-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R0710tWPRC6xz3FxAbQdIEW8lXN+SOM2A0qMl8FJANhc8/xYZciUxuenu0Px96sy e8KTsXNyDIHv2PAS0H0tEg== 0000950144-97-002540.txt : 19970319 0000950144-97-002540.hdr.sgml : 19970319 ACCESSION NUMBER: 0000950144-97-002540 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970318 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARMIKE CINEMAS INC CENTRAL INDEX KEY: 0000799088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 581469127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11604 FILM NUMBER: 97558733 BUSINESS ADDRESS: STREET 1: 1301 FIRST AVE CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 4045763400 MAIL ADDRESS: STREET 1: P O BOX 391 CITY: COLUMBUS STATE: GA ZIP: 31994 10-K 1 CARMIKE CINEMAS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended DECEMBER 31, 1996. [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1966]. OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to ----------- ----------- Commission File Number 0-14993 CARMIKE CINEMAS, INC. (Exact name of registrant as specified in its charter) Delaware 58-1469127 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1301 First Avenue, Columbus, Georgia 31901 (Address of principal Executive Offices) (Zip Code) (706) 576-3400 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Class A Common Stock, par New York Stock Exchange, Inc. value $.03 per share
Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ] As of March 14, 1997, 9,758,601 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 $232,000,000. As of March 14, 1997, 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, 1996 are incorporated by reference into Part II and Part IV. (2) Specified portions of Carmike Cinemas, Inc.'s Proxy Statement relating to the 1997 Annual Meeting of Shareholders are incorporated by reference into Part III. 2 PART I Item 1. Business (a) General Development of Business Carmike Cinemas, Inc. (herein referred to as the "Company" or "Carmike"), a corporation organized under the laws of the State of Delaware, is engaged in the motion picture exhibition business. The Company was incorporated in April 1982 in connection with the leveraged buy-out of the Company's predecessor, the Martin Theatres circuit, by present management of the Company. The principal executive offices of the Company are located at 1301 First Avenue, Columbus, Georgia 31901-2109, and its telephone number at that location is (706) 576-3400. The following are several of the more significant events which have taken place since December 31, 1995: (i) Acquisitions during 1996 In separate transactions during 1996, the Company acquired certain assets and businesses as follows:
Approximate Number of ----------------- Seller Purchase Price Theatres Screens Effective Date ------ -------------- -------- ------- -------------- (in thousands) Maxi Saver Cinemas, Inc. $3,975 2 18 January 5, 1996 Fox Theatres Corp. 19,100 12 61 February 16, 1996 ------- -- -- $23,075 14 79 ======= == ==
The excess of purchase prices over net assets of businesses acquired, approximately $17.0 million in 1996, has been recorded as an intangible asset. 2 3 (ii) New Theatre Openings and Additions to Existing Theatres During 1996, the Company opened or expanded the following theatres:
THEATRE LOCATION SCREENS ------- -------- ------- NEW COMPLEXES ------------- Broadway 16 Myrtle Beach, SC 16 Carmike 10 Asheville, NC 10 Carmike 12 Greensboro, NC 12 Wynnsong 10 Columbia, SC 10 Bijou 7 Chattanooga, TN 7 Wynnsong 10 Ft. Benning, GA 10 Carmike 8 Altoona, PA 8 --- Total 73 ADDITIONS TO EXISTING COMPLEXES ------------------------------- Westwood 12 Fayetteville, NC 6 Carmike 14 Mobile, AL 4 Carmike 8 Lincolnton, NC 4 Carmike 8 Lexington, NC 4 Carmike 10 Stillwater, OK 4 Carmike 14 Columbia, SC 4 Chapel Hills 15 Colorado Springs, CO 6 --- Total 32 --- Total New Screens 105 ===
(iii) Entertainment Complex The Company is currently developing its first "entertainment complex," which will offer a broad spectrum of entertainment in addition to movie exhibition. Known as the "Hollywood Connection M," this complex, which is expected to be completed in the summer of 1997, will encompass 125,000 square feet on an 11 acre site in Columbus, Georgia. The complex will include a 10-screen theatre equipped with Lucasfilm's THX Digital surround systems and stadium seating, an indoor roller skating rink, an 18-hole themed putting golf course, a bumper car attraction, a state-of-the-art games arcade, a restaurant and a laser tag arena. 3 4 (b) Narrative Description of Business (i) Theatre Operations The Company is the largest motion picture exhibitor in the United States in terms of number of theatres and screens operated. As of December 31, 1996, the Company operated 519 theatres with an aggregate of 2,518 screens located in 33 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, 1996, aggregate attendance at the Company's theatres was approximately 74.2 million people. The Company's theatres are located in the following states:
STATE THEATRES SCREENS ----- -------- ------- Alabama 28 158 Arkansas 3 25 Colorado 14 77 Delaware 2 12 Florida 32 156 Georgia 39 215 Idaho 11 26 Illinois 3 8 Iowa 22 118 Kentucky 11 53 Louisiana 4 20 Maryland 3 15 Michigan 2 10 Minnesota 16 63 Montana 15 59 Nebraska 5 17 New Mexico 1 2 North Carolina 69 313 North Dakota 9 45 New York 1 8 Ohio 8 43 Oklahoma 16 69 Pennsylvania 44 212 South Carolina 28 151 South Dakota 6 39 Tennessee 45 255
4 5 Texas 28 114 Utah 12 48 Virginia 15 73 Washington 2 2 Wisconsin 12 57 West Virginia 6 33 Wyoming 7 22 --- ----- 519 2,518 === =====
The Company's theatre operations are under the supervision of its Vice President - General Manager and are divided into four geographic divisions, each of which is headed by a division manager. The division managers are responsible for implementing Company operating policies and supervising the Company's seventeen operating districts. Each operating district has a district manager who is responsible for overseeing the day-to-day operations of the Company's theatres. Corporate policy development, strategic planning, site selection and lease negotiation, theatre design and construction, concession purchasing, film licensing, advertising, and financial and accounting activities are centralized at the corporate headquarters of the Company. See "Film Licensing" with respect to the Company's film licensing operations. Nearly all of the Company's 2,518 screens are located in multi-screen theatres, with over 90% of the Company's screens being located in theatres having three or more screens. The Company's average number of screens per theatre is 4.9, and the Company intends to increase this ratio through the construction of larger multi-screen theatres. Multi-screen theatres enable the Company to present a variety of films appealing to several segments of the movie-going public while serving patrons from common support facilities (such as the box office, concession areas, restrooms and lobby). This strategy enhances attendance, utilization of theatre capacity and operating efficiencies (relating to theatre staffing, performance scheduling and space and equipment utilization), and thereby enhances revenues and profitability. Staggered scheduling of starting times minimizes staffing requirements for crowd control, box office and concession services while reducing congestion at the concession area. The Company's theatres are housed predominantly in modern facilities equipped with quality projection and sound equipment. 5 6 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, normally improves such theatres' operating profitability. The Company also operates certain theatres for the exhibition of first-run films at a reduced admission price. These theatres are typically in a smaller market where the Company is the only exhibitor in the market. At present, the Company operates 97 of its theatres (302 screens) as Discount Theatres. The Company also sells gift certificates and offers a discount ticket plan to attract groups of patrons to its theatres. The Company's revenues are generated primarily from box office receipts and concession sales. Additional revenues, which are not material, are generated from electronic video games installed in the lobbies of some of the Company's theatres and on-screen advertising. 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 96% of its theatres (representing approximately 98% of its screens), allows Carmike to centralize most theatre-level administrative functions at its corporate headquarters, creating significant operating leverage. I.Q. Zero allows corporate management to monitor ticket and concession sales and box office and concession staffing on a daily basis. The Company's integrated MIS, centered around I.Q. Zero, also coordinates payroll, tracks theatre invoices and generates operating reports analyzing film performance and theatre profitability. Accordingly, there is active communication between the theatres and corporate headquarters, which allows senior management to react to vital profit and staffing information on a daily basis and perform the 6 7 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 eight weeks. Under an adjusted gross box office receipts formula (commonly known as a "90/10" clause), the distributor receives a specified percentage (i.e., 90%) of the excess of box office receipts over a negotiated amount for house expenses. In addition, the Company is occasionally required to pay non-refundable guarantees of film rentals, to make advance payments of film rentals, or both, in order to obtain a license for a film. Although not specifically contemplated by the provisions of film licenses, the terms of film licenses generally are adjusted or re-negotiated subsequent to exhibition of the film in relation to its success. 7 8 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 92% of the Company's admission revenues during 1996. No single distributor dominates the market. Disruption in the production of motion pictures by the major studios and/or independent producers or poor performance of motion pictures could have an adverse effect on the business of the Company. The Company licenses films from a number of distributors and believes that its relationships with distributors generally are satisfactory. 8 9 (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. The Company is currently constructing its first complete entertainment complex, which will offer a variety of forms of family entertainment. See "General Development of Business - Entertainment Complex". (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. 