<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 31, 1995
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________________
to _____________________
Commission File Number 0-14993
CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1469127
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1301 First Avenue, Columbus, Georgia 31901
(Address of principal Executive Offices) (Zip Code)
(706) 576-3400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------------
Class A Common Stock, par value $.03 per share New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [X]
As of March 18, 1996, 9,745,101 shares of Class A Common Stock, par value $.03
per share, were outstanding and the aggregate market value of the shares of
the Class A Common Stock held by non-affiliates of the registrant was
approximately $207,508,000.
As of March 18, 1996, 1,420,700 shares of Class B Common Stock, par value $.03
per share, were outstanding, all of which shares are held by affiliates of the
registrant.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Specified portions of Carmike Cinemas, Inc.'s Annual Report to
Shareholders for the fiscal year ended December 31, 1995 are incorporated
by reference into Part II and Part IV.
(2) Specified portions of Carmike Cinemas, Inc.'s Proxy Statement relating to
the 1996 Annual Meeting of Shareholders are incorporated by reference
into Part III.
<PAGE> 2
PART I
Item 1. Business
(a) General Development of Business
Carmike Cinemas, Inc. (herein referred to as the "Company" or "Carmike"), a
corporation organized under the laws of the State of Delaware, is engaged in
the motion picture exhibition business. The Company was incorporated in April
1982 in connection with the leveraged buy-out of the Company's predecessor, the
Martin Theatres circuit, by present management of the Company. The principal
executive offices of the Company are located at 1301 First Avenue, Columbus,
Georgia 31901-2109, and its telephone number at that location is (706)
576-3400.
The following are several of the more significant events which have taken
place since December 31, 1994:
(i) Acquisitions during 1995
In separate transactions during 1995, the Company acquired certain assets
and businesses as follows:
<TABLE>
<CAPTION>
Number of
Approximate --------------------
Seller Purchase Price Theatres Screens Effective Date
------ -------------- -------- ------- --------------
(in thousands)
<S> <C> <C> <C> <C>
Carolina Cinema Corp. $ 750 2 7 February 10, 1995
Theatre Developers, Inc. 1,200 1 8 February 24, 1995
Floyd Theatres, Inc.
and affiliates 11,300 21 83 March 17, 1995
Rocky Mountain Cinema
Partners 1,585 5 11 May 5, 1995
Plitt Theatres, Inc. 22,000 28 145 June 2, 1995
Midcontinent Theatres, Inc. 19,000 14 67 October 13, 1995
Cinemark, USA 8,000 10 46 November 10, 1995
Theatre Consulting and
Management 650 2 10 November 10, 1995
------------- ----- -----
$ 64,485 83 377
============= ===== =====
</TABLE>
The excess of purchase prices over net assets of businesses acquired,
approximately $16.7 million in 1995, has been recorded as an intangible asset.
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(ii) Acquisitions in 1996 to date
Effective January 5, 1996, the Company purchased certain assets
consisting of 2 theatres (18 screens) and assumed certain contractual
liabilities of Maxi Saver Cinemas, Inc. for a cash purchase price of
approximately $3,975,000. This acquisition has been accounted for using the
purchase method and accordingly the purchase price has been preliminarily
allocated to the tangible and intangible assets acquired based on their
estimated fair value at the date of acquisition. The excess of purchase price
over the net assets acquired (approximately $1,500,000) has been recorded as an
intangible asset.
Effective February 16, 1996, the Company purchased certain assets
consisting of 12 theatres (61 screens) and assumed certain contractual
liabilities of Fox Theatres Corp. for a cash purchase price of approximately
$19,100,000. This acquisition has been accounted for using the purchase method
and accordingly the purchase price has been preliminarily allocated to the
tangible and intangible assets acquired based on their estimated fair value at
the date of acquisition. The excess of purchase price over the net assets
acquired (approximately $8,000,000) has been recorded as an intangible asset.
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(iii) New Theatre Openings and Additions to Existing Theatres
During 1995, the Company opened or expanded the following theatres:
<TABLE>
<CAPTION>
THEATRE LOCATION SCREENS
------- -------- -------
<S> <C> <C>
NEW COMPLEXES
-------------
Carmike 10 Longview, TX 10
Carmike 10 Ft. Collins, CO 10
Wynnsong 10 Chattanooga, TN 10
Carmike 10 Colorado Springs, CO 10
Carmike 8 Dublin, GA 8
Carmike 10 Pensacola, FL 10
Wynnsong 10 Nashville, TN 10
Wynnsong 10 Little Rock, AR 10
Carmike 10 Panama City, FL 10
Carmike 12 Salt Lake City, UT 12
----
Total 100
ADDITIONS TO EXISTING COMPLEXES
-------------------------------
Carmike 7 Greenville, SC 3
Carmike 6 Uniontown, PA 2
College Square 9 Morristown, TN 3
Carmike 11 Des Moines, IA 5
----
Total 13
----
Total New Screens 113
====
</TABLE>
(b) Narrative Description of Business
(i) Theatre Operations
The Company is the largest motion picture exhibitor in the
United States in terms of number of theatres and screens operated. As of
December 31, 1995, the Company operated 519 theatres with an aggregate of 2,383
screens located in 32 states. The Company's screens are located principally
in communities where the Company is the sole or leading exhibitor. For the
year ended December 31, 1995, aggregate attendance at the Company's theatres
was approximately 65.0 million people.
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The Company's theatres are located in the following states:
<TABLE>
<CAPTION>
STATE THEATRES SCREENS
----- -------- -------
<S> <C> <C>
Alabama 29 160
Arkansas 3 25
Colorado 14 71
Florida 33 158
Georgia 39 208
Idaho 11 26
Illinois 3 8
Iowa 22 118
Kentucky 10 43
Louisiana 4 20
Maryland 1 3
Michigan 1 5
Minnesota 16 63
Montana 15 59
Nebraska 5 17
New Mexico 1 2
North Carolina 75 299
North Dakota 9 45
New York 1 8
Ohio 9 45
Oklahoma 16 65
Pennsylvania 35 156
South Carolina 26 121
South Dakota 6 39
Tennessee 48 259
Texas 30 120
Utah 12 48
Virginia 15 73
Washington 3 3
Wisconsin 13 60
West Virginia 6 33
Wyoming 8 23
---- ------
519 2,383
==== ======
</TABLE>
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 Company operating policies and supervising the
Company's seventeen operating districts. Each operating district has a
district manager who is responsible for overseeing the day-to-day operations of
the Company's theatres.
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Corporate policy development, strategic planning, site selection and lease
negotiation, theatre design and construction, concession purchasing, film
licensing, advertising, and financial and accounting activities are centralized
at the corporate headquarters of the Company. See "Film Licensing" with
respect to the Company's film licensing operations.
Nearly all of the Company's 2,383 screens are located in multi-screen
theatres, with over 90% of the Company's screens being located in theatres
having three or more screens. The Company's average number of screens per
theatre is 4.6, and the Company intends to increase this ratio through the
construction of larger multi-screen theatres. 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,
box office and concession services while reducing congestion at the concession
area. The Company's theatres are housed predominantly in modern facilities
equipped with quality projection and sound equipment.
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. The Company also operates certain theatres
for the exhibtion of first-run films at a reduced admission price. These
theatres are typically in a smaller market where the Company is the only
exhibitor in the market. At present, the Company operates 113 of its theatres
(344 screens) as Discount Theatres.
The Company also sells gift certificates and offers a discount ticket plan
to attract groups of patrons to its theatres.
The Company's revenues are generated primarily from box office receipts and
concession sales. Additional revenues, which are not material, are generated
from electronic video games installed in the lobbies of some of the Company's
theatres and on-screen advertising.
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The Company relies upon advertisements and movie schedules published in
newspapers to inform its patrons of film selections and show times. Newspaper
advertisements are typically displayed in a single group for all 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 in its theatres 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, which is presently
installed in approximately 89% of its theatres (representing approximately 94%
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 in its
recently acquired theatres and plans to have the system in virtually all of its
theatres. I.Q. Zero 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, 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.
(ii) 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.
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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 eight 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 re-negotiated 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
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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 80% of industry admission revenues during 1994 and 43 of the top
50 grossing films according to data published by the National Association of
Theatre Owners. 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.
(iii) 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, seating capacity, location
and prestige of an exhibitor's theatres, 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, location of the theatres, patron comfort, quality of projection
and sound and the ticket prices. The
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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.
(iv) 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.
(v) Restaurants
The Company, through its wholly-owned subsidiary Wooden Nickel Pub,
Inc., operates two restaurants, one of which is adjacent to a theatre. These
restaurants, which were opened by the Company's predecessor, offer light fare
as well as beer and wine. These restaurants are not material to the Company's
consolidated operations. The Company does not currently anticipate opening
additional restaurant facilities.
(vi) 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.
The Federal Americans With Disabilities Act (the "Disabilities Act")
prohibits discrimination on the basis of disability in public accommodations
and employment. The
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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.
(vii) Employees
At December 31, 1995, the Company had approximately 10,082 employees.
Ninety-one of the Company's employees are covered by collective bargaining
agreements. The Company considers its relations with its employees to be good.
Item 2. Properties
At December 31, 1995, of the Company's 519 theatres, 72 were owned by the
Company, 357 were leased pursuant to building leases, 83 were leased pursuant
to ground leases, and 7 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. See
Note F of Notes to Consolidated Financial Statements incorporated by reference
in Item 8 herein for information with respect to the Company's lease
commitments.
The Company owns its headquarters building in Columbus, Georgia. The
Company occupies all of this modern five-story office building, which has
approximately 48,500 square feet. 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.
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Item 3. Legal Proceedings
From time to time, the Company is involved in routine litigation and legal
proceedings in the ordinary course of its business, such as personal injury
claims, employment matters and contractual disputes. 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.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
last quarter of the year ended December 31, 1995.
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Executive Officers of the Registrant
[Included pursuant to Regulation S-K,
Item 401(b), Instruction 3]
The following sets forth certain information regarding the executive
officers of the Company. For purposes of this section, references to the
Company include the Company's predecessor, Martin Theatres, Inc.
C. L. Patrick, age 77, who has served as Chairman of the Board of Directors
of the Company since April 1982, joined the Company in 1945, became its General
Manager in 1948 and served as President of the Company from 1969 to 1970. He
served as President of Fuqua Industries, Inc. ("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, age 45, has served as President of the Company since
October 1981, a director of the Company since April 1982 and Chief Executive
Officer since March 29, 1989. 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 the son of Mr. C. L. Patrick. Mr. Patrick is a
director of Columbus Bank & Trust Company. He also serves as a director of the
Will Rogers Institute and Welcome Home, Inc.
John O. Barwick, III, age 46, joined the Company as Controller in July 1977
and was elected Treasurer and Chief Financial Officer 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.
Anthony J. Rhead, age 54, 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.
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Larry M. Adams, age 52, joined the Company as Data Processing Manager in
July 1973. In August 1982, he became Vice President - Informational Systems
and in August 1988 he became Secretary of the Company.
Fred W. Van Noy, age 39, 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.
Prentiss Lamar Fields, age 41, 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.
H. Madison Shirley, age 44, 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.
Marilyn Grant, age 48, 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.
James R. Davis, age 57, joined the Company in 1990 as Technical Director.
He served in this position until December 1995, when he was elected to his
present position as Vice President-Technical.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Information regarding the market for the Company's common equity and
related stockholder matters is incorporated by reference to the inside back
cover of the Company's 1995 Annual Report to Shareholders.
