-----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, T0XpxjIRAgsSPOhAaQ/6KH3ic1JGXzfwJtM84rOwvndGlifq2nyrFyt1OgUxUoss AF/2J3ciGK9GkFi6mfyhwg== 0000950144-96-008237.txt : 19961118 0000950144-96-008237.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950144-96-008237 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11604 FILM NUMBER: 96664223 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-Q 1 CARMIKE CINEMAS 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended SEPTEMBER 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- --------------- Commission file number 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 31901-2109 (Address of Principal Executive Offices) (Zip Code)
(706) 576-3400 (Registrants telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock, $.03 par value -- 9,758,601 shares outstanding as of November 11, 1996 Class B Common Stock, $.03 par value -- 1,420,700 shares outstanding as of November 11, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ (Unaudited) (000's omitted) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,027 $ 11,345 Short-term investments 7,823 7,502 Recoverable construction allowances under capital leases 1,400 4,300 Accounts and notes receivable 5,685 7,911 Inventories 2,794 2,936 Prepaid expenses 8,630 5,632 ----------- ---------- TOTAL CURRENT ASSETS 28,359 39,626 OTHER ASSETS 11,775 7,304 PROPERTY AND EQUIPMENT -- Net of accumulated depreciation and amortization -- Notes B and D 370,661 371,851 EXCESS OF COST OVER FAIR VALUE OF TANGIBLE ASSETS ACQUIRED -- Notes B and D 63,258 59,231 ----------- ---------- $ 474,053 $ 478,012 =========== ==========
2 3
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ (Unaudited) (000's omitted) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 19,814 $ 24,873 Accrued expenses 20,575 19,102 Current maturities of long-term debt and capital lease obligations 15,001 12,205 ----------- ---------- TOTAL CURRENT LIABILITIES 55,390 56,180 LONG-TERM DEBT -- less current maturities 119,048 79,214 SENIOR NOTES 93,831 107,792 CAPITAL LEASE OBLIGATIONS -- less current maturities 27,362 27,996 CONVERTIBLE SUBORDINATED DEBT 3,503 3,303 DEFERRED INCOME TAXES 1,163 18,433 SHAREHOLDERS' EQUITY Class A Common Stock, $.03 par value, authorized 22,500,000 shares, issued 9,758,601 and 9,745,101 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 99,927 99,814 Retained earnings 73,494 84,945 ----------- ---------- 173,756 185,094 ----------- ---------- $ 474.053 $ 478,012 =========== ==========
See accompanying notes to condensed consolidated financial statements. 3 4 CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 -------- -------- -------- -------- (000's omitted except per share data) REVENUES Admissions $ 83,385 $ 77,162 $219,924 $186,363 Concessions and other 37,723 35,259 98,038 81,189 -------- -------- -------- -------- 121,108 112,421 317,962 267,552 COSTS AND EXPENSES Film exhibition costs 43,600 41,702 113,704 98,264 Concession costs 5,137 4,772 13,026 10,829 Other theatre operating costs 43,439 40,459 123,586 106,674 General and administrative 1,443 1,372 4,446 3,976 Depreciation and amortization 7,199 6,983 21,288 19,533 Impairment of long-lived assets (Note B) -0- -0- 45,447 -0- -------- -------- -------- -------- 100,818 95,288 321,497 239,276 -------- -------- -------- -------- OPERATING INCOME(LOSS) 20,290 17,133 (3,535) 28,276 Interest expense 4,862 4,066 14,933 11,704 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 15,428 13,067 (18,468) 16,572 Income taxes(benefit) 5,863 5,227 (7,018) 6,629 -------- -------- -------- -------- NET INCOME (LOSS) $ 9,565 $ 7,840 $(11,450) $ 9,943 ======== ======== ======== ======== NET INCOME(LOSS) PER SHARE $ .85 $ .70 $ (1.02) $ .88 ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 4 5 CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 --------- --------- (000's omitted) OPERATING ACTIVITIES Net income (loss) $ (11,450) $ 9,943 Items which did not use cash: Depreciation and amortization 21,288 19,533 Impairment of long-lived assets 45,447 -0- Deferred income taxes (17,270) 1,200 Gain on sale of property and equipment (807) (194) Changes in operating assets and liabilities: Accounts and notes receivable and inventories 2,368 (4,150) Prepaid expenses (2,998) 17 Accounts payable (5,059) (3,811) Accrued expenses 1,473 6,404 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 32,992 28,942 INVESTING ACTIVITIES Purchases of property and equipment (47,332) (33,638) Purchases of assets from other theatre operators (23,075) (39,215) Disposals of property and equipment 1,765 386 Decrease (increase) in: Short-term investments (321) (2,613) Other (4,593) (69) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (73,556) (75,149) FINANCING ACTIVITIES Debt and other liabilities: Borrowings under revolving credit line 811,000 180,700 Repayments of revolving credit line (771,000) (145,200) Other borrowings -0- 5,180 Payments on long term obligations (11,765) (8,340) Issuance of Class A Common Stock 111 17 Received from lessor under capital leases 2,900 -0- --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 31,246 32,357 --------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (9,318) (13,850) Cash and cash equivalents at beginning of period 11,345 17,872 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,027 $ 4,022 ========= =========