9 10 (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 "ADA"), which became effective in 1992, prohibits discrimination on the basis of disability in public accommodations and employment. The Company constructs new theatres to be accessible to the disabled and believes that it is otherwise in substantial compliance with all applicable regulations relating to accommodating the needs of the disabled. The Company does not currently anticipate that ongoing compliance with the ADA and the regulations thereunder will require the Company to expend substantial funds. (vii) Employees At December 31, 1996, the Company had approximately 9,874 employees. Eighty of the Company's employees are covered by collective bargaining agreements. The Company considers its relations with its employees to be good. 10 11 (viii) Other Factors Except for historical information contained herein, certain matters set forth in this Annual Report on Form 10-K are forward looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Potential risks and uncertainties include such factors as the financial strength of the motion picture industry, the level of consumer spending, the availability of popular motion pictures and the success of planned advertising, marketing and promotional campaigns. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Item 2. Properties At December 31, 1996, of the Company's 519 theatres , 71 were owned by the Company, 366 were leased pursuant to building leases, 75 were leased pursuant to ground leases, and 7 were subject to shared ownership or shared leasehold interests with various unrelated third parties. The Company's leases are generally entered into on a long-term basis. See Note F of Notes to Consolidated Financial Statements incorporated by reference in Item 8 herein for information with respect to the Company's lease commitments. The Company owns its headquarters building in Columbus, Georgia. The Company occupies all of this modern five-story office building, which has approximately 48,500 square feet. The Company's interest in the building is encumbered by a Deed to Secure Debt and Security Agreement in favor of the Downtown Development Authority of Columbus, Georgia. The Company also owns and occupies a four-story building in Columbus, Georgia that has approximately 48,000 square feet. The Company uses this building for storage and refurbishment of 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 11 12 management believes will have a material adverse effect, either individually or in the aggregate, upon the Company. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the last quarter of the year ended December 31, 1996. 12 13 Executive Officers of the Registrant [Included pursuant to Regulation S-K, Item 401(b), Instruction 3] The following sets forth certain information regarding the executive officers of the Company. For purposes of this section, references to the Company include the Company's predecessor, Martin Theatres, Inc. C. L. Patrick, age 78, who has served as Chairman of the Board of Directors of the Company since April 1982, joined the Company in 1945, became its General Manager in 1948 and served as President of the Company from 1969 to 1970. He served as President of Fuqua Industries, Inc. ("Fuqua") from 1970 to 1978, and as Vice Chairman of the Board of Directors of Fuqua from 1978 to 1982. Mr. Patrick is a director emeritus of Columbus Bank & Trust Company. Michael W. Patrick, age 46, 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 47, 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 55, joined the Company in June 1981 as manager of the booking office in Charlotte, North Carolina. Since July 1983, Mr. Rhead has been Vice President - Film of the Company. Prior to joining the Company, he worked as a film booker for Plitt Theatres, Inc. from 1973 to 1981. 13 14 Larry M. Adams, age 53, 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 40, 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 42, 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 45, 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 49, joined the Company in 1975 as a bookkeeper. She served as the Advertising Coordinator from 1984 to 1985 and became the Director of Advertising in 1985. In August 1990, she was elected to her present position as Vice President - Advertising. James R. Davis, age 58, joined the Company in 1990 as Technical Director. He served in this position until December 1995, when he was elected to his present position as Vice President-Technical. 14 15 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information regarding the market for the Company's common equity and related stockholder matters is incorporated by reference to the inside back cover of the Company's 1996 Annual Report to Shareholders. Item 6. Selected Financial Data Selected financial data for the five years ended December 31, 1996 is incorporated by reference to page 26 of the Company's 1996 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 page 24 of the Company's 1996 Annual Report to Shareholders. Item 8. Financial Statements and Supplementary Data The information required by this item is incorporated by reference to pages 12 through 23 of the Company's 1996 Annual Report to Shareholders. Information as to quarterly results of operations for the year ended December 31, 1996 is incorporated by reference to page 22 of the Company's 1996 Annual Report to Shareholders. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable 15 16 PART III Item 10. Directors and Executive Officers of the Registrant Information regarding the directors of the Company is incorporated by reference to the section entitled "Election of Directors" in the Proxy Statement relating to the 1997 Annual Meeting of Shareholders of the Company (hereinafter, the "1997 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 1997 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 1997 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 1997 Proxy Statement. 16 17 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a)(1) and (2) Financial Statements and Financial Statement Schedules The following consolidated financial statements of Carmike Cinemas, Inc. included in the Company's 1996 Annual Report to Shareholders are incorporated by reference in Item 8: Consolidated balance sheets--December 31, 1996 and 1995 Consolidated statements of operations--Years ended December 3l, 1996, 1995 and 1994 Consolidated statements of shareholders' equity--Years ended December 3l, 1996, 1995 and 1994 Consolidated statements of cash flows--Years ended December 31, 1996, 1995 and 1994 Notes to consolidated financial statements--December 31, 1996 Report of Independent Auditors Financial statement schedules are omitted because they are not applicable or not required under the related instructions, or because the required information is shown either in the consolidated financial statements or in the notes thereto. 17 18 (a)(3) Listing of Exhibits
Exhibit Number - ------ 2(a) Purchase Contract dated May 20, 1992, by and between American Multi-Cinema, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(a) to the Company's Form 10-K for the fiscal year ended December 31, 1992 (the "1992 Form 10-K"), and incorporated herein by reference). 2(b) Asset Purchase Agreement dated May 12, 1992 by and between Plitt Theatres, Inc., Plitt Southern Theatres, Inc. and Plitt Cine Theatres, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(b) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(c) Asset Purchase Agreement dated May 21, 1992 by and between Resources Financial and Carmike Cinemas, Inc.(filed as Exhibit 2(c) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(d) Purchase Contract dated as of November 18, 1992 by and between Cinamerica Theatres, L.P. and Carmike Cinemas, Inc.(filed as Exhibit 2(d) to the Company's 1992 Form 10-K and incorporated herein by reference). 2(e) Asset Purchase Agreement dated November 19, 1993 by and between Manos Enterprises, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(e) to the Company's Form 10 -K for the fiscal year ended December 31, 1993 (the "1993 Form 10-K") and incorporated herein by reference). 2(f) Asset Purchase Agreement dated January 21, 1994 by and between General Cinema Corp. of Georgia, General Cinema Corp. of Virginia, General Cinema Corp. of West Virginia and Carmike Cinemas, Inc.(filed as Exhibit 2(f) to the Company's 1993 Form 10-K and incorporated herein by reference). 2(g) Asset Purchase Agreement dated May 18, 1994 by and between Cinema World, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(a) to the Company's Form 8-K filed on June 6, 1994 and incorporated herein by reference). 2(h) Agreement dated as of March 17, 1995 by and between Floyd Theatres, Inc., Tallahassee Theatres, Inc., Floyd Theatres of Georgia, Inc., MasTec, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(h) to the Company's Form 10-K for the fiscal year ended December 31, 1994 (the "1994 Form 10-K") and incorporated herein by reference).
18 19 (a)(3)(Continued)
Exhibit Number - ------ 2(i) Agreement dated as of June 2, 1995 by and between Carmike Cinemas, Inc. and Plitt Theatres, Inc. (filed as Exhibit 12 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995 and incorporated herein by reference). 2(j) Agreement dated as of September 8, 1995 by and between Midcontinent Theatre Company of Minnesota, Midcontinent Theatre Company of South Dakota, Midcontinent Theatre Company of North Dakota and Carmike Cinemas, Inc. (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(k) Agreement dated as of October 19, 1995 by and between Cinemark USA, Inc., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 5 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(l) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox Theatres Corporation, Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 2(l) to the Company's Form 10-K for the fiscal year ended December 31, 1995, and incorporated herein by reference). 3(a)(i) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation (filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter ended June 30, 1995, and incorporated herein by reference). 3(b) By-laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the fiscal year ended December 31, 1987 (the "1987 Form 10-K"), and incorporated herein by reference). 4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to 10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1990, and incorporated herein by reference). 4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to 7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's Form l0-K for the year ended December 31, 1991, and incorporated herein by reference).
