UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 29, 1994
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 01-12429
AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1304369
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 West 14th Street
Kansas City, Missouri 64105-1977
(Address of principal executive offices) (Zip Code)
(816) 221-4000
(Registrant's telephone number, including area code)
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 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 ________
Title of Each Class of Common Stock Outstanding at September 29, 1994
Common Stock, 66 2/3 cents par value 5,302,630
Class B Stock, 66 2/3 cents par value 11,157,000
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
PERIODS (26 AND 13 WEEKS) ENDED SEPTEMBER 29, 1994, SEPTEMBER 30, 1993
AND YEAR (52 WEEKS) ENDED MARCH 31, 1994
INDEX
Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED STATEMENTS OF OPERATIONS 3
CONSOLIDATED BALANCE SHEETS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION 12
PART II. OTHER INFORMATION 16
ITEM 1. LEGAL PROCEEDINGS
SIGNATURES 17
ITEM 6A. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 10 - EMPLOYMENT AGREEMENTS
A)PETER C. BROWN 18
B)PHILIP M. SINGLETON 24
EXHIBIT 11 - STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS 30
EXHIBIT 27 - FINANCIAL DATA SCHEDULE 32
ITEM 6B. REPORTS ON FORM 8-K 31
2
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited) (Unaudited)
Thirteen Twenty-six Fifty-two
Weeks Ended Weeks Ended Weeks Ended
<CAPTION>
<S> <C> <C> <C> <C> <C>
9/29/94 9/30/93 9/29/94 9/30/93 3/31/94
Revenues
Admissions $108,347 $116,456 $193,227 $210,182 $389,454
Concessions 50,577 53,233 89,506 95,318 176,274
Other 5,667 5,061 10,339 9,869 21,725
Total revenues 164,591 174,750 293,072 315,369 587,453
Expenses
Film rentals 58,350 62,991 98,634 111,173 197,461
Concession merchandise 7,493 7,639 14,011 14,279 26,349
Other 59,996 61,119 114,629 116,439 225,367
Total cost of
operations 125,839 131,749 227,274 241,891 449,177
Depreciation and
amortization 9,801 9,598 18,161 19,422 38,048
General and
administrative
expenses 9,983 10,134 19,603 18,449 39,492
Total expenses 145,623 151,481 265,038 279,762 526,717
Operating income 18,968 23,269 28,034 35,607 60,736
Other expense (income)
Interest expense
Corporate borrowings 6,458 6,226 12,623 12,974 25,699
Capitalized leases 2,863 2,803 5,658 5,541 10,676
Investment income (2,954) (438) (5,517) (1,034) (1,156)
Minority interest - - - (1,599) (1,599)
Loss (gain) on
disposition of assets 77 21 75 78 (296)
Earnings before income
taxes 12,524 14,657 15,195 19,647 27,412
Income tax provision 5,100 6,000 6,200 7,900 12,100
Net earnings 7,424 8,657 8,995 11,747 15,312
Preferred dividends 1,750 - 3,500 - 538
Net earnings for
common shares $5,674 $8,657 $5,495 $ 11,747 $ 14,774
Earnings per share $ .34 $ .52 $ .33 $.72 $.89
Weighted average number of
shares outstanding 16,632 16,499 16,537 16,364 16,521
See Notes to Consolidated Financial Statements
3
</TABLE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
(Unaudited)
<CAPTION>
<S> <C> <C> <C>
9/29/94 9/30/93 3/31/94
Current assets:
Cash and equivalents $ 21,858 $ 37,045 $ 32,319
Investments 127,307 - 119,150
Receivables, net of allowance for doubtful
accounts of $1,177 at September 29, 1994,
$1,270 at March 31, 1994 and $601 at
September 30, 1993 9,044 8,061 9,197
Other current assets 15,177 8,840 11,575
Total current assets 173,386 53,946 172,241
Property, net 254,200 272,353 252,861
Intangible assets, net 46,895 40,677 49,403
Other long-term assets 23,889 26,264 26,771
Total assets $498,370 $393,240 $501,276
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,256 $ 27,554 $ 28,706
Accrued expenses and other liabilities 39,876 43,014 48,053
Estimated IRS settlement 3,389 3,146 3,146
Current maturities of borrowings and
capital lease obligations 2,375 2,654 2,168
Total current liabilities 72,896 76,368 82,073
Corporate borrowings 200,149 200,113 200,115
Capital lease obligations 65,973 66,738 65,905
Other long-term liabilities 23,483 18,855 22,779
Total liabilities 362,501 362,074 370,872
Commitments and contingencies
Stockholders' equity
Cumulative Convertible Preferred stock;
4,000,000 shares issued and outstanding;
(aggregate liquidation preference of
$100,000) 2,667 - 2,667
Common stock; 5,302,630 shares issued
and outstanding at September 29, 1994,
5,266,830 shares at March 31, 1994
and 4,678,130 shares at September 30, 1993 3,535 3,119 3,511
Class B stock; 11,157,000 shares issued and
outstanding at September 29, 1994 and
March 31, 1994 and 11,730,000 shares
at September 30, 1993 7,438 7,820 7,438
Additional paid-in capital 107,130 13,955 106,951
Retained earnings 15,099 6,272 9,837
Total stockholders' equity 135,869 31,166 130,404
Total liabilities and stockholders' equity $498,370 $393,240 $501,276
See Notes to Consolidated Financial Statements
4
</TABLE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Twenty-six Fifty-two
Weeks Ended Weeks Ended
<CAPTION>
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 9/29/94 9/30/93 3/31/94
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $8,995 $ 11,747 $ 15,312
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization - property 14,743 14,612 29,074
- other assets 3,418 2,878 7,075
Loss (gain) on sale of long-term assets 75 78 (296)
Change in assets and liabilities net of
effects from acquisitions:
Receivables 153 (1,707) (2,843)
Other current assets (3,602) 1,093 (1,925)
Accounts payable (1,450) 4,290 5,187
Accrued expenses and other liabilities (7,473) 4,041 13,542
Estimated IRS settlement 243 (1,650) (1,650)
Other, net (1,833) 2,236 204
Total adjustments 4,274 25,871 48,368
Net cash provided by operating activities 13,269 37,618 63,680
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions (15,118) (4,226) (10,651)
Investment in real estate (6,195) - -
Investments in short term instruments, net (8,157) 26,109 (93,041)
Proceeds from sale of other investments 11,689 - -
Purchase of partnership interest,
net of cash acquired - (8,486) (8,486)
Proceeds from disposition of property 30 140 1,270
Other, net (1,373) (6) (597)
Net cash provided by (used in)
investing activities (19,124) 13,531 (111,505)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit agreements - 30,000 30,000
Repayments under line of credit agreements - (30,000) (30,000)
Principal payments under capital leases (1,059) (876) (1,700)
Repayment of acquired subsidiary indebtedness - (37,000) (37,000)
Other repayments (17) (1,119) (1,720)
Proceeds from issuance of common stock 203 1,248 1,321
Proceeds from issuance of preferred stock - - 95,600
Dividends paid on preferred stock (3,733) - -
Deferred financing costs - (354) (354)
Net cash provided by (used) in financing
activities (4,606) (38,101) 56,147
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (10,461) 13,048 8,322
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 32,319 23,997 23,997
CASH AND EQUIVALENTS AT END OF PERIOD $ 21,858 $ 37,045 $ 32,319
5
</TABLE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except narratives)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
(Unaudited)
Twenty-six Fifty-two
Weeks Ended Weeks Ended
<CAPTION>
<S> <C> <C> <C>
9/29/94 9/30/93 3/31/94
Capital lease obligations incurred in
connection with property acquired $1,363 $ 3,278 $ 5,219
</TABLE>
On May 28, 1993, a wholly-owned subsidiary of American Multi-Cinema, Inc.
