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 27, 1996
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 ________
Number of Shares
Title of Each Class of Common Stock Outstanding as of June 27, 1996
Common Stock, 66 2/3 cents par value 6,541,731
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 5-6
Notes to Consolidated Financial Statements 7
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 8-10
PART II.OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS 11-12
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Thirteen
Weeks Ended
June 27, June 29,
1996 1995
(Unaudited)
Revenues
Admissions $106,285 $101,928
Concessions 49,831 46,181
Other 6,327 5,701
Total revenues 162,443 153,810
Expenses
Film rentals 53,691 51,468
Concession merchandise 9,070 7,761
Other 71,624 60,772
Total cost of operations 134,385 120,001
Depreciation and amortization 11,674 9,972
General and administrative expenses 11,977 10,223
Total expenses 158,036 140,196
Operating income 4,407 13,614
Other expense (income)
Interest expense
Corporate borrowings 2,335 5,546
Capitalized leases 2,574 2,763
Investment income (182) (2,226)
Loss (gain) on disposition of assets (18) 15
Earnings (loss) before income taxes (302) 7,516
Income tax provision (125) 3,100
Net earnings (loss) $ (177) $ 4,416
Preferred dividends 1,546 1,750
Net earnings (loss) for common shares $ (1,723) $ 2,666
Earnings per share:
Primary $(.10) $.16
Fully diluted $(.10) $.16
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 27, March 28,
1996 1996
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ 10,262 $ 10,795
Receivables, net of allowance
for doubtful accounts of
$657 as of June 27, 1996,
and $801 as of March 28, 1996 20,748 20,503
Other current assets 14,457 15,179
Total current assets 45,467 46,477
Property, net 394,695 355,485
Intangible assets, net 34,918 36,483
Other long-term assets 47,644 45,013
Total assets $522,724 $483,458
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 69,033 $ 64,353
Accrued expenses and other liabilities 38,940 38,319
Current maturities of corporate
borrowings and capital lease obligations 3,075 2,904
Total current liabilities 111,048 105,576
Corporate borrowings 161,122 126,127
Capital lease obligations 58,372 59,141
Other long-term liabilities 34,931 33,696
Total liabilities 365,473 324,540
Stockholders' equity:
Cumulative Convertible Preferred Stock;
3,328,100 shares issued and
outstanding as of June 27, 1996
and 4,000,000 shares issued and outstanding
as of March 28, 1996 (aggregate liquidation
preference of $83,203 as of
June 27, 1996, and $100,000 as
of March 28, 1996) 2,219 2,667
Common Stock; 6,562,231 shares issued
as of June 27, 1996, and 5,388,880 shares
issued as of March 28, 1996 4,375 3,593
Convertible Class B Stock; 11,157,000 shares
issued and outstanding 7,438 7,438
Additional paid-in-capital 107,793 107,986
Retained earnings 35,795 37,603
Less - Common Stock in treasury, at cost, 157,620 159,287
20,500 shares as of June 27, 1996
and March 28, 1996 369 369
Total stockholders' equity 157,251 158,918
Total liabilities and stockholders' equity $522,724 $483,458
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Thirteen
Weeks Ended
June 27, June 29,
1996 1995
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (177) $ 4,416
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 11,674 9,972
Loss (gain) on sale of other long-term assets (18) 15
Change in assets and liabilities:
Receivables (245) 196
Other current assets 722 100
Accounts payable 9,145 13,499
Accrued expenses and other liabilities (3,623) 7,549
Other, net 366 770
Total adjustments 18,021 32,101
Net cash provided by operating activities 17,844 36,517
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (48,674) (21,220)
Purchases of available for sale investments - (215,862)
Proceeds from maturities of available
for sale investments - 163,416
Other, net (3,144) (944)
Net cash used in investing activities (51,818) (74,610)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility 35,000 -
Principal payments under capital lease
obligations and other (604) (628)
Cash overdrafts 535 -
Proceeds from exercise of stock options 141 668
Dividends paid on preferred stock (1,631) (1,750)
Net cash provided by (used in)
financing activities 33,441 (1,710)
NET DECREASE IN CASH AND EQUIVALENTS (533) (39,803)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 10,795 71,233
CASH AND EQUIVALENTS AT END OF PERIOD $ 10,262 $ 31,430
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Thirteen
Weeks Ended
June 27, June 29,
1996 1995
(Unaudited)
Cash paid during the period for:
Interest (net of amounts capitalized
of $368 and $656) $ 5,093 $ 2,830
Income taxes paid (refunded) (3,222) 230
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
AMC Entertainment Inc. ("AMCE"), through its direct and indirect
subsidiaries, including 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 throughout the United States and in Japan.
