Delaware | 000-14993 | 58-1469127 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
1301 First Avenue, Columbus, Georgia | 31901 | |||
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
þ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
99.1 | Press Release, dated August 1, 2016. | |
99.2 | Carmike Cinemas Second Quarter Fiscal 2016 Management Commentary. |
CARMIKE CINEMAS, INC. | ||||||
Date: August 1, 2016 | By: | /s/ Richard B. Hare | ||||
Richard B. Hare | ||||||
Senior Vice President-Finance, Treasurer and Financial Officer |
Exhibit No. | Description of Exhibit | ||
99.1 | Press Release, dated August 1, 2016. | ||
99.2 | Carmike Cinemas Second Quarter Fiscal 2016 Management Commentary. |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Total operating revenues | $ | 204.7 | $ | 219.1 | $ | 410.9 | $ | 403.4 | |||||||
Operating income | 8.8 | 26.9 | 24.4 | 38.9 | |||||||||||
Interest expense | 12.4 | 12.6 | 24.8 | 25.3 | |||||||||||
Theatre level cash flow (1) | 37.9 | 47.0 | 81.0 | 82.5 | |||||||||||
Net (loss) income | (1.6) | (1.4) | 0.6 | (1.1) | |||||||||||
Adjusted net income (1) | 2.4 | 8.8 | 7.8 | 11.9 | |||||||||||
Adjusted EBITDA (1) | 31.0 | 40.8 | 67.3 | 70.6 | |||||||||||
(in millions) | Jun. 30, 2016 | Dec. 31, 2015 | |||||||||||||
Total debt(1) | $ | 461.3 | $ | 454.7 | |||||||||||
Net debt(1) | $ | 352.7 | $ | 352.2 |
(1) | Theatre level cash flow, adjusted net income, adjusted EBITDA, total debt and net debt are supplemental non-GAAP financial measures. The most comparable GAAP measures are net (loss) income and long-term debt. Reconciliations of theatre level cash flow and adjusted EBITDA to net (loss) income and adjusted net income to net (loss) income for the three and six months ended June 30, 2016 and 2015, as well as a schedule of total debt and net debt as of June 30, 2016 and December 31, 2015, are included in the supplementary tables accompanying this news announcement. |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Average theatres | 275 | 271 | 275 | 272 | |||||||||||
Average screens | 2,946 | 2,884 | 2,947 | 2,889 | |||||||||||
Average attendance per screen | 5,389 | 6,145 | 10,725 | 11,504 | |||||||||||
Average admission per patron | $ | 7.69 | $ | 7.62 | $ | 7.75 | $ | 7.42 | |||||||
Average concessions/other sales per patron | $ | 5.20 | $ | 4.75 | $ | 5.25 | $ | 4.73 | |||||||
Total attendance (in thousands) | 15,875 | 17,724 | 31,605 | 33,181 | |||||||||||
Total operating revenues (in thousands) | $ | 204,674 | $ | 219,099 | $ | 410,862 | $ | 403,433 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Revenues: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Admissions | $ | 122,153 | $ | 134,986 | $ | 244,856 | $ | 246,342 | ||||||
Concessions and other | 82,521 | 84,113 | 166,006 | 157,091 | ||||||||||
Total operating revenues | 204,674 | 219,099 | 410,862 | 403,433 | ||||||||||
Operating costs and expenses: | ||||||||||||||
Film exhibition costs | 70,280 | 79,288 | 138,624 | 140,971 | ||||||||||
Concession costs | 9,925 | 9,728 | 19,505 | 17,750 | ||||||||||
Salaries and benefits | 25,967 | 26,069 | 50,727 | 49,783 | ||||||||||
Theatre occupancy costs | 26,876 | 23,899 | 52,754 | 47,334 | ||||||||||
Other theatre operating costs | 33,746 | 33,082 | 68,287 | 65,111 | ||||||||||
General and administrative expenses | 11,421 | 8,211 | 23,743 | 18,238 | ||||||||||
Depreciation and amortization | 15,311 | 13,747 | 30,468 | 26,834 | ||||||||||
Loss (gain) on sale of property and equipment | 342 | (2,293) | 60 | (3,324) | ||||||||||
Impairment of long-lived assets | 1,980 | 481 | 2,260 | 1,870 | ||||||||||
Total operating costs and expenses | 195,848 | 192,212 | 386,428 | 364,567 | ||||||||||