19 20 (a)(3)(Continued)
Exhibit Number - ------ 4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to 7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's Form l0-Q for the fiscal quarter ended March 31, 1993, and incorporated herein by reference). 4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated herein by reference). 4(e) Credit Agreement dated as of April 23, 1996 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, 1996, and incorporated herein by reference). 10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended, together with form of Stock Option Agreement (filed as Exhibit 10(a) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985 (filed as Exhibit 10(d) to Amendment No. 1 to the Company's Registration Statement on Form S-1, No. 33-8007 on October 10, 1986, and incorporated herein by reference). 10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick and the Company, as amended on October 31, 1986 and January 1, 1990 (filed as Exhibit 10(e) to the Company's Registration Statement on Form S-1, Commission File No. 33-33558, and incorporated herein by reference). 10(d) Employment Agreement dated January 1, 1993 by and between Michael W. Patrick and the Company (filed as Exhibit 10(e) to the Company's 1992 Form 10-K and incorporated herein by reference). 10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and between C.L.P. Equipment and the Company (filed as Exhibit 10(h) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(f) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Kingsport, Tennessee) (filed as Exhibit 10(i) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
20 21 (a)(3)(Continued)
Exhibit Number - ------ 10(g) Equipment Lease Agreement dated January 29, 1983 by and between Michael W. Patrick and the Company (Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(h) Equipment Lease Agreement dated November 23, 1983 by and between Michael W. Patrick and the Company (Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W. Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L. Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(l) Summary of Extensions of Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit 10(o) to the 1987 Form 10-K and incorporated herein by reference). 10(m) Summary of Extensions of the Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) as extended as shown in Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference).
21 22 (a)(3)(Continued)
Exhibit Number - ------ 10(o) 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 1996 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 (for SEC use only)
22 23 (b) Reports on Form 8-K During the fiscal quarter ended December 31, 1996, the Company did not file any reports on Form 8-K. (c) Exhibits The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statements Schedules None. 23 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARMIKE CINEMAS, INC. Date: March 18, 1997 By: /s/ ---------------------- 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/ - -------------------- Chairman of the Board March 18, 1997 C.L. Patrick /s/ - -------------------- President and Chief March 18, 1997 Michael W. Patrick Executive Officer, Director /s/ - -------------------- Vice President-Finance, Treasurer March 18, 1997 John O. Barwick, III (Chief Financial Officer, Chief Accounting Officer) /s/ - -------------------- Director March 18, 1997 Carl L. Patrick, Jr. /s/ - -------------------- Director March 18, 1997 Carl E. Sanders /s/ - -------------------- Director March 18, 1997 John W. Jordan, II /s/ - -------------------- Director March 18, 1997 David W. Zalaznick
24 25 CARMIKE CINEMAS, INC. EXHIBIT INDEX Report on Form 10-K for the fiscal year Ended December 31, 1996
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.(filed as Exhibit 2(h) to the Company's Form 10-K for fiscal year ended December 31, 1994 (the "1994 Form 10-K") and incorporated herein by reference). 2(i) Agreement dated as of June 2, 1995 by and between Carmike Cinemas, Inc. and Plitt Theatres, Inc. (filed as Exhibit 12 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 2(j) Agreement dated as of September 8, 1995 by and between Midcontinent Theatre Company of Minnesota, Midcontinent Theatre Company of South Dakota, Midcontinent Theatre Company of North Dakota and Carmike Cinemas, Inc. (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(k) Agreement dated as of October 19, 1995 by and between Cinemark USA, Inc., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 5 to the Company's Form 10-Q for the fiscal quarter ended September 30, 1995, and incorporated herein by reference). 2(l) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox Theatres Corp., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc.(filed as Exhibit 2(l) to the Company's Form 10-K for the fiscal year ended December 31, 1995, and incorporated herein by reference).
27
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 3(a)(i) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and incorporated herein by reference). 3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation (filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter ended June 30, 1995, and incorporated herein by reference). 3(b) By-Laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the fiscal year ended December 31, 1987 (the "1987 Form 10-K"), and incorporated herein by reference). 4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to 10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1990, and incorporated herein by reference). 4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to 7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's Form l0-K for the year ended December 31, 1991, and incorporated herein by reference). 4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to 7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended March 31, 1993, and incorporated herein by reference). 4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated herein by reference).
28
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 4(e) Credit Agreement dated as of April 23, 1996 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, 1996, and incorporated herein by reference). 10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended, together with form of Stock Option Agreement (filed as Exhibit 10(a) to the Company's Form 10-K for the year ended December 31, 1990, and incorporated herein by reference). 10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985 (filed as Exhibit 10(d) to Amendment No. 1 to the Company's Registration Statement on Form S-1, No. 33-8007 on October 10, 1986, and incorporated herein by reference). 10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick and the Company, as amended on October 31, 1986 and January 1, 1990 (filed as Exhibit 10(e) to the Company's Registration Statement on Form S-1, Commission File No. 33-33558, and incorporated herein by reference). 10(d) Employment Agreement dated January 1, 1993 by and between Michael W. Patrick and the Company, (filed as Exhibit 10(e) to the Company's 1992 Form 10-K and incorporated herein by reference). 10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and between C.L.P. Equipment and the Company (filed as Exhibit 10(h) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
29
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 10(f) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Kingsport, Tennessee) (filed as Exhibit 10(i) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(g) Equipment Lease Agreement dated January 29, 1983 by and between Michael W. Patrick and the Company (Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(h) Equipment Lease Agreement dated November 23, 1983 by and between Michael W. Patrick and the Company (Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael W. Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W. Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference). 10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L. Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
30
Page Number Exhibit in Manually Number Description Signed Original - ------ ----------- --------------- 10(l) Summary of Extensions of Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit 10(o) to the 1987 Form 10-K and incorporated herein by reference). 10(m) Summary of Extensions of the Equipment Lease Agreements, which are Exhibits 10(f), 10(g), 10(h), 10(i) and 10(k) as extended as shown in Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to the Company's Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10(o) 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 1996 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 (for SEC use only)
EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE CARMIKE CINEMAS, INC.
Years Ended December 3l -------------------------------------- 1996 1995 1994 -------- ------- ------- (In thousands, except per share data) PRIMARY: Average shares outstanding 11,174 11,161 8,312 Net effect of dilutive stock options and warrants based on the treasury stock method using average market price -0- 99 165 -------- ------- ------- Totals 11,174 11,260 8,477 ======== ======= ======= NET INCOME (LOSS) $(7,277) $13,087 $16,953 ======== ======= ======= NET INCOME (LOSS) PER SHARE $ (.65) $ 1.16 $ 2.00 ======== ======= =======
Note: Fully diluted calculation is not presented because dilution is less than 3%. 25 EX-13 3 1996 ANNUAL REPORT 1 CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data) December 31 1996 1995 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents ........................................................ $ 5,569 $ 11,345 Short-term investments ........................................................... 7,726 7,502 Recoverable construction allowances under capital leases ......................... 4,178 4,300 Accounts and notes receivable .................................................... 644 7,911 Inventories ...................................................................... 2,631 2,936 Prepaid expenses ................................................................. 5,363 5,632 ----------- ----------- TOTAL CURRENT ASSETS 26,111 39,626 OTHER ASSETS Investments in and advances to partnerships ...................................... 10,324 4,973 Other ............................................................................ 2,425 2,331 ----------- ----------- 12,749 7,304 PROPERTY AND EQUIPMENT--Notes B, C, E and F Land ............................................................................. 42,182 38,841 Buildings and improvements ....................................................... 126,790 119,504 Leasehold improvements ........................................................... 148,586 133,273 Leasehold interests .............................................................. 38,180 49,758 Equipment ........................................................................ 151,988 143,029 ----------- ----------- 507,726 484,405 Accumulated depreciation and amortization ........................................ (119,811) (112,554) ----------- ----------- 387,915 371,851 EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED - Note C ............ 62,608 59,231 ----------- ----------- $ 489,383 $ 478,012 =========== ===========
