-----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, RPvPGmnf7dkU4qptz3iLMF3An/y5Y/fV9bwy2WHK0SOi/jF8+JlAzWR79emEpg5m Pk6izFjum5m2+jiWYlIUEw== 0000950144-96-007589.txt : 19961106 0000950144-96-007589.hdr.sgml : 19961106 ACCESSION NUMBER: 0000950144-96-007589 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961003 FILED AS OF DATE: 19961105 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGAL CINEMAS INC CENTRAL INDEX KEY: 0000905035 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 621412720 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21772 FILM NUMBER: 96654414 BUSINESS ADDRESS: STREET 1: 7132 COMMERCIAL PARK DR CITY: KNOXVILLE STATE: TN ZIP: 37918 BUSINESS PHONE: 4239221123 MAIL ADDRESS: STREET 1: 7132 COMMERCIAL PARK DR CITY: KNOXVILLE STATE: TN ZIP: 37918 10-Q 1 REGAL CINEMAS, INC. FORM 10-Q 10-3-96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 3, 1996 Commission file number 0-21772 ----------- Regal Cinemas, Inc. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Tennessee 62-1412720 - ---------------------------------------- ------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 7132 Commercial Park Drive Knoxville, Tennessee 37918 - ---------------------------------------- ---------------------------- (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (423) 922-1123 -------------------------- 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 ---- ----- Common Stock outstanding - 32,856,971 shares at November 1, 1996 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. - ------------------------------------------------------------------------------- REGAL CINEMAS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------------- (in thousands of dollars) ASSETS
October 3, December 28, 1996 1995 ---------- ----------- Current assets: Cash and equivalents $ 5,120 $ 5,775 Accounts receivable 836 927 Inventories 1,082 875 Prepaids and other current assets 3,312 3,039 Refundable income taxes 2,025 2,493 Deferred income taxes 148 122 -------- -------- Total current assets 12,523 13,231 -------- -------- Property and equipment: Land 23,524 25,200 Buildings and leasehold improvements 175,730 133,590 Equipment 105,110 83,523 Construction in progress 39,524 22,391 -------- -------- 343,888 264,704 Accumulated depreciation and amortization (50,443) (40,995) -------- -------- Total property and equipment, net 293,445 223,709 -------- -------- Other assets 22,016 9,941 -------- -------- Total assets $327,984 $246,881 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 REGAL CINEMAS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) ------------------------------------------------------- (in thousands of dollars, except share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY October 3, December 28, 1996 1995 ---------- ------------ Current liabilities: Current maturities of long-term obligations $ 73 $ 13,254 Accounts payable 15,132 16,684 Accrued expenses 5,781 5,685 Dividends payable - 271 -------- -------- Total current liabilities 20,986 35,894 Long-term obligations, less current maturities 27,600 95,088 Other liabilities 3,421 3,542 Deferred income taxes 7,269 5,454 -------- -------- Total liabilities 59,276 139,978 -------- -------- Shareholders' equity: Common stock, no par; 50,000,000 shares authorized, 32,856,971 and 27,666,192 shares issued and outstanding at October 3, 1996 and December 28, 1995, respectively 215,322 74,484 Retained earnings 53,386 32,419 -------- -------- 268,708 106,903 -------- -------- Total liabilities and shareholders' equity $327,984 $246,881 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 REGAL CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME ----------------------------------------------------------- (in thousands of dollars, except per share amounts)
Three Months Ended Nine Months Ended ------------------------- ------------------------ October 3, September 28, October 3, September 28, 1996 1995 1996 1995 ---------- ------------- --------- ------------ Revenues: Admissions $54,260 $42,951 $133,661 $104,157 Concessions 23,094 18,186 55,659 43,158 Other operating revenues 2,392 1,340 5,964 2,955 ------- ------- -------- -------- Total Revenues 79,746 62,477 195,284 150,270 ------- ------- -------- -------- Operating Expenses: Film rental and advertising costs 29,478 23,485 72,502 56,271 Cost of concessions and other 2,925 2,388 7,090 5,532 Theatre operating expenses 22,167 17,349 59,891 48,743 General & administrative expenses 2,440 2,112 7,038 5,689 Depreciation & amortization 3,635 2,760 10,094 7,459 Merger expenses - - 1,639 1,246 ------- ------- -------- -------- Total operating expenses 60,645 48,094 158,254 124,940 Other income (expense): Interest expense (263) (1,267) (3,119) (3,407) Interest income 293 2 450 152 Other 311 38 867 194 ------- ------- -------- -------- Income before taxes and extraordinary item 19,442 13,156 35,228 22,269 Provision for income taxes 7,587 5,209 14,032 9,012 ------- ------- -------- -------- Income before extraordinary item 11,855 7,947 21,196 13,257 Extraordinary item net of tax: Loss on extinguishment of debt - - - (448) ------- ------- -------- -------- Net income $11,855 $ 7,947 $ 21,196 $ 12,809 ======= ======= ======== ======== GST Dividends - 244 229 372 ------- ------- -------- -------- Net income applicable to common stock $11,855 $ 7,703 $ 20,967 $ 12,437 ======= ======= ======== ======== Earnings per common share before effect of extraordinary item: Primary $ .35 $ .26 $ .68 $ .45 Fully diluted $ .35 $ .26 $ .68 $ .45 Extraordinary item: Primary $ - $ - $ - $ (.02) Fully diluted $ - $ - $ - $ (.02) Earnings per common share: Primary $ .35 $ .26 $ .68 $ .43 ======= ======= ======== ======== Fully diluted $ .35 $ .26 $ .68 $ .43 ======= ======= ======== ========
See accompanying notes to condensed consolidated financial statements. 5 REGAL CINEMAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ---------------------------------------------------- (in thousands of dollars)
Nine Months Ended ------------------------------------- October 3, September 28, 1996 1995 ---------- ------------ Cash flows from operating activities: Net income $ 21,196 $12,809 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,094 7,459 Loss on extinguishment of debt - 448 Deferred income taxes 1,788 2,676 Changes in operating assets and liabilities: 92 205 Accounts receivable Inventories (208) (160) Prepaids and other current assets (273) 10 Refundable income taxes 1,401 1,151 Accounts payable (1,552) (6,075) Accrued expenses and other liabilities 25 (75) -------- ------- Net cash provided by operating activities 32,563 18,448 Cash flows from investing activities: Capital expenditures, net (73,191) (51,889) Investment in other assets (5,921) (2,752) -------- ------- Net cash used in investing activities (79,112) (54,641) Cash flows from financing activities: Net borrowings (payments) on long-term debt (80,669) 31,363 Dividends paid to GST shareholders (500) (372) Redemption of preferred stock - (1,196) Net proceeds from issuance of common stock 126,973 2,982 Stock compensation expense 90 90 -------- ------- Net cash provided by financing activities 45,894 32,867 -------- ------- Net increase (decrease) in cash and equivalents (655) (3,326) Cash and equivalents at beginning of period 5,775 7,222 -------- ------- Cash and equivalents at end of period $ 5,120 $ 3,896 ======== =======
See accompanying notes to condensed consolidated financial statements. 6 REGAL CINEMAS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- Regal Cinemas, Inc. Notes to Condensed Consolidated Financial Statements 1. THE COMPANY AND BASIS OF PRESENTATION Regal Cinemas, Inc. ("Regal") and its wholly owned subsidiaries, Litchfield Theatres, Ltd. ("Litchfield"), Neighborhood Entertainment Inc. ("Neighborhood"), and Georgia State Theatres, Inc. ("GST"), collectively referred to as the "Company" operate multi-screen motion picture theatres principally throughout the eastern United States. The Company formally operates on a fiscal year ending on the Thursday closest to December 31. On June 15, 1994, Regal issued 8,706,068 shares of its common stock for all of the outstanding common stock of Litchfield. On April 17, 1995, Regal issued 814,755 shares of its common stock for all of the outstanding common stock of Neighborhood. On May 30, 1996, Regal issued 1,410,213 shares of its common stock for all of the outstanding common stock of GST. The mergers have been accounted for as poolings of interests and, accordingly, these condensed consolidated financial statements have been restated for all periods to include the results of operations and financial positions of Litchfield, Neighborhood and GST. Separate results of the combining entities for the year ended 1995 and the three-month and nine-month periods ended October 3, 1996 are as follows:
(in thousands) THREE NINE MONTHS MONTHS ENDED ENDED OCTOBER 3, OCTOBER 3, 1995 1996 1996 -------- ------- -------- Revenues: Regal $184,958 $79,746 $190,575 Neighborhood (through April 27 for 1995) 5,135 - - GST (through May 30 for 1996) 13,321 - 4,709 -------- ------- -------- $203,414 $79,746 $195,284 ======== ======= ======== Net income (loss): Regal $ 19,061 $11,855 $ 21,106 Neighborhood (through April 27 for 1995) (1,824) - - GST (through May 30 for 1996) 866 - 90 -------- ------- -------- $ 18,103 $11,855 $ 21,196 ======== ======= ========