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 28, 1996. 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 28, 1996, are
not necessarily indicative of the results to be expected for the fiscal year
(53 weeks) ending April 3, 1997.
The year-end consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
Certain amounts have been reclassified from prior period consolidated
financial statements to conform with the current year presentation.
NOTE 2 - EARNINGS PER SHARE
Primary earnings (loss) per share is computed by dividing net earnings
(loss) less preferred dividends 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 16,817,000 for the
thirteen weeks ended June 27,1996, and 16,661,000 for the thirteen weeks ended
June 29,1995. On a fully-diluted basis, net earnings (loss) and shares
outstanding are adjusted to assume conversion of the Cumulative Convertible
Preferred Stock, if dilutive. The average shares used in the computations
were 16,817,000 for the thirteen weeks ended June 27, 1996 and 16,730,000 for
the thirteen weeks ended June 29,1995.
<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 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 27, 1996, and June 29, 1995.
Thirteen Thirteen
Weeks Ended Weeks Ended
% of Total% of Total
6/27/96Revenues6/29/95Revenues
(Dollars in thousands)
Revenues
Admissions $106,285 65% $101,928 66%
Concessions 49,831 31 46,181 30
Other 6,327 4 5,701 4
Total $162,443 100% $153,810 100%
Cost of Operations
Film rentals $ 53,691 33% 51,468 33%
Concession merchandise 9,070 6 7,761 5
Other 71,624 44 60,772 40
Total $134,385 83% $120,001 78%
Operating Results
Total revenues for the thirteen weeks ended June 27, 1996, increased
5.6%, or $8,633,000, to $162,443,000 compared to $153,810,000 for the thirteen
weeks ended June 29, 1995. Admissions revenues increased by 4.3% due to a .2%
increase in attendance and a 4.2% increase in average ticket prices.
Admissions revenues at same theatres, theatres opened prior to the first
quarter of fiscal 1996, decreased 8.7% compared to the prior year.
Attendance in the first quarter increased due to the net addition of 158
screens since the first quarter of fiscal 1996 which was offset by a reduction
in attendance at same theatres due to a lack of popular film product compared
to the prior year. Concessions revenues and average concessions per patron
increased by 7.9% and 7.5%, respectively, during the current period.
Total cost of operations increased 12.0%, or $14,384,000, during the
thirteen weeks ended June 27, 1996, to $134,385,000 from $120,001,000 for the
thirteen weeks ended June 29, 1995. As a percentage of total revenues, cost
of operations was 83% for the first quarter of fiscal 1997 compared to 78% for
the same period in the prior year. Film rentals expense increased 4.3% due
to higher admissions revenues. Concession merchandise and other costs of
operations increased 17.7% from the same period in the prior year due to
increases in payroll, concession merchandise, rent and other theatre operating
expenses associated with the higher number of screens in operation and due to
start-up expenses of new theatres.
Depreciation and amortization increased 17.1%, or $1,702,000, from
$9,972,000 for the thirteen weeks ended June 29, 1995, to $11,674,000 for the
current period. This increase resulted primarily from an increase in employed
theatre assets in connection with the Company's expansion plans.
