoid the occurrence of an event of default under any contract, license, lease or agreement by which the Property are bound or otherwise, the Seller shall use reasonable efforts to obtain any such consent prior to the Closing Date. Specifically, Seller shall use reasonable efforts to obtain any and all consents required and necessary in order to validly and effectually transfer and assign each of the leases of real property set forth on Schedule 3.09, without change in the terms and conditions thereof, except as otherwise provided herein, on which the Theatres are operated by Seller, and are to be transferred to Buyer. 4.09. No Shopping. From and after the date hereof and until the Closing, the Seller will not, directly or indirectly, through any officer, director, agent, broker or otherwise (i) solicit, initiate or encourage submission of proposals or offers from any third party relating to any acquisition or purchase of the Property, or (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to any of the foregoing, or (iii) otherwise cooperate in any way with, or assist, or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing. The Seller acknowledges that Buyer is relying on this covenant as a basis for incurring expenses and executive time and effort in proceeding in good faith towards the consummation of the purchase hereunder; accordingly, Buyer shall be entitled, in addition to such legal relief as it may have available to it, to equitable relief (including without limitation injunctive and specific performance relief) in the event of a violation of this covenant, it being acknowledged that the Property represents a unique investment opportunity. 4.10. Covenants Not to Compete. Seller shall enter into an agreement with Buyer to be in substantially the form attached as Exhibit "F" hereto. 4.11. Termination of Employees. On or before the Closing Date, Seller shall terminate all of its Theatre Level Employees. 20 21 ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER The obligations of the Buyer to consummate the transactions provided for herein are, at the option of the Buyer, subject to the satisfaction in all material respects of the following conditions precedent on or prior to the Closing Date. 5.01. Compliance by Seller. All the terms, covenants and conditions of this Agreement to be complied with and performed by the Seller on or before the Closing Date shall have been fully complied with and performed. 5.02. Representations and Warranties of Seller. The representations and warranties of Seller contained herein and in the Schedules, Exhibits and certificates delivered pursuant hereto, or in connection with the transactions as contemplated hereby shall be true and correct on and as of the Closing Date with the same effect as though all such representations and warranties had been made on and as of that date, and Buyer shall have received a certificate dated the Closing Date signed by the Seller stating that all such representations and warranties are true and correct. On the Closing Date such representations and warranties will not contain, any untrue statement of a material fact, or omit to state any material fact necessary in order to make the statements contained therein not misleading, and all statements, information, representations and warranties of Seller to Buyer contained herein and in the Schedules, Exhibits and certificates delivered pursuant thereto shall be true and complete on and as of the Closing Date as though made on that date. True copies of all available leases, agreements, plans, Continuing Contracts and other instruments listed on or referred to, or otherwise related to any item referred to in the Schedules and Exhibits, delivered or furnished to the Buyer pursuant to this agreement have been delivered or have been made available, or will upon request be made available for inspection by the Buyer. Buyer shall be entitled to rely upon the accuracy of all such information, whether provided orally or in writing, in the preparation of its filings with the Securities and Exchange Commission. 5.03. No Adverse Change. Except for changes affecting the motion picture exhibition business generally, there shall not have been any material adverse change in the operation of the Theatres comprising the Property between execution hereof and the Closing Date, and the Seller shall have delivered to Buyer a certificate signed by the Seller dated the Closing Date, to such effect. 5.04. Approval of Legal Matters. All actions, proceedings, instruments and documents reasonably necessary or reasonably appropriate to Buyer, or its counsel, to effectuate this Agreement and the consummation of the transactions contemplated hereby, or incidental thereto shall have been approved by such counsel. 21 22 5.05. Litigation. No suit shall, at the Closing Date, be pending or threatened before any court, governmental agency, bureau, board or other authority in which the transactions contemplated by this Agreement are sought to be restrained. 5.06. Condition of Property and Risk of Loss. On the Closing Date, all of the Property including equipment, furniture and fixtures located in the Theatres shall be substantially in the same condition as at the close of business on the date hereof except for: (a) Ordinary use and wear thereof; (b) Changes occurring in the ordinary course of business between the date hereof and the Closing Date. 5.07. Uniform Commercial Code Searches; Title Insurance. The Buyer shall have received Uniform Commercial Code Searches (conducted by Buyer at Buyer's expense through a date reasonably proximate in time to the Closing Date) of filings made pursuant to Article 9 thereof in all jurisdictions where the Theatres are located, which searches shall be in form, scope and substance reasonably satisfactory to Buyer and its counsel, and which shall not disclose any liens, security interests or encumbrances not disclosed in a Schedule. Buyer shall, at Buyer's expense, cause an examination to be made of the Seller's title to the leased premises upon which the Theatres are located and such title examination shall only disclose the Permitted Title Exceptions. Further, Buyer shall have received irrevocable commitments from Mid-South Title/Lawyers Title, Chicago Title Insurance Company, Commonwealth Land Title Insurance Company, Lawyers Title of North Carolina or Lawyers Title Insurance Corporation to issue their standard form ALTA extended coverage policy of title insurance on the Leasehold Interests, dated as of the Closing Date. If and to the extent that lien searches or title searches undertaken by Buyer indicate that any of Seller's representations or warranties made in this Agreement, including, without limitation, Section 3.08 or 3.09, are not accurate, Buyer shall notify Seller of any such inaccuracy not less than ten (10) business days prior to Closing, and Seller shall cure such inaccuracy by taking steps at Seller's own expense to remove the disclosed lien or defect in title prior to Closing. If Seller has diligently commenced steps to remove the disclosed lien or defect in title reflected in such inaccuracy, but has not completed its steps by the Closing Date, Seller shall be entitled to a reasonable extension of the Closing for the purpose of completing such cure. If Seller is unable to correct or cure the lien reflected in such inaccuracy, and Buyer elects to proceed to close hereunder, or if Buyer does not so disclose such liens or defects in title to Seller so that Seller may remove or cure the same, Buyer shall have waived its rights to indemnification under this Agreement arising out of such liens or defects in title. 5.08. Consents. Seller shall have delivered to Buyer the written consent of third parties referred to in Section 2.07 (e), 22 23 which consent shall be in substantially the form, scope and substance attached hereto as Exhibit "G". 5.09. Extension of Leases. Seller shall have delivered to Buyer, amendment to the Leases of the Wyomissing Theatre, Reading, PA and Sun and Surf Theatre, Ocean City, MD, whereby the Leases for said Theatres are extended to terminate no earlier than 12/31/2007, with no other changes in the terms and conditions of said Leases. ARTICLE VI FIRE, CONDEMNATION AND INSURANCE 6.01. Fire, Condemnation and Insurance. (a) If, prior to the Closing Date, all or a part of the Property shall be destroyed or damaged by fire or any other casualty, or if all or a part thereof shall be condemned, in whole or in part, by governmental or other lawful authority, neither Seller nor Buyer shall have any liability for any such destruction, damage or condemnation and Buyer shall have the option of (i) completing the purchase without adjustment in the Purchase Price, in which event Seller shall comply with its obligations set forth in paragraph (b) of this Section, or (ii) canceling this Contract and all obligations of Seller and Buyer hereunder; provided, however, Buyer may not elect to exercise the option set forth in clause (ii) if the Property shall be damaged or destroyed by fire or other casualty covered by Seller's Required Insurance, (as defined in paragraph (c) of this Section) and the cost to repair or replace such damaged or destroyed Property shall not exceed $250,000 in the aggregate provided Seller complies with its obligations under paragraphs (b) and (c) of this Section. Buyer shall exercise one of the aforesaid two options by giving notice to Seller within 10 days after the giving of notice by Seller to Buyer of the occurrence of the damage or destruction or condemnation, and the failure of Buyer to give any notice within said 10 day period shall constitute an election by Buyer not to cancel this Contract. (b) In the event of damage to or destruction of the Property or a condemnation thereof and this Contract is not terminated as provided in paragraph (a) of this Section, Seller shall have no obligation to restore or repair the same and Buyer shall accept the same in its then condition at Closing, but Seller shall pay to Buyer, at Closing, all insurance or condemnation proceeds received by Seller with respect to such loss or taking, plus the amount of any deductible under any Required Insurance. (c) Prior to the Closing Date, Seller shall maintain in full force and effect on the Property damage insurance coverage ("Required Insurance"), as presently in effect, a description of which is set forth on Exhibit "H" hereto. 23 24 ARTICLE VII REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF BUYER The Buyer represents and warrants to the Seller as follows: 7.01. Organization in Good Standing. The Buyer consists of Carmike Cinemas, Inc. a corporation duly organized and existing, and in good standing under the laws of the State of Delaware, and Eastwynn Theatres, Inc., a corporation duly organized and existing, and in good standing under the laws of the State of Alabama. Each member of Buyer has full corporate power to carry on its businesses, to own and operate its properties and assets, and to consummate the transactions contemplated by this Agreement. 7.02. Authority. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Buyer; no further corporate action of any nature is required pursuant to the Articles of Incorporation and By-Laws of the Buyer; and this Agreement constitutes the valid and binding obligations of the Buyer, except as may be limited by bankruptcy, insolvency, or other laws affecting creditors rights generally, or as may be modified by a court of equity in an action for specific performance. The execution, delivery and performance of this Agreement will not violate or result in default under any provision of the Articles of Incorporation or By-Laws of the Buyer, or any material commitment, indenture, license or other obligation to which the Buyer is a party, and will not, to the best knowledge of the Buyer, contravene any law, rule or regulation of any administrative agency or governmental body or any other order, writ, injunction or decree of any court, administrative agency or governmental agency applicable to the Buyer. 7.03. Governmental Notifications and Consents. Except as set forth on Schedule 7.03, no material notification, consent, authorization, order of approval of, or filing or registration with any governmental commission, board or other regulatory body, or any other party, is required for or in connection with the execution and delivery of this Agreement by Buyer, and the consummation by Buyer of the transactions contemplated hereby. 7.04. Buyer's Indemnity for Seller's Continuing Liability under Leases. Buyer hereby covenants and agrees that it shall indemnify and hold harmless Seller, and Donald M. Fox, Richard A. Fox and Helen Fox, to the extent said individuals are guarantors under the Leases, from any and all claims, actions, damages and other liabilities to any person arising out of Buyer's occupancy or operation of the Theatres on the Premises demised by the Leases or Buyer's failure to comply, from and after the Closing Date, with the terms and conditions of the Leases and Continuing Contracts to be assigned to Buyer at Closing upon which Seller is not released by the applicable Landlord. 24 25 7.05. Carmike Guaranty of Eastwynn's Obligations Under Leases and Continuing Contracts. Carmike hereby covenants and agrees that it shall provide financial information and guarantee the performance of any of the Leases as requested by Landlords therefor. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The obligations of the Seller to consummate the transactions provided for herein are subject to the satisfaction, in all material respects, of the following conditions on or prior to the Closing Date: 8.01. Compliance by the Buyer. All the terms, covenants and conditions of this Agreement to be complied with and performed by the Buyer on or before the Closing Date shall have been fully complied with and performed in all material respects. 8.02. Representations and Warranties of the Buyer. The representations and warranties of the Buyer contained herein shall be true and correct, on and as of the Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the Closing Date, and the Buyer shall have furnished to the Seller a certificate dated the Closing Date and signed by the President or Vice President and Secretary of the Buyer to such effect. 8.03. Litigation. No suit shall, at the Closing Date, be pending or threatened before any court, governmental agent, bureau, board or other authority in which the transactions contemplated by this Agreement are sought to be restrained, or in connection with which damages or other relief is sought, or in which any material claim shall be asserted against the Buyer regarding the Theatres not disclosed herein, or in the Schedules or Exhibits delivered hereto. 8.04. Approval of Legal Matters. All actions, proceedings, instruments and documents reasonably necessary or reasonably appropriate to Seller, or its counsel, to effectuate this Agreement and the consummation of the transactions contemplated hereby, or incidental thereto shall have been approved by such counsel. 8.05. Landlord Consents. All Landlord consents required hereunder or under the Leases have been obtained. ARTICLE IX TERMINATION 9.01. Right of Termination. This Agreement and the transactions contemplated by this Agreement may be terminated at any time prior to the Closing Date: 25 26 (a) By the mutual consent of the Board of Directors of Buyer and the Board of Directors of Seller; (b) By the Board of Directors of Buyer in the event the conditions set forth in Articles IV and V of this Agreement shall not have been satisfied or waived by March 31, 1996. (c) By the Board of Directors of Seller in the event that the conditions set forth in Articles VII and VIII of this Agreement shall not have been satisfied or waived by March 31, 1996. (d) By either the Boards of Directors of Buyer or the Seller if any action or proceeding before any court or other governmental body or agency shall have been instituted in good faith by an unrelated third party (i) to restrain, modify or prohibit the transaction contemplated by this Agreement, (ii) to recover damages from Buyer or Seller if such action or proceeding, directly related to this Agreement, could result in the imposition of a material liability against or affecting the business or properties of the Buyer or the Seller in the opinion of the party seeking to terminate this agreement, or (iii) to force Buyer or the Seller to take any action that would have a material and adverse effect on the business or properties of Buyer or Seller, directly related to this Agreement, in the opinion of the party seeking to terminate this Agreement unless either the Buyer or the Seller causes such action or proceeding to be dismissed on or prior to the Closing Date. 9.02. Notice of Termination. Notice of termination of this Agreement, as provided for in this Article, shall be given by the parties so terminating to the other parties hereto, in accordance with the provisions of Section 11.08 of this Agreement. 9.03. Effect of Termination. In the event that this Agreement is terminated, this Agreement shall become void, and of no further force and effect, without liability of any party to any other party. ARTICLE X PARTIES' AGREEMENT TO CROSS-INDEMNIFY 10.01. Agreement to Indemnify. Subject to the terms and conditions of this Article X, each party (the "Indemnifying Party") agrees to indemnify, defend and hold the other party (the "Indemnified Party) harmless from and against all claims asserted against, imposed upon or incurred by the other party by reason of, or resulting from: (a) A breach or non-fulfillment of any warranty, or any inaccuracy of any representation contained in, or made pursuant to this Agreement, or 26 27 (b) A breach or non-fulfillment of any covenant or agreement, other than a representation or warranty, contained in or made pursuant to this Agreement; or (c) Any undisclosed liability, provided that nothing herein shall require Seller to indemnify Buyer with respect to any liability created by Buyer on and after the Closing Date. 10.02. Conditions of Indemnification. Obligations and liabilities of the Indemnifying Party hereunder with respect to claims shall be subject to the following terms and conditions: (a) The Indemnified Party shall give the Indemnifying Party notice of any claim promptly after the Indemnified Party receives notice thereof, and to the best of Indemnified Party's knowledge advise Indemnifying Party which representation and warranty, covenant or agreement set forth herein said claim violates (in no event more than thirty (30) days after Indemnified Party receives such notice), and the Indemnifying Party will undertake the defense thereof by representatives of its own choosing reasonably satisfactory to Indemnified Party. All costs and expenses of such defense (including fees of counsel), and any settlement or compromise resulting from the defense of any claim will be paid by the Indemnifying Party. (b) In the event that the Indemnifying Party, within a reasonable time after receipt of notice of any such claim, but in no event more than thirty (30) days after receipt of such notice, fails to defend, the Indemnified Party will (upon further notice to the Indemnifying Party) have the right to undertake the defense, compromise or settlement of such claim on behalf, for the account and risk of the Indemnifying Party, and at Indemnifying Party's expense, subject to the right of the Indemnifying Party to assume the defense of such claim at any time prior to settlement, compromise or final determination thereof. 10.03. Assistance. In the event so requested by the Indemnifying Party, the Indemnified Party shall use its best efforts to make available all information and assistance reasonably required in the defense by the Indemnifying Party of a claim. 10.04. Limitations. The Indemnifying Party's obligation to indemnify the Indemnified Party as provided in Section 10.01 above is subject to the condition that the Indemnifying Party shall have been given notice by Indemnified Party of the claim for which indemnity is sought within eighteen (18) months after the Closing Date. Except as to claims not seeking payment of money, Seller shall not be obligated to so save, defend, indemnify and hold the Buyer harmless from and against, and shall not be obligated to pay or reimburse Buyer for any claims, demands, causes of action, liabilities or expenses arising out of or relating in any way to the ownership or use of the Property (collectively the "Claims") as herein set forth, unless and to the extent that the aggregate claims of the Buyer for such indemnification exceed the amount of $15,000.00. For example, in the event Buyer's aggregate Claims 27 28 reach $16,000.00, Seller will be obligated to pay or reimburse Buyer the entire $16,000.00. In the event Buyer's aggregate Claims are less than $15,000.00, Seller will not be obligated to pay or reimburse Buyer anything. Further, Seller's liability hereunder shall not exceed $3,000,000.00 in any event. ARTICLE XI MISCELLANEOUS 11.01. Survival of Representations. All statements contained in any Schedule, Exhibit, document, certificate or other instrument delivered by or on behalf of the Buyer or the Seller pursuant hereto, or in connection with the transactions contemplated hereby, shall be deemed representations and warranties hereunder by the Buyer or the Seller as the case may be. The representations, warranties and agreements made by the Buyer and the Seller herein shall survive consummation of the transactions contemplated hereby for eighteen (18) months after Closing Date, and no audit of the inventories, properties, financial condition, records or other matters relating to the Seller shall limit, affect or impair the ability of the Buyer to rely upon the representations, warranties and agreements of the Seller set forth herein. 11.02. Assignment. This Agreement shall not be assignable by either party hereto without the written consent of the other, and shall inure to the benefit of and be binding upon the parties hereto and their respective successors, assignees and legal representatives. 