See accompanying notes to condensed consolidated financial statements. 5 6 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1996 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. NOTE B -- IMPAIRMENT OF LONG LIVED ASSETS The Company adopted Statement of Financial Accounting Standards 121 (FASB 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", as of January 1, 1996. The Company reviews long-lived assets, and goodwill related to those assets, to be held and used in the business for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or a group of assets may not be recoverable. The Company considers a trend of operating results that are not in line with management's expectations to be its primary indicator of potential impairment. For purposes of FASB 121, assets are evaluated for impairment at the theatre level, which management believes is the lowest level for which there are identifiable cash flows. The Company deems a theatre to be impaired if a forecast of undiscounted future operating cash flows directly related to the theatre, including disposal value if any, is less than its carrying amount. If a theatre is determined to be impaired, the loss is measured as the amount by which the carrying amount of the theatre exceeds its fair value. Fair value is based on management's estimates which are based on using the best information available, including prices for similar theatres or the results of valuation techniques such as discounting estimated future cash flows as if the decision to continue to use the impaired theatres was a new investment decision. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. Recoverability of other long-lived assets, primarily investments in unconsolidated affiliates and goodwill not identified with impaired theatres covered by the above paragraph, will continue to be evaluated on a recurring basis. The primary indicator of recoverability is current or forecasted profitability over the estimated remaining life of these assets. If recoverability is unlikely based on the evaluation, the carrying amount is written down to the fair value. The initial non-cash charge upon the Company's adoption of FASB 121 was approximately $45,447,000 ($28,177,000 after tax or $2.50 per share) to reduce the carrying amount of 138, or 26%, of the Company's theatres. This initial charge resulted from evaluating the recoverability of individual theatres, which is at a lower level than under the Company's previous accounting policy for measuring impairment. Under the Company's previous policy, the Company's long-lived assets were evaluated market by market for impairment. As a result of the reduced carrying amount of the impaired assets, depreciation and amortization expense for the first quarter of 1996 was reduced by approximately $750,000 ($465,000 after tax or $.04 per share). Depreciation and amortization expense for each of the second and third quarters of 1996 was reduced by approximately $1,140,000 ($707,000 after tax or $.06 per share) and 1996 annual depreciation and amortization expense is estimated to be reduced by approximately $4,170,000 ($2,585,000 after tax or $.23 per share). FASB 121 also requires, among other provisions, that long-lived assets held for disposal and certain identified intangibles be reported at the lower of the asset's carrying amount or its fair value less costs to sell. The impact of adopting FASB 121 on assets held for disposal during the first quarter of 1996 was not material. 6 7 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1996 NOTE B -- IMPAIRMENT OF LONG LIVED ASSETS (continued) The Company intends to perform its next impairment evaluation in the fourth quarter of 1996. NOTE C -- REVOLVING CREDIT FACILITY On April 23, 1996, the Company entered into an Amended and Restated Credit Agreement (the "Agreement") with four banks to provide a revolving line of credit of up to $175,000,000 for working capital, acquisitions and other general corporate purposes. The Agreement has a three year revolving credit period, 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 base rate of Wachovia Bank of Georgia, N.A. or LIBOR + .40% and is required to pay annual fees of .20% on the full amount of the facility. The interest rate and facility fees are subject to adjustment based upon the Company's ratio of total debt to defined cash flows. The Agreement contains certain restrictive provisions which, among other things, limit additional indebtedness of the Company, limit dividend and other restricted payments, require that certain debt to capitalization ratios be maintained and require minimum levels of cash flows. At September 30, 1996, the Company had $116,500,000 outstanding under this facility. Under the terms of this Agreement, no payments are due until after April 23, 1999, nor does the Company anticipate reducing the amount outstanding at September 30, 1996. Accordingly, no amounts outstanding under the