<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1994.
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 58-1469127
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1301 FIRST AVENUE
COLUMBUS, GEORGIA 31901
(706) 576-3400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
JOHN O. BARWICK, III
VICE PRESIDENT -- FINANCE
CARMIKE CINEMAS, INC.
1301 FIRST AVENUE
COLUMBUS, GEORGIA 31901
(706) 576-3400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
WITH A COPY TO:
<TABLE>
<S> <C> <C>
JAMES J. CLARK, ESQ. MICHAEL W. PATRICK PATRICIA A. WILSON, ESQ.
CAHILL GORDON & REINDEL PRESIDENT TROUTMAN SANDERS
80 PINE STREET CARMIKE CINEMAS, INC. 600 PEACHTREE STREET, N.E.
NEW YORK, NEW YORK 10005 1301 FIRST AVENUE SUITE 5200
COLUMBUS, GEORGIA 31901 NATIONSBANK PLAZA
ATLANTA, GEORGIA 30308-2216
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
---------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
---------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT* OFFERING PRICE* FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par
value $.03 per share..... 2,875,000 Shares $23.188 $66,665,500 $22,989
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION *
* OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 1994
PROSPECTUS
2,500,000 SHARES
CARMIKE CINEMAS, INC.
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
60.8% of the combined voting power of all outstanding shares of capital stock of
the Company (approximately 59.9% 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 October 21, 1994, the last
reported sale price of the Class A Common Stock on the New York Stock Exchange
was $23 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>
==========================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
- ------------------------------------------------------------------------------------------------
Total(3)......................... $ $ $
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- ------------------------------------------------------------------------------------------------
</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 $ .
(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 $ ,
$ and $ , 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 , 1994.
---------------------
MERRILL LYNCH & CO. THE ROBINSON-HUMPHREY
COMPANY, INC.
---------------------
The date of this Prospectus is , 1994.
<PAGE> 3
PICTURES
(See Appendix to Electronic Format Document)
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> 4
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> 5
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................. 10,774,301 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> 6
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 $ 15,287
Total assets.................................................................. 357,003 362,523
Total long-term debt(11)...................................................... 191,903 142,403
Shareholders' equity.......................................................... 110,683 165,703
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA(12)
----------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1993(5) 1994(6)
------------ ---------------
<S> <C> <C>
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> 7
(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> 8
(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> 9
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 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 68.1% of the combined voting power of both
classes of Common Stock (60.8% upon completion of this offering and 59.9% 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> 10
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> 11
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 $55,020,000
(approximately $63,325,000 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> 12
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 October 21, 1994).................................. 24 3/8 21 3/4
</TABLE>
On October 21, 1994, the last reported sale price of the Class A Common
Stock on the New York Stock Exchange was $23 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> 13
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 (assumed
to be $55 million) 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 96,922
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................................... 110,683 165,703
-------- --------
Total capitalization......................................... $311,521 $317,041
======== ========
</TABLE>
- ---------------
(1) As of October 24, 1994, the Company's debt under its Credit Agreement was
$52,000,000, an increase of $2,500,000 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> 14
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> 15
<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
Provisions 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> 16
(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> 17
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> 18
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 October 20, 1994, the Company had approximately $8,800,000 in
cash and short-term investments on hand and $48,000,000 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
$100,000,000 available under its existing Credit Agreement.
17
<PAGE> 19
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> 20
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 totalled 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
19
<PAGE> 21
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.
20
<PAGE> 22
- 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> 23
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.
22
<PAGE> 24
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.
23
<PAGE> 25
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> 26
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> 27
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
26
<PAGE> 28
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.
27
<PAGE> 29
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 68.1% of the combined voting power of the Common Stock and will be
approximately 60.8% 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%
28
<PAGE> 30
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
29
<PAGE> 31
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 of 1933, as amended
(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.
30
<PAGE> 32
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......................................................... [ ]
The Robinson-Humphrey Company, Inc................................................ [ ]
---------
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 $ per
share. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of $ 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.
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
31
<PAGE> 33
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.
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, 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.
32
<PAGE> 34
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.
33
<PAGE> 35
- ------------------------------------------------------
- ------------------------------------------------------
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>
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......................... 31
Experts............................... 31
Available Information................. 32
Incorporation of Certain Information
by Reference........................ 32
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,500,000 SHARES
CARMIKE CINEMAS, INC.
CLASS A COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
, 1994
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 36
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
Inside Front Cover
- ------------------
(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/Left Flap
- -------------------------------------
(Photo - top) Shown is an exterior view of a Carmike theatre location.
(Photo - bottom) Shown is a Carmike theatre concession stand.
Inside Front Cover Fold-Out/Right Flap
- --------------------------------------
(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.
<PAGE> 37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid in connection with the issuance and distribution of
the securities being registered, other than underwriting discounts and
commissions, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $ 22,989
NASD Filing Fee........................................................... 7,167
Legal Fees and Expenses................................................... 125,000
Accounting Fees and Expenses.............................................. 25,000
Printing Fees and Expenses................................................ 125,000
Blue Sky Fees and Expenses................................................ 25,000
Exchange Listing Fee...................................................... 9,468
Miscellaneous............................................................. 10,376
--------
Total........................................................... $350,000
========
</TABLE>
All of the above items are estimates except the SEC Registration Fee, the
NASD Filing Fee and the Exchange Listing Fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended, provides
in regard to indemnification of directors and officers as follows:
sec. 145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or
II-1
<PAGE> 38
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections (a) and
(b). Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding even
though less than a quorum, or (2) if there are no such directors, or, if
such directors so direct, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
II-2
<PAGE> 39
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
Article VI of the Company's Bylaws provides in regard to indemnification of
directors and officers as follows:
The corporation shall indemnify and hold harmless, to the full extent and
under the circumstances permitted by the Delaware General Corporation Law, as
the same exists or may hereafter be amended, each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against all expenses, liability and loss reasonably incurred. This
right to indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators.