("AMC"), acquired a fifty percent partnership interest in Exhibition
Enterprises Partnership ("EEP") from TPI Entertainment, Inc.Together with
thepartnership interest already owned, EEP became wholly-owned by
subsidiaries of AMC.Cash and equivalents held by EEP at May 28, 1993 totaled
$9,014,000.Liabilities assumed from the May 28, 1993 transaction follows:
Fair value of assets acquired
(including cash and equivalents) $ 70,170
Cash paid (17,500)
Liabilities assumed $ 52,670
<TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(Unaudited)
Twenty-Six Fifty-two
Weeks Ended Weeks Ended
<CAPTION>
<S> <C> <C> <C>
9/29/94 9/30/93 3/31/94
Cash paid during the period for:
Interest (net of amounts capitalized) $ 18,262 $ 18,645 $ 35,742
Income taxes 11,603 3,498 13,659
Income taxes resulting from IRS settlement 157 1,650 1,650
Cash received during the period for:
Interest and dividend income 2,548 968 1,973
Income tax refunds - 106 417
</TABLE>
See Notes to Consolidated Financial Statements
6
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
(Unaudited)
<CAPTION> Additional Retained Total
Preferred Stock Common Stock Class B Stock Paid-in Earnings Stockholders'
Shares Amount Shares Amount Shares Amount Capital (Deficit) Equity
<S> <C> <C> <C> <c <C> <C> <C> <C> <C>
Balance, April 1, 1993 - $- 4,539,380 $3,026 11,730,000 $7,820 $12,800 $(5,475) $ 18,171
Net earnings for
the twenty-six
weeks ended
September 30, 1993 - - - - - - - 11,747 11,747
Net proceeds from sale of
Common Stock - - 138,750 93 - - 1,155 - 1,248
Balance, September 30, 1993 - - 4,678,130 3,119 11,730,000 7,820 13,955 6,272 31,166
Net earnings for the
twenty-sixweeks ended
March 31, 1994 - - - - - - - 3,565 3,565
Net proceeds from sale
of Common Stock - - 15,700 10 - - 63 - 73
Net proceeds from
sale of
Preferred Stock 4,000,000 2,667 - - - - 92,933 - 95,600
Conversion of
Class B Stock - - 573,000 382 (573,000) (382) - - -
Balance,
March 31, 1994 4,000,000 2,667 5,266,830 3,511 11,157,000 7,438 106,951 9,837 130,404
Net earnings for
the twenty-six
weeks ended
September 29, 1994 - - - - - - - 8,995 8,995
Net proceeds from sale
of Common Stock - - 35,800 24 - - 179 - 203
Dividends declared:
$1.75 Preferred Stock - - - - - - - (3,733) (3,733)
Balance,
September 29, 1994 4,000,000 $2,667 5,302,630 $3,535 11,157,000 $7,438$107,130 $15,099 $135,869
See Notes to Consolidated Financial Statements
7
</TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 29, 1994
(UNAUDITED)
NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
AMC Entertainment Inc. ("AMCE"), through American Multi-Cinema, Inc.
("AMC") and its subsidiaries (collectively with AMCE, unless the context
otherwise requires, the "Company"), is principally involved in the
operation of motion picture theatres.
In the opinion of management, the accompanying consolidated financial
data contains all adjustments (which comprise only normal recurring
accruals) necessary to present fairly its financial position as of
September 29, 1994 and September 30, 1993 and the results of operations
and cash flows.
The interim consolidated financial data is submitted in response to
the requirements of Form 10-Q and should be read in conjunction with the
notes to the consolidated financial statements appearing in the Company's
1994 annual report.
Due to the seasonal nature of the Company's business, results for the
twenty-six weeks ended September 29, 1994 are not necessarily indicative
of the results to be expected for the entire year.
Fiscal Year
The Company has a 52/53 week fiscal year ending on the Thursday
closest to the last day of March (March 30, 1995 for the current year,
which includes fifty-two weeks and March 31, 1994 for the prior year,
which included fifty-two weeks).
Earnings Per Share
Primary earnings per share is computed based upon net earnings for
the period less preferred stock dividends divided by the sum of the
weighted average number of common shares outstanding and outstanding
stock options, when their effect is dilutive.
Presentation
Certain amounts have been reclassified from prior period consolidated
financial statements to conform with the current year presentation.Such
amounts were not material.
NOTE 2 - ACQUISITION OF EXHIBITION ENTERPRISES PARTNERSHIP
On May 28, 1993, the Company completed the acquisition of the
remaining partnership interest in Exhibition Enterprises
Partnership("EEP") for $17,500,000 in cash.At the time of the acquisition
EEP owned 60 theatres containing 452 screens which were managed by the
Company.The acquisition also required the repayment of $37,000,000 in EEP
bank indebtedness, which was funded by borrowings under a revolving line
of credit of $30,000,000 together with cash on hand.The acquisition was
accounted for under the purchase method of accounting and EEP was
consolidated, for financial reporting purposes, as a wholly-owned
subsidiary.
8
For fiscal 1994, the Company accounted for its investment in EEP on a
consolidated basis by including EEP'srevenues and expenses in the
Consolidated Statement of Operations beginning April 2, 1993.One-half of
EEP's net loss for the period April 2, 1993 through May 27, 1993
($1,599,000) has been recorded as minority interest in the Consolidated
Statement of Operations.
NOTE 3 - BORROWINGS
Loan Agreement
Effective August 10, 1992, AMC entered into a three year loan
agreement with two banks to provide a revolving line of credit of up to
$40,000,000 for working capital and other general corporate purposes,
which loan agreement was amended and restated as of June 14, 1994 (the
"Credit Facility").The Company has the option to borrow at rates based on
either the bank's base rate or LIBOR and is required to pay an annual
commitment fee based on margin ratios that could result in a rate between
1/4 and 1/2 of 1% on the unused amount of the commitment.At September 29,
1994, AMC had no borrowings on the Credit Facility and could borrow up to
$40,000,000 as provided in the loan agreement.