The net loss for Neighborhood for the four months ended April 27, 1995, reflects approximately $1,219,000 (net of applicable income taxes) of expense associated with the merger, principally legal and accounting fees, severance costs, and other costs of consolidating. The net loss for GST for the five months ended May 30, 1996, reflects approximately $1,200,000 (net of applicable income taxes) of expense associated with the merger, principally legal and accounting fees, and severance related costs. 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet as of October 3, 1996, the condensed consolidated statements of income for the three months and nine months ended October 3, 1996 and September 28, 1995, and the condensed consolidated statements of cash flows for the nine months ended October 3, 1996 and September 28, 1995 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. The December 28, 1995 information has been derived from the audited December 28, 1995 balance sheet of Regal Cinemas, Inc. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Report filed on Form 8-K dated July 1, 1996. The results of operations for the three month and nine month periods ended October 3, 1996 are not necessarily indicative of the operating results for the full year. 3. INCOME TAXES The Company's effective income tax rate differs from the expected federal income tax rate of 35% due to certain merger expenses which are not deductible for tax purposes and the inclusion of state income taxes. 4. LONG-TERM OBLIGATIONS Long-term obligations at October 3, 1996 and December 28, 1995, consists of the following:
October 3, December 28, 1996 1995 ---------- ------------ (in thousands) Regal $150,000,000 senior reducing revolving credit facility which expires on June 30, 2003, with interest payable quarterly, at LIBOR (5.6% and 5.7% at October 3, 1996 and December 28, 1995, respectively) plus .4%. Draw capability will expire on June 30,1999. Repayment of the outstanding balance on the credit facility will begin September 30, 1999, and consist of 5% of the outstanding balance on a quarterly basis through June 30, 2001. Thereafter, payments will be 7.5% of the outstanding balance quarterly through June 30, 2003. $25,000 $ 92,450 Other obligations 2,673 15,892 ------- -------- 27,673 108,342 Less current maturities (73) (13,254) ------- -------- $27,600 $ 95,088 ======= ========
8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Regal's reducing revolving credit facility contains various restrictive covenants which require Regal to maintain certain financial ratios. On September 30, 1996, the Company amended its Loan Agreement to decrease the interest rate, extend the maturity of the facility to June 30, 2003, and modify certain financial covenants. The Company's debt at October 3, 1996 is scheduled to mature as follows: (in thousands) 1996 $ 73 1997 54 1998 54 1999 6,304 Thereafter 21,188 ------- Total $27,673 =======
5. EARNINGS PER SHARE Primary earnings per share have been computed by dividing net income applicable to common stock (net income less dividend requirements for preferred stock) by the weighted average number of common and common equivalent shares outstanding during each period. Shares issued in connection with the Litchfield, Neighborhood and GST mergers have been included in shares outstanding for all periods presented. Common equivalent shares relating to options issued during the 12-month period preceding the initial public offering have been calculated using the treasury stock method assuming that the options were outstanding during each period presented and that the fair value of the Company's common stock during each period was equal to the initial public offering price. Common equivalent shares relating to options issued subsequent to the initial public offering have been calculated using the treasury stock method for the portion of each period for which the options were outstanding and using the fair value of the company's common stock for each of the respective periods. All per share data has also been adjusted to give effect to the May 1993, November 1994, December 1995 and September 1996, respectively, common stock splits. After giving effect to the items described above, primary earnings per common share have been computed based on the assumed weighted average number of common and common equivalent shares outstanding in each period (29,111 shares for the three-month period ended September 28, 1995 and 34,047 shares for the three-month period ended October 3, 1996 and 28,612 shares for the nine-month period ended September 28, 1995 and 31,044 shares for the nine-month period ended October 3, 1996). Fully diluted earnings per common share reflect the retroactive effect of the preferred stock conversion at the time of the initial public offering. The calculation utilizes net income before preferred dividends and increased common share equivalents from the conversion (29,190 shares for the three-month period ended September 28, 1995 and 34,047 shares for the three month period ended October 3, 1996 and 28,815 shares for the nine-month period ended September 28, 1995 and 31,044 shares for the nine-month period ended October 3, 1996). 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 6. ACQUISITION On September 13, 1996, Regal completed the purchase of assets consisting of eight theatres with 69 screens in California from an individual, George Krikorian, and corporations controlled by him (collectively, "Krikorian") for consideration of 703,241 shares of Regal common stock with an approximate fair value of $14.0 million and approximately $14.0 million in cash. 7. STOCK OFFERING On June 10, 1996, the Company completed a secondary stock offering of 4,312,500 shares of the Company's common stock at $30.83 per share. The total proceeds to the Company from the offering were approximately $126.5 million, net of underwriting discount and certain other expenses of $6.5 million. 8. COMMON STOCK Regal's common shares authorized, issued and outstanding throughout the financial statements and notes reflect the authorization of additional shares and the effect of the two 3-for-2 stock splits authorized in December 1995 and September 1996. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following analysis of the financial condition and results of operations of Regal Cinemas, Inc. ("Regal") and its wholly owned subsidiaries, Litchfield Theatres, Ltd. ("Litchfield"), Neighborhood Entertainment, Inc. ("Neighborhood") and Georgia State Theatres, Inc. ("GST") (collectively referred to as the "Company") should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included elsewhere herein. Regal consummated the acquisitions of Litchfield, Neighborhood, and GST on June 15, 1994, April 17, 1995, and May 30, 1996, respectively. These three acquisitions have been accounted for as poolings of interests. BACKGROUND OF REGAL Regal has achieved significant growth in theatres and screens since its formation in November of 1989. Since inception through October 3, 1996, Regal acquired 113 theatres with 757 screens, developed 34 new theatres with 377 screens and added 51 new screens to acquired theatres. Theatres developed by Regal typically generate positive theatre level cash flow within the first three months following commencement of operation and reach a mature level of attendance within one to three years following commencement of operation. Regal does not defer any pre-opening costs associated with opening its theatres and expenses such costs in the periods incurred. Theatre closings have had no significant effect on the operations of Regal. On April 8, 1994, Regal completed the acquisition of 13 theatres from National Theatre Holdings Corp. The purchase price of the acquisition was approximately $24.5 million and the assumption of certain obligations totaling $500,000, which Regal funded from cash on hand and borrowings available under the then $60 million revolving credit facility. On April 28, 1995, the Company completed the purchase of substantially all of the assets of three companies which held four theatres with 40 screens. Consideration for the transaction was approximately $14.3 million cash and other consideration and 241,313 shares of Regal common stock. On September 13, 1996, Regal completed the purchase of assets consisting of eight theatres with 69 screens in California from an individual, George Krikorian and corporations controlled by him (collectively "Krikorian"). The purchase price was approximately $14.0 million cash and 703,241 shares of Regal common stock. RESULTS OF OPERATIONS The Company's revenues are generated primarily from box office receipts and concession sales. Additional revenues are generated by electronic video games located adjacent to the lobbies of certain of the Company's theatres and by on-screen advertisements and revenues from the Company's two entertainment centers which are adjacent to theatre complexes. Direct theatre costs consist of film rental costs, costs of concessions and theatre operating expenses. Film rental costs are related to the popularity of a film and the length of time since the film's release and generally decline as a percentage of admission revenues the longer a film has been released. Because certain concession items, such as fountain drinks and popcorn, are purchased in bulk and not pre-packaged for individual servings, the Company is able to improve its margins by negotiating volume discounts. Theatre operating expenses consist primarily of theatre labor and occupancy costs. Future increases in minimum wage requirements or legislation requiring additional employer funding of health care, among other things, may increase theatre operating expenses as a percentage of total revenues. 11 The following table sets forth for the fiscal periods indicated the percentage of total revenues represented by certain items reflected in the Company's consolidated statements of income.