This right of indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition shall not be
exclusive of any other right to which any other person may have or hereafter
acquire under any statute, Certificate of Incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise. The Corporation may, by
action of its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the indemnification
of directors and officers.
The Corporation may maintain insurance to protect itself and any director,
officer, employee or agent of the Corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person under Delaware
Corporate Law.
Article 9 of the Company's Certificate of Incorporation provides in regard
to the limitation of liability of directors and officers as follows:
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction for which the
director derived an improper personal benefit. This Article NINTH shall not
eliminate or limit the liability of a director for any act or omission
occurring prior to the time this Article NINTH became effective.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
1 -- Form of Purchase Agreement
4.1 -- Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to
Amendment No. 1 to the Company's Registration Statement on Form S-1 (No. 33-8007),
and incorporated herein by reference).
4.2 -- By-Laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the
fiscal year ended December 31, 1987, and incorporated herein by reference).
</TABLE>
II-3
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
5 -- Opinion of Troutman Sanders as to the legality of the securities being registered.
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Troutman Sanders (contained in Exhibit 5)
24 -- Powers of Attorney (see page II-5)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change in such information in the Registration
Statement; provided, however, that the registrant need not file a post-effective
amendment to include the information required to be included by subsection (i)
or (ii) if such information is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement; (2) that, for the
purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia on the 24th day of October,
1994.
CARMIKE CINEMAS, INC.
By: /s/ MICHAEL W. PATRICK
-----------------------
Michael W. Patrick
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Michael W. Patrick and John O.
Barwick, III, and each of them acting individually, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them
acting individually, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them acting individually, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 24, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<C> <S>
/s/ C.L. PATRICK Chairman of the Board of Directors
-----------------------------------
C.L. Patrick
/s/ MICHAEL W. PATRICK President; Director (Chief Executive
----------------------------------- Officer)
Michael W. Patrick
/s/ JOHN O. BARWICK, III Vice President -- Finance; Treasurer (Chief
----------------------------------- Financial and Accounting Officer)
John O. Barwick, III
/s/ CARL L. PATRICK, JR. Director
-----------------------------------
Carl L. Patrick, Jr.
/s/ CARL E. SANDERS Director
-----------------------------------
Carl E. Sanders
/s/ JOHN W. JORDAN, II Director
-----------------------------------
John W. Jordan, II
/s/ DAVID W. ZALAZNICK Director
-----------------------------------
David W. Zalaznick
</TABLE>
II-5
<PAGE> 42
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ---------------------------------------------------------------------------------------
<C> <C> <S> <C>
1 -- Form of Purchase Agreement
4.1 -- Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a)
to Amendment No. 1 to the Company's Registration Statement on Form S-1 (No.
33-8007), and incorporated herein by reference).
4.2 -- By-Laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K
for the fiscal year ended December 31, 1987, and incorporated herein by
reference).
5 -- Opinion of Troutman Sanders as to the legality of the securities being
registered.
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Troutman Sanders (contained in Exhibit 5)
24 -- Powers of Attorney (see page II-5)
</TABLE>
<PAGE> 1
Exhibit 1
2,500,000 Shares
CARMIKE CINEMAS, INC.
(a Delaware corporation)
Class A Common Stock
(Par Value $.03 Per Share)
PURCHASE AGREEMENT
__, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
THE ROBINSON-HUMPHREY COMPANY, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Carmike Cinemas, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"), The Robinson-Humphrey Company, Inc.
("Robinson-Humphrey") and each of the other underwriters named in Schedule A
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 11 hereof), for
whom Merrill Lynch and Robinson-Humphrey are acting as representatives (in
such capacity, Merrill Lynch and Robinson-Humphrey shall hereinafter be
referred to as the "Representatives"), with respect to the sale by the Company
of 2,500,000 shares of Class A Common Stock, par value $.03 per share (the
"Common Stock"), of the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock
set forth in said Schedule A, aggregating 2,500,000 shares of Common Stock,
and with respect to the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of an aggregate of 375,000 additional shares of
Common Stock solely to cover over-allotments, in each case except as may
otherwise be provided in the Pricing Agreement,
<PAGE> 2
-2-
as hereinafter defined. The aforesaid 2,500,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part
of the 375,000 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are collectively hereinafter
called the "Securities".
Prior to the purchase and public offering of the Securities by the
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form
of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
among the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Purchase Agreement (this "Agreement"), as
supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-) and a
related preliminary prospectus for the registration of the Securities under
the Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be required.
Such registration statement (as amended, if applicable) and the prospectus
constituting a part thereof (including in each case all documents incorporated
or deemed to be incorporated by reference therein, except as modified or
superseded therein, and the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations)), as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Underwriters for such use.
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated"
in the Registration Statement or the Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial statements
and schedules and other information which is or is deemed to be incorporated
by reference in the Registration Statement or the Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
<PAGE> 3
-3-
Registration Statement or the Prospectus shall be deemed to mean and include
the filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
The Company understands that the Underwriters propose to
make a public offering of the Securities as soon as the Representatives deem
advisable after the Registration Statement becomes effective and the Pricing
Agreement has been executed and delivered.
SECTION 1. Representations and Warranties. (a) The
Company represents and warrants to each Underwriter as of the date hereof and
as of the date of the Pricing Agreement (such latter date being hereinafter
referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement
will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations, and will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, at the Representation Date
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection
with the offering of the Securities which differs from the Prospectus
on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to
the Underwriters for such use) and at the Closing Time referred to in
Section 2, will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
with respect to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in
the Registration Statement or Prospectus.
