<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
[X] EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1997
-------------------------------------------
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to
________________________________________________________________
Commission File Number: 333-1742
-------------------------
AMC, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2201031
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
240 Peachtree St., N. W. Suite 2200 Atlanta, GA 30303
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(404) 220-3000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
61,962,751 shares of common stock, $1 par value as of February 28, 1997.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1997 AND AUGUST 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
February 28 August 31
----------- ---------
<S> <C> <C>
Current assets:
Cash $ 622,417 1,052,082
Restricted cash 2,590,495 2,623,528
Restricted escrow deposits 1,597,315 739,779
Current maturities of notes receivable 939,076 939,076
Receivables:
Tenants 5,902,340 5,974,210
Affiliates 314,179 369,753
------------- -----------
6,216,519 6,343,963
Allowance for doubtful receivables (2,178,901) (2,205,797)
------------- -----------
Net receivables 4,037,618 4,138,166
------------- -----------
Deferred income taxes 1,819,528 1,819,528
Other assets 684,694 1,208,225
------------- -----------
Total current assets 12,291,143 12,520,384
------------- -----------
Commercial property, at cost 327,370,322 321,708,239
Accumulated depreciation (129,966,925) (123,305,557)
------------- -----------
Net commercial property 197,403,397 198,402,682
Notes receivable, less current maturities 1,799,060 2,268,598
Deferred income taxes 18,683,611 20,368,611
------------- -----------
Other assets 1,272,842 1,661,261
------------- -----------
$ 231,450,053 235,221,536
============= ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
Revolving line of credit $ 2,021,214 -
Current installments of corporate notes payable:
Mart Bonds interest payments 12,600,000 12,600,000
AMM Escrow Bonds - 512,703
------------- -----------
Total current installments of corporate notes payable 12,600,000 13,142,703
------------- -----------
Accounts payable:
Trade and other 5,718,476 6,253,639
Affiliate 30,000 30,000
------------- -----------
Total accounts payable 5,748,476 6,283,639
------------- -----------
Accrued interest payable 599,969 698,617
Deferred revenue 2,170,139 2,226,144
Accrued loan extension fees 268,205 268,205
------------- -----------
Total current liabilities 23,408,003 22,589,308
------------- -----------
Corporate notes payable, excluding current installments:
Mart Bonds (face amount of $160,000,000) 196,600,000 202,600,000
Antecedent Debt Bonds 7,303,273 7,303,273
------------- -----------
Total corporate notes payable, excluding current installments 203,903,273 209,903,273
------------- -----------
Mortgage loan payable 101,636,657 102,951,830
Security deposits 2,727,076 2,427,838
Accrued loan extension fees, excluding current installments 268,205 536,410
------------- -----------
Total liabilities 331,943,214 338,408,659
------------- -----------
Stockholders' equity (deficit):
Common stock - $1 par value, 100,000,000 shares authorized and
61,962,751 shares issued and outstanding 61,962,751 61,962,751
Capital deficit (172,450,472) (172,450,472)
Retained earnings since formation 9,994,560 7,300,598
------------- -----------
Total stockholders' deficit (100,493,161) (103,187,123)
------------- -----------
$ 231,450,053 235,221,536
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
AMC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED
EARNINGS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
AND FEBRUARY 29, 1996 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues (note 2):
Rental $ 24,063,932 23,709,894
Trade shows 8,192,082 8,176,942
Other 2,175,437 1,986,935
------------ ----------
Total revenues 34,431,451 33,873,771
------------ ----------
Operating expenses:
Building operations 4,110,063 4,183,271
Trade shows 1,667,259 1,814,773
Marketing 2,445,544 1,876,431
General and administrative 8,367,653 8,272,763
Bad debt 183,095 656,408
Property taxes 2,276,772 2,195,502
Depreciation and amortization 6,827,855 6,422,179
------------ ----------
Total operating expenses 25,878,241 25,421,327
------------ ----------
Operating income 8,553,210 8,452,444
------------ ----------
Other (income) expenses:
Interest expense 4,157,079 6,497,377
Interest income (222,465) (235,812)
Other 239,634 190,479
------------ ----------
Total other expenses, net 4,174,248 6,452,044
------------ ----------
