10-K
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CARMIKE CINEMAS, INC. FORM 10-K
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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, 1994 (Fee Required)
OR
[ ]Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from __________________ to ___________________ (No Fee Required)
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 incorporation or organization) (I.R.S. Employer Identification No.)
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 NONE
Securities registered pursuant to Section 12(g) of the Act Class A Common
Stock, par value $.03 per share
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 [ ]
As of March 15, 1995, 8,420,910 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 $185,260,020.
As of March 15, 1995, 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, 1994 are incorporated
by reference into Part II and Part IV.
(2) Specified portions of Carmike Cinemas, Inc.'s Proxy Statement relating to
the 1995 Annual Meeting of Shareholders are incorporated by reference
into Part III.
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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, 1993:
(i) Sale of Stock
On November 28, 1994 the Company sold in a public offering 2,875,000
shares of its Class A Common Stock, consisting of 2,705,000 newly issued shares
and 170,000 treasury shares. The net proceeds from this sale, approximately $58
million, will be used to continue the Company's acquisition and expansion
program and for general corporate purposes. Pending such uses, these proceeds
were used temporarily by the Company to repay indebtedness under its revolving
credit facility.
(ii) New Credit Agreement
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, subject to
possible successive annual renewals upon the mutual consent of the Company and
the banks, 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 a bank base rate or LIBOR plus .4375% 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,
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facility fees and commitment fees are subject to adjustment based upon the
Company's ratio of total debt to defined cash flows.
(iii) Acquisitions
Effective January 21, 1994, the Company purchased certain assets consisting
of 6 multiplex theatres (28 screens) and assumed certain contractual
liabilities of certain subsidiaries of General Cinema Corp. for a cash purchase
price of approximately $6,400,000. This acquisition 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 excess of purchase price over the net
assets acquired (approximately $2,500,000) has been recorded as an intangible
asset. The results of operations of these theatres are included in the
Consolidated Financial Statements of the Company from the effective date.
Pro-forma results of this acquisition have not been presented as the effect on
prior periods is not significant.
Effective May 20, 1994, the Company purchased certain assets consisting of
4 multiplex theatres (20 screens) and assumed certain contractual liabilities
of General Cinema Corp. of Louisiana for a cash purchase price of approximately
$5,800,000. This acquisition 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 these theatres are included in the
Consolidated Financial Statements of the Company from the effective date.
Pro-forma results of this acquisition have not been presented as the effect on
prior periods is not significant.
Also effective May 20, 1994, the Company purchased certain assets
consisting of 38 multiplex theatres (176 screens) and assumed certain
contractual liabilities of Cinema World, Inc. for a cash purchase price of
approximately $38,100,000. This acquisition has been accounted for using the
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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 excess of purchase price over the net assets
acquired (approximately $12,589,000) has been recorded as an intangible asset.
The results of operations of these theatres are included in the Consolidated
Financial Statements of the Company from the effective date. Unaudited
pro-forma results of operations are presented (see Note C of Notes to
Consolidated Financial Statements) but do not purport to represent what the
Company's actual results of operations would have been had the Cinema World,
Inc. acquisition occurred on January 1, 1993 and should not serve as a forecast
of the Company's operating results for any future periods.
Effective March 17, 1995, the Company purchased certain assets
consisting of 21 theatres (83 screens) and assumed certain contractual
liabilities of Floyd Theatres, Inc. for a cash purchase price of approximately
$11,300,000. 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 $1,300,000) has been recorded as an intangible asset.
(iv) New Theatre Openings and Additions to Existing Theatres During 1994
During 1994, the Company opened or expanded the following theatres:
THEATRE LOCATION SCREENS
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NEW COMPLEXES
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Wynnsong 10 Durham, North Carolina 10
Carmike 8 Lawton, Oklahoma 8
Cobblestone 9 Des Moines, Iowa 9
Dunes 8 Myrtle Beach, South Carolina 8
Carmike 8 Allegany, New York 8
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Total 43
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ADDITIONS TO EXISTING COMPLEXES
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Campus 8 Bozeman, Montana 5
Bellvue 8 Nashville, Tennessee 4
Highland 10 Cookville,Tennessee 6
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Total 15
--
Total New Screens 58
==
(b) Narrative Description of Business
(i) Theatre Operations
The Company is the second largest motion picture exhibitor in
the United States in terms of number of theatres and screens operated. As of
December 31, 1994, the Company operated 445 theatres with an aggregate of 1,942
screens located in 31 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, 1994, aggregate attendance at the Company's theatres was
approximately 59.7 million people. The Company's theatres are located in the
following states:
STATE THEATRES SCREENS
----- -------- -------
Alabama 29 154
Arkansas 2 15
Colorado 10 46
Florida 3 11
Georgia 18 100
Idaho 11 26
Illinois 3 8
Iowa 22 113
Kentucky 5 23
Louisiana 4 20
Maryland 1 3
Minnesota 13 48
Montana 15 59
Nebraska 5 17
New Mexico 1 2
North Carolina 80 310
North Dakota 3 15
New York 1 8
Ohio 9 45
Oklahoma 18 68
Pennsylvania 37 160
South Carolina 23 103
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STATE THEATRES SCREENS
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South Dakota 4 23
Tennessee 43 224
Texas 30 113
Utah 11 36
Virginia 16 75
Washington 3 3
Wisconsin 14 64
West Virginia 6 33
Wyoming 5 17
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445 1,942
=== =====
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 fourteen operating districts. Each operating district has a district
manager who is responsible for overseeing the day-to-day operations of the
Company's theatres. 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 1,942 screens are located in multi-screen
theatres, with over 89% of the Company's screens being located in theatres
having three or more screens. The Company's average number of screens per
theatre is 4.4, 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.
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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. At present, the Company operates 71 of its
theatres as Discount Theatres. The Company also sells gift certificates and
offers a discount ticket plan to attract groups of patrons.
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.
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 75% of its theatres (representing approximately 81%
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
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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.
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 seven 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
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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 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 84% of industry admission revenues during 1993 and 45 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
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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 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.
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(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 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.
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(vii) Employees
At December 31, 1994, the Company had approximately 8,060 employees.
Seventy-five 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, 1994, of the Company's 445 theatres , 61 were owned by the
Company, 299 were leased pursuant to building leases, 78 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 approximately 30,000 square feet of this modern five-story
office building, which has approximately 48,500 square feet. Remaining space
in the building is fully leased through March 1995. Subsequent to that date
the Company will occupy the entire building. 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.
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.
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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, 1994.
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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 76, 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., the predecessor of the Actava
Group, 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 44, 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 45, 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 53, 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.
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Larry M. Adams, age 51, 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 38, 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 40, 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 43, 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 47, 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.
Each of the above is currently an officer of the Company, serving a term
running from the last annual meeting of directors (May 1994) for one year until
the next annual meeting or until his or her successor is elected and qualified.
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PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
Information regarding the market for the Company's common equity and
related shareholder matters is incorporated by reference to the inside back
cover of the Company's 1994 Annual Report to Shareholders.
Item 6. Selected Financial Data
Selected financial data for the five years ended December 31, 1994 is
incorporated by reference to page 28 of the Company's 1994 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 1994 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference to pages
13 through 25 of the Company's 1994 Annual Report to Shareholders.
Quarterly Results of Operations for the year ended December 31, 1994 is
incorporated by reference to page 25 of the Company's 1994 Annual Report to
Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable
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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 1995 Annual Meeting of Shareholders of the Company
(hereinafter, the "1995 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 1995 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 1995 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 1995 Proxy Statement.
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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 1994 Annual Report to
Shareholders are incorporated by reference in Item 8:
Report of Independent Auditors
Consolidated balance sheets--December 31, 1994 and 1993
Consolidated statements of income--Years ended December
3l, 1994, 1993 and 1992
Consolidated statements of shareholders' equity--Years
ended December 3l, 1994, 1993 and 1992
Consolidated statements of cash flows--Years ended
December 31, 1994, 1993 and 1992
Notes to consolidated financial statements--December 31,
1994
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.
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(a)(3) Listing of Exhibits
Exhibit
Number
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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.
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(a)(3)(Continued)
Exhibit
Number
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3(a) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to Amendment No. 1 to the Company's
Registration Statement on Form S-1, No. 33-8007, 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 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).
