August 1, 1995
Enclosed for filing under Sections 13 or 15d of the Securities
Act of 1934 is the copy of the Form 10-Q Thirteen weeks ended
June 29, 1995 for AMC Entertainment Inc.
Sincerly
Gail P. McClenton
<PAGE>
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 June 29, 1995
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.
YesxNo ________
Number of Shares
Title of Each Class of Common Stock Outstanding as of June 29, 1995
Common Stock, 66 2/3 cents par value 5,366,380
Class B Stock, 66 2/3 cents par value 11,157,000
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
INDEX
Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Note to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
Exhibit 11 - Statements Regarding
Computation
of Per Share Earnings 12
Exhibit 27 - Financial Data Schedule 13
SIGNATURES 14
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Thirteen
Weeks Ended
June 29, June 30,
1995 1994
(Unaudited)
Revenues
Admissions $101,928 $ 84,880
Concessions 46,181 38,929
Other 5,701 4,672
Total revenues 153,810 128,481
Expenses
Film rentals 51,468 40,284
Concession merchandise 7,761 6,518
Other 60,772 54,633
Total cost of operations 120,001 101,435
Depreciation and amortization 9,972 8,360
General and administrative expenses 10,223 9,620
Total expenses 140,196 119,415
Operating income 13,614 9,066
Other expense (income)
Interest expense
Corporate borrowings 5,546 6,165
Capitalized leases 2,763 2,795
Investment income (2,226) (2,563)
Loss (gain) on disposition of assets 15 (2)
Earnings before income taxes 7,516 2,671
Income tax provision 3,100 1,100
Net earnings $ 4,416 $ 1,571
Preferred dividends 1,750 1,750
Net earnings (loss) for common shares $ 2,666 $(179)
Earnings per share:
Primary $ .16 $ (.01)
Fully diluted $ .16 $ (.01)
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 29, March 30,
1995 1995
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ 31,430 $ 71,233
Investments 121,590 69,144
Receivables net of allowance for doubtful
accounts of $1,477 as of June 29, 1995,
and $1,529 as of March 30, 1995 8,376 8,572
Other current assets 11,969 12,069
Total current assets 173,365 161,018
Property, net 290,489 279,904
Intangible assets, net 42,788 42,926
Other long-term assets 38,872 38,306
Total assets $545,514 $522,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,546 $ 29,047
Accrued expenses and other liabilities 40,257 33,794
Current maturities of corporate borrowings
and capital lease obligations 2,637 2,516
Total current liabilities 85,440 65,357
Corporate borrowings 200,199 200,183
Capital lease obligations 64,066 64,805
Other long-term liabilities 35,087 34,421
Total liabilities 384,792 364,766
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; 5,366,380 shares issued and
outstanding as of June 29, 1995, and
5,306,380 shares as of March 30, 1995 3,578 3,538
Convertible Class B Stock; 11,157,000
shares issued and outstanding 7,438 7,438
Additional paid-in capital 107,791 107,163
Retained earnings 39,248 36,582
Total stockholders' equity 160,722 157,388
Total liabilities and stockholders' equity $545,514 $522,154
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Thirteen
Weeks Ended
June 29, June 30,
1995 1994
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,416 $ 1,571
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization - property 7,804 7,280
- other long-term assets 2,168 1,080
Gain on sale of available for sale investments - (841)
Loss (gain) on sale of other long-term assets 15 (2)
Change in assets and liabilities:
Receivables 196 (108)
Other current assets 100 (240)
Accounts payable 13,499 (60)
Accrued expenses and other liabilities 7,549 (702)
Other, net 770 97
Total adjustments 32,101 6,504
Net cash provided by operating activities 36,517 8,075
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (21,220) (12,588)
Purchases of available for sale investments (215,862) (88,670)
Proceeds from maturities of available
for sale investments 163,416 74,721
Proceeds from sales of available for
sale investments - 9,699
Proceeds from disposition of other
long-term assets 17 30
Other, net (961) (597)
Net cash used in investing activities (74,610) (17,405)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease
obligations (619) (535)
Other repayments (9) (9)
Proceeds from exercise of stock options 668 133
Dividends paid on preferred stock (1,750) (1,983)
Net cash used in financing activities (1,710) (2,394)
NET DECREASE IN CASH AND EQUIVALENTS (39,803) (11,724)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 71,233 32,319
CASH AND EQUIVALENTS AT END OF PERIOD $ 31,430 $ 20,595
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Thirteen
Weeks Ended
June 29, June 30,
1995 1994
(Unaudited)
Capital lease obligations incurred in
connection with property acquired $ - $ 1,363
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Thirteen
Weeks Ended
June 29, June 30,
1995 1994
(Unaudited)
Cash paid during the period for:
Interest (net of amounts capitalized of
$656 and $61) $ 2,830 $ 2,825
Income taxes 230 2,896
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 1995
(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.