Agreement have been classified as current maturities in the accompanying Condensed Consolidated Financial Statements. The Company has entered into interest rate swap agreements to modify the interest characteristics of a portion of its outstanding debt. The agreements involve the exchange of amounts based on a variable interest rate for amounts based on a fixed interest rate over the life of the agreements without an exchange of the notional amount upon which the payments are based. The Company specifically designates interest rate swaps on hedges of debt instruments and recognizes interest differentials as adjustments to interest expense in the period they occur. The differential to be paid or received as interest rates change is accrued and recognized as an adjustment of interest expense related to the debt (the accrual accounting method). The related amount payable to, or receivable from, counter-parties is included in other liabilities or assets. The fair value of the swap agreements is not recognized in the financial statements. If, in the future, an interest rate swap agreement were terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the interest rate swap agreement. In the event of the early extinguishment of a designated debt obligation, any realized or unrealized gain or loss from the swap would be recognized in income coincident with the extinguishment. The interest rate swap agreements changed floating interest rate expense on amounts outstanding under the Agreement. Under one interest rate swap agreement, the Company has fixed $50 million of the Company's floating rate debt for seven years. The effective rate at September 30, 1996 was 6.105%, equal to a fixed rate of 5.705% plus the margin of .40% the Company presently pays over LIBOR. Under another interest rate swap agreement, the Company has fixed $20 million of its floating rate debt for 5 years at a fixed rate of 5.51% plus the margin the Company pays over LIBOR (presently .40%) for a total effective rate of 5.91%. The unrealized gain for the interest rate swaps was approximately $1,651,000 million at November 8, 1996 based on evaluations made by the counter-parties to the interest rate swaps. The Company does not anticipate realization of this gain as the Company intends to hold the interest rate swaps to maturity. The Company is exposed to credit losses in the event of nonperformance by counter-parties on interest rate swaps. The Company does not believe there is a significant risk of nonperformance by any of the counter- 7 8 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1996 NOTE C -- REVOLVING CREDIT FACILITY (continued) parties to these instruments and the Company monitors the financial stability of such parties on a periodic basis. NOTE D -- ACQUISITIONS The Company's acquisitions 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 condensed consolidated statements as of their respective acquisition dates. The assets and liabilities of acquired businesses in 1996 are included based on a preliminary allocation of the purchase price. In separate transactions, the Company acquired certain assets and businesses as follows:
Number of Approximate ------------------ Seller Purchase Price Theatres Screens Effective Date - --------------------------------------------- -------------- -------- ------- -------------------- (in thousands) 1996 Maxi Saver Cinemas $ 3,975 2 18 January 5, 1996 Fox Theatres Corp. 19,100 12 61 February 16, 1996 ------- -- --- $ 23,075 14 79 ======= == === 1995 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 has been recorded as an intangible asset. Amounts recorded were approximately $16.3 million to date in 1996 and $16.7 million in 1995. Pro-forma results have not been presented for those acquisitions which were not significant during the periods 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 the acquisitions occurred on January 1, 1995 and should not serve as a forecast of the Company's operating results for any future periods. 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):
Nine Months Ended September 30, 1995 ------------------- Revenues $ 264,686 Net income (loss) 8,594 Earnings per share .76
8 9 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1996 NOTE D -- ACQUISITIONS (continued) The pro-forma adjustments for the 1995 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 administrative 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. d. Income taxes have been adjusted to reflect the Company's effective tax rate. 9 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. COMPARISON OF THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 The following discussion of the Company's financial condition and results of operations should be read in conjunction with the financial information included herein and the Company's annual report on Form 10-K for the fiscal year ended December 31, 1995 (the " 1995 Form 10-K"), as filed with the Securities and Exchange Commission (the "SEC"). Except for the historical information contained herein, the following discussion contains forward-looking statements that involve a number of risks and uncertainties. Factors