11.03. Public Announcements. Except as required by law, neither party shall make any public announcement concerning this Agreement or the transactions contemplated hereby without the prior written consent of the other party, such consent not to be unreasonably withheld. 11.04. Construction. This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia, USA. 11.05. Amendment. This Agreement may be amended, supplemented or interpreted at any time by written instrument executed by the parties hereto. 11.06. Expenses; Brokers and Finders Fees. Except for Seller's engagement of Wilson Capital Corporation, whose fees shall be paid by Seller, Seller and Buyer agree that there are no brokers or finders fees or commissions payable to any person employed by Seller or Buyer in connection with the transactions contemplated by this Agreement, and Seller and Buyer will indemnify each other with respect thereto, and hold each other harmless therefrom. Each party hereto shall pay its or his or her own expenses incident to this Agreement and the transactions contemplated hereby, including all 28 29 fees and expenses of their counsel, whether or not such transaction shall be consummated. 11.07. Further Assurances. The parties hereto agree and acknowledge that certain computations, exchange and notification of information and other actions may be required from time to time, and after the date hereof through and after the Closing Date with respect to this Agreement. The parties hereto, and their respective representatives, shall use their best efforts to cooperate with one another in the expeditious completion of all such computations, notifications and actions required. Without limiting the generality of the foregoing, Seller agrees to use its best efforts to assist Buyer with respect to the resolution of any matters arising in connection with or affecting the title of the Seller to any of the Property. Seller shall execute and deliver any and all documents, and will cause any and all other action to be taken, either before or after the Closing which may be necessary or proper to effect or evidence the provisions of this Agreement, and the transactions contemplated hereby. 11.08. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have duly been given if delivered, or if mailed by United States or Canadian Registered Mail, prepaid, to the parties or their assignees, at the following addresses (or such other addresses as shall be given in writing by the parties to one another), or sent via telecopier to the parties at the telecopier number set forth below: BUYER: John O. Barwick, III Carmike Cinemas, Inc. 1301 - 1st Avenue Columbus, GA 31901 TELEPHONE : 706/576-3415 FAX : 706/576-3419 With a copy to: F. Lee Champion, III Champion & Champion 1030 Second Avenue Columbus, GA 31901 TELEPHONE : 706/324-4477 FAX : 706/324-0470 SELLER: Fox Theatres Corporation ATTN: Donald M. Fox 825 Berkshire Boulevard Wyomissing, PA 19610 29 30 With a copy to: William A. Newman Blumenthal & Lynne 488 Madison Avenue New York, NY 10022 TELEPHONE : 212/758-0190 FAX : 212/752-0097 11.09. Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy. The election of any one remedy by a party hereto shall not constitute a waiver of the right to pursue other available remedies. 11.10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.11. Entire Agreement. This Agreement, the Exhibits hereto, and the certificates, Schedules and other documents delivered pursuant hereto are incorporated by reference herein, contain the entire agreement between the parties concerning the transaction contemplated herein, and supersede all prior agreements or understandings between the parties hereto relating to the subject matter hereof. No oral representation, agreement or understanding made by any party hereto shall be valid or binding upon such party or any other party hereto. The parties hereto agree that the Letter of Intent dated January 4, 1996 between the parties is superseded hereby. 11.12. Additional Documents. The parties hereto will at any time after the date hereof sign, execute and deliver, or cause others so to do, all such powers of attorneys, deeds, assignments, documents and instruments, and do or cause to be done all such other acts and things as may be necessary or proper to carry out the transactions contemplated by this Agreement. 11.13. Captions and Section Headings. The captions and section headings used herein are for convenience only, and are not a part of this Agreement, and shall not be used in construing it. 11.14. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 30 31 11.15. Schedules. To the extent that identical information may be required by two or more Schedules hereto, such information need be supplied on only one Schedule if appropriate cross-references are made on such other Schedules, or if the information is readily available on another Schedule, or in the Agreement. 11.16. Bulk Transfer. The parties hereby waive the applicable provisions of the Uniform Commercial Code relating to Bulk Transfers in the states in which the Property is located, and Seller hereby indemnifies Buyer from Seller's failure to comply with such provisions. ARTICLE XII BUYER'S MANAGEMENT OF CERTAIN OF SELLER'S THEATRES At Seller's option, Buyer and Seller will enter into a Management Agreement in form substantially as set forth on Exhibit "K" attached hereto whereby Buyer will manage the Festival 8 Theatre, Pompano Beach, FL, the Sunrise 8 Theatre, Sunrise, FL, the Fox White Marlin Theatre, Ocean City, MD and the Fox East Theatre, Redding, PA. Seller will hold Buyer harmless for any of Buyer's actions in operating said theatres, other than gross negligence, and Seller agrees to pay and be wholly responsible for payments of rent and other lease related costs to Landlords, and generation of reports to said Landlords. ARTICLE XIII AGREEMENT REGARDING FOX WHITE MARLIN THEATRE, OCEAN CITY, MD, AND FOX EAST THEATRE, REDDING, PA Seller covenants and agrees that from and after the Closing, and through the expiration of the Leases and any extensions thereof, neither the Fox White Marlin Theatre, Ocean City, MD, nor the Fox East Theatre, Redding, PA will be operated as "First Run", nor shall said Theatres be expanded or additional screens added thereto. Seller will deliver to Buyer at Closing an agreement in recordable form evidencing the foregoing prohibition, which shall be recorded to provide notice thereof to any subsequent purchasers of Seller's leasehold interest in said Theatres. 31 32 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, on the day and year first above written. SELLER: Signed, sealed and delivered FOX THEATRES CORPORATION by SELLER in the presence of BY: /s/ /s/ Mary F. Stewart ----------------------------- - ---------------------------- Title: President Witness --------------------- /s/ Deborah A. Kochel ATTEST: /s/ Betsy Breneaser - ---------------------------- -------------------------- Notary Public Title: Assistant Secretary --------------------- [Notary Seal] (Corporate Seal) BUYER: Signed, sealed and delivered CARMIKE CINEMAS, INC. in the presence of: BY: - ---------------------------- --------------------------- Witness President - ---------------------------- ATTEST: Notary Public ----------------------- Secretary (Corporate Seal) Signed, sealed and delivered EASTWYNN THEATRES, INC. in the presence of: - ---------------------------- BY: Witness --------------------------- President - ---------------------------- ATTEST: Notary Public ----------------------- Secretary (Corporate Seal) 32 EX-11 3 COMPUTATION OF EPS 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE CARMIKE CINEMAS, INC.
Years Ended December 3l --------------------------------------- 1995 1994 1993 -------- --------- ---------- (In thousands, except per share data) PRIMARY: Average shares outstanding 11,161 8,312 7,756 Net effect of dilutive stock options and warrants based on the treasury stock method using average market price 99 165 161 -------- --------- ---------- Totals 11,260 8,477 7,917 ======== ========= ========== Income before cumulative effect of change in accounting $ 13,087 $ 16,953 $ 11,861 Cumulative effect of change in accounting -0- -0- 390 -------- --------- ---------- NET INCOME $ 13,087 $ 16,953 $ 12,251 ======== ========= ========== Earnings per share: Income before cumulative effect of change in accounting $ 1.16 $ 2.00 $ 1.50 Cumulative effect of change in accounting -0- -0- .05 -------- --------- ---------- NET INCOME PER SHARE $ 1.16 $ 2.00 $ 1.55 ======== ========= ==========
Note: Fully diluted calculation is not presented because dilution is less than 3%. EX-13 4 1995 ANNUAL REPORT 1 EXHIBIT 13 (PHOTO) 1995 was a momentous year in the history of Carmike, as during this period, we became the largest circuit in the United States in terms of number of theatres and screens operated. While this is a milestone and a great achievement, it is not the ultimate goal of the Company. We intend to continue our growth strategy with a goal of 5000 screens. During 1995 we added 377 screens through acquisitions. We also accelerated our construction program by building and opening 113 new screens during the year. The majority of these were complexes housing 10 auditoriums each. In 1996 we plan to open 200-250 screens through our construction program. We feel the future holds much promise for Carmike. We enter 1996 with a strong balance sheet and the ability to continue our growth strategy. /s/ Carl L. Patrick, Sr. /s/ Michael. W. Patrick - ------------------------ ----------------------- Carl L. Patrick, Sr. Michael W. Patrick Chairman President 2 (PHOTO) Supervision of the finances of the Company is in the capable hands of John O. Barwick, III (right), Vice President-Finance. He is responsible for all the financial affairs of the Company, including financial reporting, acquisitions, banking and shareholder relations. J.D. Bradley (left) is the Budget Director. The top grossing film of 1995 was "Batman Forever" starring Val Kilmer, Tommy Lee Jones, Jim Carrey and Nicole Kidman. The film grossed nearly $185 million in 1995. (pictured at left) Jim Carrey as the Riddler. 3 (PHOTO) Our proprietary computer system, "IQ Zero," which we believe is the best in the industry, is custom designed for Carmike. Supervising this operation is Larry Adams, Vice President-Informational Systems (standing, left). Pictured with Larry is Controller, Matt Citrin and Human Resources Director, Sadie Harper. "Apollo 13," directed by Ron Howard and starring Tom Hanks, Kevin Bacon, Bill Paxton, Gary Sinise and Ed Harris, brought in over $184 million in 1995, making it the second highest grossing picture of the year. (pictured at left) Bill Paxton, Kevin Bacon and Tom Hanks. 4 (PHOTO) Fred Van Noy, Vice President-General Manager, has the responsibility of supervising the operation of all of Carmike's screens. He is assisted in this task by four Division Managers and 17 Distict Managers.. Marilyn Grant, Vice President-Advertising has the task of letting the public know in advance what is playing on all Carmike screens through an extensive advertising program. She works closely with all the film companies in selling their pictures on our screens. Bringing toys to life with the aid of computer animation, Disney's "Toy Story" brought in over $146 million making it the third highest grossing film of 1995. (pictured at left) Characters from "Toy Story". 