(ii) The financial statements and schedules included in
or incorporated by reference into the Registration Statement and the
Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries, as at the dates indicated and the
results of operations for the periods specified; except as otherwise
stated in the Registration Statement, said financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis; and the supporting
schedules included in or incorporated by reference into the
Registration Statement and the Prospectus present fairly the
information required to be stated therein.
<PAGE> 4
-4-
(iii) Ernst & Young LLP, who certified the financial
statements and supporting schedules incorporated by reference into
the Registration Statement and the Prospectus, are independent public
accountants with respect to the Company and its subsidiaries as
required by the 1933 Act and the 1933 Act Regulations.
(iv) The pro forma financial information included in or
incorporated by reference into the Registration Statement and the
Prospectus (A) presents fairly in all material respects the
information shown therein, (B) has been prepared in accordance with
applicable requirements of Regulation S-X promulgated under the 1934
Act, (C) has been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and (D)
has been properly computed on the bases described therein. In the
opinion of the Company, the assumptions used in the preparation of
any such pro forma financial information are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(v) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its
capital stock.
(vi) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware with corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under this Agreement and the Pricing Agreement; and the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries considered as one
enterprise.
(vii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
<PAGE> 5
-5-
properties and to conduct its business as described in the Prospectus
and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries considered as one
enterprise; all of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim.
(viii) The Company had the authorized, issued and
outstanding capitalization set forth in the Prospectus as of the date
such information was given in the Prospectus; the shares of issued
and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
the Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment
of the consideration set forth in the Pricing Agreement, will be
validly issued and fully paid and non-assessable; the Common Stock
conforms to all statements relating thereto contained in the
Prospectus; the issuance of the Securities is not subject to
preemptive or other similar rights; the certificates for the
Securities are in due and proper form; and the holders of the
Securities will not be subject to personal liability solely by reason
of being such holders.
(ix) This Agreement has been, and, at the
Representation Date the Pricing Agreement will have been, duly
authorized, executed and delivered by the Company.
(x) Neither the Company nor any of its subsidiaries is
in violation of its respective charter or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company
or any of its subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, which default or
violation would have a material adverse effect on the Company and its
subsidiaries considered as one enterprise; the execution, delivery
and performance of this Agreement and the Pricing Agreement and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and
thereunder have been duly authorized by all necessary corporate
action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any
<PAGE> 6
-6-
property or assets of the Company or any of its subsidiaries pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, except for such conflicts, breaches, defaults, liens,
charges or encumbrances which, singly or in the aggregate, would not
have a material adverse effect on the Company and its subsidiaries
considered as one enterprise, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or any of its subsidiaries or any violation of any applicable law,
administrative regulation or administrative or court decree, except
for such violations which, singly or in the aggregate, would not
have a material adverse effect on the Company and its subsidiaries
considered as one enterprise.
(xi) No labor dispute with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent, except for those which would not result in any
material adverse change in the condition, financial or otherwise, or
in the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xii) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of the Company, threatened, against or
to the knowledge of the Company affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which, considered
singly or in the aggregate, might result in any material adverse
change in the condition, financial or otherwise, or in the earnings
or business affairs of the Company and its subsidiaries considered as
one enterprise, or which might materially and adversely affect the
properties or assets thereof or which might materially or adversely
affect the consummation of this Agreement or the Pricing Agreement;
all pending legal or governmental proceedings to which the Company or
any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material; and there are no contracts or documents of the Company or
any of its subsidiaries which are required to be filed as exhibits to
the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed.
(xiii) The Company and its subsidiaries own or possess,
have the right to use or can acquire on reasonable terms, all
material licenses, copyrights, know-how (including trade secrets and
other un-patented and/or un-patentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, "intellectual property") presently
employed by them in connection
<PAGE> 7
-7-
with the business now operated by them, except where the failure to
own or possess or have the ability to acquire any such intellectual
property would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings or business affairs of
the Company and its subsidiaries considered as one enterprise, and
neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse
change in the condition, financial or otherwise, or in the earnings
or business affairs of the Company and its subsidiaries considered as
one enterprise.
(xiv) No authorization, approval or consent of any court
or governmental authority or agency is necessary in connection with
the offering, issuance or sale of the Securities hereunder, except
such as may be required under the 1933 Act or the 1933 Act
Regulations, which qualification has been obtained, or state and
foreign securities laws.
(xv) The Company and its subsidiaries possess such
certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them and which are material to
the Company and its subsidiaries considered as one enterprise, and
neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
(xvi) The documents incorporated or deemed to be
incorporated by reference in the Prospectus pursuant to Item 12 of
Form S-3 under the 1933 Act, at the time they become effective or
were or hereafter are filed or last amended, as the case may be, with
the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations
of the Commission under the 1934 Act (the "1934 Act Regulations"),
and, when read together with the other information in the Prospectus,
at the time the Registration Statement and any amendments thereto
became effective, at the Representation Date and at the Closing Date,
did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
<PAGE> 8
-8-
(xvii) There are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or included in the offering contemplated by
this Agreement who have not waived such rights in writing in
connection with the offering and sale of the Securities contemplated
hereby.
(xviii)The Company has furnished the Representatives
letters from each of the executive officers and directors of the
Company pursuant to which such persons have agreed during a period of
120 days from the date hereof that, without the prior written consent
of Merrill Lynch, such persons will not sell, offer to sell, contract
to sell, or otherwise dispose of, directly or indirectly, any shares
of Common Stock, any other equity security of the Company, or any
security convertible into or exchangeable or exercisable for shares
of Common Stock or such equity securities, beneficially owned by such
person or with respect to which such person has the power of
disposition.