The Credit Facility includes several financial covenants.The Company
is required to maintain a maximum net debt to consolidated EBITDA ratio
of 4.50 to 1 and a minimum fixed charge coverage ratio of 1.40 to 1.In
addition, the Credit Facility among other things (i) generally limits the
Company's capital expenditures to $100,000,000 per year, reduced by the
amount of investments made during such year in any entity which is not a
guarantor of the Credit Facility, and (ii) generally limits investments
in entities which are not guarantors of the Credit Facility, or which do
not become wholly-owned subsidiaries of AMC as a result of the
investment, to $100,000,000 in the aggregate, plus the greater of 25% of
free cash flow or 50% of consolidated net income (minus 100% of
consolidated net income ifnegative), as defined in the Credit Facility,
from August 2, 1992.As of September 29, 1994, the Company has satisfied
all financial covenants relating to the Credit Facility.
The Credit Facility permits the Company to pay dividends as long as
the amount of dividends and other restricted payments in any four
consecutive fiscal quarters (a "Relevant Period") is less than the amount
by which consolidated EBITDA exceeds the product of 1.4 times fixed
charges for the four consecutive fiscal quarters ended immediately before
the Relevant Period, as defined in the Credit Facility. At September 29,
1994, after deducting preferred dividends declared, the most restrictive
covenant in the Credit Facility would allow the Company to pay a cash
dividend of approximately $38,844,000.
NOTE 4 - PROPERTY
A summary of property follows (in thousands):
(Unaudited)
9/29/94 9/30/93 3/31/94
Property owned:
Land $ 23,045 $ 20,239 $ 20,239
Buildings and improvements 87,338 86,552 86,177
Furniture, fixtures and equipment 163,200 166,755 160,944
Leasehold improvements 120,015 116,664 116,496
9
393,598 390,210 383,856
Less - accumulated depreciation
and amortization 182,330 163,990 174,229
211,268 226,220 209,627
Property leased under capitalized leases:
Buildings 69,723 69,495 68,162
Less - accumulated amortization 26,791 23,362 24,928
42,932 46,133 43,234
Net property $254,200 $272,353 $252,861
NOTE 5 - CONTINGENCIES
The Company, in the normal course of business, is party to various
legal actions.Management believes that the potential exposure, if any,
from such matters would not have a material adverse effect on the
financial condition or results of operations of the Company.The following
paragraphs summarize significant litigation and proceedings to which the
Company is a party.
Income Tax Litigation.The Company has been in litigation with the
Internal Revenue Service ("IRS") primarily concerning the Company's
method, for the years 1975 and 1978 to 1987, inclusive, of reporting, for
income tax purposes, film rental deductions in the year paid (cash
method) rather than in the year the related film was exhibited (accrual
method).These and other issues, including the determination of various
credit and loss carrybacks, and issues related to certain capital gains,
the dividends received deduction, and the understatement penalty, were
the subject of two United States Tax Court cases (Durwood, Inc. v.
Commissioner of Internal Revenue, Docket No. 3706-88 filed February 23,
1988 and Durwood, Inc. v. Commissioner of Internal Revenue, Docket No.
3322-91 filed February 22, 1991).
Settlements have been reached with respect to all issues in each of
the tax court cases.The settlements have been approved by the
Congressional Joint Committee on Taxation as required by law.On July 26,
1994, the Tax Court entered its decisions in each of these cases.Through
September 29, 1994, the Company has recorded provisions totaling
approximately $23,351,000, representing the estimated federal and state
income taxes and interest resulting from the IRS litigation.Through
September 29, 1994, the Company has made payments totaling approximately
$19,962,000 to federal and state tax authorities associated with the tax
court settlements.Management believes that adequate amounts have been
reserved with respect to these income tax matters.
NOTE 6 - INCOME TAX
The Company records deferred income taxes in accordance with
Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes" using enacted tax laws and rates for the
years in which the taxes are expected to be paid.
The Company has recorded a valuation allowance against deferred tax
10
assets based on the lack of sufficient evidence required under SFAS 109
to support the realizability of the deferred assets. At September 29,
1994, the valuation allowance amounted to approximately $22,773,000.
Based on increasing positive evidence supporting the potential
realizability of the deferred tax assets, it is possible that this
valuation allowance may be decreased in future periods.A reduction in the
valuation allowance will increase net income in the period of adjustment.
NOTE 7 - COMMITMENTS
The Company has entered into agreements to lease space for the
operation of theatres not yet fully constructed.Of the total number of
anticipated openings, leases for nine new theatres with 165 screens and
leases for the expansion of 40 screens at six existing locations have
been finalized.The scheduled completion of construction and theatre
openings are at various dates through the fourth quarter of fiscal
1996.The estimated minimum rental payments that may be required under the
terms of the leases total approximately $234,000,000.
NOTE 8 - SALE OF INVESTMENTS
During the first quarter of fiscal 1995, the Company sold 1,475,144
shares of TPI Enterprises, Inc. common stock for $9,614,000 resulting in
a gain of approximately $841,000 which is included in investment income.
During the second quarter of fiscal 1995, the Company sold 89,600
common shares and 64,000 preferred shares of AmeriHealth, Inc. for
$2,166,000 resulting in a gain of approximately $566,000 which is also
included in investment income.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
General
The Company's revenues are derived principally from box office
admissions and theatre concession sales.Additional revenues are derived
from other sources such as on-screen advertising and license fees from
electronic video games in theatre lobbies.The Company's principal costs
of operations are film rentals, concession merchandise and other expenses
such as advertising, payroll, occupancy costs and insurance.Set forth
below is a summary of operating revenues for the thirteen week and
twenty-six week periods ended September 29, 1994 and September 30, 1993.