5 (PHOTO) Carmike has grown almost ten fold in its short history. Lamar Fields, Vice President - Development (center) has the primary responsibility for all construction, leases and insurance. Assisting Lamar in his many duties is his capable staff, which includes Brenda Blum and George Wilcox. An Academy Award(R) winning score and beautiful animation in Disney's classic style, brought "Pocahontas" to life. Making over $141 million, Pocahontas became the fourth highest grossing film of 1995. (pictured at right) Characters from "Pocahontas". 6 The film that plays in the theatres is by far the most important ingredient in our operation and the cost of film is by far our biggest single item of expense. Heading this department is Vice President-Film, Anthony Rhead (second from left) and his three film buyers, (left to right) Larry Collins, Bob Scarborough, and Tom Sawyer. They supervise the buying and booking of all pictures that play on Carmike's screens throughout the country. In his second outing as Ace Ventura, Jim Carrey ventured from Mongolia to the wilds of Africa and brought in over $104 million making "Ace Ventura 2 - When Nature Calls" the fifth highest grossing film of 1995. (pictured at right) Jim Carrey as "Ace Ventura". 7 Whether it's popcorn, Coca-Cola(TM) or candy, our Vice President - Concessions, Matt Shirley (left), makes it happen. He is responsible for the purchase and sale of our concession items and the satisfaction of the customer. Matt performs a very important job for Carmike. While film is our most important product, it cannot be completely enjoyed without the proper environment, and Jim Davis (right), our Vice President-Technical, has the responsibility. He insures that the seats, air conditioning, heating and the projection and sound equipment all contribute to a relaxing and enjoyable experience. Combining computer animation with live-action footage brought ghostly characters to life and made "Casper" the sixth highest grossing film of 1995 making over $100 million. (pictured at right) Bill Pullman and ghostly co-stars from "Casper". 8 Of primary concern to Carmike, is the comfort of our patrons. That is why we are a leader in the industry. We are continually looking for new ways to improve the cinamatic experience. We incorporate Lucasfilm's THX(R) Digital surround sound systems into the design of our new comlexes. These complexes are regulary tested by sound engineers to ensure that the strictest sound quality standards are met. Carmike uses high quality seats to provide the utmost in comfort to our patrons. At Carmike we are committed to bringing the movies to life. (PHOTO) (pictured at right) Carmike Cinemas 7; Columbus, Georgia (pictured below) Peachtree Cinemas 8; Columbus, Georgia 9 (PHOTO) SOUTHERN DIVISION LOUIS HOURANY DIVISION MANAGER (pictured at bottom left) DISTRICT MANAGERS VICTOR ALLEN HORACE RICHARDSON DAVID SAVAGE DAVID THILGES WESTERN DIVISION GARY GREEN DIVISION MANAGER (pictured at top left) DISTRICT MANAGERS GENE HOMER SHARON SALINAS TOBY BRISTER PHIL CARDIN GARY KRANNACKER MIDWESTERN DIVISION SHIRLEY BARNES DIVISION MANAGER (pictured at bottom right) DISTRICT MANAGERS ED ARMSTRONG MIKE GARFIELD DEBRA TRIPLITT NORTHEASTERN DIVISION KEN LEHMAN DIVISION MANAGER (pictured at top right) DISTRICT MANAGERS BOB JOHNSON RANDY BOLEMAN MICHAEL LUBENSKY JAMES HAWBECKER 10 Board of Directors and Shareholders Carmike Cinemas, Inc. We have audited the accompanying consolidated balance sheets of Carmike Cinemas, Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Carmike Cinemas, Inc. and subsidiaries at December 31, 1995 and 1994 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note I to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for income taxes. Ernst & Young LLP Columbus, Georgia February 6, 1996 11
(in thousands, except for share data) December 31 1995 1994 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 11,345 $ 17,872 Short-term investments . . . . . . . . . . . . . . . . . . $ 7,502 $ 4,815 Recoverable construction allowances under capital leases $ 4,300 $ 1,100 Accounts and notes receivable $ 7,911 $ 2,714 Inventories. . . . . . . . . . . . . . . . . . . . . . . . $ 2,936 $ 1,939 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . $ 5,632 $ 5,025 --------- --------- TOTAL CURRENT ASSETS $ 39,626 $ 33,465 OTHER ASSETS Investments in and advances to partnerships $ 4,973 $ 4,631 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,331 $ 2,375 --------- --------- $ 7,304 $ 7,006 PROPERTY AND EQUIPMENTNNotes B, C, D and F Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,841 $ 31,835 Buildings and improvements . . . . . . . . . . . . . . . . $ 119,504 $ 88,500 Leasehold improvements . . . . . . . . . . . . . . . . . . $ 133,273 $ 107,155 Leasehold interests. . . . . . . . . . . . . . . . . . . . $ 49,758 $ 42,581 Equipment . . . . . . . . . . . . . . . . . . . . . . . . $ 143,029 $ 111,780 --------- --------- $ 484,405 $ 381,851 Accumulated depreciation and amortization $(112,554) $ (87,880) --------- --------- $ 371,851 $ 293,971 EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED. . . . . . . . . . . . . . . $ 59,231 $ 43,156 --------- --------- $ 478,012 $ 377,598 ========= =========
12
December 31 1995 1994 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,873 $ 23,478 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,102 $ 11,327 Current maturities of long-term debt, senior notes and capital lease obligations . . . . . . . . . . . . . . . . . . . . . $ 12,205 $ 9,352 -------- -------- TOTAL CURRENT LIABILITIES $ 56,180 $ 44,157 LONG-TERM DEBT, less current maturities-Note D. . . . . . . . . . . . . . . . . $ 79,214 $ 3,495 SENIOR NOTES-Note E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $107,792 $118,182 CAPITAL LEASE OBLIGATIONS, less current maturities-Note F . . . . . . . . . . . $ 27,996 $ 19,245 CONVERTIBLE SUBORDINATED DEBT-Note C. . . . . . . . . . . . . . . . . . . . . . $ 3,303 $ 3,051 DEFERRED INCOME TAXES-Note I. . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,433 $ 17,512 SHAREHOLDERS' EQUITY-Notes D, E, G, and H Class A Common Stock, $.03 par value, authorized 22,500,000 shares, issued and outstanding 9,745,101 and 9,738,101 shares, respectively $ 292 $ 292 Class B Common Stock, $.03 par value, authorized 5,000,000 shares, issued and outstanding 1,420,700 shares. . . . . . . . . . . . . . . . . $ 43 $ 43 Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,814 $ 99,763 Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 84,945 $ 71,858 -------- -------- 185,094 171,956 -------- -------- $478,012 $377,598 ======== --------
See accompanying notes. 13
(in thousands, except for per share data) Years Ended December 31 1995 1994 1993 Revenues: Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . $253,691 $232,134 $167,294 Concessions and other. . . . . . . . . . . . . . . . . . . . . $111,058 $ 95,485 $ 74,504 -------- -------- -------- $364,749 $327,619 $241,798 Costs and Expenses: Film exhibition costs. . . . . . . . . . . . . . . . . . . . . $135,654 $123,610 $ 90,874 Concession costs . . . . . . . . . . . . . . . . . . . . . . . $ 14,959 $ 12,241 $ 9,406 Other theatre operating costs. . . . . . . . . . . . . . . . . $143,682 $118,905 $ 86,498 General and administrative . . . . . . . . . . . . . . . . . $ 5,482 $ 5,092 $ 4,710 Depreciation and amortization. . . . . . . . . . . . . . . . . $ 27,216 $ 22,544 $ 16,255 -------- -------- -------- $326,993 $282,392 $207,743 -------- -------- -------- OPERATING INCOME $ 37,756 $ 45,227 $ 34,055 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . $ 16,031 $ 17,028 $ 14,282 -------- -------- -------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES $ 21,725 $ 28,199 $ 19,773 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,638 $ 11,246 $ 7,912 -------- -------- -------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES $ 13,087 $ 16,953 $ 11,861 Cumulative effect of change in accounting for income taxes Note-I . . . . . . . . . . . . . . . . . . . . . -0- -0- 390 -------- -------- -------- NET INCOME $ 13,087 $ 16,953 $ 12,251 ======== ======== ======== Weighted average common shares outstanding . . . . . . . . . . . $ 11,260 $ 8,477 $ 7,917 ======== ======== ======== Earnings per share:. . . . . . . . . . . . . . . . . . . . . . . Income before cumulative effect of change in accounting for income taxes. . . . . . . . . . . . . . . . . $ 1.16 $ 2.00 $ 1.50 Cumulative effect of change in accounting for income taxes . . . . . . . . . . . . . . . . . . . . . . -0- -0- .05 -------- -------- -------- NET INCOME PER SHARE $ 1.16 $ 2.00 $ 1.55 ======== ======== ========
See accompanying notes. 14
(in thousands) Years Ended December 31 1995 1994 1993 ---- ---- ---- OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,087 $ 16,953 $ 12,251 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization . . . . . . . . . . . . . . $ 27,216 $ 22,544 $ 16,255 Deferred income taxes . . . . . . . . . . . . . . . . . . 921 1,674 691 Gain on sales of property and equipment (723) (122) (932) Changes in operating assets and liabilities: Accounts and notes receivable (5,197) 1,692 (909) Inventories . . . . . . . . . . . . . . . . . . . . . . (997) (376) (300) Prepaid expenses. . . . . . . . . . . . . . . . . . . . (607) (1,399) (911) Accounts payable. . . . . . . . . . . . . . . . . . . . 1,395 2,721 2,929 Accrued expenses. . . . . . . . . . . . . . . . . . . . 7,775 3,597 (2,908) -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 42,870 47,284 26,166 INVESTING ACTIVITIES Purchases of property and equipment . . . . . . . . . . . . . (58,035) (29,096) (33,466) Purchases of assets from other theatre operators. . . . . . . (64,485) (51,050) (11,200) Acquisition of remaining interest in Westwynn Theatres, Inc.. net of cash acquired . . . . . . . . . . . . . . . . . . . -0- -0- (8,774) Proceeds from sales of property and equipment . . . . . . . . 2,232 860 1,466 Decrease (increase) in: Short-term investments. . . . . . . . . . . . . . . . . . . (2,687) 17,189 (3,506) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . (458) (2,493) (1,304) NET CASH USED IN INVESTING ACTIVITIES (123,433) (64,590) (56,784) -------- -------- -------- FINANCING ACTIVITIES Debt: Additional borrowings . . . . . . . . . . . . . . . . . . . 392,689 110,950 29,275 Repayments. . . . . . . . . . . . . . . . . . . . . . . . . (315,504) (146,468) (5,656) Issuance of Class A Common Stock 51 61,147 806 Due from lessor under capital leases (3,200) (1,100) -0- -------- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 74,036 24,529 24,425 -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,527) 7,223 (6,193) Cash and cash equivalents at beginning of year. . . . . . . . . 17,872 10,649 16,842 -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 11,345 $ 17,872 $ 10,649 ======== ======== ========
See accompanying notes. 15
