<PAGE> 1
Filed pursuant to Rule 424(b)(1)
Registration Statement No. 33-56143
PROSPECTUS
2,500,000 SHARES
[GRAPHIC]
CARMIKE CINEMAS
CLASS A COMMON STOCK
---------------------
All the shares of Class A Common Stock, par value $.03 per share (the
"Class A Common Stock"), offered hereby are being offered by Carmike Cinemas,
Inc., a Delaware corporation (the "Company").
The Class A Common Stock has one vote per share, while the Class B Common
Stock of the Company, par value $.03 per share (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock"), has ten votes per
share. Upon completion of this offering, the Patrick Family (as hereinafter
defined), which holds all of the Class B Common Stock, will have approximately
60.6% of the combined voting power of all outstanding shares of capital stock of
the Company (approximately 59.7% if the Underwriters' over-allotment option is
exercised in full). For information with respect to such voting rights and
certain other features of the Class A Common Stock as compared to the Class B
Common Stock, see "Description of Capital Stock."
The Company's Class A Common Stock is listed on the New York Stock Exchange
and currently trades under the symbol "CKE." On November 17, 1994, the last
reported sale price of the Class A Common Stock on the New York Stock Exchange
was $21 3/8 per share. See "Price Range of Class A Common Stock and Dividend
Policy."
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS, SEE "INVESTMENT CONSIDERATIONS."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------
Per Share........................ $21.375 $1.125 $20.25
- ------------------------------------------------------------------------------------------------
Total(3)......................... $53,437,500 $2,812,500 $50,625,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $350,000.
(3) The Company has granted the several Underwriters an option to purchase up to
an additional 375,000 shares of Class A Common Stock to cover
over-allotments. If all of such shares are purchased, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $61,453,125,
$3,234,375 and $58,218,750, respectively. See "Underwriting."
---------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Class A Common Stock will be made in New York, New
York on or about November 28, 1994.
---------------------
MERRILL LYNCH & CO. THE ROBINSON-HUMPHREY
COMPANY, INC.
---------------------
The date of this Prospectus is November 17, 1994.
<PAGE> 2
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Class A Common Stock offered hereby. This Prospectus
constitutes a part of the Registration Statement and does not contain all the
information set forth therein, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Any statements
contained herein concerning the provisions of any contract or other document are
not necessarily complete and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference. For further information regarding
the Company and the securities offered hereby, reference is made to the
Registration Statement and to the exhibits thereto.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Commission. The Registration Statement (with exhibits), as well as such reports,
proxy statements, and other information filed by the Company with the
Commission, may be inspected and copied at the public reference facilities
maintained by the Commission at its principal offices at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Commission: 7 World Trade Center, 13th Floor, New York,
New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates. The Company's Class A Common Stock is listed on the New
York Stock Exchange (the "NYSE"), and the aforementioned material can also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents heretofore filed by the Company with the Commission
(File No. 0-14993) pursuant to the Exchange Act, are incorporated and made a
part of this Prospectus by reference, except as superseded or modified herein:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994, June 30, 1994 and September 30, 1994;
3. The Company's Current Report on Form 8-K dated May 20, 1994, as
filed with the Commission on June 2, 1994 and as amended on July 12, 1994;
and
4. The Company's Current Report on Form 8-K dated October 12, 1994, as
filed with the Commission on October 13, 1994.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act prior to the termination of the offering
made hereby shall be deemed to be incorporated by reference in this Prospectus
and shall be part hereof from the date of filing of such documents. Any
statement contained herein or in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
herein (not including exhibits to those documents unless such exhibits are
specifically incorporated by reference into the information incorporated into
this Prospectus). Requests for such copies should be directed to Mr. John O.
Barwick, III, Vice President -- Finance, Carmike Cinemas, Inc., 1301 First
Avenue, Columbus, Georgia 31901, (706) 576-3400.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S CLASS
A COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) included
elsewhere in this Prospectus or in documents incorporated by reference in this
Prospectus. As used in this Prospectus, the "Company" or "Carmike" refers to
Carmike Cinemas, Inc. and its subsidiaries, unless the context otherwise
indicates. Carmike(R) and Carmike Cinemas(R) are registered trademarks of the
Company. Unless otherwise indicated, the information in this Prospectus does not
give effect to the exercise of the Underwriters' over-allotment option.
THE COMPANY
Carmike Cinemas, Inc. is the second largest motion picture exhibitor in the
United States, in terms of number of theatres and screens operated. As of
September 30, 1994, the Company operated 444 theatres with an aggregate of 1,906
screens located in 31 states. Since its initial public offering in 1986, Carmike
has increased the number of screens it operates from 436, primarily through
acquisitions, doubling its number of screens between 1990 and 1994 alone. The
Company has a record of successfully integrating acquired theatres into its
system and improving their profitability and operating margins, while incurring
only slight increases in general and administrative costs. During the seven
fiscal years since its initial public offering, the Company has increased
revenues and operating cash flow by 187% and 204%, respectively, while
maintaining operating cash flow margins within a range of 19% to 23%.
The Company pursues a growth strategy of selectively acquiring and building
theatres and implements an operating strategy of centralized management of
multi-screen theatres. As a result, Carmike has grown from a regional exhibitor
located primarily in the Southern United States to a geographically diversified
exhibitor in 31 states nationwide. In evaluating expansion opportunities, the
Company generally targets markets in which it can achieve a dominant position as
the sole or leading motion picture exhibitor in the film licensing zones of the
target market. A film licensing zone is a geographic area, established by film
distributors, where they allocate a given film to only one theatre. The Company
currently serves more than 300 film licensing zones nationwide and is the sole
exhibitor in approximately 60% of its zones. Additionally, the Company is the
leading exhibitor (owning 50% or more of the screens in a given zone) in
approximately 80% of its film licensing zones.
As a result of the Company's dominant position in its markets and the
overall size of the Company's operations, Carmike believes that it commands
significant purchasing power in its negotiations with movie distributors and
concession suppliers. For example, in film licensing zones where the Company has
little competition, Carmike obtains film licenses by selecting the best films
from among those offered versus more competitive markets where the Company is
allocated its films or, in rare circumstances, bids for its films. When making
concession purchases, Carmike buys in bulk because of its overall size and
national presence.
The Company's integrated proprietary management information system ("MIS")
gives management immediate access to comprehensive operating data which it
reviews on a daily basis. Senior management can then quickly react to profit and
staffing information and perform the majority of theatres' administrative
functions, thereby enabling the theatre manager to focus on the day-to-day
operations of the theatre. Management believes that the Company's extensive use
of its MIS will continue to allow the Company to expand significantly its number
of screens with minimal increases in general and administrative expenses.
The Company focuses on acquiring, developing and operating multi-screen
theatres. Since 1986, Carmike has raised its percentage of multi-screen theatres
to approximately 99% of the Company's screens. Management believes that this
strategy allows for maximization of operating cash flow while simultaneously
decreasing operating risk. Operating costs are less because multiple screens can
be serviced from a common support area and film start times can be staggered,
allowing for efficient staffing. Multiple screens also allow the Company to
maximize attendance and revenue by moving films to smaller auditoriums as demand
declines. Finally, film-buying risk can be reduced by offering a larger number
of features that appeal to a wider variety of the public.
3
<PAGE> 4
The domestic theatre exhibition industry is comprised of approximately 400
exhibitors, approximately 120 of which operate ten or more screens. There has
been significant consolidation in the industry since 1986, and management
believes that this trend will continue. From December 1985 to May 1994, the top
ten motion picture exhibitors increased their control of theatres in the United
States from 27% to 49%.
Carmike's history of successful growth, through acquiring and building
theatres and screens, has moved the Company from the sixth largest exhibitor of
first-run movies, in terms of screens operated, in 1986 to currently the second
largest. During that period, aggregate attendance at the Company's theatres has
grown from approximately 15.0 million in 1986 to approximately 45.5 million in
1993. By continuing to pursue its strategy of measured expansion and rigorous
financial control, management believes that Carmike can continue its growth and
will, over time, become the largest operator of motion picture screens in the
United States.
THE OFFERING
Class A Common Stock
offered hereby............. 2,500,000 shares
Common Stock outstanding
after the offering:
Class A Common Stock..... 9,353,101 shares
Class B Common Stock..... 1,420,700 shares
----------
Total................. 10,773,801 shares
----------
----------
Voting rights.............. The holders of Class A Common Stock are entitled
to one vote per share and the holders of Class B
Common Stock to ten votes per share. Each share
of Class B Common Stock is convertible at any
time into one share of Class A Common Stock.
Through beneficial ownership of all outstanding
shares of Class B Common Stock, members of the
Patrick Family (as hereinafter defined) control a
majority of the combined voting power of both
classes of Common Stock, which enables them to
elect all of the directors of the Company and to
determine the outcome of any other matter
submitted to stockholders for approval (except
for matters requiring approval of holders of both
classes voting separately). See "Description of
Capital Stock -- General."
Use of proceeds............ The Company will use the net proceeds of the
offering to continue its theatre acquisition and
construction program and for general corporate
purposes. Pending such use, the Company will use
the net proceeds to temporarily repay amounts
currently outstanding under its Credit Agreement
(as hereinafter defined). See "Use of Proceeds."
NYSE symbol................ "CKE"
4
<PAGE> 5
SUMMARY FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
The Summary Financial and Operating Information should be read in
conjunction with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the related notes included elsewhere herein. The historical financial data set
forth below is qualified in its entirety by reference to the Company's
Consolidated Financial Statements and the Notes thereto, incorporated by
reference in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------- -------------------
1989(1) 1990(2) 1991(3) 1992(4) 1993(5) 1993(5) 1994(6)
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues....................................... $99,444 $127,420 $145,796 $171,978 $241,798 $176,400 $244,516
Depreciation and amortization.................. 5,342 7,612 9,437 11,134 16,255 11,874 17,146
Operating income............................... 17,472 18,552 19,531 21,743 34,055 27,172 35,390
Interest expense............................... 6,927 8,038 9,914 11,623 14,282 10,412 12,804
Net income(7).................................. 6,241 6,293 5,715 6,112 11,861 10,056 13,552
Earnings per common share(7)................... $ 1.00 $ 0.84 $ 0.75 $ 0.80 $ 1.50 $ 1.28 $ 1.65
OPERATING DATA:
Theatres (at end of period).................... 228 263 265 302 409 385 444
Screens (at end of period)..................... 813 979 1,033 1,215 1,701 1,563 1,906
Average screens per theatre (at end of
period)...................................... 3.6 3.7 3.9 4.0 4.2 4.1 4.3
Total attendance (in thousands)................ 21,767 26,215 29,126 34,415 45,493 33,294 44,705
Operating cash flow (in thousands)(8).......... $22,814 $ 26,164 $ 28,968 $ 32,877 $ 50,310 $ 39,046 $ 52,536
Theatre level cash flow (in thousands)(9)...... $26,053 $ 29,838 $ 32,796 $ 36,774 $ 55,020 $ 42,596 $ 56,216
General and administrative expenses as a
percentage of revenues....................... 3.3% 2.9% 2.6% 2.3% 1.9% 2.0% 1.5%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
----------------------------------
ACTUAL AS ADJUSTED(10)
------------ ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and short-term investments............................................... $ 9,767 $ 10,542
Total assets.................................................................. 357,003 357,778
Total long-term debt(11)...................................................... 191,903 142,403
Shareholders' equity.......................................................... 110,683 160,958
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA(12)
----------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1993(5) 1994(6)
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INCOME STATEMENT DATA:
Revenues...................................................................... $300,456 $ 257,919
Depreciation and amortization................................................. 20,325 17,898
Operating income.............................................................. 37,563 36,883
Interest expense.............................................................. 17,057 13,458
Net income(7)................................................................. 12,301 14,055
Earnings per common share(7).................................................. $ 1.53 $ 1.72
OPERATING DATA:
Theatres (at end of period)................................................... 447 444
Screens (at end of period).................................................... 1,877 1,906
Average screens per theatre (at end of period)................................ 4.2 4.3
Total attendance (in thousands)............................................... 55,706 46,752
Operating cash flow (in thousands)(8)......................................... $ 57,888 $ 54,781
Theatre level cash flow (in thousands)(9)..................................... $ 63,011 $ 58,544
General and administrative expenses as a percentage of revenues............... 1.6% 1.4%
</TABLE>
5
<PAGE> 6
(1) Effective December 1, 1989, the Company purchased certain assets consisting
of 24 multi-screen theatres (116 screens) from Consolidated Theatres, Inc.