Income before income taxes 4,378,962 2,000,400
Deferred income tax expense 1,685,000 1,613,000
------------ ----------
Net income 2,693,962 387,400
Retained earnings at beginning of period 7,300,598 ==========
------------
Retained earnings at end of period $ 9,994,560
============
Net income per share - primary (note 4) $ .04
============
Net income per share - fully diluted (note 4) $ .04
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
AMC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED
EARNINGS FOR THE QUARTERS ENDED FEBRUARY 28, 1997 AND
FEBRUARY 29, 1996 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues (note 2):
Rental $ 12,165,242 12,051,118
Trade shows 6,826,067 6,668,996
Other 1,309,412 1,400,433
------------ ----------
Total revenues 20,300,721 20,120,547
------------ ----------
Operating expenses:
Building operations 2,233,938 2,232,888
Trade shows 1,239,909 1,271,858
Marketing 1,940,891 1,044,968
General and administrative 4,324,976 4,350,209
Bad debt 50,149 592,424
Property taxes 1,142,884 1,148,026
Depreciation and amortization 3,676,969 3,208,840
------------ ----------
Total operating expenses 14,609,716 13,849,213
------------ ----------
Operating income 5,691,005 6,271,334
------------ ----------
Other (income) expenses:
Interest expense 2,063,075 2,109,245
Interest income (98,661) (122,346)
Other 119,817 110,601
------------ ----------
Total other expenses, net 2,084,231 2,097,500
------------ ----------
Income before income taxes 3,606,774 4,173,834
Deferred income tax expense 1,384,000 1,586,000
------------ ----------
Net income 2,222,774 2,587,834
Retained earnings at beginning of period 7,771,786 43,370
------------ ----------
Retained earnings at end of period $ 9,994,560 2,631,204
============ ==========
Net income per share - primary (note 4) $ .04 .04
============ ==========
Net income per share - fully diluted (note 4) $ .03 .04
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
AMC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net income $ 2,693,962 387,400
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 7,067,489 6,612,658
Deferred income tax expense 1,685,000 1,613,000
Decrease in net receivables 100,548 38,378
Decrease in prepaid expenses and other assets 975,367 1,521,637
Decrease in accrued interest payable (98,648) (30,279)
Decrease in accounts payable, affiliate payables and other
accrued expenses (535,163) (3,249,459)
Increase in deferred revenue and security deposits 243,233 1,678,752
------------ ----------
Net cash provided by operating activities 12,131,788 8,572,087
------------ ----------
Cash flows from investing activities:
Additions to commercial property (5,662,083) (5,380,258)
Decrease in restricted cash 33,033 459,874
------------ ----------
Net cash used in investing activities (5,629,050) (4,920,384)
------------ ----------
Cash flows from financing activities:
(Increase) Decrease in restricted escrow deposits (857,536) 1,931,145
Decrease in accrued loan extension fees (268,205) --
Net increase in revolving line of credit 2,021,214 --
Principal payments of AMM Escrow Bonds (512,703) (548,776)
Mart Bond payments (6,000,000) (3,000,000)
Principal repayments of mortgage loan (1,315,173) 2,198,199)
------------ ----------
Net cash used in financing activities (6,932,403) (3,815,830)
------------ ----------
Decrease in cash (429,665) (164,127)
Cash at beginning of period 1,052,082 1,557,327
------------ ----------
Cash at end of period $ 622,417 1,393,200
============ ==========
Noncash financing activities:
Principal repayment on AMM Escrow Bonds through
contribution from stockholder $ - 13,567
============ ==========
Supplemental disclosure - cash paid during the period for interest $ 4,255,727 6,527,656
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
AMC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
(UNAUDITED)
(1) BASIS OF PRESENTATION
Except as noted below, the accompanying financial statements reflect the
consolidated accounts of AMC, Inc. and subsidiaries (the "Company"). The
financial statements for the six months ended February 29, 1996 include the
combined accounts of the Atlanta Market Center Companies (the predecessor
companies of AMC, Inc.) from September 1, 1995 to the formation of AMC, Inc. on
October 2, 1995. The financial statements are unaudited; however, in the opinion
of management, all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the financial position at February 28, 1997
and August 31, 1996, and the results of operations for the six months and the
three months ended February 28, 1997 and February 29, 1996; and the cash flows
for the six months ended February 28, 1997 and February 29, 1996 have been
included.