Class A Class B Common Stock Common Stock --------------- ----------------- Shares Amount Shares Amount ------ ------ ------ ------ BALANCES AT DECEMBER 31, 1992 6,632 $199 1,421 $43 Issuance of Class A Common Stock on exercise of stock options. . . . . . . . . . 93 2 -0- -0- Issuance of Treasury shares-Note C. . . . . . . . -0- -0- -0- -0- Net income. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0- ----- ---- ----- --- BALANCES AT DECEMBER 31, 1993 6,725 $201 1,421 $43 Issuance of Class A Common Stock: Public offering . . . . . . . . . . . . . . . . 2,705 81 -0- -0- Exercise of warrant . . . . . . . . . . . . . . 250 8 -0- -0- Exercise of stock options . . . . . . . . . . . 58 2 -0- -0- Net income. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0- ----- ---- ----- --- BALANCES AT DECEMBER 31, 1994 9,738 292 1,421 43 ISSUANCE OF CLASS A COMMON STOCK ON EXERCISE OF STOCK OPTION . . . . . . . . . . 7 -0- -0- -0- NET INCOME. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0- ----- ---- ----- --- BALANCES AT DECEMBER 31, 1995 9,745 $292 1,421 $43 ===== ==== ===== ===
See accompanying notes. 16
Class A Common Stock in Treasury Paid-in Retained -------------------- Capital Earnings Shares Amount Total ------- -------- ------ ------ ----- BALANCES AT DECEMBER 31, 1992 $35,519 $42,654 500 $(2,687) $ 75,728 Issuance of Class A Common Stock on exercise of stock options. . . . . . . . . . 804 -0- -0- -0- 806 Issuance of Treasury shares-Note C. . . . . . . . $ 3,298 -0- (330) 1,773 5,071 Net income. . . . . . . . . . . . . . . . . . . . -0- 12,251 -0- -0- 12,251 ------- ------- ---- ------- -------- BALANCES AT DECEMBER 31, 1993 39,621 54,905 170 (914) 93,856 Issuance of Class A Common Stock: Public offering . . . . . . . . . . . . . . . . 56,784 -0- (170) 914 57,779 Exercise of warrant . . . . . . . . . . . . . . 2,867 -0- -0- -0- 2,875 Exercise of stock options . . . . . . . . . . . 491 -0- -0- -0- 493 Net income. . . . . . . . . . . . . . . . . . . . -0- 16,953 -0- -0- 16,953 ------- ------- ---- ------- -------- BALANCES AT DECEMBER 31, 1994 99,763 71,858 -0- -0- 171,956 ISSUANCE OF CLASS A COMMON STOCK ON EXERCISE OF STOCK OPTION . . . . . . . . . . 51 -0- -0- -0- 51 NET INCOME. . . . . . . . . . . . . . . . . . . . -0- 13,087 -0- -0- 13,087 ------- ------- ---- ------- -------- BALANCES AT DECEMBER 31, 1995 $99,814 $84,945 -0- -0- $185,094 ======= ======= ==== ======= ========
17 December 31, 1995 NOTE A-SIGNIFICANT ACCOUNTING POLICIES The primary business of the Company is the operation of motion picture theatres which generate revenues principally through admissions and concessions sales. Such revenues are received in cash at the point of sale. PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. OPERATING AGREEMENTS: The Company jointly owns or leases certain theatres which it operates under the terms of operating agreements related to the other participants' undivided interest in such theatres. The Company consolidates the results of operations of these theatres in the accompanying Consolidated Statements of Income. CASH EQUIVALENTS: Cash equivalents are highly liquid investments consisting primarily of money market accounts and investment grade, short-term debt instruments and have maturities at the date of purchase of less than three months. The Company limits the amount of its credit exposure to any one commercial issue of debt instruments. Cash equivalents are stated at cost which represents the deposit amount plus interest credited to the account. Deposits with banks are federally insured in limited amounts. SHORT-TERM INVESTMENTS: Short-term investments consist principally of U.S. Government securities with maturity dates less than one year from date of purchase and are stated at cost which approximates market. INVENTORIES: Inventories, principally concessions and theatre supplies, are stated at the lower of cost (first-in, first-out method) or market. INVESTMENT IN PARTNERSHIPS: The Company is a partner in four partnerships which operate motion picture theatres. The investments in these partnerships are accounted for by the equity method whereby the cost of the investment is adjusted to reflect the Company's equity in the earnings or losses of the partnership less withdrawals made by the Company. The Company's equity in the earnings of these partnerships amounted to approximately $405,000, $568,000 and $744,000 for each of the years in the period ended December 31, 1995. PROPERTY AND EQUIPMENT: Property and equipment are carried at cost. Depreciation is computed by the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Amortization of assets recorded under capital leases is included with depreciation expense in the accompanying Consolidated Statements of Income. ACCRUED EXPENSES: Accrued expenses include accrued property taxes of approximately $2.7 million and $2.6 million at December 31, 1995 and 1994, respectively. ADVERTISING: The Company expenses advertising costs when incurred. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED: The excess of purchase price over the net assets of businesses acquired is amortized on a straight-line basis over a 40 year period. In the event that facts and circumstances indicate that the excess of purchase price over net assets of businesses acquired may be impaired, an evaluation of continuing value would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with this asset would be compared to its carrying amount to determine if a write down to market value or discounted cash flow value is required. BENEFIT PLANS: The Company has a non-qualified deferred compensation plan for certain of its executive officers. Under this plan, the Company contributes ten percent of the employeeOs taxable compensation to a trust designated for the employee. The Company also has a discretionary benefit plan for certain non-executive employees. Contributions to this plan are at the discretion of the Company's executive management. Expenses related to these plans are not material to the Company's operations. STOCK BASED COMPENSATION: The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the 18 shares at the date of grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and accordingly, recognizes no compensation expense for the stock option grants. The Company plans to continue to account for stock options in accordance with APB Opinion No. 25. EARNINGS PER COMMON SHARE: Primary earnings per common share are based on the weighted average common shares outstanding, adjusted for the incremental shares attributed to outstanding options to purchase common stock which are calculated using the treasury stock method. In November 1994, the Company sold 2,875,000 shares of its Class A Common Stock pursuant to a public offering. Net proceeds of approximately $58.2 million were used, in part, to retire certain outstanding debt of the Company. If the transaction had occurred as of January 1, 1994, the net earnings per share would have been $1.80 per share for the year ended December 31, 1994. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS: In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Statement 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The Company will adopt Statement No. 121 in the first quarter of 1996; how- ever, the Company has not completed the calculations necessary to determine the effect of adoption. CHANGES IN PRESENTATION: Certain amounts in the accompanying financial statements have been reclassified to conform with the 1995 presentation of the financial statements. NOTE B-ACQUISITIONS The Company's acquisitions in 1995, 1994 and 1993 have been accounted for under the purchase method of accounting. Under the purchase method of accounting, the results of operations of the acquired businesses are included in the accompanying consolidated financial statements as of their respective acquisition dates. The assets and liabilities of acquired businesses are included based on an allocation of the purchase price. In separate transactions, the Company acquired certain assets and businesses as follows:
- ---------------------------------------------------------------------------------------------- Approximate Purchase Number Number Price of of Effective Seller (in thousands) Theatres Screens Date - ------------------------------------- -------------- --------- ------- --------------- 1995 Carolina Cinema, Corp. $ 750 2 7 Feb. 10,1995 Theatre Developers, Inc. 1,200 1 8 Feb. 24, 1995 Floyd Theatres, Inc. and affiliates 11,300 21 83 Mar. 17, 1995 Rocky Mountain Cinema Partners 1,585 5 11 May 5, 1995 Plitt Theatres, Inc. $22,000 28 145 June 2, 1995 Midcontinent Theatres, Inc. $19,000 14 67 Oct. 13, 1995 Cinemark, USA 8,000 10 46 Nov. 10, 1995 Theatre Consulting and Management 650 2 10 Nov. 10, 1995 ------- -- --- $64,485 83 377 ======= == === 1994 General Cinema Corp. and subsidiaries $ 6,400 6 28 Jan. 21, 1994 General Cinema Corp. of Louisiana 5,800 4 20 May 20, 1994 Cinema World, Inc. 38,100 38 176 May 20, 1994 $50,300 48 224 ------- -- --- 1993 Manos Enterprises, Inc. $11,200 19 80 Nov. 19, 1993 ======= == === - ----------------------------------------------------------------------------------------------
The excess of purchase price over net assets of businesses acquired has been recorded as an intangible asset. Amounts recorded were $16.7 million in 1995, $18.7 million in 1994, and $3.2 million in 1993. Pro-forma results have not been preseneted for those acquisitions which were not significant during the year presented. The pro-forma unaudited results of operations below do not purport to represent what the Company's actual results of operations would have been had acquisitions occurred on January 1 of the year presented and should not serve as a forecast of the Company's operating results for any future periods. 19 Unaudited pro-forma results for the 1995 acquisitions of Floyd Theatres, Inc., Plitt Theatres, Inc., Midcontinent Theatres, Inc., and Cinemark, USA are as follows (in thousands, except for per share data):
- ------------------------------------------- Year Ended December 31 1995 1994 ---- ---- Revenues. . . . . . $390,605 $384,016 ======== ======== Net income. . . . . $ 11,545 $ 18,157 ======== ======== Earnings per share. $ 1.03 $ 2.14 ======== ======== - -------------------------------------------
The above pro-forma income statement data gives effect to the 1995 acquisitions of assets as if those acquisitions had occurred at January 1, 1994. Unaudited pro-forma results of the 1994 acquisition of Cinema World, Inc. are as follows (in thousands, except per share data):
- ----------------------------------------------------------- Year Ended December 31 1994 1993 ---- ---- Revenues. . . . . . . . . . . . . . . $341,022 $278,836 ======== ======== Net income. . . . . . . . . . . . . . $ 17,456 $ 12,663 ======== ======== Earnings per share before cumulative effect of change in accounting. . . . $ 2.06 $ 1.60 ======== ======== - -----------------------------------------------------------