Income statement data includes the operating results of this acquisition
since the effective date of acquisition.
(2) Effective June 8, 1990, the Company purchased certain assets consisting of
24 multi-screen theatres (96 screens) from Plitt Theatres, Inc. Effective
June 28, 1990, the Company purchased certain assets consisting of 9
multi-screen theatres (41 screens) from United Artists Theatre Circuit,
Inc. Income statement data includes the operating results of these
acquisitions since the respective effective dates of acquisition.
(3) Effective May 24, 1991, the Company purchased certain assets consisting of 8
multi-screen theatres (45 screens) from American Multi-Cinema, Inc. Income
statement data includes the operating results of this acquisition since the
effective date of acquisition.
(4) In separate transactions in 1992, the Company acquired certain assets as
follows:
<TABLE>
<CAPTION>
NUMBER OF
------------------
SELLER THEATRES SCREENS EFFECTIVE DATE
-------------------------------------------- -------- ------- --------------
<S> <C> <C> <C>
Plitt Theatres, Inc......................... 14 57 May 22, 1992
America Multi-Cinema, Inc................... 5 32 May 22, 1992
Resources Financial......................... 5 17 June 5, 1992
Cinamerica Theatres, L.P.................... 16 60 Nov. 18, 1992
</TABLE>
Income statement data includes the operating results of these acquisitions
since the respective effective dates of acquisition.
(5) Effective August 29, 1991, the Company along with certain former
shareholders of Excellence Theatre Corporation ("Excellence") and certain
other investors formed Westwynn Theatres, Inc. ("Westwynn"). Westwynn then
acquired substantially all the assets, interests and rights and assumed
certain defined liabilities of Excellence. The Company accounted for its
investment in Westwynn under the cost method until June 11, 1993. Effective
June 11, 1993, the Company purchased the remaining interests in Westwynn
that it did not already own. Westwynn operated 92 theatres (355 screens) on
June 11, 1993. Effective November 18, 1993, the Company purchased certain
assets consisting of 19 multi-screen theatres (80 screens) from Manos
Enterprises, Inc. Income statement data includes the operating results of
these acquisitions since the respective effective dates of acquisition.
(6) Effective January 20, 1994, the Company purchased certain assets consisting
of 6 multi-screen theatres (28 screens) from General Cinema Corp. of
Georgia, General Cinema Corp. of Virginia and General Cinema Corp. of West
Virginia. Effective May 20, 1994, the Company purchased certain assets
consisting of 4 multi-screen theatres (20 screens) from General Cinema
Corp. of Louisiana. Also effective May 20, 1994, the Company purchased
certain assets consisting of 38 multi-screen theatres (176 screens) from
Cinema World, Inc. ("Cinema World"). Income statement data includes the
operating results of these acquisitions since the respective effective
dates of acquisition.
(7) Excludes $390,000, or $.05 per share, cumulative effect of change in
accounting for income taxes for the year ended December 31, 1993 and the
nine month period ended September 30, 1993.
(8) Operating cash flow is defined as operating income plus depreciation and
amortization. Operating cash flow is not intended to represent cash flow
from operations or any other measure of performance in accordance with
Generally Accepted Accounting Principles ("GAAP"). The Company believes
that this is a useful statistic to investors in analyzing companies.
(9) Theatre level cash flow represents total revenues less film rentals,
concession costs and other theatre operating costs (see "Selected
Consolidated Financial Data"). Theatre level cash flow is not intended to
represent cash flow from operations or any other measure of performance in
accordance with GAAP. The Company believes that this is a useful statistic
to investors in analyzing companies in the motion picture exhibition
industry.
(10) Adjusted to give effect to the net proceeds from the sale of 2,500,000
shares of Class A Common Stock offered hereby (after deducting estimated
underwriting discounts and commissions and offering expenses) and the
reduction of indebtedness under the Credit Agreement and increase in
short-term investments. See "Use of Proceeds" and "Capitalization."
6
<PAGE> 7
(11) Less current maturities. Includes amounts outstanding under the Credit
Agreement, senior notes, capital lease obligations and convertible
subordinated debt.
(12) The pro forma income statement data for the year ended December 31, 1993
and for the nine month period ended September 30, 1994 give effect to the
acquisition of the remaining interests in Westwynn (see footnote 5 above)
and to the acquisition of assets from Cinema World as if the acquisitions
had occurred at the beginning of the period. Pro forma results have not
been presented for those acquisitions which were not significant during the
year ended December 31, 1993 or the nine months ended September 30, 1994.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The adjustments to the
historical data are as follows:
(a) General and administrative costs were reduced to reflect the
incremental amount of general and administrative costs Carmike
estimates it would have incurred over the applicable time period.
(b) Depreciation expense was adjusted to reflect depreciation based upon
Carmike's allocation of the acquisition purchase prices.
(c) Interest income has been adjusted to reflect the loss of interest
income on investments used to fund the Westwynn acquisition.
(d) Interest expense has been adjusted to reflect debt incurred or assumed
on both acquisitions at borrowing rates of 4.5% to 5%.
(e) Dividends received on preferred stock of Westwynn and management fees
received from Westwynn were eliminated. Management fees paid by
Westwynn to Carmike were also eliminated.
7
<PAGE> 8
THE COMPANY
The Company has grown to become the second largest motion picture exhibitor
in the United States in terms of number of theatres and screens operated. As of
September 30, 1994, the Company operated 444 theatres with an aggregate of 1,906
screens located in 31 states. The Company's screens are located primarily in
communities where the Company is the sole or leading exhibitor. The Company is
currently the sole exhibitor in approximately 60% of its film licensing zones
and is the leading exhibitor in approximately 80% of its film licensing zones.
Approximately 99% of the Company's screens are located in multi-screen theatres,
with over 88% of its screens located in theatres with three or more screens.
Carmike was incorporated in Delaware in 1982. Its predecessor, Martin
Theatres, Inc. ("Martin Theatres"), was founded in 1912. C. L. Patrick, Chairman
of the Board of Directors of Carmike, joined Martin Theatres in 1945 and became
a Director and its General Manager in 1948. Martin Theatres was acquired by
Fuqua Industries, Inc. ("Fuqua", now known as The Actava Group Inc.) in 1969.
Michael W. Patrick, C. L. Patrick's son, joined the Company in 1970 and has
served in a variety of operational and managerial capacities, including theatre
manager, district manager and film buyer. Michael Patrick became the President
of the Company in 1981. The Patrick Family, along with certain other investors,
acquired the Company from Fuqua in April 1982. In June 1985, the Company's name
was changed from Martin Theatres, Inc. to Carmike Cinemas, Inc. The Company
completed its initial public offering in 1986.
The principal executive offices of the Company are located at 1301 First
Avenue, Columbus, Georgia 31901, and the telephone number at that address is
(706) 576-3400.
INVESTMENT CONSIDERATIONS
Prospective purchasers of the Class A Common Stock should carefully
consider the factors set forth below, as well as the other information contained
in this Prospectus, in evaluating an investment in the Class A Common Stock
offered hereby.
DUAL CLASSES OF COMMON STOCK; CONTROL BY PRINCIPAL STOCKHOLDERS
The authorized Common Stock of the Company consists of 15,000,000 shares of
Class A Common Stock and 5,000,000 shares of Class B Common Stock, of which
6,852,101 shares (net of 170,000 treasury shares) of Class A Common Stock and
1,420,700 shares of Class B Common Stock were outstanding as of September 30,
1994. Except for voting with respect to additional issuances of Class B Common
Stock and for class votes as required by Delaware law, holders of both classes
of Common Stock vote together as a single class, with each share of Class A
Common Stock having one vote per share and each share of Class B Common Stock
having ten votes per share. All of the outstanding shares of the Class B Common
Stock are owned, directly or indirectly, by the members of the Patrick Family,
including C. L. Patrick, the Chairman of the Company's Board of Directors,
Michael W. Patrick, the Company's President, and Carl L. Patrick, Jr., a
director of the Company (the "Patrick Family"). Through its beneficial ownership
of all the outstanding shares of the Class B Common Stock and 124,791 shares of
the Class A Common Stock, the Patrick Family owns 67.8% of the combined voting
power of both classes of Common Stock (60.6% upon completion of this offering
and 59.7% if the Underwriters' over-allotment option is exercised in full),
which enables them to elect all of the directors of the Company and to determine
the outcome of any other matter submitted to stockholders for approval (except
for matters requiring approval of holders of both classes voting separately).
The voting rights of the Class B Common Stock may make the Company less
attractive as the potential target of a hostile tender offer or other proposal
to acquire or merge with the Company, even if such actions would be in the best
interests of the holders of Class A Common Stock. See "Description of Capital
Stock -- General." In addition to voting rights, the two classes of Common Stock
differ with respect to certain other rights and features. No cash dividends may
be paid on either class of the Common Stock unless a cash dividend is also paid
on the other class, with each share of Class B Common Stock entitled to a cash
dividend equal to 85% of the cash dividend payable on each share of Class A
Common Stock. The Class B Common Stock is convertible into Class A Common Stock
on a share-for-share basis and is subject to certain restrictions on
transferability. See "Description of Capital Stock."
8
<PAGE> 9
EXPANSION PLANS
Theatre acquisitions and new theatre openings have greatly expanded the
Company's operations in the past several years and the Company intends to
continue to pursue a strategy of expansion. The success of these expansion plans
will depend on a number of factors including the selection and availability of
suitable acquisition candidates and potential site locations and the
availability of sufficient funds. There can be no assurance that suitable
candidates or locations will be available or that sufficient funds will be
internally generated or can be obtained on terms satisfactory to the Company.
Further, there can be no assurance that the Company will be as successful in
making future acquisitions or in integrating such acquisitions into the
Company's existing operations as it has been in the past.
DEPENDENCE UPON MOTION PICTURE PRODUCTION AND PERFORMANCE
The Company's business is dependent both upon the availability of suitable
motion pictures for exhibition in its theatres and the performance of such
pictures in the Company's markets. Accordingly, the Company's results of
operations will vary from period to period based upon the quantity and quality
of the motion pictures it exhibits. A disruption in the production of motion
pictures or lack of success of motion pictures could have a material adverse
effect on the Company's business. See "Business -- Film Licensing."
DEPENDENCE ON SENIOR MANAGEMENT
The Company's success depends upon the continued contributions of its
senior management, including Michael W. Patrick and John O. Barwick, III. The
loss of the services of one or more members of the Company's senior management
could have a material adverse effect upon the Company's business and
development. The Company has an employment agreement with Michael W. Patrick.
See "Management."