(2) REVENUE RECOGNITION
Rental revenues are recorded monthly based on amounts billed to tenants. The
leases with the Company's tenants generally require equal monthly rents. The
effects of not recording rental income on a straight-line basis for the leases
that contain variable payment amounts during the terms of the leases do not
result in significant impact to the Company's consolidated financial statements.
Trade show revenues are generally collected in advance and initially recorded as
deferred revenue. Trade show revenues are recognized in the month the related
show occurs.
Management fee revenues are recorded as earned in accordance with the related
management agreements.
(3) MARKETING COSTS
The Company incurs costs for various marketing and advertising efforts. All
costs related to marketing and advertising are expensed in the period incurred
or, if directly related to specific trade shows, are expensed in the month the
related show occurs.
(4) INCOME PER SHARE
Weighted average shares outstanding for the six months and the quarter ended
February 28, 1997 were 61,962,751. Primary net income per share has been
calculated assuming no common stock equivalents resulting from outstanding
warrants since such warrants are exercisable only upon certain conditions and
such conditions have not yet occurred. Even though the exercise price for the
warrants is equal to the assumed market price for a share of AMC, Inc. common
stock, as a result of total warrants exceeding 20% of current outstanding
shares, fully diluted net income per share has been calculated assuming
16,736,548 additional shares issuable and outstanding and assuming earnings
increases of approximately $410,000 and $205,000 for the six month period and
the three month period ended February 28, 1997, respectively. Such assumed
earnings increases have been determined using a tax-effected interest rate of
4.9%, applied to the proceeds that would have been received from the additional
16,736,548 shares assumed to be issued. For the period from October 2, 1995 (the
date of the formation of AMC, Inc.) through February 29, 1996, primary and fully
diluted income per share approximated $0.04.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The Company was formed in conjunction with a series of transactions in 1995
which involved the exchange of certain assets, debt and equity and the debt
restructuring of Mr. John C. Portman, Jr. and a group of affiliated entities
with their creditors. As a result of these transactions, the initial assets of
the Company included the Atlanta Merchandise Mart (the "Merchandise Mart"), the
Atlanta Apparel Mart (the "Apparel Mart"), the Atlanta Gift Mart (the "Gift
Mart"); (the Merchandise Mart, the Apparel Mart and the Gift Mart hereinafter
collectively, AmericasMart), and the assets of Atlanta Market Center Management
Company, Inc., a Georgia corporation ("AMCMC") which operated AmericasMart and
was merged into the Company.
This restructuring has been accounted for as a troubled debt restructuring in
accordance with Statement of Financial Accounting Standards No. 15, "Accounting
by Debtors and Creditors for Troubled Debt Restructurings" (SFAS 15). As a
result of this troubled debt restructuring in which the existing debt exceeded
the fair value of the equity interests issued and the total future principal and
interest payments called for under the Company's notes, these notes have been
initially recorded at an amount equal to the total future cash payments,
including interest, specified by their terms in accordance with SFAS 15. All
future cash payments will be accounted for as a reduction of the carrying amount
of the notes, and no interest expense will be recognized.
The Company's primary business is the operation of AmericasMart and the
management of trade shows in conjunction with such marts. Additionally, the
Company manages trade shows on behalf of third parties at other locations.
RESULTS OF OPERATIONS
The Company's principal sources of revenues are rental revenues from the lease
of showroom and exhibition space in AmericasMart and trade show revenues, which
relate to specific shows staged for related industries. The Company leases
showroom space over terms ranging from one to five years (on average three
years) with rent payable monthly over the term of the lease. In addition, the
Company rents exhibition space for short terms thereby affording manufacturers
an opportunity to exhibit merchandise during a specific trade show.