General and administrative expenses increased 17.2%, or $1,754,000,
from $10,223,000 for the thirteen weeks ended June 29, 1995, to $11,977,000
for the current period. The increase in general and administrative expenses
is primarily attributable to payroll expenses and costs associated with the
Company s expansion plans. As a percentage of total revenues, general and
administrative expenses increased from 6.6% to 7.4%.
Interest expense decreased 40.9%, or $3,400,000, to $4,909,000 for the
first quarter of fiscal 1997 from $8,309,000 for the same period in the prior
year. The decrease in interest expense resulted from lower interest rates
under the Company's New Credit Facility.
Investment income decreased 91.8%, or $2,044,000, during the thirteen
weeks ended June 27, 1996, due primarily to a decrease in cash and investments
from June 29, 1995 to June 27, 1996. Cash and investments decreased primarily
as a result of the Company's redemption of Senior and Senior Subordinated
Notes on December 28, 1995.
Net earnings (loss) decreased $4,593,000 during the thirteen weeks
ended June 27, 1996, to ($177,000) from $4,416,000 in the previous year. Net
earnings (loss) per common share, after deducting $1,546,000 and $1,750,000
of preferred dividends in fiscal 1997 and 1996, respectively, was ($.10)
compared to $.16 for the previous 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.
On December 28, 1995, the Company completed the redemption of
substantially all of its Senior and Senior Subordinated Notes and entered into
a new loan agreement (the "Refinancing Plan"). The Company redeemed
$99,383,000 of its 11 7/8% Senior Notes Due 2000 at a total price of $1,117.90
per $1,000 principal amount and $95,096,000 of its outstanding 12 5/8% Senior
Subordinated Notes Due 2002 at a total price of $1,144.95 per $1,000 principal
amount. The Company utilized cash and investments along with borrowings of
$130,000,000 under a new loan agreement to redeem the Senior and Senior
Subordinated Notes. The Refinancing Plan was intended to improve the
Company's financial and operating flexibility, reduce its net interest
expense, extend the average life of its indebtedness and increase its
available credit.
As a part of the Refinancing Plan, the Company entered into a new loan
agreement with several banks to provide a revolving credit facility of up to
$425,000,000 (the "Credit Facility"). The Credit Facility matures in 2002,
permits borrowings at interest rates based on either the bank's base rate or
LIBOR and requires an annual commitment fee based on margin ratios that could
result in a rate of .25% or .375% on the unused portion of the commitment.
As of June 27, 1996, the Company had outstanding borrowings of $155,000,000
under the Credit Facility at an average rate of 6.0%.
The Credit Facility contains covenants that generally limit the
Company's capital expenditures, as defined in the loan agreement, to
$150,000,000 per year plus amounts for unused capital expenditures from the
prior year of approximately $34,000,000 and amounts received for assets placed
in sale and leaseback or other comparable funding programs . The Company is
pursuing various financing programs to allow it to continue with its
increased rate of capital expenditures and comply with the terms of the loan
agreement. The Company anticipates that its capital expenditures in fiscal
1997 will comply with the limits in the Credit Facility.
Additionally, other covenants impose limitations on the incurrence of
additional indebtedness, creation of liens, a change of control, transactions
with affiliates, mergers, investments, guaranties and asset sales. The
Company is required to maintain a maximum net indebtedness to consolidated
earnings before interest, taxes, depreciation and amortization ("EBITDA")
ratio, as defined in the loan agreement, of 4.50 to 1 during the first four
years of the Credit Facility and a ratio of 4.0 to 1 thereafter, and a minimum
cash flow coverage ratio, as defined in the loan agreement, of 1.40 to 1. The
Company does not anticipate that any such covenants will materially impede its
operations. As of June 27, 1996, the Company was in compliance with all
financial covenants relating to the Credit Facility.