(b) Any certificate signed by any officer of the
Company and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a)On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at the price
per share agreed upon by the Representatives as set forth in the Pricing
Agreement, the number of the Initial Securities set forth in Schedule A
opposite the name of such Underwriter, plus any additional number of Initial
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 11 hereof.
(i) If the Company has elected not to rely upon Rule
430A under the 1933 Act Regulations, the initial public offering
price of the Securities and the purchase price per share of the
Securities to be paid by the several Underwriters shall be agreed
upon and set forth in the Pricing Agreement, dated the date hereof,
and an amendment to the Registration Statement and the Prospectus
will be filed before the Registration Statement becomes effective.
(ii) If the Company has elected to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price of
the Securities and the purchase price per share of the Securities to
be paid by the several Underwriters shall be determined by agreement
among the Representatives and the Company as set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon
and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day
following the date of this Agreement, this
<PAGE> 9
-9-
Agreement shall terminate forthwith, without liability of any party
to any other party, unless otherwise agreed to by the Company and the
Representatives.
(b) In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth and the delivery and payment for the Initial Securities pursuant to
this Agreement, the Company hereby grants an option to the Underwriters, acting
severally and not jointly, to purchase up to an aggregate of an additional
375,000 shares of Common Stock at the price per share set forth in the Pricing
Agreement. The option hereby granted will expire 30 calendar days after (i)
the date the Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the 1933 Act Regulations or (ii) the
date of the Pricing Agreement, if the Company has elected to rely on Rule 430A
under the 1933 Act Regulations, and may be exercised in whole or in part at the
Closing Time and at one date subsequent to the Closing Time but prior to the
expiration of such option only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives and may be the same date
as the Closing Time, as hereinafter defined (but not earlier than the Closing
Time), but shall not be earlier than two full business days nor later than
seven full Business Days after the giving of notice of the exercise of said
option, unless otherwise agreed by the Representatives and the Company. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities as to which the option is
being exercised which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities (except as otherwise provided in the Pricing Agreement), subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005, or at such other
place as shall be agreed upon by the Representatives and the Company, at 10:00
A.M. on the fifth business day (unless postponed in accordance with the
provisions of Section 11) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time"). In addition, in the event that any or
all of the Option Securities are to be purchased by the Underwriters, payment
of the purchase price for, and delivery of certificates for, such Option
Securities
<PAGE> 10
-10-
shall be made at the above-mentioned offices of Cahill Gordon & Reindel, or at
such other place as shall be agreed upon by the Representatives and the
Company on each Date of Delivery as specified in the notice from the
Representatives to the Company. Payment for the Securities shall be made to
the Company by certified or official bank check or checks in New York Clearing
House Funds payable to the order of the Company against delivery of the
Securities to the Representatives for the respective accounts of the
Underwriters. The certificates representing Securities shall be in such
denominations and registered in such names as the Representatives may request
in writing at least two business days before the Closing Time or any Date of
Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. The Representatives may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Underwriter whose check has not been received by the Closing Time or any Date
of Delivery, but such payment shall not relieve such Underwriter from its
obligations hereunder. The certificates for the Securities will be made
available for examination and packaging by the Underwriters not later than
10:00 A.M. on the last business day prior to the Closing Time or any Date of
Delivery, as the case may be, at such place as the Underwriters may designate
in New York, New York.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives
immediately, and confirm the notice in writing (if requested), (i) of
the effectiveness of the Registration Statement and any amendment
thereto (including any post-effective amendment), (ii) of the receipt
of any comments from the Commission in respect of the Registration
Statement, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose or the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or the threatening or
initiation of any proceeding for that purpose. The Company will make
every reasonable effort to prevent the issuance of any stop order or
any order preventing or suspending the use of any preliminary
prospectus or suspending such qualification and, if any stop order or
any order preventing or suspending the use of any preliminary
prospectus or suspending such qualification is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any amendment
or supplement to the Prospectus (including any
<PAGE> 11
-11-
revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective), whether pursuant to the
1933 Act, the 1934 Act or otherwise, will furnish the Representatives
with copies of any such amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such
prospectus to which the Representatives or counsel for the
Underwriters shall reasonably object; provided, however, that
notwithstanding any objections from the Representatives, any such
amendment or supplement may be filed if, in the opinion of counsel
for the Company, any such amendment or supplement is necessary to
comply with applicable law.
(c) The Company will deliver to the Representatives
five signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and will also deliver to the
Representatives a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for
each of the Underwriters.
(d) The Company will furnish to each Underwriter, from
time to time during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies
of the Prospectus (as amended or supplemented) as such Underwriter
may reasonably request for the purposes contemplated by the 1933 Act
or the 1934 Act or the respective applicable rules and regulations of
the Commission thereunder.
(e) If any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the
Underwriters, to amend or supplement the Prospectus in order to make
the Prospectus not misleading in light of the circumstances existing
at the time it is delivered to a purchaser or if for any other reason
it shall be necessary to amend or supplement the Prospectus in order
to comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act
or the 1934 Act Regulations, the Company will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriters) so that, as so amended or supplemented,
the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the
time it is delivered to a purchaser, not misleading and will comply
with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations, and the Company will furnish to the
Underwriters a reasonable number of copies of such amendment or
supplement.
<PAGE> 12
-12-
(f) The Company will cooperate fully with the
Underwriters and counsel for the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as the
Representatives may reasonably designate; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in
effect, for so long as may be required to complete the distribution
of the Securities.
(g) The Company will make generally available to its
security holders as soon as practicable, but not later than 90 days
after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a twelve month period beginning not later than
the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration
Statement.
(h) The Company will use the net proceeds received by
it from the sale of the Initial Securities in the manner specified in
the Prospectus under "Use of Proceeds."