Percentage of Total Revenues ---------------------------------------------------- Three Months Ended Nine Months Ended ------------------------- ------------------------- October 3, September 28, October 3, September 28, 1996 1995 1996 1995 ----------- ------------- ---------- ------------- Revenues: Admissions 68.0% 68.7% 68.4% 69.3% Concession 29.0% 29.2% 28.5% 28.7% Other 3.0% 2.1% 3.1% 2.0% ----- ------ ----- ----- Total Revenues 100.0% 100.0% 100.0% 100.0% Operating Expenses: Film rental and advertising costs 37.0% 37.6% 37.1% 37.4% Cost of concessions and other 3.7% 3.8% 3.6% 3.7% Theatre operating expenses 27.8% 27.8% 30.7% 32.4% General & administrative Expenses 3.1% 3.4% 3.6% 3.8% Depreciation & amortization 4.6% 4.4% 5.2% 5.0% Merger expenses 0.0% 0.0% .8% 0.8% ----- ----- ----- ----- Total operating expenses 76.0% 77.0% 81.0% 83.1% Other income (expense): Interest expense (.3%) (2.0%) (1.6%) (2.3%) Interest income .3% 0.0% .2% .1% Other .4% 0.0% .4% .1% ----- ----- ----- ----- Income before taxes and extraordinary item 24.4% 21.0% 18.0% 14.8% Provision for income taxes (9.5%) (8.3%) (7.2%) (6.0%) ----- ----- ----- ----- Income before extraordinary item 14.9% 12.7% 10.8% 8.8% Extraordinary item: Loss on extinguishment of debt 0.0% 0.0% 0.0% (0.3%) ----- ----- ----- ----- NET INCOME 14.9% 12.7% 10.8% 8.5% ===== ===== ===== =====
12 MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED THREE MONTHS ENDED OCTOBER 3, 1996 AND SEPTEMBER 28, 1995 TOTAL REVENUES -- Total revenues for the third quarter of fiscal 1996 increased by 27.6% to $79.7 million from $62.5 million in the comparable 1995 period. This increase was due to a 17.8% increase in attendance attributable primarily to the net addition of 231 screens in fiscal 1995 and first nine months of 1996. Of the $17.2 million net increase in revenues for the period, a $5.0 million increase was attributed to theatres previously operated by the Company, a $9.1 million increase was attributed to theatres acquired by the Company, and a $3.1 million increase was attributed to new theatres constructed by the Company. Average ticket prices increased 7.3% during the period, reflecting a smaller proportion of discount theatres in the 1996 period than in the same period in 1995 and, to a lesser degree, an increase in ticket prices. Average concession sales per customer increased 7.8% for the period, reflecting both an increase in consumption and, to a lesser degree, an increase in concession prices. DIRECT THEATRE COSTS -- Direct theatre costs increased by 26.4% to $54.6 million in the third quarter 1996 from $43.2 million in the third quarter 1995. Direct theatre costs as a percentage of total revenues decreased to 68.5% in the 1996 period from 69.2% in the 1995 period. The decrease of direct theatre costs as a percentage of total revenues was primarily attributable to better monitoring and control of costs at the Company's theatres, especially acquired theatres, and to a lesser extent, to a decrease in occupancy expenses as a percentage of total revenues. GENERAL AND ADMINISTRATIVE EXPENSES -- General and administrative expenses increased by 15.5% to $2.4 million in the third quarter 1996 from $2.1 million in the third quarter 1995. As a percentage of total revenues, general and administrative expenses decreased to 3.1% in the 1996 period from 3.4% in the 1995 period. DEPRECIATION AND AMORTIZATION -- Depreciation and amortization expense increased in the third quarter 1996 by 31.7% to $3.6 million from $2.8 million in the third quarter 1995. This increase was primarily the result of theatre property additions associated with the Company's expansion efforts. OPERATING INCOME -- Operating income for the third quarter 1996 increased by 32.8% to $19.1 million, or 24.0% of total revenues, from $14.4 million, or 23.0% of total revenues, in the third quarter 1995. INTEREST EXPENSE -- Interest expense decreased in the third quarter 1996 by 79.2% to $263,000 from $1.3 million in the third quarter 1995. The decrease was primarily due to lower average borrowings outstanding. INCOME TAXES -- The provision for income taxes increased in the third quarter 1996 by 45.7% to $7.6 million from $5.2 million in the third quarter 1995. The effective tax rate was 39.0% in the 1996 period as compared to 39.6% in the 1995 period. NET INCOME -- Net income in the third quarter 1996 increased by 49.2% to $11.9 million from $7.9 million in the third quarter 1995. The increase in net income reflects primarily the additional screens operated by the Company. NINE MONTHS ENDED OCTOBER 3, 1996 AND SEPTEMBER 28, 1995 TOTAL REVENUES -- Total revenues for the nine months ended October 3, 1996 increased by 30.0% to $195.3 million from $150.3 million in the comparable 1995 period. This increase was due to a 19.1% increase in attendance attributable primarily to the net addition of 231 screens in fiscal 1995 and first nine months of 1996 as well as strong film releases in the first six months of 1996. Of the $45.0 million net increase in revenues for the period, a $16.4 million increase was attributed to theatres previously operated by the Company, a $16.8 million increase was attributed to theatres acquired by the Company, and an $11.8 million increase was attributed to new theatres constructed by the Company. Average ticket prices increased 7.8% during the period, reflecting a smaller 13 MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED proportion of discount theatres in the 1996 period than in the same period in 1995 and, to a lesser degree, an increase in ticket prices. Average concession sales per customer increased 8.3% for the period, reflecting both an increase in consumption and, to a lesser degree, an increase in concession prices. DIRECT THEATRE COSTS -- Direct theatre costs increased by 26.2% to $139.5 million for the nine months ended October 3, 1996 from $110.5 million in the comparable 1995 period. Direct theatre costs as a percentage of total revenues decreased to 71.4% in the 1996 period from 73.6% in the 1995 period. The decrease of direct theatre costs as a percentage of total revenues was primarily attributable to better monitoring and control of costs at the Company's theatres, especially acquired theatres, and to a lesser extent, to a decrease in occupancy expenses as a percentage of total revenues. GENERAL AND ADMINISTRATIVE EXPENSES -- General and administrative expenses increased by 23.7% to $7.0 million for the nine months ended October 3, 1996 from $5.7 million in the comparable 1995 period. As a percentage of total revenues, general and administrative expenses decreased to 3.6% in the 1996 period from 3.8% in the 1995 period. DEPRECIATION AND AMORTIZATION -- Depreciation and amortization expense increased for the nine months ended October 3, 1996 by 35.3% to $10.1 million from $7.5 million in the comparable 1995 period. This increase was primarily the result of theatre property additions associated with the Company's expansion efforts. OPERATING INCOME -- Operating income for the nine months ended October 3, 1996 increased by 46.2% to $37.0 million, or 19.0% of total revenues, from $25.3 million, or 16.9% of total revenues, in the comparable 1995 period. INTEREST EXPENSE -- Interest expense decreased for the nine months ended October 3, 1996 by 8.5% to $3.1 million from $3.4 million in the comparable 1995 period. The decrease was primarily due to lower average borrowings outstanding, net of capitalized interest totaling $1.4 million during the 1996 period, relating to projects under construction. INCOME TAXES -- The provision for income