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 July 3, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-8747
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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No ________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of Shares
Title of Each Class of Common Stock Outstanding as of July 3, 1997
Common Stock, 66 2/3 cents par value 7,221,504
Class B Stock, 66 2/3 cents par value 11,157,000
1
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
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 17
2
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<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Thirteen
Weeks Ended
July 3, June 27,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Revenues
Admissions $125,998 $106,285
Concessions 59,072 49,831
Other 9,392 5,811
------- --------
Total revenues 194,462 161,927
Expenses
Film exhibition costs 71,142 56,139
Concession costs 10,056 8,525
Other 78,472 68,157
------- --------
Total cost of operations 159,670 132,821
General and administrative 14,755 13,025
Depreciation and amortization 16,367 11,674
------- --------
Total expenses 190,792 157,520
------- --------
Operating income 3,670 4,407
Other expense (income)
Interest expense
Corporate borrowings 5,899 2,335
Capital lease obligations 2,346 2,574
Investment income (172) (182)
Gain on disposition of assets (1,178) (18)
------- --------
Loss before income taxes (3,225) (302)
Income tax provision (1,386) (125)
------- --------
Net loss $ (1,839) $ (177)
======= ========
Preferred dividends 1,369 1,546
------- --------
Net loss for common shares $ (3,208) $ (1,723)
======= ========
Loss per share:
Primary $ (.18) $ (.10)
======= ========
Fully diluted $ (.18) $ (.10)
======== ========
See Notes to Consolidated Financial Statements
3
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<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
July 3, April 3,
1997 1997
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and equivalents $ 24,245 $ 24,715
Receivables, net of allowance for
doubtful accounts of
$735 as of July 3, 1997 and $704
as of April 3, 1997 70,140 42,188
Other current assets 18,593 16,769
------- --------
Total current assets 112,978 83,672
Property, net 624,220 543,058
Intangible assets, net 27,681 28,679
Other long-term assets 67,850 62,804
------- --------
Total assets $832,729 $718,213
======= =======
LIABILITIES AND STOCKHOLDERS= EQUITY
Current liabilities:
Accounts payable $105,187 $ 88,367
Accrued expenses and other liabilities 51,805 42,459
Current maturities of corporate borrowings
and capital lease obligations 3,610 3,441
------- --------
Total current liabilities 160,602 134,267
Corporate borrowings 404,450 315,046
Capital lease obligations 54,167 55,237
Other long-term liabilities 46,973 43,651
------- --------
Total liabilities 666,192 548,201
Stockholders' equity:
$1.75 Cumulative Convertible Preferred Stock,
66 2/3 cents par value;
2,933,800 shares issued and outstanding as
of July 3, 1997 and 3,303,600
shares issued and outstanding as of
April 3, 1997 (aggregate liquidation
preference of $73,345 as of July 3, 1997 and
$82,590 as of April 3, 1997) 1,956 2,202
Common Stock, 66 2/3 cents par value; 7,242,004
shares issued as of
July 3, 1997 and 6,604,469 shares issued as
of April 3, 1997 4,828 4,403
Convertible Class B Stock, 66 2/3 cents par value;
11,157,000 shares issued
and outstanding 7,438 7,438
Additional paid-in capital 107,602 107,781
Foreign currency translation adjustment (2,295) (2,048)
Retained earnings 47,377 50,605
------- --------
166,906 170,381
Less - Common Stock in treasury, at cost,
20,500 shares as of July 3, 1997 and April 3, 1997 369 369
------- --------
Total stockholders' equity 166,537 170,012
------- --------
Total liabilities and stockholders' equity $832,729 $718,213
======= =======
See Notes to Consolidated Financial Statements.