For the thirteen weeks ended June 27, 1996, the Company had capital
expenditures of $48,674,000, primarily for the development of new theatres and
the addition of screens at existing locations. The Company anticipates that
total capital expenditures, including assets that may be placed in sale and
leaseback or other comparable funding programs, will be approximately
$260,000,000 for fiscal 1997. The Company believes that cash generated from
operations, existing cash and cash equivalents and the unused commitment
amount under its Credit Facility will be sufficient to fund operating results
and planned capital expenditures for the next twelve months.
During the thirteen weeks ended June 27, 1996, various holders of the
Company's Cumulative Convertible Preferred Stock converted 671,900 shares into
1,158,351 shares of Common Stock. Preferred Stock dividend payments decreased
6.8%, or $119,000, from $1,750,000 for the thirteen weeks ended June 29, 1995
to $1,631,000 for the current period as a result of the conversions. Future
conversions will continue to reduce the amount of dividends paid by the
Company and increase the number of shares of Common Stock outstanding.
During the current fiscal year, the Company opened seven leased
theatres with 105 screens including its first international theatre, the Canal
City 13 in Fukuoka, Japan. In addition, the Company closed two leased
theatres with 12 screens resulting in a circuit total of 1,803 screens in 231
theatres as of June 27, 1996. The Company has under construction 7 new
leased theatre locations totaling 120 screens, 3 new owned theatres with 76
screens and additions to existing theatres for 16 new screens.
<PAGE>
PART II.
ITEM 1. LEGAL PROCEEDINGS - (OPEN)
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.
Counsel for the parties in the Derivative Action have entered into a
Memorandum of Understanding concerning a possible settlement providing for,
among other things (i) the discharge of claims against the defendants, (ii)
the nomination of two additional outside directors to serve on the Company's
Board of Directors and the voting of shares owned by Durwood family members
for such nominees in the same proportion as votes cast by all stockholders not
affiliated with the Company, its directors and officers, (iii) the sale by
members of the Durwood family in an underwritten secondary offering (which
will only be made by means of a prospectus) of 3 million shares of the
Company's common stock within 12 months after consummation of the proposed
merger referred to below, and (iv) the payment by defendants of an aggregate
of approximately $1.3 million to persons who were holders of Common Stock on
January 1, 1996, other than Durwood, Inc. or members of the Durwood family.
The obligation to nominate the additional outside directors would continue for
three years, and during this time such directors (serving on one or more
committees with not more than one existing director) would be empowered to
approve certain related transactions between the Company and members of the
Durwood family and certain other affiliates.
The Memorandum of Understanding is non-binding pending the completion of
certain discovery by plaintiffs and the execution by the parties and
submission to the Court of a formal Stipulation of Settlement incorporating
its terms. The Stipulation of Settlement will be conditioned upon
consummation of a proposed merger between the Company and Durwood, Inc., which
is presently being negotiated, and will require Court approval.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.1.Certificate of Incorporation of AMC Entertainment Inc. (1)
3.2.Certificate of Designations relating to $1.75 Cumulative
Convertible Preferred Stock (2)
3.3.Bylaws of AMC Entertainment Inc. (1)
3.4.Articles of Incorporation, as amended, of American Multi-Cinema,
Inc. (3)
3.5.Bylaws of American Multi-Cinema, Inc. (3)
3.6.Certificate of Incorporation, as amended, of AMC Philadelphia, Inc.
(3)
3.7.Bylaws of AMC Philadelphia, Inc. (3)
3.8.Certificate of Incorporation, as amended, of AMC Realty, Inc. (3)
3.9.Bylaws of AMC Realty, Inc. (3)
3.10.Certificate of Incorporation, as amended, of AMC Canton Realty,
Inc. (3)
3.11.Bylaws of AMC Canton Realty, Inc. (3)
3.12.Certificate of Incorporation, as amended, of Budco Theatres, Inc.
