-----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, L3hXJgchCB+Kf49YXPDC+0PJp7A/7ZoVDcyfvT1GzlwvGNn7zRaWPuRQxDEzhX1Z 616aDlRJ9NhMJb+bBugFyA== 0000950144-98-006171.txt : 19980603 0000950144-98-006171.hdr.sgml : 19980603 ACCESSION NUMBER: 0000950144-98-006171 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARMIKE CINEMAS INC CENTRAL INDEX KEY: 0000799088 STANDARD INDUSTRIAL CLASSIFICATION: 7830 IRS NUMBER: 581469127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11604 FILM NUMBER: 98620510 BUSINESS ADDRESS: STREET 1: 1301 FIRST AVE CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 4045763400 MAIL ADDRESS: STREET 1: P O BOX 391 CITY: COLUMBUS STATE: GA ZIP: 31994 10-Q 1 CARMIKE CINEMAS INC 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended MARCH 31, 1998 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 (I.R.S. Employer of incorporation or organization) Identification No.) 1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901-2109 (Address of principal Executive Offices) (Zip Code) (706) 576-3400 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock, $.03 par value -- 9,941,487 shares outstanding as of May 11, 1998 Class B Common Stock, $.03 par value -- 1,420,700 shares outstanding as of May 11, 1998 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1998 1997 -------- ------------ (Unaudited) (000's omitted) ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,264 $ 16,545 Short-term investments 8,326 3,042 Recoverable construction allowances under capital leases 2,100 2,100 Accounts and notes receivable 2,395 758 Inventories 3,527 3,082 Prepaid expenses 5,811 5,448 -------- -------- TOTAL CURRENT ASSETS 27,423 30,975 OTHER ASSETS 21,388 23,817 PROPERTY AND EQUIPMENT - Net of accumulated depreciation and amortization - 512,855 497,056 EXCESS OF COST OVER FAIR VALUE OF TANGIBLE ASSETS ACQUIRED 67,690 68,149 -------- -------- $629,356 $619,997 ======== ========
2 3
March 31, December 31, 1998 1997 -------- ------------ (Unaudited) (000's omitted) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 30,553 $ 26,122 Accrued expenses 17,709 17,833 Current maturities of long-term debt and capital lease obligations 19,169 19,077 -------- -------- TOTAL CURRENT LIABILITIES 67,431 63,032 LONG-TERM DEBT - less current maturities - Note B 229,676 222,242 SENIOR NOTES 72,727 79,870 CAPITAL LEASE OBLIGATIONS - less current maturities 39,290 39,550 DEFERRED INCOME TAXES 13,431 12,431 SHAREHOLDERS' EQUITY Class A Common Stock, $.03 par value, one vote per share, authorized 22,500,000 shares, issued and outstanding 9,941,287 and 9,918,587 shares, respectively 298 298 Class B Common Stock, $.03 par value, ten votes per share, authorized 5,000,000 shares, issued and outstanding 1,420,700 shares 43 43 Paid-in capital 104,812 104,677 Retained earnings 101,648 97,854 -------- -------- 206,801 202,872 -------- -------- $629,356 $619,997 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 4 CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1998 1997 -------- -------- (000's omitted except per share data) REVENUES Admissions $ 80,625 $ 77,270 Concessions and other 36,517 31,187 -------- -------- 117,142 108,457 COSTS AND EXPENSES Film exhibition costs 42,666 39,539 Concession costs 4,674 4,007 Other theatre operating costs 46,650 43,952 General and administrative 1,731 1,594 Depreciation and amortization 8,986 7,734 -------- -------- 104,707 96,826 -------- -------- OPERATING INCOME 12,435 11,631 Interest expense 6,317 5,237 -------- -------- INCOME BEFORE INCOME TAXES 6,118 6,394 Income tax expense 2,324 2,429 -------- -------- NET INCOME $ 3,794 $ 3,965 ======== ======== NET INCOME PER BASIC AND DILUTED SHARE $ .33 $ .35 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 5 CARMIKE CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, 1998 1997 --------- --------- (000's omitted) OPERATING ACTIVITIES Net income $ 3,794 $ 3,965 Items which did not use cash: Depreciation and amortization 8,986 7,734 Deferred income taxes 1,000 -0- Gain on sale of assets (424) (144) Changes in operating assets and liabilities: Accounts and notes receivable and inventories (2,082) (1,670) Prepaid expenses (363) (1,993) Accounts payable 3,432 7,892 Accrued expenses 876 248 --------- --------- NET CASH PROVIDED BY OPERATIONS 15,219 16,032 INVESTING ACTIVITIES Purchases of property and equipment (24,261) (30,754) Disposals of property and equipment -0- 1,357 Decrease (increase) in: Short-term investments (5,284) (593) Other 2,788 (2,828) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (26,757) (32,818) FINANCING ACTIVITIES Debt and other liabilities: Borrowings under revolving credit line 692,500 437,000 Repayments of revolving credit line (685,000) (413,000) Payments of other long term borrowings (7,377) (7,337) Issuance of Class A Common Stock 134 -0- --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 257 16,663 --------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (11,281) (123) Cash and cash equivalents at beginning of period 16,545 5,569 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,264 $ 5,446 ========= =========