4
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<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Thirteen
Weeks Ended
July 3, June 27,
1997 1996
---- ----
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,839) $ (177)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 16,367 11,674
Gain on sale of other long-term assets (1,178) (18)
Change in assets and liabilities:
Receivables (1,040) 636
Other current assets (1,824) 722
Accounts payable 8,788 9,145
Accrued expenses and other liabilities 12,169 (3,623)
Other, net (213) 366
-------- --------
Total adjustments 33,069 18,902
-------- --------
Net cash provided by operating activities 31,230 18,725
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (94,162) (48,674)
Net change in refundable construction advances (26,912) (881)
Proceeds from disposition of long-term assets 2,446 -
Other, net (7,934) (3,144)
-------- --------
Net cash used in investing activities (126,562) (52,699)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility 90,000 35,000
Principal payments under capital
lease obligations and other (877) (604)
Cash overdrafts 8,032 535
Proceeds from exercise of stock options - 141
Dividends paid on preferred stock (1,389) (1,631)
Deferred financing costs and other (635) -
-------- --------
Net cash provided by financing activities 95,131 33,441
-------- --------
Effect of exchange rate changes on cash
and equivalents (269) -
-------- --------
NET DECREASE IN CASH AND EQUIVALENTS (470) (533)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 24,715 10,795
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 24,245 $ 10,262
======== ========
5
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<CAPTION>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Thirteen
Weeks Ended
July 3, June 27,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized
of $1,859 and $368) $ 4,795 $ 5,093
Income taxes paid (refunded) 4,994 (3,222)
See Notes to Consolidated Financial Statements.
6
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AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 3, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
AMC Entertainment Inc. ("AMCE") is a holding company which, 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 and
Portugal. The Company is also involved in the business of providing on-
screen advertising and other services to AMC and other theatre circuits
through a wholly-owned subsidiary, National Cinema Network, Inc. ("NCN").
Prior to fiscal 1998, NCN was consolidated with the Company as of a
fiscal period end that was one month earlier than the Company' fiscal period
end. Beginning in fiscal year 1998, this one-month reporting lag was
eliminated and NCN results include activity for four months.
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 (53
weeks) ended April 3, 1997. 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 July 3, 1997, are
not necessarily indicative of the results to be expected for the fiscal year
(52 weeks) ending April 2, 1998.
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 per share is computed by dividing net earnings 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 18,006,000 for
the thirteen weeks ended July 3, 1997 and 16,817,000 for the thirteen weeks
ended July 27, 1996. On a fully diluted basis, net earnings and shares
outstanding are adjusted to assume conversion of the $1.75 Cumulative
Convertible Preferred Stock, if dilutive. The average shares used in the
computations were 18,006,000 for the thirteen weeks ended July 3, 1997 and
16,817,000 for the thirteen weeks ended June 27, 1996.
NOTE 3 - MERGER WITH PARENT
The Board of Directors has approved an agreement (the "Merger
Agreement") providing for the merger of the Company and its principal
stockholder, Durwood, Inc. ("DI"), with the Company remaining as the
surviving entity (the "Merger"). The Merger has been sought by members of
the Durwood family so that they may hold their interests in the Company
directly instead of indirectly through DI and a related entity. In the
Merger, stockholders of DI would exchange their shares of DI stock for shares
of the Company's stock. Although the outstanding shares of the Company's
Common Stock will increase and the outstanding shares of its Class B Stock
will decrease if the Merger is effected, no aggregate increase in total
outstanding shares will occur because the shares of the Company owned by DI
will be canceled and the shares of the Company held by other stockholders
would not be exchanged in the Merger.
A special meeting of the stockholders of the Company will be held on
August 15, 1997. At the meeting, holders of the Company's Common Stock and
Class B Stock will be asked to approve and adopt the Merger Agreement. A
condition to the Merger is that the Merger Agreement receive approval of the
holders of a majority of the shares of Common Stock other than DI, the
Durwood family, their spouses and children and officers and directors of the
Company.
DI is primarily a holding company with no significant operations or
assets other than its equity interest in the Company. The Merger will be
accounted for as a corporate reorganization and the recorded balances for
consolidated assets, liabilities, total stockholders' equity and results of
operations of the Company will not be affected. If the Merger occurs, the
Company will be responsible for paying 50% of its costs in connection with
the Merger; the aggregate merger costs for both the Company and DI are
estimated to be approximately $2 million. Management does not believe that
the transaction will have a significant effect on the Company's financial
condition, liquidity or capital resources.
<TABLE>
<CAPTION>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Operating Results
Set forth in the table below is a summary of revenues, cost of
operations, general and administrative expenses and depreciation and
amortization, attributable to the Company's domestic and international
theatrical exhibition operations and the Company's on-screen advertising
business.