taxes increased for the nine months ended October 3, 1996 by 55.7% to $14.0 million from $9.0 million in the comparable 1995 period. The effective tax rate was 39.8% in the 1996 period as compared to 40.5% in the 1995 period as each period reflected certain merger expenses which are not deductible for tax purposes. NET INCOME -- Net income for the nine months ended October 3, 1996 increased by 65.5% to $21.2 million from $12.8 million in the comparable 1995 period. The increase in net income reflects primarily the additional screens operated by the Company, as well as strong film releases in the first six months of 1996. LIQUIDITY AND CAPITAL RESOURCES Substantially all of the Company's revenues are derived from cash box office receipts and concession sales, while film rental fees are ordinarily paid to distributors 15 to 45 days following receipt of admission revenues. The Company thus has an operating cash "float" which partially finances its operations, reducing the Company's needs for external sources of working capital. The Company's capital requirements have arisen principally in connection with acquisitions of existing theatres, new theatre openings and the addition of screens to existing theatres and have been financed with borrowings under the Company's loan agreement, equity financings and internally generated cash. The Company amended its loan to a $150 million revolving credit facility as of October 3, 1996. The amendments to the loan agreement require that the indebtedness under the facility be amortized at a rate of $7.5 million per quarter commencing with the 14 MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED quarter ending September 30, 1999, and at a rate of $11.3 million per quarter commencing with the quarter ending September 30, 2001. The loan agreement requires the Company to comply with certain financial and other covenants, including maintaining a minimum net worth of not less than $230.0 million plus 50% of the Company's net income for each quarter commencing with the quarter ending June 27, 1996. On October 3, 1996, $25.0 million was outstanding under the Company's loan agreement. On April 17, 1995, Regal consummated the acquisition of Neighborhood for 814,755 shares of Regal common stock. In conjunction with this transaction, the Company refinanced approximately $10 million of debt on Neighborhood's balance sheet under the Company's revolving credit facility, and Neighborhood redeemed its preferred stock for $1,150,000. On April 28, 1995, the Company completed the acquisition of two theatres with 18 screens, one theatre with 14 screens and one theatre with eight screens from Southern Cinemas, Inc., South Asheville Cinemas, Inc. and Cinemas South, Inc., respectively. The respective theatres are located in Aiken and Charleston, South Carolina, Asheville, North Carolina and Rock Hill, South Carolina. Consideration for the transaction was approximately $14,300,000 cash and other consideration and 241,313 shares of Regal common stock. On May 30, 1996, the Company consummated the acquisition of GST for 1,410,213 shares of Regal common stock. In conjunction with the transaction, the Company refinanced approximately $3 million of GST's debt under the Company's revolving credit facility. On June 10, 1996, the Company completed a secondary stock offering of 4,312,500 shares of the Company's common stock at $30.83 per share. The total proceeds to the Company from the offering were approximately $126.5 million, net of the underwriting discount and other expenses of $6.5 million and were used to repay amounts outstanding under the Company's revolving credit facility. On September 13, 1996, the Company completed the purchase of assets consisting of 8 theatres with 69 screens in California from an individual, George Krikorian, and corporations controlled by him (collectively "Krikorian") for consideration of 703,241 shares of Regal common stock and approximately $14.0 million in cash. At October 3, 1996, the Company had 147 multi-screen theatres with an aggregate of 1,184 screens. At such date, the Company had 15 new theatres with 178 new screens and 8 new screens at 1 existing location under construction. The Company anticipates that its capital expenditures over the next twelve months will approximate $150 million. The Company believes that its capital needs for completion of theatre construction and development for at least the next 12 to 18 months will be satisfied by available credit under the loan agreement, as amended, internally generated cash flow and available cash and equivalents. 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - -------------------------------------------------------------------------------- (a) Exhibits: (10) Regal Cinemas, Inc. -- Sixth Amendment to Second Amendment and Restated Loan Agreement dated September 30, 1996 (11) Statement re: computation of per share earnings (27) Financial Data Schedule (for SEC use only) (b) The Company filed the following Current Reports on Form 8-K during the quarter ended October 3, 1996: Form 8-K dated July 1, 1996 (filed July 1, 1996);
16 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. REGAL CINEMAS, INC. Date: November 5, 1996 By: /s/ Michael L. Campbell ------------------------------------- Michael L. Campbell, Chairman, President and Chief Executive Officer By: /s/ Lewis Frazer III -------------------------------------- Lewis Frazer III, Executive Vice President, Chief Financial Officer and Treasurer 17 EXHIBIT INDEX
ITEM DESCRIPTION - --------- ----------------------------------------------------------------- (10) Regal Cinemas, Inc. -- Sixth Amendment to Second Amendment and Restated Loan Agreement dated September 30, 1996 (11) Statement re: computation of per share earnings (27) Financial Data Schedule (for SEC use only)
EX-10 2 SIXTH AMENDMENT TO 2ND AMENDED AGMT. 1 EXHIBIT 10 SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT THIS SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT (the "Sixth Amendment"), is made and entered into as of the 30th day of September, 1996, by and among (i) REGAL CINEMAS, INC., a Tennessee corporation with principal office and place of business in Knoxville, Tennessee (the "Borrower"), (ii)(a) PNC BANK, KENTUCKY, INC., a Kentucky banking corporation with principal office and place of business in Louisville, Kentucky ("PNC"), (b) THE FIRST NATIONAL BANK OF BOSTON, a national banking association with principal office and place of business in Boston, Massachusetts ("Bank of Boston"), (c) FIRST UNION NATIONAL BANK OF TENNESSEE, a national banking association with principal office and place of business in Nashville, Tennessee ("First Union"), (d) FIRST AMERICAN NATIONAL BANK, a national banking association with principal office and place of business in Knoxville, Tennessee ("First American"), (e) THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH, a Japanese banking corporation maintaining an office in Chicago, Illinois ("Sumitomo"), in its capacity as the assignee and successor in interest to The Daiwa Bank, Limited ("Daiwa"), (f) NATIONSBANK OF TENNESSEE, N.A., a national banking association with an office and place of business in Knoxville, Tennessee (NationsBank"), and (g) WACHOVIA BANK OF GEORGIA, N.A., a national banking association with principal office and place of business in Atlanta, Georgia ("Wachovia") (PNC, Bank of Boston, First Union, First American, Sumitomo, NationsBank and Wachovia is each hereinafter individually referred to as a "Bank," and all of the same are hereinafter collectively referred to as the "Banks"), (iii) PNC