Operating income | 8,826 | 26,887 | 24,434 | 38,866 | ||||||||||
Interest expense | 12,382 | 12,639 | 24,768 | 25,308 | ||||||||||
Loss on extinguishment of debt | - | 17,550 | - | 17,550 | ||||||||||
Loss before income tax and income from unconsolidated affiliates | (3,556) | (3,302) | (334) | (3,992) | ||||||||||
Income tax (benefit) expense | (857) | (1,281) | 554 | (1,014) | ||||||||||
Income from unconsolidated affiliates | 1,101 | 576 | 1,515 | 1,924 | ||||||||||
Net (loss) income | $ | (1,598 | ) | $ | (1,445 | ) | $ | 627 | $ | (1,054 | ) | |||
Weighted average shares outstanding: | ||||||||||||||
Basic | 24,580 | 24,464 | 24,567 | 24,393 | ||||||||||
Diluted | 24,580 | 24,464 | 24,975 | 24,393 | ||||||||||
Net (loss) income per common share (Basic and Diluted): | ||||||||||||||
Net (loss) income per common share | $ | (0.07 | ) | $ | (0.06 | ) | $ | 0.03 | $ | (0.04 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Net (loss) income | $ | (1,598 | ) | $ | (1,445 | ) | $ | 627 | $ | (1,054 | ) | |
Income tax (benefit) expense | (857) | (1,281) | 554 | (1,014) | ||||||||
Interest expense | 12,382 | 12,639 | 24,768 | 25,308 | ||||||||
Depreciation and amortization | 15,311 | 13,747 | 30,468 | 26,834 | ||||||||
EBITDA | $ | 25,238 | $ | 23,660 | $ | 56,417 | $ | 50,074 | ||||
Income from unconsolidated affiliates | (1,101) | (576) | (1,515) | (1,924) | ||||||||
Loss on extinguishment of debt | — | 17,550 | — | 17,550 | ||||||||
Loss (gain) on sale of property and equipment | 342 | (2,293) | 60 | (3,324) | ||||||||
Impairment of long-lived assets | 1,980 | 481 | 2,260 | 1,870 | ||||||||
Merger and acquisition-related expenses | 3,886 | 799 | 7,638 | 2,453 | ||||||||
Share-based compensation expense | 678 | 1,177 | 2,401 | 3,858 | ||||||||
Adjusted EBITDA | $ | 31,023 | $ | 40,798 | $ | 67,261 | $ | 70,557 | ||||
General and administrative expenses | 6,857 | 6,235 | 13,704 | 11,927 | ||||||||
Theatre level cash flow | $ | 37,880 | $ | 47,033 | $ | 80,965 | $ | 82,484 |
June 30, | Dec. 31, | ||||||
2016 | 2015 | ||||||
Current maturities of capital leases and long-term financing obligations | $ | 12,446 | $ | 9,978 | |||
Long-term debt | 223,846 | 223,406 | |||||
Capital leases and long-term financing obligations, less current maturities | 224,968 | 221,315 | |||||
Total debt | $ | 461,260 | $ | 454,699 | |||
Less cash and cash equivalents | (108,544) | (102,511) | |||||
Net debt | $ | 352,716 | $ | 352,188 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Net (loss) income | $ | (1,598 | ) | $ | (1,445 | ) | $ | 627 | $ | (1,054 | ) | |
Impairment of long-lived assets | 1,980 | 481 | 2,260 | 1,870 | ||||||||
Loss on extinguishment of debt | - | 17,550 | - | 17,550 | ||||||||
Loss (gain) on sale of property and equipment | 342 | (2,293) | 60 | (3,324) | ||||||||
Merger and acquisition-related expenses | 3,886 | 799 | 7,638 | 2,453 | ||||||||
Share-based compensation expense | 678 | 1,177 | 2,401 | 3,858 | ||||||||
Tax effect of adjustments to net (loss) income | (2,892) | (7,440) | (5,191) | (9,411) | ||||||||
Adjusted net income | $ | 2,396 | $ | 8,829 | $ | 7,795 | $ | 11,942 | ||||
Weighted average shares outstanding (basic) | 24,580 | 24,464 | 24,567 | 24,393 | ||||||||
Weighted average shares outstanding (diluted) | 24,961 | 24,863 | 24,975 | 24,826 | ||||||||
Adjusted net income per share (basic) | $ | 0.10 | $ | 0.36 | $ | 0.32 | $ | 0.49 | ||||
Adjusted net income per share (diluted) | $ | 0.10 | $ | 0.36 | $ | 0.31 | $ | 0.48 |
Operating Results | Management Comments | ||||
$ in millions | Q2 2016 | Q2 2015 | $ Variance | % Change | |
Operating Revenues | |||||