Thirteen Thirteen Twenty-Six Twenty-Six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
% of Total % of Total % of Total % of Total
9/29/94 Rev 9/30/94 Rev 9/29/94 Rev 9/30/93 Rev
(Dollars in thousands)
Revenues
Admissions $108,347 66% $116,456 67% $193,227 66% $210,182 67%
Concessions 50,577 31 53,233 30 89,506 31 95,318 30
Other 5,667 3 5,061 3 10,339 3 9,869 3
Total $164,591 100% $174,750 100% $293,072 100% $315,369100%
Cost of Operations
11
Film rental $58,350 35% $ 62,991 36% $ 98,634 34% $111,173 35%
Concession
merchandise 7,493 5 7,639 4 14,011 5 14,279 5
Other 59,996 36 61,119 35 114,629 39 116,439 3
Total $125,839 76% $131,749 75% $227,274 78% $241,891 77%
Operating Results
Total revenues for the twenty-six weeks ended September 29, 1994
decreased $22,297,000, or 7.1%, from the comparable period in fiscal
1994.The decrease in total revenues was partially the result of a
decrease in attendance of 5.9% which lowered admission and concession
revenues by $12,331,000 and $5,592,000, respectively.The attendance
decline in the current period resulted from record setting attendance in
the summer of 1993, when "Jurassic Park" was released, and from a dispute
with a major distributor over film terms, which has resulted in the
Company receiving less than its normal allocation of film product from
that distributor .The Company is taking steps to improve its relationship
with this distributor.The decrease in admission revenue was also affected
by a decrease in the average ticket price of 2.2% from the previous year,
which lowered revenues by $4,624,000.The concession revenue decrease was
also due in part to a .6% decrease in concession revenue per patron
resulting in lower revenues of $220,000.The Company believes that the
drop in concession revenue per patron was primarily due to the public
health announcement regarding the health effects of oil utilized for
popping popcorn which had a major effect on the sale of such items in the
early weeks of the first quarter.The Company has changed the type of oil
it uses and believes that sales have returned to previous levels.
Cost of operations decreased $14,617,000, or 6.0%, from
$241,891,000 in the prior period to $227,274,000 currently.Film rental
expense decreased $12,539,000, or 11.3%, of which $8,968,000 was due to
lower attendance and $3,571,000 due to a decrease in the percentage of
revenues paid to distributors.Concession merchandise cost decreased
$268,000, or 1.9%, from $14,279,000 in the prior period to $14,011,000
for the twenty-six weeks ended September 29, 1994.This decreasewas the
result of lower attendance which decreased expense by $871,000, which was
partially offset by a .6% increase in the percentage of revenues paid to
suppliers, which increased expense $603,000.Other costs of operations
decreased $1,810,000, or 1.6%, from $116,439,000 in the prior period to
$114,629,000 for the twenty-six weeks ended September 29, 1994.
Operating income decreased during the twenty-six weeks ended
September 29, 1994 by $7,573,000, or 21.3%, to $28,034,000 from
$35,607,000 in the prior period.
General and administrative expense increased $1,154,000, or 6.3%,to
$19,603,000 in the current period from $18,449,000 for the twenty-six
weeks ended September 30, 1993.The increase was primarily the result of
additional payroll, pension costs and expenses related to the
restructuring of the division offices.
Interest expense decreased $234,000, or 1.3%, to $18,281,000 during
the twenty-six weeks ended September 29, 1994.The decrease consisted of a
$351,000 decrease in interest expense related to corporate borrowings
partially offset by $117,000 of additional interest expense associated
with capitalized leases.For the first half of fiscal 1994, the Company
incurred $507,000 of interest expense from borrowings on its $40,000,000
12
Credit Facilitywith its primary banks (the "Credit Facility")which was
used to retire Exhibition Enterprises Partnership ("EEP")
indebtedness.The Credit Facility has not been utilized in fiscal 1995.
Investment income increased $4,483,000 from $1,034,000 for the
twenty-six weeks ended September 30, 1993 to $5,517,000 currently.This
increase is the result of additional interest income of $2,648,000 and an
increase in other investment income of $1,835,000.The increase in
interest income is due to additional cash and short-term investments as a
result of the March 3, 1994 sale of preferred stock. The increase in
investment income is due primarily from the sale of stock of TPI
Enterprises, Inc. and AmeriHealth, Inc.
Income from minority interest in the amount of $1,599,000 was
recorded in the first quarter of fiscal 1994 relating to TPI
Entertainment, Inc.'s ("TPIE") share ofthe EEP operating loss from April
2, 1993 through May 27, 1993, prior to the Company's acquisition of
TPIE's partnership interest in EEP.
For the twenty-six weeks ended September 29, 1994, the Company
recorded earnings prior to taxes of $15,195,000, a decrease of $4,452,000
compared to earnings of $19,647,000 in the comparable period of the prior
year.After taxes, net earnings were $8,995,000 in the current period
compared to $11,747,000 for the twenty-six weeks ended September 30,
1993.The net earnings for common shares, after deducting $3,500,000 for
preferred dividends, was $5,495,000, or $.33 per share, compared to
earnings of $11,747,000, or $.72 per share, in the prior period during
which there were no preferred dividends paid.
Total revenues for the thirteen weeks ended September 29, 1994
decreased 5.8% to $164,591,000, compared to $174,750,000 in the prior
year.Admissions revenue decreased $8,109,000, or 7.0%, while concession
revenue decreased $2,656,000, or 5.0%.Decreased attendance of 1,767,000
patrons contributed to the majority of the decrease while minimal changes
in the average ticket price and concession revenue per patron resulted in
the remainder of the decrease.The decrease in revenuesis partially due to
the dispute with a distributor, as referred to above.
Liquidity, Capital Structure and Resources
On March 3, 1994, the Company sold in a public offering 4,000,000
shares of $1.75 Cumulative Convertible Preferred Stock at a purchase
price of $25 per share.The net proceeds to the Company from the sale of
the Convertible Preferred were approximately $95.6 million.The Company
intends to use such proceeds (i) to improve its domestic theatre circuit
through the construction of new theatres, the addition of screens at, or
remodeling of, existing theatres and the acquisition of existing theatres
from other circuits, (ii) to finance the construction or acquisition of
theatres in foreign markets (iii) to repurchase and retire a portion of
its debt securities pursuant to open market or privately negotiated
purchases or otherwise and (iv) for general corporate purposes.Such new
theatres and screens may be acquired pursuant to lease agreements or
through acquisition of fee ownership and may be constructed by the
Company on a stand alone basis or through partnerships or other
arrangements with third parties.The Company's intentionto acquire its
debt securities will depend on many factors, including factors beyond its
control such as prevailing market prices for the debt securities, and may
be subject to limitations in the Indentures, the Credit Facility and
other debt instruments to which it is a party.Pending their use for the
purposes set forth above, the Company has invested the net proceeds in
13
interest-bearing instruments and other short-term securities.
The Company's revenues are collected in cash, principally through
box office admissions and theatre concession sales. Cash flow from
operating activities, as reflected in the Consolidated Statement of Cash
Flows, was $13,269,000 and $37,618,000 for the first two quarters of
fiscal 1995 and 1994, respectively.The Company has an operating "float"
which partially finances its operations and which permits the Company to
maintain a small amount of working capital capacity. This "float" exists
because admissions revenues are received in cash, while exhibition costs
(primarily film rentals) are ordinarily paid to distributors from 30 to
45 days following receipt of box office admission revenues and the
Company is only occasionally required to make advance payments or non-
refundable guarantees of film rentals.
In addition to cash and cash equivalents and short-term investments
of $149,165,000 at September 29, 1994, the Company had available to it at
such date the total commitment amount under its $40,000,000 Credit
Facility. In connection with the acquisition of EEP on May 28, 1993, the
Company borrowed $30,000,000 under the Credit Facility, which amount was
repaid from cash flow from operations by July 28, 1993. Except for this
borrowing, the Company has not utilized the Credit Facility and does not
anticipate that it will need to do so.