Item 6. Selected Financial Data
Selected financial data for the five years ended December 31, 1995 is
incorporated by reference to page 28 of the Company's 1995 Annual Report to
Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's discussion and analysis of financial condition and results of
operations of the Company is incorporated by reference to pages 26 and 27 of
the Company's 1995 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference to pages
11 through 25 of the Company's 1995 Annual Report to Shareholders.
Information as to quarterly results of operations for the year ended
December 31, 1995 is incorporated by reference to page 25 of the Company's 1995
Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the Company is incorporated by
reference to the section entitled "Election of Directors" in the Proxy
Statement relating to the 1996 Annual Meeting of Shareholders of the Company
(hereinafter, the "1996 Proxy Statement").
Information regarding the executive officers of the Company is set forth in
Part I of this Report on Form 10-K pursuant to General Instruction G(3) of Form
10-K.
Item 11. Executive Compensation
Information regarding executive compensation is incorporated by reference
to the section entitled "Executive Compensation and Other Information"
contained in the 1996 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference to the
sections entitled "Security Ownership of Certain Beneficial Holders" and
"Security Ownership of Management" contained in the 1996 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is
incorporated by reference to the section entitled "Certain Relationships and
Related Transactions" contained in the 1996 Proxy Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) and (2) Financial Statements and Financial Statement Schedules
The following consolidated financial statements of Carmike
Cinemas, Inc. included in the Company's 1995 Annual Report to
Shareholders are incorporated by reference in Item 8:
Report of Independent Auditors
Consolidated balance sheets--December 31, 1995 and 1994
Consolidated statements of income--Years ended December
3l, 1995, 1994 and 1993
Consolidated statements of shareholders' equity--Years
ended December 3l, 1995, 1994 and 1993
Consolidated statements of cash flows--Years ended
December 31, 1995, 1994 and 1993
Notes to consolidated financial statements--December 31,
1995
Financial statement schedules are omitted because they are not
applicable or not required under the related instructions, or because the
required information is shown either in the consolidated financial statements
or in the notes thereto.
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(a)(3) Listing of Exhibits
Exhibit
Number
- ------
2(a) Purchase Contract dated May 20, 1992, by and between American
Multi-Cinema, Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(a) to
the Company's Form 10-K for the fiscal year ended December 31, 1992
(the "1992 Form 10-K"), and incorporated herein by reference).
2(b) Asset Purchase Agreement dated May 12, 1992 by and between Plitt
Theatres, Inc., Plitt Southern Theatres, Inc. and Plitt Cine Theatres,
Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(b) to the
Company's 1992 Form 10-K and incorporated herein by reference).
2(c) Asset Purchase Agreement dated May 21, 1992 by and between Resources
Financial and Carmike Cinemas, Inc.(filed as Exhibit 2(c) to the
Company's 1992 Form 10-K and incorporated herein by reference).
2(d) Purchase Contract dated as of November 18, 1992 by and between
Cinamerica Theatres, L.P. and Carmike Cinemas, Inc.(filed as Exhibit
2(d) to the Company's 1992 Form 10-K and incorporated herein by
reference).
2(e) Asset Purchase Agreement dated November 19, 1993 by and between Manos
Enterprises, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(e) to
the Company's Form 10-K for the fiscal year ended December 31, 1993
(the "1993 Form 10-K") and incorporated herein by reference).
2(f) Asset Purchase Agreement dated January 21, 1994 by and between General
Cinema Corp. of Georgia, General Cinema Corp. of Virginia, General
Cinema Corp. of West Virginia and Carmike Cinemas, Inc.(filed as
Exhibit 2(f) to the Company's 1993 Form 10-K and incorporated herein
by reference).
2(g) Asset Purchase Agreement dated May 18, 1994 by and between Cinema
World, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(a) to the
Company's Form 8-K filed on June 6, 1994 and incorporated herein by
reference).
2(h) Agreement dated as of March 17, 1995 by and between Floyd Theatres,
Inc., Tallahassee Theatres, Inc., Floyd Theatres of Georgia, Inc.,
MasTec, Inc. and Carmike Cinemas, Inc. (filed as Exhibit 2(h) to the
Company's Form 10-K for the fiscal year ended December 31, 1994 (the
"1994 Form 10-K") and incorporated herein by reference).
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(a)(3)(Continued)
Exhibit
Number
- ------
2(i) Agreement dated as of June 2, 1995 by and between Carmike Cinemas,
Inc. and Plitt Theatres, Inc. (filed as Exhibit 12 to the Company's
Form 10-Q for the fiscal quarter ended June 30, 1995 and incorporated
herein by reference).
2(j) Agreement dated as of September 8, 1995 by and between Midcontinent
Theatre Company of Minnesota, Midcontinent Theatre Company of South
Dakota, Midcontinent Theatre Company of North Dakota and Carmike
Cinemas, Inc. (filed as Exhibit 4 to the Company's Form 10-Q for the
fiscal quarter ended September 30, 1995, and incorporated herein by
reference).
2(k) Agreement dated as of October 19, 1995 by and between Cinemark USA,
Inc., Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as
Exhibit 5 to the Company's Form 10-Q for the fiscal quarter ended
September 30, 1995, and incorporated herein by reference).
2(l) Asset Purchase Agreement dated as of January 25, 1996 by and between
Fox Theatres Corporation, Carmike Cinemas, Inc. and Eastwynn
Theatres, Inc.
3(a)(i) Restated Certificate of Incorporation of the Company (filed as
Exhibit 3(a) to the Company's Form 10-Q for the fiscal quarter ended
June 30, 1995, and incorporated herein by reference).
3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation
(filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by reference).
3(b) 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 (the "1987 Form
10-K"), and incorporated herein by reference).
4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to
10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's
Form 10-Q for the fiscal quarter ended June 30, 1990, and
incorporated herein by reference).
4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to
7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's
Form l0-K for the year ended December 31, 1991, and incorporated
herein by reference).
19
<PAGE> 20
(a)(3)(Continued)
Exhibit
Number
- ------
4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to
7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's Form
l0-Q for the fiscal quarter ended March 31, 1993, and incorporated
herein by reference).
4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as
Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated herein
by reference).
4(e) Credit Agreement dated as of May 4, 1994 among Carmike Cinemas, Inc.,
various banks and Wachovia Bank of Georgia, N.A., as Agent (filed as
Exhibit 4 to the Company's Form 10-Q for the fiscal quarter ended
March 31, 1994, and incorporated herein by reference).
10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended,
together with form of Stock Option Agreement (filed as Exhibit 10(a)
to the Company's Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference).
10(b) Downtown Development Authority of Columbus, Georgia $4,500,000
Industrial Development Revenue Bonds (Martin Theatres, Inc.
Project), Series 1985 (filed as Exhibit 10(d) to Amendment No. 1 to
the Company's Registration Statement on Form S-1, No. 33-8007 on
October 10, 1986, and incorporated herein by reference).
10(c) Employment Agreement dated August 30, 1986 by and between C. L.
Patrick and the Company, as amended on October 31, 1986 and January
1, 1990 (filed as Exhibit 10(e) to the Company's Registration
Statement on Form S-1, Commission File No. 33-33558, and incorporated
herein by reference).
10(d) Employment Agreement dated January 1, 1993 by and between Michael W.
Patrick and the Company (filed as Exhibit 10(e) to the Company's 1992
Form 10-K and incorporated herein by reference).
10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and
between C.L.P. Equipment and the Company (filed as Exhibit 10(h) to
the Company's Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
10(f) Equipment Lease Agreement dated December 17, 1982 by and between
Michael W. Patrick and the Company (Kingsport, Tennessee) (filed as
Exhibit 10(i) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
20
<PAGE> 21
(a)(3)(Continued)
Exhibit
Number
- ------
10(g) Equipment Lease Agreement dated January 29, 1983 by and between
Michael W. Patrick and the Company (Valdosta, Georgia) (filed as
Exhibit 10(j) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(h) Equipment Lease Agreement dated November 23, 1983 by and between
Michael W. Patrick and the Company (Nashville (Belle Meade),
Tennessee) (filed as Exhibit 10(k) to the Company's Registration
Statement on Form S-1, No. 33-8007, and incorporated herein by
reference).
10(i) Equipment Lease Agreement dated December 17, 1982 by and between
Michael W. Patrick and the Company (Opelika, Alabama) (filed as
Exhibit 10(l) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael
W. Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed
as Exhibit 10(m) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(k) Equipment Lease Agreement dated December 17, 1982 by and between C.
L. Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit
10(n) to the Company's Registration Statement on Form S-1, No.
33-8007, and incorporated herein by reference).
10(l) Summary of Extensions of Equipment Lease Agreements, which are
Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit
10(o) to the 1987 Form 10-K and incorporated herein by reference).
10(m) Summary of Extensions of the Equipment Lease Agreements, which are
Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) as extended as shown
in Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K
for the year ended December 31, 1991 and incorporated herein by
reference).
10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease
Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o)
to the Company's Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
10(o) Amended and Restated Credit Agreement dated as of September 28, 1990
by and between Carmike Cinemas, Inc. and Carmike Midwest, Inc. as
borrower and The First National Bank of Atlanta (filed as Exhibit 6
to the Company's Form 10-Q for the fiscal quarter ended September 30,
1990, and incorporated herein by reference).
21
<PAGE> 22
(a)(3)(Continued)
Exhibit
Number
- ------
10(p) Carmike Cinemas, Inc. Deferred Compensation Agreement and Trust
Agreement dated as of January 1, 1990 (filed as Exhibit 10(u) to the
Company's Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference).
11 Statement re: Computation of Earnings per share.
13 1995 Annual Report to Shareholders of Carmike Cinemas, Inc. (with the
exception of the information expressly incorporated by reference in
Items 5, 6, 7 and 8, this Annual Report is not to be deemed "filed"
with the Securities and Exchange Commission or otherwise subject to
the liabilities of Section 18 of the Securities Exchange Act of
1934).
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
22
<PAGE> 23
(b) Reports on Form 8-K
During the fiscal quarter ended December 31, 1995, the Company
did not file any reports on Form 8-K.
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statements Schedules
None.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CARMIKE CINEMAS, INC.
Date: March 28, 1996 By: /s/ Michael W. Patrick
-----------------------------
Michael W. Patrick
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ C. L. Patrick Chairman of the Board March 28, 1996
- ------------------------------
C. L. Patrick
/s/ Michael W. Patrick President and Chief March 28, 1996
- ------------------------------ Executive Officer, Director
Michael W. Patrick
/s/ John O. Barwick, III Vice President-Finance, Treasurer March 28, 1996
- ------------------------------ (Chief Financial Officer,
John O. Barwick, III Chief Accounting Officer)
/s/ Carl L. Patrick, Jr. Director March 28, 1996
- ------------------------------
Carl L. Patrick, Jr.
/s/ Carl E. Sanders Director March 28, 1996
- ------------------------------
Carl E. Sanders
/s/ John W. Jordan, II Director March 28, 1996
- ------------------------------
John W. Jordan, II
/s/ David W. Zalaznick Director March 28, 1996
- ------------------------------
David W. Zalaznick
</TABLE>
24
<PAGE> 25
CARMIKE CINEMAS, INC.
EXHIBIT INDEX
Report on Form 10-K for the fiscal year Ended December 31, 1995
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
2(a) Purchase Contract dated May 20, 1992,
by and between American Multi-Cinema,
Inc. and Carmike Cinemas, Inc.(filed as Exhibit 2(a)
to the company's Form 10-K for the fiscal year ended
December 31, 1992 (the "1992 Form 10-K"), and
incorporated herein by reference).