Admissions Revenue | $122.2 | $135.0 | ($12.8) | (9.5)% | • Industry box office was down 9.3% compared to Q2 2015. • Admissions revenue per screen decreased 11.4% from Q2 2015 to Q2 2016. • As a percentage of total admissions revenue, admissions revenue from premium format viewings (3D, IMAX, etc.) decreased from 22% in Q2 2015 to 18% in Q2 2016. • Sundance Cinemas acquisition (Q4 2015) contributed admissions revenues of $2.2 million. • Recognized $0.3 million in gift card breakage in Q2 2016. • Year-over-year per patron spend increased from $7.62 to $7.69. Factors include: o + Tax on Top o + Sundance o - 3D ticket % o - Discounts, including $5 Tuesday promotions |
Concessions and Other Revenue | $82.5 | $84.1 | ($1.6) | (1.9)% | • Sundance Cinemas acquisition (Q4 2015) contributed concessions and other revenues of $1.9 million. • Recognized $0.2 million in gift card breakage in Q2 2016. • Increase in per patron spend from $4.75 to $5.20, primarily driven by tax-on-top pricing strategy implemented in Q4 2015. • Expanded hot food and alcohol programs continue to generate incremental per patron spend of approximately $0.15 at each location. • Q2 2016 marks the fourth quarter in which all three Ovation dining theatres have been in operation. |
Operating Expenses | |||||
Film Exhibition Costs | $70.3 | $79.3 | ($9.0) | (11.4)% | • Film exhibition costs as % of admission revenue decreased from 58.7% to 57.5%. • Film exhibition costs % decreased due to a lower concentration of top grossing films in Q2 2016 vs. Q2 2015. |
Concession Costs | $9.9 | $9.7 | $0.2 | 2.0% | • Concession costs as % of concessions and other revenues increased from 11.6% to 12.0%. • Concession cost as % of concessions and other revenue increased due to rollout of in-theatre dining locations (including the addition of the Sundance locations) during 2015 as well as expansion of locations serving hot food and alcohol. |
Salaries & Wages Expense | $26.0 | $26.1 | ($0.1) | (0.4)% | • Salaries and benefits decreased in Q2 2016, reflecting lower staffing levels associated with decreased attendance, partially offset by increased salaries and benefits associated with recent acquisitions and theatre openings. |
Theatre Occupancy Costs | $26.9 | $23.9 | $3.0 | 12.5% | • Increase in theatre occupancy costs related to 5 theatres and 63 screens (not including acquired screens) opened since Q2 2015, partially offset by impact of closures. • Increase of $0.8 million due to acquired Sundance theatres. |
Other Theatre Operating Expenses | $33.7 | $33.1 | $0.6 | 2.0% | • Other theatre operating costs as a % of total operating revenues increased from 15.1% in Q2 2015 to 16.5% in Q2 2016. • Increase of $0.8 million due to acquired Sundance theatres. |
Other Income/Expenses |
General and Administrative | $11.4 | $8.2 | $3.2 | 39.1% | • Increase in merger and acquisition fees of $3.9 million, primarily associated with the pending AMC merger. |
Depreciation and Amortization Expense | $15.3 | $13.7 | $1.6 | 11.4% | • Increase resulting from higher fixed asset base due to recent acquisitions. |
Interest Expense | $12.4 | $12.6 | ($0.2) | (2.0)% | • Reduction in interest expense primarily due to a decrease in the weighted-average interest rate of the Company’s 6.00% Senior Notes compared to its previous Senior Notes. • Partially offset by increase in capital lease and financing obligation balance |
Loss on Extinguishment of Debt | $— | $17.6 | ($17.6) | 100.0% | • Refinanced senior secured notes in Q2 2015. |
Income Tax Benefit | ($0.9) | ($1.3) | ($0.4) | (33.1)% | • Decrease resulting from lower pre-tax loss in Q2 2016. |
Income from Unconsolidated Affiliates | $1.1 | $0.6 | $0.5 | 91.1% | • Amount is largely attributable to our investment in Screenvision. |