See accompanying notes to condensed consolidated financial statements. 5 6 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1998 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. NOTE B -- REVOLVING CREDIT FACILITY On October 17, 1997, the Company entered into a credit agreement (the "1997 Credit Agreement") with a consortium of twelve banks to provide a revolving line of credit of up to $275 million for working capital, acquisitions and other general corporate purposes. The revolving line of credit under the 1997 Credit Agreement is available for a five-year period. The Company has the option to borrow at rates based on either the base rate of Wachovia Bank, N.A. or LIBOR + .50% and is required to pay annual fees of .225% on the full amount of the facility. The interest rate and facility fees are subject to adjustment based upon the Company's ratio of defined funded debt to defined cash flows. At December 31, 1997, the Company had $55.0 million available for borrowings under this facility. The Company has classified all amounts outstanding under the 1997 Credit Agreement as long-term in the accompanying Consolidated Balance Sheets because management intends that at least that amount would remain outstanding during 1998. INTEREST RATE SWAPS: 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 interest rate swap agreements changed floating interest rate expense on amounts outstanding under the 1997 Credit Agreement. Under one interest rate swap agreement, the Company has fixed $50.0 million of its floating rate debt through February 7, 2003. The effective rate at March 31, 1998 was 6.205%, equal to a fixed rate of 5.705% plus the margin of .50% the Company presently pays over LIBOR. Under another interest rate swap agreement, the Company has fixed $20.0 million of its floating rate debt through February 7, 2001 at a fixed rate of 5.51% plus the margin the Company pays over LIBOR (.50% at March 31, 1998) for a total effective rate of 6.01%. 6 7 CARMIKE CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1998 The Company is exposed to credit losses in the event of non-performance by counter-parties on interest rate swap agreements. The Company does not believe there is a significant risk of non-performance by any of the counter-parties to these instruments and the Company monitors the financial stability of such parties on a periodic basis. NOTE C -- EARNINGS PER SHARE
Three Months Ended March 31, 1998 1997 ------- ------- Weighted average shares outstanding: Basic 11,341 11,180 Effect of dilutive securities - Employee stock options 84 93 ------- ------- Diluted 11,425 11,273 ======= ======= NET INCOME $ 3,794 $ 3,965 ======= ======= Earnings per common share: Basic $ .33 $ .35 ======= ======= Diluted $ .33 $ .35 ======= =======
7 8 Item 2. 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, 1997 (the "1997 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, the effect of consolidations in the movie exhibition industry and competition with other forms of entertainment, as well as those discussed or identified from time to time in the Company's filings with the SEC, including, but not limited to, the Company's 1997 Form 10-K. RESULTS OF OPERATIONS Total revenues for the quarter ended March 31, 1998 increased 8.0% to $117.1 million from $108.5 million for the quarter ended March 31, 1997. This increase consists of a $3.4 million increase in admissions and a $5.3 million increase in concessions and other. The increases are attributed to additional revenues generated by the increased number of screens in operation, increases in admission prices and additional revenues from the Company's new family entertainment center, The Hollywood Connection(R). These increases were partially offset by a 4.2% decline in attendance per average screen. For the quarter ended March 31, 1998, the Company's average admission price was $4.30, its average concession sale per patron was $1.78 and revenue per average screen was $43,210. For the quarter ended March 31, 1997, the Company's average admission price was $4.25, its average concession sale per patron was $1.61 and revenue per average screen was $43,021. Cost of operations (film exhibition costs, concession costs and other theatre operating costs) increased 7.4% to $94.0 million in the quarter ended March 31, 1998 from $87.5 million in the quarter ended March 31, 1997. This dollar increase is due to additional film rentals paid on the increased admissions plus an increase in expenses due to the increased number of screens in operation. As a percentage of total revenues, cost of operations decreased to 80.2% of total revenues from 80.7%. This percentage decrease is due primarily to the level of fixed costs, such as occupancy costs, managers salaries and utilities, included in this cost category that do not vary with changes in revenues and attendance levels. General and administrative costs increased from $1.6 million to $1.7 million, reflecting additional general and administrative costs incurred in connection with the additional screens added in 1997 and 1998. As a percentage of total revenues, general and administrative costs remained the same at 1.4%. Depreciation and amortization increased 16.2% from $7.7 million for the quarter ended March 31, 1997 to $9.0 million for the quarter ended March 31, 1998 due to the increased screens in operation. Interest expense for the quarter ended March 31, 1998 increased 