COMPETITION
The Company's operations are subject to varying degrees of competition with
respect to licensing films, attracting patrons, obtaining new theatre sites and
acquiring theatre circuits. In addition, the Company's theatres face competition
from a number of motion picture exhibition delivery systems, such as pay
television, pay-per-view and home video systems. While the impact of such
delivery systems on the motion picture exhibition industry is difficult to
determine precisely, there can be no assurance that they will not have an
adverse impact on attendance. Movie theatres also face competition from other
forms of entertainment competing for the public's leisure time and disposable
income. See "Business -- Competition."
9
<PAGE> 10
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Class A Common Stock are estimated to be approximately $50,275,000
(approximately $57,869,000 if the Underwriters' over-allotment option is
exercised in full) after deduction of estimated offering expenses and the
underwriting discounts. The Company will use the net proceeds to continue its
theatre acquisition and construction program and for general corporate purposes.
Although the Company, in the ordinary course of business, continually evaluates
prospective acquisition candidates, the Company is not presently engaged in
formal negotiations relating to acquisitions nor is it a party to any agreements
for future acquisitions. At September 30, 1994, the Company had 64 screens under
construction and plans to construct 100 to 150 screens annually over the next
several years. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Pending the uses described above, the net proceeds from the sale of the
Class A Common Stock offered hereby will be used by the Company to reduce
indebtedness outstanding under the credit agreement entered into in May 1994
between the Company, the banks party thereto and Wachovia Bank of Georgia, N.A.
as agent (the "Credit Agreement"); if such proceeds exceed the amount of such
outstanding indebtedness, the balance will be invested in short-term liquid
investments. The Credit Agreement provides a three-year $100 million revolving
credit facility which may be used by the Company for working capital,
acquisitions and general corporate purposes. Amounts repaid under the revolving
credit facility may be reborrowed, subject to borrowing availability and certain
other conditions. The revolving credit period expires on May 3, 1997 (subject to
possible successive annual renewals upon the mutual consent of the Company and
the lenders), at which time the facility converts to a four-year term loan as to
the then outstanding principal balance. At September 30, 1994, $49.5 million was
outstanding under the revolving facility, bearing interest at rates ranging from
LIBOR plus .4375% to the base rate (as defined in the Credit Agreement). The
outstanding indebtedness under the Credit Agreement was incurred to repay
certain indebtedness associated with the Company's acquisition of Westwynn and
to fund the May 1994 acquisitions of assets from Cinema World and General Cinema
Corp. of Louisiana. See "Business."
10
<PAGE> 11
PRICE RANGE OF CLASS A COMMON STOCK
AND DIVIDEND POLICY
The Class A Common Stock began trading on the New York Stock Exchange on
December 23, 1992 under the symbol "CKE." Prior to that date, the Class A Common
Stock was traded in the over-the-counter market and was reported on the NASDAQ
National Market System under the symbol "CMIKA." The following table sets forth,
on a per share basis, for the respective periods indicated the high and low sale
prices for the Class A Common Stock as reported on the New York Stock Exchange
and the high and low bid quotations of the Class A Common Stock as reported on
the NASDAQ National Market System, as the case may be.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1992:
First Quarter.............................................................. $15 1/2 $12 1/2
Second Quarter............................................................. 17 14
Third Quarter.............................................................. 16 1/4 10 3/4
Fourth Quarter............................................................. 15 1/2 10 1/2
1993:
First Quarter.............................................................. 14 7/8 12 7/8
Second Quarter............................................................. 16 3/8 14 1/4
Third Quarter.............................................................. 19 1/2 15
Fourth Quarter............................................................. 20 3/4 15 5/8
1994:
First Quarter.............................................................. 19 1/8 16 3/8
Second Quarter............................................................. 22 3/8 17 3/8
Third Quarter.............................................................. 23 1/4 16 5/8
Fourth Quarter (through November 17, 1994)................................. 24 3/8 19 5/8
</TABLE>
On November 17, 1994, the last reported sale price of the Class A Common
Stock on the New York Stock Exchange was $21 3/8 per share.
The Company has never declared or paid a cash dividend on its Common Stock.
It is the present policy of the Board of Directors to retain all earnings to
support operations and to finance expansion of the business; therefore, the
Company does not anticipate declaring or paying cash dividends on the Common
Stock in the foreseeable future. The declaration and payment of dividends in the
future is within the discretion of the Board of Directors and is subject to many
considerations, including covenants in debt instruments, operating results,
business and capital requirements and other factors. Pursuant to various debt
instruments, the Company is subject to certain restrictions on the payment of
dividends. For a description of the dividend rights of the holders of the two
classes of the Company's Common Stock, see "Description of Capital Stock."
11
<PAGE> 12
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1994 on an actual basis and as adjusted to give
effect to the issuance and sale of 2,500,000 shares of Class A Common Stock by
the Company and the application of the estimated net proceeds therefrom
(approximately $50,275,000) as set forth under "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
---------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current maturities of long-term debt and capital lease obligations... $ 8,935 $ 8,935
-------- --------
Long-term debt:
Revolving credit and term loan agreement(1).......................... 49,500 0
Capitalized lease obligations........................................ 16,964 16,964
Industrial revenue bonds............................................. 2,972 2,972
Senior notes......................................................... 118,182 118,182
Other indebtedness................................................... 4,285 4,285
-------- --------
Total long-term debt......................................... 191,903 142,403
-------- --------
Shareholders' equity (2):
Class A Common Stock, par value $.03, authorized 15,000,000 shares,
issued 7,022,101 shares, 9,352,101 shares as adjusted(3).......... 211 281
Class B Common Stock, par value $.03, authorized 5,000,000 shares,
issued and outstanding 1,420,700 shares........................... 43 43
Paid-in capital...................................................... 42,886 92,177
Retained earnings.................................................... 68,457 68,457
Treasury stock, 170,000 shares and 0 shares, respectively, of Class A
Common Stock, at cost............................................. (914) 0
-------- --------
Total shareholders' equity................................... 110,683 160,958
-------- --------
Total capitalization......................................... $311,521 $312,296
======== ========
</TABLE>
- ---------------
(1) As of November 17, 1994, the Company's debt under its Credit Agreement was
$55,000,000, an increase of $5,500,000 over such debt at September 30,
1994.
(2) The Company also has authorized 1,000,000 shares of Preferred Stock, none of
which is issued or outstanding.
(3) In addition to issued and outstanding shares of Class A Common Stock, at
September 30, 1994, there were reserved for issuance (i) 1,420,700 shares
issuable upon conversion of the outstanding Class B Common Stock, (ii)
100,000 shares issuable upon conversion of a zero coupon convertible
subordinated note (the "Convertible Note") issued in connection with the
Westwynn acquisition, and (iii) 274,850 shares issuable upon exercise of
options outstanding under the Company's Stock Option Plan.
12
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
The following table sets forth selected consolidated financial data of the
Company for the periods and dates indicated. The selected income statement and
balance sheet data for the five years ended December 31, 1993 are derived from
financial statements which have been audited by Ernst & Young LLP, independent
auditors. The information for the nine months ended September 30, 1993 and 1994
is unaudited. In the opinion of the Company, the information for the interim
periods ended September 30, 1993 and 1994 reflects all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
results of operations and the financial position of the Company for such
periods. The interim results are not necessarily indicative of the results that
may be expected for the entire year ended December 31, 1994. The unaudited pro
forma financial information of the Company as of and for the year ended December
31, 1993 and for the interim period ended September 30, 1994 has been adjusted
to give effect to the acquisitions of Westwynn and Cinema World as set forth
below in footnote 11. Such pro forma information does not purport to represent
what the Company's results of operations would have been had these acquisitions
occurred on the dates presented or to project the Company's financial position
or results of operations for any future period. The historical financial data
set forth below is qualified in its entirety by reference to the Company's
Consolidated Financial Statements and the Notes thereto, incorporated by
reference in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1989(1) 1990(2) 1991(3) 1992(4) 1993(5) 1993(5) 1994(6)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions........................... $ 64,996 $ 86,378 $ 99,110 $119,408 $167,294 $121,684 $172,976
Concessions and other................ 34,448 41,042 46,686 52,570 74,504 54,716 71,540
-------- -------- -------- -------- -------- -------- --------
Total revenues.................. 99,444 127,420 145,796 171,978 241,798 176,400 244,516
Operating Expenses:
Film rentals......................... 32,820 43,381 48,635 58,671 83,635 59,548 84,451
Concession costs..................... 5,327 6,203 6,575 7,815 9,406 7,099 9,557
Other theatre operating costs........ 35,244 47,998 57,790 68,718 93,737 67,157 94,292
General and administrative........... 3,239 3,674 3,828 3,897 4,710 3,550 3,680
Depreciation and amortization........ 5,342 7,612 9,437 11,134 16,255 11,874 17,146
-------- -------- -------- -------- -------- -------- --------
Total operating expenses........ 81,972 108,868 126,265 150,235 207,743 149,228 209,126
-------- -------- -------- -------- -------- -------- --------
Operating income................ 17,472 18,552 19,531 21,743 34,055 27,172 35,390
Interest expense....................... 6,927 8,038 9,914 11,623 14,282 10,412 12,804
-------- -------- -------- -------- -------- -------- --------
Income before income taxes...... 10,545 10,514 9,617 10,120 19,773 16,760 22,586
Income taxes........................... 4,304 4,221 3,902 4,008 7,912 6,704 9,034
-------- -------- -------- -------- -------- -------- --------
Net income(7)................... $ 6,241 $ 6,293 $ 5,715 $ 6,112 $ 11,861 $ 10,056 $ 13,552
========= ========= ========= ========= ========= ========= =========
Earnings per common share(7)........... $ 1.00 $ 0.84 $ 0.75 $ 0.80 $ 1.50 $ 1.28 $ 1.65
Weighted average shares outstanding.... 7,522 7,491 7,648 7,672 7,917 7,881 8,004
OPERATING DATA:
Theatres (at end of period)............ 228 263 265 302 409 385 444
Screens (at end of period)............. 813 979 1,033 1,215 1,701 1,563 1,906
Average screens per theatre (at end of
period).............................. 3.6 3.7 3.9 4.0 4.2 4.1 4.3
Total attendance (in thousands)........ 21,767 26,215 29,126 34,415 45,493 33,294 44,705
Operating cash flow (in
thousands)(8)........................ $ 22,814 $ 26,164 $ 28,968 $ 32,877 $ 50,310 $ 39,046 $ 52,536
Theatre level cash flow (in
thousands)(9)........................ $ 26,053 $ 29,838 $ 32,796 $ 36,774 $ 55,020 $ 42,596 $ 56,216
General and administrative expenses as
a percentage of revenues............. 3.3% 2.9% 2.6% 2.3% 1.9% 2.0% 1.5%
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and short-term investments........ $ 15,182 $ 30,423 $ 23,962 $ 32,105 $ 32,653 $ 45,644 $ 9,767
Total assets........................... 134,895 178,670 184,058 230,291 327,024 318,033 357,003
Total long-term debt(10)............... 85,104 94,022 91,605 120,234 180,636 179,865 191,903
Shareholders' equity................... 32,770 63,329 69,177 75,728 93,856 91,576 110,683
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
PRO FORMA(11)
--------------------------------
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1993(5) 1994(6)
------------ -----------------
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions............................................................ $209,367 $ 181,800
Concessions and other................................................. 91,089 76,119
------------ -----------------
Total revenues................................................... 300,456 257,919
Operating Expenses:
Film rentals.......................................................... 96,620 88,551
Concession costs...................................................... 10,534 9,969
Other theatre operating costs......................................... 130,291 100,855
General and administrative............................................ 4,881 3,725
Depreciation and amortization......................................... 20,325 17,898
Provision for theatre closing......................................... 242 38
------------ -----------------
Total operating expenses......................................... 262,893 221,036
------------ -----------------
Operating income................................................. 37,563 36,883
Interest expense........................................................ 17,057 13,458
------------ -----------------
Income before income taxes....................................... 20,506 23,425
Income taxes............................................................ 8,205 9,370
------------ -----------------
Net income(7).................................................... $ 12,301 $ 14,055
=========== ================
Earnings per common share(7)............................................ $ 1.53 $ 1.72
Weighted average shares outstanding..................................... 8,063 8,190
OPERATING DATA:
Theatres (at end of period)............................................. 447 444
Screens (at end of period).............................................. 1,877 1,906
Average screens per theatre (at end of period).......................... 4.2 4.3
Total attendance (in thousands)......................................... 55,706 46,752
Operating cash flow (in thousands)(8)................................... $ 57,888 $ 54,781
Theatre level cash flow (in thousands)(9)............................... $ 63,011 $ 58,544
General and administrative expenses as a percentage of revenues......... 1.6% 1.4%
</TABLE>
- ---------------
(1) Effective December 1, 1989, the Company purchased certain assets consisting
of 24 multi-screen theatres (116 screens) from Consolidated Theatres, Inc.