12 2 CONSOLIDATED BALANCE SHEETS
December 31 1996 1995 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable ................................................................. $ 21,432 $ 24,873 Accrued expenses ................................................................. 17,240 19,102 Current maturities of long-term debt, senior notes and capital lease obligations . 15,026 12,205 ----------- ----------- TOTAL CURRENT LIABILITIES 53,698 56,180 LONG-TERM DEBT, less current maturities-Note D ...................................... 124,476 79,214 SENIOR NOTES-Note E ................................................................. 93,831 107,792 CAPITAL LEASE OBLIGATIONS, less current maturities-Note F ........................... 31,351 27,996 CONVERTIBLE SUBORDINATED DEBT ....................................................... 3,575 3,303 DEFERRED INCOME TAXES-Note I ........................................................ 4,522 18,433 SHAREHOLDERS' EQUITY-Notes D, E, G, and H Class A Common Stock, $.03 par value, authorized 22,500,000 shares, issued and outstanding 9,758,601 and 9,745,101 shares, respectively ............. 292 292 Class B Common Stock, $.03 par value, authorized 5,000,000 shares, issued and outstanding 1,420,700 shares ......................................... 43 43 Paid-in capital .................................................................. 99,927 99,814 Retained earnings ................................................................ 77,668 84,945 ----------- ----------- 177,930 185,094 ----------- ----------- $ 489,383 $ 478,012 =========== ===========
See accompanying notes. 13 3 CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data) Years Ended December 31 1996 1995 1994 ---- ---- ---- Revenues: Admissions .................................................................. $ 296,629 $253,691 $232,134 Concessions and other ....................................................... 130,097 111,058 95,485 --------- -------- -------- 426,726 364,749 327,619 Costs and Expenses: Film exhibition costs ....................................................... 156,968 135,654 123,610 Concession costs ............................................................ 17,252 14,959 12,241 Other theatre operating costs ............................................... 164,149 143,682 118,905 General and administrative .................................................. 5,959 5,482 5,092 Depreciation and amortization ............................................... 28,408 27,216 22,544 Impairment of long-lived assets - Note B .................................... 45,447 - 0 - - 0 - --------- -------- -------- 418,183 326,993 282,392 --------- -------- -------- OPERATING INCOME 8,543 37,756 45,227 Interest expense ............................................................... 20,289 16,031 17,028 INCOME (LOSS) BEFORE INCOME TAXES (11,746) 21,725 28,199 Income tax expense (benefit) ................................................... (4,469) 8,638 11,246 --------- -------- -------- NET INCOME (LOSS) $ (7,277) $ 13,087 $ 16,953 ========= ======== ======== Weighted average common shares outstanding ..................................... 11,174 11,260 8,477 ========= ======== ======== NET INCOME (LOSS) PER SHARE $ (.65) $ 1.16 $ 2.00 ========= ======== ========
See accompanying notes. 14 4 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) Years Ended December 31 1996 1995 1994 ---- ---- ---- OPERATING ACTIVITIES Net income (loss) ....................................................................... $ (7,277) $ 13,087 $ 16,953 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization ........................................................ 28,408 27,216 22,544 Impairment of long-lived assets ...................................................... 45,447 - 0 - - 0 - Deferred income taxes ................................................................ (14,811) 921 1,674 Gain on sales of property and equipment .............................................. (767) (723) (122) Changes in operating assets and liabilities: Accounts and notes receivable ..................................................... 7,267 (5,197) 1,692 Inventories ....................................................................... 305 (997) (376) Prepaid expenses .................................................................. (231) (607) (1,399) Accounts payable .................................................................. (2,941) 1,395 2,721 Accrued expenses .................................................................. (962) 7,775 3,597 ----------- ---------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................... 54,438 42,870 47,284 INVESTING ACTIVITIES Purchases of property and equipment ..................................................... (70,926) (58,035) (29,096) Purchases of assets from other theatre operators ........................................ (23,075) (64,485) (51,050) Proceeds from sales of property and equipment ........................................... 1,808 2,232 860 Decrease (increase) in: Short-term investments ............................................................... (224) (2,687) 17,189 Other ................................................................................ (5,781) (458) (2,493) ----------- ---------- --------- NET CASH USED IN INVESTING ACTIVITIES ................................................ (98,198) (123,433) (64,590) FINANCING ACTIVITIES: Debt: Additional borrowings ............................................................. 1,205,678 392,689 110,950 Repayments ........................................................................ (1,167,929) (315,504) (146,468) Issuance of Class A Common Stock ........................................................ 113 51 61,147 Recoverable construction allowances under capital leases ................................ 122 (3,200) (1,100) ----------- ---------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES ............................................... 37,984 74,036 24,529 ----------- ---------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........................................ (5,776) (6,527) 7,223 Cash and cash equivalents at beginning of year ............................................. $ 11,345 $ 17,872 $ 10,649 ----------- ---------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR ................................................ $ 5,569 $ 11,345 $ 17,872 =========== ========== =========
See accompanying notes. 15 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS'EQUITY
Class A Class B Class A Common Stock Common Stock Common Stock in Treasury ------------ ------------ Paid-in Retained ------------------ Shares Amount Shares Amount Capital Earnings Shares Amount Total ------ ------ ------ ------ ------- -------- ------ ------ ----- BALANCES AT DECEMBER 31, 1993 ...... 6,725 $201 1,421 $ 43 $ 39,621 $ 54,905 (170) $(914) $ 93,856 Issuance of Class A Common Stock: Public offering ............... 2,705 081 - 0 - - 0 - 56,784 - 0 - (170) (914) 57,779 Exercise of warrant ........... 250 8 - 0 - - 0 - 2,867 - 0 - - 0 - - 0 - 2,875 Exercise of stock options ..... 58 2 - 0 - - 0 - 491 - 0 - - 0 - - 0 - 493 Net income ...................... - 0 - - 0 - - 0 - - 0 - - 0 - 16,953 - 0 - - 0 - 16,953 ----- ----- ----- ------- -------- -------- ----- ----- --------- BALANCES AT DECEMBER 31, 1994 ...... 9,738 292 1,421 43 99,763 71,858 - 0 - - 0 - 171,956 Issuance of Class A Common Stock on exercise of stock options .. 7 - 0 - - 0 - - 0 - 51 - 0 - - 0 - - 0 - 51 Net income ...................... - 0 - - 0 - - 0 - - 0 - - 0 - 13,087 - 0 - - 0 - 13,087 ----- ----- ----- ------- ------- --------- ----- ----- --------- BALANCES AT DECEMBER 31, 1995 ...... 9,745 292 1,421 43 99,814 84,945 - 0 - - 0 - 185,094 ISSUANCE OF CLASS A COMMON STOCK ON EXERCISE OF STOCK OPTIONS . 14 - 0 - - 0 - - 0 - 113 - 0 - - 0 - - 0 - 113 NET LOSS ........................ - 0 - - 0 - - 0 - - 0 - - 0 - (7,277) - 0 - - 0 - (7,277) ----- ----- ----- ------- -------- -------- ----- ----- --------- BALANCES AT DECEMBER 31, 1996 ...... 9,759 $292 1,421 $ 43 $ 99,927 $ 77,668 - 0 - $- 0 - $ 177,930 ===== ===== ===== ======= ======== ======== ===== ====== =========