Thirteen
Weeks Ended
July 3, June 27,
1997 1996 Change
---- ----
(Dollars in thousands)
REVENUES
<S> <C> <C> <C>
Domestic
Admissions $121,312 $105,089 15.4%
Concessions 58,086 49,684 16.9
Other 3,434 2,861 20.0
------- ------- -----
182,832 157,634 16.0
International
Admissions 4,686 1,196 *
Concessions 986 147 *
Other 47 - -
------- ------- -----
5,719 1,343 *
On-screen advertising and other 5,911 2,950 *
------- ------- -----
Total revenues $194,462 $161,927 20.1%
======= ======= ======
COST OF OPERATIONS
Domestic
Film exhibition costs $ 68,660 $ 55,565 23.6%
Concession costs 9,642 8,481 13.7
Rent 20,980 17,566 19.4
Other 50,125 46,427 8.0
------- ------- -----
149,407 128,039 16.7
International
Film exhibition costs 2,482 574 *
Concession costs 414 44 *
Rent 1,474 661 *
Other 1,504 856 75.7
------- ------- -----
5,874 2,135 *
On-screen advertising and other 4,389 2,647 65.8
------- ------- -----
Total cost of operations $159,670 $132,821 20.2%
======= ======= ======
GENERAL AND ADMINISTRATIVE
Corporate and domestic $ 11,626 $ 10,486 10.9%
International 1,478 1,490 (0.8)
On-screen advertising and other 1,651 1,049 57.4
------- ------- ------
Total general and administrative $ 14,755 $ 13,025 13.3%
======= ======= ======
DEPRECIATION AND AMORTIZATION
Corporate and domestic $ 15,146 $ 11,102 36.4%
International 616 169 *
On-screen advertising and other 605 403 50.1%
------- ------- -------
Total depreciation and amortization $ 16,367 $ 11,674 40.2%
======= ======= ======
* Percentage change in excess of 100%
</TABLE>
Thirteen Weeks Ended July 3, 1997 and June 27, 1996
The forward-looking statements included in this section, which reflect
management's best judgment based on factors currently known, involve risks
and uncertainties. Actual results could differ materially from those
anticipated in the forward-looking statements included herein as a result of
a number of factors, including but not limited to the Company's ability to
enter into various financing programs, competition from other companies,
changes in economic climate, increase in demand for real estate, demographic
changes, changes in real estate, zoning and tax laws, the ability to open new
theatres and screens as currently planned, the performance of films licensed
by the Company and other risks and uncertainties.
Revenues. Total revenues increased 20.1%, or $32,535,000, during the thirteen
weeks ended July 3, 1997 compared to the thirteen weeks ended June 27, 1996.
Total domestic revenues increased 16.0%, or $25,198,000, from the prior year.
Admissions revenues increased 15.4%, or $16,223,000, due to a 9.9% increase
in attendance, which contributed $10,411,000 of the increase, and a 5.0%
increase in average ticket prices, which contributed $5,812,000 of the
increase. The increase in attendance was due primarily to the Company's
megaplex theatres (theatres having at least 14 screens with predominately
stadium-style seating). Attendance at megaplex theatres increased during the
quarter as a result of the addition of 12 new megaplex theatres with 266
screens since June 27, 1996 and a 7.5% increase in attendance at comparable
megaplex theatres, theatres opened before the first quarter of the prior
fiscal year. The increase in attendance from megaplex theatres was partially
offset by a 5.4% decrease in attendance at comparable multiplex theatres
(theatres generally without stadium-style seating and having less than 14
screens) and the closure or sale of 16 theatres with 82 screens since the
first quarter of fiscal 1997. The decline in attendance at comparable
multiplex theatres was due primarily to competition from megaplex theatres in
areas where the Company's multiplex theatres operate, a trend which the
Company anticipates will continue, and the overall performance of film
product. The increase in average ticket prices was due to price increases and
the growing number of megaplexes in the Company's circuit, which yield higher
average ticket prices than multiplexes. Concessions revenues at domestic
theatres increased by 16.9%, or $8,402,000, due to the increase in total
attendance, which contributed $4,922,000 of the increase, and a 6.4% increase
in average concessions per patron, which contributed $3,480,000 of the
increase. The increase in average concessions per patron was attributable
to the increasing number of megaplexes in the Company's circuit, where
concession spending per patron is higher than multiplex theatres.