The above pro-forma income statement data gives effect to the acquisition of assets from Cinema World, Inc. as if the acquisition had occurred at January 1, 1993. The pro-forma adjustments for the 1995 and 1994 acquisitions are based upon available information and certain assumptions that management believes reasonable. The adjustments to the historical data are as follows: a. General and administrative costs were reduced to reflect the incremental amount of general and admin- istrative costs the Company estimates it would have incurred over the applicable time period. b. Depreciation expense was adjusted to reflect depreciation based upon the Company's allocation of the acquisition purchase price. c. Interest expense has been adjusted to reflect debt incurred at borrowing rates of 6.0% for 1995 and 5% for 1994. d. Income taxes have been adjusted to reflect the Company's effective tax rate. NOTE C-ACQUISITION OF WESTWYNN THEATRES, INC. Effective August 29, 1991, the Company along with certain former shareholders of Excellence Theatres Corporation ("Excellence") and certain other investors formed Westwynn Theatres, Inc. ("Westwynn"). Westwynn then acquired substantially all the assets, interests and rights and assumed certain defined liabilities of Excellence. In connection with the formation of Westwynn and the acquisition of the assets of Excellence, the Company invested $2.8 million in cash and contributed to Westwynn certain operating theatres and land with a book value of $6.48 million. In exchange, the Company received 6,400 shares of Westwynn's Senior Preferred Stock, 4,625 shares of Westwynn's 9% Junior Preferred Stock and three operating theatres with an appraised value of approximately $1.2 million. Both the Senior and Junior Preferred Stock were non-voting and had preference in liquidation to all other classes of Westwynn capital stock. The Company recorded its investment in Westwynn at the book value of the assets and cash contributed to Westwynn even though the appraised value of the equity securities and property received exceeded that amount. The Company accounted for its investment in Westwynn under the cost method. During the year ended December 31, 1993, the Company recognized income of $207,000, relating to its ownership of Westwynn's 9% Junior Preferred Stock. On June 22, 1993, the Company agreed in principle to a transaction (effective June 11, 1993) ("the Westwynn Transaction") to purchase the remaining securities of Westwynn that it did not previously own for a purchase price of approximately $19.78 million (net of liabilities assumed). The Westwynn Transaction was closed on July 23, 1993. In connection with the Westwynn Transaction, the Company issued 330,000 shares of its Class A Common Stock (out of shares previously held as Treasury Stock), a $4.0 million face value zero coupon convertible subordinated note maturing June 1, 1998 (fair market value of approximately $3.3 million and $3.1 million at December 31, 1995 and 1994, respectively) and paid $11,780,000 in cash for the retirement of Westwynn subordinated notes and the purchase of certain Westwynn equity securities. 20 The excess of the purchase price over the net assets acquired (approximately $16 million) has been recorded as an intangible asset. The Westwynn Transaction has been accounted for using the purchase method and, accordingly, the purchase price has been allocated to the tangible and intangible assets acquired based on their estimated fair value at the date of acquisition. The results of operations of Westwynn are included in the accompanying consolidated income statements from the effective date. Westwynn operated 92 theatres (355 screens) at June 11, 1993. The pro-forma unaudited results of operations for the year ended December 31, 1993, assuming consummation of the Westwynn Transaction as of January 1, 1993, are as follows (in thousands, except for per share data): Total revenues. . . . . . . . . . . . $263,418 ======== Net income. . . . . . . . . . . . . . $ 11,559 ======== Earnings per share before cumulative effect of change in accounting. . . $ 1.42 ======== The pro-forma results include adjustments to reflect (i) loss of interest income from use of investments or the incurrence of interest expense to fund the Westwynn Transaction; (ii) depreciation and amortization of assets acquired; (iii) elimination of certain general and administrative costs; and (iv) the income tax effect of such pro-forma adjustments. The Company managed the operations of Westwynn through June 11, 1993 pursuant to a management agreement (the "Management Agreement"). During the term of the Management Agreement, the Company had the sole responsibility and sole and exclusive authority to manage and operate Westwynn, subject to the general supervision of the board of directors of Westwynn and certain contractual limitations relating to the ability to enter into debt and non-film rental agreements, authorization of capital expenditures and construction of new theatres or to discontinue operations of existing theatres. The Company earned management fees of $790,000 for the year ended December 31, 1993, from Westwynn and its predecessor. NOTE D-LONG-TERM DEBT Long-term debt consists of the following (in thousands):
- ---------------------------------------------------------------------- December 31 1995 1994 ---- ---- Revolving credit facility $76,500 $ -0- Industrial Revenue Bonds; payable in equal installments through May 2006, with interest ranging from 3.90% to 8.25% . . . . . . . . . 2,942 3,175 Term Loan 875 1,750 Other indebtedness -0- 471 ------- ----- 80,317 5,396 Less current maturities (1,103) (1,901) ------- ----- $79,214 $3,495 ======= ===== - ----------------------------------------------------------------------
On May 4, 1994, the Company entered into a credit agreement (the "Agreement") with four banks to provide a revolving line of credit of up to $100 million for working capital, acquisitions and other general corporate purposes. The Agreement has a three year revolving credit period, which can be extended, upon the mutual consent of the Company and the banks, for one year periods and will convert to a four year term loan at the end of the revolving credit period. The Company has the option to borrow at rates based on either the bank base rate or LIBOR + .4375% (effective rate of 6.27% at December 31, 1995) and is required to pay annual fees of .125% on the full amount of the facility and annual fees of .075% on the unused part of the commitment. The interest rate, facility fees and commitment fees are subject to adjustment based upon the Company's ratio of total debt to defined cash flows. At December 31, 1995, the Company had $76.5 million outstanding under this facility. The Company has classified all amounts as long-term in the accompanying Consolidated Balance Sheet. The agreement contains certain restrictive provisions which, among other things, limit additional indebtedness of the Company, limit dividend and other defined restricted payments, require that certain debt to capitalization ratios be maintained and require minimum levels of cash flows. The Company has an Amended and Restated Term Loan Agreement (the "Term Loan") which provides for payment of equal quarterly installments of principal of $291,667 plus accrued interest through July 1996. The interest rate at December 31, 1995 has been fixed at 9.72% through July 1996. The Term Loan contains certain restrictive provisions which, among other things, limit additional indebtedness and require the Company to maintain minimum levels of net worth and cash flows. 21 On May 1, 1996, the holders of the Industrial Revenue Bonds have the right to require the Company to repurchase, for the then outstanding principal amount, all bonds still outstanding at such date. The Company, if the bonds are called, will replace the bonds with other long-term debt. Interest paid and interest capitalized were as follows (in thousands):
- -------------------------------------------------------------------------------- Year Ended December 31 Interest Paid Interest Capitalized - ---------------------- ------------- -------------------- 1995. . . . . . . . . . $13,264 $794 1994. . . . . . . . . . $16,398 $408 1993. . . . . . . . . . $15,562 $515 - --------------------------------------------------------------------------------
Aggregate principal payments on long-term debt as of December 31, 1995 are as follows (in thousands): 1996. . . . . . . . . . . . . $ 1,103 1997. . . . . . . . . . . . . $76,743 1998. . . . . . . . . . . . . $ 252 1999. . . . . . . . . . . . . $ 263 2000. . . . . . . . . . . . . $ 263 Thereafter. . . . . . . . . . $ 1,693 ------- $80,317 =======
NOTE E-SENIOR NOTES The Company has outstanding various unsecured notes payable to institutional investors (collectively the "Senior Notes") as follows (in thousands):
- ------------------------------------------------------------ December 31 1995 1994 ----- ----- 10.53% Senior Notes, due 2005. . . $ 68,182 $75,000 7.90% Senior Notes, due 2002 . . . 25,000 25,000 7.52% Senior Notes, due 2003 . . . 25,000 25,000 -------- ------- 118,182 125,000 Less current maturities. . . . . . (10,390) (6,818) -------- ------- $107,792 $118,182 ======== ======== - ------------------------------------------------------------
The 7.52% Senior Notes provide for annual principal payments of $3.6 million beginning March 1, 1997 through maturity. The 7.9% Senior Notes provide for annual principal payments of $3.6 million beginning March 1, 1996 through maturity. The 10.53% Senior Notes provide for annual principal payments of $6.8 million beginning June 1, 1995 through maturity. Loan fees of approximately $908,000 applicable to the 10.53% Senior Notes were capitalized and are being amortized over the life of the 10.53% Senior Notes. The agreements pursuant to which each of the above Senior Notes were issued contain certain restrictive provisions which, among other things, limit additional indebtedness of the Company and require minimum levels of net worth and cash flows. NOTE F-LEASES Certain of the Company's theatres and equipment are leased under non-cancellable leases expiring in various years through 2023. The theatre leases generally provide for the payment of fixed monthly rentals, contingent rentals based on a percentage of revenue over a specified amount, and the payment of property taxes, common area maintenance, insurance and repairs. The Company, at its option, can renew a substantial portion of its theatre leases, at the then fair rental rate, for various periods with the maximum renewal period totaling 40 years. Property and equipment includes the following amounts related to capital lease assets (in thousands):
- -------------------------------------------------------------------------- December 31 1995 1994 ---- ---- Buildings and improvements. . . . . . . $31,140 $22,668 Equipment . . . . . . . . . . . . . . . 2,877 3,872 ------- ------- 34,017 26,540 Less accumulated amortization . . . . . (8,804) (7,809) ------- ------- $25,213 $18,731 ======= ======= - --------------------------------------------------------------------------