The accompanying unaudited consolidated financial statements have
been prepared in response to the requirements of Form 10-Q and should be
read in conjunction with the Company's annual report on Form 10-K for the
year (52 weeks) ended March 30, 1995. In the opinion of management, these
interim financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the Company's
financial position and results of operations. Due to the seasonal nature
of the Company's business, results for the thirteen weeks ended June 29,
1995, are not necessarily indicative of the results to be expected for the
fiscal year ended March 28, 1996.
Earnings Per Share
Primary earnings per share is computed by dividing net earnings
for common shares by the sum of the weighted average number of common
shares outstanding and outstanding stock options, when their effect is
dilutive. The average shares used in the computations were 16,661,000
and 16,442,000 for the thirteen weeks ended June 29, 1995, and June 30,
1994, respectively. On a fully diluted basis, both net earnings and
shares outstanding are adjusted to assume the conversion of the Cumulative
Convertible Preferred Stock, if dilutive. The average shares used in
the computations were 16,730,000 and 16,442,000 for the thirteen weeks
ended June 29, 1995, and June 30, 1994, respectively.
Presentation
Certain amounts have been reclassified from prior period
consolidated financial statements to conform with the current year
presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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
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 periods
ended June 29, 1995, and June 30, 1994.
Thirteen Thirteen
Weeks Ended Weeks Ended
% of Total % of Total
6/29/95 Revenues 6/30/94 Revenues
(Dollars in thousands)
Revenues
Admissions $101,928 66.3% $ 84,880 66.1%
Concessions 46,181 30.0 38,929 30.3
Other 5,701 3.7 4,672 3.6
Total $153,810 100.0% $128,481 100.0%
Cost of Operations
Film rental $ 51,468 33.5% $ 40,284 31.3%
Concession merchandise 7,761 5.0 6,518 5.1
Other 60,772 39.5 54,633 42.5
Total $120,001 78.0% $101,435 78.9%
Operating Results
Total revenues for the thirteen weeks ended June 29, 1995, increased
19.7%, or $25,329,000, to $153,810,000 compared to $128,481,000 for the
thirteen weeks ended June 30, 1994. Admissions revenues increased by
20.1% due to a 13.9% increase in attendance and a 5.5% increase in average
ticket prices. The increase in attendance resulted from the popularity of
films released during the period and the net addition of 43 screens since
the first quarter of fiscal 1995. Concessions revenues and average
concessions per patron increased by 18.6% and 4.2%, respectively, during
the current period. The increase in concession revenue was primarily
attributable to the attendance increase.
Total cost of operations increased 18.3%, or $18,566,000, during the
thirteen weeks ended June 30, 1995, to $120,001,000 from $101,435,000 for
the thirteen weeks ended June 30, 1994. As a percentage of total
revenues, cost of operations was 78.0% for the first quarter of fiscal
1996 compared to 78.9% for the same period in the prior year. Film
rentals expense increased 27.8% due to higher attendance levels and a 3.0%
increase in the percentage of admissions paid to film distributors. Other
costs of operations increased 12.1% from the same period in the prior year
due to increases in payroll, concession merchandise and other theatre
operating expenses required to support the increase in admissions and
concessions revenue and from the higher number of screens in operation.