2(b) Asset Purchase Agreement dated May 12, 1992
by and between Plitt Theatres, Inc., Plitt Southern
Theatres, Inc. and Plitt Cine Theatres, Inc. and
Carmike Cinemas, Inc.(filed as Exhibit 2(b) to the Company's
1992 Form 10-K and incorporated herein by reference).
2(c) Asset Purchase Agreement dated May 21, 1992
by and between Resources Financial and
Carmike Cinemas, Inc.(filed as Exhibit 2(c) to the Company's
1992 Form 10-K and incorporated herein by reference).
2(d) Purchase Contract dated as of November 18, 1992
by and between Cinamerica Theatres, L.P. and
Carmike Cinemas, Inc.(filed as Exhibit 2(d) to the Company's
1992 Form 10-K and incorporated herein by reference).
2(e) Asset Purchase Agreement dated November 19, 1993 by and
between Manos Enterprises, Inc. and Carmike Cinemas, Inc.
(filed as Exhibit 2(e) to the Company's Form 10K for the fiscal
year ended December 31, 1993 (the "1993 Form 10-K") and
incorporated herein by reference).
2(f) Asset Purchase Agreement dated January 21, 1994 by and between
General Cinema Corp. of Georgia, General Cinema Corp. of Virginia,
General Cinema Corp. of West Virginia and Carmike Cinemas, Inc.
(filed as Exhibit 2(f) to the Company's 1993 Form 10-K and
incorporated herein by reference).
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
2(g) Asset Purchase Agreement dated May 18, 1994 by and
between Cinema World, Inc. and Carmike Cinemas, Inc.
(filed as Exhibit 2(a) to the Company's Form 8-K filed on
June 6, 1994 and incorporated herein by reference).
2(h) Agreement dated as of March 17, 1995 by and between
Floyd Theatres, Inc., Tallahassee Theatres, Inc., Floyd
Theatres of Georgia, Inc., MasTec, Inc. and Carmike
Cinemas, Inc.(filed as Exhibit 2(h) to the Company's
Form 10-K for fiscal year ended December 31, 1994
(the "1994 Form 10-K") and incorporated herein by
reference).
2(i) Agreement dated as of June 2, 1995 by and between
Carmike Cinemas, Inc. and Plitt Theatres, Inc. (filed as
Exhibit 12 to the Company's Form 10-Q for the fiscal
quarter ended June 30, 1995, and incorporated
herein by reference).
2(j) Agreement dated as of September 8, 1995 by and between
Midcontinent Theatre Company of Minnesota, Midcontinent
Theatre Company of South Dakota, Midcontinent Theatre
Company of North Dakota and Carmike Cinemas, Inc.
(filed as Exhibit 4 to the Company's Form 10-Q for the fiscal
quarter ended September 30, 1995, and incorporated
herein by reference).
2(k) Agreement dated as of October 19, 1995 by and between
Cinemark USA, Inc., Carmike Cinemas, Inc. and Eastwynn
Theatres, Inc. (filed as Exhibit 5 to the Company's Form 10-Q
for the fiscal quarter ended September 30, 1995, and
incorporated herein by reference).
2(l) Agreement dated as of January 5, 1996 by and between
Maxi-Saver Cinemas, Inc., Pennsylvania Theatre Company,
Carmike Cinemas, Inc. and Eastwynn Theatres, Inc.
2(m) Asset Purchase Agreement dated as of January 25, 1996
by and between Fox Theatres Corp., Carmike Cinemas, Inc.
and Eastwynn Theatres, Inc.
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
3(a)(i) Restated Certificate of Incorporation of the Company
(filed as Exhibit 3(a) to the Company's Form 10-Q for the
fiscal quarter ended June 30, 1995, and incorporated
herein by reference).
3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation
(filed as Exhibit 3(b) to the Company's Form 10-Q for the
quarter ended June 30, 1995, and incorporated herein by
reference).
3(b) 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 (the "1987 Form 10-K"),
and incorporated herein by reference).
4(a) Note Purchase Agreement dated as of June 1, 1990
with respect to 10.53% Senior Notes due 2005
(filed as Exhibit 4 to the Company's Form 10-Q for
the fiscal quarter ended June 30, 1990, and
incorporated herein by reference).
4(b) Note Purchase Agreement dated as of March 1, 1992
with respect to 7.90% Senior Notes due 2002
(filed as Exhibit 4(c) to the Company's Form l0-K
for the year ended December 31, 1991, and
incorporated herein by reference).
4(c) Note Purchase Agreement dated as of April 15, 1993
with respect to 7.52% Senior Notes due 2003 (filed as
Exhibit 4 to the Company's Form 10-Q for the fiscal quarter
ended March 31, 1993, and incorporated herein by reference).
4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998
(filed as Exhibit 4(e) to the Company's 1993 Form 10-K, and
incorporated herein by reference).
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
4(e) Credit Agreement dated as of May 4, 1994 among Carmike
Cinemas, Inc., various banks and Wachovia Bank of
Georgia, N.A., as Agent (filed as Exhibit 4 to the Company's
Form 10-Q for the fiscal quarter ended March 31, 1994,
and incorporated herein by reference).
10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan,
as amended, together with form of Stock Option Agreement
(filed as Exhibit 10(a) to the Company's Form 10-K
for the year ended December 31, 1990, and incorporated
herein by reference).
10(b) Downtown Development Authority of Columbus, Georgia
$4,500,000 Industrial Development Revenue Bonds
(Martin Theatres, Inc. Project), Series 1985 (filed as
Exhibit 10(d) to Amendment No. 1 to the Company's
Registration Statement on Form S-1, No. 33-8007 on
October 10, 1986, and incorporated herein by reference).
10(c) Employment Agreement dated August 30, 1986 by and
between C. L. Patrick and the Company, as amended on
October 31, 1986 and January 1, 1990 (filed as Exhibit 10(e)
to the Company's Registration Statement on Form S-1,
Commission File No. 33-33558, and incorporated herein
by reference).
10(d) Employment Agreement dated January 1, 1993
by and between Michael W. Patrick and the Company,
(filed as Exhibit 10(e) to the Company's 1992 Form 10-K
and incorporated herein by reference).
10(e) Aircraft Lease dated July 1, 1983, as amended
June 30, 1986, by and between C.L.P.
Equipment and the Company (filed as Exhibit 10(h)
to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
10(f) Equipment Lease Agreement dated December 17, 1982
by and between Michael W. Patrick and the Company
(Kingsport, Tennessee) (filed as Exhibit 10(i) to the
Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(g) Equipment Lease Agreement dated January 29, 1983
by and between Michael W. Patrick and the Company
(Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's
Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
10(h) Equipment Lease Agreement dated November 23, 1983
by and between Michael W. Patrick and the Company
(Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k)
to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(i) Equipment Lease Agreement dated December 17, 1982
by and between Michael W. Patrick and the Company
(Opelika, Alabama) (filed as Exhibit 10(l) to the Company's
Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
10(j) Equipment Lease Agreement dated July 1, 1986 by and
between Michael W. Patrick and the Company (Muskogee
and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the
Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(k) Equipment Lease Agreement dated December 17, 1982
by and between C. L. Patrick and the Company
(Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's
Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
10(l) Summary of Extensions of Equipment Lease Agreements,
which are Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k)
(filed as Exhibit 10(o) to the 1987 Form 10-K and
incorporated herein by reference).
10(m) Summary of Extensions of the Equipment Lease Agreements,
which are Exhibits 10(f), 10(g), 10(h), 10(i) and 10(k) as
extended as shown in Exhibit 10(m) (filed as Exhibit 10(n)
to the Company's Form 10-K for the year ended December 31,
1991 and incorporated herein by reference).
10(n) Summary of Extensions of Aircraft Lease Agreement and
Equipment Lease Agreement which are Exhibits 10(e) and
10(k) (filed as Exhibit 10(o) to the Company's Form 10-K
for the year ended December 31, 1991 and incorporated
herein by reference).
10(o) Amended and Restated Credit Agreement dated as of
September 28, 1990 by and between Carmike Cinemas, Inc.
and Carmike Midwest, Inc. as borrower and The First National
Bank of Atlanta (filed as Exhibit 6 to the Company's Form 10-Q
or the fiscal quarter ended September 30, 1990, and incorporated
herein by reference).
10(p) Carmike Cinemas, Inc. Deferred Compensation Agreement and
Trust Agreement dated as of January 1, 1990 (filed as Exhibit 10(u)
to the Company's Form 10-K for the year ended December 31, 1990,
and incorporated herein by reference).
11 Statement re: Computation of Earnings per share.
13 1995 Annual Report to Shareholders of Carmike Cinemas,
Inc. (with the exception of the information expressly
incorporated by reference in Items 5, 6, 7 and 8, this
Annual Report is not to be deemed "filed" with the Securities
and Exchange Commission or otherwise subject to the liabilities
of Section 18 of the Securities Exchange Act of 1934).
21 List of Subsidiaries.
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Page Number
Exhibit in Manually
Number Description Signed Original
- ------ ----------- ---------------
<S> <C>
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2(l)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of the ____ day of __________, 1996, by
and between FOX THEATRES CORPORATION, a Pennsylvania corporation (hereinafter
"Seller"), and CARMIKE CINEMAS, INC., a Delaware corporation, and EASTWYNN
THEATRES, INC., an Alabama Corporation (hereinafter collectively "Buyer").
W I T N E S S E T H :
WHEREAS, Seller operates certain theatres for the exhibition of motion
pictures; and
WHEREAS, the Boards of Directors of Seller and the Board of Directors of
Buyer deem it appropriate to effect the sale and transfer of certain of
Seller's assets and liabilities pursuant to the agreement set forth
hereinafter.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and for other consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the meanings set
forth below:
1.01. "AFFILIATE" - Any person, firm, corporation, partnership or
association controlling, controlled by, or under common control with another
person, firm, corporation, partnership or association.
1.02. "AGREEMENT" - This Agreement, including the Exhibits attached
hereto, and the Schedules delivered pursuant hereto.
1.03. "CLOSING" - The Closing referred to in Section 2.05 hereof.
1.04. "CLOSING DATE" - The date referred to in Section 2.05 hereof.
1.05. "CONTINUING CONTRACTS" - The agreements relating to the operation
and maintenance of the Property (excluding film exhibition agreements), which
are described on Exhibit "A" attached hereto, together with any contracts in
the nature thereof executed
1
<PAGE> 2
by Seller after the date hereof, as herein permitted and approved in writing by
Buyer, except any contract which is terminable with thirty (30) days notice
without penalty.
1.06. "ERISA" - The Employee Retirement Income Security Act of 1974, as
amended.
1.07. "EXCLUDED PROPERTY" - That Property set forth on Schedule 1.07.
1.08. "EXHIBITS" - Those Exhibits referenced in this Agreement and
incorporated herein by such reference.
1.09. "GUARANTEED FILM CONTRACTS" - Those film contracts which require
Seller to pay a guaranteed minimum film rental amount, notwithstanding that the
film may not have earned same.
1.10. "IMPOSITIONS" - All real estate taxes, special and benefit
assessments, sewer rents, water rates, personal property taxes, and all other
taxes, assessments and charges of every kind, which may affect the Property or
any part thereof by virtue of any present or future law of any governmental
authority.
1.11. "INTANGIBLE PROPERTY" - All intangible property now or on the
Closing Date owned by Seller pertaining solely to the Property, including all
assignable business licenses, warranties, the Continuing Contracts (to the
extent assignable), trademarks, trade names, telephone exchange numbers to the
extent assignable, plans and specifications, blueprints, engineering
information and reports, and governmental approvals.
1.12. "LANDLORD'S CONSENT" - Consent of the Landlords referred to in
Section 2.07 (e) to the transfer and assignment of the leases described in
Schedule 3.09 (a).
1.13. "LEASEHOLD IMPROVEMENTS" - All right, title and interest of Seller
in leasehold improvements of any kind and description now, or on the Closing
Date, located on or which are a part of the Leased Premises.