Total international revenues increased $4,376,000 from the prior year.
Admissions revenues increased $3,490,000 due to an increase in attendance,
which contributed $8,551,000 of the increase, offset by a decrease in average
ticket prices which reduced revenues by $5,061,000. Attendance increased as
a result of the opening of the Company's second international theatre, the
Arrabida 20 in Portugal, during the third quarter of fiscal 1997.
Concessions revenues increased by $839,000 due to the increase in total
attendance, which contributed $1,051,000 of the increase, offset by a
decrease in average concessions per patron, which reduced revenues by
$212,000. The decrease in average ticket prices and concessions per patron
was due to the lower ticket and concessions prices at the theatre in Portugal
compared to the theatre in Japan.
On-screen advertising and other revenues increased $2,961,000 due to a change
in the number of periods included in the results of operations of the
Company's on-screen advertising business and an increase in the number of
screens served, a result of its expansion program.
Cost of Operations. Total cost of operations increased 20.2%, or
$26,849,000, during the thirteen weeks ended July 3, 1997 compared to the
thirteen weeks ended June 27, 1996.
Total domestic cost of operations increased 16.7%, or $21,368,000, from the
prior year. Film exhibition costs increased 23.6%, or $13,095,000, due to
higher attendance, which contributed $8,200,000 of the increase, and an
increase in the percentage of admissions paid to film distributors, which
caused an increase of $4,895,000. As a percentage of admissions revenues,
film exhibition costs increased to 56.6% in the current year as compared with
52.9% in the prior year. This increase was due to a change in attendance
patterns and the popularity of films released during the period which had
higher film exhibition terms. Attendance was more concentrated in the early
weeks for the films released during the current period, which typically
results in higher film exhibition costs. The 13.7%, or $1,161,000, increase
in concession costs is attributable to the increase in concessions revenues.
As a percentage of concessions revenues, concession costs decreased from
17.1% to 16.6%. Rent expense increased 19.4%, or $3,414,000, due to the
higher number of screens in operation. Other cost of operations increased
8.0%, or $3,698,000. As a percentage of total revenues, other cost of
operations decreased from 29.5% in the prior year to 27.4% in the current
year, primarily as a result of more effective staffing at the Company's
theatres.
Total international cost of operations increased $3,739,000 from the prior
year. Film exhibition costs increased $1,908,000 due primarily to higher
attendance. The $370,000 increase in concession costs was primarily
attributable to the increase in concessions revenues. Rent expense increased
$813,000 and other cost of operations increased $648,000 from the prior year
due to the opening of the Arrabida 20 during the third quarter of fiscal
1997.
On-screen advertising and other cost of operations increased $1,742,000 as a
result of a change in the number of periods included in the results of
operations of the Company's on-screen advertising business and the higher
number of screens served.
General and Administrative. General and administrative expenses increased
13.3%, or $1,730,000, during the thirteen weeks ended July 3, 1997.
Corporate and domestic general and administrative expenses increased 10.9%,
or $1,140,000, due primarily to increases in salaries, costs associated with
modification of computer applications for the "Year 2000" and beyond and
costs associated with the Company's development of theatres.
General and administrative expenses associated with on-screen advertising and
other increased 57.4%, or $602,000, due to a change in the number of periods
included in the results of operations of the Company's on-screen advertising
business and an increase in payroll and related costs to support its
expansion program.
Depreciation and Amortization. Depreciation and amortization increased
40.2%, or $4,693,000, during the thirteen weeks ended July 3, 1997. This
increase was caused by an increase in employed theatre assets resulting from
the Company's expansion plan.
Operating Income. Operating income decreased 16.7%, or $737,000, during the
thirteen weeks ended July 3, 1997. The decrease in operating income was
primarily attributable to the attendance and revenue decline at multiplex
theatres, an increase in film exhibition costs as a percentage of admissions
revenues and the increases in depreciation and amortization and general and
administrative expenses, the effects of which were partially offset by an
increase in attendance and revenues at megaplex theatres.