Six Months Ended February 28, 1997 Compared to Six Months Ended February 29,
1996
Rental revenues increased approximately $354,000 during the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996. Rental
revenues increased approximately $217,000 in the Gift Mart due to an increase in
rental rates of approximately $459,000, partially offset by a decrease of
$242,000 due to a decrease in occupancy. Rental revenues increased approximately
$298,000 in the Merchandise Mart, reflecting an increase in rental rates of
approximately $623,000, partially offset by a decrease of approximately $325,000
due to a decrease in occupancy. Rental revenues in the Apparel Mart decreased
approximately $161,000, reflecting an approximate increase of $86,000 in rental
rates, partially offset by a decrease in occupancy of approximately $247,000.
Trade show revenues increased approximately $15,000 for the six months ended
February 28, 1997, compared to the six months ended February 29, 1996. This
increase was due to an increase in trade show booth revenue, partially offset by
a decrease in food services revenue.
Other revenues increased approximately $189,000 for the six months ended
February 28, 1997, compared to the six months ended February 29, 1996 due to an
increase in management fees earned from independent trade shows, partially
offset by a decrease in parking revenue.
Building operations expenses decreased approximately $73,000 for the six months
ended February 28, 1997 as compared to the six months ended February 29, 1996
due to a decrease in electricity costs, partially offset by an increase in
security costs.
Trade show expenses decreased approximately $148,000 for the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996 due to a
decrease in buyer accommodation expenses.
Marketing expenses increased approximately $569,000 for the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996. This
increase was primarily the result of an increase in publishing expenses.
<PAGE> 8
General and administrative expenses increased approximately $95,000 for the six
months ended February 28, 1997 as compared to the six months ended February 29,
1996. This increase was due to an increase in insurance costs and a decrease in
certain reimbursed costs received from independent trade shows.
Bad debt expense decreased approximately $473,000 for the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996. This
decrease was due to improved cash collections during 1997.
Property tax expense increased approximately $81,000 for the six months ended
February 28, 1997, compared to the six months ended February 29, 1996 due to an
anticipated increase in property tax assessments for 1997.
Depreciation and amortization expense increased approximately $406,000 for the
six months ended February 28, 1997 as compared to the six months ended February
29, 1996. This increase was due to certain building and tenant improvements
being written-off during the quarter ended February 28, 1997. This write-off is
related to assets disposed of in order to open the Holiday and Floral Center in
the Merchandise Mart.
The resulting operating income was approximately $8,553,000 for the six months
ended February 28, 1997 as compared to $8,452,000 for the six months ended
February 29, 1996. This increase in operating income was primarily due to the
increase in revenues and the decrease in bad debt expense which was partially
offset by an increase in marketing and depreciation expenses.
Interest expense decreased approximately $2,340,000 during the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996. This
decrease in interest expense was primarily due to the fact that, subsequent to
the formation of the Company, interest on the Company's Mart Bonds is charged
against their carrying value and no interest expense is recognized on the Mart
Bonds.
Income tax expense increased approximately $72,000 for the six months ended
February 28, 1997 as compared to the six months ended February 29, 1996 due to
the fact that prior to the formation of the Company, the predecessor companies
were partnerships and S corporations, and any liability for income taxes was
that of the partners and stockholders and not that of the Company.
Net income was approximately $2,694,000 for the six months ended February 28,
1997 as compared to $387,000 for the six months ended February 29, 1996. This
increase in net income is due primarily to the fact that interest expense
relating to the Mart Bonds is charged against principal and no interest expense
is recognized on such debt.
Quarter Ended February 28, 1997 Compared to Quarter Ended February 29, 1996
Rental revenues increased approximately $114,000 during the quarter ended
February 28, 1997 as compared to the quarter ended February 29, 1996. Rental
revenues increased approximately $42,000 in the Gift Mart due to an increase in
rental rates of approximately $203,000, partially offset by a decrease due to
decreased occupancy of approximately $161,000. Rental revenues increased
approximately $320,000 in the Merchandise Mart, reflecting an increase of
approximately $133,000 due to occupancy, and an increase in rental rates of
approximately $187,000, resulting from the opening of the Holiday and Floral
Center in January. Rental revenues in the Apparel Mart decreased approximately
$248,000, reflecting an approximate decrease of $82,000 in rental rates, and a
decrease in occupancy of approximately $166,000.
