Published: December 14, 2004
Carmike Cinemas Announces Filing of Form 10-Q, Restatement of Prior Period Results, Cash Dividend and Election of New Director
Carmike Cinemas, Inc.
announced today that it filed its Form 10-Q for the third quarter ended
September 30, 2004. Previously, Carmike announced that it was delaying the
filing of its Form 10-Q for the third quarter ended September 30, 2004 due
to its ongoing evaluation of certain lease accounting issues related to
transactions entered into in prior periods.
Concurrently with the Form 10-Q, Carmike is also filing a Form 10-K/A for
the year ended December 31, 2003 to reflect the restatement of its
consolidated financial statements, the notes thereto, and related
disclosures for the years ended 1999, 2000, 2001, 2002 and 2003. Carmike
also intends to file Form 10-Q/As for the quarters ended March 31, 2004 and
June 30, 2004, to reflect the restatement of its unaudited consolidated
financial statements, the notes thereto and related disclosures for such
quarters. These restatements are necessary in order to correct the
improper reporting of certain leases as operating leases, rather than as
financing obligations, as well as to record an adjustment to Carmike's
deferred tax asset resulting from the identification of additional tax
deductions related to certain bankruptcy-related costs incurred in prior
periods.
As a result of the restatements, for 2003, total assets increased from the
originally reported $604.3 million to $634.6 million and total debt
increased from $376.4 million to $393.1 million. In addition, operating
income increased from $67.8 million to $71.0 million and net income
decreased from $107.4 million to $106.4 million. Please refer to the
tables included with this press release for a summary of the changes
resulting from the restatement for 2001, 2002 and 2003. The impact of the
restatements for the first and second quarter of 2004 will be reflected in
Form 10-Q/As which we expect to file with the Securities and Exchange
Commission as soon as practicable.
"As we previously expressed, Carmike appreciates the patience and
understanding our stockholders have given the company during this delay,"
stated Martin A. Durant, Carmike's Senior Vice President -- Finance,
Treasurer and Chief Financial Officer. "In addition, with the filing of our
Form 10-Q for the third quarter, we intend to request The Nasdaq Stock
Market, Inc. to end its proceedings for delisting the company's stock and
to re-instate the company's ticker symbol 'CKEC.'"
Results for the Third Quarter Ended September 30, 2004
Carmike reported today its total revenues decreased to $116.9 million for
the three months ended September 30, 2004, compared to total revenues of
$128.2 million for the three months ended September 30, 2003. The decrease
in revenue is attributable to lower attendance which was impacted by
industry trends generally and storms that impacted certain of Carmike's
markets in the southeastern United States. Operating expenses for the three
months ended September 30, 2004 decreased 2.9% to $105.6 million from
$108.8 million for the three months ended September 30, 2003. Operating
income for the three months ended September 30, 2004 decreased 42.1% to
$11.3 million compared to $19.5 million for the three months ended
September 30, 2003. Theatre level cash flow for the three months ended
September 30, 2004 was $25.3 million, a decrease of 19.7% when compared to
the three months ended September 30, 2003 of $31.5 million.
Income before income taxes for the three months ended September 30, 2004
was $12.2 million, an increase of 31.2% compared to $9.3 million for the
three months ended September 30, 2003. Net income for the three months
ended September 30, 2004 was $7.6 million, a decrease of 18.3% from $9.3
million for the three months ended September 30, 2003. Basic and diluted
net income per common share decreased to $0.64 and $0.60, respectively, for
the three months ended September 30, 2004 compared to $1.03 and $.98,
respectively for the three months ended September 30, 2003.
Revenues for the nine months ended September 30, 2004 were $367.0 million,
compared to $361.9 million for the nine months ended September 30, 2003.
Operating expenses for the nine months ended September 30, 2004 were $316.2
million, an increase of 2.9%, compared to $307.3 million for the nine
months ended September 30, 2003. Operating income was $50.7 million for the
nine months ended September 30, 2004, a decrease of 7.1% when compared to
$54.6 million for the nine months ended September 30, 2003. Theatre level
cash flow for the nine months ended September 30, 2004 was $91.3 million,
an increase of 4.7% compared to $87.2 million for the nine months ended
September 30, 2003. As of September 30, 2004, Carmike had total debt
outstanding of $319.5 million and net debt of $281.1 million.
Carmike will hold its third quarter 2004 earnings conference call on
Thursday, December 16, 2004, at 11:00 a.m. (ET). Dial in information is as
follows: U.S. Toll Free (800) 391-2548 and International (302) 709-8328.
The verbal passcode is VR917242. This call is being webcast by CCBN and
can be accessed at our website, www.carmike.com at the Corporate
Information link. For those not able to listen during the live webcast, the
audio re-play of the webcast will be available on our website,
www.carmike.com, at the Corporate Information link until January 16, 2005.
Cash Dividend Declaration
Carmike declared a cash dividend payable for the fourth quarter of 2004.