(3)
3.13.Bylaws of Budco Theatres, Inc. (3)
*10.1. Employment agreement between American Multi-Cinema, Inc. and
Richard M. Fay
*11.Computation of Per Share Earnings
(1) Incorporated by reference from Amendment No. 2 to AMCE's
Registration Statement on Form S-2 (File No. 33-51693) filed
February 18, 1994
(2) Incorporated by reference from AMCE's Form 8-K (File No. 01-12429)
dated April 7, 1994
(3) Incorporated by reference from AMCE's Form S-1 (File No. 33-48586)
filed June 12, 1992, as amended
* - Filed herewith
(b)Reports on Form 8-K
On May 6, 1996, the Company filed a Form 8-K reporting under Item 5 a
proposed merger of the Company with the Company's parent, Durwood, Inc.
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: July 31, 1996
/s/ Peter C. Brown
Peter C. Brown
Executive Vice President and
Chief Financial Officer
Date: July 31, 1996
/s/ Richard L. Obert
Richard L. Obert
Senior Vice President-
Chief Accounting and
Information Officer
<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 27, June 29,
1996 1995
PRIMARY EARNINGS PER SHARE
Net earnings (loss) $ (177) $ 4,416
Preferred dividends (1,546) (1,750)
Net earnings (loss) for common shares $(1,723) $ 2,666
Average shares for primary earnings per share:
Weighted average number of shares outstanding 16,817 16,468
Stock options whose effect is dilutive n/a (1) 193
Total shares outstanding 16,817 16,661
Primary earnings (loss) per share $ (.10) $0.16
FULLY DILUTED EARNINGS PER SHARE
Net earnings (loss) $ (177) $ 4,416
Preferred dividends (1,546) (1,750)
Net earnings (loss) for common shares $(1,723) $ 2,666
Average shares for fully diluted earnings per share:
Weighted average number of shares outstanding 16,817 16,468
Stock options whose effect is dilutive n/a (1) 262
Shares issuable upon conversion of
preferred stock n/a (1) n/a (1)
Total shares outstanding 16,817 16,730
Fully diluted earnings (loss) per share $ (.10) $ .16
(1) Shares from stock options and conversion of preferred stock are excluded
from the primary and fully diluted earnings per share calculation because they
are anti-dilutive.
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of April 16, 1996 by and
between American Multi-Cinema, Inc. (the "Company") and Richard M. Fay (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 as
President of AMC Film Marketing to the business of AMC Film Marketing and
its affiliates, as directed from time to time by the Chief Executive
Officer of the Company or its Board of Directors.
2. The Term. The term of Employee's employment with the Company
pursuant to this Agreement shall be from September 8, 1995 through
September 7, 1998, subject, however, to paragraph 9 of this Agreement (the
"Term").
3.Compensation. Employee shall be compensated at an annual base
salary of $275,000.00 payable bi-weekly 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 Chief Executive Officer of the Company.
During the first year of this Agreement, Employee shall receive an
additional $50,000 for costs associated with relocation. 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 Compensation Committee
of the Board of Directors of the Company upon the recommendation of the
Chief Executive Officer. 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
9(a) below. Employee shall also receive his appropriate share, if any, 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, 401(k) plan, stock purchase plans and the like, subject to the
eligibility provisions of each respective plan, as amended from time to
time.
4.Expense Reimbursement.
(a)During the Term of Employee's employment under this Agreement
the Company shall reimburse Employee for business travel and
entertainment expenses reasonably incurred by the Employee on behalf
of the Company in accordance with Company procedures.
(b)Company shall reimburse Employee for Employee's reasonable
approvable relocation costs.
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, 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 to anyone except in confidence and as is necessary to the
performance of his duties for the Company; (b) to keep such information
confidential; (c) to take appropriate precautions to maintain the
confidentiality of such information; 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 originals and copies of 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.Duty of Loyalty. Employee agrees that he will provide the
services contemplated under this Agreement only to and for the benefit of
the Company and its affiliates and not for his own benefit or the benefit
of any other person.