which could cause the Company's actual results in future periods to differ materially include, but are not limited to, those discussed below, as well as those discussed or identified from time to time in the Company's filings with the SEC, including, but not limited to, the Company's 1995 Form 10-K and the Company's current report on Form 8-K filed on June 14, 1996. RESULTS OF OPERATIONS Total revenues for the quarter ended September 30, 1996 increased 7.7% to $121,108,000 from $112,421,000 for the quarter ended September 30, 1995. This increase consists of a $6,223,000 increase in admissions and a $2,464,000 increase in concessions and other. The increase in admissions is a result of a greater number of screens in operation for the quarter ended September 30, 1996 compared to the quarter ended September 30, 1995 combined with an increase in admission prices. These additional screens were acquired in acquisitions in October and November 1995 and the Maxi Saver Cinemas and Fox Theatres Corp. acquisitions in January and February 1996, respectively.(See Note C of Notes to Condensed Consolidated Financial Statements)(the "Acquisitions"). The increase in concessions and other reflects the increased attendance resulting from the increased number of screens in operation as a result of the Acquisitions and an increase in the average concession sale per patron. Total attendance for the quarter increased 5.3% but on a same screen basis, attendance per average screen decreased 5.9%. Average admission prices increased 2.6% for the quarter ended September 30, 1996 and concession prices increased 1.6%. Total revenues for the nine months ended September 30, 1996 increased 18.8% to $317,962,000 from $267,552,000 for the nine months ended September 30, 1995. This increase consists of a $33,561,000 increase in admissions and a $16,849,000 increase in concessions and other. These increases are due primarily to the additional revenues generated by the increase in attendance resulting from the increase in the number of screens in operation as a result of the Acquisitions and increases in the average concession sale per patron. For the nine months ended September 30, 1996, total attendance increased 17.9% above that for the nine months ended September 30, 1995 and for the same period, admission prices remained the same and concession prices increased 2.3%. Attendance per average screen remained the same. Cost of operations (film rentals, concession costs and other theatre operating costs) increased 6.0% to $92,176,000 from $86,933,000 in the quarter ended September 30, 1995. The dollar increase is due to the increased number of screens in operation as a result of the Acquisitions. As a percentage of total revenues, cost of operations decreased to 76. 1% in the quarter ended September 30, 1996 from 77.3% in the quarter ended September 30, 1995. This decrease is due to a lower level of salaries in the quarter ended September 30, 1996, combined with a decrease in film exhibition costs as a percentage of admissions revenue. Cost of operations for the nine months ended September 30, 1996 increased 16.0% to $250,316,000 from $215,767,000 in the nine months ended September 30, 1995. The dollar increase is due to the increased number of screens in operation as a result of the Acquisitions. As a percentage of total revenues, cost of operations decreased from 80.6% for the nine months ended September 30, 1995 to 78.7% of revenues in the nine months ended September 30, 1996. This percentage decrease is due to a lower level of salaries for the period combined with a decrease in film exhibition costs as a percentage of admission revenues. 10 11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. General and administrative costs for the quarter ended September 30, 1996 increased 5.2% from $1,372,000 to $1,443,000 primarily as a result of increased personnel costs because of the Acquisitions and expansions and remained the same as a percentage of total revenues at 1.2%. General and administrative costs for the nine months ended September 30, 1996 increased 11.8% to $4,446,000 from $3,976,000 primarily as a result of additional personnel costs resulting from the Acquisitions and expansions. As a percentage of total revenues, general and administrative costs decreased from 1.5% to 1.4% Depreciation and amortization increased 3.1% from $6,983,000 to $7,199,000 for the quarter ended September 30, 1996 due to the Acquisitions and expansions. As a percentage of total revenues, depreciation and amortization decreased from 6.2% to 5.9% due to increases in revenues offset by additional depreciation and amortization from the Acquisitions and expansions in 1995 and 1996 and due to the fixed nature of the costs. Depreciation and amortization for the quarter ended September 30, 1996 was offset by approximately $1,140,000 in decreases due to write-downs of assets under FASB 121 (See Note B of Notes to Condensed Consolidated Financial Statements). Depreciation and amortization for the nine months ended September 30, 1996 increased 12.3% from $19,533,000 to $21,288,000 due to the Company's Acquisitions and expansions. As a percentage