The dividend of $0.175 per share is payable on February 1, 2005, to all
stockholders of record as of January 3, 2005.
Election of New Director
Fred W. Van Noy, Senior Vice President -- Chief Operating Officer of
Carmike, has been elected to the Board of Directors. "In his 29 years with
Carmike, Fred has distinguished himself in the motion picture exhibitor
industry," said Michael W. Patrick, President, Chief Executive Officer and
Chairman of the Board of Directors. "Based upon Fred's experience, we are
confident that he will make significant contributions and provide valuable
insight to the board."
Mr. Van Noy joined Carmike in 1975. He served as a District Manager from
1984 to 1985 and as Western Division Manager from 1985 to 1988, when he
became Vice President -- General Manager. In December 1997, he was elected
to the position of Senior Vice President -- Operations. In November 2000,
he became Senior Vice President -- Chief Operating Officer.
Carmike is a leading motion picture exhibitor in the United States with 285
theatres and 2,195 screens in 36 states, as of September 30, 2004.
Carmike's focus for its theatre locations is small to mid-sized communities
with populations of fewer than 100,000. Carmike's common stock is
currently traded on the Nasdaq National Market under the ticker symbol
"CKECE." For more information visit Carmike's website, www.carmike.com.
Total debt, net debt and theatre level cash flows are supplemental non-GAAP
financial measures used by Carmike to evaluate its operating performance.
Total debt is defined as the sum of long-term debt, capital lease and
financing obligations and current maturities of long-term debt, capital
lease and financing obligations. Net debt is defined as total debt less
cash and cash equivalents. Theatre level cash flow is a supplemental
non-GAAP financial measure used by Carmike to evaluate its operating
performance. Carmike defines theatre level cash flow as operating income
plus general and administrative expenses, depreciation and amortization
expenses and the reserve for pending litigation minus gain on disposals of
property and equipment. Carmike believes that theatre level cash flow is an
important supplemental measure of operating performance for a motion
picture exhibitor's operations because it provides a measure of the core
operations, rather than factoring in general and administrative expenses,
depreciation and amortization, and pending litigation reserves. In
addition, Carmike believes that theatre level cash flow, as defined, is a
widely accepted measure of comparative operating performance in the motion
picture exhibition industry. A reconciliation of theatre level cash flow to
operating income for the three and nine months ended September 30, 2004 and
2003, as well as a schedule of total debt and net debt is included in the
table accompanying this press release.
This press release may contain forward-looking statements within the
meaning of the federal securities laws. Statements that are not historical
facts, including statements about our beliefs and expectations, are
forward-looking statements. Forward-looking statements include statements
preceded by, followed by or that include the words, "anticipate,"
"estimate," "plans," "expects," "projects," "should," "will," "believes" or
"intends" or similar expressions. Forward-looking statements are only
predictions and are not guarantees of performance. These statements are
based on beliefs and assumptions of our management, which in turn are based
on currently available information. The forward-looking statements also
involve risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement. Many of
these factors are beyond our ability to control or predict. Such factors
include, but are not limited to the filing of our amended 10-Qs; the
resolution of the Nasdaq issues discussed above; the availability of
suitable motion pictures for exhibition in our markets; competition in our
markets; competition with other forms of entertainment; the effect of our
leverage on our financial condition; and other factors including the risk
factors discussed in our Form 10-K under the heading "Risk Factors" which
are specifically incorporated by reference in this press release.
We believe these forward-looking statements are reasonable; however, undue
reliance should not be placed on any forward-looking statements, which are
based on current expectations. Further, forward-looking statements speak
only as of the date they are made, and we undertake no obligation to update
publicly any of them in light of new information or future events.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
CARMIKE CINEMAS, INC. and SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues
Admissions $ 77,750 $ 86,539 $ 246,652 $ 242,763
Concessions and
miscellaneous 39,178 41,688 121,300 119,118
--------- --------- --------- ---------
116,928 128,227 366,952 361,881
Costs and Expenses
Film exhibition costs 41,857 46,652 127,282 128,665
Concession costs 4,043 4,605 13,113 13,613
Other theatre operating