Interest Expense. Interest expense increased 68.0%, or $3,336,000, during
the thirteen weeks ended July 3, 1997 compared to the prior year. The
increase in interest expense resulted primarily from an increase in average
outstanding borrowings.
Gain on Disposition of Assets. Gain on disposition of assets increased
$1,160,000 during the thirteen weeks ended July 3, 1997 from the sale of one
of the Company's multiplex theatres during the current year.
Income Tax Provision. The provision for income taxes decreased $1,261,000 to
a benefit of $1,386,000 during the current year from a benefit of $125,000 in
the prior year. The effective tax rate was 43.0% during the current year
compared to 41.4% in the prior year.
Net Loss. Net loss increased $1,662,000 during the thirteen weeks ended July
3, 1997 to $1,839,000 from $177,000 in the prior year. Net loss per common
share, after deducting preferred dividends, was $.18 compared to $.10 for the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues are collected in cash, principally through box office
admissions and theatre concessions 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 admissions revenues. The
Company is only occasionally required to make advance payments or non-
refundable guarantees of film rentals. Film distributors generally release
during the summer and holiday seasons the films which they anticipate will be
the most successful. Consequently, the Company typically generates higher
revenues during such periods. Cash flows from operating activities, as
reflected in the Consolidated Statements of Cash Flows, were $31,230,000 and
$18,725,000 for the thirteen weeks ended July 3, 1997 and June 27, 1996,
respectively.
During the current fiscal year, the Company had capital expenditures and net
increases in refundable construction advances of $94,162,000 and $26,912,000,
respectively, primarily for the development of new theatres and the addition
of screens at existing locations. The Company has continued its expansion
plan by opening 3 megaplex theatres with 74 screens and one multiplex theatre
with 6 screens and expanding an existing multiplex theatre by 10 screens. In
addition, the Company closed or sold 3 multiplex theatres with 18 screens
resulting in a circuit total of 21 megaplex theatres with 440 screens and 209
multiplex theatres with 1,591 screens as of July 3, 1997.
The Company has plans to open approximately 700 screens during fiscal 1998.
If these planned screens are opened as scheduled, the Company estimates that
total capital expenditures for fiscal 1998 will aggregate approximately $400
million. Included in these amounts are assets which the Company may place
into sale/leaseback or other comparable financing programs which will have
the effect of reducing the Company's net cash outlays. As of July 3, 1997,
the Company had under construction 26 megaplex theatres with 608 screens and
2 multiplex theatres with 25 screens.
The Company maintains a $425 million credit facility (the "Credit Facility"),
which was amended and restated as of April 10, 1997. The Credit Facility
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 .1875% to .375% on the unused portion of the commitment.
The Credit Facility matures in 2004. The commitment thereunder will reduce by
$25 million on each of December 31, 2002, March 31, 2003, June 30, 2003 and
September 30, 2003 and by $50 million on December 31, 2003. As of July 3,
1997, the Company had outstanding borrowings of $200,000,000 under the Credit
Facility at an average interest rate of 6.5% per annum.
Covenants of the Credit Facility impose limitations on indebtedness, creation
of liens, change of control, transactions with affiliates, mergers,
investments, guaranties, asset sales, dividends, business activities and
pledges. As of July 3, 1997, the Company was in compliance with all financial
covenants relating to the Credit Facility.
Prior to its April 10, 1997 amendment and restatement, the Credit Facility
contained a covenant that generally limited the Company's capital
expenditures. This covenant has been eliminated.
On March 19, 1997, the Company sold $200 million aggregate principal amount
of 9 1/2% Senior Subordinated Notes due 2009 (the "Notes"). The Note
Indenture requires the Company to use its best efforts to consummate a
registered offer to exchange the Notes (the "Exchange Offer") for notes of
AMCE with terms identical in all material respects to the Notes. If the
Exchange Offer is not effected by September 15, 1997, the interest rate on
the Notes will increase by .50% following such date until the Exchange Offer
is consummated. The Company expects the Exchange Offer will be consummated
on or around September 5, 1997.
The Company believes that cash generated from operations, existing cash and
equivalents, amounts received from sale/leaseback or other comparable
financing programs which the Company is currently pursuing and the unused
commitment amount under its Credit Facility will be sufficient to fund
operations and planned capital expenditures for the next twelve months.