Income statement data includes the operating results of this acquisition
since the effective date of acquisition.
(2) Effective June 8, 1990, the Company purchased certain assets consisting of
24 multi-screen theatres (96 screens) from Plitt Theatres, Inc. Effective
June 28, 1990, the Company purchased certain assets consisting of 9
multi-screen theatres (41 screens) from United Artists Theatre Circuit,
Inc. Income statement data includes the operating results of these
acquisitions since the respective effective dates of acquisition.
(3) Effective May 24, 1991, the Company purchased certain assets consisting of
8 multi-screen theatres (45 screens) from American Multi-Cinema, Inc.
Income statement data includes the operating results of this acquisition
since the effective date of acquisition.
(4) In separate transactions in 1992, the Company acquired certain assets as
follows:
<TABLE>
<CAPTION>
NUMBER OF
------------------
SELLER THEATRES SCREENS EFFECTIVE DATE
----------------------------------------------- -------- ------- --------------
<S> <C> <C> <C>
Plitt Theatres, Inc............................ 14 57 May 22, 1992
American Multi-Cinema, Inc..................... 5 32 May 22, 1992
Resources Financial............................ 5 17 June 5, 1992
Cinamerica Theatres, L.P....................... 16 60 Nov. 18, 1992
</TABLE>
Income statement data includes the operating results of these acquisitions
since the respective effective dates of acquisition.
14
<PAGE> 15
(5) Effective August 29, 1991, the Company along with certain former
shareholders of Excellence and certain other investors formed Westwynn.
Westwynn then acquired substantially all the assets, interests and rights
and assumed certain defined liabilities of Excellence. The Company
accounted for its investment in Westwynn under the cost method until June
11, 1993. Effective June 11, 1993, the Company purchased the remaining
interests in Westwynn that it did not already own. Westwynn operated 92
theatres (355 screens) on June 11, 1993. Effective November 18, 1993, the
Company purchased certain assets consisting of 19 multi-screen theatres (80
screens) from Manos Enterprises, Inc. Income statement data includes the
operating results of these acquisitions since the respective effective
dates of acquisition.
(6) Effective January 20, 1994, the Company purchased certain assets consisting
of 6 multi-screen theatres (28 screens) from General Cinema Corp. of
Georgia, General Cinema Corp. of Virginia and General Cinema Corp. of West
Virginia. Effective May 20, 1994, the Company purchased certain assets
consisting of 4 multi-screen theatres (20 screens) from General Cinema
Corp. of Louisiana. Also effective May 20, 1994, the Company purchased
certain assets consisting of 38 multi-screen theatres (176 screens) from
Cinema World. Income statement data includes the operating results of these
acquisitions since the respective effective dates of acquisition.
(7) Excludes $390,000, or $.05 per share, cumulative effect of change in
accounting for income taxes for the year ended December 31, 1993 and the
nine month period ended September 30, 1993.
(8) Operating cash flow is defined as operating income plus depreciation and
amortization. Operating cash flow is not intended to represent cash flow
from operations or any other measure of performance in accordance with
GAAP. The Company believes that this is a useful statistic to investors in
analyzing companies.
(9) Theatre level cash flow represents total revenues less film rentals,
concession costs and other theatre operating expenses. Theatre level cash
flow is not intended to represent cash flow from operations or any other
measure of performance in accordance with GAAP. The Company believes that
this is a useful statistic to investors in analyzing companies in the
motion picture exhibition industry.
(10) Less current maturities. Includes amounts outstanding under the Credit
Agreement, senior notes, capital lease obligations and convertible
subordinated debt.
(11) The pro forma income statement data for the year ended December 31, 1993
and for the nine month period ended September 30, 1994 give effect to the
acquisition of the remaining interests in Westwynn (see footnote 5 above)
and to the acquisition of assets from Cinema World as if the acquisitions
had occurred at the beginning of the period. Pro forma results have not
been presented for those acquisitions which were not significant during the
year ended December 31, 1993 or the nine months ended September 30, 1994.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The adjustments to the
historical data are as follows:
(a) General and administrative costs were reduced to reflect the
incremental amount of general and administrative costs Carmike
estimates it would have incurred over the applicable time period.
(b) Depreciation expense was adjusted to reflect depreciation based upon
Carmike's allocation of the acquisition purchase prices.
(c) Interest income has been adjusted to reflect the loss of interest
income on investments used to fund the Westwynn acquisition.
(d) Interest expense has been adjusted to reflect debt incurred or assumed
on both acquisitions at borrowing rates of 4.5% to 5%.
(e) Dividends received on preferred stock of Westwynn and management fees
received from Westwynn were eliminated. Management fees paid by
Westwynn to Carmike were also eliminated.
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993
RESULTS OF OPERATIONS
Total revenues for the quarter ended September 30, 1994 increased 32.2% to
$108,999,000 from $82,446,000 for the quarter ended September 30, 1993. This
increase consists of a $19,837,000 increase in admissions and a $6,716,000
increase in concessions and other. The increases are attributed to additional
revenues generated by the increased attendance resulting from the increased
number of screens in operation as a result of the acquisitions in 1993 and 1994
(the "Acquisitions," as described in "Business -- Expansion History") and
increases in admission and concession prices. Attendance for the quarter
increased 28.7% and combined admission and concession prices increased 3.7%. On
a same screen basis, attendance increased 3.6%.
Total revenues for the nine months ended September 30, 1994 increased 38.6%
to $244,516,000 from $176,400,000 for the nine months ended September 30, 1993.
This increase consists of a $51,292,000 increase in admissions and a $16,824,000
increase in concessions and other. These increases are due primarily to the
additional revenues generated by the increase in attendance resulting from the
Acquisitions and increases in admission and concession prices. For the nine
months ended September 30, 1994, attendance increased 34.3% above that for the
nine months ended September 30, 1993 and for the same period, combined admission
and concession prices increased 6.2%.
Film rentals for the quarter ended September 30, 1994 increased 38.4% to
$39,567,000 from $28,594,000 for the quarter ended September 30, 1993 primarily
as a result of the additional admission revenues generated by the increase in
the number of screens in operation as a result of the Acquisitions. As a
percentage of admissions revenues, film rentals for the quarter ended September
30, 1994 increased to 51.2% from 49.7% for the quarter ended September 30, 1993
due to the quantity of popular films in the quarter ended September 30, 1994
which commanded higher percentage film rentals.
Film rentals for the nine months ended September 30, 1994 increased 41.8%
to $84,451,000 from $59,548,000. The dollar increase is due to additional film
rentals being paid on the additional admission revenues discussed above. As a
percentage of admission revenues, film rentals for the nine months ended
September 30, 1994 decreased to 48.8% from 48.9% for the nine months ended
September 30, 1993.
Concession costs in the quarter ended September 30, 1994 increased to
$4,358,000 from $3,772,000 for the quarter ended September 30, 1993 primarily as
a result of the increased attendance due to the number of screens in operation.
Concession costs as a percentage of concession revenues (concession and other
revenues excluding other revenues) for the quarter ended September 30, 1994
decreased to 15.0% of concession revenues from 16.4% of concession revenues for
the quarter ended September 30, 1993. This decrease reflects an increase in
concession prices combined with a change in the mix of products sold in the
third quarter.
Concession costs for the nine months ended September 30, 1994 increased to
$9,557,000 from $7,099,000 for the nine months ended September 30, 1993. The
dollar increase is due to additional concession costs associated with theatres
added in the Acquisitions. As a percentage of concession revenues (concession
and other revenues excluding other revenues), concession costs decreased to
14.4% from 14.5%.
Other theatre operating costs increased 27.6% for the quarter ended
September 30, 1994 to $36,027,000 from $28,243,000 for the quarter ended
September 30, 1993. As a percentage of total revenues, other theatre operating
costs decreased to 33.1% of total revenues from 34.3% of total revenues. The
dollar increase is due primarily to additional operating costs associated with
the additional screens in operation, primarily from the Acquisitions. The
percentage decrease reflects an increase in attendance on a same screen basis
combined with increased prices, whereas certain fixed costs, primarily rent
expense, or certain variable costs with a fixed cost component such as salaries,
utilities and property taxes have not increased proportionately. Rent expense
16
<PAGE> 17
represented a larger percentage of operating costs in 1994 than in 1993.
Excluding rent expense, cost of operations decreased to 23.6% of total revenues
from 25.3% of total revenues.
Other theatre operating costs for the nine months ended September 30, 1994
increased 40.4% to $94,292,000 from $67,157,000. The dollar increase is due to
additional operating costs associated with the Acquisitions. As a percentage of
total revenues, other theatre operating costs increased to 38.6% from 38.1%. The
dollar increase is due primarily to additional operating costs associated with
the additional screens in operation, whereas the percentage increase reflects a
higher level of rent expense. Excluding rent expense, cost of operations
decreased to 27.3% of total revenues from 28.0% of total revenues.
General and administrative costs for the quarter ended September 30, 1994
increased 12.0% to $1,358,000 from $1,213,000 for the quarter ended September
30, 1993, primarily as a result of additional salary costs and decreased as a
percentage of total revenues to 1.2% from 1.5%.
General and administrative costs for the nine months ended September 30,
1994 increased 3.7% to $3,680,000 from $3,550,000 primarily as a result of
additional salary costs. As a percentage of total revenues, general and
administrative costs decreased to 1.5% from 2.0%.
Depreciation and amortization for the quarter ended September 30, 1994
increased 37.2% to $6,212,000 from $4,529,000 and for the nine months ended
September 30, 1994, increased 44.4% or $5,272,000 to $17,146,000 from
$11,874,000 due to the Acquisitions and additional depreciation on new screens
added in 1994 and 1993 as part of the Company's internal expansion program.
Interest expense for the quarter ended September 30, 1994 increased 9.8% to
$4,338,000 from $3,952,000 due to additional debt incurred to finance the
Acquisitions.
Interest expense for the nine months ended September 30, 1994 increased
23.0% to $12,804,000 from $10,412,000 for the nine months ended September 30,
1993 due to the addition of Westwynn's debt effective June 11, 1993, plus debt
incurred to finance the Acquisitions.