See accompanying notes. 16 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1996 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. Seven major distributors in the motion picture industry accounted for films producing approximately 92% of the Company's admission revenues in 1996. PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its 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 Operations. CASH EQUIVALENTS: Cash equivalents are highly liquid investments consisting primarily of money market accounts and investment grade, short-term debt instruments and have maturities at the date of purchase of less than three months. The Company limits the amount of its credit exposure to any one commercial issue of debt instruments. Cash equivalents are stated at cost which represents the deposit amount plus interest credited to the account. Deposits with banks are federally insured in limited amounts. SHORT-TERM INVESTMENTS: Short-term investments consist principally of U.S. Government securities with maturity dates less than one year from date of purchase and are stated at cost which approximates market. INVENTORIES: Inventories, principally concessions and theatre supplies, are stated at the lower of cost (first-in, first-out method) or market. INVESTMENT IN PARTNERSHIPS: The Company is a partner in three 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 was approximately $399,000, $405,000, and $568,000 for each of the years in the period ended December 31, 1996. PROPERTY AND EQUIPMENT: Property and equipment are carried at cost. Depreciation is computed by the straight-line method for financial reporting purposes as follows: 30 years for buildings and improvements; 1-30 years for leasehold interests and leasehold improvements; and 5-15 years for equipment. The Company uses accelerated methods of depreciation for income tax purposes. Amortization of assets recorded under capital leases is included with depreciation expense in the accompanying Consolidated Statements of Operations. ACCRUED EXPENSES: Accrued expenses include accrued property taxes of approximately $2.7 million at December 31, 1996 and 1995. ADVERTISING" The Company expenses advertising costs when incurred. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED: The excess of purchase price over the net assets of businesses acquired is amortized on a straight-line basis over a 40 year period. In the event that facts and circumstances indicate that the excess of purchase price over net assets of businesses acquired may be impaired, an evaluation of continuing value would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with this asset would be compared to its carrying amount to determine if a write down to market value or discounted cash flow value is required. BENEFIT PLANS: The Company has a non-qualified deferred compensation plan for certain of its executive officers. Under this plan, the Company contributes ten percent of the employee's taxable compensation to a trust designated for the employee. The Company also has a discretionary benefit plan for certain non-executive employees. Contri-butions to this plan are at the discretion of the Company's executive management. Expenses related to these plans are not material to the Company's operations. STOCK BASED COMPENSATION: The Company grants stock options to employees for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and accordingly, recognizes no compensation expense for the stock option grants. EARNINGS PER COMMON SHARE: Primary earnings per common share are based on the weighted average common shares outstanding, adjusted for the incremental shares attributed to outstanding options to purchase common stock which are calculated using the treasury stock method. In November 1994, the Company sold 2,875,000 shares of its Class A Common Stock pursuant to a public offering. Net proceeds of approximately $58.2 million were used, in part, to retire certain outstanding debt of the Company. If the transaction had occurred as of January 1, 1994, the net earnings per share would have been $1.80 per share for the year ended December 31, 1994. 17 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B--IMPAIRMENT OF LONG LIVED ASSETS The Company adopted Statement of Financial Accounting Standards 121 ("Statement 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", as of January 1, 1996. The Company reviews for impairment long-lived assets, and goodwill related to those assets, to be held and used in the business whenever events or changes in circumstances indicate that the carrying amount of an asset or a group of assets may not be recoverable. The Company considers a trend of operating results that are not in line with management's expectations to be its primary indicator of potential impairment. For purposes of Statement 121, assets are evaluated for impairment at the theatre level, which management believes is the lowest level for which there are identifiable cash flows. The Company deems a theatre to be impaired if a forecast of undiscounted future operating cash flows directly related to the theatre, including disposal value if any, is less than its carrying amount. If a theatre is determined to be impaired, the loss is measured as the amount by which the carrying amount of the theatre exceeds its fair value. Fair value is based on management's estimates which are based on using the best information available, including prices for similar theatres or the results of valuation techniques such as discounting estimated future cash flows as if the decision to continue to use the impaired theatres was a new investment decision. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. Recoverability of other long-lived assets, primarily investments in unconsolidated affiliates and goodwill not identified with impaired theatres covered by the above paragraph, will continue to be evaluated on a recurring basis. The primary indicator of recoverability is the forecasted profitability over the estimated remaining life of these assets. If recoverability is unlikely based on the evaluation, the carrying amount is written down to the fair value. In the future, additional adjustments could be required. The initial non-cash charge upon the Company's adoption of Statement 121 was approximately $45.4 million ($28.2 million after tax or $2.50 per share) to reduce the carrying amount of 138 of the Company's theatres. This initial charge resulted from evaluating the recoverability of individual theatres, which is at a lower level than under the Company's previous accounting policy for measuring impairment. Under the Company's previous policy, the Company's long-lived assets were evaluated on a market by market basis for impairment. As a result of the reduced carrying amount of the impaired assets, depreciation and amortization expense for 1996 was reduced by approximately $4.2 million ($2.6 million after tax or $.23 per share). Statement 121 also requires, among other provisions, that long-lived assets held for disposal and certain identified intangibles be reported at the lower of the asset's carrying amount or its fair value less costs to sell. The impact of adopting Statement 121 on assets held for disposal was not material. The Company's policy is to perform its impairment calculations and evaluations in the fourth quarter of each year. NOTE C--ACQUISITIONS The Company's acquisitions are accounted for under the purchase method of accounting. Under the purchase method of accounting, the results of operations of the acquired businesses are included in the accompanying consolidated financial statements as of their respective acquisition dates. The assets and liabilities of acquired businesses are included based on an allocation of the purchase prices. In separate transactions, the Company acquired certain assets and businesses as follows:
- ------------------------------------------------------------------------------------------------------- Approximate Number of Number of Seller Purchase Price Theatres Screens Effective Date - ------------------------------------------------------------------------------------------------------- (in thousands) 1996: Maxi Saver Cinemas ......................... $ 3,975 2 18 Jan. 5, 1996 Fox Theatres Corp. ......................... 19,100 12 61 Feb. 16, 1996 ------- -- -- $23,075 14 79 ======= == === 1995: Carolina Cinema, Corp. ................ $ 750 2 7 Feb. 10,1995 Theatre Developers, Inc. .............. 1,200 1 8 Feb. 24, 1995 Floyd Theatres, Inc. and affiliates ... 11,300 21 83 March 17, 1995 Rocky Mountain Cinema Partners ........ 1,585 5 11 May 5, 1995 Plitt Theatres, Inc. .................. 22,000 28 145 June 2, 1995 Midcontinent Theatre, Inc. ............ 19,000 14 67 Oct. 13, 1995 Cinemark, USA ......................... 8,000 10 46 Nov. 10, 1995 Theatres Consulting and Management .... 650 2 10 Nov. 10,1995 $64,485 83 377 ======= == === 1994: General Cinema Corp. and subsidiaries . $ 6,400 6 28 Jan. 21, 1994 General Cinema Corp. of Louisiana ..... $ 5,800 4 20 May 20, 1994 Cinema World, Inc. .................... $38,100 38 176 May 20, 1994 ------- -- --- $50,300 48 224 ======= == ===
18 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The excess of purchase price over net assets of businesses acquired has been recorded as an intangible asset. Amounts recorded were $17.0 million in 1996, $16.7 million in 1995, and $18.7 million in 1994. Pro-forma results have not been presented for those acquisitions which were not significant during the years presented. The pro-forma unaudited results of operations below do not purport to represent what the Company's actual results of operations would have been had the acquisitions occurred on January 1 of the year presented and should not serve as a forecast of the Company's operating results for any future periods. Unaudited pro-forma results for the 1995 acquisitions of Floyd Theatres, Inc., Plitt Theatres, Inc., Midcontinent Theatres, Inc., and Cinemark, USA are as follows (in thousands, except for per share data):
- ---------------------------------------------------------- Years Ended December 31 1995 1994 -------- -------- Revenues ................ $390,605 $384,016 ======== ======== Net income .............. 11,545 18,157 ======== ======== Earnings per share ...... $ 1.03 $ 2.14 ======== ======== - ----------------------------------------------------------
The above pro-forma income statement data gives effect to the 1995 acquisitions of assets as if those acquisitions had occurred at January 1, 1994. Unaudited pro-forma results of the 1994 acquisition of Cinema World, Inc. are as follows (in thousands except for per share data):
- ---------------------------------------------------------- Year Ended December 31, 1994 Revenues ............. $ 341,022 ========== Net income ........... $ 17,456 ========== Earnings per share ... $ 2.06 ========== - ----------------------------------------------------------
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, 1994. The pro-forma adjustments for the 1995 and 1994 acquisitions are based upon available information and certain assumptions that management believes reasonable. The adjustments to the historical data are as follows: a. General and administrative costs were reduced to reflect the incremental amount of general and administrative costs the Company estimates it would have incurred over the applicable time period. b. Depreciation expense was adjusted to reflect depreciation based upon the Company's allocation of the acquisition purchase price. c. Interest expense has been adjusted to reflect debt incurred at borrowing rates of 6.0% for 1995 and 5.0% for 1994. d. Income taxes have been adjusted to reflect the Company's effective tax rate. NOTE D--LONG-TERM DEBT Long-term debt consists of the following (in thousands):