Trade show revenues increased approximately $157,000 for the quarter ended
February 28, 1997, compared to the quarter ended February 29, 1996. This
increase was due to an increase in trade show booth revenue from the January
gift show.
Other revenues decreased approximately $91,000 for the quarter ended February
28, 1997, compared to the quarter ended February 29, 1996 due to a decrease in
parking revenue.
Building operations expense remained relatively stable for the quarter ended
February 28, 1997, compared to the quarter ended February 29, 1996.
Marketing expenses increased approximately $896,000 for the quarter ended
February 28, 1997 as compared to the quarter ended February 29, 1996. This
increase was the result of an increase in publishing expenses and the timing of
marketing expenditures.
General and administrative expenses remained relatively stable for the quarter
ended February 28, 1997 as compared to the quarter ended February 29, 1996.
<PAGE> 9
Bad debt expense decreased approximately $542,000 for the quarter ended February
28, 1997 as compared to the quarter ended February 29, 1996. This decrease was
due to improved cash collections during 1997.
Property tax expense remained relatively stable for the quarter ended February
28, 1997 compared to the quarter ended February 29, 1996.
Depreciation expense increased approximately $468,000 for the quarter ended
February 28, 1997 as compared to the quarter ended February 29, 1996. This
increase was due to certain building and tenant improvements being written-off
during the quarter ended February 28, 1997. This write-off is related to assets
disposed of in order to open the Holiday and Floral Center in the Merchandise
Mart.
The resulting operating income was approximately $5,691,000 for the quarter
ended February 28, 1997 as compared to $6,271,000 for the quarter ended February
29, 1996. This decrease in operating income was primarily due to the increase in
marketing and depreciation and amortization expenses, which were partially
offset by the increase in revenues.
Interest expense decreased approximately $46,000 during the quarter ended
February 28, 1997 as compared to the quarter ended February 29, 1996. The
decrease in interest expense was primarily due to the pay off of the AMM Escrow
Bonds during January 1997.
Income tax expense decreased approximately $202,000 for the quarter ended
February 28, 1997, compared to the quarter ended February 29, 1996 due to a
decrease in income before taxes during 1997.
Net income was approximately $2,223,000 for the quarter ended February 28, 1997
as compared to $2,588,000 for the quarter ended February 29, 1996. This decrease
in net income was primarily due to the increase in marketing and depreciation
and amortization expenses, which were partially offset by the increase in
revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of cash is internally generated funds from
operations. The availability of cash flows generated by the Gift Mart are
limited by the terms of its financing. Net income from operations less capital
improvements of the Gift Mart must be used to repay principal outstanding on the
Gift Mart financing and cannot be used to fund operations or capital
improvements of other properties of the Company. Principal payments on the Gift
Mart financing totaled approximately $1.3 million and $2.2 million for the six
months ended February 28, 1997 and February 29, 1996, respectively.
The Company has entered into a line of credit agreement (the Revolver) with a
bank for up to $10 million which may be used to fund operations and capital
improvements and for acquisition and start-up costs for new trade shows in an
amount not to exceed $2.5 million. At February 28, 1997, the Company had $8.0
million available under the Revolver.
Cash flows from operations were approximately $12.1 million during the six
months ended February 28, 1997, and $8.6 million during the six months ended
February 29, 1996. Cash flows from operations have been significantly higher
than net income during the past two years, primarily due to the fact that net
income is negatively impacted by depreciation expense, which is a non-cash
charge to earnings. Under the terms of its indebtedness, the Company is required
to use certain portions of its cash flows to repay its indebtedness. The terms
of such debt limit the Company's ability to make required capital improvements.
Significant capital expenditures were incurred during the past several years and
ongoing capital expenditures will be necessary to adequately improve and
maintain the Company's properties. Total capital expenditures were approximately
$5.7 million during the six months ended February 28, 1997, and approximately
$5.4 million during the six months ended February 29, 1996. Management expects
that additional capital expenditures, including tenant improvements, of
approximately $4.3 million to $6.3 million will be needed to improve and
maintain the buildings during the remainder of the year ending August 31, 1997.
There can be no assurance, however, that changes in the competitive environment,
governmental regulations or unforeseen loss or damage will not cause capital
expenditures to exceed management's estimate.