(i) If, at the time that the Registration Statement
becomes effective, any information shall have been omitted therefrom
in reliance upon Rule 430A of the 1933 Act Regulations, then
immediately following the execution of the Pricing Agreement, the
Company will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the
1933 Act Regulations, copies of an amended Prospectus, or, if
required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended Prospectus), containing
all information so omitted.
(j) The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to
Sections 13, 14 or 15 of the 1934 Act within the time periods
required by the 1934 Act and the 1934 Act Regulations.
(k) During a period of 120 days from the date hereof,
the Company will not, without the prior written consent of Merrill
Lynch, sell, offer to sell, contract to sell, or otherwise dispose
of, directly or indirectly, any shares of Common Stock, any other
equity security of the Company or any security convertible into or
exchangeable or exercisable for Common Stock or such equity security
(except for shares of Common Stock issued pursuant to this Agreement
and the Pricing Agreement and except for shares of Common Stock
issued pursuant to reservations, agreements,
<PAGE> 13
-13-
existing employee stock option or other benefit plans or the
exercise of convertible securities referred to in the Prospectus.)
(l) The Company will take all action necessary to
cause the Securities to be listed on the New York Stock Exchange.
(m) The Company will use all commercially reasonable
efforts to do and perform all things required or necessary to be done
and performed by it under this Agreement prior to the Closing Time
and to satisfy all conditions precedent to the delivery of the
Securities.
SECTION 4. Payment of Expenses. The Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including (i) the printing and filing and delivery to the
Underwriters of copies of the Registration Statement as originally filed and of
each amendment thereto, (ii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey, (v) the printing and delivery to the
Underwriters of copies of the Registration Statement as originally filed and
each amendment thereto, of the preliminary prospectuses, and of the Prospectus
and any amendments or supplements thereto, (vi) the delivery to the
Underwriters of the Blue Sky Survey, (vii) the fees and expenses of the
Company's transfer agent, (viii) the fees payable to the National Association
of Securities Dealers, Inc. and (ix) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 10 (a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become
effective not later than 5:30 P.M. on the date hereof, or with the
consent of the Representatives, at a later time and date, not later,
however, than 5:30 P.M. on the first business day following the date
hereof, or at such later time and date as may be approved by the
Underwriters; and at the Closing Time no stop order suspending the
effectiveness of
<PAGE> 14
-14-
the Registration Statement shall have been issued under the 1933
Act or proceedings therefor initiated or threatened by the
Commission. If the Company has elected to rely upon Rule 430A of the
1933 Act Regulations, the price of the Securities and any
price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of
the 1933 Act Regulations within the prescribed time period, and prior
to Closing Time the Company shall have provided evidence satisfactory
to Merrill Lynch of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed
and declared effective in accordance with the requirements of Rule
430A of the 1933 Act Regulations.
(b) At the Closing Time the Underwriters shall have
received:
(1) An opinion, dated the Closing Time, of
Troutman Sanders, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters,
to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
(ii) The Company has the corporate power
and authority to own, lease and operate its
properties and to conduct its business as
described in the Registration Statement and to
enter into and perform its obligations under this
Agreement and the Pricing Agreement.
(iii) To the best of their knowledge and
information, the Company is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required except where the failure
to be so qualified would not have a material
adverse effect on the Company and its subsidiaries
considered as one enterprise.
(iv) The authorized, issued and outstanding
capital stock of the Company was as set forth in
the Prospectus under "Capitalization" as of the
date such information was given in the Prospectus,
and the shares of issued and outstanding Common
Stock have been duly authorized and validly issued
and are fully paid and non-assessable.
(v) The Securities have been duly
authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to
this Agreement
<PAGE> 15
-15-
against payment of the consideration set forth in
the Pricing Agreement, will be validly issued and
fully paid and non-assessable.
(vi) The issuance of the Securities is not
subject to preemptive rights arising by statute,
under the charter or by-laws of the Company or, to
the best of their knowledge and information,
otherwise; and no holder of the Securities will be
subject to personal liability solely by reason of
being such a holder.
(vii) Each subsidiary of the Company has
been duly incorporated and is validly existing as
a corporation in good standing under the laws of
the jurisdiction of its incorporation, has
corporate power and authority to own, lease and
operate its properties and to conduct its business
as described in the Registration Statement and, to
the best of their knowledge and information, is
duly qualified as a foreign corporation to
transact business and is in good standing in each
jurisdiction in which such qualification is
required except where the failure to be so
qualified would not have a material adverse effect
on the Company and its subsidiaries considered as
one enterprise; all of the issued and outstanding
capital stock of each such subsidiary has been
duly authorized and validly issued, is fully paid
and non-assessable and, to the best of their
knowledge and information, is owned by the
Company, directly or through subsidiaries, free
and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(viii)This Agreement and the Pricing
Agreement has each been duly authorized, executed
and delivered by the Company.
(ix) Counsel for the Company has been
advised by the Staff of the Commission that the
Registration Statement and all post-effective
amendments, if any, have been declared effective
under the 1933 Act; and to the best of their
knowledge and information, based solely on
conversations with the Staff of the Commission, no
stop order suspending the effectiveness of the
Registration Statement has been issued under the
1933 Act or proceedings therefor initiated or
threatened by the Commission.
(x) At the time the Registration Statement
and each amendment thereto became effective and at
the Representation Date, the Registration
Statement (other than the financial statements and
the notes thereto, supporting schedules and other
financial and statistical data
<PAGE> 16
-16-
included or incorporated therein, as to which no
opinion need be rendered) complied as to form in
all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(xi) The Common Stock conforms as to legal
matters to the description thereof contained in
the Prospectus in all material respects, and the
form of certificate used to evidence the Common
Stock is in due and proper form and complies with
all applicable statutory requirements.