- ------------------------------------------------------------------- December 31 1996 1995 -------- -------- Revolving credit facility ............. $122,000 $ 76,500 Industrial Revenue Bonds; payable in equal installments through May 2006, with interest rates ranging from 3.90% to 5.98% ..... 2,719 2,942 Term Loan ............................. - 0 - 875 -------- -------- $124,719 80,317 Less current maturities ............... (243) (1,103) -------- -------- $124,476 $ 79,214 ======== ======== - ------------------------------------------------------------------
On April 23, 1996, the Company entered into a credit agreement (the "Credit Agreement") with four banks to provide a revolving line of credit of up to $175 million for working capital, acquisitions and other general corporate purposes. The Credit 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 interest rates based on either the bank base rate or LIBOR plus .40% (effective rate of 6.27% at December 31, 1996) and is required to pay annual commitment fees of .20% on the full amount of the facility. 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, 1996, the Company had $53.0 million available for borrowing under this facility. The Company has classified all amounts outstanding under the Credit Agreement as long-term in the accompanying Consolidated Balance Sheets. The Credit Agreement contains certain restrictive provisions which, among other things, limit additional indebtedness of the Company, limit the payment of dividends and other defined restricted payments, require that certain debt to capitalization ratios be maintained and require minimum levels of cash flows. The Company has entered into interest rate swap agreements to modify the interest characteristics of a portion of its outstanding debt. The agreements involve the exchange of amounts based on a variable interest rate for amounts based on a fixed interest rate over the life of the agreements without an exchange of the notional amounts upon which the payments are based. The Company specifically designates interest rate swaps on hedges of debt instruments and recognizes interest differentials as adjustments to interest expense in the period they occur. The differential to be paid or received as interest rates change is accrued and recognized as an adjustment of interest expense related to the debt (the accrual accounting method). The related amount payable to, or receivable from, counter-parties is included in other liabilities or assets. The fair value of the swap agreements is not recognized in the financial statements. If, in the future, an interest rate swap agreement were terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the interest rate swap agreement. In the event of early extinguishment of a designated debt obligation, any realized or unrealized gain or loss from the swap would be recognized in income coincident with the extinguishment. The interest rate swap agreements changed floating interest rate expense on amounts outstanding under the Credit Agreement. Under one interest rate swap agreement, the Company has fixed $50.0 million of the Company's floating rate debt for seven years. The effective rate at December 31, 1996 was 6.105%, equal to a fixed rate of 5.705% plus the margin of .40% the Company presently pays over 19 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS LIBOR. Under another interest rate swap agreement, the Company has fixed $20.0 million of its floating rate debt for five years at a fixed rate of 5.51% plus the margin the Company pays over LIBOR (.40% at December 31, 1996) for a total effective rate of 5.91%. The Company is exposed to credit losses in the event of nonperformance by counter-parties on interest rate swap agreements. The Company does not believe there is a significant risk of nonperformance by any of the counter-parties to these instruments and the Company monitors the financial stability of such parties on a periodic basis. On December 31, 1996, the Company had approximately $40.1 million of unrestricted retained earnings available for dividends under the most restrictive debt agreement. Interest paid and interest capitalized were as follows (in thousands):
- ---------------------------------------------------- Year Ended Interest Interest December 31 Paid Capitalized ----------- -------- ----------- 1996 $17,590 $1,115 1995 13,264 794 1994 16,398 408 - ----------------------------------------------------
Aggregate principal payments on long-term debt as of December 31, 1996 are as follows (in thousands): 1997................ $ 243 1998................ 252 1999................ 122,263 2000................ 263 2001................ 263 Thereafter.......... 1,435 $124,719
NOTE E--SENIOR NOTES The Company has outstanding various unsecured notes payable to institutional investors (collectively the "Senior Notes") as follows (in thousands):
- -------------------------------------------------------- December 31 1996 1995 ---- ---- 10.53% Senior Notes, due 2005 ............. $ 61,364 $ 68,182 7.90% Senior Notes, due 2002 ............. 21,428 25,000 7.52% Senior Notes, due 2003 ............. 25,000 25,000 -------- -------- 107,792 118,182 Less current maturities . (13,961) (10,390) -------- -------- $ 93,831 $107,792 ======== ======== - --------------------------------------------------------
The 7.52% Senior Notes provide for annual principal payments of $3.6 million beginning March 1, 1997 through maturity. The 7.90% Senior Notes provide for annual principal payments of $3.6 million through maturity. The 10.53% Senior Notes provide for annual principal payments of $6.8 million through maturity. Loan fees of approximately $908,000 applicable to the 10.53% Senior Notes were capitalized and are being amortized over the life of the 10.53% Senior Notes. The agreements pursuant to which each of the above Senior Notes were issued contain certain restrictive provisions which, among other things, limit additional indebtedness of the Company and require minimum levels of net worth and cash flows. NOTE F--LEASES Certain of the Company's theatres and equipment are leased under non-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 1996 1995 -------- -------- Buildings and improvements .... $ 32,655 $ 31,140 Equipment ..................... 2,877 2,877 -------- -------- 35,532 34,017 Less accumulated amortization . (9,141) (8,804) -------- -------- $ 26,391 $ 25,213 ======== ======== - ---------------------------------------------------------------
Future minimum payments, by year and in the aggregate, under capital leases and non-cancelable operating leases with terms over one year as of December 31, 1996 are as follows (in thousands):
- -------------------------------------------------------- Operating Capital Leases Leases --------- ------- 1997 $ 43,529 $ 4,711 1998 41,230 4,715 1999 39,110 4,600 2000 36,998 4,460 2001 34,174 4,403 Thereafter 219,024 61,528 -------- ------- Total minimum lease payments $414,065 $84,417 ======== Less amounts representing interest ......... (52,244) Present value of future ------- minimum lease payments .................. 32,173 Less current maturities .................... (822) ------- $31,351 =======
Rent expense for each of the three years in the period ended December 31, 1996 was approximately $54.8 million, $45.6 million and $36.1 million, respectively. NOTE G-STOCK OPTION PLAN The Company has a stock option plan covering 700,000 shares of Class A Common Stock. Key employees may be granted options at terms (purchase price, expiration date and vesting schedule) established at the date of grant by a committee of the Company's Board of Directors. Options granted through December 31, 1996, have been at a price which approximated fair market value on the date of the grant. 20 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in outstanding stock options were as follows (in thousands, except per share amounts):
- --------------------------------------------------------------------------------------------------------------------- Exercise Price Per Share ------------------------ $6.00 $8.50 $9.00 $18.00 Total ----- ----- ----- ------ ----- Stock options outstanding at December 31, 1993 1 156 23 - 0 - 180 Issued........................................... - 0 - - 0 - - 0 - 143 143 Exercised........................................ - 0 - (56) (2) - 0 - (58) Stock options outstanding at December 31, 1994........ 1 100 21 143 265 Exercised........................................ - 0 - (7) - 0 - - 0 - (7) Stock options outstanding at December 31, 1995........ 1 93 21 143 258 Exercised........................................ - 0 - (14) - 0 - - 0 - (14) Forfeited........................................ (1) - 0 - (1) (8) (10) Stock options outstanding at December 31,1996......... - 0 - 79 20 135 234 - ---------------------------------------------------------------------------------------------------------------------------
The Company had 169,000 and 160,000 shares available for grant as of December 31, 1996 and 1995, respectively. At December 31, 1996, all the above options were exercisable except for the $18.00 options which become exercisable on March 16, 1997. NOTE H--SHAREHOLDERS' EQUITY The Company's authorized capital consists of 22.5 million shares of Class A Common Stock, $.03 par value, 5 million shares of Class B Common Stock, $.03 par value, and 1 million shares of Preferred Stock, $1.00 par value. Each share of Class A Common Stock entitles the holder to one vote per share, whereas a share of Class B Common Stock entitles the holder to ten votes per share. Each share of Class B Common Stock is entitled to cash dividends, when declared, in an amount equal to 85% of the cash dividends payable on each share of Class A Common Stock. Additionally, Class B Common Stock is convertible at any time by the holder into an equal number of shares of Class A Common Stock. In connection with a 1993 acquisition, the Company issued a $4 million face value zero coupon convertible subordinated note (the "Convertible Note") maturing June 1, 1998 and convertible, at the holder's option, into 100,000 shares of Class A Common Stock. The Company has shares of Class A Common Stock reserved for future issuance as follows (in thousands):
December 31 1996 1995 ---- ---- Stock option plan ........... 405 418 Convertible Note ............ 100 100 Conversion rights of Class B Common Stock ..... 1,421 1,421 ----- ----- 1,926 1,939 ===== =====