7.Non-Competition.
(a)During the Term of this Agreement and during Employee's
employment with the Company under any arrangement or nature whatsoever,
and for a period of six (6) months after the termination of Employee's
employment, Employee hereby covenants and agrees that he will not,
directly or indirectly, either individually or jointly or on behalf of
or in concert with any other person or entity, as a proprietor,
partner, shareholder, director, officer, employee, agent, consultant
or in any other capacity or manner whatsoever, engage in any business
activity competitive with the motion picture exhibition business of the
Company or its affiliates as constituted during the Term of this
Agreement and on the date of the termination of this Agreement,
including but not limited to film licensing or acquisition, site
selection, lease and contract negotiations, and coordination of the
execution of leases and other agreements for the operation of motion
picture theatres. During the Term of this Agreement and during
Employee's employment with the Company under any arrangement or nature
whatsoever, and for a period of six (6) months after termination of
Employee's employment, Employee hereby covenants and agrees that he
will not, directly or indirectly, either individually or jointly or on
behalf of or in concert with any other person or entity, as a
proprietor, partner, shareholder, director, officer, employee, agent,
consultant or in any other capacity or manner whatsoever, compete with
the Company for film licensing or acquisition selection, acquisition
or leasing of sites recommended to the Company by Employee.
(b)The parties acknowledge that irreparable damage will result
to the Company from any violation of paragraph 7(a) by Employee. The
parties expressly agree that, in addition to any and all remedies
available to the Company for any such violation, the Company shall have
the remedy of restraining order and injunction and any such equitable
relief as may be declared or issued by a court to enforce the
provisions of paragraph 7(a) and Employee agrees not to claim in any
such equitable proceeding that a remedy at law is available to the
Company. Notwithstanding anything contained herein to the contrary and
if, and only if, any provision of the type contained in paragraph 7(a)
is enforceable in the jurisdiction in question, if any one or more of
the provisions contained in paragraph 7(a) shall for any reason be held
to be excessively broad as to duration, geographical scope, activity
or subject, such provision shall be construed by limiting and reducing
it so as to be enforceable to the extent compatible with the applicable
law in such jurisdiction as it shall then appear.
8.Non-Interference. Employee agrees that during the Term of this
Agreement and during Employee's employment with the Company under any
arrangement or nature whatsoever, and for a period of two years after the
termination of Employee's employment, Employee will not (a) solicit,
entice or otherwise induce any employee of the Company or its affiliates
to leave the employ of the Company or its affiliates for any reason
whatsoever; (b) directly or indirectly aid, assist or abet any other person
or entity into soliciting, enticing or inducing any employee of the
Company or its affiliates to leave their employ or in hiring any employee
of the Company or its affiliates; or (c) interfere with any contractual or
other business relationship or expectancy between the Company or its
affiliates and their employees.
9.Termination; Severance.
(a)Termination Without Severance. The employment of Employee
with the Company shall terminate without severance upon Employee's
resignation or voluntary departure from AMC Film Marketing (except
under the circumstances described in paragraph 9(b) below),
Employee's death, the disability of Employee which renders him unable
to perform his usual and customary duties for a period of 180
consecutive days, a good faith determination of the Company or the
Board of Directors that Employee has been dishonest or has committed
a breach of trust respecting the Company, or (v) a good faith
determination of the Company or the Board of Directors that Employee
has breached a term of this Agreement.
(b)Termination With Severance.
(i)The employment of Employee with the Company may be
terminated with or without cause with severance at any time by the
Chief Executive Officer of the Company or the Board of Directors in
his or their sole discretion.
(ii)Upon any termination of Employee's employment pursuant to
this paragraph 9(b), the Company shall elect at its sole discretion
and pay to Employee one of the two alternative severance
compensation payments described in clause (A) or (B) below.