20
21
(a)(3)(Continued)
Exhibit
Number
------
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).
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).
21
22
(a)(3)(Continued)
Exhibit
Number
------
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).
10(q) 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 1994 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, 1994, the Company
filed one report on Form 8-K dated October 25, 1994, reporting pursuant to Item
5 thereof the filing of a registration statement on Form S-3.
(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 29, 1995 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 29, 1995
------------------------------
C. L. Patrick
/s/ Michael W. Patrick President and Chief March 29, 1995
------------------------------ Executive Officer, Director
Michael W. Patrick
/s/ John O. Barwick, III Vice President-Finance, Treasurer March 29, 1995
------------------------------ (Chief Financial Officer,
John O. Barwick, III Chief Accounting Officer)
/s/ Carl L. Patrick, Jr. Director March 29, 1995
------------------------------
Carl L. Patrick, Jr.
/s/ Carl E. Sanders Director March 29, 1995
------------------------------
Carl E. Sanders
/s/ John W. Jordan, II Director March 29, 1995
------------------------------
John W. Jordan, II
/s/ David W. Zalaznick Director March 29, 1995
------------------------------
David W. Zalaznick
24
25
CARMIKE CINEMAS, INC.
EXHIBIT INDEX
Report on Form 10-K for the fiscal year Ended December 31, 1994
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).
26
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.
3(a) Restated Certificate of Incorporation of the Company
(filed as Exhibit 3(a) to Amendment No. 1 to the
Company's Registration Statement on Form S-1, No. 33-8007,
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).
27
Page Number
Exhibit in Manually
Number Description Signed Original
------ ----------- ---------------
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).
28
Page Number
Exhibit in Manually
Number Description Signed Original
------ ----------- ---------------
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).
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).
29
Page Number
Exhibit in Manually
Number Description Signed Original
------ ----------- ---------------
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(g), 10(h), 10(i), 10(j), and 10(l)
(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(f), 10(g), 10(h), 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(q) 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.
30
Page Number
Exhibit in Manually
Number Description Signed Original
------ ----------- ---------------
13 1994 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
EX-2.(H)
2
AGREEMENT BETWEEN FLOYD THEATRES AND MASTEC
1
EXHIBIT 2(h)
A G R E E M E N T
AGREEMENT, dated as of the 17th day of March, 1995, between FLOYD
THEATRES, INC., a Delaware corporation, TALLAHASSEE THEATRES, INC., a Delaware
corporation, FLOYD THEATRES OF GEORGIA, INC., a Georgia corporation, and
MASTEC, INC., a Delaware corporation (hereinafter collectively referred to as
"Seller"), and CARMIKE CINEMAS, INC., a Delaware corporation, ("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
1
2
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 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" - Property tax refund due on Lakeside
Theatres, Sebring, Florida, and five (5) vehicles owned by Seller.
1.08. "ESCROW" - TWO-HUNDRED TWENTY-FIVE THOUSAND DOLLARS
($225,000.00) to be deposited with Commercial Bank of Florida and held and
distributed pursuant to the terms and conditions of the Escrow Agreement
attached hereto as Exhibit I.
1.09. "EXHIBITS" - Those Exhibits referenced in this Agreement and
incorporated herein by such reference.
1.10. "FORD LEASES" - The two (2) master lease agreements between
Ford Equipment Leasing Company and Floyd Theatres, Inc., dated November 26,
1991, copies of which are attached hereto as Exhibit "H".
1.11. "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.
1.12. "ICE MACHINE LEASES" - Those leases by and between John Spears
Sales & Service, Inc. and Floyd Theatres for ice machines, ice makers, and
storage bins, copies of which are attached hereto a Exhibit "L"
1.13. "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.
1.14. "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.
1.15. "INVENTORY" - The usable concession items consisting of
popcorn, syrup, cups, candy and other items normally stocked in
2
3
the theatres, and the replacement Xenon bulbs. Purchaser shall pay Seller at
Closing the costs of said Inventory.
1.16. "LANDLORD CONSENT" - Consent of the Landlords referred to in
Section 2.07 (d) to the transfer and assignment of the leases described in
Schedule 3.09 (a).
1.17. "LEASEHOLD IMPROVEMENTS" - All right, title and interest of
Seller in the Leasehold Improvements of any kind and description now, or in the
Closing Date, located on or which are a part of the Leased Premises.
1.18. "LEASEHOLD INTERESTS" - All and singular the interests,
estates, rights, privileges, titles, easements, options and appurtenances
belonging or in any way appertaining to the Seller as tenant under the Leases.
1.19. "LEASES" - The leases for the Theatres and all amendments and
modifications thereof, all of which are described on Exhibit C attached hereto.
1.20. "LEASED PREMISES" - The premises demised by the Leases.
1.21. "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; (iii) Permitted Title Exceptions; (iv) the
Ford Leases; and (v) the Ice Machine Leases.
1.22. "PERMITTED TITLE EXCEPTIONS" - With respect to the real
property those preprinted exceptions in a standard form ALTA extended coverage
policy of title insurance and those encumbrances set forth on Schedule 1.22.
1.23. "PERSONAL PROPERTY" - All tangible personal property now or on
the Closing Date owned by Seller or any of Seller's affiliates and used in the
operation of the Leased Premises, including all supplies, service and
concession equipment, heating, ventilating and cooling equipment, fixtures,
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
3
4
Property shall not include (a) accounts receivable as of the Closing Date, (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); and
(c) furniture, fixtures and equipment located at the Home Office, 4226 Old
Highway 37, Lakeland, Florida 33813.
1.24. "PROPERTY" - The Inventory, Leasehold Interests, Leasehold
Improvements, Personal Property, Real Property and Intangible Property.
1.25. "PURCHASE PRICE" - The Purchase Price for the Property is ELEVEN
MILLION THREE HUNDRED THOUSAND DOLLARS ($11,300,000.00), payable as set forth
in paragraph 2.02 hereof.
1.26. "PURCHASE PRICE ADJUSTMENT" - In the event Seller is not able
to procure a three-year extension of the lease on the same terms and conditions
for the Brandon Twin Theatre, Brandon, Florida, the Purchase Price shall be
reduced in accordance with the terms of Exhibit "A" attached to the Escrow
Agreement.
1.27. "REAL PROPERTY" - The property described on Schedule 3.09 (a).
1.28. "SCHEDULES" - Those Schedules referred to in this Agreement,
and incorporated herein by reference.
1.29. "SELLER" - Seller is made up of four (4) separate corporations,
namely: FLOYD THEATRES, INC., TALLAHASSEE THEATRES, INC., FLOYD THEATRES OF
GEORGIA, INC., and MASTEC, INC. All representations, warranties and covenants
are made by the corporation which owns the Theatre which is subject to said
representation, warranty or covenant.
1.30. "THEATRES" - The Twenty-Two (22) locations consisting of
Eighty-Three (83) screens for the exhibition of motion pictures as specifically
set forth on Exhibit D.
1.31. "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 by 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
4
5
reference are the following:
EXHIBIT A - CONTINUING CONTRACTS
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - LEASES
EXHIBIT D - THEATRES
EXHIBIT E - BILL OF SALE
EXHIBIT F - COVENANT NOT TO COMPETE AGREEMENT
EXHIBIT G - FORM OF LANDLORD'S CONSENT
AND ESTOPPEL
EXHIBIT H - FORD LEASES
EXHIBIT I - ESCROW AGREEMENT
EXHIBIT J - CERTIFICATE OF ASSUMPTION
EXHIBIT K - FORM OF LEASE ASSIGNMENT
EXHIBIT L - ICE MACHINE LEASES
SCHEDULE 1.22 - PERMITTED TITLE EXCEPTIONS
SCHEDULE 2.02(a) - WIRING INSTRUCTIONS
SCHEDULE 2.03 - PURCHASE PRICE ALLOCATION
SCHEDULE 2.07(c) - CONSENT OF OTHERS
SCHEDULE 3.02(a) - FINANCIAL DATA
SCHEDULE 3.02(b) - 90/10 HOUSE ALLOWANCES
SCHEDULE 3.02(c) - SEATS BY AUDITORIUM
SCHEDULE 3.02(d) - PROFIT AND LOSS STATEMENTS
SCHEDULE 3.02(e) - INFORMATION MEMORANDUM DATED 10/94
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 OWNED
BY SELLER
SCHEDULE 3.09(b) - DESCRIPTION OF REAL PROPERTY LEASED
TO SELLER
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 3.17(a) - CONTRACTS AND COMMITMENTS
SCHEDULE 3.19(a) - EMPLOYEE BENEFIT PLANS
SCHEDULE 3.19(b) - WELFARE PLANS
SCHEDULE 3.23 - ENVIRONMENTAL MATTERS
SCHEDULE 3.25 - DISCOUNTS AND GIFT CERTIFICATES
SCHEDULE 7.04 - GOVERNMENTAL NOTIFICATIONS
AND CONSENTS REQUIRED BY BUYER
ARTICLE II
PURCHASE AND SALE OF PROPERTY
5
6
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 certain 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, plus Seller's cost of the Inventory, plus the amount of
Seller's petty cash located at the Theatres, less $225,000.00, which Buyer
shall wire to the Escrow Agent pursuant to the Escrow Agreement.