of total revenues, depreciation and amortization decreased from 7.3% to 6.7% due to increases in revenues offset by additional depreciation and amortization from the Acquisitions and expansions in 1995 and 1996 and due to the fixed nature of the costs. Depreciation and amortization for the nine months ended September 30, 1996 was offset by approximately $3,030,000 in decreases due to write-downs of assets under FASB 121 (See Note B of Notes to Condensed Consolidated Financial Statements). The Company adopted Statement of Financial Accounting Standards 121 (" FASB 121 Accounting for the Impairment of Long-Lived Assets to be Disposed of," as of January 1, 1996. The initial non-cash charge upon the Company's adoption of FASB 121 was approximately $45,447,000 ($28,177,000 after tax, or $2.50 per share) to reduce the carrying value of 138 theatres, constituting 26% of the Company's theatres. This charge resulted from the evaluation of asset impairment on an individual theatre level rather than on a market level, which had been the Company's previous accounting policy for evaluating and measuring impairment. See Note B of Notes to Condensed Consolidated Financial Statements. As noted above, the write-down of assets under FASB 121 resulted in a reduction in depreciation and amortization expense in the three months and nine months ended September 30, 1996. Interest expense for the quarter ended September 30, 1996 increased 19.6% to $4,862,000 from $4,066,000 for the quarter ended September 30, 1995 due to the increase in the average amount of outstanding debt. Interest expense for the nine months ended September 30, 1996 increased 27.6% to $14,933,000 from $11,704,000 for the nine months ended September 30, 1995 due to the increase in the average amount of outstanding debt. The Company grouped its theatres into corporations in 1995 to achieve business and tax efficiencies. As a result of these changes, management cost is more appropriately allocated among the operations and the Company's effective tax rate declined from approximately 40% to approximately 38%. 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. 11 12 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 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 typically are financed with internally generated cash flow, bank credit lines or under long-term leasing arrangements with developers. The Company currently has 173 screens under construction. The Company believes that its presently anticipated capital needs for theatre construction and possible acquisitions will be satisfied by short-term investments on hand, borrowings under its revolving credit facility (See Note C of Notes to Condensed Consolidated Financial Statements), additional sale of debt and/or equity securities, additional bank financings, private placements of debt, internally generated cash flow and, where appropriate, future lease financings. At November 11, 1996, the Company had approximately $14,300,000 in cash and short term investments on hand and $51,000,000 was available under the Company's revolving credit facility. 12 13 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits 11 -- Statement re: computation of earnings per share 27 -- Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K None 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CARMIKE CINEMAS, INC. (Registrant) Date: November 14, 1996 By: /s/ MICHAEL W. PATRICK ------------------------ ------------------------------------------- Michael W. Patrick -- President (Chief Executive Officer) Date: November 14, 1996 By: /s/ JOHN 0. BARWICK, III ------------------------ ------------------------------------------- John 0. Barwick, III -- Vice President Finance (Chief Accounting and Financial Officer)
14 EX-11 2 COMPUTATION OR EARNINGS 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE ($000's omitted, except for per share data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 -------- -------- -------- -------- (000's omitted except per share data) Average shares outstanding 11,180 11,161 11,173 11,151 Net effect of dilutive stock options based on the treasury stock method using average market price 107 95 -0- 108 -------- -------- -------- -------- TOTALS 11,287 11,256 11,173 11,259 ======== ======== ======== ======== NET INCOME (LOSS) $ 9,565 $ 7,840 $(11,450) $ 9,943 ======== ======== ======== ======== NET INCOME (LOSS) PER SHARE $ .85 $ .70 $ (1.02) $ .88 ======== ======== ======== ========
Note: Fully diluted calculation is not presented because dilution is less than 3%. 15 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10Q OF CARMIKE CINEMAS INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10Q. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 2,027,000 7,823,000 5,685,000 0 2,794,000 28,359,000 484,013,000 113,352,000 474,053,000 55,390,000 0 0 0 335,000 173,421,000 474,053,000 98,038,000 317,962,000 13,026,000 250,316,000 71,181,000 0 14,933,000 (18,468,000) 7,018,000 (11,450,000) 0 0 0 (11,450,000) (1.02) 0 INCOME PRETAX INCLUDES FASB 121 CHARGE OF $45,447,000 AFTER TAX EFFECT IS $28,177,000 OR $2.50 SHARE.
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