BANK, KENTUCKY, INC., in its capacity as agent for the Banks (in such capacity, the "Agent"), and (iv) THE FIRST NATIONAL BANK OF BOSTON, in its capacity as Lead Manager. P R E L I M I N A R Y S T A T E M E N T: A. Pursuant to that certain Second Amended and Restated Loan Agreement dated as of July 7, 1993, among the Borrower, PNC, Bank of Boston, First Union, First American, Daiwa and NationsBank (collectively, the "Original Banks"), the Agent and Bank of Boston, in its capacity as Lead Manager, as amended pursuant to (i) that certain First Amendment to Second Amended and Restated Loan Agreement dated as of May 6, 1994, among the Borrower, the Original Banks and the Agent (the "First Amendment"), (ii) that certain Second Amendment to Second Amended and Restated Loan Agreement dated as of June 15, 1994, among the Borrower, the Original Banks and the Agent (the "Second Amendment"), (iii) that certain Third Amendment to Second Amended and Restated Loan Agreement dated as of March 31, 1995, among the Borrower, the Original Banks and the Agent (the "Third Amendment"), (iv) that certain Fourth Amendment to Second Amended and Restated Loan Agreement dated as of November 30, 1995, among the Borrower, the Original Banks, Wachovia and the Agent (the "Fourth Amendment"), and (v) that certain Fifth Amendment to Second Amended and Restated Loan Agreement dated as of May 31, 1996, among the Borrower, the Banks and the Agent (the "Fifth Amendment") (collectively, the "Loan Agreement"), the Banks have established a reducing revolving credit facility in the principal amount of One Hundred Fifty Million Dollars ($150,000,000.00) (the "Reducing Revolver") in favor of the Borrower upon the terms and conditions set forth in the Loan Agreement. B. The Borrower has now requested that the Banks agree to certain amendments to the Loan Agreement, which the Banks are willing to do upon the express condition that the Borrower execute and deliver this Sixth Amendment. 2 NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth herein and for other good and valuable consideration, the mutuality, receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows: 1. Each capitalized term used herein, unless otherwise expressly defined herein, shall have the meaning set forth in the Loan Agreement. 2. The term "Applicable Commitment Fee", as defined in Section 1.119 of the Loan Agreement, is hereby re-defined to mean, as of each date of determination thereof, (a) .225% per annum if, as at the most recent Fiscal Quarter end of the Borrower, the ratio of the Borrower's Total Funded Debt as at such Fiscal Quarter end, to the Borrower's Theater Level Cash Flow for the four-Fiscal Quarter period ended on such Fiscal Quarter end, was greater than 2.5 to 1.0, and (b) .175% per annum if, as at the most recent Fiscal Quarter end of the Borrower, the ratio of the Borrower's Total Funded Debt as at such Fiscal Quarter end, to the Borrower's Theater Level Cash Flow for the four-Fiscal Quarter period ended on such Fiscal Quarter end, was equal to or less than 2.5 to 1.0. 3. The term "Pricing Level", as defined in Section 1.81 of the Loan Agreement, is hereby redefined to mean, for any Pricing Period, Pricing Level I, Pricing Level II or Pricing Level III, as may be in effect for such Pricing Period; provided, however, the Default Rate shall be in effect upon the occurrence and during the continuation of any Event of Default. 4. The term "Pricing Level I", as defined in Section 1.82 of the Loan Agreement, is hereby redefined to mean the Pricing Level that will be in effect for the applicable Pricing Period if, as at the relevant Date of Determination, the ratio of the Borrower's Total Funded Debt as measured on such Date of Determination, to the Borrower's Theater Level Cash Flow for the four-Fiscal Quarter Period ended on such Date of Determination, is greater than 2.5 to 1.0. 5. The term "Pricing Level II", as defined in Section 1.83 of the Loan Agreement, is hereby redefined to mean the Pricing Level that will be in effect for the applicable Pricing Period if, as at the relevant Date of Determination, the ratio of the Borrower's Total Funded Debt as measured on such Date of Determination, to the Borrower's Theater Level Cash Flow for the four-Fiscal Quarter Period ended on such Date of Determination, is greater than 1.5 to 1.0 but is equal to or less than 2.5 to 1.0. 6. The term "Pricing Level III", as defined in Section 1.84 of the Loan Agreement, is hereby redefined to mean the Pricing Level that will be in effect for the applicable Pricing Period if, as at the relevant Date of Determination, the ratio of the Borrower's Total Funded Debt as measured on such Date of Determination, to the Borrower's Theater Level Cash Flow for the four-Fiscal Quarter Period ended on such Date of Determination, is equal to or less than 1.5 to 1.0. 7. The term "Pricing Level IV", as defined in Section 1.85 of the Loan Agreement, and the term "Pricing Level V", as defined in Section 1.117 of the Loan Agreement, are hereby deleted. 8. The term "Revolving Loan Commitment Termination Date", as defined in Section 1.100 of the Loan Agreement, is hereby redefined to mean the Revolving Loan Commitment Termination Date then in effect, which shall be the earliest of (i) June 30, 2003, (ii) the date as of which the Secured Obligations shall have become immediately due and payable pursuant to Section 9 of the Loan Agreement, and (iii) the date on which all of the Secured Obligations are paid in full (including, without limitation, the repayment, 2 3 expiration, termination or cash collateralization of Letters of Credit pursuant to this Loan Agreement) and all Revolving Loan Commitments are reduced to zero. 9. The term "Total Funded Debt", as defined in Section 1.113 of the Loan Agreement, is hereby redefined to mean, as at any date on which the amount thereof shall be determined, (i) all Indebtedness for borrowed money of the Borrower as of such date, including, without limitation, all unpaid Secured Obligations, all unpaid Subordinated Indebtedness and all amounts due under all Capital Leases entered into or assumed by the Borrower, but excluding all Net Cash Proceeds on deposit in the account maintained by the Borrower with the Agent pursuant to Section 2.4(A)(ii)(1) hereof, plus (ii) all Contingent Obligations of the Borrower. 10. The term "Guaranty Agreement", as defined in Section 1.121 of the Loan Agreement, is hereby redefined to mean, collectively, (a) that certain Guaranty Agreement dated as of March 31, 1995, executed and delivered by Litchfield Theatres, Ltd., a South Carolina corporation, in favor of the Agent, as amended pursuant to (i) that certain First Amendment to Guaranty Agreement dated as of November 30, 1995, between Litchfield Theatres, Ltd. and the Agent, and (ii) that certain Second Amendment to Guaranty Agreement dated as of September 30, 1996, between Litchfield Theatres, Ltd. and the Agent, together with all future amendments and modifications thereto, (b) that certain Guaranty Agreement dated as of November 30, 1995, executed and delivered by Neighborhood Entertainment, Inc, a Virginia corporation, in favor of the Agent, as amended pursuant to that certain First Amendment to Guaranty Agreement dated as of September 30, 1996, between Neighborhood Entertainment, Inc. and the Agent, together with all future amendments and modifications thereto, and (c) that certain Guaranty Agreement dated as of September 30, 1996, executed and delivered by Georgia State Theatres, Inc., a Georgia corporation, in favor of the Agent, together with all future amendments and modifications thereto. 11. The term "Stock Pledge Agreement", as defined in Section 1.122 of the Loan Agreement, is hereby redefined to mean that certain Stock Pledge Agreement dated as of March 31, 1995, between the Borrower and the Agent, as amended pursuant to (a) that certain First Amendment to Stock Pledge Agreement dated as of November 30, 1995, between the Borrower and the Agent, and (b) that certain Second Amendment to Stock Pledge Agreement dated as of September 30, 1996, between the Borrower and the Agent, together with all future amendments and modifications thereto. 12. Section 2.1E of the Loan Agreement, titled Scheduled Reductions in Revolving Loan Commitments, as previously amended pursuant to Section 17 of the First Amendment, Section 7 of the Third Amendment and Section 10 of the Fourth Amendment, is hereby amended to provide that the Revolving Loan Commitments of the Banks shall permanently reduce by the following amounts and on the following dates (the "Revolving Loan Commitment Reduction Dates") in proportion to each Bank's Pro Rata Share per the following schedule: 3 4