20.6% to $6.3 million from $5.2 million in the comparable quarter of 1997, due to the increase in the average amount of outstanding debt. 8 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. On October 17, 1997, the Company entered into a new credit agreement (the "1997 Credit Agreement") with a consortium of twelve banks to provide a revolving line of credit of up to $275 million for working capital, acquisitions and other general corporate purposes. The revolving line of credit under the 1997 Credit Agreement is available for a five year period. The Company has the option to borrow at interest rates based on either the bank base rate or LIBOR plus .50% and is required to pay annual commitment fees of .225% 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. The Company's credit facilities contain 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's capital expenditures arise principally in connection with theatre acquisitions, renovation and expansion of existing theatres and the development of new theatres. During the first three months of 1998, such capital expenditures totaled $24.3 million. The Company estimates that total capital expenditures for 1998 will be approximately $150.0 million. The Company believes that its presently anticipated capital needs for theatre construction and possible acquisitions will be satisfied by the cash and cash equivalents and short-term investments on hand, borrowing under the revolving credit lines (see Note B of the Notes to Condensed Consolidated Financial Statements (Unaudited) herein), additional sale of debt and/or equity securities, additional bank financings and other forms of long-term debt, internally generated cash flow and, where appropriate, future lease financings. On May 11, 1998, the Company had approximately $15.7 million in cash and short term investments on hand and approximately $29.5 million was available under the Company's revolving credit facility. Cash from operating activities was $15.2 million for the three months ended March 31, 1998, compared to $16.0 million for the three months ended March 31, 1997. The decrease in cash flow from operating activities was primarily due to the decrease in accounts payable. Net cash used in investing activities was $26.8 million for the three months ended March 31, 1998 as compared to $32.8 million in the prior year period. This decrease in cash used in investing activities was primarily due to the decreased level of capital expenditures. For the three month periods ended March 31, 1998 and 1997, cash provided by financing activities was $.3 million and $16.7 million, respectively. The decrease in cash provided by financing activities was due to a decreased level of borrowings under the Company's revolving credit line. 9 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company has initiated an internal review of its systems to ensure that Year 2000 issues do not have a material adverse effect on the Company's core business operations or transactions with customers, suppliers and financial institutions. Based on this review, which was substantially completed at December 31, 1997, the Company has determined that it will need to modify or replace portions of its IQ-Zero software so that it will properly generate reports and manage certain operations properly after December 31, 1999. In connection with its review, the Company will also discuss the Year 2000 issues with its significant suppliers and financial institutions to ensure that their systems are fully Year 2000 compliant relative to how their systems interface with the Company's systems or otherwise impact the Company's operations. The Company will evaluate alternatives should such suppliers and financial institutions fail to remediate their Year 2000 problems. The Company believes that its review is adequate to address its Year 2000 concerns and that the cost of its Year 2000 initiatives has not had, and are not expected to have, a material adverse effect on the Company's operating results or financial condition. However, there can be no assurance that the Company's systems nor the systems of other companies with whom the Company conducts business will be Year 2000 complaint prior to December 31, 1999 or that the failure of any such system will not have a material adverse effect on the Company's business, operating results and financial condition. 10 11 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits 27 - Financial Data Schedules (for SEC use only). (b) Reports on Form 8-K None 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARMIKE CINEMAS, INC. (Registrant) Date: March 14, 1998 By: /s/ Michael W. Patrick ---------------------------------- Michael W. Patrick - President (Chief Executive Officer) Date: March 14, 1998 By: /s/ John O. Barwick, III ---------------------------------- John O. Barwick, III - Senior President - Finance (Chief Accounting and Financial Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM, 10-Q OF CARMIKE CINEMAS, INC. FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 5,264 8,326 4,495 0 3,527 27,423 668,486 155,631 629,356 68,431 0 0 0 341 206,460 629,356 36,517 117,142 4,674 93,990 10,717 0 6,317 6,118 2,324 3,794 0 0 0 3,794 .33 .33
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