Depreciation and amortization increased 19.3% from $8,360,000 to
$9,972,000 for the current quarter. This increase resulted primarily from
the reduction, effective December 30, 1994, in the estimated lives of
lease rights and location premiums on certain smaller theatres to
correspond to the base terms of the theatre leases.
General and administrative expenses increased 6.3%, or $603,000, from
$9,620,000 for the thirteen weeks ended June 30, 1994, to $10,223,000 for
the current period. The increase in general and administrative expenses
is primarily attributable to costs associated with the Company s
development of theatres in the United States and certain international
markets. As a percentage of total revenues, general and administrative
expenses decreased from 7.5% to 6.6%.
Interest expense decreased $651,000, or 7.3%, to $8,309,000 for the
first quarter of fiscal 1996 from $8,960,000 for same period in the prior
year. The decrease in interest expense resulted from higher amounts of
capitalized interest from increased construction activities.
Investment income decreased 13.1% during the thirteen weeks ended
June 29, 1995, due to a gain of $841,000 recorded in the first quarter of
the prior year from the sale of stock of TPI Enterprises, Inc., offset by
an increase of $551,000 in interest income during the current period.
For the thirteen weeks ended June 29, 1995, the Company recorded net
earnings of $4,416,000, a 181.1% increase from net earnings of $1,571,000
for the thirteen weeks ended June 30, 1994. Net earnings per common
share, after deducting $1,750,000 of preferred dividends, was $.16
compared to a net loss of $.01 for the same period in the prior year.
Liquidity and Capital Resources
The Company's revenues are collected in cash, principally through box
office admissions and theatre concession sales. The Company has an
operating "float" which partially finances its operations and which
generally permits the Company to maintain a smaller 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. The Company is only occasionally required
to make advance payments or non-refundable guarantees of film rentals.
In addition to cash equivalents and short-term investments totaling
$153,020,000 as of June 29, 1995, the Company had available to it the
total commitment amount under its $40,000,000 Credit Facility. The
Company has not utilized the Credit Facility during the last twelve months
and does not anticipate that it will need to do so.
The Credit Facility agreement and the Indentures to the Company's
Senior and Senior Subordinated Notes contain covenants that limit the
Company's capital expenditures to $100,000,000 per year and restrict the
Company's ability to pay dividends. Additionally, other covenants impose
limitations on the creation of liens, a change of control, transactions
with affiliates, mergers and investments. The Company does not anticipate
that any such covenants will materially impede its operations. However,
given that the Company's expansion program has increased the rate of
capital spending, the amount available for payment of dividends under the
Indentures may be reduced in the future. The Company is considering
various alternatives that would allow it to maintain its ability to pay
dividends on the Cumulative Convertible Preferred Stock and continue its
increased rate of capital spending.
For the thirteen weeks ended June 29, 1995, the Company had capital
expenditures of $21,210,000, primarily for the development of new theatres
and the addition of screens at existing locations, and anticipates that
total capital expenditures will be approximately $100 million in fiscal
1996, excluding property under capital lease obligations. Included in the
fiscal 1996 capital expenditures estimate are the costs to convert
substantially all of the Company s auditoriums to digital sound, which may
total $50 million over the next three years. The Company believes that
cash generated from operations, cash on hand and short-term investments
will be sufficient to fund operating results and planned capital
expenditures for at least the next twelve months.
During the first quarter of fiscal 1996, the Company opened an owned
theatre with 24 screens resulting in a circuit total of 1,656 screens in
234 theatres as of June 29, 1995. In addition, the Company has under
construction one fee basis theatre with 16 screens, five new leased
theatre locations totaling 83 screens and additions to existing theatres
for 24 new screens. The Company anticipates that approximately 200 or
more new domestic and international screens will be opened or under
construction by the end of the fiscal year.
ITEM 3. LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and
proceedings to which the Company is a party.
