Published: August 09, 2005
Carmike Cinemas, Inc. Completes Acquisition of GKC Theatres, Refinances Credit Facilities and Announces Results for Second Quarter of 2005
Carmike Cinemas, Inc. (NASDAQ: CKEC) Michael
W. Patrick, Chairman of the Board, President and CEO, stated today, "We
were able to complete the acquisition of GKC Theatres on the targeted date
of May 19th in order to take full advantage of the opening of Star Wars
'Revenge of the Sith,' the biggest film of the summer." Patrick also noted,
"This acquisition added 30 theatres with 263 screens in Illinois, Indiana,
Michigan and Wisconsin. Because of the weakness in box office performance,
we were able to take advantage of a great opportunity to acquire this
theatre circuit at a very attractive price. When the box office returns,
we will realize the financial benefits associated with this acquisition.
Our growth strategy continues to include the selective acquisition of
theatres located in small to mid-sized communities, constructing new
theatres, expanding our existing complexes and retrofitting some of our
circuit with stadium seating and digital stereo surround sound."
The Company announced today its total revenues decreased to $119.8 million
for the three months ended June 30, 2005; a 10.0% decrease when compared to
total revenues of $133.1 million for the three months ended June 30, 2004.
The decrease in revenue is attributable to a 13.4% decrease in total
attendance partially offset by increases in average admission and
concession prices. The decrease in attendance was driven by poor box
office performance of many films. Operating expenses for the three months
ended June 30, 2005, increased to $114.0 million from $113.5 million for
the three months ended June 30, 2004. Operating income for the three months
ended June 30, 2005 decreased 70.7% to $5.7 million compared to $19.6
million for the three months ended June 30, 2004. Theatre level cash flow
for the three months ended June 30, 2005, was $ 20.7 million, a decrease of
37.5% when compared to the three months ended June 30, 2004, of $33.1
million.
Income (loss) before taxes decreased from $13.7 million for the three
months ended June 30, 2004, to $(6.8) million for the three months ended
June 30, 2005. Net income (loss) decreased from $10.5 million for the
three months ended June 30, 2004 to $(4.1) million for the three months
ended June 30, 2005. Basic and diluted net income (loss) per common share
decreased to $(0.34) and $(0.34), respectively, for the quarter ended June
30, 2005 compared to $.88 and $.82, respectively for the quarter ended June
30, 2004.
Revenues for the six months ended June 30, 2005 were $221.5 million, a
decrease of 11%, compared to $250.0 million for the six months ended June
30, 2004. Operating expenses for the six months ended June 30, 2005 were
$210.8 million, compared to $210.6 million for the six months ended June
30, 2004. Operating income was $10.7 million for the six months ended June
30, 2005; a decrease of 73% when compared to $39.4 million for the six
months ended June 30, 2004. Theatre level cash flow for the six months
ended June 30, 2005 was $38.9 million, a decrease of 40.0% compared to
$65.0 million for the six months ended June 30, 2004. Carmike paid a
dividend of $ 0.175 per share on August 1, 2005.
"We were able to successfully complete the refinancing of our $50 million
revolver and $99 million term loan at very attractive rates and terms in a
financial market that has become very challenging; particularly with the
downturn in box office performance," noted Martin A. Durant, Chief
Financial Officer. "The refinancing also allowed us to provide for future
acquisition flexibility with the addition of a $185 million delayed draw
term loan. Although we are disappointed with the overall film performance
in the second quarter, we are very pleased with the timely acquisition of
GKC Theatres and the financial benefits we expect to receive in the future
with the refinancing."
Carmike will hold its second quarter 2005 earnings conference call on
Wednesday, August 10, at 11:00 a.m. (ET). Dial in information is as
follows: 800-391-2548 (Domestic) and 302-709-8328 (International). The
verbal pass code for both numbers is VR390742. 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 September 9, 2005.
Carmike Cinemas, Inc is a premiere motion picture exhibitor in the United
States with 311 theatres and 2,471 screens in 37 states, as of June 30,
2005. 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 traded on the Nasdaq National Market under the ticker symbol "CKEC."
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
long-term financing obligations and current maturities of long-term debt
and capital lease and long-term financing obligations. Net debt is defined
as total debt less cash and cash equivalents. Carmike defines theatre
level cash flow as operating income minus gains on sales of real estate
plus general and administrative expenses, depreciation expenses. 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 depreciation and amortization, general and administrative expenses. 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 six months ended June 30, 2005 and
2004, 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, "believes," "expects,"
"anticipates," "plans," "estimates" 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
following: 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 those discussed under the caption "Risk Factors"
in our Annual Report on Form 10-K for the fiscal year ended December 31,
2004. The risk factors discussed in our Form 10-K under the heading "Risk
Factors" 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues
Admissions $ 78,780 $ 88,353 $146,349 $167,902
Concessions and other 40,989 44,743 75,103 82,122
-------- -------- -------- --------
119,769 133,096 221,452 250,024
Costs and Expenses
Film exhibition costs 46,920 49,103 82,302 85,425
Concession costs 4,447 4,943 8,043 9,069
Other theatre operating
costs 47,744 45,984 92,178 90,554
General and administrative
expenses 5,607 5,116 10,675 8,881
Depreciation expenses 9,733 8,628 17,997 17,246
Gain on sales of property
and equipment (424) (272) (426) (577)
-------- -------- -------- --------
114,027 113,502 210,769 210,598
Operating income 5,742 19,594 10,683 39,426
Other expenses
Interest expense 6,788 5,933 13,358 14,027
Loss on extinguishment
of debt 5,795 - 5,795 9,579
-------- -------- -------- --------
Income (loss) before
reorganization costs and
income taxes (6,841) 13,661 (8,470) 15,820
Reorganization expense
(benefit) 3 (3,205) (2,388) (3,881)
-------- -------- -------- --------
Income (loss) before
income taxes (6,844) 16,866 (6,082) 19,701
Income tax expense (benefit) (2,723) 6,325 (2,395) 7,388
-------- -------- -------- --------
Net income (loss) available for
common stockholders $ (4,121) $ 10,541 $ (3,687) $ 12,313
-------- -------- -------- --------
Weighted average shares
outstanding:
Basic 12,212 11,991 12,175 11,414
Diluted 12,701 12,830 12,672 12,179
Net income (loss) per
common share:
Basic $ (0.34) $ 0.88 $ (0.30) $ 1.08
Diluted $ (0.34) $ 0.82 $ (0.30) $ 1.01
Dividend declared per
common share $ 0.175 $ - $ 0.35 $ -
Other Information:
Reconciliation of Theatre
level cash flow to operating
income
Operating income 5,742 19,594 10,683 39,426
General and administrative
expenses 5,607 5,116 10,675 8,881
Depreciation expenses 9,733 8,628 17,997 17,246
Gain on sales of property
and equipment (424) (272) (426) (577)
-------- -------- -------- --------
Theatre level cash flow 20,658 33,066 38,929 64,976
======== ======== ======== ========
Total Debt and Net Debt (unaudited)
Carmike Cinemas, Inc.
(in thousands) As of
June 30,
2005
---------
Current Portion of long-term debt and capital lease
and long-term financing obligations $ 3,406
Long-term debt 318,300
Capital lease and long-term financing obligations 71,724
---------
Total Debt 393,430
Less cash and cash equivalents (1,589)
---------
Net Debt $ 391,841
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