1.14. "LEASEHOLD INTERESTS" - All and singular the interests, estates,
rights, privileges, titles, easements, options and appurtenances belonging or
in any way appurtaining to the Seller as tenant under the Leases.
1.15. "LEASES" - The leases for the Theatres and all amendments and
modifications thereof, all of which are described on Exhibit "C" attached
hereto.
1.16. "LEASED PREMISES" - The premises demised by the Leases.
1.17. "LICENSE" - Rights to use certain trade names, trademarks and logos
pursuant to the terms and conditions set forth on Schedule 1.17 attached
hereto.
2
<PAGE> 3
1.18. "PERMITTED LIENS" - (i) Liens and taxes due and payable and which
are prorated pursuant to Section 2.04 hereof; (ii) liens that shall be
discharged prior to or at Closing; and (iii) Permitted Title Exceptions.
1.19. "PERMITTED TITLE EXCEPTIONS" - With respect to the Leased Premises
those preprinted exceptions in a standard form ALTA extended coverage policy of
title insurance and those encumbrances set forth on Schedule 1.19, and in any
event, zoning restrictions, easements, licenses or other restrictions on the
use of the Leased Premises so long as same do not impair the use, value or
marketability of such Leased Premises in any material respect.
1.20. "PERSONAL PROPERTY" - All tangible personal property now or on the
Closing Date owned by Seller and used in the operation of the Leased Premises,
including, but not limited to, all supplies, service and concession equipment,
heating, ventilating and cooling equipment, fixtures, inventory, cleaning
equipment and supplies, alarm systems, screens, projection equipment, theatre
seats, cash registers, display cases, acoustical wall panels, sound systems,
speakers, computers, office equipment and desks, popcorn poppers and storage
bins, linoleum, carpets, drapes, laundry tubs and trays, washers, dryers, ice
boxes, refrigerators, heating units, stoves, ovens, water heaters,
incinerators, furniture and furnishings, and communication systems, now or on
the Closing Date affixed or attached to or placed upon and used in connection
with the operation of the Theatres or any of them (without limiting the
generality of the foregoing, the personal property listed on Exhibit "B"
attached hereto shall be included in Personal Property); provided, however,
Personal Property shall not include (a) accounts receivable as of the Closing
Date, and (b) cash and cash equivalents (including certificates of deposit,
commercial paper, and investments in securities on hand or in banks as of the
Closing Date, (c) proprietary items including, but not limited to, uniforms,
and film transfer stock, (d) the Excluded Property.
1.21. "PETTY CASH" - Sums of cash left in the Theatres by Seller on the
Closing Date and reimbursed to Seller by Buyer at Closing.
1.22. "PROPERTY" - The Leasehold Interests, Leasehold Improvements,
Personal Property and Intangible Property, less and excepting the Excluded
Property.
1.23. "PURCHASE PRICE" - The Purchase Price for the Property is NINETEEN
MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($19,100,000.00), payable as
set forth in paragraph 2.02 hereof.
1.24. "SCHEDULES" - Those Schedules referred to in this Agreement, and
incorporated herein by reference.
3
<PAGE> 4
1.25. "THEATRES" - The twelve (12) locations consisting of sixty-one (61)
screens for the exhibition of motion pictures as specifically set forth on
Exhibit "D".
1.26. "THEATRE LEVEL EMPLOYEE" - Any employee who actually works at a
Theatre location.
The definitions of this section shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The term "person" includes individuals, partnerships, corporations, trusts and
other associations. The words "include", "includes" and "including" shall be
deemed to be followed the phrase "without limitation". The words "herein",
"hereof", "hereunder" and similar terms shall refer to this contract, unless
the context otherwise requires.
Attached to this contract and incorporated herein by reference are the
following:
EXHIBIT A - CONTINUING CONTRACTS
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - LEASES
EXHIBIT D - THEATRES
EXHIBIT E - FORM OF BILL OF SALE
EXHIBIT F - FORM OF COVENANT NOT TO COMPETE
AGREEMENT
EXHIBIT G - FORM OF LANDLORD'S CONSENT
AND ESTOPPEL
EXHIBIT H - SELLER'S REQUIRED INSURANCE
EXHIBIT I - FORM OF ASSIGNMENT
EXHIBIT J - AUTHORIZATION AND RELEASE NOTICE
EXHIBIT K - MANAGEMENT AGREEMENT
EXHIBIT L - LEASE AND CONTINUING CONTRACTS
ACCEPTANCE AND ASSUMPTION AGREEMENT
EXHIBIT M - UNCONDITIONAL GUARANTY AND
REIMBURSEMENT AGREEMENT
SCHEDULE 1.07 - EXCLUDED PROPERTY
SCHEDULE 1.17 - LICENSE
SCHEDULE 1.19 - PERMITTED TITLE EXCEPTIONS
SCHEDULE 2.02(a) - WIRING INSTRUCTIONS
SCHEDULE 2.03 - PURCHASE PRICE ALLOCATION
SCHEDULE 2.06(a) - CLOSING STATEMENT
SCHEDULE 3.02(a) - CASH FLOW INFORMATION
SCHEDULE 3.02(c) - 90/10 AMOUNTS
SCHEDULE 3.02(d) - SEATS BY AUDITORIUM
SCHEDULE 3.03(a) - TRANSACTIONS NOT IN ORDINARY COURSE
SCHEDULE 3.03(f) - AMENDMENTS OR TERMINATIONS
SCHEDULE 3.04 - TAX RETURNS
SCHEDULE 3.06 - GOVERNMENTAL NOTIFICATIONS
AND CONSENTS
SCHEDULE 3.07 - COMPLIANCE WITH OTHER INSTRUMENTS
SCHEDULE 3.09(a) - DESCRIPTION OF REAL PROPERTY LEASED
TO SELLER
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SCHEDULE 3.10 - LICENSES, PERMITS AND TRADEMARKS
SCHEDULE 3.11 - INSURANCE
SCHEDULE 3.12 - DEFAULTS
SCHEDULE 3.13 - LITIGATION
SCHEDULE 3.14 - COMPLIANCE WITH LAWS
SCHEDULE 3.16(a) - LABOR MATTERS
SCHEDULE 3.16(c) - FAILURE TO COMPLY WITH LAWS
REGARDING
EMPLOYMENT OF THEATRE
LEVEL EMPLOYEES
SCHEDULE 3.17 - CONTRACTS AND COMMITMENTS
SCHEDULE 3.19(a) - EMPLOYEE BENEFIT PLANS
SCHEDULE 3.19(b) - WELFARE PLANS
SCHEDULE 3.23 - ENVIRONMENTAL MATTERS
SCHEDULE 3.24 - DISCOUNTS AND GIFT CERTIFICATES
SCHEDULE 3.25 - ROOF WARRANTIES
SCHEDULE 7.03 - GOVERNMENTAL NOTIFICATIONS
AND CONSENTS REQUIRED BY BUYER
ARTICLE II
PURCHASE AND SALE OF PROPERTY
2.01. Agreement to Sell. Pursuant to the terms and conditions of this
Agreement, at Closing Seller agrees to sell, convey, transfer, assign and
deliver to Buyer, and Buyer agrees to purchase from Seller all of the Property
owned and used by Seller in the operation of its motion picture exhibition
business in the Theatres.
2.02. Purchase Price. The Purchase Price for the Property will be paid
to the Seller as follows:
(a) At Closing, Buyer shall pay and deliver by wire transfer to
Seller, pursuant to wiring instructions set forth on Schedule 2.02 (a), the
Purchase Price.
2.03. Purchase Price Allocation. The Purchase Price will be allocated to
the Property as shown on Schedule 2.03, and each of the parties agree to report
this transaction for Federal income tax purposes in accordance with the
allocation shown on said schedule.
2.04. Closing Adjustments.
(a) The following items affecting the Property shall be
apportioned, adjusted or otherwise accounted for between Seller and Buyer as of
the Closing Date:
(i) Subject to paragraph (d) of this Section, rent,
additional rent, common area maintenance, payments to merchants' associations
or similar business promotion organizations, and all other charges payable by
Seller as tenant under the Leases as follows: (1) any charge payable on a
monthly basis which is subject to year end adjustment shall be prorated for
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the month in which the Closing Date shall occur and any year end adjustment
thereof shall be paid by, or the refund from the lessor paid to, Seller and
Buyer in proportion to their respective payments thereof (i.e., Seller to make
all such payments prior to the Closing Date and Buyer to make all such payments
after the Closing Date), and (2) Impositions under the Leases not payable
monthly but payable in full after the Closing at the end of a lease year or
tax fiscal year, as provided in the respective Leases, shall be prorated as of
the Closing Date but Seller will pay Buyer its share thereof within 30 days
after Buyer furnishes Seller the billing and substantiation thereof received
from each respective lessor;
(ii) Buyer shall pay Seller on the Closing Date for any
security deposits held by lessors under the Leases, and the Seller's petty cash
at each theatre;
(iii) Reduced admission tickets, group tickets or
so-called other "discount tickets" (collectively "Discount Tickets") issued by
Seller prior to the Closing Date and presented by customers for admission to
the Theatres on or after the Closing Date shall be honored by Buyer but may be
redeemed by Buyer from Seller for the amount shown on the Discount Ticket as
the cost paid to Seller for such Ticket. Seller shall also reimburse Buyer in
the amount of any gift certificates issued by Seller prior to the Closing Date
and used at the Theatres subsequent to the Closing Date, when, as and in the
amount said gift certificates are redeemed, provided, however, Buyer shall not
be obligated to honor any such gift certificate or Discount Ticket after one
(1) year immediately following the Closing Date. Buyer shall (and hereby
covenants and agrees to) be bound by all free admission passes distributed
prior to the Closing Date by Seller or Seller's authorized agents to third
parties. Any monies which Seller shall owe Buyer for reimbursement for
Discount Tickets that are presented for payment to Seller within a calendar
month in the manner required herein shall be paid to Buyer by the 30th day of
the next following calendar month.
(b) General real property taxes and other Impositions imposed upon
or assessed against the Property (and not otherwise payable by Seller as tenant
under the Leases directly to the lessors thereunder or payable by such lessors
without any obligation of payment on the part of Seller) shall be remitted to
the collecting authorities by Seller if the same are due and payable on or
before the Closing Date, and by Buyer if due and payable thereafter; provided,
however, such real property taxes and other Impositions imposed upon or
assessed against the Property for the current tax fiscal year in which the
Closing Date occurs ("Proration Period") shall be apportioned and prorated
between Seller and Buyer on and as of the Closing Date with Buyer bearing only
the expense of that proportion of such Impositions that the number of days in
the Proration Period following and including the Closing Date bears to 365. If
the amount of any such taxes, assessments and other Impositions to be borne by
the parties hereto, as above provided, is not ascertainable on the Closing
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Date, Seller shall pay to Buyer its share of the amount of such taxes,
assessments or other Impositions within 15 days after receipt by Seller of the
appropriate tax bill(s) evidencing the amount thereof.
(c) Seller shall pay all utility costs in respect of the Leased
Premises (except to the extent the lessors are liable therefor under the Leases
or such costs are a part of a lease charge to be prorated pursuant to clause
(i) of paragraph (a) of this Section) incurred prior to the Closing Date, and
those incurred thereafter shall be paid by Buyer. If the utility charges for
the last utility period cannot be ascertained on the Closing Date, then at such
subsequent date as all utility bills for such utility period have been
obtained, the parties shall promptly pay their respective prorated amounts. Any
deposits of Seller held by utility companies shall be returned to Seller, and
Buyer shall be responsible for making its own deposits with the utility
companies.