costs 45,746 45,500 136,301 132,443
General and administrative
expenses 4,588 3,862 13,468 10,697
Depreciation and
amortization expenses 9,363 8,150 26,609 24,381
(Gain)/Loss on disposals of
property and equipment 7 (1) (570) (2,503)
--------- --------- --------- ---------
105,604 108,768 316,203 307,296
--------- --------- --------- ---------
Operating income 11,324 19,459 50,749 54,585
Other expenses
Interest expense 4,240 10,323 18,266 30,806
Loss on extinguishment of
debt - - 9,579 -
--------- --------- --------- ---------
Income before reorganization
costs and income taxes 7,084 9,136 22,904 23,779
Reorganization costs (5,116) (115) (8,997) (3,923)
--------- --------- --------- ---------
Income before income taxes 12,200 9,251 31,901 27,702
Income tax expense 4,574 - 11,962 -
--------- --------- --------- ---------
Net income available for
common stock $ 7,626 $ 9,251 $ 19,939 $ 27,702
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 11,991 8,991 11,608 8,991
Diluted 12,715 9,397 12,343 9,331
Net income per common share:
Basic $ 0.64 $ 1.03 $ 1.72 $ 3.08
Diluted $ 0.60 $ 0.98 $ 1.62 $ 2.97
Dividend declared per
common share $ 0.175 $ - $ 0.350 $ -
TOTAL DEBT AND NET DEBT (UNAUDITED)
CARMIKE CINEMAS, INC. and SUBSIDIARIES
(in thousands)
Nine Months
Ended
September 30,
2004
---------
Current maturities of long-term debt, capital
lease and financing obligations $ 2,962
Long-term debt 248,250
Capital lease and financing obligations 68,301
---------
Total debt 319,513
Less cash and cash equivalents (38,449)
---------
Net debt $ 281,064
=========
THEATRE LEVEL CASH FLOW (UNAUDITED)
CARMIKE CINEMAS, INC. and SUBSIDIARIES
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------- ------- ------- -------
Operating income $11,324 $19,459 $50,749 $54,585
(Gain)/loss on disposal of
property and equipment 7 (1) (570) (2,503)
General and administrative Expenses 4,588 3,862 13,468 10,697
Depreciation and amortization 9,363 8,150 26,609 24,381
Reserve for pending litigation - - 1,000 -
------- ------- ------- -------
Theatre level cash flow $25,282 $31,470 $91,256 $87,160
======= ======= ======= =======
RESTATEMENT TABLES (UNAUDITED)
CARMIKE CINEMAS, INC. and SUBSIDIARIES
(in thousands)
As Previously
2003 Reported As Restated
Consolidated Balance Sheet
Recoverable construction allowances $ 355 $ -
Prepaid expenses 10,714 6,956
Property and equipment, net of
accumulated depreciation 420,831 460,323
Deferred income tax asset 73,852 72,036
Other assets 23,388 20,121
Total assets 604,320 634,616
Accrued expenses 44,412 44,413
Total debt 376,430 393,101
Total stockholder's equity $ 126,607 $ 140,231
Consolidated Statement of Operations
Other theatre operating costs $ 181,678 $ 176,781
Depreciation and amortization expense 31,744 33,432
Operating income (loss) 67,815 71,024
Interest expense 39,825 42,206
Income (loss) before reorganization
costs and income taxes 27,990 28,818
Income (loss) before income taxes 32,099 32,927
Income tax expense (75,279) (73,463)
Net income (loss) available to
common stockholders $ 107,378 $ 106,390
Income per common share
Basic $ 11.94 $ 11.83
Diluted $ 11.37 $ 11.26
Consolidated Statement of Cash Flows
Net cash provided by operating activities $ 51,810 $ 53,263
Net cash used in financing activities $ (51,949) $ (53,312)
RESTATEMENT TABLES (UNAUDITED)
CARMIKE CINEMAS, INC. and SUBSIDIARIES
(in thousands)
2002 As Previously As Restated
Reported
Consolidated Balance Sheet
Prepaid expenses $ 9,367 $ 5,609
Property and equipment, net of
accumulated depreciation 439,168 475,230
Other assets 20,923 15,488
Total assets 556,727 583,596
Total debt 418,768 431,025
Total stockholder's equity $ 13,206 $ 27,818
Consolidated Statement of Operations
Other theatre operating costs $ 182,841 $ 178,376
Depreciation and amortization expense 32,079 33,738
Operating income (loss) 68,787 71,593
Interest expense 102,773 105,520
Income (loss) before reorganization
costs and income taxes (33,986) (33,927)
Income (loss) before income taxes (54,533) (54,474)
Net income (loss) available to
common stockholders $ (39,827) $ (39,768)
Income per common share
Basic $ (4.33) $ (4.32)
Diluted $ (4.33) $ (4.32)
Consolidated Statement of Cash Flows
Net cash provided by operating activities $ 15,559 $ 16,272
Net cash used in financing activities $ (41,707) $ (42,375)
2001 As Previously As Restated
Reported
Consolidated Statement of Operations
Other theatre operating costs $ 182,054 $ 177,834
Depreciation and amortization expense 42,153 42,659
Impairment charge 132,207 118,776
Operating income (loss) (99,701) (82,556)
Interest expense 6,138 9,096
Income (loss) before reorganization
costs and income taxes (105,839) (91,652)
Income (loss) before income taxes (125,387) (111,200)
Net income (loss) available to
common stockholders $ (125,387) $ (111,200)
Income per common share
Basic $ (11.05) $ (9.80)
Diluted $ (11.05) $ (9.80)
Consolidated Statement of Cash Flows
Net cash provided by operating activities $ 49,421 $ 50,683
Net cash used in financing activities $ (6,762) $ (8,024)
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