(xii) To the best of their knowledge and
information, there are no legal or governmental
proceedings pending or threatened against the
Company or any of its subsidiaries which are
required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xiii)To the best of their knowledge and
information, there are no material contracts,
indentures, mortgages, loan agreements, notes,
leases or other instruments required to be
described or referred to in the Registration
Statement or to be filed as exhibits thereto other
than those described or referred to therein or
filed or incorporated by reference as exhibits
thereto, the descriptions thereof or references
thereto, insofar as they are descriptions of
contracts or other legal documents, or refer to
statements of law or legal conclusions, accurately
and fairly present the information required to be
shown.
(xiv) No authorization, approval, consent or
order of any court or governmental authority or
agency is required in connection with the
offering, issuance or sale of the Securities to
the Underwriters, except such as may be required
under the 1933 Act or the 1933 Act Regulations or
state securities laws; and, to the best of their
knowledge and information, the execution, delivery
and performance of this Agreement and the Pricing
Agreement and the consummation of the transactions
contemplated herein and therein and compliance by
the Company with its obligations hereunder and
thereunder will not conflict with or constitute a
breach of, or default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to,
any material contract, indenture, mortgage, loan
agreement, note, lease or other material
instrument to which the Company or any of its
subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property
or assets of the Company or any of its
subsidiaries is subject, nor will such action
result in any violation of the
<PAGE> 17
-17-
provisions of the charter or by-laws of the
Company, or any applicable law, administrative
regulation or administrative or court decree known
to such counsel, where such conflict, breach or
violation would have a material adverse effect on
the Company and its subsidiaries considered as one
enterprise.
(xv) To the best of their knowledge and
information, there are no persons with
registration or other similar rights to have any
securities registered pursuant to the Registration
Statement.
(xvi) Each document filed pursuant to the
1934 Act (other than the financial statements and
the notes thereto, supporting schedules and other
financial and statistical data included therein,
as to which no opinion need be rendered) and
incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed
as to form in all material respects with the 1934
Act and the 1934 Act Regulations.
(2) The favorable opinion, dated as of Closing Time,
of Cahill Gordon & Reindel, counsel for the Underwriters, with
respect to certain of the matters set forth in (i), (v) and (viii) to
(xi), inclusive, of subsection (b)(1) of this Section.
(3) In giving their opinions required by subsections
(b)(1) and (b)(2), respectively, of this Section, Troutman Sanders
and Cahill Gordon & Reindel shall each additionally state that
nothing has come to their attention that would lead them to believe
that the Registration Statement (except for financial statements and
schedules and other financial or statistical data included or
incorporated by reference therein, as to which counsel need make no
statement), at the time it became effective or at the Representation
Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus
(except for financial statements and the notes thereto, schedules and
other financial or statistical data included or incorporated by
reference therein, as to which counsel need make no statement), at
the Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company
for use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time
it is first provided to the Underwriters for such use) or at Closing
Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
<PAGE> 18
-18-
(c) At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of
business, other than as described in the Registration Statement or
the Prospectus and the Underwriters shall have received a certificate
of the Chief Executive Officer of the Company and the chief financial
or chief accounting officer of the Company, dated as of the Closing
Time, to the effect that (A) there has been no such material adverse
change, (B) the representations and warranties in Section 1 are true
and correct with the same force and effect as though expressly made
at and as of the Closing Time, (C) the Company has complied with all
agreements and satisfied all conditions on its part required to be
performed or satisfied at or prior to the Closing Time, and (D) no
stop order suspending the effectiveness of the Registration Statement
has been issued and, to their knowledge, no proceedings for that
purpose have been initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement,
the Underwriters shall have received from Ernst & Young LLP,
independent auditors, a letter dated such date, in form and substance
previously approved by the Representatives, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus.
(e) At the Closing Time, the Underwriters shall have
received from Ernst & Young LLP, independent auditors, a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of
this Section, except that the date therein shall be a date not more
than five days prior to the Closing Time.
(f) At the Closing Time, the Representatives shall
have been furnished with such documents and opinions as it may
reasonably require for the purpose of enabling counsel for the
Underwriters to pass upon the issuance and sale of the Securities as
herein contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
(g) At the time of the execution of this Agreement,
the Representatives shall have received from each of the executive
officers and directors of the Company a letter in which each such
person agrees during a period of 180 days from the date
<PAGE> 19
-19-
hereof, that such person will not, without the prior written consent
of Merrill Lynch, sell, offer to sell, contract to sell, or otherwise
dispose of, directly or indirectly, any shares of Common Stock, any
other equity security of the Company or any security convertible into
or exchangeable or exercisable for shares of Common Stock or other
equity security, beneficially owned by such person or with respect to
which such person has the power of disposition except for shares of
Common Stock issued pursuant to reservations, agreements, existing
employee stock option or other benefit plans or the exercise of
convertible securities referred to in the Prospectus.
(h) At the Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject to
official notice of issuance.
If any condition specified in this Section shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4. Notwithstanding any
such termination, the provisions of Sections 7 and 8 shall remain in effect.
SECTION 6. Conditions to Purchase of Option Securities.
In the event that the Underwriters exercise their option granted in Section
2(b) hereof to purchase all or any portion of the Option Securities and the
Date of Delivery determined by the Representatives pursuant to Section 2(b) is
later than the Closing Time, the obligations of the several Underwriters to
purchase and pay for the Option Securities that they shall have respectively
agreed to purchase pursuant to this Agreement are subject to the accuracy, in
all material respects, of the representations and warranties of the Company
herein contained, to the performance, in all material respects, by the Company
of its obligations hereunder and to the following further conditions:
(a) The Registration Statement shall remain effective
at the Date of Delivery, and at the Date of Delivery no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act and no proceedings for that purpose
shall have been instituted or shall be pending or, to the
Representatives' knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with
to the reasonable satisfaction of counsel for the Underwriters.