(ii)Installment Payments. An amount equal to the base salary
of Employee in effect at the time of termination, payable over the
remaining Term of Employee's employment hereunder pursuant to
paragraph 2 above, payable in advance at the beginning of each
month in equal monthly installments over such remaining term; or
(ii)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 9(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 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 the remaining Term following the date
of termination, excluding, however, any interest, dividends and other
income of Employee 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
remaining Term. Employee also agrees to send notice to the Company of any
employment obtained after the date of termination. Employee shall provide
to the Company all records and other documents which relate to his wages,
compensation or income for such one-year period other than interest,
dividends and other income generated by passive investment activities,
including but not limited to, check receipts, Form W-2s, Form 1099s and
Form K-1s.
(iii)Notwithstanding any provision of this Agreement to the
contrary, the aggregate value of all severance benefits received by
Employee under this paragraph 9(b) shall not exceed an amount (the
"Maximum Severance Amount") equal to 299% of Employee's base amount
of 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 s/s 280G; and (ii) the term
"base amount" shall have the meaning given to such term in such
s/s 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.
10.Survival. Upon termination of Employee's employment with the
Company, the respective rights and obligations of the Company and Employee
under sections 1, 2, 3 and 4 hereof shall cease. However, the Company's
and Employee's obligations under sections 5, 6, 7, 8 and 9 hereof shall
survive the termination of Employee's employment with the Company.
11.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 Chief Executive
Officer of the Company or the Board of Directors.
12.Notices. All notices, requests, demands or other communications
under this Agreement shall be in writing addressed as follows:
If to the Company, to:
AMC Entertainment
International, Inc.
106 West 14th Street
Suite 1700
Kansas City,
Missouri 64105
Attention: Stanley
H. Durwood
With a copy to:
R. F. Beagle, Esq.
Lathrop & Gage L.C.
2345 Grand Boulevard
Suite 2800
Kansas City,
Missouri 64108
(a) If to
Employee, to:
Richard M. Fay
AMC Film Marketing
21700 Oxnard Street
Suite 640
Woodland Hills,
California 91367
Any such notice, request, demand or other communication shall be
effective as of the date of actual delivery thereof. Either party may
change such notice address by written notice as provided herein.
13.Governing Law. This Agreement shall be governed by the laws of
the State of Missouri.
14.Entire Agreement. 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.
15.Severability. In the event one or more of the provisions
contained in this Agreement or any application thereof shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement or any other
application thereof shall not in any way be affected or impaired thereby.
16.Attorneys' Fees.The prevailing party in any dispute brought to
enforce, interpret or apply any of the provisions of this Agreement or in
any action for breach of this Agreement shall be entitled to their
attorneys' fees and costs.
17.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 not be assignable by one party without the
prior written consent of the other party. Paragraph headings herein have
no legal significance.
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:
"EMPLOYEE"
Name: Richard M. Fay
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Financial Statements of AMC Entertainment Inc. as of and for the
thirteen weeks ended June 27, 1996, 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> 3-MOS
<FISCAL-YEAR-END> APR-03-1997
<PERIOD-END> JUN-27-1996
<CASH> 10262
<SECURITIES> 0
<RECEIVABLES> 21405
<ALLOWANCES> 657
<INVENTORY> 0
<CURRENT-ASSETS> 45467
<PP&E> 649323
<DEPRECIATION> 254628
<TOTAL-ASSETS> 522724
<CURRENT-LIABILITIES> 111048
<BONDS> 219494
0
2219
<COMMON> 11813
<OTHER-SE> 143219
<TOTAL-LIABILITY-AND-EQUITY> 522724
<SALES> 49831
<TOTAL-REVENUES> 162443
<CGS> 9070
<TOTAL-COSTS> 134385
<OTHER-EXPENSES> 11674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4909
<INCOME-PRETAX> (302)
<INCOME-TAX> (125)
<INCOME-CONTINUING> (177)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (177)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