Net Loss/EPS | |||||
Net Loss | ($1.6) | ($1.4) | ($0.2) | (10.6)% | |
EPS (Basic and Diluted) | ($0.07) | ($0.06) | ($0.01) | (16.7)% |
Operating Results | Management Comments | ||||
$ in millions | Q2 2016 | Q2 2015 | $ Variance | % Change | |
Non-GAAP Performance Measures | |||||
Adjusted EBITDA | $31.0 | $40.8 | ($9.8) | (24.0)% | • Decrease in top-line revenue growth as Q2 2016 faced difficult comparison against record setting Industry box office in Q2 2015 . |
Net Debt1 | $352.7 | $352.2 | $0.5 | 0.1% | |
Adjusted Net Income | $2.4 | $8.8 | ($6.4) | (72.9)% | • Factors noted above combined with non-cash and other non-recurring charges including expenses incurred with the pending AMC merger and non-cash share-based compensation expense. |
Adjusted EPS (diluted) | $0.10 | $0.36 | ($0.26) | (72.2)% | • Factors noted above. |
Operating Results | Management Comments | ||||
$ in millions | YTD 2016 | YTD 2015 | $ Variance | % Change | |
Operating Revenues | |||||
Admissions Revenue | $244.9 | $246.3 | ($1.4) | (0.6)% | • Industry box office was up 0.4% in for the first six months of 2016 compared to the same period in 2015. • Admissions revenue per screen decreased 2.6%. • Sundance Cinemas acquisition (Q4 2015) contributed YTD admissions revenues of $5.8 million. • Recognized $0.7 million in gift card breakage in 2016. • Year-over-year per patron spend increased from $7.42 to $7.75. Factors include: o + Tax on Top o + Sundance o - Discounts, including $5 Tuesday promotions |
Concessions and Other Revenue | $166.0 | $157.1 | $8.9 | 5.7% | • Sundance Cinemas acquisition (Q4 2015) contributed concessions and other revenues of $4.6 million. • Recognized $0.7 million of settlement funds related to the 2010 BP oil spill. • Recognized $0.4 million in gift card breakage in 2016. • Increase in per patron spend from $4.73 to $5.25, primarily driven by tax-on-top pricing strategy implemented in Q4 2015, expanded food and beverage options and a greater number of in-theatre dining locations, including Sundance. • Expanded hot food and alcohol programs continue to generate incremental per patron spend of approximately $0.15 at each location. |
Operating Expenses | |||||
Film Exhibition Costs | $138.6 | $141.0 | ($2.4) | (1.7)% | • Film exhibition costs as % of admission revenue decreased from 57.2% to 56.6%. • Film exhibition costs % decreased due to a lower concentration of top grossing films in the first half of 2016 (including carryover of successful carryover films from Q4 2015) vs. the 2015 period. |
Concession Costs | $19.5 | $17.8 | $1.7 | 9.9% | • Concession costs as % of concessions and other revenues increased from 11.3% to 11.7%. • Concession cost as % of concessions and other revenue increased due to rollout of in-theatre dining locations (including the addition of the Sundance locations) during 2015 as well as expansion of locations serving hot food and alcohol. |
Salaries & Wages Expense | $50.7 | $49.8 | $0.9 | 1.9% | • Increase in salaries and benefits due to recently acquired theatres • Salaries and benefits as a % of total operating revenues remained flat year over year. |
Theatre Occupancy Costs | $52.8 | $47.3 | $5.5 | 11.5% | • Increase in theatre occupancy costs related to 5 theatres and 63 screens (not including acquired screens) opened since Q2 2015, partially offset by impact of closures. • Increase of $1.7 million due to acquired Sundance theatres. |
Other Theatre Operating Expenses | $68.3 | 65.1 | $3.2 | 4.9% | • Other theatre operating costs as a % of total operating revenues increased from 16.1% in Q2 2015 to 16.6% in Q2 2016. • Increase of $1.8 million due to acquired Sundance theatres. |
Other Income/Expenses | |||||