Income taxes as a percentage of income before income taxes for the quarter
and nine months ended September 30, 1994 remained constant at 40%.
Net income for the quarter ended September 30, 1994 increased 41.1% to
$10,284,000 from $7,286,000 and for the nine months ended September 30, 1994
increased 34.8% to $13,552,000 from $10,056,000, excluding cumulative effect of
change in accounting for income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues are collected in cash, principally through box
office admissions and theatre concessions. Because its revenues are received in
cash prior to the payment of related expenses, the Company has an operating
"float" which partially finances its operations.
The Company's capital requirements arise principally in connection with new
theatre openings and acquisitions of existing theatres and theatre circuits. New
theatre openings typically are financed with internally generated cash flow,
bank credit lines or under long-term leasing arrangements with developers. The
Company currently has 64 screens under construction and plans to construct an
additional 100 to 150 screens annually for the next several years.
The Company believes that its presently anticipated capital needs for
theatre construction and possible acquisitions will be satisfied by short-term
investments on hand, borrowings under the Credit Agreement, additional bank
financings, additional sale of debt and/or equity securities, private placements
of debt, internally generated cash flow and, where appropriate, future lease
financings. At November 17, 1994, the Company had approximately $9,700,000 in
cash and short-term investments on hand and $45,000,000 was available under the
Credit Agreement. After the reduction in indebtedness resulting from the
application of the proceeds from this offering, the Company will have
approximately $95,000,000 available under its existing Credit Agreement.
17
<PAGE> 18
BUSINESS
The Company is the second largest motion picture exhibitor in the United
States, in terms of number of theatres and screens operated, and at September
30, 1994 operated 444 theatres with an aggregate of 1,906 screens located in 31
states. The Company operates in cities ranging in size from Silsbee, Texas with
a population of approximately 7,700 to Nashville, Tennessee with a population of
approximately 456,000. The Company generally targets film licensing zones in
markets where the Company can become the sole or leading exhibitor. The Company
is currently the sole exhibitor in approximately 60% of its film licensing zones
and is the leading exhibitor in approximately 80% of its film licensing zones.
In the year ended December 31, 1993, aggregate attendance at the Company's
theatres was approximately 45.5 million. The following table provides certain
information about the Company's theatre operations as of September 30, 1994:
<TABLE>
<CAPTION>
SCREENS PER
THEATRES THEATRE
---------------- TOTAL PERCENT OF -----------
STATE OWNED LEASED SCREENS TOTAL SCREENS 1-3 4+
- ---------------------------------------- ----- ------ ------- ------------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Alabama................................. 3 26 154 8.1% 8 21
Arkansas................................ 0 2 15 0.8 0 2
Colorado................................ 1 9 46 2.4 4 6
Florida................................. 1 2 11 0.6 1 2
Georgia................................. 8 10 100 5.2 6 12
Idaho................................... 0 11 26 1.4 9 2
Illinois................................ 0 3 8 0.4 2 1
Iowa.................................... 1 20 104 5.5 6 15
Kentucky................................ 1 4 23 1.2 1 4
Louisiana............................... 2 2 20 1.0 1 3
Maryland................................ 0 1 3 0.2 1 0
Minnesota............................... 0 13 48 2.5 7 6
Montana................................. 1 14 59 3.1 8 7
Nebraska................................ 0 5 17 0.9 2 3
New Mexico.............................. 1 0 2 0.1 1 0
North Carolina.......................... 17 63 310 16.3 44 36
North Dakota............................ 0 3 15 0.8 1 2
New York................................ 0 1 8 0.4 0 1
Ohio.................................... 0 8 36 1.9 3 5
Oklahoma................................ 3 14 60 3.1 9 8
Pennsylvania............................ 0 38 162 8.5 12 26
South Carolina.......................... 8 15 99 5.2 14 9
South Dakota............................ 1 3 23 1.2 1 3
Tennessee............................... 9 34 214 11.2 15 28
Texas................................... 3 28 115 6.0 13 18
Utah.................................... 1 10 36 1.9 5 6
Virginia................................ 2 14 75 3.9 6 10
Washington.............................. 0 3 3 0.2 3 0
Wisconsin............................... 0 14 64 3.4 4 10
West Virginia........................... 0 6 33 1.7 2 4
Wyoming................................. 0 5 17 0.9 3 2
----- ----- ------ --------- --- ---
63 381 1,906 100.0% 192 252
===== ===== ====== ========= === ===
</TABLE>
18
<PAGE> 19
INDUSTRY OVERVIEW
According to data published by the National Association of Theatre Owners
("NATO"), the domestic theatre exhibition industry is comprised of approximately
400 exhibitors, approximately 120 of which operate ten or more screens. There
has been significant consolidation in the industry since 1986, and management
believes that this trend will continue. From December 1985 to May 1994, the top
ten motion picture exhibitors increased their control of theatres in the United
States from 27% to 49%. From 1986 through 1993 the number of indoor screens in
operation in the United States increased from 19,947 to 24,887, according to the
1993 economic survey released by the Motion Picture Association of America
("MPAA"). Admission revenues increased from approximately $3.8 billion to
approximately $5.2 billion over the same period.
Theatrical exhibition is the primary initial distribution channel for new
motion picture releases. Management believes that the emergence of new forms of
delivery systems, such as home video and network, syndicated and pay television,
has not adversely affected attendance at motion picture theatres. Management
further believes that the success of a movie in such other follow-on delivery
systems is largely dependent on its successful theatrical release. In addition,
management believes that, to date, the proliferation of distribution channels,
home video in particular, has enhanced the value of film product, resulting in
additional film product for exhibition. Management believes that the public will
continue to recognize the advantages of viewing a movie on a large screen with
superior audio-visual quality as a shared experience in a public forum and that
alternative delivery systems do not provide an experience comparable to the
out-of-home entertainment experience of attending a movie in a theatre.
Admission revenue of approximately $5.2 billion in 1993 was a record for
the industry. In addition, attendance has exceeded 1.0 billion during each of
the past 14 years. In 1993, the number of patrons attending theatres in North
America totaled approximately 1.24 billion people. Previously reported
attendance data released by the MPAA has recently been revised following an
in-depth study conducted by the MPAA in conjunction with NATO. Annual industry
attendance and total admission revenues for the past eight years as determined
by the MPAA are as follows (in billions):
<TABLE>
<CAPTION>
ANNUAL INDUSTRY TOTAL ADMISSION
YEAR ATTENDANCE REVENUES
-------------------------------------------------- ------------------- ------------------
<S> <C> <C>
1986.............................................. 1.02 $ 3.78
1987.............................................. 1.09 4.25
1988.............................................. 1.09 4.46
1989.............................................. 1.26 5.03
1990.............................................. 1.19 5.02
1991.............................................. 1.14 4.80
1992.............................................. 1.17 4.87
1993.............................................. 1.24 5.15
</TABLE>
The MPAA study shows that the actual average ticket price was $4.14 in 1993
and that ticket prices increased at a lower rate than increases in the cost of
living. In the last five years, the average ticket price has increased
approximately 4%, according to figures released by NATO, compared to the U.S.
Consumer Price Index which increased by approximately 16.5% during the same
period. The Company believes that movie exhibition is priced competitively
relative to other out-of-home entertainment options, such as music concerts,
sporting events and live theatre.
The Company believes that production of feature films will continue to
increase as a result of increasing demand for film product. Increasing demand is
evidenced by the growth of the theatre exhibition industry outside of the United
States and Canada and the evolution of the "information super highway," which
will require increasing amounts of feature film product to fill the programming
requirements of the expected 500 channel universe. This increased demand is
currently being met by an increase in production of feature films by the seven
major studios, which are scheduled to release 151 pictures in 1994 compared to
107 in 1991. Moreover, the emergence of stronger and better capitalized
independent producers and distributors, such as Savoy Pictures, Gramercy
Pictures, Turner Pictures (which includes New Line Cinemas and Castle Rock
Entertainment) and the newly formed partnership among Jeffrey Katzenberg, Steven
Spielberg and David
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<PAGE> 20
Geffen, should strengthen the film production industry. The Company believes
that an increased supply of feature films should positively affect its box
office and concession revenues.
BUSINESS STRATEGY
The Company pursues a growth strategy of selectively acquiring and building
theatres and implements an operating strategy of centralized management of
multi-screen theatres. As a result of these business strategies, from 1987 to
1993, revenues have grown from $84 million to $242 million and operating cash
flow has grown from $17 million to $50 million. Over the same period, the
Company has been able to maintain its operating cash flow margins within a range
of 19% to 23% while increasing revenues 187%.
GROWTH STRATEGY. The following are the key elements of the Company's
growth strategy:
- Selectively Acquire Theatres. Carmike has added 1,374 screens through
acquisitions since its initial public offering in 1986. The Company
believes that it can continue to acquire motion picture theatre operators
at favorable prices and, by implementing the Company's operating strategy,
improve profitability and operating margins at acquired properties. The
Company intends to make further acquisitions if such properties continue
to become available.
- Build New Theatres and Add Screens to Existing Theatres. The Company has
constructed 322 screens since its initial public offering in 1986. The
Company currently has 64 screens under construction and plans to construct
an additional 100 to 150 screens annually for the next several years.
Management focuses on developing new theatres and adding screens to
existing theatres in markets that it believes are under-screened relative
to market demand. The Company also anticipates that all of its new
theatres will house eight or more screens. In addition, Carmike
continually upgrades its existing theatres to reflect market needs and to
improve competitiveness with other theatre operators as well as other
media. By selectively adding screens, management believes that it can
improve profitability through enhanced rotation of films from larger to
smaller auditoriums, increased leverage of concession areas and increased
staffing efficiency. Whenever the Company adds screens, it generally
refurbishes the entire theatre complex, including adding THX(R) sound and
renovating the lobby and concession area.
OPERATING STRATEGY. The following are the key elements of the Company's
operating strategy:
- Dominant Operator in Target Markets. The Company typically targets
markets in which it can achieve a dominant position as the sole or leading
motion picture exhibitor. The Company is currently the sole exhibitor in
approximately 60% of the film licensing zones in which it operates and is
the leading exhibitor in approximately 80% of the film licensing zones in
which it operates. Management believes that this dominant market position
enables the Company to achieve a significant competitive advantage with
respect to film bookings.
- Centralized Revenue and Expense Control. By developing sophisticated
internal controls and its MIS, the Company has reduced administrative and
operating expenses as a percentage of total revenues and has achieved
operating cash flow margins which compare favorably with other major
motion picture exhibitors. Using its MIS, the Company can closely monitor
and manage ticket and concession revenues and cost components, including
staffing, on a daily basis. The MIS and other cost control measures have
allowed the Company to centralize certain functions through its corporate
office, including film licensing and concession purchasing. Since the
initial public offering in 1986, the number of screens has increased from
436 to 1,906, while general and administrative costs as a percentage of
revenues have decreased from 4.7% for the fiscal year ended 1986 to 1.5%
for the nine months ended September 30, 1994.
- Leadership in Motion Picture Exhibition. As a result of its growth, the
Company has evolved from being a leading exhibitor in the Southern United
States to become a national exhibitor, with operations primarily in the
Southern, Mid-Western, Mid-Atlantic and Western regions of the United
States. This national leadership, combined with the Company's dominance in
a majority of the film licensing zones in which it operates, gives the
Company significant negotiating power with respect to film distributors
and concession suppliers.