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 and Post-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 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 as of
the Closing Date for 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 15 days after Buyer furnishes Seller the billing and substantiation
thereof received from each respective lessor;
(ii) Payments owing by Seller under the Leases to
merchants' associations or similar business promotion organizations;
(iii) Buyer shall pay Seller on the Closing Date
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for any security deposits held by lessors under the Leases, and the Seller's
petty cash at each theatre;
(iv) Buyer shall pay Seller on the Closing Date its
prorated share of confirmed prepaid expenses, if any, on Continuing Contracts
and Leases assumed by Buyer at Closing, for which Buyer receives a benefit
after Closing.
(b) (i) 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.
(ii) 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.
(iii) For the period not to exceed one (1) year after the
Closing Date, Buyer 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. Also, Buyer agrees to honor the two lifetime passes
issued in favor of Harold T. Spears and party and Mr. and Mrs. J. Lem Nevil,
Jr.
(iv) Any monies which Seller shall owe Buyer for
reimbursement for Discount Tickets and gift certificates 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.
(c) 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,
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assessments and other Impositions to be borne by the parties hereto, as above
provided, is not ascertainable on the Closing 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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
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offices of Carlos & Abbott, P. A., Suite 12150, 999 Ponce de Leon Boulevard,
Coral Gables, Florida 33134, at 12:00 Noon on March 17, 1995, or on such other
date prior thereto as may be agreed by the parties hereto (the Closing Date).
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. The Closing Statement shall be agreed upon by the
parties, and executed on the Closing Date.
(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) Certificate of Assumption. At Closing, Buyer shall execute
a Certificate of Assumption in substantially the form attached hereto as
Exhibit J, wherein Buyer shall agree to assume and hold Seller harmless from
all liabilities arising out of Continuing contracts and the Leases arising on
or after the Closing Date (the "Assumed Liabilities").
2.07. Seller's Performance at Closing. At Closing, Seller will
deliver to Buyer:
(a) All bills of sale, substantially in form attached hereto as
Exhibit E; assignments of licenses and permits (to the extent assignable),
executory contracts, leases, warranty deeds and other real estate documents,
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;
(b) Actual possession and operating control of the Property;
(c) A certificate of Seller, executed by an officer, certifying
that the persons executing this Agreement and other documents consummating
transactions contemplated by this Agreement have been duly and validly
authorized by its Board of Directors so
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to do, and that except as set forth on Schedule 2.07 (c), 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;
(d) 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 adverse to the Buyer in the terms and conditions thereof.
(e) The properly executed Unconditional Guaranty and
Reimbursement Agreement of MasTec, substantially in form attached hereto as
Exhibit H.
(f) The properly executed sublease for the Home Office of Floyd
Theatres, Inc., presently occupied at 4226 Old Highway 37, Lakeland, Florida
33813, for a period not to exceed one (1) year, at a monthly rental of $500.00
per month.
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 when due and payable one-half (1/2) 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) Until April 30, 1996, 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
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assist Buyer, at Buyer's expense, in the 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) Except for those liabilities expressly assumed by Buyer,
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.
(g) Provide to Buyer, as soon as possible after Closing,
individual profit and loss statements on each Theatre for the period 5/1/94
through the Closing Date.
(h) Continue to make the payments required, and otherwise comply
with the terms and conditions of the Ford Leases; and, at or prior to the
termination of each Ford Lease, pay the option price to purchase the property
which is the subject matter of said lease, deliver bill of sale from Lessor to
Buyer, and procure cancellation of Uniform Commercial Code-1 Financing
Statements securing same.
2.09. Buyer Does Not Assume Any of Seller's Liabilities or
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.
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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,
contemplated by this Agreement for a period of twelve (12) months from the
Closing Date, and shall be deemed to be independently relied upon by Buyer.
3.01. Legal Status. Floyd Theatres, Inc. is a Delaware corporation,
Tallahassee Theatres, Inc. is a Delaware corporation, and Floyd Theatres of
Georgia, Inc. is a Georgia corporation. Each of said corporations is a
corporation duly organized, validly existing, and in good standing under the
laws of the State wherein incorporated. Each of said corporations 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 certain financial data of the
Theatres for the year to date, periods ended 12-31-93 and 12-31-94.
(b) Schedule 3.02 (b) contains the 90/10 house allowances for
each screen included in the Theatres.
(c) Schedule 3.02 (c) lists by auditorium for each of the
Theatres the number of seats in each auditorium.
(d) Schedule 3.02 (d) contains profit and loss statements on
each of the Theatres for each month starting 2/1/94 and continuing through the
month of the Closing Date.
(e) Schedule 3.02 (e) contains the Floyd Theatres Information
Memorandum dated October 1994.
(f) The financial data is in accordance, in all material
respects, with the books and records of the Seller, and except as stated
therein presents fairly the results of operations of the Theatres for the
respective periods indicated, subject to year end adjustments in the case of
any interim statement.
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3.03. Absence of Specified Changes. Since November 1994, 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 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) Amendment or termination of any material contract, Lease,
agreement or 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;
(h) Except as set forth on Schedule 3.24, arrangement for
discount, promotional or prepaid tickets, or admission passes 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, or subject
to a valid extension, 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
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outstanding, proposed or assessed against it, and to the best of Seller's
knowledge, 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 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) Schedule 3.09 (a) contains a true and correct description
of all real property owned by Seller which is included
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in the Property, including all structures located thereon. Seller has good and
marketable title to said real property, free and clear of all mortgages, liens,
charges and encumbrances, except for permitted Title Exceptions.
(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. 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 Seller obtain the valid and binding consents pursuant to
Sections 2.07 (d) and 4.08, the continuation, validity and effectiveness of
those leases will in no way be affected by the transactions contemplated by
this Agreement.
(b) Seller has received no written notice that the improvements
on the real estate, leased to or used by the Seller do not 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.
(c) Seller has received no notice that the improvements on the
real estate owned by, leased to, or used by Seller do not 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.
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
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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. Buyer
will procure its own insurance as of the Closing Date, and is not relying upon
Seller's determination of the sufficiency of the policies listed on Schedule
3.11.
3.12. Defaults. Except as set forth on Schedule 3.12, there is no
default or claim or 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 material obligation on the part of the Seller to be
performed under any Continuing Contract or agreement which affects the
operation of the Property, and those contracts or agreements set out on
Schedule 3.17. The Seller has in all 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, 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 in writing 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; (ii) to the best of Seller's knowledge, 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) to the best of Seller's knowledge, 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, to the best of Seller's
knowledge, 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
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governmental agency, department or instrumentality that would adversely affect
Buyer's operation of the Theatres after the Closing Date.
3.15. Brokers and Finders. Other than Seller's retention of Lazard
Freres & Co., who has been employed by Seller, and 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) 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
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 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 Seller's operation of the Theatres, 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 Seller's operation of the Theatres, to the best of Seller's
knowledge, 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
(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.