General and Administrative | $23.7 | $18.2 | $5.5 | 30.2% | • Increase in merger and acquisition fees of $7.8 million, primarily associated with the pending AMC merger. |
Depreciation and Amortization Expense | $30.5 | $26.8 | $3.7 | 13.5% | • Increase resulting from higher fixed asset base resulting from recent acquisitions. |
Interest Expense | $24.8 | $25.3 | ($0.5) | (2.1)% | • Reduction in interest expense primarily due to a decrease in the weighted-average interest rate of its 6.00% Senior Notes compared to the previous Senior Notes, partially offset by higher capital lease and financing obligation balances |
Loss on Extinguishment of Debt | $— | $17.6 | ($17.6) | 100.0% | • Refinanced senior secured notes in Q2 2015. |
Income Tax Expense (Benefit) | $0.6 | ($1.0) | $1.6 | 154.6% | • Increase resulting from higher pre-tax income resulting from higher 2016 box office revenues. |
Income from Unconsolidated Affiliates | $1.5 | $1.9 | ($0.4) | (21.3)% | • Amount is largely attributable to our investment in Screenvision. |
Net Income (Loss)/EPS | |||||
Net Income (Loss) | $0.6 | ($1.1) | $1.7 | 159.5% |
EPS (Basic and Diluted) | $0.03 | ($0.04) | $0.07 | 175.0% |
Operating Results | Management Comments | ||||
$ in millions | YTD 2016 | YTD 2015 | $ Variance | % Change | |
Non-GAAP Performance Measures | |||||
Adjusted EBITDA | $67.3 | $70.6 | ($3.3) | (4.7)% | • Decrease in top-line revenue growth as Q2 2016 faced difficult comparison against record setting Industry box office in Q2 2015. |
Adjusted Net Income | $7.8 | $11.9 | ($4.1) | (34.7)% | • Factors noted above combined with non-cash and other non-recurring charges including expenses incurred with the pending AMC merger and non-cash share-based compensation expense. |
Adjusted EPS (diluted) | $0.31 | $0.48 | ($0.17) | (35.4)% | • Factors noted above. |
• | We acquired 5 theatres and 37 screens from Sundance Cinemas in October 2015. These screens are expected to generate annual revenues and Adjusted EBITDA of approximately $24 million and $5.6 million, respectively. |
• | In January 2016, prior to the announcement of our planned merger with AMC Entertainment Holdings, Inc. ("AMC"), we acquired two theatres and 22 screens from a subsidiary of AMC Entertainment Holdings, Inc. Since late 2011, we have added 65 theatres and over 800 screens to our circuit. Our acquisition plans are currently on hold given the planned merger with AMC. |
• | Our tax-on-top pricing strategy, implemented in Q4 2015, continues to generate growth in per patron spend in admissions and concessions. |
• | Concessions and other revenue per patron increased 9.5% from $4.75 in Q2 2016 to $5.20 in Q2 2016. This marks the 26th consecutive quarter of year-over-year increases in this important growth metric. |
• | At the end of Q2 2016, 60 locations are serving alcohol while 71 locations are serving hot foods. This is up from approximately 40 locations serving alcohol and hot foods, respectively, at the end of Q2 2015. |
• | We opened a 12 screen theatre in Tulsa, OK in January 2016 and plan to open 4 additional theatres and 38 screens by the end of 2016, all of which will include in-theatre dining. |
• | Our circuit currently includes 55 premium format auditoriums, including 32 of our proprietary Big D auditoriums, 21 IMAX auditoriums and 2 MuviXL auditoriums. |
• | Capital expenditures for Q2 2016 were $10.9 million. The Company anticipates total capital expenditures, net of landlord reimbursements, for fiscal year 2016 to be approximately $50 million to $55 million, primarily associated with theatre renovations, new build-to-suit theatres and maintenance. |
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