Effective June 14, 1994, the Companyamended and restated its Credit
Facility.The amended loan agreement provides greater flexibility than the
original loan agreement by (i) increasing the maximum allowable net
indebtedness to EBITDA ratio to 4.50 to 1 from 4.00 to 1, (ii) increasing
allowable capital expenditures (foreign and domestic) plus investments in
non-guarantors to $100,000,000 per year from allowable capital
expenditures of $25,000,000 per year (of which $10,000,000 could be spent
on foreign capital expenditures) and investments in non-guarantors which
was limited to $3,000,000, and (iii) liberalize permitted dividends from
approximately $6,267,000 under the original loan agreement to
approximately $38,844,000 as of September 29, 1994.(See Note 3 of the
Company's "Notes to Consolidated Financial Statements.")
The Company estimates that total capital expenditures will be
approximately $50,000,000 in fiscal 1995 (excluding property under
capital lease obligations). Such expenditures include normal maintenance
capital expenditures of approximately 1.5% of revenues and capital
expenditures for expansion of the theatre circuit. Total property
acquisitions, including those for refurbishment of existing theatres,
excludingcapital lease obligations, were $15,118,000 for the twenty-six
weeks ended September 29, 1994.
The Company recently announcedthat it plans to convert
substantially all of its auditoriums to digital sound.The Company intends
to sign a contract with the Sony Corporation to provide the equipment for
this conversion which may cost as much as $50,000,000 over the next three
years.
During the first two quarters of fiscal 1995, the Company opened
two new theatres with 22 screens, added 13 screens at two existing
locations and ceased operation of three theatres with 11 screens.The
Company has entered into agreements to lease space for the operation of
theatres not yet fully constructed.Of the total number of anticipated
openings, leases for nine new theatres with 165 screens and leases for
14
the expansion of 40 screens at six existing locations have been
finalized.The scheduled completion of construction and theatre openings
are at various dates through the fourth quarter of fiscal 1996.The
estimated minimum rental payments that may be required under the terms of
the leases total approximately $234,000,000.
The Company continually monitors the performance of its portfolio
of theatres to determine the best strategy given local and industry-wide
conditions. If an individual theatre's operating margins are
unsatisfactory, management may decide, among other options, to convert
the theatre to a "dollar house," to sell the property (or the lease
rights thereto) or to close the theatre. The closure of a theatre may be
coordinated with the opening of a new, modern AMC theatre complex where
the operating margins are expected to be superior to those of the
replaced theatre. The decision to sell or close a theatre may result in a
loss when the carrying value of the property exceeds the sales price or
when a theatre is closed with a remaining lease commitment. The loss is
charged to earnings during the period in which the decision is made.
The Indentures and the Credit Facility contain covenants that,
among other things, restrict the type and amount of debt that the Company
may incur and impose limitations on the creation of liens, a change of
control, transactions with affiliates, mergers,investments, dividends and
capital expenditures. The Company does not anticipate that these
covenants will materially impede the operation of the Company.
PART II.OTHER INFORMATION
ITEM I.LEGAL PROCEEDINGS
Scott C. Wallace, Derivatively on Behalf of Nominal Defendant AMC
Entertainment Inc. v. Stanley H. Durwood, et al., Chancery Court for New
Castle County, Delaware (Civil Action No. 12855).On January 27, 1993,
plaintiff filed a derivative action on behalf of AMCE against four of its
directors, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E.
Vardeman and Charles J. Egan, Jr. (the "Wallace litigation").AMCE was
named as a nominal defendant.The lawsuit alleges breach of fiduciary
duties of care, loyalty and candor, mismanagement and waste of assets in
connection with the provision of film licensing, accounting and financial
services by American Associated Enterprises, a partnership beneficially
owned by Mr. Stanley H. Durwood and members of his family, to the
Company, certain other transactions with affiliates of the Company,
termination payments to a former officer of the Company and other
transactions.The lawsuit seeks unspecified money damages and equitable
relief and costs, including reasonable attorneys' fees.
James M. Bird, Derivatively on Behalf of Nominal Defendant AMC
Entertainment Inc. v. Stanley H. Durwood, et al., Chancery Court for New
Castle County, Delaware (Civil Action No. 12939).On April 16, 1993,
plaintiff filed a derivative action on behalf of AMCE against four of its
directors, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E.
Vardeman and Charles J. Egan, Jr., and one of its former directors,Mr.
Phillip E. Cohen (the "Bird litigation").AMCE was named as a nominal
defendant.The lawsuit alleges many of the same claims that are alleged in
the Wallace litigation, as well as claims involving certain transactions
with National Cinema Supply Corporation and a fee paid by a subsidiary of
the Company to Mr. Cohen in connection with a transaction between the
Company and TPI Entertainment, Inc.The lawsuit seeks unspecified money
damages and equitable relief and costs, including reasonable attorney's
15
fees.
On August 20, 1993, the defendants filed motions to dismiss both
the Wallace litigation and the Bird litigation.On September 10, 1993,
such defendants filed motions to stay discovery pending the court's
resolution of defendants' motions to dismiss.On November 1, 1993, the
court ordered that discovery be stayed in the Wallace litigation and the
Bird litigation pending resolution of the motions to dismiss, except for
discovery concerning the fitness of Mr. Wallace to serve as a derivative
plaintiff.
On October 18, 1994, Phillip J. Bogosian, Auginco, Norman M.
Werther and Helen K. Werther filed a Motion for Intervention and a
Complaint in Intervention in the Wallace litigation.Their motion states
in part as grounds for intervention that their absence from the
litigation may impair their ability to protect their interests in light
of (i) defendants' motion to dismiss Mr. Wallace as unsuitable to serve
as derivative plaintiff and (ii) the fact that they have held AMCE stock
longer than Mr. Bird and thus may be able to assert claims that Mr. Bird
cannot.Their Complaint alleges many of the same claims that are alleged
in the Wallace litigation and the Bird litigation, which generally are
various breaches of fiduciary duty, waste of assets, mismanagement and
constructive fraud.The court has not yet set a date for the hearing on
the Motion.
For additional information relative to legal proceedings, See Note
5 of Notes to Consolidated Financial Statements.
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.
AMC ENTERTAINMENT INC.
Date:October 31, 1994
Peter C. Brown
Executive Vice President
and Chief Financial
Officer
Date:October 31, 1994
Richard L. Obert
Vice President and
Chief Accounting Officer
16
Exhibit 10 A
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of September 26, 1994 by
and between AMERICAN MULTI-CINEMA, INC., a Missouri corporation (the
"Company"), and PETER C. BROWN (the "Employee").
In consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:
1. Duties.Employee shall devote his full time and attention to
the business of the Company, and its affiliates, as reasonably directed
from time to time by the Chairman of the Board of the Company or its
Board of Directors.
2. Term. The term of Employee's employment with the Company,
pursuant to this Agreement shall be from September 26, 1994 through
September 26, 1996; subject, however, to termination of Employee's
employment pursuant to Section 4 hereafter.On each September 27
hereafter, commencing in 1995, one year shall be added to the term of
Employee's employment with the Company under this Agreement, so that as
of each September 27 the term of Employee's employment hereunder shall be
two years.
3. Compensation.Employee shall be compensated at a minimum
annual base salary ofTwo hundred twenty-seven thousand Dollars
($227,000.00) payable semi-monthly during the term of this Agreement,
plus any payments resulting from an Executive Incentive Plan or other
bonus arrangement, if any, as determined from time to time in the sole
discretion of the Compensation Committee of the Board of Directors of the
Company upon the recommendation of the Chairman of the Board of the
Company.Subject to the following sentence, all or a portion of any earned
bonus may be deferred for a reasonable period of time determined by the
17
Compensation Committee of the Board of Directors of the Company upon the
recommendation of the Chairman of the Board.The deferred portion will be
paid pursuant to and consistent with the Company's compensation policy in
effect at the time the bonus is earned, but not later than the end of the
term of this Agreement, provided, however, that the deferred portion
shall not be paid to Employee if Employee's employment with the Company
is terminated under paragraph 4(A) below.Employee shall also receive his
appropriate share of all benefits existing from time to time that inure
to the benefit of all other executives of the Company, as determined in
the sole discretion of the Board of Directors of the Company, such as
group insurance, pension plans, thrift plans, stock purchase plans and
the like.
4. Termination; Severance.
(A) Termination Without Severance.The employment of Employee
with the Company shall terminate without severance upon (i) Employee's
resignation or voluntary departure from the Company (except under the
circumstances described in paragraph 4(B) below), (ii) Employee's death,
(iii) the disability of Employee which renders him unable to perform his
usual and customary duties for a period of 180 consecutive days, or (iv)
a good faith determination by the Board of Directors or the Chairman of
the Board that Employee has been dishonest or has committed a breach of
trust respecting the Company.
(B) Termination With Severance; Change in Control.
(i) The employment of Employee with the Company may be
terminated with severance at any time (a) by the Board of Directors
or the Chairman of the Board of the Company in their or his sole
discretion, or (b) by the Employee if Stanley H. Durwood shall
hereafter fail to control the Company (as defined below) by reason of
its sale, merger or consolidation, orbecause of his death or
disability, or for any other reason. For purposes of this Agreement,
18
the term "control" means the possession of the power, acting alone or
in concert with others, to direct or cause the direction of the
management and policies of the Company, whether through the ownership
of voting securities, by contract or otherwise.
(ii)Upon any termination of Employee's employment pursuant
to this paragraph 4(B), the Company shall elect and pay to Employee
one of the two alternative severance compensation payments described
in clause (a) or (b) below.
(a)Installment Payments.An amount equal to twice the
annual salary of Employee in effect at the time of
termination, payable in advance at the beginning of each
month in equal monthly installments over the two years
immediately following the date of termination;
OR
(b)Lump-sum Payment.Within 30 days of the date of
termination, Employee shall receive an amount equal to the
net present value of the payments described in paragraph
4(B)(ii)(a) above.The discount of such payments to their net
present value shall utilize a discount rate equal to the
prime rate of interest published in The Wall Street Journal
on the date of termination (such prime rate currently
defined in The Wall Street Journal as the base rate on
corporate loans posted by at least 75% of the nation's 30
largest banks) or if such rate is not available, then the
prime rate of interest of Boatmen's Bank of Kansas City in
effect on the date of termination (hereinafter the "Prime
Rate").
The Company shall have the right to elect either the severance
compensation described in clause (a) or (b) above, at its sole
discretion.Any amounts payable under clause (a) or (b) above shall be
reduced by any wages, compensation or income, cash or otherwise,
received by Employee from sources other than the Company during such
two-year period following the date of termination, excluding,
however, any interest, dividends and other income of Employee
19
generated by passive investment activities of Employee.Employee
hereby agrees to use his best efforts to obtain other comparable
employment after the date of termination and to maximize the
compensation received by Employee from sources other than the Company
during such two-year period.Employee shall provide to the Company all
records and other documents which relate to his wages, compensation
or income for such two-year period other than interest, dividends and
other income generated by passive investment activities, including
but not limited to, check receipts, Form W-2's, Form 1099's and Form
K-1's.
(iii) Upon any termination of Employee's employment pursuant to
Paragraph 4(B)(i)(b), the stock options granted to Employee pursuant
to the terms of the Stock Option Agreement (the "Option Agreement")
dated June 14, 1983, between Employee and AMC Entertainment Inc.
("AMCE") shall be immediately exercisable by Employee,
notwithstanding any provisions of the Option Agreement to the
contrary.AMCE has executed this Agreement below to indicate its
agreement to the modification of the terms of the Option Agreement as
set forth in this Agreement.
(iv)Notwithstanding any provision of this Agreement to the
contrary, the aggregate value of all severance benefits received by
Employee under this paragraph 4(B), including without limitation the
value of any stock options exercisable by Employee as a result of an
event described in paragraph 4(B)(i)(b) and under any other agreement
20
between Employee and the Company, resulting or deemed to result from
a change in control, shall not exceed an amount (the "Maximum
Severance Amount") equal to 299% of Employee's base amount for the
five year period immediately preceding the date of termination.For
purposes of the preceding sentence:(i) the "aggregate value of all
severance benefits" shall be computed in the manner in which the
aggregate present value of payments in the nature of compensation
which are contingent on a change in control are computed under
Internal Revenue Code 280G; and (ii) the term "base amount" shall
have the meaning given to such term in such 280G.In the event the
Internal Revenue Service makes a retroactive determination or
adjustment that results in the aggregate value of the severance
benefits received by Employee exceeding the Maximum Severance Amount,
Employee shall immediately on demand by the Company pay the Company
in cash an amount equal to the excess of the aggregate value of the
severance benefits over the Maximum Severance Amount.
(C) Full Satisfaction.The payments described in paragraph 4(B)
above shall be in full and complete satisfaction of any obligation or
liability of the Company to Employee arising from any termination of
Employee's employment with the Company.
5. Confidentiality.Employee acknowledges that he knows and in the
future will know information relating to the Company and its affiliated
companies and their respective operations that is confidential or a trade
secret.Such information includes information, whether obtained in
21
writing, in conversation or otherwise, concerning corporate strategy,
intent and plans, business operations, financing, pricing, costs,
budgets, equipment, potential locations of new screens, the status, scope
and terms of pending negotiations and transactions, the terms of existing
or proposed leases, contracts and obligations, and corporate and
financial reports.Such confidential or trade secret information does not,
however, include information in the public domain unless Employee has,
without authority, made it public.