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(a) Schedule 3.17 (a) contains a list of any of the following
contracts or commitments regarding Seller's operation of the Theatres to which
Seller is a party or by which Seller benefits, which are not terminable by
Seller at will, without penalty, and which are not listed or described in any
other Schedule, and for which Buyer will have any liability whatsoever: (i)
Oral or written contracts or commitments for the employment of any Theatre
Level Employee, including any severance or other termination provisions with
respect to such employment; (ii) oral or written contracts with or commitments
to any labor union or any other agreements, amendments, supplements, letters or
memoranda of understanding with any labor union or other representative of
Theatre Level Employees; (iii) oral or written contracts for the purchase,
sale, production or supply, whether on a continuing basis or otherwise, of
goods or services of any type; (iv) oral or written distributor, sales agency
or vendor contracts or subcontracts or any franchise or license agreement; (v)
oral or written advertising contracts or commitments; (vi) employee benefit
plans, and to the extent not included, any other bonus, vacation, pension,
profit sharing, retirement, disability, stock purchase, stock option, health,
hospitalization, insurance or similar plan or practice, formal or informal, in
effect concerning Theatre Level Employees, for which Buyer will have any
liability whatsoever; (vii) any continuing contract or commitment for the
purchase, use, or leasing of materials, supplies, inventory, motion pictures,
equipment or services not terminable without penalty on less than thirty (30)
days notice by Seller; (viii) any contracts, leases, agreements, commitments,
quotas, restrictions or trade conditions upon which the Property depend or are
materially affected; (ix) oral or written agreements for the employment of any
agents, finders, brokers, booking agents, advertising agents or independent
contractors involving payment by Seller of salary, commissions or other
amounts under or in respect of such agreement; (x) oral or written contracts or
commitments for the acquisition (by lease, purchase or otherwise) of theatres,
theatre sites, or other interest in real estate, construction of any buildings
or fixtures, the expansion or remodeling of any of Seller's existing theatres,
and the operation and management of theatres for, on behalf of, or in
partnership with other persons or entities; and (xi) any other material
contracts or commitments not otherwise specified above.
(b) Each of the contracts listed in Schedule 3.17 (a) or
described in this Section, but which is included in any other Schedule, is in
full force and effect, and, to the best of Seller's knowledge, there are no
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 effect
on Seller's operation of the Theatres. Except as reflected in such Schedules,
the continuation, validity and effectiveness of such contracts, and all other
material terms thereof, will in no way be affected by the transactions
contemplated by this Agreement.
(c) Except as set forth on Schedule 3.17 (c), the
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Theatres are not subject to any screen advertising or credit card acceptance
agreements.
(d) Except as set forth on Schedule 3.17(d), Seller has no
Guaranteed Film Contracts with respect to the Theatres.
3.18. AS IS - WHERE IS. Seller shall transfer all of the Property
to Buyer in AS IS - WHERE IS condition, and, with the exception of warranty as
to title, no other representation or warranty whatsoever as to condition or
fitness for a particular purpose is made or implied.
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 Seller, or under which Seller has any present or future
obligation or liability, or under which any employee of 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 Seller for which Buyer will have any liability whatsoever.
3.20. Authority. This Agreement constitutes the valid and binding
obligation of 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. Neither the execution and delivery of this Agreement by
Seller, nor the consummation of the transactions contemplated hereby will
violate any provisions of the Articles of Incorporation or Bylaws of 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 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
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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. Seller shall immediately notify
Buyer of any inaccuracies or omissions in any of such information previously
supplied to Buyer, of which Seller becomes aware.
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 the actual knowledge of
Seller, except items normally found in motion picture theatres generally, such
as cleaning supplies, 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 the actual knowledge of Seller, Seller has
no 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 the actual knowledge of Seller, 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 the actual knowledge of Seller, no
aboveground or
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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. No Representations of Warranties Implied. Other than as
specifically set forth in this Agreement, Seller is giving no representations
or warranties, and none shall be implied.
3.26. Information Provided by Schedules. Any information provided in
one schedule shall be deemed to have been provided for all schedules.
ARTICLE IV
OBLIGATIONS AND COVENANTS OF SELLER
Seller covenants and agrees with the Buyer that the fulfillment of
each of the following obligations and covenants 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 past business practices;
(b) Maintain all of the Theatres in normal operating order and
condition, reasonable wear and use excepted;
(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. Unless this Agreement is sooner
terminated, from the date hereof through April 30, 1996, 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
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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 known threat of institution of legal
proceedings against the Seller regarding or affecting the operation of the
Theatres, or the status or conduct of material 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) Except film contracts entered into in the ordinary course
of business, other than Guaranteed Film Contracts, 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 any lease 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 of the Theatres.
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 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 material breach
of any Continuing Contract, lease, employment contract or collective bargaining
agreement regarding the Theatres.
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4.07. Compliance with Laws. At all times after the date hereof and
through the Closing Date, the Seller will, in all material respects, 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, 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.
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.
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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.
5.03. No Material Adverse Change. Except as otherwise fully and
adequately disclosed in this Agreement or on Schedule 5.03 hereto and 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.
5.05. 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.
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
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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, dated as of the Closing Date.
5.08. Consents. Seller shall have delivered to Buyer the written
consent of third parties referred to in Section 2.07 (d), which consent shall
be in substantially the form, scope and substance of the Landlord's estoppels
attached hereto as Exhibit "G".
5.09. Seller shall have delivered to Buyer an agreement with the
Landlord of the Brandon Twin Theatre, Brandon, Florida, which shall extend the
present term of said lease for a minimum of an additional five (5) years, with
no change in the terms and conditions of said lease.
5.10. Seller shall have closed, and covenants and agrees that it
shall not reopen, nor allow any third party to reopen Seller's drive-in located
in Dade City, Florida.
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)
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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
Schedule 3.11 hereto.
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 is a corporation duly
organized and existing, and in good standing under the laws of the State of
Delaware, and 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
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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. Claims. Except for claims arising under or in connection with
this Agreement, Buyer neither has nor on the Closing Date will have any claims
of any nature, whether asserted or unasserted, against Seller.
7.04. Governmental Notifications and Consents. Except as set forth on
Schedule 7.04, 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.
7.05. Buyer's Indemnity for Seller's Continuing Liability under
Leases. Buyer hereby covenants and agrees that it shall indemnify and hold
harmless Seller from any and all claims, actions, damages and other liabilities
to any person arising out of Buyer's occupancy or operation of 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 to be assigned to Buyer at
Closing upon which Seller is not released by the applicable Landlord.
7.06. 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.
ARTICLE VIII
CONDITIONS PRECEDENT 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 precedent 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.
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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:
(a) By the mutual consent of the Board of Directors of Buyer
and the Boards 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 the Closing Date.
(c) By the Boards 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 the Closing Date.
(d) By either of 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,
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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.
(e) By either party in the event Closing does not take place
on or before March 17, 1995.
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
material inaccuracy of any representation contained in, or made pursuant to
this Agreement, or
(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;
(d) Buyer's breach of Assumed Liabilities.
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
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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 their own choosing satisfactory to Indemnified Party. All
costs and expenses of such defense (including reasonable fees of counsel), and
any settlement or compromise resulting from the defense of any claim will be
paid by the Indemnifying Party. Except as to claims not seeking payment of
money, Seller shall not be obligated to so save, defend, indemnify and hold
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
or the Premises (collectively the "Claims") as herein set forth unless and to
the extent that the aggregate claims of Buyer for such indemnification exceed
the amount of $25,000.00. For example, in the event Buyer's claims reach
$25,001.00, Seller shall be obligated to pay or reimburse Buyer the entire
$25,001.00. In the event Buyer's aggregate claims are less than $25,000.00,
Seller will not be obligated to pay or reimburse buyer anything.
(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 twelve (12)
months after the Closing Date.
10.05. Unlimited Indemnity Regarding Ford Leases. Notwithstanding
anything set forth hereinabove to the contrary, Seller's indemnification of
Buyer regarding payment and performance pursuant to the terms and conditions of
the Ford Leases, and Seller's compliance with Section 2.08 (h) hereof, shall
not be limited to twelve (12) months after the Closing Date, nor subject to the
$25,000.00 limitation set forth in 10.02 (a).
ARTICLE XI
30
31
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. Except for
Buyer's obligations regarding the Ford Leases set forth in paragraph 2.08 (h)
hereof, and the obligations set forth in paragraph 5.10, which shall not
terminate or expire, the representations, warranties and agreements made by the
Buyer and the Seller herein shall survive consummation of the transactions
contemplated hereby for twelve (12) 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. Provided, however, any representation or warranty which Buyer
knows to be untrue or incorrect not raised at Closing shall be waived.