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<PAGE> 21
- Concentration on Multi-Screen Theatres. Approximately 99% of the
Company's screens are located in multi-screen theatres. By pursuing a
multi-screen strategy, the Company believes that it achieves a large
number of operational benefits, including: reduced revenue dependence on
any single film; the ability to rotate films to smaller auditoriums in the
same theatre as attendance decreases during the release life of the film;
substantial operating efficiencies such as increased leverage of
concession areas; and more efficient use of staff through staggered start
times of films.
EXPANSION HISTORY
Since its initial public offering in 1986, the Company has completed a
series of acquisitions and has conducted an aggressive internal expansion
program. During this time, Carmike has increased its number of screens from 436
to 1,906 as of September 30, 1994.
The Company has a record of successfully integrating acquired theatres into
its system and improving their profitability and operating margins, while
incurring only slight increases in general and administrative costs. A summary
of Carmike's major theatre acquisitions since its initial public offering is set
forth in the following table:
<TABLE>
<CAPTION>
DATE SELLER THEATRES SCREENS
- ----- ---------------------------------------------------------------------- -------- -------
<C> <S> <C> <C>
12/86 Essantee Theatres, Inc................................................ 74 209
12/89 Consolidated Theatres Incorporated.................................... 24 116
06/90 Plitt Theatres, Inc................................................... 24 96
06/90 United Artists Theatre Circuit, Inc................................... 9 41
05/91 American Multi-Cinema, Inc............................................ 8 45
05/92 Plitt Theatres, Inc................................................... 14 57
05/92 American Multi-Cinema, Inc............................................ 5 32
06/92 Resources Financial................................................... 5 17
11/92 Cinamerica Theatres, L.P.............................................. 16 60
06/93 Westwynn Theatres, Inc.(1)............................................ 92 355
11/93 Manos Enterprises, Inc................................................ 19 80
01/94 General Cinema Corp. of Georgia, General Cinema Corp. of Virginia,
General Cinema Corp. of West Virginia............................... 6 28
05/94 General Cinema Corp. of Louisiana..................................... 4 20
05/94 Cinema World, Inc..................................................... 38 176
</TABLE>
- ---------------
(1) Effective August 29, 1991, the Company along with certain former
shareholders of Excellence and certain other investors formed Westwynn.
Westwynn then acquired substantially all the assets, interests and rights
and assumed certain defined liabilities of Excellence. Effective June 11,
1993, the Company purchased the remaining interests in Westwynn that it did
not already own.
In addition to the acquisition of existing theatres, the Company has
expanded its operations through building new theatres and adding screens to its
existing theatres. Since its initial public offering in 1986, the Company has
developed 322 screens through construction of new theatres and additions of
screens to existing theatres. The Company periodically reviews the profitability
of each of its theatres, especially those whose lease terms are about to expire,
to determine whether to continue their operations.
OPERATIONS
The Company's theatre operations are under the supervision of its Vice
President -- General Manager and are divided into four geographic divisions,
each of which is headed by a division manager. The division managers are
responsible for implementing the Company's operating policies and supervising
the Company's fourteen operating districts. Each operating district has a
district manager who is responsible for overseeing the day-to-day operations of
the Company's theatres. Corporate policy development, strategic planning, site
selection and lease negotiation, theatre design and construction, concession
purchasing, film licensing,
21
<PAGE> 22
advertising and financial and accounting activities are centralized at the
corporate headquarters of the Company.
Nearly all of the Company's 1,906 screens are located in multi-screen
theatres, with over 88% of the Company's screens being located in theatres
having three or more screens. The Company has increased its average number of
screens per theatre from 2.8 in 1986 to 4.3 in 1994, and management intends to
increase this ratio through the construction of larger multi-screen theatres.
The Company anticipates that all of its new theatres will contain eight or more
screens per theatre. Multi-screen theatres enable the Company to present a
variety of films appealing to several segments of the movie-going public while
serving patrons from common support facilities such as the box office,
concession areas, restrooms and lobby. This strategy enhances attendance,
utilization of theatre capacity and operating efficiencies (relating to theatre
staffing, performance scheduling and space and equipment utilization), and
thereby enhances revenues and profitability. Staggered scheduling of starting
times minimizes staffing requirements for crowd control and box office and
concession services while reducing congestion at the concession area.
For the nine months ended September 30, 1994, Carmike derived approximately
27% of its revenues from concession sales. Margins on concession sales are
significantly greater than those realized on ticket sales. Therefore, the
ability to increase attendance and concession sales per patron has a positive
impact on Carmike's operating earnings and margins.
The Company relies upon advertisements and movie schedules published in
newspapers to inform its patrons of film selections and show times. Newspaper
advertisements typically are displayed in a single group for all of the
Company's theatres located in the newspaper's circulation area. In addition, the
Company utilizes radio spots and promotions to further market its films. Major
distributors frequently share the cost of newspaper and radio advertising. The
Company also exhibits previews of coming attractions and films presently playing
on the Company's other screens in the same market area.
The Company's proprietary computer system, I.Q. Zero(TM), which is
presently installed in approximately 75% of its theatres (representing
approximately 81% of its screens), allows Carmike to centralize most
theatre-level administrative functions at its corporate headquarters, creating
significant operating leverage. The Company is in the process of installing I.Q.
Zero(TM) in its recently acquired theatres and plans to have the system in
virtually all of its theatres. I.Q. Zero(TM) allows corporate management to
monitor ticket and concession sales and box office and concession staffing on a
daily basis. The Company's integrated MIS, centered around I.Q. Zero(TM), also
coordinates payroll, tracks theatre invoices and generates operating reports
analyzing film performance and theatre profitability. Accordingly, there is
active communication between the theatres and corporate headquarters, which
allows senior management to react to vital profit and staffing information on a
daily basis and perform the majority of the theatre-level administrative
functions, thereby enabling the theatre manager to focus on the day-to-day
operations of the theatre. Management believes that its extensive use of
computer systems will continue to allow the Company to expand significantly its
number of screens with minimal increases in general and administrative expenses.
For example, while the number of screens has increased from 436 since its
initial public offering in 1986 to 1,906 at September 30, 1994, general and
administrative costs as a percentage of revenues have decreased from 4.7% for
the fiscal year ended 1986 to 1.5% for the nine months ended September 30, 1994.
From time to time, the Company converts marginally profitable theatres to
"Discount Theatres" for the exhibition of films that have previously been shown
on a first-run basis. Increased attendance at these theatres following these
conversions, combined with a lower film rental cost, has improved such theatres'
operating profitability. At present, the Company operates 69 of its theatres as
Discount Theatres. The Company also offers a discount ticket plan to attract
groups of patrons.
Carmike's average ticket price for the year ended December 31, 1993 was
$3.68 and was well below the average ticket price for the industry of $4.14.
Management expects to implement a gradual escalation in Carmike's admission
charges commensurate with industry practices; however, the Company remains
sensitive to a possible negative impact of over-aggressive pricing policies.
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<PAGE> 23
FILM LICENSING
Carmike obtains licenses to exhibit films by directly negotiating with or,
in rare circumstances, submitting bids to film distributors. The Company
licenses films through its booking office located in Columbus, Georgia. The
Company's Vice President -- Film, in consultation with the Company's President,
directs the Company's motion picture bookings.
Prior to negotiating or bidding for a film license, the Company's Vice
President -- Film and film booking personnel evaluate the prospects for upcoming
films. The criteria considered for each film include cast, director, plot,
performance of similar films, estimated film rental costs and expected MPAA
rating. Successful licensing depends greatly upon the availability of
commercially popular motion pictures, knowledge of the tastes of residents in
markets served by each theatre and insight into the trends in those tastes. The
Company maintains a database that includes revenue information on films
previously exhibited in its markets. This historical information is then
utilized by the Company to match new films with particular markets so as to
maximize revenues.
Film licenses typically specify rental fees based on the higher of a gross
box office receipts formula or an adjusted gross box office receipts formula.
Under a gross box office receipts formula, the distributor receives a specified
percentage of box office receipts, with the percentage declining over the term
of the run. The Company's film rental fees typically begin at 60% of admission
revenues and gradually decline to as low as 30% over a period of four to seven
weeks. Under an adjusted gross box office receipts formula (commonly known as a
"90/10" clause), the distributor receives a specified percentage (i.e., 90%) of
the excess of box office receipts over a negotiated amount for house expenses.
In addition, the Company is occasionally required to pay non-refundable
guarantees of film rentals, to make advance payments of film rentals, or both,
in order to obtain a license for a film. Although not specifically contemplated
by the provisions of film licenses, the terms of film licenses generally are
adjusted or renegotiated subsequent to exhibition of the film in relation to its
success.
Film licensing zones are geographic areas (generally encompassing a radius
of three to five miles) established by film distributors where any given film is
allocated to only one theatre within that area. In film licensing zones where
the Company has little or no competition, the Company obtains film licenses by
selecting a film from among those offered and negotiating directly with the
distributor. In competitive film licensing zones, a distributor will either
require the exhibitors in the zone to bid for a film or will allocate its films
among the exhibitors in the zone. When films are licensed under the allocation
process, a distributor will choose which exhibitor is offered a movie and then
that exhibitor will negotiate film rental terms directly with the distributor
for the film. Over the past several years, distributors have generally used the
allocation rather than the bidding process to license their films. When films
are licensed through a bidding process, exhibitors compete for licenses based
upon economic terms. The Company currently does not bid for films in any of its
film licensing zones.
The Company predominantly licenses "first-run" films. If a film has
substantial remaining potential following its first-run, the Company may license
it for a subsequent run (a "sub-run"). Although average daily sub-run attendance
is often less than average daily first-run attendance, sub-run film cost is
generally less than first-run film cost. Additionally, sub-runs enable the
Company to exhibit a variety of films during periods in which there are few new
releases.
The Company's business is dependent upon the availability of marketable
pictures and its relationships with distributors. While there are numerous
distributors which provide quality first-run movies to the motion picture
exhibition industry, seven major distributors accounted for approximately 86% of
industry admission revenues during 1993 and 48 of the top 50 grossing films
according to data published by NATO. No single distributor dominates the market.
Disruption in the production of motion pictures by the major studios and/or
independent producers or poor performance of motion pictures could have an
adverse effect on the business of the Company. The Company licenses films from a
number of distributors and believes that its relationships with distributors
generally are satisfactory.
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<PAGE> 24
SEASONALITY
The major film distributors generally release during the summer and holiday
seasons, primarily Thanksgiving and Christmas, those films which they anticipate
to be the most successful. Consequently, the Company has historically generated
higher revenues during such periods.
COMPETITION
The Company's operations are subject to varying degrees of competition with
respect to licensing films, attracting patrons, obtaining new theatre sites or
acquiring theatre circuits. In markets where it is not the sole exhibitor, the
Company competes against regional and independent operators as well as the
larger theatre circuit operators.
The Company believes that the principal competitive factors with respect to
film licensing include licensing terms, the seating capacity, location and
prestige of an exhibitor's theatres, the quality of projection and sound at the
theatres and the exhibitor's ability and willingness to promote the films. The
competition for patrons is dependent upon factors such as the availability of
popular films, the location of the theatres, patron comfort, the quality of
projection and sound and the ticket prices. The Company believes that its
admission prices are competitive with admission prices of competing theatres.
The Company's theatres face competition from a number of motion picture
exhibition delivery systems, such as pay television, pay-per-view and home video
systems. The impact of such delivery systems on the motion picture exhibition
industry is difficult to determine precisely, and there can be no assurance that
existing or future delivery systems will not have an adverse impact on
attendance. The Company believes that its strongest competition is from other
forms of entertainment competing for the public's outside-the-home leisure time
and disposable income.