In Re: AMC Shareholder Derivative Litigation, Chancery Court For New
Castle County, Delaware (Civil Action No. 12855). On February 15, 1995,
the court ordered the consolidation of two derivative actions filed
against four directors of AMCE, Mr. Stanley H. Durwood, Mr. Edward D.
Durwood, Mr. Paul E. Vardeman and Mr. Charles J. Egan, Jr., and one of its
former directors, Mr. Phillip Ean Cohen. The two cases were originally
filed on January 27, 1993, by Mr. Scott C. Wallace and on April 16, 1993,
by Mr. James M. Bird, respectively. On December 8, 1994, the court,
pursuant to a stipulation by the parties, entered an order approving Mr.
Wallace's withdrawal as a derivative plaintiff, granting the motion for
intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman M.
Werther and Ms. Ellen K. Werther, and authorizing the filing of the
intervenors' complaint. The intervenors' complaint includes substantially
the same allegations as the Wallace and Bird complaints. The two actions,
as consolidated, are referred to below as the "Derivative Action."
In the Derivative Action, plaintiffs allege breach of fiduciary
duties of care, loyalty and candor, mismanagement, constructive fraud and
waste of assets in connection with, among other allegations, 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, certain transactions between the Company
and 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 Derivative Action seeks
unspecified money damages and equitable relief and costs, including
reasonable attorneys' fees.
On February 9, 1995, the defendants filed a motion to dismiss the
Derivative Action. Discovery has been stayed pending resolution of the
motion to dismiss.
The Company is named as a defendant in a number of other lawsuits
arising in the normal course of its business. Management does not expect
that any actions to which the Company is a party will result in a material
loss to the Company.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement Regarding Computation of Per Share Earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed or required to be filed for the
thirteen weeks ended June 29, 1995.<PAGE>
EXHIBIT 11.
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
Thirteen
Weeks Ended
June 29,June 30,
1995 1994
PRIMARY EARNINGS PER SHARE:
Net earnings $ 4,416 $ 1,571
Preferred dividends (1,750) (1,750)
Net earnings for common shares $ 2,666 $(179)
Average shares for primary earnings per share:
Weighted average number of shares outstanding 16,468 16,442
Stock options whose effect is dilutive 193 -
Total shares outstanding 16,661 16,442
Primary earnings per share $0.16 $ (0.01)
FULLY DILUTED EARNINGS PER SHARE:
Net earnings $ 4,416 $ 1,571
Preferred dividends (1,750) (1,750)
Net earnings for common shares $ 2,666 $(179)
Average shares for fully diluted earnings per share:
Weighted average number of shares outstanding 16,468 16,442
Stock options whose effect is dilutive 262 -
Shares issuable upon conversion of preferred stock n/a (1) n/a (1)
Total shares outstanding 16,730 16,442
Fully diluted earnings per share, including
conversion shares $ 0.16 $(0.01)
(1)Shares from conversion of preferred stock are excluded from the fully
diluted earnings per share calculation because they are anti-dilutive.<PAGE>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
Filed with EDGAR<PAGE>
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: August 1, 1995 \s\Peter Brown
Peter C. Brown
Executive Vice President and
Chief Financial Officer
Date: August 1, 1995 \s\Richard L. Obert
Richard L. Obert
Vice President and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information estracted from the
Consolidated Financial Statements of AMC Entertainment Inc. as of and for the
thirteen weeks ended June 29, 1995, submitted in response to the requirements to
to Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
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<PERIOD-END> JUN-29-1995
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<ALLOWANCES> 1477
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<CURRENT-ASSETS> 173365
<PP&E> 518084
<DEPRECIATION> 227595
<TOTAL-ASSETS> 545514
<CURRENT-LIABILITIES> 85440
<BONDS> 264265
<COMMON> 11016
0
2667
<OTHER-SE> 147039
<TOTAL-LIABILITY-AND-EQUITY> 545514
<SALES> 46181
<TOTAL-REVENUES> 153810
<CGS> 7761
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<OTHER-EXPENSES> 9972
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<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