NOTE I--INCOME TAXES The Company accounts for income taxes in accordance with FASB Statement No. 109, "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rate and laws that will be in effect when the differences are expected to reverse. The provision for income tax expense (benefit) is summarized as follows (in thousands):
- -------------------------------------------------------------------- Years Ended December 31 1996 1995 1994 ---- ---- ---- Current: Federal................. $ 8,492 $6,255 $ 7,165 State................... 1,850 1,462 1,860 Deferred.................. (14,811) 921 2,221 -------- ------ ------- $ (4,469) $8,638 $11,246 ======== ====== ======= - --------------------------------------------------------------------
Significant components of the Company's deferred tax liabilities (assets) are as follows (in thousands):
- -------------------------------------------------------------------- December 31 1996 1995 ---- ---- Financial statement bases of property and equipment over tax bases ....... $ 3,744 $ 18,135 Westwynn net operating loss carry-forward ... $ (568) (1,121) Deferred rent ........... (1,595) (1,171) Income taxes payable for prior years ...... 2,504 2,518 Other ................... 437 72 -------- -------- $ 4,522 $ 18,433 ======== ======== - --------------------------------------------------------------------
21 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of income tax expense (benefit) at the federal income tax rate and income tax expense (benefit) as reflected in the consolidated financial statements follows (in thousands):
Years Ended December 31 1996 1995 1994 ------- -------- -------- Income tax expense (benefit) at statutory rates ........................... $(4,111) $ 7,604 $ 9,870 State income taxes, net of federal tax benefit ............. (501) 1,071 1,523 Amortization of excess of purchase price over net assets of business acquired ............ 79 79 79 Other items, net ................... 64 (116) (226) ------- -------- -------- $(4,469) $ 8,638 $ 11,246 ======= ======== ========
Income taxes paid in each of the three years in the period ended December 31, 1996, were approximately $9.2 million, $3.7 million and $8.7 million, respectively. NOTE J--COMMITMENTS AND CONTINGENCIES The Company is subject to various claims and lawsuits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of these matters will not have a material effect on the consolidated financial statements of the Company. NOTE K--FINANCIAL INSTRUMENTS CONCENTRATIONS OF CREDIT RISK: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and short-term investments. The Company maintains cash and cash equivalents and short-term investments and certain other financial instruments with various financial institutions. These financial institutions are located in the southeast and Company policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. SHORT-TERM INVESTMENTS: The Company's short-term investments consist of U.S. Treasury Notes with maturities of less than one year. The carrying value approximates market at December 31, 1996 and 1995. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance sheets for cash and cash equivalents approximates their fair value. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE: The carrying amounts reported in the balance sheets for accounts receivable and accounts payable approximate their fair value. LONG-TERM DEBT: The carrying amounts of the Company's long-term debt borrowings approximate their fair value. The fair values of the Company's long-term debt are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. SENIOR NOTES: The cumulative fair value of the Company's Senior Notes at December 31, 1996 is estimated to be approximately $113.4 million. 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. INTEREST RATE SWAP AGREEMENTS: The unrealized gain for the interest rate swap agreements was approximately $2.2 million at December 31, 1996 based on evaluations made by the counter-parties to the interest rate swap agreements. The Company does not anticipate realization of this gain as the Company intends to hold the interest rate swap agreements to maturity. NOTE L--QUARTERLY RESULTS (UNAUDITED) (In thousands, except for per share data)
- ---------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL - ---------------------------- ----------- ----------- ----------- ----------- ----- TOTAL REVENUES ...................................... $ 92,156 $104,698 $121,108 $108,764 $426,726 OPERATING INCOME BEFORE ADOPTION OF STATEMENT 121 ... 8,583 13,039 20,290 12,078 53,990 NET INCOME BEFORE ADOPTION OF STATEMENT 121 ......... 2,263 4,899 9,565 4,173 20,900 NET INCOME PER COMMON SHARE ......................... .20 .43 .85 .37 1.85 Year Ended December 31, 1995 Total revenues ...................................... $ 63,898 $ 91,233 $112,421 $ 97,197 $364,749 Operating income .................................... 244 10,899 17,133 9,480 37,756 Net income (loss) ................................... (2,058) 4,161 7,840 3,144 13,087 Net income (loss) per common share .................. (.18) .37 .70 .28 1.16 - ----------------------------------------------------------------------------------------------------------------------
Net income (loss) 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 equal the net income (loss) per common share amount for the year. Amounts presented above for the quarter ended March 31, 1996 and the year ended December 31, 1996 exclude the impact of adopting Statement 121. Amounts including the impact of Statement 121 were as follows:
- ----------------------------------------------------------- 1st Quarter Total ----------- ------------- Total revenues................ $(92,156) $426,726 Operating income (loss)....... (36,864) 8,543 Net loss...................... (25,915) (7,277) Net loss per common share..... $ (2.30) $ (.65) - -----------------------------------------------------------
12 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, 1996 and 1995, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31,1996. 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, 1996 and 1995 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. As discussed in Note B to the financial statements, in 1996 the Company changed its method of accounting for long-lived assets. /s/ Ernst & Young LLP Columbus, Georgia February 3, 1997 23 13 SELECTED FINANCIAL AND OPERATING DATA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the Company's financial condition and results of operations should be read in conjunction with the financial information included herein and the Company's annual report on Form 10-K for the fiscal year ended December 31, 1996 (the "1996 Form 10-K") as filed with the Securities and Exchange Commission (the "SEC"). Except for the historical information contained herein, the following discussion contains forward-looking statements that involve a number of risks and uncertainties. Factors which could cause the Company's actual results in future periods to differ materially include, but are not limited to, the availability of suitable motion pictures for exhibition in the Company's markets, the availability of opportunities for expansion, and competition with other forms of entertainment, as well as other factors discussed or identified from time to time in the Company's filings with the SEC, including, but not limited to, the Company's 1996 Form 10-K. RESULTS OF OPERATIONS Comparison of Years Ended December 31, 1996 and December 31, 1995 Total revenues for the year ended December 31, 1996 increased 17.0% to $426,726,000 from $364,749,000. This increase consists of a $42,938,000 increase in admissions and a $19,039,000 increase in concessions and other. Overall attendance increased 14.3% due to the additional screens in operation which were acquired in 1995 and 1996 (see Note C of Notes to Consolidated Financial Statements). Attendance on a same screen comparison was basically the same for 1996 as 1995. Average admission prices increased 2.3% to $4.00 from $3.91 and average concession sales per person increased 2.5% from $1.58 to $1.62. Cost of theatre operations (film exhibition costs, concession costs and other theatre operating costs) increased 15.0% to $338,369,000 from $294,295,000 due to the increased number of screens in operation and the increase in attendance. As a percentage of revenues, cost of theatre operations decreased from 80.7% of total revenues to 79.3%. This percentage decrease is due primarily to a lower level of salaries at the Company. General and administrative costs increased 8.7% from $5,482,000 in 1995 to $5,959,000 in 1996 reflecting additional general and administrative costs incurred to properly integrate the new screens acquired in 1995 and 1996. As a percentage of total revenues, general and administrative costs decreased from 1.5% to 1.4%. Depreciation and amortization increased 4.4% to $28,408,000 from $27,216,000 as a result of the increased screens in operation which were acquired in 1995 and 1996 (see Note C of Notes to Consolidated Financial Statements) combined with the additional screens added through internal construction. This amount has also been reduced from the impact of adopting Statement 121 (see Note B of Notes to Consolidated Financial Statements). As a percentage of total revenues, depreciation and amortization decreased from 7.5% of total revenues to 6.7% of total revenues. Interest expense increased 26.6% to $20,289,000 from $16,031,000 in 1995. This increase reflects a higher average amount of debt outstanding for 1996. The Company adopted Statement of Financial Accounting Standards 121 ("Statement 121"), "Accounting for the Impairment of Long-Lived Assets to be Disposed of," as of January 1, 1996 (see Note B of Notes to Consolidated Financial Statements). The initial non-cash charge upon the Company's adoption of Statement 121 was approximately $45,447,000 ($28,177,000 after tax, or $2.50 per share) to reduce the carrying value of 138 theatres, constituting approximately 26% of the Company's theatres. This charge resulted from the evaluation of asset impairment on an individual theatre level rather than on a market level, which had been the Company's previous accounting policy for evaluating and measuring impairment. As noted above, the write-down of assets under Statement 121 resulted in a reduction in depreciation and amortization expense in the year ended December 31, 1996. The Company grouped its theatres into corporations in 1995 to achieve business and tax efficiencies. As a result of these changes, management cost is more appropriately allocated among the operations and the Company's effective tax rate declined from approximately 40% to approximately 38%. 