Employee agrees:(A)not to disclose such information to anyone except
in confidence and as is necessary to the performance of duties for the
Company; (B) to keep such information confidential; (C) to take
appropriate precautions to maintain the confidentiality of such infor-
mation; and (D) not to use such information for personal benefit or the
benefit of any competitor of the Company or any other person.
Upon termination of his employment with the Company, Employee shall
return all materials in his possession or under his control which were
prepared by or relate to the Company or its affiliates, including without
limitation the "black book" and other materials containing files,
memoranda, price lists, reports, budgets, employee handbooks and
confidential information.
6. Survival.Upon termination of Employee's employment with the
Company, the respective rights and obligations of the Company and
Employee under Sections 1, 2 and 3 hereof shall cease.However, the
22
Company's and Employee's obligations under Sections 4 and 5 hereof shall
survive the termination of Employee's employment with the Company.
7. Total Compensation.The compensation to be paid to Employee under
this Agreement shall be in full payment for all services rendered by
Employee in any capacity to the Company or any affiliate of the Company,
as may be reasonably designated from time to time by the Chairman of the
Board or the Board of Directors of the Company.
8. Miscellaneous Provisions.This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective heirs, personal representatives, successors and
permitted assigns.This Agreement shall be governed by the laws of the
State of Missouri.This Agreement represents the entire agreement of the
parties hereto and shall not be amended except by a written agreement
signed by all the parties hereto.This Agreement supersedes any prior oral
or written agreements or understandings between the Company, or any
affiliate of the Company, and Employee concerning Employee's relationship
and employment with the Company or any affiliate of the Company.This
Agreement shall not be assignable by one party without the prior written
consent of the other party.
In witness whereof, the parties have executed this Employment
Agreement as of the day and year first above written.
"COMPANY"
23
AMERICAN MULTI-CINEMA, INC.
By:
S. H. Durwood, Chairman of the
Board
and Chief Executive Officer
"EMPLOYEE"
Name:Peter C. Brown
ACCEPTED AND AGREED:
AMC Entertainment Inc.
By:
S.H. Durwood, Chairman of
the Board
24
Exhibit 10 B
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of September 26, 1994 by
and between AMERICAN MULTI-CINEMA, INC., a Missouri corporation (the
"Company"), and PHILIP M. SINGLETON (the "Employee").
In consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:
1. Duties.Employee shall devote his full time and attention to the
business of the Company, and its affiliates, as reasonably directed from
time to time by the Chairman of the Board of the Company or its Board of
Directors.
2. Term. The term of Employee's employment with the Company,
pursuant to this Agreement shall be from September 26, 1994 through
September 26, 1996; subject, however, to termination of Employee's
employment pursuant to Section 4 hereafter.On each September 27
hereafter, commencing in 1995, one year shall be added to the term of
Employee's employment with the Company under this Agreement, so that as
of each September 27the term of Employer's employment hereunder shall be
two years.
3. Compensation.Employee shall be compensated at a minimum annual
base salary ofTwo hundred sixty-six thousand Dollars ($266,000.00)
payable semi-monthly during the term of this Agreement, plus any payments
resulting from an Executive Incentive Plan or other bonus arrangement, if
any, as determined from time to time in the sole discretion of the
Compensation Committee of the Board of Directors of the Company upon the
recommendation of the Chairman of the Board of the Company.Subject to the
following sentence, all or a portion ofany earned bonus may be deferred
for a reasonable period of time determined by the Compensation Committee
25
of the Board of Directors of the Company upon the recommendation of the
Chairman of the Board.The deferred portion will be paid pursuant to and
consistent with the Company's compensation policy in effect at the time
the bonus is earned, but not later than the end of the term of this
Agreement, provided, however, that the deferred portion shall not be paid
to Employee if Employee's employment with the Company is terminated under
paragraph 4(A) below.Employee shall also receive his appropriate share of
all benefits existing from time to time that inure to the benefit of all
other executives of the Company, as determined in the sole discretion of
the Board of Directors of the Company, such as group insurance, pension
plans, thrift plans, stock purchase plans and the like.
4. Termination; Severance.
(A) Termination Without Severance.The employment of Employee
with the Company shall terminate without severance upon (i) Employee's
resignation or voluntary departure from the Company (except under the
circumstances described in paragraph 4(B) below), (ii) Employee's death,
(iii) the disability of Employee which renders him unable to perform his
usual and customary duties for a period of 180 consecutive days, or (iv)
a good faith determination by the Board of Directors or the Chairman of
the Board that Employee has been dishonest or has committed a breach of
trust respecting the Company.
(B) Termination With Severance; Change in Control.
(i) The employment of Employee with the Company may be
terminated with severance at any time (a) by the Board of Directors
or the Chairman of the Board of the Company in their or his sole
discretion, or (b) by the Employee if Stanley H. Durwood shall
hereafter fail to control the Company (as defined below) by reason of
its sale, merger or consolidation, orbecause of his death or
disability, or for any other reason. For purposes of this Agreement,
26
the term "control" means the possession of the power, acting alone or
in concert with others, to direct or cause the direction of the
management and policies of the Company, whether through the ownership
of voting securities, by contract or otherwise.
(ii)Upon any termination of Employee's employment pursuant
to this paragraph 4(B), the Company shall elect and pay to Employee
one of the two alternative severance compensation payments described
in clause (a) or (b) below.
(a)Installment Payments.An amount equal to twice the
annual salary of Employee in effect at the time of
termination, payable in advance at the beginning of each
month in equal monthly installments over the two years
immediately following the date of termination;
OR
(b)Lump-sum Payment.Within 30 days of the date of
termination, Employee shall receive an amount equal to the
net present value of the payments described in paragraph
4(B)(ii)(a) above.The discount of such payments to their net
present value shall utilize a discount rate equal to the
prime rate of interest published in The Wall Street Journal
on the date of termination (such prime rate currently
defined in The Wall Street Journal as the base rate on
corporate loans posted by at least 75% of the nation's 30
largest banks) or if such rate is not available, then the
prime rate of interest of Boatmen's Bank of Kansas City in
effect on the date of termination (hereinafter the "Prime
Rate").
The Company shall have the right to elect either the severance
compensation described in clause (a) or (b) above, at its sole
discretion.Any amounts payable under clause (a) or (b) above shall be
reduced by any wages, compensation or income, cash or otherwise,
received by Employee from sources other than the Company during such
two-year period following the date of termination, excluding,
however, any interest, dividends and other income of Employee
27
generated by passive investment activities of Employee.Employee
hereby agrees to use his best efforts to obtain other comparable
employment after the date of termination and to maximize the
compensation received by Employee from sources other than the Company
during such two-year period.Employee shall provide to the Company all
records and other documents which relate to his wages, compensation
or income for such two-year period other than interest, dividends and
other income generated by passive investment activities, including
but not limited to, check receipts, Form W-2's, Form 1099's and Form
K-1's.