EMPLOYEES
At September 30, 1994, Carmike had 6,922 employees. Seventy of the
Company's employees are covered by collective bargaining agreements. The Company
considers its relations with its employees to be good.
PROPERTIES
At September 30, 1994, of the 444 theatres operated by the Company, 60 were
owned by the Company, 298 were leased pursuant to building leases, 79 were
leased pursuant to ground leases, and seven were subject to shared ownership or
shared leasehold interests with various unrelated third parties. The Company's
leases are generally entered into on a long-term basis. The Company believes
that its theatres are in good condition.
The Company owns its headquarters building in Columbus, Georgia. It
occupies approximately 30,000 square feet of this modern five-story building,
which has approximately 48,500 square feet. Remaining space in the building is
fully leased. The Company's interest in the building is encumbered by a Deed to
Secure Debt and Security Agreement in favor of the Downtown Development
Authority of Columbus, Georgia.
The Company also owns and occupies a four-story building in Columbus,
Georgia that has approximately 48,000 square feet. The Company uses this
building for storage and refurbishment of surplus theatre equipment.
REGULATORY ENVIRONMENT
The distribution of motion pictures is in large part regulated by federal
and state antitrust laws and has been the subject of numerous antitrust cases.
Certain consent decrees resulting from such cases bind certain major motion
picture distributors and require the motion pictures of such distributors to be
offered and licensed to exhibitors, including the Company, on a
theatre-by-theatre basis. Consequently, exhibitors such as the Company cannot
assure themselves of a supply of motion pictures by entering into long-term
arrangements with major distributors but must compete for licenses on a
film-by-film and theatre-by-theatre basis.
24
<PAGE> 25
The Federal Americans With Disabilities Act (the "Disabilities Act")
prohibits discrimination on the basis of disability in public accommodations and
employment. The Disabilities Act became effective as to public accommodations in
January 1992 and as to employment in July 1992. Because of the recent
effectiveness of the Disabilities Act and the absence of comprehensive
regulations thereunder, the Company is unable to predict precisely the extent to
which the Disabilities Act will impact the Company. However, the Company
currently constructs new theatres to be accessible to the disabled and believes
that it is otherwise in substantial compliance with all current applicable
regulations relating to accommodations for the disabled. The Company intends to
comply with future regulations relating to accommodating the needs of the
disabled, and the Company does not currently anticipate that such compliance
will require the Company to expend substantial funds.
LEGAL PROCEEDINGS
From time to time the Company is involved in routine litigation and
proceedings in the ordinary course of business. Currently, the Company does not
have pending any litigation or proceedings that management believes will have a
material adverse effect, either individually or in the aggregate, upon the
Company.
25
<PAGE> 26
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- ----------------------------------------------------------
<S> <C> <C>
C. L. Patrick............... 75 Chairman of the Board of Directors
Michael W. Patrick.......... 44 President, Chief Executive Officer and Director
John O. Barwick, III........ 45 Vice President -- Finance, Treasurer and Chief Financial
Officer
Carl L. Patrick, Jr......... 48 Director
John W. Jordan, II.......... 45 Director
Carl E. Sanders............. 69 Director
David W. Zalaznick.......... 40 Director
Larry M. Adams.............. 51 Vice President -- Information Systems and Secretary
Prentiss Lamar Fields....... 39 Vice President -- Development
Marilyn Grant............... 47 Vice President -- Advertising
Anthony J. Rhead............ 53 Vice President -- Film
H. Madison Shirley.......... 42 Vice President -- Concessions
Fred W. Van Noy............. 37 Vice President -- General Manager
</TABLE>
The following is a brief description of the business experience of the
directors and executive officers of the Company for at least the past five
years. For purposes of this description, references to the Company include the
Company's predecessor, the Martin Theatres circuit.
C. L. Patrick has served as Chairman of the Board of Directors of the
Company since April 1982. He joined the Company in 1945, became its General
Manager in 1948 and served as President of the Company from 1969 to 1970. Mr.
Patrick served as President of Fuqua from 1970 to 1978, and as Vice Chairman of
the Board of Directors of Fuqua from 1978 to 1982. Mr. Patrick is a director
emeritus of Columbus Bank & Trust Company.
Michael W. Patrick has served as President of the Company since October
1981 and as a director of the Company since April 1982. He joined the Company in
1970 and served in a number of operational and film booking and buying
capacities prior to becoming President. Mr. Patrick is a director of Columbus
Bank & Trust Company. He also serves as a director of the National Association
of Theatre Owners of Georgia, the National Association of Theatre Owners of
Alabama, the National Association of Theatre Owners of Tennessee, the National
Association of Theatre Owners of North and South Carolina and the Will Rogers
Institute.
John O. Barwick, III joined the Company as Controller in July 1977 and was
elected Treasurer in August 1981. In August 1982, he became Vice
President -- Finance of the Company. Prior to joining the Company, Mr. Barwick
was a certified public accountant with Ernst & Ernst, a predecessor of the
accounting firm of Ernst & Young LLP, from 1973 to 1977.
Carl L. Patrick, Jr. has served as a director of the Company since April
1982. He was the Director of Taxes for the Atlanta, Georgia office of Arthur
Young & Co., a predecessor of the accounting firm of Ernst & Young LLP, from
October 1984 to September 1986. Previously, he was a certified public accountant
with Arthur Andersen & Co. from 1976 to October 1984. Mr. Patrick served two
terms as Chairman of the Board of Summit Bank Corporation and currently serves
as a director of that company. Mr. Patrick is Co-Chairman of PGL Entertainment
Corp.
John W. Jordan, II has been a director of the Company since April 1982. He
is a co-founder and managing partner of The Jordan Company, which was founded in
1982. Mr. Jordan is a managing partner of Jordan/Zalaznick Capital Company and
Chairman of the Board and Chief Executive Officer of Jordan Industries, Inc.
From 1973 until 1982, he was a Vice President of Carl Marks & Company, a New
York
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<PAGE> 27
investment banking company. Mr. Jordan is a director of Jones Plumbing Systems,
Inc. and Leucadia National Corporation, as well as the companies in which The
Jordan Company holds investments.
Carl E. Sanders has been a director of the Company since April 1982. He is
engaged in the private practice of law as Chairman of Troutman Sanders, an
Atlanta, Georgia law firm. Mr. Sanders is a director of The Actava Group, Inc.,
First Union Corporation of Georgia and Healthdyne, Inc.
David W. Zalaznick has served as a director of the Company since April
1982. He is a co-founder and general partner of The Jordan Company, a managing
partner of Jordan/Zalaznick Capital Company and a director of Jordan Industries,
Inc. From 1978 to 1980, he worked as an investment banker with Merrill Lynch
White Weld Capital Markets Group and, from 1980 until the formation of The
Jordan Company in 1982, Mr. Zalaznick was a Vice President of Carl Marks &
Company. Mr. Zalaznick is a director of Jones Plumbing Systems, Inc., Custom
Chrome, Inc., American Safety Razor Company, Cookies USA, Inc. and NewFlo Corp.,
as well as the companies in which The Jordan Company holds investments.
Larry M. Adams joined the Company as Data Processing Manager in July 1973.
In August 1982 he became Vice President -- Information Systems and in August
1988 he became Secretary of the Company.
Prentiss Lamar Fields joined the Company in January 1983 as Director of
Real Estate. He served in this position until 1985 when he was elected to his
present position as Vice President -- Development.
Marilyn Grant joined the Company in 1975 as a bookkeeper. She served as the
Advertising Coordinator from 1984 to 1985 and became the Director of Advertising
in 1985. In August 1990, she was elected to her present position as Vice
President -- Advertising.
Anthony J. Rhead joined the Company in June 1981 as manager of the booking
office in Charlotte, North Carolina. Since July 1983, Mr. Rhead has been Vice
President -- Film of the Company. Prior to joining the Company he worked as a
film booker for Plitt Theatres, Inc. from 1973 to 1981.
H. Madison Shirley joined the Company in 1976 as a theatre manager. He
served as a District Manager from 1983 to 1987 and as Director of Concessions
from 1987 until 1990. He was elected to his present position as Vice
President -- Concessions in 1990.
Fred W. Van Noy joined the Company in 1975. He served as a District Manager
from 1984 to 1985 and as Western Division Manager from 1985 to 1988, when he was
elected to his present position as Vice President -- General Manager.
Messrs. Michael W. Patrick and Carl L. Patrick, Jr. are the sons of Mr. C.
L. Patrick.
In April 1982, C. L. Patrick entered into an employment agreement with the
Company with respect to his services as Chairman of the Board. This agreement,
as restated and amended on January 1, 1990, provides a base annual salary of
$200,000 with annual cost of living adjustments. Such cost of living adjustments
have resulted in a base annual salary of $269,000 for C. L. Patrick effective
August 1, 1994. Effective as of January 1, 1993, Michael W. Patrick entered into
an employment agreement with the Company with respect to his services as Chief
Executive Officer. This agreement provides a base annual salary of $500,000,
with annual cost of living adjustments. Each agreement provides for a three-year
term which is automatically extended each year after the first year for an
additional year unless either party gives written notice of termination within
30 days prior to the anniversary date of such agreement. These agreements also
provide during their terms for a death benefit equal to one year's salary, as
well as for reimbursement of business-related expenses.
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<PAGE> 28
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's authorized capital stock consists of 15,000,000 shares of
Class A Common Stock, 5,000,000 shares of Class B Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"). As
described below, the Class A Common Stock has one vote per share, and the Class
B Common Stock has ten votes per share. Members of the Patrick Family
beneficially own an aggregate of 1,420,700 shares of Class B Common Stock,
constituting all of the outstanding shares of such stock, and 124,791 shares of
Class A Common Stock. The voting power of the Patrick Family is currently
approximately 67.8% of the combined voting power of the Common Stock and will be
approximately 60.6% upon completion of this offering (if the Underwriters'
over-allotment option is not exercised). If any holder of Class B Common Stock
elects to convert such shares to Class A Common Stock, the individual voting
power of each of the other holders of the remaining Class B Common Stock would
be increased, although the aggregate voting power of the holders of the
remaining Class B Common Stock would be decreased. See "Description of Common
Stock."
As a result of its ownership of the Company's Class B Common Stock, the
Patrick Family is able to elect all of the directors of the Company and can
thereby direct or substantially influence the Company's affairs and policies, as
long as it holds Class B Common Stock representing more than 50% of the voting
power of the Common Stock. In addition, such holders of Class B Common Stock
have the ability to determine the outcome of matters submitted to stockholders
for approval, including acquisitions, mergers, consolidations and similar
extraordinary transactions requiring a vote of stockholders (other than actions
which require separate votes of the Class A Common Stock and Class B Common
Stock, including amendments to the provisions of the Restated Certificate
relating to the Company's capitalization and future issuances of Class B Common
Stock except in connection with stock dividends or stock splits). The voting
rights of the Class B Common Stock may make the Company less attractive as the
potential target of a hostile tender offer or other proposal to acquire the
stock or business of the Company, and merger proposals might be rendered more
difficult, even if such actions would be in the best interests of the holders of
the Class A Common Stock.
DESCRIPTION OF COMMON STOCK
Except as described below under "Voting," "Dividends and Other
Distributions (Including Distributions Upon Liquidation of the Company)," and
"Transferability; Convertibility of Class B Common Stock," the Class A Common
Stock and the Class B Common Stock are identical to each other. The following
summary does not purport to be a complete description of the provisions of the
Certificate of Incorporation with respect to the Class A Common Stock and the
Class B Common Stock and is qualified in its entirety by reference to the
Certificate of Incorporation.