Future minimum payments, by year and in aggregate, under capital leases and non-cancelable operating leases with terms over one year as of December 31, 1995 are as follows (in thousands):
- ------------------------------------------------------------- Operating Leases Capital Leases ---------------- -------------- 1996. . . . . . . . . $ 40,135 $ 4,177 1997. . . . . . . . . 37,909 4,181 1998. . . . . . . . . 36,498 4,186 1999. . . . . . . . . 33,097 4,070 2000. . . . . . . . . 31,806 4,026 Thereafter. . . . . . 214,750 54,299 -------- ------- Total minimum lease payments 394,195 74,939 ======== Less amounts representing interest . . . . . . . . (46,231) ------- Present value of future minimum lease payments . . . . . . . . . . . . . . . . . 28,708 Less current maturities. . . . . . . . . . . . . . (712) ------- $27,996 ======= - -------------------------------------------------------------
22 Rent expense for each of the three years in the period ended December 31, 1995 was approximately $45.6 million, $36.1 million and $26.1 million, respectively. NOTE G-STOCK OPTION PLAN The Company has a Stock Option Plan covering 700,000 shares of Class A Common Stock. Key employees may be granted options at terms (purchase price, expiration date and vesting schedule) established at the date of grant by a committee of the Company's Board of Directors. Options granted through December 31, 1995, have been at a price which is approximately equal to fair market value on the date of the grant. Changes in outstanding stock options were as follows (in thousands): - --------------------------------------------------------------------------------------------------------
Exercise Price Per Share ------------------------ $6.00 $8.50 $9.00 $18.00 Total ----- ----- ----- ------ ----- Stock options outstanding at December 31, 1992 5 210 58 -0- (273) Exercised (4) (54) (35) -0- (93) --- --- --- ---- ---- Stock options outstanding at December 31, 1993 1 156 23 -0- 180 Issued -0- -0- -0- 143 143 Exercised -0- (56) (2) -0- (58) --- --- --- ---- ---- Stock options outstanding at December 31, 1994 1 100 (21) 143 265 Exercised -0- (7) -0- -0- (7) --- --- --- ---- ---- Stock options outstanding at December 31, 1995 1 93 (21) (143) (258) === === === ==== ====
The Company had 160,000 shares available for grant as of December 31, 1995 and 1994. At December 31, 1995, all the above options were exercisable except for the $18.00 options which become exercisable on March 16, 1997. NOTE H SHAREHOLDERS' EQUITY The Company's authorized capital consists of 22.5 million shares of Class A Common Stock, $.03 par value, 5 million shares of Class B Common Stock, $.03 par value, and 1 million shares of Preferred Stock, $1.00 par value. Each share of Class A Common Stock entitles the holder to one vote per share, whereas a share of Class B Common Stock entitles the holder to ten votes per share. Each share of Class B Common Stock is entitled to cash dividends, when declared, in an amount equal to 85% of the cash dividends payable on each share of Class A Common Stock. Additionally, Class B Common Stock is convertible at any time by the holder into an equal number of shares of Class A Common Stock. In connection with the Westwynn acquisition (see Note C), the Company issued a $4 million face value zero coupon convertible subordinated note (the "Convertible Note") maturing June 1, 1998 and convertible, at the holder's option, into 100,000 shares of Carmike Class A Common Stock. The Company has shares of Class A Common Stock reserved for future issuance as follows (in thousands): - ------------------------------------------------------------------------------
December 31 1995 1994 ---- ---- Stock option plan 418 425 Convertible Note 100 100 Conversion rights of Class B Common Stock 1,421 1,421 ----- ----- 1,939 1,946 ===== =====
NOTE I-INCOME TAXES Effective January 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rate and laws that will be in effect when the differences are expected to reverse. The change in the deferred income tax liability at January 1, 1993, results primarily from recording deferred taxes relative to differences between the tax bases of property and equipment and their book bases in accordance with Statement 109. These differences arose in connection with prior purchase business combinations. The cumulative effect of the change increased net income by $390,000, or $.05 per share in the first quarter of 1993. The provision for income taxes is summarized as follows (in thousands): - -----------------------------------------------------------------------------------
Years Ended December 31 1995 1994 1993 ---- ---- ---- Current Federal $6,255 $ 7,165 $5,241 State 1,462 1,860 1,590 Deferred 921 2,221 1,081 ------ ------ ------ $8,638 $11,246 $7,912 ====== ======= ======
23 Significant components of the Company's deferred tax liabilities (assets) are as follows (in thousands): - ------------------------------------------------------------------------------------
December 31 1995 1994 ---- ---- Financial statement bases of property and equipment over tax bases $18,135 $18,142 Westwynn net operating loss carry forward (1,121) (1,971) Deferred rent (1,171) (747) Income taxes payable for prior years 2,518 1,672 Other 72 416 ------- ------- $18,433 $17,512 ======= =======
A reconciliation of income taxes at the federal income tax rate and income taxes as reflected in the consolidated financial statements follows (in thousands): - ------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993 ---- ---- ---- Income taxes at statutory rates $7,604 $9,870 $6,821 Plus state income taxes, net of federal tax benefit 1,071 1,523 1,197 ------ ------ ------ 8,675 11,393 8,018 Tax exempt interest -0- (70) (246) Amortization of excess of purchase price over net assets of business acquired 79 79 114 Impact of change in tax rate on temporary differences -0- -0- 330 Other items, net (116) (156) (304) ------ ------- ------- $8,638 $11,246 $7,912 ====== ======= ======
Income taxes paid in each of the three years in the period ended December 31, 1995, were approximately $3,650,000, $8,724,000 and $8,306,000, respectively. NOTE J-FINANCIAL INSTRUMENTS Concentrations of credit risk: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and short-term investments. The Company maintains cash and cash equivalents and short-term investments and certain other financial instruments with various financial institutions. These financial institutions are located in the southeast and Company policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. Short-term Investments: The Company's short-term investments consist of U.S. Treasury Notes with maturities of less than one year. The carrying value approximates market at December 31, 1995 and 1994. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and cash equivalents: The carrying amount reported in the balance sheet for cash and cash equivalents approximates their fair value. Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximated their fair value. Long-term debt: The carrying amounts of the Company's long-term debt borrowings approximate their fair value. The fair values of the Company's long-term debt are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Senior Notes: The cumulative fair value of the Company's Senior Notes at December 31, 1995 is estimated to be approximately $124,700,000. This estimate is based on a discounted cash flow analysis using the Company's current incremental borrowing rates for similar types of agreements. The Company does not anticipate settlement of this debt at fair value and currently intends to hold the Senior Notes through maturity. 24 NOTE K-QUARTERLY RESULTS (UNAUDITED)
(In thousands except for per share data) - ----------------------------------------------------------------------------------------------------------------------------------- 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTALS ------------ ----------- ------------- ------------ -------- YEAR ENDED DECEMBER 31, 1995 Total revenues . . . . . . . . . . $63,898 $91,233 $112,421 $97,197 $364,749 Operating income . . . . . . . . . 244 10,899 17,133 9,480 37,756 Net income (loss) . . . . . . . . (2,058) 4,161 7,840 3,144 13,087 Net income (loss) per common share (.18) .37 .70 .28 1.16 YEAR ENDED DECEMBER 31, 1994 Total revenues . . . . . . . . . . $67,432 $68,085 $108,999 $83,103 $327,619 Operating income . . . . . . . . . 6,770 7,143 21,477 9,837 45,227 Net income . . . . . . . . . . . . 1,655 1,613 10,284 3,401 16,953 Net income per common share . . . .20 .20 1.25 .36 2.00 - -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share calculations for each of the above quarters are based on the weighted average number of shares outstanding for each period and the sum of the quarters may not necessarily equal the net income per common share amount for the year. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Comparison of Years Ended December 31, 1995 and December 31, 1994 Total revenues for the year ended December 31, 1995 increased 11.3% to $364,749,000 from $327,619,000. This increase consists of a $21,557,000 increase in admissions and a $15,573,000 increase in concessions and other. Overall attendance increased 8.9% due to the additional screens in operation which were acquired in 1994 and 1995 (see Note B of Notes to Consolidated Financial Statements); however, attendance for 1995 on a same screen comparison decreased 7.9%, reflecting fewer blockbuster type movies in 1995. Average admission prices increased .5% to $3.91 and average concession sales per patron increased 8.2% from $1.46 to $1.58. Cost of theatre operations (film exhibition costs, concession costs and other theatre operating costs) increased 15.5% to $294,295,000 due to the increased number of screens in operation and the increase in attendance. As a percentage of revenues, cost of theatre operations increased from 77.8% of total revenues to 80.7% of total revenues. This percentage increase is due primarily to a higher level of occupancy expense and, to a lesser degree, salaries included in this expense category that do not fluctuate proportionately with decreases in attendance levels. General and administrative costs increased 7.7% from $5,092,000 to $5,482,000 in 1995 reflecting additional general and administrative costs incurred to properly integrate the new screens acquired in 1994 and 1995. As a percentage of revenues, general and administrative costs decreased from 1.6% of total revenues to 1.5%. Depreciation and amortization increased 20.7% to $27,216,000 from $22,544,000 as a result of the increased screens in operation which were acquired in 1994 and 1995 (see Note B of Notes to Consolidated Financial Statements) combined with the additional screens added through internal construction. As a percentage of total revenues, depreciation and amortization increased from 6.8% of total revenues to 7.5% of total revenues. Interest expense decreased 5.9% to $16,031,000 from $17,028,000 in 1994. This decrease reflects a lower average amount of debt outstanding for most of 1995. Comparison of Years Ended December 31, 1994 and December 31, 1993 Total revenues for the