(d) With respect to any percentage rent (as defined in the
respective leases) payable under the Leases for the applicable lease years
thereunder during which the lease assignments occur, the percentage rent
(taking into account any applicable credits or adjustments) shall be prorated
between the Buyer and Seller such that each party shall pay when due that
percent of the total percentage rent payable which equals such party's
respective gross receipts (as defined in the respective leases) divided by the
total gross receipts for such lease year.
(e) Seller and Buyer shall also make such other adjustments or
apportionments with respect to the Property as may be necessary to carry out
the intention of the parties hereto so that Buyer shall not be liable for
matters accruing or occurring prior to the Closing Date and that Seller shall
not be liable for matters accruing or occurring from and after the Closing Date
and that Seller shall bear all of the expenses and burdens, and shall be
entitled to all of the benefits and income, of and from ownership of the
Property prior to the Closing Date and Buyer shall bear all such expenses and
burdens and shall be entitled to all such benefits and income from and after
the Closing Date.
(f) The foregoing adjustments shall be determined and payment made
from one party to the other (as the case may be) on the Closing Date to the
extent they are known and agreed to by both parties; otherwise, such
adjustments shall be determined as soon as possible after the Closing Date and
the adjustments, if any, shall be determined and payment made by the party
owing the adjustment to the other within 30 days after the adjustment is
determined.
2.05. Closing Date and Place. The Closing of the transactions
contemplated by this Agreement shall take place at the offices of Choate, Hall
& Stewart, Boston, MA, at 12:00 Noon on February 23, 1996, or on such other
date prior thereto as may be agreed by the parties hereto (the Closing Date).
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2.06. Buyer's Performance at Closing. At Closing, Buyer shall:
(a) Pay and deliver by wire transfer the Purchase Price as shown
on the Closing Statement to be attached hereto as Schedule 2.06 (a) at Closing.
(b) Deliver to Seller a Certificate of the Secretary of Buyer
stating that this Agreement and other instruments and documents executed in
connection herewith have been duly authorized by the Board of Directors of
Buyer and setting forth the names, titles, signatures and attesting to the
incumbency of those persons authorized to execute this Agreement and the
instruments and documents executed in connection herewith. Copies of all
resolutions pertaining to such authorization shall be attached to the
certificate.
(c) Pay and deliver by wire transfer the amount representing
Seller's cost for the concession inventory (if known) located in the Theatres,
the amount of security deposits and prepaid expenses (if known at Closing) for
which Buyer shall benefit after Closing, and the amount of Petty Cash in the
Theatres. In the event Seller's cost for the concession inventory and the
amount of any prepaid expenses is not known at Closing, same shall be paid as
soon as determined.
(d) Deliver to Seller the Lease and Continuing Contracts
Acceptance and Assumption Agreement whereby Buyer assumes Seller's obligations
under the Leases and Continuing Contracts, in form and substance substantially
as set forth on Exhibit L attached hereto.
2.07. Seller's Performance at Closing. At Closing, Seller will deliver
to Buyer:
(a) All bills of sale for the Personal Property, substantially in
form attached hereto as Exhibit "E";
(b) Assignments (to the extent assignable), substantially in form
attached hereto as Exhibit "I", of licenses and permits, executory contracts,
leases, easements and rights of way accompanied by certain covenants and
endorsements as are necessary in order to effectively vest in Buyer good,
indefeasible and marketable title to the Property free and clear of all
encroachments, leases, tenancies, liens, encumbrances, mortgages, conditional
sales and other title retention agreements, pledges, covenants, restrictions,
reservations, easements and options except for the Permitted Liens;
(c) Actual possession and operating control of the Property;
(d) A certificate of Seller, executed by an officer, certifying
that the persons executing this Agreement and
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other documents consummating transactions contemplated by this Agreement have
been duly and validly authorized by its Board of Directors so to do, and that
except as set forth on Schedule 2.07(d), no consent or approval of any other
person is necessary. Such certificate shall set forth the names, titles, and
signatures and attest to the incumbency of those persons authorized to execute
this Agreement and all Agreements, instruments and documents in connection
herewith. Copies of all resolutions pertaining to such authorization shall be
attached to the certificate;
(e) Any and all consents of third parties necessary for the
transfer and assignment of the Property, including, but not limited to, any
required Landlords' Consents to the assignment of all Leases for the Theatres
with no changes in the terms and conditions thereof.
(f) The Authorization and Release Notice in form attached hereto as
Exhibit "J" transferring all of Seller's right, title and interest in and to
the telephone numbers shown thereon.
(g) The License.
(h) The Unconditional Guaranty and Reimbursement Agreement
regarding Asset Purchase Agreement of Donald M. Fox in form and substance
substantially attached hereto as Exhibit "M".
2.08. Seller's Performance At and After Closing. Seller hereby covenants
and agrees that at or after the Closing, as required, Seller shall:
(a) At the request of Buyer, take all action reasonably necessary
to put Buyer in actual possession of the Property, and execute and deliver such
further instruments of conveyance, sale, transfer and assignment, and take such
other action as may be reasonably necessary to transfer to Buyer any of the
Property and confirm the title of Buyer to the Property. Further, after
Closing, should Seller be a necessary party in order for Buyer to exercise its
rights with respect to the Property, Seller will take reasonable efforts, at
Buyer's expense, to assist Buyer therein;
(b) Pay any governmental taxes or other governmental charges which
may arise out of the transfer of the Property, including without limitation any
transfer, documentary stamp tax, surtax, gross receipts, excise, title, and
sales and use tax. The parties agree to cooperate in taking such steps as may
be necessary or appropriate in order to take advantage of any exemptions from
any such governmental taxes, or other charges which may be available with
respect to the transfer of the Property;
(c) For a period of two (2) years following the Closing Date,
provide Buyer access to any operating records, accounting records,
correspondence, memoranda, and other records and data relating to the ownership
or operation of the Property, which are in Seller's possession, and assist
Buyer in the
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preparation of any financial statements and/or completion of any
audit of financial statements that may be required to meet SEC Regulations;
(d) At the request of Buyer, prosecute or otherwise enforce in
Seller's name for the benefit of Buyer, any claims, rights or benefits that are
being transferred to Buyer under this Agreement, and that require prosecution or
enforcement in Seller's name. Any such prosecution or enforcement shall be at
Buyer's expense, unless such prosecution or enforcement is made necessary by a
material breach of this Agreement by the Seller, in which case such prosecution
or enforcement shall be at Seller's sole expense;
(e) Hold Buyer harmless from all charges or liabilities incurred
by the Seller prior to the Closing Date relating to the Property; and
(f) Transfer or deliver to Buyer any and all cash remittances or
property Seller may receive in respect of the Property relating to the periods
after the Closing Date.
2.09. Buyer's Assumption of Certain of Seller's Liabilities and
Obligations. Seller, at Closing, will transfer all of the Property to Buyer
free and clear of any and all claims, liens, mortgages, options, charges,
security interests, assignments, restrictions, easements, actions or demands or
encumbrances whatsoever, except for:
(a) Obligations arising after the Closing Date with respect to
Continuing Contracts and Leases included in the Property as described on
Schedule 3.09 (a),
(b) Permitted Liens, and
(c) The post-closing prorated items included in Section 2.04.
Except as expressly set forth herein, or in any law applicable
hereto, Buyer is not assuming any obligations or liabilities of Seller or of
Seller's business or any liabilities attendant to any of the Property, whether
known or unknown, liquidated or contingent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement for Buyer's performance hereunder, Seller hereby
makes the following representations and warranties, each of which (as qualified
by all Exhibits and Schedules to this Agreement) is true and correct on the
date of this Agreement, shall be true and correct on the Closing Date, except
as otherwise disclosed by Seller to Buyer in a Schedule or Exhibit attached
hereto, and shall survive the Closing and the transactions,
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contemplated by this Agreement for a period of eighteen (18) months from the
Closing Date, and shall be deemed to be independently relied upon by Buyer.
3.01. Legal Status. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. Seller has all requisite corporate power and authority to own
its properties, to carry on its business, as now being owned and operated by
it, to enter into this Agreement, and to perform its obligations hereunder.
3.02. Financial Data.
(a) Schedule 3.02 (a) contains (i) the Theatre Operating Cash Flow
Statement for twelve (12) months ended 7/27/95, (ii) the four (4) quarters
ended 12/29/94; and (iii) statements dated October 26, 1995 and 1994 for the
ten (10) months then ended.
(b) The financial information is prepared from and in accordance
with the books and records of Seller, in accordance with generally accepted
accounting principles consistently applied, and except as stated therein
present fairly the results of operations of the Theatres for the respective
periods indicated.
(c) Schedule 3.02 (c) contains the 90/10 amounts for each screen
included in the Theatres.
(d) Schedule 3.02 (d) lists by auditorium for each of the Theatres
the number of seats in each auditorium.
3.03. Absence of Specified Changes. Since 10/26/95, there has not been
any, except as otherwise provided below:
(a) Transaction by Seller with respect to the Property except in
the ordinary course of business as conducted on that date, except as set forth
on Schedule 3.03 (a).
(b) Debt, obligation or liability (whether absolute or contingent)
incurred by Seller which will not be discharged at or before Closing (whether
or not presently outstanding), which creates a lien upon or otherwise encumbers
the Property;
(c) Mortgage, pledge or other encumbrance of any of the Property,
except for Permitted Liens;
(d) Sale, lease, abandonment or other disposition of any of the
Property, excluding concession inventory;
(e) Labor dispute, strike, work stoppage, or any other occurrence,
event or condition of a similar nature which impacts the Property which
materially impacts Buyer's ability to operate the Property;
(f) Except as set forth on Schedule 3.03 (f), amendment or
termination of any contract, Lease, agreement or
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license included in the Property to be assigned to Buyer in which
Seller is a party;
(g) Agreement, other than this Agreement, by Seller to do any of
the acts described in this Section 3.03; or
(h) Except as set forth on Schedule 3.24, arrangement for discount,
promotional or prepaid tickets, admission passes, gift certificates or other
similar arrangement not in the ordinary course of business of Seller, or for
which Seller shall reimburse Buyer.
3.04. Tax Returns. Except with respect to real and personal property
taxes payable after the date hereof, and except as set out on Schedule 3.04,
all known taxes, including without limitation, income, property, ad valorem,
sales, use, franchise, gross receipts, added value, employees income
withholding and social security taxes imposed by the United States, by any
state, municipality, other local government or other subdivision or
instrumentality of the United States, or by any other taxing authority, that
are due or payable by the Seller prior to the Closing, and all interest and
penalties thereon, whether disputed or not, which would result in the
imposition of a lien, claim or encumbrance on the Property or against the Buyer
have been paid in full, all tax returns required to be filed in connection
therewith have been accurately prepared and duly and timely filed, and all
deposits required by law to be made by Seller with respect to employees
withholding taxes have been duly made. Seller is not delinquent in the payment
of any tax, assessment, or governmental charge or deposits which would result
in the imposition of a lien, claim or encumbrance on the Property or against
the Buyer, and has no tax, deficiency or claim outstanding, proposed or
assessed against it, and there is no basis for any such deficiency or claim,
which would result in the imposition or any lien, claim or encumbrance on the
Property or against the Buyer.
3.05. Authorization. The execution and delivery of this Agreement by
Seller, and the consummation by Seller of the transactions contemplated by this
Agreement have been or will be duly and validly authorized, and no further
corporate authorization is necessary on the part of Seller.
3.06. Governmental Notifications and Consents. Except as set forth on
Schedule 3.06, no material notification, consent, authorization, order of
approval of, or filing or registration with any governmental commission, board
or other regulatory body, is required for or in connection with the execution
and delivery of this Agreement by Seller, and the consummation by Seller of the
transactions contemplated hereby.