Revolving Loan Scheduled Reduction Remaining Commitment in Revolving Revolving Reduction Date Loan Commitments Loan Commitments - --------------- ------------------- ---------------- October 1, 1999 $ 7,500,000 $142,500,000 January 1, 2000 $ 7,500,000 $135,000,000 April 1, 2000 $ 7,500,000 $127,500,000 July 1, 2000 $ 7,500,000 $120,000,000 October 1, 2000 $ 7,500,000 $112,500,000 January 1, 2001 $ 7,500,000 $105,000,000 April 1, 2001 $ 7,500,000 $ 97,500,000 July 1, 2001 $ 7,500,000 $ 90,000,000 October 1, 2001 $11,250,000 $ 78,750,000 January 1, 2002 $11,250,000 $ 67,500,000 April 1, 2002 $11,250,000 $ 56,250,000 July 1, 2002 $11,250,000 $ 45,000,000 October 1, 2002 $11,250,000 $ 33,750,000 January 1, 2003 $11,250,000 $ 22,500,000 April 1, 2003 $11,250,000 $ 11,250,000 June 30, 2003 $11,250,000 0
The schedule set forth in this Section 12 shall supersede in their entirety the schedules respectively set forth in Section 2.1E of the Loan Agreement, Section 17 of the First Amendment, Section 7 of the Third Amendment and Section 10 of the Fourth Amendment. 13. The schedules of the Applicable Base Rate Margins respectively set forth in Section 2.2A(i) of the Loan Agreement, Section 18 of the First Amendment, Section 8 of the Third Amendment and Section 11 of the Fourth Amendment are hereby amended and restated as follows: 4 5
Applicable Pricing Level Base Rate Margin ------------------------ ------------------------ Pricing Level I 0% Pricing Level II 0% Pricing Level III 0%
The schedule set forth in this Section 13 shall supersede in their entirety the schedules respectively set forth in Section 2.2A(i) of the Loan Agreement, Section 18 of the First Amendment, Section 8 of the Third Amendment and Section 11 of the Fourth Amendment. 14. The schedules of the Applicable LIBOR Rate Margins respectively set forth in Section 2.2A(ii) of the Loan Agreement, Section 19 of the First Amendment, Section 9 of the Third Amendment and Section 12 of the Fourth Amendment are hereby amended and restated as follows:
Pricing Level Applicable LIBOR Rate Margin ------------------------ ------------------------------- Pricing Level I .90% Pricing Level II .65% Pricing Level III .40%
The schedule set forth in this Section 14 shall supersede in their entirety the schedules respectively set forth in Section 2.2A(ii) of the Loan Agreement, Section 19 of the First Amendment, Section 9 of the Third Amendment and Section 12 of the Fourth Amendment. 15. Section 2.3B of the Loan Agreement, titled Commitment Fee, as amended pursuant to Section 11 of the Third Amendment and Section 13 of the Fourth Amendment, is hereby amended to provide that the Borrower shall pay to the Agent, for the benefit of the Banks in proportion to their respective Pro Rata Shares, commitment fees for the period from and including the effective date of this Sixth Amendment to and excluding the date the Revolving Loan Commitments expire, equal to the average of the daily excess of the Revolving Loan Commitments (as reduced in accordance with the schedule set forth in Section 12 of this Sixth Amendment or pursuant to Section 2.4C of the Loan Agreement) over the aggregate principal amount of Revolving Loans outstanding plus the Letter of Credit Usage multiplied by the Applicable Commitment Fee, such commitment fees to be calculated on the basis of a 360-day year and the actual number of days elapsed and to be payable quarterly in arrears on the last day of each Fiscal Quarter, commencing on the first such date to occur after the date of this Sixth Amendment, and on the date the Revolving Loan Commitments expire. Reductions in the amounts available for borrowing under the Revolving Loan Commitments arising from the operation of the limitation set forth in the second paragraph of Section 2.1A of the Loan Agreement shall not constitute usages of Revolving Loan Commitments for purposes of this Section 15 or Section 2.3B of the Loan Agreement and shall not reduce the amount of the commitment fees payable by the Borrower under this Section 15 or Section 2.3B of the Loan Agreement. 5 6 16. The schedules of the Applicable Letter of Credit Fee Percentages respectively set forth in Section 2.7F(ii) of the Loan Agreement, Section 20 of the First Amendment, Section 13 of the Third Amendment and Section 14 of the Fourth Amendment are hereby amended and restated as follows:
Pricing Level Applicable Letter of Credit Fee Percentage --------------------- ------------------------------------------ Pricing Level I .90% Pricing Level II .65% Pricing Level III .40%
The schedule set forth in this Section 16 shall supersede in their entirety the schedules respectively set forth in Section 2.7F(ii) of the Loan Agreement, Section 20 of the First Amendment, Section 13 of the Third Amendment and Section 14 of the Fourth Amendment. 17. Section 8.10 of the Loan Agreement, titled Total Funded Debt to Theater Level Cash Flow, as previously amended pursuant to Section 22 of the First Amendment and Section 17 of the Third Amendment, is hereby amended to provide that the Borrower will not permit, as at each Fiscal Quarter end, the ratio of (a) its Total Funded Debt as at such Fiscal Quarter end, to (b) its Theater Level Cash Flow for the four-Fiscal Quarter period ended on such Fiscal Quarter end: i. To exceed 3.0 to 1.0 at any Fiscal Quarter end during the period from the date hereof through June 30, 1999; and ii. To exceed 2.5 to 1.0 at any Fiscal Quarter end after June 30, 1999. For purposes of determining the Borrower's compliance with the provisions of this Section 17 as of each Funding Date and/or Transaction Date, the Borrower's Total Funded Debt shall also be determined as of the particular Funding Date and/or Transaction Date, the Borrower's Theater Level Cash Flow shall be determined for the twelve full calendar months preceding the particular Funding Date and/or Transaction Date, and the Borrower will not permit the ratio of the Borrower's Total Funded Debt as of the particular Funding Date and/or Transaction Date to the Borrower's Theater Level Cash Flow for the twelve full calendar months preceding the particular Funding Date and/or Transaction Date: i. To exceed 3.0 to 1.0 on any Funding Date and/or Transaction Date during the period from the date hereof through June 30, 1999; and ii. To exceed 2.5 to 1.0 on any Funding Date and/or Transaction Date after June 30, 1999. 