During the thirteen weeks ended July 3, 1997, various holders of the
Company's $1.75 Cumulative Convertible Preferred Stock (the "Convertible
Preferred Stock") converted 369,800 shares into 637,535 shares of Common
Stock at a conversion rate of 1.724 shares of Common Stock for each share of
Convertible Preferred Stock. Convertible Preferred Stock dividend payments
decreased 14.8%, or $242,000, to $1,389,000 for the thirteen weeks ended July
3, 1997 from $1,631,000 in the prior year 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.
OTHER
On July 24, 1997, the Company announced the formation of a joint venture with
Planet Hollywood International, Inc. to develop, own and operate an
integrated moviegoing, dining and retail concept worldwide. The new
complexes, which will be branded "Planet Movies by AMC", will combine the
Company's megaplex theatre concept with Planet Hollywood-theming, as well as
additional dining, retail and entertainment opportunities.
RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS
During fiscal 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings per Share.
SFAS 128 eliminates the presentation of primary and fully diluted earnings
per share ("EPS") and requires presentation of basic and diluted EPS. The
principal difference between primary and basic EPS is that common stock
equivalents are not included with the weighted average number of shares
outstanding used in the computation of basic EPS. Diluted EPS is computed
similarly to fully diluted EPS. SFAS 128 is effective for periods ending
after December 15, 1997, including interim periods, and requires restatement
of all prior-period EPS data. Early adoption is not permitted. The Company
plans to adopt SFAS 128 during the third quarter of fiscal 1998. The impact
of adopting SFAS 128 on primary and fully diluted loss per share for the
thirteen weeks ended July 3, 1997 and June 27, 1996 is not expected to be
material.
During fiscal 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting
Comprehensive Income, and Statement of Financial Accounting Standards No. 131
("SFAS 131"), Disclosures About Segments of an Enterprise and Related
Information. SFAS 130 requires disclosure of comprehensive income and its
components in a company's financial statements and is effective for fiscal
years beginning after December 15, 1997. SFAS 131 requires new disclosures
of segment information in a company's financial statements and is effective
for fiscal years beginning after December 15, 1997. The Company is currently
evaluating the financial statement impact of adopting SFAS 130 and SFAS 131.
PART II.
ITEM 1. 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). There have been no
material developments in this litigation since it was last reported on in the
Company's Form 10-K for the fiscal year ended April 3, 1997.
From time to time the Company is involved in various legal proceedings
arising from the ordinary course of its business operations, such as personal
injury claims, employment matters and contractual disputes. The Company
believes that its potential liability with respect to proceedings currently
pending is not material in the aggregate to the Company's consolidated
financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
2.1. Agreement and Plan of Merger dated as of March 31, 1997
between AMC Entertainment Inc. and Durwood, Inc.
(Incorporated by reference from Exhibit 2.1 to AMCE's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
2.2. Form of Stock Agreement to be entered into among AMC
Entertainment Inc. and Stanley H. Durwood, Carol D.
Journagan, Edward D. Durwood, Thomas A. Durwood, Elissa D.
Grodin, Brian H. Durwood and Peter J. Durwood ("Durwood
Family Stockholders") (Incorporated by reference from Exhibit
2.2 to AMCE's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
2.3. Form of Registration Agreement to be entered into between AMC
Entertainment Inc. and the Durwood Family Stockholders
(Incorporated by reference from Exhibit 2.3 to AMCE's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
2.4.(a) Indemnification Agreement dated as of March 31, 1997 among
AMC Entertainment Inc., the Durwood Family Stockholders and
Delta Properties, Inc. (Incorporated by reference from
Exhibit 2.4.(a) to AMCE's Registration Statement on Form S-4
(File No. 333-25755) filed April 24, 1997).
2.4.(b) Durwood Family Settlement Agreement (Incorporated by
reference from Exhibit 99.1 to Schedule 13-D of Durwood, Inc.
and Stanley H. Durwood filed May 7, 1996).