3.07. Compliance with Other Instruments. Except as specifically
disclosed in Schedule 3.07 to this Agreement, and except such instruments as
will be discharged or in respect of which consents or waivers will be obtained
at or before Closing, the execution and delivery of this Agreement, and the
consummation
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of the transactions of the Seller contemplated by this Agreement will not
result in or constitute any of the following: (i) an event that would
permit any party to terminate any agreement, or to accelerate the maturity of
any indebtedness, or other obligation by which any of the Property may be bound
or affected, or (ii) a breach, violation, or default, or an event that with
notice or lapse of time, or both, would constitute a breach, violation or
default under the Articles of Incorporation or By-Laws of Seller, or any Lease,
assignable license, Continuing Contract, or (iii) a violation of any order,
writ, injunction or decree of any court, administrative agency or governmental
body, or (iv) an event which would result in the creation or imposition of any
lien, charge or encumbrance on any of the Property.
3.08. Personal Property. The Seller has good and marketable title to all
Personal Property included in the Property, free and clear of all liens,
claims, charges, security interests, and other encumbrances of any kind or
nature, except for the Permitted Liens. All of the Seller's machinery,
furniture and equipment included in the Property is located on the premises of
the Theatres, and is set forth on Exhibit "B".
3.09. Real Property.
(a) The documents described in Schedule 3.09 (a) contain a true and
correct description of all real property leased to the Seller included in the
Property, including, to best of Seller's knowledge, the correct name, street
address and telephone number of the Landlord, and the Theatres. Each of the
leases included in the Property disclosed in said Schedule is in full force and
effect, and, except as set forth on said Schedule, Seller has received no
written notice of any existing defaults or events of default, real or claimed,
or events which with notice or lapse of time, or both, would constitute
defaults, the consequences of which, severally or in the aggregate, would have
a material adverse affect on the business or operations of the Seller relating
to or being carried on at the real property in question. Except for the
requirement that the Seller obtain those valid and binding consents pursuant to
Sections 2.07 (e) and 4.08, the continuation, validity and effectiveness of
those leases will in no way be affected by the transactions contemplated by
this Agreement. Seller shall retain its option and any other right to acquire
the Demised Premises referred to as "The Theatre Complex" under The Theatre
Complex Lease, dated May 6, 1993, between J. P. Development Company and Seller.
(b) To the best of Seller's knowledge, the improvements on the real
estate, leased to or used by the Seller conform in all material respects to all
applicable federal, state and local laws, zoning and building ordinances, and
health and safety ordinances, and the property is zoned for the various
purposes for which the real estate and improvements thereon are presently being
used.
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3.10. Licenses, Permits and Trademarks. Schedule 3.10 lists all trade
names used by the Seller exclusively in the operation of the Property. The
Seller has all governmental permits, licenses, and similar authorities
presently issued or granted to or used by the Seller and which are material to
the conduct of its business in the Theatres. The Seller has not received
written notice that its use of any such trade names violates or infringes upon
any rights claimed therein by third parties.
3.11. Insurance. Schedule 3.11 contains a list and brief description of
the policies of fire, liability, and other forms of insurance (except title
insurance) owned or held by the Seller, regarding the Property. The properties
and business of the Seller, consisting of the Theatres, of an insurable nature
are insured to the extent and against such risks customarily insured against
by corporations of similar size and in similar businesses, as required by the
terms of the Leases of the Theatres to which the Seller is a party. All
policies listed on Schedule 3.11 will be outstanding and duly in force on the
Closing Date. The Seller is not now, and on the Closing Date will not be in
default regarding the provisions of any such policies, and has not and shall
not have failed to give any notice or present any claim thereunder in due and
timely fashion.
3.12. Defaults. Except as set forth on Schedule 3.12, there is no
default or claim of purported or alleged default, or state of facts (including
any facts which will exist as a result of the consummation of and performance
under this Agreement), which, with notice or lapse of time, or both, would
constitute a default in any obligation on the part of the Seller to be
performed under any Continuing Contract or agreement which materially affects
the operation of the Property, and those contracts or agreements set out on
Schedule 3.17. The Seller has in all material respects performed, and on the
Closing Date shall have performed, all obligations required to be performed by
it under any such material contract or agreement, and Seller has not waived any
right under any such material contract or agreement.
3.13. Litigation. Except as set forth on Schedule 3.13, Seller has
received no written notice of any actions, suits, investigations or proceedings
(whether or not purportedly on behalf of the Seller) to which the Seller is a
party, and which any of the Property is or may be subject, or which are
pending, or to the best of Seller's knowledge threatened against or affecting
the Seller, or any of the Property, at law, in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
3.14. Compliance with Laws. Except to the extent disclosed in Schedule
3.14, (i) the Seller has not been notified that it has failed to comply in any
respect with, or is in default in any respect under any laws, ordinances,
requirements, regulations or orders applicable to its operation of the
Theatres;
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(ii) the Seller is not subject to any judgment, order, writ,injunction or
decree that adversely affects, or might in the future reasonably be expected to
adversely affect its operation of the Theatres; (iii) the Seller is not now,
and on the Closing Date will not be in default concerning any order, writ,
injunction or decree of any federal, state, municipal court or any other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign with respect to the Theatres, and there is no investigation
pending or, to the best of Seller's knowledge, threatened against or affecting
the Seller by any state or federal governmental agency, and Seller has not
received written notice of any investigation pending or threatened against or
affecting the Seller by any state or federal governmental agency, department
or instrumentality that would adversely affect Buyer's operation of the
Theatres after the Closing Date.
3.15. Brokers and Finders. Except for Seller's engagement of Wilson
Capital Corporation which shall be paid by Seller, neither Seller nor any of
its officers, directors or employees have employed any broker, agent or finder,
or incurred any liability for any brokerage fees, agent's commissions or
finder's fees concerning the transactions contemplated hereby.
3.16. Labor Matters.
(a) The Seller is not a party to and has no obligations under any
agreement, collective bargaining or otherwise, with any party regarding the
rates of pay or working conditions of any of the Theatre Level Employees of the
Seller, nor is obligated under any agreement to recognize or bargain with any
labor organization or union on behalf of any of said employees regarding the
operation of the Theatres, other than as shown on Schedule 3.16 (a);
(b) Regarding Seller's operation of the Theatres, to the best of
Seller's knowledge, there is no organization activity among any of the Seller's
employees, and neither the Seller nor any of its officers, directors, employees
or agents has currently been charged or notified of or to the best of Seller's
knowledge threatened with the charge of any unfair labor practice;
(c) Regarding the Seller's operation of the Theatres, the Seller
has not been notified that it has failed to comply with any applicable federal
and state laws and regulations concerning the employer/employee relationship,
and with any of its agreements relating to the employment of its Theatre Level
Employees including, without limitation, regulations or agreement provisions
relating to wages, bonuses, employment practices, hours of work, and the
payment of Social Security taxes, other than as shown on Schedule 3.16 (c).
Regarding the Seller's operation of the Theatres, to the best of Seller's
knowledge, the Seller is not liable, except in the ordinary course of business,
for any unpaid wages, bonuses or commissions or any tax, penalty, assessment or
forfeiture for failure to comply with any of the foregoing; and
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(d) The Buyer shall not be liable to Seller or Seller's employees
for any contractually or legally required severance payments or accrued and
unpaid employee benefits, to which Seller's employees are entitled based on
services rendered to Seller prior to the Closing, including, but not limited
to, pension and profit sharing plans, vacation pay, sick pay, longevity
bonuses, commissions or merit bonuses, and Seller shall indemnify and hold
Buyer harmless from any and all damages, costs and expenses (including
attorneys fees) associated with such payments or benefits which accrue prior to
Closing.
3.17. Contracts and Commitments. Schedule 3.17 contains a list of any
contracts or commitments regarding the Seller's operation of the Theatres to
which the Seller is a party, or by which the Seller benefits, which are not
terminable by the Seller at will, without penalty, and which are not listed or
described on Exhibit "A". Buyer will not have any liability whatsoever for the
contracts and commitments shown on said Schedule 3.17 (a) after Closing.
3.18. Condition of Property. With the exception of the canopy on the
Gold Coast Mall Theatre, Ocean City, MD, and the exterior paint on the Howard
Theatre, Lebanon, PA, both of which shall be repaired or replaced prior to
Closing by Seller, all items of inventory, machinery and equipment, furniture
and fixtures, and Leasehold Improvements included in the Property are
transferred and sold to Buyer in "AS IS - WHERE IS" condition, with no
warranty, either express or implied, as to condition or fitness for a
particular purpose.
3.19. Employee Benefit Plans.
(a) Except as set forth on Schedule 3.19 (a), there are no Theatre Level
Employee benefit plans, (as defined in Section 3 (3) of ERISA, including
employee pension benefit plans, as defined in Section 3 (2) of ERISA,
maintained by the Seller, or under which the Seller has any present or future
obligation or liability, or under which any employee of the Seller has any
present or future rights to benefits) for which Buyer will have any liability
whatsoever.
(b) There are no welfare plans, other than as set forth on Schedule 3.19
(b), as defined in Section 3 (1) of ERISA covering Theatre Level Employees of
the Seller for which Buyer will have any liability whatsoever.
3.20. Authority. This Agreement constitutes the valid and binding
obligation of the Seller, enforceable in accordance with its terms, except as
may be limited by bankruptcy, insolvency, or other laws affecting creditor
rights generally, or as may be modified by a court of equity, in an action for
specific performance. Except as disclosed on Schedule 3.07, neither the
execution and delivery of this Agreement by the Seller, nor the consummation of
the transactions contemplated hereby will violate any provisions of the
Articles of Incorporation or Bylaws of
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Seller, or any law or any order of any court, or any governmental unit to which
Seller is subject, nor will such execution, delivery or consummation conflict
with, or result in a breach of, or constitute a default under any indenture,
mortgage, lease, agreement or other instrument to which Seller is a party, or
by which any of them is bound, or result in the creation of any lien, charge or
encumbrance upon Seller's assets or properties, or result in acceleration of
the maturity of any payment date of any of Seller's obligations, or increase or
materially and adversely affect the obligations of Seller thereunder to which
the Property is subject.
3.21. Accuracy of Information. No representation or warranty of, or any
information provided to Buyer by Seller in this Agreement, or in any statement,
certificate or schedule furnished by the Seller pursuant hereto, or in
connection with the transactions contemplated hereby, contains, or on the
Closing Date will contain, any untrue statement of a material fact, or omits,
or on the Closing Date will omit, to state any material fact necessary in order
to make the statements contained therein not misleading, and all such
statements, information, representations, warranties, certificates and
schedules shall be true and complete on and as of the Closing Date as though
made on that date, except to the extent otherwise disclosed by Seller to Buyer
on a Schedule or Exhibit attached hereto. To the extent same are in Seller's
possession, true copies of all Leases, Continuing Contracts, labor agreements,
and other instruments (necessary to the Buyer in operation of the Property)
listed on or referred to, or otherwise related to any item referred to in the
Schedules, delivered or furnished to the Buyer pursuant to this Agreement have
been delivered or have been made available, or will upon request be made
available for inspection by the Buyer. Buyer shall be entitled to rely upon
the accuracy of all such written information in the preparation of its filings
with the Securities and Exchange Commission. The Seller shall immediately
notify Buyer of any inaccuracies or omissions in any of such information
previously supplied to Buyer.
3.22. Claims. Except for claims arising under or in connection with
this Agreement, Seller does not nor on the Closing Date will have, any claims
of any nature, whether asserted or unasserted, against Buyer.