18. Section 8.11 of the Loan Agreement, titled Fixed Charge Coverage Ratio, as previously amended pursuant to Section 18 of the Third Amendment, is hereby amended to provide that the Borrower will not permit, as at each Fiscal Quarter end, the ratio of (a) its Cash Flow Available for Fixed Charges for the four-Fiscal Quarter period ended on such 6 7 Fiscal Quarter end, to (b) its Fixed Charges for the four-Fiscal Quarter period ended on such Fiscal Quarter end to be less than 1.75 to 1.0 as at any Fiscal Quarter end, commencing with the Fiscal Quarter ending September 30, 1996. 19. Section 8.12 of the Loan Agreement, titled Pro Forma Debt Service Coverage, as previously amended pursuant to Section 23 of the First Amendment, Section 19 of the Third Amendment and Section 15 of the Fourth Amendment, is hereby amended to provide that the Borrower will not permit, as at each Fiscal Quarter end, the ratio of (a) its Cash Flow From Operations for the four-Fiscal Quarter period ended on such four-Fiscal Quarter end, to (b) its Pro Forma Debt Service in respect of the four (4) immediately succeeding Fiscal Quarters, to be less than 1.25 to 1.0 as at any Fiscal Quarter end, commencing with the Fiscal Quarter ending September 30, 1996. For purposes of determining the Borrower's compliance with the provisions of this Section 19 as of each Funding Date and/or Transaction Date, the Borrower's Cash Flow From Operations shall be determined for the twelve full calendar months preceding the particular Funding Date and/or Transaction Date, the Borrower's Pro Forma Debt Service shall be determined for the twelve full calendar months commencing with the calendar month in which the particular Funding Date and/or Transaction Date occurs, and the Borrower will not permit the ratio of the Borrower's Cash Flow From Operations for the twelve full calendar months preceding the particular Funding Date and/or Transaction Date to the Borrower's Pro Forma Debt Service for the twelve full calendar months commencing with the calendar month in which the particular Funding Date and/or Transaction Date occurs to be less than 1.25 to 1.0 as at any calendar month end occurring after August 31, 1996. 20. Section 8.13 of the Loan Agreement, titled Minimum Tangible Net Worth, and renamed Minimum Net Worth pursuant to the Fourth Amendment, as previously amended pursuant to Section 24 of the First Amendment, Section 20 of the Third Amendment and Section 16 of the Fourth Amendment, is hereby amended to provide that the Borrower will not permit its Net Worth, as such term has been defined in the Fourth Amendment, (a) to be less than Two Hundred Thirty Million Dollars ($230,000,000.00) as of June 27, 1996, and (b) with respect to each Fiscal Quarter of the Borrower after Fiscal Quarter ended June 27, 1996, to be less than the minimum Net Worth required of the Borrower as at its immediately preceding Fiscal Quarter end plus the sum of (i) 50% of its Net Income (but not including any net losses) for its Fiscal Quarter then ended, (ii) 100% of all proceeds (net of underwriters' discount and other customary and usual closing costs) realized by the Borrower from the private placement and/or public offering of any shares of its stock during the Borrower's Fiscal Quarter then ended, and (iii) 100% of all additions to the Borrower's stockholders' equity resulting from the issuance by the Borrower of its capital stock to pay in whole or in part the purchase price of Theaters acquired by the Borrower during the Borrower's Fiscal Quarter then ended. 21. Section 8.14 of the Loan Agreement, titled Capital Expenditures, as previously amended pursuant to Section 25 of the First Amendment, Section 21 of the Third Amendment, Section 17 of the Fourth Amendment and Section 2 of the Fifth Amendment, is hereby deleted in its entirety. 22. The Borrower hereby confirms to the Banks that the Borrower has formed a Tennessee limited liability company known as Green Hills Commons, LLC (the "Company") with GH Company, LLC to construct a theater and adjacent FunScape in Nashville, Tennessee. The Borrower further desires to lend up to Fifteen Million Dollars ($15,000,000.00) to the Company to enable the Company to purchase the land upon which the theaters and FunScape shall be constructed and to finance certain of the costs of constructing the theaters and FunScape. In order to permit the Borrower to consummate the foregoing transactions without violating certain provisions of the Loan Agreement, the Borrower has requested, and the Banks have agreed, to the following amendments to the Loan Agreement: 7 8 (a) The Banks hereby waive the provisions of Section 8.1(d) of the Loan Agreement in order to permit the Borrower to own an interest in the Company without violating the Loan Agreement; and (b) The Banks hereby waive the provisions of Section 8.5 of the Loan Agreement through April 1, 1997, in order to permit the Borrower to lend up to Fifteen Million Dollars ($15,000,000.00) to the Company without violating the Loan Agreement. The foregoing waiver of the provisions of Section 8.5 of the Loan Agreement shall be in effect only through April 1, 1997, by which date all amounts lent by the Borrower to the Company shall be required to have been repaid to the Borrower. The Borrower's share of the net income (or net loss) of the Company, as determined in accordance with GAAP, shall be included in the Borrower's Net Income, Cash Flow Available for Fixed Charges, Cash Flow from Operations, EBITDA and Theater Level Cash Flow for purposes of Sections 8.10, 8.11 and 8.12 of the Loan Agreement. The Borrower hereby acknowledges and agrees that, except to the limited extent set forth in this Section 22, the Banks have not waived any of the provisions of Sections 8.1 or 8.5 of the Loan Agreement or have otherwise modified the defined terms Net Income, Cash Flow Available for Fixed Charges, Cash Flow from Operations, EBITDA and Theater Level Cash Flow and/or the provisions of Sections 8.10, 8.11 or 8.12 of the Loan Agreement. 23. Pursuant to Section 22(e) of the Third Amendment, (a) the Borrower hereby confirms to the Banks that Georgia State Theatres, Inc., a Georgia corporation, is a Consolidated Subsidiary of the Borrower, (b) the Borrower shall pledge to the Agent, on behalf of the Banks, all of the issued and outstanding shares of capital stock of Georgia State Theatres, Inc. pursuant to that certain Second Amendment to Stock Pledge Agreement dated as of September 30, 1996, between the Borrower and the Agent, and (c) the Borrower shall cause Georgia State Theatres, Inc. to guarantee the payment of the Revolving Notes to the Banks pursuant to that certain Guaranty Agreement dated as of September 30, 1996, between Georgia State Theatres, Inc. and the Agent. 24. This Sixth Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 25. Except to the extent expressly amended or modified hereby, the Borrower hereby ratifies and reaffirms each of its covenants, agreements, obligations, representations and warranties set forth in the Loan Agreement. 26. The Borrower agrees to pay all out-of-pocket fees and expenses, including, without limitation, reasonable attorneys' fees, incurred by the Agent in preparing, negotiating and obtaining the execution and delivery of this Sixth Amendment and the other documents and instruments referred to herein and in consummating the transactions described herein. 