Voting. Each share of Class A Common Stock entitles the holder thereof to
one (1) vote per share on all matters on which stockholders are entitled to
vote, including election of directors. Each share of Class B Common Stock
entitles the holder thereof to ten (10) votes per share on all such matters.
There is no provision in the Certificate of Incorporation permitting cumulative
voting. All actions submitted to a vote of stockholders will be voted upon by
holders of Class A and Class B Common Stock voting together as a single class,
except that a separate class vote is required on any additional issuances of
Class B Common Stock (other than in connection with stock splits and stock
dividends) and on any other matters on which Delaware law requires a class vote.
Such matters include amendments of the Certificate of Incorporation to change
the authorized number of shares of such class, to change the par value of the
shares of such class, or to alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely.
Dividends and Other Distributions (Including Distributions Upon Liquidation
of the Company). Shares of the Class A Common Stock and the Class B Common
Stock are entitled to dividends if, as and when such dividends may be declared
by the Board of Directors out of assets or funds of the Company legally
available therefor. No cash dividends may be paid on either class of the Common
Stock unless a cash dividend is also paid on the other class, with each share of
the Class B Common Stock entitled to a cash dividend equal to 85%
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<PAGE> 29
of the cash dividend payable on each share of the Class A Common Stock. Delaware
law requires a separate class vote by stockholders of the Company in order to
amend the provisions of the Company's Certificate of Incorporation with respect
to such cash dividend differential. If holders of Class A Common Stock receive
shares of Class A Common Stock distributed in connection with stock dividends or
stock splits, holders of Class B Common Stock will receive shares of Class B
Common Stock in the same per-share proportion as holders of Class A Common Stock
receive shares of Class A Common Stock. The two classes of Common Stock have
identical rights in liquidation, notwithstanding the payment or nonpayment of
previous cash dividends.
Transferability; Convertibility of Class B Common Stock. The Class A
Common Stock is freely transferable by the holder thereof. The Class B Common
Stock is only transferable by a stockholder to or among principally such
holder's spouse, certain of such holder's relatives, certain trusts established
for their benefit, corporations and partnerships principally owned by such
holders, their relatives and such trusts, and such holder's estate. If the Class
B Common Stock is transferred to someone other than such permitted persons, it
is immediately converted into Class A Common Stock. Accordingly, there is no
trading market in the Class B Common Stock, and the Class B Common Stock is not
listed or traded on any exchange or in any market.
On the other hand, the Class B Common Stock is convertible at all times,
and without cost to the stockholder, into Class A Common Stock on a
share-for-share basis. Therefore, stockholders who desire to sell their shares
of Class B Common Stock may convert those shares into an equal number of shares
of Class A Common Stock and sell the shares of Class A Common Stock.
Future Issuances of Class B Common Stock; Retirement of Class B Common
Stock Upon Conversion. The Company may not issue any additional shares of Class
B Common Stock without the approval of a majority of the votes of the
outstanding shares of Class A Common Stock and Class B Common Stock, each voting
separately as a class. The Company may, however, issue additional shares of
Class B Common Stock in the event of any stock splits or stock dividends. All
shares of Class B Common Stock received by the Company upon conversion thereof
into Class A Common Stock will be retired and not reissued except as described
above.
Other. Stockholders of the Class A Common Stock and the Class B Common
Stock do not have preemptive or other rights to subscribe for additional shares.
No shares of either class are subject to redemption. The Board of Directors will
continue to possess the power to issue shares of authorized but unissued Class A
Common Stock and Preferred Stock without further stockholder action.
The transfer agent for the Class A Common Stock is Columbus Bank & Trust
Company. The Company acts as its own transfer agent for the Class B Common
Stock.
DESCRIPTION OF PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 1,000,000 shares of
Preferred Stock. The Company currently has no shares of Preferred Stock issued
and outstanding.
The Preferred Stock is issuable in one or more series, as determined by the
Board of Directors. The Board of Directors is authorized to determine, among
other things, with respect to each series which may be issued: (i) whether
dividends are payable on such series, and the dividend rate and conditions and
the dividend preferences, if any; (ii) whether dividends would be cumulative
and, if so, the date from which dividends on such series would accumulate; (iii)
whether, and to what extent, the holders of such series would enjoy voting
rights in addition to those prescribed by law; (iv) whether, and upon what
terms, such series would be convertible into or exchangeable for shares of any
other class of capital stock or other series of Preferred Stock; (v) whether,
and upon what terms, such series would be redeemable; (vi) whether or not a
sinking fund would be provided for the redemption of such series and, if so, the
terms and conditions thereof; and (vii) the preference, if any, to which such
series would be entitled in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Company. With regard to dividends, redemption
and liquidation
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<PAGE> 30
preference, any particular series of Preferred Stock may rank junior to, on a
parity with or senior to any other series of Preferred Stock.
It is not possible to state the actual effect of any future designations
and issuances of the Preferred Stock upon the rights of holders of the Common
Stock, either Class A or Class B, until the Board of Directors determines the
specific rights of the holders of a series of the Preferred Stock. However, such
effects might include (a) restrictions on dividends on the Common Stock if
dividends on Preferred Stock have not been paid; (b) dilution of the voting
power of the Common Stock to the extent that the Preferred Stock has voting
rights; (c) dilution of the equity interest of the Common Stock to the extent
that the Preferred Stock is converted into Common Stock; or (d) the Common Stock
not being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted the holders of the Preferred
Stock. The availability of Preferred Stock which can be designated and issued in
series provides desirable flexibility in connection with possible acquisitions
and other corporate purposes. The opportunity of the Board to designate and
issue series of Preferred Stock may provide a defensive mechanism to management
to discourage or render more difficult transactions not supported by the Board
designed to acquire control of the Company or remove its management. The Company
is not aware of and, given the voting rights of the outstanding Class B Common
Stock, does not anticipate any outside party contemplating any such transaction.
The Company has no present plans to designate or issue any series of the
Preferred Stock.
SHARES ELIGIBLE FOR SALE
As of September 30, 1994, the Company had reserved for issuance 1,420,700
shares of Class A Common Stock issuable upon conversion of the outstanding Class
B Common Stock, 100,000 shares of Class A Common Stock issuable upon conversion
of the Company's Convertible Note and 274,850 shares of Class A Common Stock
issuable upon exercise of options outstanding under the Company's Stock Option
Plan. The Company and its directors and executive officers have agreed that they
will not directly or indirectly for a period of 120 days following the date of
this Prospectus, sell, offer to sell or contract to sell or otherwise dispose of
any such Class A Common Stock. In addition, the Company currently has a
registration statement effective under the Securities Act, providing for the
registration of 680,000 shares of Class A Common Stock (i) 330,000 of which were
issued in connection with the Company's Westwynn acquisition, (ii) 250,000 of
which were issuable upon the exercise of a warrant (the "Warrant") and (iii)
100,000 of which are issuable upon the conversion of the Company's outstanding
Convertible Note. On September 22, 1994, the holder of the Warrant exercised it
for shares of Class A Common Stock. None of the shares currently registered
under the shelf registration are subject to any lock up or other agreement
restricting the sale thereof. Sales of such Class A Common Stock in the public
market could have an adverse affect on the market price of the Class A Common
Stock.
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<PAGE> 31
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
The Robinson-Humphrey Company, Inc. are acting as representatives (the
"Representatives"), has severally agreed to purchase the aggregate number of
shares of Class A Common Stock set forth opposite its name below. In the
Purchase Agreement, the several Underwriters have agreed, subject to the terms
and conditions set forth therein, to purchase all the Class A Common Stock
offered hereby if any such shares are purchased. In the event of a default by an
Underwriter, the Purchase Agreement provides that, in certain circumstances,
purchase commitments of the nondefaulting Underwriters may be increased or the
Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. 662,500
The Robinson-Humphrey Company, Inc........................................ 662,500
Furman Selz Incorporated.................................................. 125,000
Goldman, Sachs & Co....................................................... 125,000
Jefferies & Company, Inc.................................................. 125,000
Morgan Stanley & Co. Incorporated......................................... 125,000
NatWest Securities Limited................................................ 125,000
Oppenheimer & Co., Inc.................................................... 125,000
PaineWebber Incorporated.................................................. 125,000
J.C. Bradford & Co........................................................ 75,000
J.J.B. Hilliard, W. L. Lyons, Inc......................................... 75,000
Josephthal Lyon & Ross Incorporated....................................... 75,000
The Seidler Companies Incorporated........................................ 75,000
---------
Total........................................................ 2,500,000
========
</TABLE>
The Representatives of the Underwriters have advised the Company that they
propose initially to offer the shares of Class A Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $.65 per share.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $.10 per share on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company has granted the Underwriters an option exercisable for 30 days
after the date hereof to purchase up to 375,000 additional shares of Class A
Common Stock to cover over-allotments, if any, at the initial public offering
price, less the underwriting discount. If the Underwriters exercise this option,
each of the Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage thereof which the
number of shares of Class A Common Stock to be purchased by it shown in the
foregoing table is of the 2,500,000 shares of Class A Common Stock initially
offered hereby.
The Company and its directors and executive officers have agreed that they
will not, directly or indirectly for a period of 120 days following the date of
this Prospectus, sell, offer to sell, contract to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Class A Common Stock, other
equity securities of the Company or any securities convertible into or
exercisable or exchangeable for any shares of Class A Common Stock or other
equity securities without the prior written consent of Merrill Lynch.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
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<PAGE> 32
LEGAL MATTERS
The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Troutman Sanders, Atlanta, Georgia, counsel for
the Company, and certain legal matters with respect to the shares will be passed
upon for the Underwriters by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York. Carl E. Sanders, a partner in
Troutman Sanders, is a director of the Company and the beneficial owner of
72,500 shares of Class A Common Stock.
EXPERTS
The consolidated financial statements and schedules of Carmike Cinemas,
Inc. included in this Prospectus and Registration Statement or incorporated by
reference in Carmike Cinemas, Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1993, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of Cinema World Companies as of December
30, 1993, and for the year then ended, appearing in Carmike Cinemas, Inc.'s
Current Report on Form 8-K, as amended, dated May 20, 1994, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SHARES OF CLASS A COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
Prospectus Summary.................... 3
The Company........................... 8
Investment Considerations............. 8
Use of Proceeds....................... 10
Price Range of Class A Common Stock
and Dividend Policy................. 11
Capitalization........................ 12
Selected Consolidated Financial
Data................................ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 18
Management............................ 26
Description of Capital Stock.......... 28
Underwriting.......................... 31
Legal Matters......................... 32
Experts............................... 32
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,500,000 SHARES
[GRAPHIC]
CARMIKE CINEMAS
CLASS A COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
NOVEMBER 17, 1994
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 34
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
Inside Front Cover Fold-Out/Left Flap
- -------------------------------------
(Photo - top) "Carmike Locations Throughout the U.S."
---------------------------------------
Shown is a U.S. map with dots representing Carmike's
444 theatre locations.
(Photo - bottom) "Growth in Theatres and Screens"
--------------------------------
Shown is a bar chart with number of Carmike screens and
theatres from 1986 - 1994.
Inside Front Cover Fold-Out/Right Flap
- --------------------------------------
(Photo - top) Shown is an exterior view of a Carmike theatre location.
(Photo - bottom) Shown is a Carmike theatre concession stand.
Inside Back Cover
- -----------------
(Photo - top) Shown is the interior of a Carmike auditorium.
(Photo - middle) Shown is a little boy eating popcorn and watching a
movie. (Also presented in the 1993 annual report.)
(Photo - bottom) Shown is an exterior view of another Carmike theatre
location.