3.23. Environmental Matters. To the best of Seller's knowledge, except
items such as cleaning supplies normally found in motion picture theatres
generally, no Hazardous Waste, Hazardous Substances and Hazardous Materials, as
said terms are described under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") (hereinafter "Waste
Material"), and all other applicable environmental laws, exist, were stored or
disposed of on the Property to be conveyed or assigned hereunder during the
period Seller was in possession of said Property to be conveyed or assigned
hereunder, other than material which may have been temporarily stored thereon
and removed prior to Closing, except as specifically disclosed in Schedule 3.23
to this Agreement. To the best of Seller's knowledge, Seller has no
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knowledge or reason to believe that Waste Material from any source was stored
or disposed of on the Property to be conveyed or assigned at any time other
than material which may have been temporarily stored thereon and removed prior
to Closing. To the best of Seller's knowledge, Seller has at no time
generated, stored or disposed of Waste Material, including, but not limited to,
asbestos, PCBs, and urea formaldehyde foam insulation, as defined in CERCLA,
the Hazardous Material Transportation Act, 49 USC 1801, et. seq., as amended;
the Clean Air Act, 42 USC 7401, et. seq., as amended; the Clean Water Act, 33
USC 1251, et. seq., as amended; the Toxic Substances Control Act, 15 USC 2601,
et. seq., as amended; the Resource, Conservation and Recovery Act, 42 USC 6901,
et. seq., as amended; and the Rivers and Harbor Act, 33 USC 401, et. seq., as
amended; or any other federal and/or state environmental statute, except to the
extent such Waste Material, and their place of generation, interim or final
storage, and site of disposal are identified on Schedule 3.23 to this
Agreement. To the best of Seller's knowledge, no aboveground or underground
storage tanks are located on any of the Property to be conveyed or assigned
hereunder.
3.24. Discounts and Gift Certificates. Except as set forth on Schedule
3.24, there are not outstanding any discount or promotional tickets, gift
certificates, prepaid tickets or admission passes or any other arrangements
allowing the holder thereof to reduced or free admission to any of the
Theatres.
3.25. Roof Warranties. Seller has the roof warranties set forth on
Schedule 3.25, and said roof warranties are in full force and effect.
ARTICLE IV
OBLIGATIONS AND COVENANTS OF SELLER
The Seller covenants and agrees with the Buyer that the fulfillment of
each of the following covenants and agreements constitutes a condition
precedent to the obligations of the Buyer to close hereunder:
4.01. Conduct of the Operation of the Theatres Prior to the Closing Date.
Except to the extent that the Buyer shall otherwise consent in writing from the
date hereof to the Closing Date, the Seller shall:
(a) Operate the Theatres substantially as presently operated, and
only in the ordinary course, and use its best efforts to preserve intact its
good will and reputation, as regards the Theatres, and to preserve its
relationships with persons having business dealings with it, with respect to
the Theatres, consistent with prudent business practices;
(b) Maintain all of the Theatres in normal operating order and
condition, reasonable wear and use excepted; and
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(c) Comply with all laws materially applicable to the operation of
the Theatres, the failure of which will result in a material injury to the
said operation.
4.02. Access and Information. From the date hereof to the Closing Date,
and for two (2) years thereafter, Seller, at Buyer's expense, shall afford to
the Buyer, its counsel, accountants and other representatives, upon reasonable
notice, free and full access to all the offices, properties, books, contracts,
commitments and records of the Seller, as pertains to the Theatres, and furnish
such persons with all information, (including financial and operating data)
concerning the affairs as they reasonably may request, including copies and
extracts of pertinent records, documents and contracts, as pertains to the
Theatres. The Seller shall assist the Buyer, its counsel, accountants and
representatives in their examination of such Seller's books and records.
4.03. Notification of Changes. Between the date hereof and the Closing
Date, Seller shall promptly notify Buyer in writing of any adverse change in
the method of conducting the Seller's operations, any damage to or loss of any
property, or amount of property used in the operation of the Theatres, or the
institution of, or the threat of institution of legal proceedings against the
Seller regarding or affecting the operation of the Theatres, or the status or
conduct of legal proceedings, including investigations by any governmental
agency against the Seller which may affect the operation of the Theatres.
4.04. Certain Acts Prohibited. Between the date hereof and the Closing
Date, Seller, without the prior written consent of Buyer, shall not:
(a) Encumber or permit the encumbrance of the Property, except for
Permitted Liens;
(b) Dispose of or contract to dispose of any of the Property;
except for replacements or substitutes in the ordinary course of business (but
will not sell any of the Theatres).
(c) Enter into any agreement regarding the Theatres that is not
cancelable by the Seller without penalty upon notice of thirty (30) days or
less;
(d) Regarding the Theatres, enter into any lease or contract for
the purchase, lease or acquisition of real estate, or except in the ordinary
course of business contract for the purchase, lease or acquisition of personal
property.
(e) Grant any increase in rates of pay for Theatre Level Employees.
4.05. Insurance. From and after the date hereof and through the Closing
Date, the Seller will maintain all of its insurance policies regarding the
Property in effect as of the date
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hereof; and all property shall be used, operated, maintained and repaired in a
normal business manner, and in accordance with provisions of such insurance
policies relating thereto.
4.06. No Default. The Seller will not at any time after the date
hereof and through the Closing Date do any act or omit to do any act, or
knowingly permit any act or omission to act, that would cause a breach of any
Continuing Contract, lease, employment contract or collective bargaining
agreement regarding the Theatres.
4.07. Compliance with Laws. At all times after the date hereof and
through the Closing Date, the Seller will comply with all applicable laws,
which may be required for the consummation of the transactions contemplated
hereby.
4.08. Consent of Others. To the extent that the consummation of the
transactions provided for herein requires the consent of a third party, whether
to avoid the occurrence of an event of default under any contract, license,
lease or agreement by which the Property are bound or otherwise, the Seller
shall use reasonable efforts to obtain any such consent prior to the Closing
Date. Specifically, Seller shall use reasonable efforts to obtain any and all
consents required and necessary in order to validly and effectually transfer
and assign each of the leases of real property set forth on Schedule 3.09,
without change in the terms and conditions thereof, except as otherwise
provided herein, on which the Theatres are operated by Seller, and are to be
transferred to Buyer.
4.09. No Shopping. From and after the date hereof and until the Closing,
the Seller will not, directly or indirectly, through any officer, director,
agent, broker or otherwise (i) solicit, initiate or encourage submission of
proposals or offers from any third party relating to any acquisition or
purchase of the Property, or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to any of the foregoing, or (iii) otherwise cooperate in any way with, or
assist, or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. The Seller acknowledges
that Buyer is relying on this covenant as a basis for incurring expenses and
executive time and effort in proceeding in good faith towards the consummation
of the purchase hereunder; accordingly, Buyer shall be entitled, in addition to
such legal relief as it may have available to it, to equitable relief
(including without limitation injunctive and specific performance relief) in
the event of a violation of this covenant, it being acknowledged that the
Property represents a unique investment opportunity.
4.10. Covenants Not to Compete. Seller shall enter into an agreement
with Buyer to be in substantially the form attached as Exhibit "F" hereto.
4.11. Termination of Employees. On or before the Closing Date, Seller
shall terminate all of its Theatre Level Employees.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of the Buyer to consummate the transactions provided for
herein are, at the option of the Buyer, subject to the satisfaction in all
material respects of the following conditions precedent on or prior to the
Closing Date.
5.01. Compliance by Seller. All the terms, covenants and conditions of
this Agreement to be complied with and performed by the Seller on or before the
Closing Date shall have been fully complied with and performed.
5.02. Representations and Warranties of Seller. The representations and
warranties of Seller contained herein and in the Schedules, Exhibits and
certificates delivered pursuant hereto, or in connection with the transactions
as contemplated hereby shall be true and correct on and as of the Closing Date
with the same effect as though all such representations and warranties had been
made on and as of that date, and Buyer shall have received a certificate dated
the Closing Date signed by the Seller stating that all such representations
and warranties are true and correct. On the Closing Date such representations
and warranties will not contain, any untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements
contained therein not misleading, and all statements, information,
representations and warranties of Seller to Buyer contained herein and in the
Schedules, Exhibits and certificates delivered pursuant thereto shall be true
and complete on and as of the Closing Date as though made on that date. True
copies of all available leases, agreements, plans, Continuing Contracts and
other instruments listed on or referred to, or otherwise related to any item
referred to in the Schedules and Exhibits, delivered or furnished to the Buyer
pursuant to this agreement have been delivered or have been made available, or
will upon request be made available for inspection by the Buyer. Buyer shall
be entitled to rely upon the accuracy of all such information, whether provided
orally or in writing, in the preparation of its filings with the Securities
and Exchange Commission.
5.03. No Adverse Change. Except for changes affecting the motion picture
exhibition business generally, there shall not have been any material adverse
change in the operation of the Theatres comprising the Property between
execution hereof and the Closing Date, and the Seller shall have delivered to
Buyer a certificate signed by the Seller dated the Closing Date, to such effect.
5.04. Approval of Legal Matters. All actions, proceedings, instruments
and documents reasonably necessary or reasonably appropriate to Buyer, or its
counsel, to effectuate this Agreement and the consummation of the transactions
contemplated hereby, or incidental thereto shall have been approved by such
counsel.
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5.05. Litigation. No suit shall, at the Closing Date, be pending or
threatened before any court, governmental agency, bureau, board or other
authority in which the transactions contemplated by this Agreement are sought
to be restrained.
5.06. Condition of Property and Risk of Loss. On the Closing Date, all
of the Property including equipment, furniture and fixtures located in the
Theatres shall be substantially in the same condition as at the close of
business on the date hereof except for:
(a) Ordinary use and wear thereof;
(b) Changes occurring in the ordinary course of business between
the date hereof and the Closing Date.
5.07. Uniform Commercial Code Searches; Title Insurance. The Buyer shall
have received Uniform Commercial Code Searches (conducted by Buyer at Buyer's
expense through a date reasonably proximate in time to the Closing Date) of
filings made pursuant to Article 9 thereof in all jurisdictions where the
Theatres are located, which searches shall be in form, scope and substance
reasonably satisfactory to Buyer and its counsel, and which shall not disclose
any liens, security interests or encumbrances not disclosed in a Schedule.
Buyer shall, at Buyer's expense, cause an examination to be made of the
Seller's title to the leased premises upon which the Theatres are located and
such title examination shall only disclose the Permitted Title Exceptions.
Further, Buyer shall have received irrevocable commitments from Mid-South
Title/Lawyers Title, Chicago Title Insurance Company, Commonwealth Land Title
Insurance Company, Lawyers Title of North Carolina or Lawyers Title Insurance
Corporation to issue their standard form ALTA extended coverage policy of title
insurance on the Leasehold Interests, dated as of the Closing Date. If and to
the extent that lien searches or title searches undertaken by Buyer indicate
that any of Seller's representations or warranties made in this Agreement,
including, without limitation, Section 3.08 or 3.09, are not accurate, Buyer
shall notify Seller of any such inaccuracy not less than ten (10) business days
prior to Closing, and Seller shall cure such inaccuracy by taking steps at
Seller's own expense to remove the disclosed lien or defect in title prior to
Closing. If Seller has diligently commenced steps to remove the disclosed lien
or defect in title reflected in such inaccuracy, but has not completed its
steps by the Closing Date, Seller shall be entitled to a reasonable extension
of the Closing for the purpose of completing such cure. If Seller is unable to
correct or cure the lien reflected in such inaccuracy, and Buyer elects to
proceed to close hereunder, or if Buyer does not so disclose such liens or
defects in title to Seller so that Seller may remove or cure the same, Buyer
shall have waived its rights to indemnification under this Agreement arising
out of such liens or defects in title.