Debt repayments totaled approximately $7.8 million in the six months ended
February 28, 1997, and $5.7 million in the six months ended February 29, 1996.
Principal payments to reduce the indebtedness under the Gift Mart financing and
the Mart Bonds will be determined based upon cash flows of the Gift Mart and of
the Company, respectively.
<PAGE> 10
Management expects that cash flows from operations and borrowings under the
Revolver will be sufficient to fund planned capital expenditures and interest
and principal payments on the Company's indebtedness during the 1997 fiscal
year. Over the longer term, management anticipates that internally generated
funds will be sufficient to fund required capital expenditures and scheduled
debt service prior to the maturity date for the Gift Mart financing, provided
the Company can maintain its operating revenues and expenses at current levels.
There can be no assurance that the Company can maintain current revenue levels
which are affected by changing economic conditions in the specific industries
represented at its Marts and trade shows. In addition, there can be no assurance
that the overall level of capital expenditures will not increase as the Marts
age. In the event that internally generated funds and borrowings under the
Revolver are insufficient, the Company would be required to seek financing;
however, the Company's ability to do so is limited under the terms of the
Revolver.
The remaining principal balance on the Gift Mart financing is due on July 31,
1998, with an option to extend the maturity date for one year, if specified
performance levels are achieved. The Company's Mart Bonds are due and payable on
July 31, 2000. The Company will not generate sufficient cash to repay such
indebtedness and intends to refinance both of these debt obligations at maturity
by extending their maturity dates or securing other financing. There can be no
assurance that the Company will be able to extend the maturity dates of any of
its indebtedness or secure alternative financing to fund the repayment thereof.
INFLATION
The Company deals with the effects of inflation by adjusting rental rates on new
leases and renewal leases. In times of higher inflation, the Company's operating
results are negatively impacted due to the fact that most lease terms are from
one to five years while the term of most service contracts is one year or less.
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11. Computation of Earnings Per Common Share
27. Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K during the
quarter ended February 28, 1997 or subsequent to that date but prior to the
filing date of this Form 10-Q.
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.
<TABLE>
<S> <C>
AMC, INC
----------------------------
(Registrant)
April 11, 1997 John M. Ryan, President
- -------------------- ----------------------------
Date (Signature)
April 11, 1997 Henry G. Almquist, Jr., Principal Financial and
- -------------------- ----------------------------Accounting Officer
Date (Signature)
</TABLE>
<PAGE> 1
EXHIBIT 11
AMC, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
February 28, 1997 February 28, 1997
----------------- -----------------
<S> <C> <C>
Net earnings $ 2,222,774 $ 2,693,962
Weighted average number of outstanding common shares 61,962,751 61,962,751
Earnings per common and common stock equivalent shares $ .04 $ .04
=========== ===========
Assumed earnings increases due to exercise of warrants $ 205,000 $ 410,000
----------- -----------
Adjusted net earnings 2,427,774 3,103,962
Additional shares assumed issued due to exercise of
warrants 16,736,548 16,736,548
----------- -----------
Adjusted weighted average number of outstanding common
shares 78,699,299 78,699,299
Earnings per common and common stock equivalent shares-
fully diluted $ .03 $ .04
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE FINANCIAL STATEMENTS FILED FOR THE QUARTER ENDED FEBRUARY 28, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-28-1997
<CASH> 622
<SECURITIES> 0
<RECEIVABLES> 6,217
<ALLOWANCES> 2,179
<INVENTORY> 0
<CURRENT-ASSETS> 12,291
<PP&E> 327,370
<DEPRECIATION> 129,967
<TOTAL-ASSETS> 231,450
<CURRENT-LIABILITIES> 23,408
<BONDS> 203,903
0
0
<COMMON> 0
<OTHER-SE> 61,963
<TOTAL-LIABILITY-AND-EQUITY> 231,450
<SALES> 0
<TOTAL-REVENUES> 34,431
<CGS> 0
<TOTAL-COSTS> 25,878
<OTHER-EXPENSES> 4,174
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,157
<INCOME-PRETAX> 4,379
<INCOME-TAX> 1,685
<INCOME-CONTINUING> 2,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,694
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