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. Other than Lazard Freres
& Co., who has been employed by Seller, and 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 fees and expenses of their
counsel, whether or not such transaction shall be consummated.
31
32
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 reasonable 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 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
TELECOPIER - 706/576-34l9
With a copy to:
F. Lee Champion, III
Champion & Champion
1030 Second Avenue
Columbus, GA 31901
TELECOPIER - 706/324-0470
SELLER:
Floyd Theatres, Inc.
c/o MasTec, Inc.
ATTN: Carlos Valdes
8600 N. W. 36th Street
8th Floor
Miami, FL 33166
TELECOPIER - 305/599-1572
With a copy to:
Eliot C. Abbott
Carlos & Abbott, P. C.
Suite 1150
999 Ponce de Leon Boulevard
Coral Gables, FL 33134
TELECOPIER - 305/443-8617
32
33
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.
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, in Miami, Florida, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
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.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, on the day and year first above written.
33
34
SELLER:
FLOYD THEATRES, INC.
BY:
-----------------------------
Title: Vice President
-----------------
ATTEST:
-------------------------
Title: Vice President
-----------------
(Corporate Seal)
TALLAHASSEE THEATRES, INC.
BY:
-----------------------------
Title: Vice President
-----------------
ATTEST:
-------------------------
Title: Vice President
-----------------
(Corporate Seal)
FLOYD THEATRES OF GEORGIA, INC.
BY:
-----------------------------
Title: Vice President
-----------------
ATTEST:
-------------------------
Title: Vice President
-----------------
(Corporate Seal)
MASTEC, INC.
BY:
-----------------------------
Title: S.V.P. - Finance
-----------------
ATTEST:
-------------------------
Title: Vice President
-----------------
(Corporate Seal)
34
35
BUYER:
CARMIKE CINEMAS, INC.
BY:___________________________
President
ATTEST:_______________________
Secretary
(Corporate Seal)
\Floyd\Contract.frm
35
EX-11
3
COMPUTATION OF EARNINGS
1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
CARMIKE CINEMAS, INC.
Years Ended December 3l
--------------------------------------
1992 1993 1994
-------- -------- ---------
(In thousands, except per share data)
PRIMARY:
Average shares outstanding 7,524 7,756 8,312
Net effect of dilutive stock
options and warrants based
on the treasury stock method
using average market price 148 161 165
-------- --------- ----------
Totals 7,672 7,917 8,477
======== ========= ==========
Income before cumulative
effect of change in accounting $ 6,112 $ 11,861 $ 16,953
Cumulative effect of change in accounting -0- 390 -0-
-------- --------- ---------
NET INCOME $ 6,112 $ 12,251 $ 16,953
======== ========= ==========
Earnings per share:
Income before cumulative
effect of change in accounting $ .80 $ 1.50 $ 2.00
Cumulative effect of change in accounting -0- .05 -0-
-------- ---------- ----------
NET INCOME PER SHARE $ .80 $ 1.55 $ 2.00
======== ========== ==========
Note: Fully diluted calculation is not presented because dilution is less than
3%.
EX-13
4
1994 ANNUAL REPORT OF CARMIKE CINEMAS
1
EXHIBIT 13
[LOGO]
Carmike Cinemas
Report Of Independent Auditors
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, 1994 and 1993, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1994. 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, 1994 and 1993 and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, 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, 1995
2
[LOGO]
Carmike Cinemas
Consolidated Balance Sheets
Carmike Cinemas, Inc. and Subsidiaries
(in thousands)
December 31
1994 1993
-------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 17,872 $ 10,649
Short-term investments . . . . . . . . . . . . . . . . . 4,815 22,004
Accounts and notes receivable . . . . . . . . . . . . . . 3,814 4,406
Inventories . . . . . . . . . . . . . . . . . . . . . . . 1,939 1,563
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 5,025 3,626
-------- --------
TOTAL CURRENT ASSETS 33,465 42,248
OTHER ASSETS
Investments in and advances to partnerships . . . . . . . 4,631 2,098
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,375 2,575
-------- --------
7,006 4,673
PROPERTY AND EQUIPMENT--Notes B, C, D and F)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . 31,835 26,717
Buildings and improvements . . . . . . . . . . . . . . . 88,500 76,866
Leasehold improvements . . . . . . . . . . . . . . . . . 107,155 86,095
Leasehold interests . . . . . . . . . . . . . . . . . . . 42,581 36,624
Equipment . . . . . . . . . . . . . . . . . . . . . . . . 111,780 90,775
-------- --------
381,851 317,077
Accumulated depreciation and amortization . . . . . . . . (87,880) (67,527)
-------- --------
293,971 249,550
EXCESS OF PURCHASE PRICE OVER NET
ASSETS OF BUSINESSES ACQUIRED . . . . . . . . . . . . . . 43,156 30,553
-------- --------
$377,598 $327,024
======== ========
3
December 31
1994 1993
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,478 $ 20,757
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,327 8,265
Current maturities of long-term debt, senior notes and
capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . 9,352 8,207
-------- --------
TOTAL CURRENT LIABILITIES 44,157 37,229
LONG-TERM DEBT, less current maturities--Note D . . . . . . . . . . . . . . . 3,495 35,376
SENIOR NOTES--Note E. 118,182 125,000
CAPITAL LEASE OBLIGATIONS, less current maturities--Note F . . . . . . . . . 19,245 17,441
CONVERTIBLE SUBORDINATED DEBT--Note B . . . . . . . . . . . . . . . . . . . . 3,051 2,819
DEFERRED INCOME TAXES--Note I . . . . . . . . . . . . . . . . . . . . . . . . 17,512 15,303
SHAREHOLDERS' EQUITY--Notes D, E, G, and H
Class A Common Stock, $.03 par value, authorized 15,000,000 shares,
issued 9,738,101 and 6,724,901 shares, respectively . . . . . . . . . . . 292 201
Class B Common Stock, $.03 par value, authorized 5,000,000 shares,
issued and outstanding 1,420,700 shares . . . . . . . . . . . . . . . . . 43 43
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,763 39,621
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,858 54,905
Treasury stock, -0- and 170,000 shares, respectively, of
Class A Common Stock, at cost . . . . . . . . . . . . . . . . . . . . . . -0- (914)
-------- --------
171,956 93,856
-------- --------
$377,598 $327,024
======== ========
See notes to consolidated financial statements.
4
[LOGO]
Carmike Cinemas
Consolidated Statements of Income
Carmike Cinemas, Inc. and Subsidiaries
(in thousands, except for per share data)
Years Ended December 31,
1994 1993 1992
-------- -------- --------
Revenues:
Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $232,134 $167,294 $119,408
Concessions and other . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,485 74,504 52,570
-------- -------- --------
327,619 241,798 171,978
Costs and expenses:
Film rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,689 83,635 58,671
Concession costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,241 9,406 7,815
Other theatre operating costs . . . . . . . . . . . . . . . . . . . . . . . 127,826 93,737 68,718
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . 5,092 4,710 3,897
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 22,544 16,255 11,134
-------- -------- --------
282,392 207,743 150,235
-------- -------- --------
OPERATING INCOME 45,227 34,055 21,743
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,028 14,282 11,623
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES 28,199 19,773 10,120
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,246 7,912 4,008
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES 16,953 11,861 6,112
Cumulative effect of change in accounting for income taxes -- Note I . . . . -0- 390 -0-
-------- -------- --------
NET INCOME $ 16,953 $ 12,251 $ 6,112
======== ======== ========
Weighted average common shares outstanding . . . . . . . . . . . . . . . . . 8,477 7,917 7,672
======== ======== ========
Earnings per share:
Income before cumulative effect of change in
accounting for income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 2.00 $ 1.50 $ 0.80
Cumulative effect of change in
accounting for income taxes . . . . . . . . . . . . . . . . . . . . . . . -0- 0.05 -0-
-------- -------- --------
NET INCOME PER SHARE $ 2.00 $ 1.55 $ 0.80
======== ======== ========
See notes to consolidated financial statements.