year ended December 31, 1994 increased 35.5% to $327,619,000 from $241,798,000. This increase consists of a $64,840,000 increase in admissions and a $20,981,000 increase in concessions and other. Overall attendance increased 31.1% due to the additional screens in operation which were acquired in 1993 and 1994 (see Notes B and C of Notes to Consolidated Financial Statements). Average admission prices increased 5.7% to $3.89 and average concession sales per patron increased from $1.45 to $1.46. Cost of theatre operations (film rentals, concession costs, and other theatre operating costs) increased 36.4% to $254,756,000 due to the increased number of screens in operation and the increase in attendance. As a percentage of revenues, cost of theatre operations increased from 77.2% of total revenues to 77.8% of total revenues. This percentage increase is due primarily to a higher level of occupancy expense included in cost of theatre operations. Excluding occupancy expense, cost of theatre operations as a percentage of revenues increased from 66.5% of total revenues to 66.7%. General and administrative costs increased 8.1% from $4,710,000 in 1993 to $5,092,000 in 1994 reflecting primarily additional salary cost. As a percentage of revenues, general and administrative costs decreased from 1.9% of total revenues to 1.6%. Depreciation and amortization increased 38.7% to $22,544,000 from $16,255,000 as a result of the additional screens in operation which were acquired in 1993 and 1994 (see Notes B and C of Notes to Consolidated Financial Statements) combined with the additional screens added through internal construction. As a percentage of total revenues, depreciation and amortization increased from 6.7% of total revenues to 6.9% of total revenues. Interest expense increased 19.2% to $17,028,000 from $14,282,000 in 1993. This increase reflects a higher average amount of debt outstanding for most of 1994, which was partially offset by lower interest rates under the Company's new revolving credit facility. 26 SEASONALITY AND INFLATION The major film distributors generally release those films which they anticipate to be the most successful during the summer and holiday seasons. Consequently, the Company has historically generated higher revenues during such periods. Inflation has not had a significant impact on the operations of the Company in any of the periods discussed above. LIQUIDITY AND CAPITAL RESOURCES The Company's revenues are collected in cash, principally through box office admissions and theatre concessions. Because its revenues are received in cash prior to the payment of related expenses, the Company has an operating "float" which partially finances its operations. The Company's capital requirements arise principally in connection with new theatre openings and acquisitions of existing theatres and theatre circuits. New theatre openings and acquisitions typically have been financed with internally generated cash and by debt financings, including borrowings under the Company's revolving credit facility. The Company believes that its capital needs for theatre construction and possible acquisitions should be satisfied by internally generated cash flow, cash and cash equivalents and short-term investments on hand, borrowings under the revolving credit line (see Note D of Notes to Consolidated Financial Statements), additional sale of debt and/or equity securities, additional bank financing and other forms of long-term debt and, where appropriate, future lease financing. At March 15, 1996, the Company had approximately $9.2 million in cash and short-term investments on hand and approximately $13 million was available under the Company's revolving credit facility. 27
(in thousands, except for per share and operating data) YEARS ENDED DECEMBER 31 1995 (1) 1994 (1) 1993 (1)(2)(3) 1992 1991 -------- -------- -------------- ----- ----- INCOME STATEMENT DATA: Revenues: Admissions............................. $253,691 $232,134 $167,294 $119,408 $ 99,110 Concessions and other.................. 111,058 95,485 74,504 52,570 46,686 -------- -------- -------- -------- -------- TOTAL REVENUES 364,749 327,619 241,798 171,978 145,796 Costs and Expenses: Film exhibition costs................. 135,654 123,610 90,874 63,826 53,320 Concession costs...................... 14,959 12,241 9,406 7,815 6,575 Other theatre operating costs......... 143,682 118,905 86,498 63,563 53,105 General and administrative............ 5,482 5,092 4,710 3,897 3,828 Depreciation and amortization......... 27,216 22,544 16,255 11,134 9,437 -------- -------- -------- -------- -------- 326,993 282,392 207,743 150,235 126,265 -------- -------- -------- -------- -------- OPERATING INCOME 37,756 45,227 34,055 21,743 19,531 Interest expense........................... 16,031 17,028 14,282 11,623 9,914 -------- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 21,725 28,199 19,773 10,120 9,617 Income taxes............................... 8,638 11,246 7,912 4,008 3,902 -------- -------- -------- -------- -------- NET INCOME $ 13,087 $ 16,953 $ 11,861 $ 6,112 $ 5,715 ======== ======== ======== ======== ======== Earnings per common share.................. $ 1.16 $ 2.00 $ .80 $ .75 $ 1.16 ======== ======== ======== ======== ======== Weighted average common shares outstanding. 11,260 8,477 7,917 7,672 7,648 ======== ======== ======== ======== ======== OPERATING DATA: Theatres (at end of period).......... 519 445 409 302 265 Screens (at end of period)........... 2,383 1,942 1,701 1,215 1,033 Average screens per theatre.......... 4.6 4.4 4.2 4.0 3.9 Total attendance (thousands)......... 64,496 59,660 45,493 34,415 29,126 BALANCE SHEET DATA: (at end of year) Cash and cash equivalents............ $ 11,345 $ 17,872 $ 10,649 $ 16,842 $ 9,528 Total assets......................... 478,012 377,598 327,024 230,291 184,058 Total long-term debt (4)............. 218,305 143,973 180,636 120,234 91,605 Shareholders' equity................. 185,094 171,956 93,856 75,728 69,177
(1) See Note B of Notes to Consolidated Financial Statements with respect to acquisitions. (2) See Note C of Notes to Consolidated Financial Statements with respect to the acquisition of Westwynn Theatres, Inc. (3) Excludes $390,000 cumulative effect of change in accounting for income taxes. (4) Less current maturities. Includes senior notes, capital lease obligations and convertible subordinated debt (see Notes C, D, E and F of Notes to Consolidated Financial Statements). 28 DIRECTORS C.L. PATRICK Chairman of the Board Carmike Cinemas, Inc. Columbus, Georgia MICHAEL W. PATRICK President and Chief Executive Officer Carmike Cinemas, Inc. Columbus, Georgia JOHN W. JORDAN, II Managing Partner The Jordan Company New York, New York CARL L. PATRICK, JR. Certified Public Accountant/Attorney Director, Summit Bank Corporation and Co-Chairman PGL Entertainment Corporation Atlanta, Georgia CARL E. SANDERS Chairman Troutman Sanders, Attorneys Atlanta, Georgia DAVID ZALAZNICK Partner The Jordan Company New York, New York OFFICERS C.L. PATRICK Chairman of the Board MICHAEL W. PATRICK President & Chief Executive Officer JOHN O. BARWICK, III Vice President - Finance, Treasurer & Chief Financial Officer FRED W. VAN NOY Vice President - General Manager LARRY M. ADAMS Vice President - Informational Systems & Secretary ANTHONY J. RHEAD Vice President - Film P. LAMAR FIELDS Vice President - Development H. MADISON SHIRLEY Vice President - Concessions & Assistant Secretary MARILYN B. GRANT Vice President - Advertising JAMES R. DAVIS Vice President - Technical GENERAL OFFICES Carmike Cinemas, Inc. Carmike Plaza 1301 First Avenue Columbus, Georgia 31901-2109 GENERAL INFORMATION Carmike Cinemas, Inc. is the largest motion picture exhibitor in the United States, operating 519 theatres with an aggregate of 2,383 screens in markets located primarily in the Southeast, the Northeast, the Midwest and the West. During 1995, the Company opened ten new theatres (100 screens), added thirteen screens to existing complexes and purchased eighty-three multiplex theatres with a total of 377 screens. STOCK TRADING INFORMATION Carmike Cinemas, Inc. Class A Common Stock trades on the New York Stock Exchange under the symbol "CKE. " The following table sets forth for the periods indicated the high and low sales prices of a share of Class A Common Stock as reported by the New York Stock Exchange:
1995 1994 ----------------------------------------------------- Quarter Ended High Low High Low - ------------------- ------ ------- ------ ------ March $23 3/8 $19 1/2 $19 1/8 $16 3/8 June $25 1/2 $18 3/4 $22 3/8 $17 3/8 September $25 1/8 $19 1/4 $23 1/4 $16 5/8 December $24 1/4 $20 1/4 $24 3/8 $19 5/8
The Company has declared no dividends and intends to employ future earnings in the expansion of its business. (See Notes D and E of Notes to Consolidated Financial Statements with respect to restrictions on dividends.) On March 12, 1996, the Class A Common Stock was held of record by 783 shareholders; the Company believes that such number substantially understates the beneficial holders of its Class A Common Stock. As of the same date, the Class B Common Stock was held of record by twelve shareholders. There is no public trading market for the Class B Common Stock of the Company. SHAREHOLDER SERVICES Shareholders desiring to change the name, address, or ownership of stock, to report lost certificates or to consolidate accounts should contact the transfer agent: Synovus Trust Company Corporate Trust Department P.O. Box 120 Columbus, Georgia 31902 706/649-2058 FORM 10-K A copy of the Company's 1995 Annual Report on Form 10-K, filed with the Securities and Exchange Commission, is available at no charge to each shareholder upon written request to: John O. Barwick, III Vice President - Finance Carmike Cinemas, Inc. P.O. Box 391 Columbus, Georgia 31902-0391 EX-21 5 LIST OF SUBSIDIARIES 1 EXHIBIT 21 CARMIKE CINEMAS, INC. LIST OF SUBSIDIARIES
STATE OF SUBSIDIARY % OWNED INCORPORATION - ---------- ------- ------------- Wooden Nickel Pub, Inc. 100% Delaware Eastwynn Theatres, Inc. 100% Alabama
EX-23 6 CONSENT OF ERNST & YOUNG 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Carmike Cinemas, Inc. of our report dated February 6, 1996, included in the 1995 Annual Report to Shareholders of Carmike Cinemas, Inc. and subsidiaries. We also consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-13723 and Form S-8 No. 33-48011) pertaining to the stock option plan of Carmike Cinemas, Inc. and subsidiaries of our report dated February 6, 1996, with respect to the consolidated financial statements of Carmike Cinemas, Inc. and subsidiaries incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 1995. /s/ Ernst & Young LLP Columbus, Georgia March 29, 1996 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CARMIKE CINEMAS FOR THE YEAR ENDED DECEMBER 31,1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 11,345 7,502 7,911 0 2,936 39,626 484,405 112,554 478,012 56,180 0 335 0 0 184,759 478,012 111,058 364,749 14,959 294,295 32,698 0 16,031 21,725 8,638 13,087 0 0 0 13,087 1.16 1.16
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