2.4.(c) First Amendment to Durwood Family Settlement Agreement
(Incorporated by reference from Exhibit 2.4.(c) to AMCE's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
3.1. Amended and Restated Certificate of Incorporation of AMC
Entertainment Inc. (Incorporated by reference from Exhibit
3.1 to Amendment No. 2 to AMCE's Registration Statement on
Form S-2 (File No. 33-51693) filed February 18, 1994).
3.2. Certificate of Designations relating to $1.75 Cumulative
Convertible Preferred Stock (Incorporated by reference from
Exhibit 4.1 to AMCE's Form 8-K (File No. 1-8747) dated
April 8, 1994).
3.3. Bylaws of AMC Entertainment Inc. (Incorporated by reference
from Exhibit 3.3 to AMCE's Form 10-Q (File No. 0-12429) for
the quarter ended December 26, 1996).
4.1. Amended and Restated Credit Agreement dated as of April 10,
1997, among AMC Entertainment Inc., as the Borrower, The Bank
of Nova Scotia, as Administrative Agent and Bank of America
National Trust and Savings Association, as Documentation
Agent and Various Financial Institutions, as Lenders,
together with the following exhibits thereto; significant
subsidiary guarantee, form of notes, form of pledge agreement
and form of subsidiary pledge agreement. (Incorporated by
reference from Exhibit 4.3 to AMCE's Registration Statement
on Form S-4 (File No. 333-25755) filed April 24, 1997).
4.2. First Supplemental Indenture respecting AMC Entertainment
Inc.'s 9 1/2% Senior Subordinated Notes due 2009.
(Incorporated by reference from Exhibit 4.4(b) to Amendment
No. 2 to AMCE's Registration Statement on Form S-4 (File No.
333-29155) filed August 4, 1997).
*11. Computation of Per Share Earnings.
*27. Financial Data Schedule
_______
* Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed or required to be filed for the
thirteen weeks ended July 3, 1997.
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 14, 1997 /s/ Peter C. Brown
Peter C. Brown
President and Chief Financial
Officer
Date: August 14, 1997 /s/ Richard L. Obert
Richard L. Obert
Senior Vice President-
Chief Accounting and
Information Officer
<TABLE>
<CAPTION>
EXHIBIT 11.
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
Thirteen
Weeks Ended
July 3, June 27,
1997 1996
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Net loss $ (1,839) $ (177)
Preferred dividends (1,369) (1,546)
------- -------
Net loss for common shares $ (3,208) $ (1,723)
Average shares for primary earnings per share:
Weighted average number of
shares outstanding 18,006 16,817
Stock options whose effect is dilutive n/a(1) n/a(1)
-------- -------
Total shares outstanding 18,006 16,817
======== =======
Primary loss per share $ (.18) $ (.10)
======= ========
FULLY DILUTED EARNINGS PER SHARE
Net loss $ (1,839) $ (177)
Preferred dividends (1,369) (1,546)
Net loss for common shares $ (3,208) $ (1,723)
Average shares for fully diluted earnings per share:
Weighted average number of
shares outstanding 18,006 16,817
Stock options whose effect is dilutive n/a(1) n/a(1)
Shares issuable upon conversion of
preferred stock n/a(1) n/a(1)
------- -------
Total shares outstanding 18,006 16,817
======== =========
Fully diluted loss per share $ (.18) $ (.10)
======== =========
(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.
</TABLE>
<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 July 3, 1997 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-02-1998
<PERIOD-END> JUL-03-1997
<CASH> 24,245
<SECURITIES> 0
<RECEIVABLES> 70,875
<ALLOWANCES> 735
<INVENTORY> 0
<CURRENT-ASSETS> 112,978
<PP&E> 915,859
<DEPRECIATION> 291,639
<TOTAL-ASSETS> 832,729
<CURRENT-LIABILITIES> 160,602
<BONDS> 458,617
0
1,956
<COMMON> 12,266
<OTHER-SE> 152,315
<TOTAL-LIABILITY-AND-EQUITY> 832,729
<SALES> 59,072
<TOTAL-REVENUES> 194,462
<CGS> 10,056
<TOTAL-COSTS> 159,670
<OTHER-EXPENSES> 16,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,245
<INCOME-PRETAX> (3,225)
<INCOME-TAX> (1,386)
<INCOME-CONTINUING> (1,839)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,839)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