5
[LOGO]
Carmike Cinemas
Consolidated Statements of Cash Flows
Carmike Cinemas, Inc. and Subsidiaries
(in thousands)
Years Ended December 31
1994 1993 1992
-------- -------- --------
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,953 $ 12,251 $ 6,112
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 22,544 16,255 11,134
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 1,674 691 194
Gain on sales of property and equipment . . . . . . . . . . . . . . . . (122) (932) (388)
Changes in operating assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . 592 (909) 2,138
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (376) (300) (377)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (1,399) (911) 149
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 2,721 2,929 8,378
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 3,597 (2,908) 1,965
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 46,184 26,166 29,305
INVESTING ACTIVITIES
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . (29,096) (33,466) (13,298)
Purchases of assets from other theatre operators . . . . . . . . . . . . . (51,050) (11,200) (38,083)
Acquisition of remaining interest in Westwynn Theatres, Inc.,
net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . -0- (8,774) -0-)
Proceeds from sales of property and equipment . . . . . . . . . . . . . . . 860 1,466 1,197
Decrease (increase) in:
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . 17,189 (3,506) (829)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,493) (1,304) (62)
--------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (64,590) (56,784) (51,075)
FINANCING ACTIVITIES
Debt and other liabilities:
Additional borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 110,950 29,275 30,844
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (146,468) (5,656) (2,199)
Issuance of Class A Common Stock . . . . . . . . . . . . . . . . . . . .
61,147 806 439
--------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 25,629 24,425 29,084
--------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,223 (6,193) 7,314
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . 10,649 16,842 9,528
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,872 $ 10,649 $ 16,842
======== ======== ========
See notes to consolidated financial statements.
6
[LOGO]
Carmike Cinemas
Consolidated Statements of Shareholders' Equity
Carmike Cinemas, Inc. and Subsidiaries
(in thousands)
Class A Class B
Common Stock Common Stock
------------------ -----------------
Shares Amount Shares Amount
------ ------ ------ ------
BALANCES AT DECEMBER 31, 1991 6,575 $197 1,421 $43
Issuance of Class A Common Stock on
exercise of stock options . . . . . . . . . . . . 55 2 -0- -0-
Issuance of Class A Common Stock under
employee stock bonus plan . . . . . . . . . . . . 2 -0- -0- -0-
Net income . . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
----- ---- ----- ---
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 B . . . . . . . -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
===== ==== ===== ===
7
Class A Common Stock
in Treasury
Paid-in Retained --------------------
Capital Earnings Shares Amount Total
------- -------- ------ ------ -----
$35,082 $36,542 500 $(2,687) $169,177
400 -0- -0- -0- 402
37 -0- -0- -0- 37
-0- 6,112 -0- -0- 6,112
------- ------- ---- ------- --------
35,519 42,654 500 (2,687) 75,728
804 -0- -0- -0- 806
3,298 -0- (330) 1,773 5,071
-0- 12,251 -0- -0- 12,251
------- ------- ---- ------- --------
39,621 54,905 170 (914) 93,856
56,784 -0- (170) 914 57,779
2,867 -0- -0- -0- 2,875
491 -0- -0- -0- 493
-0- 16,953 -0- -0- 16,953
------- ------- ---- ------- --------
$99,763 $71,858 -0- $ -0- $171,956
======= ======= ==== ======= ========
See notes to consolidated financial statements.
8
[LOGO]
Carmike Cinemas
Notes to Consolidated Financial Statements
Carmike Cinemas, Inc. and Subsidiaries
December 31, 1994
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 and municipal bonds with maturity dates less than one
year from date of purchase and are stated at cost which approximates market.
Inventories: Inventories, principally concessions, 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 $568,000, $744,000 and
$412,000 for each of the years in the period ended December 31, 1994.
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 $2,611,000 and $2,215,000 at December 31, 1994 and 1993,
respectively.
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 up
to ten percent of the employee's 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 immaterial to the Company's operations.
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 $
58,200,000 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.
NOTE B -- 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 as-
9
sumed certain defined liabilities of Excellence. In connection with the
formation of Westwynn and the acquisition of the assets of Excellence, the
Company invested $2,800,000 in cash and contributed to Westwynn certain
operating theatres and land with a book value of $6,477,000. 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 $1,200,000. Both the Senior and Junior
Preferred Stock were nonvoting 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 years ended December 31, 1993 and 1992, the
Company recognized income of $207,000 and $429,000, respectively, 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 $19,776,000
(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 $4,000,000 face value zero coupon convertible subordinated note
maturing June 1, 1998 (fair market value of approximately $3,051,000 and
$2,819,000 at December 31, 1994 and 1993, respectively) and paid $11,780,000 in
cash for the retirement of Westwynn subordinated notes and the purchase of
certain Westwynn equity securities.
The excess of the purchase price over the net assets acquired (approximately
$16,000,000) 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:
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 and $1,609,000 for the years ended December 31,
1993 and 1992, respectively, from Westwynn and its predecessor.
NOTE C--ACQUISITIONS
The Company's acquisitions in 1994, 1993 and 1992 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 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:
Number of
Approximate ---------------------
Seller Purchase Price Theatres Screens Effective Date
--------------------------------------- -------------- -------- ------- --------------
(in thousands)
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
1993:
Manos Enterprises, Inc. . . . . . . 11,200 19 80 Nov. 19, 1993
1992:
Plitt Theatres, Inc. . . . . . . . 5,750 14 57 May 22, 1992
American Multi-Cinema,
Inc. . . . . . . . . . . . . . . 12,100 5 32 May 22, 1992
Resources Financial . . . . . . . . 3,150 5 17 June 5, 1992
Cinamerica Theatres, L.P. . . . . . 17,150 16 60 Nov. 18, 1992
The excess of purchase prices over net assets of businesses acquired has been
recorded as an intangible asset, Amounts recorded were $18,733,000 in 1994,
$3,200,000 in 1993, and $7,150,000 in 1992.
10
[LOGO]
Carmike Cinemas
Notes to Consolidated Financial Statements
Carmike Cinemas, Inc. and Subsidiaries
Pro-forma results have not been presented for those acquisitions which were not
significant during the years ended December 31, 1994 and 1993. 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 Cinema World,
Inc. acquisition occurred on January 1, 1993 and should not serve as a forecast
of the Company's operating results for any future periods.
Unaudited pro-forma results of the Cinema World, Inc., acquisition are as
follows (in thousands):
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 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 allocation of the acquisition purchase price.
c. Interest expense has been adjusted to reflect debt incurred at borrowing
rates of 4.5% to 5%.
NOTE D--LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31
1994 1993
------ -------
Term Loan . . . . . . . . . . . . . . . $1,750 $ 2,917
Industrial Revenue Bonds; payable
in equal installments through
May 2006, with interest ranging
from 3.90% to 8.25% . . . . . . . . . $3,175 3,429
Other indebtedness . . . . . . . . . . 471 765
Westwynn Term Loan . . . . . . . . . . -0- 35,235
------ -------
5,396 42,346
Less current maturities . . . . . . . . (1,901) (7,647)
Plus unamortized debt premium . . . . . -0- 677
------ -------
$3,495 $35,376
====== =======
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 $100,000,000 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% 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, 1994, the Company has no amounts outstanding under this facility. 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, 1994 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.
On May 1, 1996, the holders of the 3.90% 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.
11
Interest paid and interest capitalized were as follows (in thousands):
Year Ended December 31 Interest Paid Interest Capitalized
------------------------------ ------------- --------------------
1994 . . . . . . . . $16,398 $408
1993 . . . . . . . . $15,562 $515
1992 . . . . . . . . $10,098 $127
Aggregate principal payments on long-term debt as of December 31, 1994 are as
follows (in thousands):
1995 . . . . . . . . . . . . . . . . . . $1,901
1996 . . . . . . . . . . . . . . . . . . 817
1997 . . . . . . . . . . . . . . . . . . 243
1998 . . . . . . . . . . . . . . . . . . 252
1999 . . . . . . . . . . . . . . . . . . 263
Thereafter . . . . . . . . . . . . . . . 1,920
------
$5,396
======
The fair value of the Company's long-term debt at December 31, 1994
approximates its carrying value. This fair value 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 long-term debt at other than book value and currently intends to
hold the debt through maturity.