27. This Sixth Amendment shall be effective as of the later of (a) September 30, 1996, or (b) the date of delivery of the following documents to the Banks and/or the Agent: i. This Sixth Amendment, duly executed by the Borrower and each of the Banks; ii. That certain Second Amendment to Stock Pledge Agreement dated as of September 30, 1996, between the Borrower and the Agent, duly executed by the Borrower, together with (1) the stock 8 9 certificates evidencing all of the issued and outstanding shares of capital stock of Georgia State Theatres, Inc. with duly executed blank stock powers attached thereto, and (2) any written evidence of the Borrower's fifty percent (50%) financial interest in the Company; iii. That certain Second Amendment to Guaranty Agreement dated as of September 30, 1996, between Litchfield Theatres, Ltd. and the Agent, duly executed and delivered by Litchfield Theatres, Ltd.; iv. That certain First Amendment to Guaranty Agreement dated as of September 30, 1996, between Neighborhood Entertainment, Inc. and the Agent, duly executed and delivered by Neighborhood Entertainment, Inc.; v. That certain Guaranty Agreement dated as of September 30, 1996, from Georgia State Theatres, Inc. to the Agent, duly executed and delivered by Georgia State Theatres, Inc.; vi. Certified resolutions of the Board of Directors of the Borrower, authorizing the Borrower's execution and delivery of this Sixth Amendment and the other documents referred to herein to be executed by the Borrower; vii. Certified resolutions of the Board of Directors of Georgia State Theatres, Inc., authorizing the execution and delivery of the Guaranty Agreement referred to in subpart (v) above; viii. An opinion of counsel on behalf of the Borrower and Georgia State Theatres, Inc., in form and substance satisfactory to the Agent. IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to Second Amended and Restated Loan Agreement to be duly executed as of the day and year first above written. REGAL CINEMAS, INC. By: /s/ Lewis Frazer III -------------------------------- Lewis Frazer III, Executive Vice President, Chief Financial Officer and Treasurer (the "Borrower") 9 10 PNC BANK, KENTUCKY, INC. By: /s/ Toby B. Rau -------------------------------- Title: AVP ----------------------------- Address: PNC Bank, Kentucky, Inc. Citizens Plaza 500 West Jefferson Street Louisville, KY 40202 Attn: Benjamin Willingham Regional Corporate Banking Group ("PNC") THE FIRST NATIONAL BANK OF BOSTON By: /s/ Reginald T. Dawson -------------------------------- Title: Director ----------------------------- Address: The First National Bank of Boston Media & Communications Dept. 100 Federal Street Mail Stop 01-08-08 Boston, MA 02110 Attn: Matthew E. Murphy, Vice President ("Bank of Boston") 10 11 FIRST UNION NATIONAL BANK OF TENNESSEE By: Deborah L. Hurley ------------------------------------- Title: AVP ---------------------------------- Address: First Union National Bank of Tennessee 150 4th Avenue Box 2648 Nashville, TN 37219 Attn: S. Scott Miler, Vice President ("First Union") FIRST AMERICAN NATIONAL BANK By: /s/ J. Harvey White ------------------------------------- Title: Executive Vice President ---------------------------------- Address:First American National Bank 505 S. Gay Street Knoxville, TN 37902 Attn: Eric Schwarzentraub, Vice President ("First American") 11 12 THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH By: /s/ Sybil H. Weldon -------------------------------- Title: Vice President & Manager ----------------------------- Address: The Sumitomo Bank, Limited One Peachtree Center 303 Peachtree Street Suite 4420 Atlanta, GA 30308 Attn: Manager ("Sumitomo") NATIONSBANK OF TENNESSEE, N.A. By: /s/ John F. Fisher -------------------------------- Title: Senior Vice President ----------------------------- Address: NationsBank of Tennessee, N.A. 550 Main Avenue Knoxville, TN 37901-0017 Attn: John F. Fisher, Senior Vice President ("NationsBank") 12 13 WACHOVIA BANK OF GEORGIA, N.A. By: /s/ John B. Tribe ----------------------------------- Title: AVP -------------------------------- Address: 191 Peachtree St, N.E. Mail Code 3940 Atlanta, GA 30303 Attn: John Tibe, Vice President ("Wachovia") (collectively, the "Banks") PNC BANK, KENTUCKY, INC., in its capacity as Agent By: /s/ Toby B. Rau ----------------------------------- Title: AVP -------------------------------- (the "Agent") THE FIRST NATIONAL BANK OF BOSTON, in its capacity as Lead Manager By: /s/ Reginald T. Dawson ----------------------------------- Title: Director -------------------------------- Litchfield Theatres, Ltd., a South Carolina corporation ("Litchfield"), in its capacity as the issuer of that certain Guaranty Agreement dated as of March 31, 1995, in favor of PNC Bank, Kentucky, Inc., as the Agent, and Neighborhood Entertainment, Inc., a Virginia corporation ("Neighborhood"), in its capacity as the issuer of that certain Guaranty Agreement dated as of November 30, 1995, in favor of PNC Bank, Kentucky, Inc., as the Agent, each hereby consents to the amendment of the Loan Agreement in the manner set forth in this Sixth 13 14 Amendment, and each hereby ratifies and reaffirms all of its representations, warranties, covenants, agreements and obligations under the Guaranty Agreement to which it is a party. LITCHFIELD THEATERS, LTD. By: /s/ Lewis Frazer III -------------------------------- Title: Secretary ----------------------------- Date: September 30, 1996 NEIGHBORHOOD ENTERTAINMENT, INC. By: /s/ Lewis Frazer III -------------------------------- Title: Secretary ----------------------------- Date: September 30, 1996 14 EX-11 3 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share data)
Three Months Ended Nine Months Ended ------------------------- ------------------------- October 3, September 28, October 3, September 28, 1996 1995 1996 1995 ---------- ------------- ---------- ------------- PRIMARY: Weighted average number of common shares outstanding $ 32,810 $ 28,173 $ 29,839 $ 27,805 Net effect of dilutive stock options and warrants based on the treasury stock method using average market price 1,237 938 1,205 807 ---------- ----------- -------- ---------- Weighted average number of common and common equivalent shares outstanding 34,047 29,111 31,044 28,612 ========== =========== ======== ========== Net income $ 11,855 $ 7,947 $ 21,196 $ 12,809 Less common and preferred dividends - 244 229 372 ---------- ----------- -------- ---------- Net income applicable to common shares $ 11,855 $ 7,703 $ 20,967 $ 12,437 ========== =========== ======== ========== Net income per common share as reported $ .35 $ .26 $ .68 $ .43 ========== =========== ======== ========== FULLY DILUTED: Weighted average number of common shares outstanding 32,810 28,173 29,839 27,805 Net effect of dilutive stock options and warrants based on the treasury stock method using ending market price 1,237 1,017 1,205 1,010 ---------- ----------- -------- ---------- 34,047 29,190 31,044 28,815 ========== =========== ======== ========== Net income $ 11,855 $ 7,947 $ 21,196 $12,809 Less common and preferred dividends related to nonconvertible securities - 244 229 372 ---------- ----------- -------- ---------- Net income applicable to common shares $ 11,855 $ 7,703 $ 20,967 $ 12,437 ========== =========== ======== ========== Net income per common share assuming full dilution, as reported $ .35 .26 .68 .43 ========== =========== ======== ==========
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF REGAL CINEMAS, INC. FOR THE NINE MONTHS ENDED OCTOBER 3, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS JAN-02-1997 DEC-29-1995 OCT-03-1996 1 5,120 0 836 0 1,082 12,523 343,888 50,443 327,984 20,986 27,673 0 0 215,322 53,386 327,984 55,659 195,284 7,090 79,592 78,662 0 3,119 35,228 14,032 21,196 0 0 0 21,196 .68 .68
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