(iii)Upon any termination of Employee's employment pursuant
to Paragraph 4(B)(i)(b), the stock options granted to Employee
pursuant to the terms of the Stock Option Agreement (the "Option
Agreement") dated June 14, 1983, between Employee and AMC
Entertainment Inc. ("AMCE") shall be immediately exercisable by
Employee, notwithstanding any provisions of the Option Agreement to
the contrary.AMCE has executed this Agreement below to indicate its
agreement to the modification of the terms of the Option Agreement as
set forth in this Agreement.
(iv)Notwithstanding any provision of this Agreement to the
contrary, the aggregate value of all severance benefits received by
Employee under this paragraph 4(B), including without limitation the
value of any stock options exercisable by Employee as a result of an
event described in paragraph 4(B)(i)(b) and under any other agreement
between Employee and the Company, resulting or deemed to result from
a change in control, shall not exceed an amount (the "Maximum
28
Severance Amount") equal to 299% of Employee's base amount for the
five year period immediately preceding the date of termination.For
purposes of the preceding sentence:(i) the "aggregate value of all
severance benefits" shall be computed in the manner in which the
aggregate present value of payments in the nature of compensation
which are contingent on a change in control are computed under
Internal Revenue Code 280G; and (ii) the term "base amount" shall
have the meaning given to such term in such 280G.In the event the
Internal Revenue Service makes a retroactive determination or
adjustment that results in the aggregate value of the severance
benefits received by Employee exceeding the Maximum Severance Amount,
Employee shall immediately on demand by the Company pay the Company
in cash an amount equal to the excess of the aggregate value of the
severance benefits over the Maximum Severance Amount.
(C) Full Satisfaction.The payments described in paragraph 4(B)
above shall be in full and complete satisfaction of any obligation or
liability of the Company to Employee arising from any termination of
Employee's employment with the Company.
5. Confidentiality.Employee acknowledges that he knows and in the
future will know information relating to the Company and its affiliated
companies and their respective operations that is confidential or a trade
secret.Such information includes information, whether obtained in
writing, in conversation or otherwise, concerning corporate strategy,
intent and plans, business operations, financing, pricing, costs,
29
budgets, equipment, potential locations of new screens, the status, scope
and terms of pending negotiations and transactions, the terms of existing
or proposed leases, contracts and obligations, and corporate and
financial reports.Such confidential or trade secret information does not,
however, include information in the public domain unless Employee has,
without authority, made it public.
Employee agrees:(D)not to disclose such information to anyone except
in confidence and as is necessary to the performance of duties for the
Company; (E) to keep such information confidential; (F) to take
appropriate precautions to maintain the confidentiality of such infor-
mation; and (G) not to use such information for personal benefit or the
benefit of any competitor of the Company or any other person.
Upon termination of his employment with the Company, Employee shall
return all materials in his possession or under his control which were
prepared by or relate to the Company or its affiliates, including without
limitation the "black book" and other materials containing files,
memoranda, price lists, reports, budgets, employee handbooks and
confidential information.
6. Survival.Upon termination of Employee's employment with the
Company, the respective rights and obligations of the Company and
Employee under Sections 1, 2 and 3 hereof shall cease.However, the
Company's and Employee's obligations under Sections 4 and 5 hereof shall
survive the termination of Employee's employment with the Company.
30
7. Total Compensation.The compensation to be paid to Employee under
this Agreement shall be in full payment for all services rendered by
Employee in any capacity to the Company or any affiliate of the Company,
as may be reasonably designated from time to time by the Chairman of the
Board or the Board of Directors of the Company.
8. Miscellaneous Provisions.This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective heirs, personal representatives, successors and
permitted assigns.This Agreement shall be governed by the laws of the
State of Missouri.This Agreement represents the entire agreement of the
parties hereto and shall not be amended except by a written agreement
signed by all the parties hereto.This Agreement supersedes any prior oral
or written agreements or understandings between the Company, or any
affiliate of the Company, and Employee concerning Employee's relationship
and employment with the Company or any affiliate of the Company.This
Agreement shall not be assignable by one party without the prior written
consent of the other party.
In witness whereof, the parties have executed this Employment
Agreement as of the day and year first above written.
"COMPANY"
AMERICAN MULTI-CINEMA, INC.
By:
S. H. Durwood, Chairman of the
Board and
Chief Executive Officer
31
"EMPLOYEE"
Name:Philip M. Singleton
ACCEPTED AND AGREED:
AMC Entertainment Inc.
By:
S.H. Durwood, Chairman of
the Board
32
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a)Exhibit 11
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
(Unaudited)
Twenty-six
Weeks Ended
9/29/94 9/30/93
Net earnings $8,995 $ 11,747
Preferred dividends (3,500) -
Net earnings applicable to common
stock for primary and fully
diluted earnings per share $5,495 $ 11,747
Average shares for primary earnings per share:
Weighted average number of
shares outstanding 16,451 16,314
Stock options outstanding whose effect
is dilutive 86 50
Total shares outstanding 16,537 16,364
Average shares for fully diluted earnings
per share:
Weighted average number of shares
outstanding 16,451 16,314
Stock options outstanding whose effect
is dilutive 86 242
Total shares outstanding 16,537 16,556
Primary earnings per share $ .33 $ .72
Fully diluted earnings per share $ .33 $ .71
33
ITEM 6B. REPORTS ON FORM 8-K
NO REPORTS ON FORM 8-K WERE FILED OR REQUIRED
TO BE FILED FOR THE TWENTY-SIX WEEKS ENDED
SEPTEMBER 29, 1994
34
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of AMC Entertainment Inc. as of and for the
twenty-six weeks ended September 29, 1994 submitted in response to the
requirements to Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> MAR-30-1995
<PERIOD-END> SEP-29-1994
<CASH> 21,858
<SECURITIES> 127,307
<RECEIVABLES> 10,221
<ALLOWANCES> 1,177
<INVENTORY> 0
<CURRENT-ASSETS> 173,386
<PP&E> 463,321
<DEPRECIATION> 209,121
<TOTAL-ASSETS> 498,370
<CURRENT-LIABILITIES> 72,896
<BONDS> 266,122
<COMMON> 10,973
0
2,667
<OTHER-SE> 122,229
<TOTAL-LIABILITY-AND-EQUITY> 498,370
<SALES> 89,506
<TOTAL-REVENUES> 293,072
<CGS> 14,011
<TOTAL-COSTS> 227,274
<OTHER-EXPENSES> 18,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,281
<INCOME-PRETAX> 15,195
<INCOME-TAX> 6,200
<INCOME-CONTINUING> 8,995
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,495
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