24 14 SELECTED FINANCIAL AND OPERATING DATA Comparison of Years Ended December 31, 1995 and December 31, 1994 Total revenues for the year ended December 31, 1995 increased 11.3% to $364,749,000 from $327,619,000. This increase consists of a $21,557,000 increase in admissions and a $15,573,000 increase in concessions and other. Overall attendance increased 8.9% due to the additional screens in operation which were acquired in 1994 and 1995 (see Note C of Notes to Consolidated Financial Statements); however, attendance for 1995 on a same screen comparison decreased 7.9%, reflecting fewer blockbuster type movies in 1995. Average admission prices increased .5% to $3.91 and average concession sales per patron increased 8.2% from $1.46 to $1.58. Cost of theatre operations (film exhibition costs, concession costs and other theatre operating costs) increased 15.5% to $294,295,000 due to the increased number of screens in operation and the increase in attendance. As a percentage of revenues, cost of theatre operations increased from 77.8% of total revenues to 80.7% of total revenues. This percentage increase is due primarily to a higher level of occupancy expense and to a lesser degree salaries included in this expense category that do not fluctuate proportionately with decreases in attendance levels. General and administrative costs increased 7.7% from $5,092,000 to $5,482,000 in 1995 reflecting additional general and administrative costs incurred to properly integrate the new screens acquired in 1994 and 1995. As a percentage of total revenues, general and administrative costs decreased from 1.6% of total revenues to 1.5% of total revenues. Depreciation and amortization increased 20.7% to $27,216,000 from $22,544,000 as a result of the increased screens in operation which were acquired in 1994 and 1995 (see Note 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 6.8% of total revenues to 7.5% of total revenues. Interest expense decreased 5.9% to $16,031,000 from $17,028,000 in 1994. This decrease reflects a lower average amount of debt outstanding for most of 1995. SEASONALITY AND INFLATION The major film distributors generally release those films which they anticipate to be the most successful during the summer and holiday seasons. Consequently, the Company has historically generated higher revenues during such periods. Inflation has not had a significant impact on the operations of the Company in any of the periods discussed above. LIQUIDITY AND CAPITAL RESOURCES The Company's revenues are collected in cash, principally through box office admissions and theatre concessions. Because its revenues are received in cash prior to the payment of related expenses, the Company has an operating "float" which partially finances its operations. The Company's capital requirements arise principally in connection with new theatre openings and acquisitions of existing theatres and theatre circuits. New theatre openings and acquisitions typically have been financed with internally generated cash and by debt financings, including borrowings under the Company's revolving credit facility. The Company believes that its capital needs for theatre construction and possible acquisitions should be satisfied by internally generated cash flow, cash and cash equivalents and short-term investments on hand, borrowings under the revolving credit line (see Note D of Notes to Consolidated Financial Statements), additional sale of debt and/or equity securities, additional bank financing and other forms of long-term debt and, where appropriate, future lease financing. At March 12, 1997, the Company had approximately $8.7 million in cash and short-term investments on hand and approximately $35.5 million was available under the Company's revolving credit facility. 25 15 SELECTED FINANCIAL AND OPERATING DATA (in thousands, except for per share and operating data)
YEARS ENDED DECEMBER 31 1996(1)(2) 1995(1) 1994(1) 1993(3) 1992 ---------- ------- ------- ------- ---- INCOME STATEMENT DATA: Revenues: Admissions ............................. $296,629 $253,691 $232,134 $167,294 $119,408 Concessions and other .................. 130,097 111,058 95,485 74,504 52,570 -------- -------- -------- -------- -------- TOTAL REVENUES 426,726 364,749 327,619 241,798 171,978 Costs and Expenses: Film exhibition costs .................. 156,968 135,654 123,610 90,874 63,826 Concession costs ....................... 17,252 14,959 12,241 9,406 7,815 Other theatre operating costs .......... 164,149 143,682 118,905 86,498 63,563 General and administrative ............. 5,959 5,482 5,092 4,710 3,897 Depreciation and amortization .......... 28,408 27,216 22,544 16,255 11,134 -------- -------- -------- -------- -------- 372,736 326,993 282,392 207,743 150,235 -------- -------- -------- -------- -------- OPERATING INCOME 53,990 37,756 45,227 34,055 21,743 Interest expense ........................... 20,289 16,031 17,028 14,282 11,623 -------- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 33,701 21,725 28,199 19,773 10,120 Income taxes ............................... 12,801 8,638 11,246 7,912 4,008 -------- -------- -------- -------- -------- NET INCOME $ 20,900 $ 13,087 $ 16,953 $ 11,861 $ 6,112 ======== ======== ======== ======== ======== Earnings per common share .................. $ 1.85 $ 1.16 $ 2.00 $ 1.50 $ .80 ======== ======== ======== ======== ======== Weighted average common shares outstanding . 11,277 11,260 8,477 7,917 7,672 ======== ======== ======== ======== ======== OPERATING DATA: Theatres (at end of period) ................ 519 519 445 409 302 Screens (at end of period) ................. 2,518 2,383 1,942 1,701 1,215 Average screens per theatre ................ 4.9 4.6 4.4 4.2 4.0 Total attendance (thousands) ............... 74,213 64,496 59,660 45,493 34,415 BALANCE SHEET DATA (AT END OF YEAR): Cash and cash equivalents .................. $ 5,569 $ 11,345 $ 17,872 $ 10,649 $ 16,842 Total assets ............................... 489,383 478,012 377,598 327,024 230,291 Total long-term debt (4) ................... 253,233 218,305 143,973 180,636 120,234 Shareholders' equity ....................... 177,930 185,094 171,956 93,856 75,728
(1) See Note C of Notes to Consolidated Financial Statements with respect to acquisitions. (2) Excludes the impact of adopting Statement 121 (see Notes B and L of Notes to Consolidated Financial Statements). (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 D, E and F of Notes to Consolidated Financial Statements). 26 16 General Information Carmike Cinemas, Inc. is the largest motion picture exhibitor in the United States, operating 519 theatres with an aggregate of 2,518 screens in markets located primarily in the Southeast, the Northeast, the Midwest and the West. During 1996, the Company opened eight new theatres (73 screens), added 32 screens to existing complexes and purchased fourteen multiplex theatres with a total of 79 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:
1996 1995 QUARTER ENDED HIGH LOW HIGH LOW March $ 23 7/8 $20 1/4 $23 3/8 $19 1/2 June 32 1/2 22 7/8 25 1/2 18 3/4 September 27 22 1/8 25 19 1/4 December 27 1/8 22 3/8 24 1/4 20 1/4
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 7, 1997, the Class A Common Stock was held of record by 763 shareholders. The Company believes that 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 c/o Carmike Cinemas, Inc. Shareholder Relations 3295 Northcrest Road, N.E. Atlanta, Georgia 30340-4099 800/241-5568 Form 10-K A copy of the Company's 1996 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 Annual Meeting The Annual Meeting of the Shareholders of Carmike Cinemas, Inc. will be held at the offices of Troutman Sanders LLP, NationsBank Plaza, 600 Peachtree St. N.E., 52nd Floor, Atlanta, Georgia on Monday, May 5, 1997, commencing at 11:00 a.m. E.S.T. Coming Soon www.carmike.com DIRECTORS, OFFICERS AND SHAREHOLDERS' INFORMATION Directors C.L PATRICK Chairman of the Board Carmike Cinemas, Inc. Columbus, Georgia MICHAEL W. PATRICK President and CEO Carmike Cinemas, Inc. Columbus, Georgia JOHN W. JORDAN, II Managing Partner The Jordan Company New York, NewYork CARL L. PATRICK, JR. Certified Public Accountant/Attorney Director, Summit Bank Corporation and Co-Chairman PGL Entertainment Corporation CARL E. SANDERS Chairman Troutman Sanders LLP Attorneys Atlanta, Georgia DAVID ZALAZNICK Partner The Jordan Company New York, New York General Offices Carmike Cinemas, Inc. 1301 First Avenue Columbus, Georgia 31901-2109 Officers C.L Patrick Chairman of the Board MICHAEL W. PATRICK President and CEO JOHN O. BARWICK, III Vice President - Finance Treasurer & CFO FRED W. VAN NOY Vice President - General Manager Larry M. Adams Vice President - Informational Systems and Secretary ANTHONY J. RHEAD Vice President - Film P. LAMAR FIELDS Vice President - Development H. MADISON SHIRLEY Vice President - Concessions & Assistant Secretary MARILYN B. GRANT Vice President - Advertising JAMES R. DAVIS Vice President - Technical 27 EX-21 4 LIST OF SUBSIDIARIES 1 EXHIBIT 21 CARMIKE CINEMAS, INC. LIST OF SUBSIDIARIES
STATE OF SUBSIDIARY % OWNED INCORPORATION - ---------- ------- ------------- Wooden Nickel Pub, Inc. 100% Delaware Eastwynn Theatres, Inc. 100% Alabama Military Services, Inc. 80% Delaware Carmike Realty, Inc. 100% Georgia
26 EX-23 5 CONSENT OF ERNST & YOUNG 1 EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Carmike Cinemas, Inc. of our report dated February 3, 1997, included in the 1996 Annual Report to Shareholders of Carmike Cinemas, Inc. and subsidiaries. We also consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-13723 and Form S-8 No. 33-48011) pertaining to the stock option plan of Carmike Cinemas, Inc. and subsidiaries of our report dated February 3, 1997, 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, 1996. /s/ Ernst & Young LLP Columbus, Georgia March 14, 1997 EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K FILED FOR YEAR ENDED 12/31/96. YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 5,569,000 7,726,000 4,822,000 0 2,631,000 26,111,000 507,726,000 119,811,000 489,383,000 53,698,000 0 0 0 335,000 177,595,000 489,383,000 130,097,000 426,726,000 17,252,000 338,369,000 79,814,000 0 0 (11,746,000) (4,469,000) (7,277,000) 0 0 0 (7,277,000) (.65) 0
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