(b) At the Date of Delivery, the provisions of
Sections 5(c) shall have been complied with at and as of the Date of
Delivery and, at the Date of Delivery, the Representatives shall have
received certificates of the Chief Executive Officer and the
<PAGE> 20
-20-
chief financial or chief accounting officer of the Company dated as
of the Date of Delivery, to such effect.
(c) At the Date of Delivery, the Representatives shall
have received the favorable opinion of Troutman Sanders, counsel for
the Company, together with signed or reproduced copies of such
opinion for each of the other Underwriters, in each case in form and
substance reasonably satisfactory to counsel for the Underwriters,
dated as of the Date of Delivery, relating to the Option Securities
and otherwise to the same effect as the opinion required by Section
5(b)(1) and (3).
(d) At the Date of Delivery, the Representatives shall
have received the favorable opinion of Cahill Gordon & Reindel,
counsel for the Underwriters, dated as of the Date of Delivery,
relating to the Option Securities and otherwise to the same effect as
the opinion required by Section 5(b)(2) and (3).
(e) At the Date of Delivery, the Representatives shall
have received a letter from Ernst & Young LLP, in form and substance
reasonably satisfactory to the Representatives and dated as of the
Date of Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to Section 5(d), except that
the specified date referred to shall be a date not more than five
days prior to the Date of Delivery.
(f) At the Date of Delivery, counsel for the
Underwriters shall have been furnished with all such documents,
certificates and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the
Option Securities as contemplated in this Agreement and the matters
referred to in Section 6(d) and in order to evidence the accuracy and
completeness, in all material respects, of any of the
representations, warranties or statements of the Company, the
performance, in all material respects, of any of the covenants of the
Company, or the fulfillment, in all material respects, of any of the
conditions herein contained; and all proceedings taken by the Company
at or prior to the Date of Delivery in connection with the
authorization, issuance and sale of the Option Securities as
contemplated in this Agreement shall be reasonably satisfactory in
form and substance to the Representatives and to counsel for the
Underwriters.
SECTION 7. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act, and
each officer and director of each Underwriter and any such controlling person
to the extent and in the manner set forth as follows:
<PAGE> 21
-21-
(i) against any and all loss, liability,
claim, damage, and expense whatsoever, as
incurred, arising out of any untrue statement or
alleged untrue statement of a material fact
contained in the Registration Statement (or any
amendment thereto), including the information
deemed to be part of the Registration Statement
pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or
alleged omission therefrom of a material fact
required to be stated therein or necessary to make
the statements therein not misleading or arising
out of any untrue statement or alleged untrue
statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact
necessary in order to make the statements therein,
in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation
or proceeding by any governmental agency or body,
commenced or threatened, or of any claim
whatsoever based upon such untrue statement or
omission, or any such alleged untrue statement or
omission, if such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense
whatsoever, as incurred (including, subject to
Section 7(c) hereof, the reasonable fees and
disbursements of counsel chosen by the
Underwriters), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by
a governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such
alleged untrue statement or omission, to the
extent that any such expense is not paid under (i)
or (ii) above;
provided, however, that (A) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information with respect to any
Underwriter furnished to the Company by or on behalf of such Underwriter
through the Representatives expressly for use in the Registration Statement (or
any amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) and (B) with respect to the Prospectus or any
preliminary prospectus to the extent that any loss, liability, claim, damage or
expense results from the fact that such Underwriter sold Securities to a person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (and any amendment or supplement thereto)
in any case where such delivery is required by the 1933 Act if the Company
previously furnished copies thereof to such Underwriter and the loss,
liability, claim, damage or expense results from an untrue statement or
omission of a
<PAGE> 22
-22-
material fact contained in the Prospectus or any preliminary prospectus which
was corrected in the Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information with
respect to any Underwriter furnished to the Company by such
Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense
of any such action. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
SECTION 8. Contribution. In order to provide for just
and equitable contribution in circumstances in which the indemnity agreement
provided for in Section 7 hereof is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms, the
Company and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and one or more of the
Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting discount appearing on the cover page of the Prospectus relating to
the Initial Securities bears to the initial public offering price appearing
thereon and the Company is responsible for the balance; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the
<PAGE> 23
-23-
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Company,
and shall survive delivery of the Securities to the Underwriters.
SECTION 10. Termination of the Agreement. (a) The
Representatives may terminate this Agreement, by notice to the Company, at any
time at or prior to the Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given
in the Registration Statement at the time it becomes effective, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States, or any new outbreak of hostilities or
material escalation thereof or other calamity or crisis, the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Initial Securities or to enforce contracts for the sale of the
Initial Securities, or (iii) if trading in the Common Stock has been suspended
by the Commission, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either federal, New York or Georgia authorities.
(b) If this Agreement is terminated pursuant to this Section 10,
such termination shall be without liability of any party to any other party
except as provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 7 and 8 shall remain in effect.
SECTION 11. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at the Closing Time to purchase
the Initial Securities which it or they are obligated to purchase under this
Agreement and the Pricing Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non- defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements with such 24-hour period, then:
<PAGE> 24
-24-
(a) if the number of Defaulted Securities does not
exceed 10% of the number of Initial Securities, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof
in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10%
of the number of Initial Securities, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve
any defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in
the termination of this Agreement, either the Representatives or the Company
shall have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
The Underwriters shall have the right to amend Schedule A
hereto by making such substitutions or corrections as indicated in the Pricing
Agreement.