NOTE E--SENIOR NOTES
The Company has outstanding various unsecured notes payable to institutional
investors as follows (in thousands):
December 31
1994 1993
-------- --------
10.53% Senior Notes, due 2005 . . . . . $ 75,000 $ 75,000
7.90% Senior Notes, due 2002 . . . . . 25,000 25,000
7.52% Senior Notes, due 2003 . . . . . 25,000 25,000
-------- --------
125,000 125,000
Less current maturities . . . . . . . . (6,818) -0-
-------- --------
$118,182 $125,000
======== ========
The 7.52% Senior Notes provide for annual principal payments of $3,571,429
beginning March 1, 1997 through maturity. The 7.90% Senior Notes provide for
annual principal payments of $3,571,429 beginning March 1, 1996 through
maturity. The 10.53% Senior Notes provide for annual principal payments of
$6,818,181 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.
The cumulative fair value of the Company's senior notes at December 31, 1994 is
estimated to be approximately $128,800,000. 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.
NOTE F--LEASES
Certain of the Company's theatres and equipment are leased under non-cancelable
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
1994 1993
------- -------
Buildings and improvements . . . . . . $22,668 $20,444
Equipment . . . . . . . . . . . . . . . 3,872 3,876
------- -------
26,540 24,320
Less accumulated amortization . . . . . 7,809 6,621
------- -------
$18,731 $17,699
======= =======
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,
1994 are as follows (in thousands):
Operating Capital
Leases Leases
------ ------
1995 . . . . . . . . . . . . . . . . . $ 29,123 $ 3,077
1996 . . . . . . . . . . . . . . . . . 28,046 3,034
1997 . . . . . . . . . . . . . . . . . 25,860 3,038
1998 . . . . . . . . . . . . . . . . . 24,593 3,047
1999 . . . . . . . . . . . . . . . . . 21,984 2,937
Thereafter . . . . . . . . . . . . . . 129,917 33,843
-------- -------
Total minimum lease payments . . . . . $259,523 48,976
========
Less amounts representing
interest . . . . . . . . . . . . . . (29,099)
-------
Present value of future minimum
lease payments . . . . . . . . . . . 19,877
Less current maturities . . . . . . . . (633)
-------
$19,244
=======
12
[LOGO]
Carmike Cinemas
Notes to Consolidated Financial Statements
Carmike Cinemas, Inc. and Subsidiaries
Rent expense for each of the three years in the period ended December 31, 1994
was approximately $36,100,000, $26,100,000 and $16,581,000, 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, 1994, 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
December 31, 1991 . . . . . . 35 210 83 -0- 328
Exercised . . . . . . . . . . (30) -0- (25) -0- (55)
--- --- --- --- ---
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
=== === === === ===
The Company has 160,000 and 302,100 shares available for grant as of December
31, 1994 and 1993, respectively.
At December 31, 1994, 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 15,000,000 shares of Class A
Common Stock, $.03 par value, 5,000,000 shares of Class B Common Stock, $.03
par value, and 1,000,000 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 Transaction (see Note B), the Company issued a
$4,000,000 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
1994 1993
------ ------
Stock option plan . . . . . . . . . . . 425 482
Convertible Note . . . . . . . . . . . 100 100
Conversion rights of
Class B Common Stock . . . . . . . . 1,421 1,421
Stock purchase warrants . . . . . . . . -0- 250
----- -----
1,946 2,253
===== =====
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. Prior to the adoption of Statement 109, income tax
expense was determined using the deferred method. Expense under the deferred
method was based on items of income and expense that were reported in different
years in the financial statements and tax returns and were measured at the tax
rate in effect in the year the difference originated. 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 effect on pretax income of recording additional property and
equipment values was an increase in depreciation expense of approximately
$800,000 for the year ended December 31, 1993.
As permitted by Statement 109, the Company elected not to restate the financial
statements of any prior years. The cumulative effect of the change increased
net income by $390,000, or $.05 per share, in the first quarter of 1993.
13
The provision for income taxes is summarized as follows (in thousands):
Years Ended December 31
1994 1993 1992
------- ------ ------
Current:
Federal . . . . . . . . . $ 7,165 $5,241 $2,789
State . . . . . . . . . . 1,860 1,590 899
Deferred . . . . . . . . . 2,221 1,081 320
------- ------ ------
$11,246 $7,912 $4,008
======= ====== ======
Significant components of the Company's deferred tax liabilities (assets) are
as follows (in thousands):
December 31
1994 1993
------- -------
Financial statement bases
of property and equipment
over tax bases . . . . . . . . . . . $18,142 $16,926
Westwynn net operating
loss carry forward . . . . . . . . . (1,971) (2,031)
Income taxes payable
for prior years . . . . . . . . . . . 1,672 1,672
Other . . . . . . . . . . . . . . . . . (331) (1,264)
------- -------
$17,512 $15,303
======= =======
The components of the deferred income tax provision, computed using the
deferred method, are as follows for the year ended December 31, 1992 (in
thousands):
Accelerated depreciation
for tax purposes . . . . . . . . . . . . . . . $ 90
Equity investment . . . . . . . . . . . . . . . . 166
Other . . . . . . . . . . . . . . . . . . . . . . 64
----
$320
====
A reconciliation of income taxes at the federal income tax rate and income
taxes as reflected in the consolidated financial statements follows (in
thousands):
Years Ended December 31
1994 1993 1992
------- ------ ------
Income taxes at
statutory rates . . . . . $ 9,870 $6,821 $3,440
Plus state income taxes,
net of federal tax
benefit . . . . . . . . . 1,523 1,197 614
------- ------ ------
11,393 8,018 4,054
Tax exempt
interest . . . . . . . . (70) (246) (106)
Amortization of excess of
purchase price over net
assets of businesses
acquired . . . . . . . . 79 114 215
Impact of change in tax
rate on temporary
differences . . . . . . . -0- 330 -0-
Other items, net . . . . . (156) (304) (155)
------- ------ ------
$11,246 $7,912 $4,008
======= ====== ======
Income taxes paid in each of the three years in the period ended December 31,
1994, were approximately $8,724,000, $8,306,000 and $3,143,000, respectively.
NOTE J--SUBSEQUENT EVENT (UNAUDITED)
Effective March 17, 1995, the Company purchased certain assets consisting of 21
multiplex theatres (83 screens) and assumed certain contractual liabilities for
a cash purchase price of approximately $11,300,000.
NOTE K--QUARTERLY RESULTS (Unaudited)
(In thousands except for per share data)
Year Ended December 31, 1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Totals
--------------------------------------------- ----------- ----------- ----------- ----------- ------
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
Year Ended December 31, 1993
---------------------------------------------
Total revenues . . . . . . . . . . . . . . . $42,972 $50,982 $ 82,446 $65,398 $241,798
Operating income . . . . . . . . . . . . . . 4,455 6,622 16,095 6,883 34,055
Net income before cumulative effect of
change in accounting for income taxes . . . 869 1,901 7,286 1,805 11,861
Net income . . . . . . . . . . . . . . . . . 1,259 1,901 7,286 1,805 12,251
Net income per common share before
cumulative effect of change in
accounting for income taxes . . . . . . . . .11 .24 .90 .22 1.50
Net income per common share . . . . . . . . . .16 .24 .90 .22 1.55
Net income per common share calculations for each of the above quarters is
based on the weighted average number of shares outstanding for each period and
the sum of the quarters may not necessarily be equal to the net income per
common share amount for the year.
14
[LOGO]
Carmike Cinemas
Review
Carmike Cinemas, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
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.
Comparison of Years Ended December 31, 1993 and December 31, 1992
Total revenues for the year ended December 31, 1993 increased 40.6% to
$241,798,000 from $171,978,000. This increase consists of a $47,886,000
increase in admissions and a $21,934,000 increase in concessions and other.
Overall attendance increased 32.2% due to additional screens in operation
acquired in the purchase of screens in November 1993 and the purchase of the
remaining interest in Westwynn Theatres, Inc. that the Company did not
previously own in June 1993. Average admission prices increased 6.1% to $3.68
and average concession sales per patron increased 13.3% from $1.28 to $1.45.
Cost of theatre operations (film rentals, concession costs, and other theatre
operating costs) increased 38.1% for the year ended December 31, 1993 to
$186,778,000 from $135,204,000 due to the increased number of screens in
operation and the increase in attendance. As a percentage of revenues, cost of
theatre operations decreased from 78.6% of total revenues to 77.2% of total
revenues. This percentage decrease is due to the higher admission and
concession prices and higher attendance on same screen basis whereby certain
fixed costs, primarily occupancy, included in this expense category do not
fluctuate with revenues. Excluding occupancy expense, cost of theatre
operations as a percentage of revenues decreased from 69.0% of total revenues
to 66.5%.