SECTION 12. Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunications.
Notices to the Underwriters shall be directed in care of the Representatives at
Merrill Lynch World Headquarters, North Tower, World Financial Center, New
York, New York 10281-1201, attention of Mr. Christopher Johnson, notices to the
Company shall be directed to it at 1301 First Avenue, Columbus, Georgia 31901,
attention of Mr. John O. Barwick, III.
SECTION 13. Parties. This Agreement and the Pricing
Agreement shall each inure to the benefit of and be binding upon the
Underwriters and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement or the Pricing Agreement is intended
or shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein and therein contained. This Agreement and the Pricing
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Underwriters and the Company and
their respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or
<PAGE> 25
-25-
corporation. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. Governing Laws and Time. This Agreement and
the Pricing Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to principles of
conflict of laws. Specified times of day refer to New York City Time. As used
herein, the term "business day" means any day on which the New York Stock
Exchange is open for business.
<PAGE> 26
-26-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters, and the Company in accordance with its
terms.
Very truly yours,
CARMIKE CINEMAS, INC.
By: __________________________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: ____________________________
Name:
Title:
For itself and as Representatives of the
other Underwriters in Schedule A hereto.
<PAGE> 27
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial Securities
Name of Underwriter to be Purchased
- ------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated
The Robinson-Humphrey Company, Inc.
---------------------
Total
=====================
</TABLE>
<PAGE> 28
Exhibit A
2,500,000 Shares
CARMIKE CINEMAS, INC.
(A Delaware corporation)
CLASS A COMMON STOCK
(Par Value $.03 Per Share)
PRICING AGREEMENT
__, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
THE ROBINSON-HUMPHREY COMPANY, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower, World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Reference is made to the Purchase Agreement, dated __,
1994 (the "Purchase Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and The Robinson-Humphrey Company,
Inc. are acting as representatives, of the above shares of the Class A Common
Stock, par value $.03 per share, of Carmike Cinemas, Inc., a Delaware
corporation (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with the Underwriters as follows:
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be [ ].
2. The purchase price per share for the Securities to be
paid by the several Underwriters shall be [ ], being an amount equal to
the initial public offering price set forth above less [ ] per share.
<PAGE> 29
-2-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
CARMIKE CINEMAS, INC.
By: _________________________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: ____________________________
Name:
Title:
For itself and as Representatives of the
other Underwriters in Schedule A to the
Purchase Agreement.
<PAGE> 1
EXHIBIT 5
October 25, 1994
Carmike Cinemas, Inc.
Carmike Plaza
1301 First Avenue
Columbus, Georgia 31901
Gentlemen:
We have examined a copy of the registration statement on Form S-3
being filed by Carmike Cinemas, Inc. (the "Company") with the Securities and
Exchange Commission on the date of this letter (such registration statement
being herein referred to as the "Registration Statement"), relating to the
registration pursuant to the Securities Act of 1933, as amended (the "Act"), of
2,875,000 shares of the Company's Class A Common Stock, par value $0.03 per
share (the "Shares"). The Shares are proposed to be sold pursuant to a
purchase agreement with respect thereto (the "Purchase Agreement"), in
substantially the form filed as Exhibit 1 to the Registration Statement.
We have also examined originals (or copies certified or otherwise
identified to our satisfaction) of the form of Class A Common Stock
certificate, the Restated Certificate of Incorporation and Bylaws of the
Company as in effect on the date hereof, corporate and other documents, records
and papers, certificates of public officials and certificates of officers of
the Company. In giving this opinion, we assume that the certificates
representing the Shares conform to the specimen examined by us. In such
examination we have also assumed the genuineness of all signatures, the
authenticity of all documents submitted to us and the genuineness and
conformity to original documents of documents submitted to us as certified or
photostatic copies.
On the basis of such examination, subject to (i) the Purchase
Agreement being entered into by the proper parties in substantially the form
thereof filed as an exhibit to the Registration Statement, (ii) the Shares
being issued and sold for value as contemplated by the terms of the Purchase
Agreement, (iii) compliance with the pertinent provisions of the Act and the
Securities Exchange Act of 1934, as amended, and (iv) compliance with such
securities or "Blue Sky" laws of any jurisdiction as may be applicable, we are
of the opinion that:
When certificates evidencing the Shares have been duly
executed, countersigned, registered, issued and delivered by
the proper officers of the Company, the Shares will be duly
and validly issued and outstanding, fully paid and
non-assessable shares of Class A Common Stock of the Company.
<PAGE> 2
Carmike Cinemas, Inc.
October 25, 1994
Page 2
We are members of the Bar of the State of Georgia. In expressing the
opinions set forth above, we are not passing on the laws of any jurisdiction
other than the laws of the State of Georgia, the General Corporation Law of the
State of Delaware and the Federal law of the United States of America.
We hereby consent to the filing of this opinion or copies thereof as
an exhibit to the Registration Statement and to the statements made in regard
to our firm under the caption "Legal Matters" in the related prospectus.
Very truly yours,
/s/ Troutman Sanders
--------------------
Troutman Sanders
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Registration Statement (Form
S-3) and related Prospectus of Carmike Cinemas, Inc. for the registration of
2,500,000 shares of its Class A Common Stock and to the incorporation by
reference therein of our reports (a) dated February 7, 1994, with respect to the
financial statements and schedules of Carmike Cinemas, Inc. included and/or
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1993, and (b) dated March 18, 1994, except for Note 7 for which the
date is May 27, 1994, with respect to the combined financial statements of
Cinema World Companies included in the Company's Current Report on Form 8-K
dated May 20, 1994, as filed on June 2, 1994, and as amended on July 12, 1994,
both filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Columbus, Georgia
October 24, 1994