General and administrative costs increased to $4,710,000 in 1993 from
$3,897,000 in 1992 reflecting additional salary costs, increased legal and
professional fees and the cost of moving the Company's film buying office from
Atlanta, Georgia to Columbus, Georgia. As a percentage of total revenues,
general and administrative costs decreased from 2.3% of total revenues to 1.9%
of total revenues.
Depreciation and amortization increased 46% in 1992 to $16,255,000 from
$11,134,000 as a result of the theatre acquisitions in June and November 1993
combined with additional screens added through internal construction. As a
percentage of total revenues, depreciation and amortization increased to 6.7%
of total revenues from 6.5% of total revenues.
Interest expense increased 22.9% to $14,282,000 in 1993 from $11,623,000 in
1992. This increase reflects interest expense on the 7.52% Senior Notes issued
in April 1993 and also the debt assumed in connection with the Westwynn
Theatres, Inc. acquisition in June 1993.
Income taxes increased from 39.6% to 40% of income before income taxes due to
the higher tax rate.
15
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 facilities.
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.
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 of 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 14, 1995, the Company had approximately $7.1 million
in cash and short-term investments on hand and approximately $100,000,000 was
available under the Company's revolving credit facility.
16
[LOGO]
Carmike Cinemas
Selected Financial and Operating Data
Carmike Cinemas, Inc. and Subsidiaries
(in thousands, except for per share and operating data)
Years Ended December 31
1994(1) 1993(1)(2)(3) 1992(1) 1991 1990
------- ------------- ------- ---- ----
INCOME STATEMENT DATA:
Revenues:
Admissions . . . . . . . . . . . . . . . . $232,134 $167,294 $119,408 $ 99,110 $ 86,378
Concessions and other . . . . . . . . . . . 95,485 74,504 52,570 46,686 41,042
-------- -------- -------- -------- --------
TOTAL REVENUES 327,619 241,798 171,978 145,796 127,420
Costs and expenses:
Film rental . . . . . . . . . . . . . . . . 114,689 83,635 58,671 48,635 43,381
Concession costs . . . . . . . . . . . . . 12,241 9,406 7,815 6,575 6,203
Other theatre operating costs . . . . . . . 127,826 93,737 68,718 57,790 47,998
General and administrative . . . . . . . . 5,092 4,710 3,897 3,828 3,674
Depreciation and amortization . . . . . . . 22,544 16,255 11,134 9,437 7,612
-------- -------- -------- -------- --------
282,392 207,743 150,235 126,265 108,868
-------- -------- -------- -------- --------
OPERATING INCOME 45,227 34,055 21,743 19,531 18,552
Interest expense . . . . . . . . . . . . . . 17,028 14,282 11,623 9,914 8,038
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES 28,199 19,773 10,120 9,617 10,514
Income taxes . . . . . . . . . . . . . . . . 11,246 7,912 4,008 3,902 4,221
-------- -------- -------- -------- --------
NET INCOME $ 16,953 $ 11,861 $ 6,112 $ 5,715 $ 6,293
======== ======== ======== ======== ========
Earnings per common share . . . . . . . . . $ 2.00 $ 1.50 $ .80 $ .75 $ .84
======== ======== ======== ======== ========
Weighted average common shares outstanding . 8,477 7,917 7,672 7,648 7,491
======== ======== ======== ======== ========
OPERATING DATA:
Theatres (at end of period) . . . . . . . . 445 409 302 265 263
Screens (at end of period) . . . . . . . . 1,942 1,701 1,215 1,033 979
Average screens per theatre . . . . . . . . 4.4 4.2 4.0 3.9 3.7
Total attendance (thousands) . . . . . . . 59,660 45,493 34,415 29,126 26,215
BALANCE SHEET DATA:
(at end of year)
Cash and cash equivalents . . . . . . . . . $ 17,872 $ 10,649 $ 16,842 $ 9,528 $ 17,762
Total assets . . . . . . . . . . . . . . . 377,598 327,024 230,291 184,058 178,670
Total long-term debt (4) . . . . . . . . . 143,973 180,636 120,234 91,605 94,022
Shareholders' equity . . . . . . . . . . . 171,956 93,856 75,728 69,177 63,329
(1) See Note C of Notes to Consolidated Financial Statements with respect to
acquisitions.
(2) See Note B 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 B, D, E, and F of Notes to
Consolidated Financial Statements).
17
[LOGO]
Carmike Cinemas
Directors, Officers and Shareholder Information
Carmike Cinemas, Inc. and Subsidiaries
DIRECTORS OFFICERS
C. L. PATRICK C. L. PATRICK
Chairman of the Board Chairman of the Board
Carmike Cinemas, Inc.
Columbus, Georgia MICHAEL W. PATRICK
President & Chief Executive Officer
MICHAEL W. PATRICK
President JOHN O. BARWICK, III
Carmike Cinemas, Inc. Vice President - Finance, Treasurer &
Columbus, Georgia Chief Financial Officer
JOHN W. JORDAN, II FRED W. VAN NOY
Managing Partner Vice President - General Manager
The Jordan Company
New York, New York LARRY M. ADAMS
Vice President - Informational Systems
CARL L. PATRICK, JR. & Secretary
Certified Public Accountant/
Attorney ANTHONY J. RHEAD
Director, Summit Bank Corporation Vice President - Film
and Co-Chairman PGL
Entertainment Corporation P. LAMAR FIELDS
Atlanta, Georgia Vice President - Development
CARL E. SANDERS H. MADISON SHIRLEY
Chairman Vice President - Concessions &
Troutman Sanders, Attorneys Assistant Secretary
Atlanta, Georgia
MARILYN B. GRANT
DAVID ZALAZNICK Vice President - Advertising
Partner
The Jordan Company
New York, New York
GENERAL OFFICES
Carmike Cinemas, Inc.
Carmike Plaza
1301 First Avenue
Columbus, Georgia 31901-2109
GENERAL INFORMATION
Carmike Cinemas, Inc. is the second largest motion picture exhibitor in the
United States, operating 445 theatres with an aggregate of 1,942 screens in
markets located primarily in the Southeast, the Midwest and the West. During
1994, the Company opened five new theatres (43 screens), added fifteen screens
to existing complexes and purchased forty-nine modern multiplex theatres with a
total of 231 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:
1994 1993
-------------------- ---------------------
Quarter Ended High Low High Low
---------------------- ------- ------- ------- -------
March $19 1/8 $16 3/8 $14 7/8 $12 7/8
June $22 3/8 $17 3/8 $16 3/8 $14 1/4
September $23 1/4 $16 5/8 $19 1/2 $15
December $24 3/8 $19 5/8 $20 3/4 $15 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 14, 1995, the Class A Common Stock was held of record by 784
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
(formerly the Trust Division of Columbus Bank & Trust Co.)
Corporate Trust Department
P.O. Box 120
Columbus, Georgia 31902
706/649-2058
FORM 10-K
A copy of the Company's 1994 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
SUBSIDIARY % OWNED STATE OF INCORPORATION
---------- ------- ----------------------
Wooden Nickel Pub, Inc. 100% Delaware
Westwynn Theatres, Inc. 100% Delaware
Carmike Southeast, Inc. 100% Delaware
EX-23
6
CONSENT OF ERNST & YOUNG, LLP
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, 1995, included in the
1994 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 and the
Registration Statement (Form S-3 No. 33-68494) pertaining to the secondary
stock offering of Carmike Cinemas, Inc. of our report dated February 6, 1995,
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, 1994.
Ernst & Young LLP
Columbus, Georgia
March 28, 1995
EX-27
7
FINANCIAL DATA SCHEDULE
5
1,000
YEAR
DEC-31-1994
JAN-01-1994
DEC-31-1994
17,872
4,815
3,814
0
1,939
33,465
381,851
87,880
377,598
44,157
0
335
0
0
171,621
377,598
327,619
327,619
254,756
254,756
27,636
0
17,028
28,199
11,246
16,953
0
0
0
16,953
2.00
2.00