5.08. Consents. Seller shall have delivered to Buyer the written consent
of third parties referred to in Section 2.07 (e),
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which consent shall be in substantially the form, scope and substance attached
hereto as Exhibit "G".
5.09. Extension of Leases. Seller shall have delivered to Buyer,
amendment to the Leases of the Wyomissing Theatre, Reading, PA and Sun and Surf
Theatre, Ocean City, MD, whereby the Leases for said Theatres are extended to
terminate no earlier than 12/31/2007, with no other changes in the terms and
conditions of said Leases.
ARTICLE VI
FIRE, CONDEMNATION AND INSURANCE
6.01. Fire, Condemnation and Insurance.
(a) If, prior to the Closing Date, all or a part of the Property
shall be destroyed or damaged by fire or any other casualty, or if all or a
part thereof shall be condemned, in whole or in part, by governmental or other
lawful authority, neither Seller nor Buyer shall have any liability for any such
destruction, damage or condemnation and Buyer shall have the option of (i)
completing the purchase without adjustment in the Purchase Price, in which
event Seller shall comply with its obligations set forth in paragraph (b) of
this Section, or (ii) canceling this Contract and all obligations of Seller and
Buyer hereunder; provided, however, Buyer may not elect to exercise the option
set forth in clause (ii) if the Property shall be damaged or destroyed by fire
or other casualty covered by Seller's Required Insurance, (as defined in
paragraph (c) of this Section) and the cost to repair or replace such damaged
or destroyed Property shall not exceed $250,000 in the aggregate provided
Seller complies with its obligations under paragraphs (b) and (c) of this
Section. Buyer shall exercise one of the aforesaid two options by giving notice
to Seller within 10 days after the giving of notice by Seller to Buyer of the
occurrence of the damage or destruction or condemnation, and the failure of
Buyer to give any notice within said 10 day period shall constitute an election
by Buyer not to cancel this Contract.
(b) In the event of damage to or destruction of the Property or a
condemnation thereof and this Contract is not terminated as provided in
paragraph (a) of this Section, Seller shall have no obligation to restore or
repair the same and Buyer shall accept the same in its then condition at
Closing, but Seller shall pay to Buyer, at Closing, all insurance
or condemnation proceeds received by Seller with respect to such loss or
taking, plus the amount of any deductible under any Required Insurance.
(c) Prior to the Closing Date, Seller shall maintain in full force
and effect on the Property damage insurance coverage ("Required Insurance"), as
presently in effect, a description of which is set forth on Exhibit "H" hereto.
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ARTICLE VII
REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS OF BUYER
The Buyer represents and warrants to the Seller as follows:
7.01. Organization in Good Standing. The Buyer consists of Carmike
Cinemas, Inc. a corporation duly organized and existing, and in good standing
under the laws of the State of Delaware, and Eastwynn Theatres, Inc., a
corporation duly organized and existing, and in good standing under the laws
of the State of Alabama. Each member of Buyer has full corporate power to
carry on its businesses, to own and operate its properties and assets, and to
consummate the transactions contemplated by this Agreement.
7.02. Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Buyer; no further corporate action of any nature is required
pursuant to the Articles of Incorporation and By-Laws of the Buyer; and this
Agreement constitutes the valid and binding obligations of the Buyer, except as
may be limited by bankruptcy, insolvency, or other laws affecting creditors
rights generally, or as may be modified by a court of equity in an action for
specific performance. The execution, delivery and performance of this
Agreement will not violate or result in default under any provision of the
Articles of Incorporation or By-Laws of the Buyer, or any material commitment,
indenture, license or other obligation to which the Buyer is a party, and will
not, to the best knowledge of the Buyer, contravene any law, rule or regulation
of any administrative agency or governmental body or any other order, writ,
injunction or decree of any court, administrative agency or governmental
agency applicable to the Buyer.
7.03. Governmental Notifications and Consents. Except as set forth on
Schedule 7.03, no material notification, consent, authorization, order of
approval of, or filing or registration with any governmental commission, board
or other regulatory body, or any other party, is required for or in connection
with the execution and delivery of this Agreement by Buyer, and the
consummation by Buyer of the transactions contemplated hereby.
7.04. Buyer's Indemnity for Seller's Continuing Liability under Leases.
Buyer hereby covenants and agrees that it shall indemnify and hold harmless
Seller, and Donald M. Fox, Richard A. Fox and Helen Fox, to the extent said
individuals are guarantors under the Leases, from any and all claims, actions,
damages and other liabilities to any person arising out of Buyer's occupancy or
operation of the Theatres on the Premises demised by the Leases or Buyer's
failure to comply, from and after the Closing Date, with the terms and
conditions of the Leases and Continuing Contracts to be assigned to Buyer at
Closing upon which Seller is not released by the applicable Landlord.
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7.05. Carmike Guaranty of Eastwynn's Obligations Under Leases and
Continuing Contracts. Carmike hereby covenants and agrees that it shall
provide financial information and guarantee the performance of any of the
Leases as requested by Landlords therefor.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of the Seller to consummate the transactions provided for
herein are subject to the satisfaction, in all material respects, of the
following conditions on or prior to the Closing Date:
8.01. Compliance by the Buyer. All the terms, covenants and conditions
of this Agreement to be complied with and performed by the Buyer on or before
the Closing Date shall have been fully complied with and performed in all
material respects.
8.02. Representations and Warranties of the Buyer. The representations
and warranties of the Buyer contained herein shall be true and correct, on and
as of the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date, and
the Buyer shall have furnished to the Seller a certificate dated the Closing
Date and signed by the President or Vice President and Secretary of the Buyer
to such effect.
8.03. Litigation. No suit shall, at the Closing Date, be pending or
threatened before any court, governmental agent, bureau, board or other
authority in which the transactions contemplated by this Agreement are sought
to be restrained, or in connection with which damages or other relief is
sought, or in which any material claim shall be asserted against the Buyer
regarding the Theatres not disclosed herein, or in the Schedules or Exhibits
delivered hereto.
8.04. Approval of Legal Matters. All actions, proceedings, instruments
and documents reasonably necessary or reasonably appropriate to Seller, or its
counsel, to effectuate this Agreement and the consummation of the transactions
contemplated hereby, or incidental thereto shall have been approved by such
counsel.
8.05. Landlord Consents. All Landlord consents required hereunder or
under the Leases have been obtained.
ARTICLE IX
TERMINATION
9.01. Right of Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing Date:
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(a) By the mutual consent of the Board of Directors of Buyer and
the Board of Directors of Seller;
(b) By the Board of Directors of Buyer in the event the conditions
set forth in Articles IV and V of this Agreement shall not have been satisfied
or waived by March 31, 1996.
(c) By the Board of Directors of Seller in the event that the
conditions set forth in Articles VII and VIII of this Agreement shall not have
been satisfied or waived by March 31, 1996.
(d) By either the Boards of Directors of Buyer or the Seller if any
action or proceeding before any court or other governmental body or agency
shall have been instituted in good faith by an unrelated third party (i) to
restrain, modify or prohibit the transaction contemplated by this Agreement,
(ii) to recover damages from Buyer or Seller if such action or proceeding,
directly related to this Agreement, could result in the imposition of a
material liability against or affecting the business or properties of the
Buyer or the Seller in the opinion of the party seeking to terminate this
agreement, or (iii) to force Buyer or the Seller to take any action that would
have a material and adverse effect on the business or properties of Buyer or
Seller, directly related to this Agreement, in the opinion of the party seeking
to terminate this Agreement unless either the Buyer or the Seller causes such
action or proceeding to be dismissed on or prior to the Closing Date.
9.02. Notice of Termination. Notice of termination of this Agreement, as
provided for in this Article, shall be given by the parties so terminating to
the other parties hereto, in accordance with the provisions of Section 11.08 of
this Agreement.
9.03. Effect of Termination. In the event that this Agreement is
terminated, this Agreement shall become void, and of no further force and
effect, without liability of any party to any other party.
ARTICLE X
PARTIES' AGREEMENT TO CROSS-INDEMNIFY
10.01. Agreement to Indemnify. Subject to the terms and conditions of
this Article X, each party (the "Indemnifying Party") agrees to indemnify,
defend and hold the other party (the "Indemnified Party) harmless from and
against all claims asserted against, imposed upon or incurred by the other
party by reason of, or resulting from:
(a) A breach or non-fulfillment of any warranty, or any
inaccuracy of any representation contained in, or made pursuant to this
Agreement, or
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(b) A breach or non-fulfillment of any covenant or agreement,
other than a representation or warranty, contained in or made pursuant to this
Agreement; or
(c) Any undisclosed liability, provided that nothing herein shall
require Seller to indemnify Buyer with respect to any liability created by
Buyer on and after the Closing Date.
10.02. Conditions of Indemnification. Obligations and liabilities of the
Indemnifying Party hereunder with respect to claims shall be subject to the
following terms and conditions:
(a) The Indemnified Party shall give the Indemnifying Party notice
of any claim promptly after the Indemnified Party receives notice thereof, and
to the best of Indemnified Party's knowledge advise Indemnifying Party which
representation and warranty, covenant or agreement set forth herein said claim
violates (in no event more than thirty (30) days after Indemnified Party
receives such notice), and the Indemnifying Party will undertake the defense
thereof by representatives of its own choosing reasonably satisfactory to
Indemnified Party. All costs and expenses of such defense (including fees of
counsel), and any settlement or compromise resulting from the defense of any
claim will be paid by the Indemnifying Party.
(b) In the event that the Indemnifying Party, within a reasonable
time after receipt of notice of any such claim, but in no event more than thirty
(30) days after receipt of such notice, fails to defend, the Indemnified Party
will (upon further notice to the Indemnifying Party) have the right to
undertake the defense, compromise or settlement of such claim on behalf, for
the account and risk of the Indemnifying Party, and at Indemnifying Party's
expense, subject to the right of the Indemnifying Party to assume the defense
of such claim at any time prior to settlement, compromise or final
determination thereof.
10.03. Assistance. In the event so requested by the Indemnifying Party,
the Indemnified Party shall use its best efforts to make available all
information and assistance reasonably required in the defense by the
Indemnifying Party of a claim.
10.04. Limitations. The Indemnifying Party's obligation to indemnify the
Indemnified Party as provided in Section 10.01 above is subject to the
condition that the Indemnifying Party shall have been given notice by
Indemnified Party of the claim for which indemnity is sought within eighteen
(18) months after the Closing Date. Except as to claims not seeking payment of
money, Seller shall not be obligated to so save, defend, indemnify and hold the
Buyer harmless from and against, and shall not be obligated to pay or reimburse
Buyer for any claims, demands, causes of action, liabilities or expenses
arising out of or relating in any way to the ownership or use of the Property
(collectively the "Claims") as herein set forth, unless and to the extent that
the aggregate claims of the Buyer for such indemnification exceed the amount of
$15,000.00. For example, in the event Buyer's aggregate Claims
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reach $16,000.00, Seller will be obligated to pay or reimburse Buyer the entire
$16,000.00. In the event Buyer's aggregate Claims are less than $15,000.00,
Seller will not be obligated to pay or reimburse Buyer anything. Further,
Seller's liability hereunder shall not exceed $3,000,000.00 in any event.
ARTICLE XI
MISCELLANEOUS
11.01. Survival of Representations. All statements contained in any
Schedule, Exhibit, document, certificate or other instrument delivered by or on
behalf of the Buyer or the Seller pursuant hereto, or in connection with the
transactions contemplated hereby, shall be deemed representations and
warranties hereunder by the Buyer or the Seller as the case may be. The
representations, warranties and agreements made by the Buyer and the Seller
herein shall survive consummation of the transactions contemplated hereby for
eighteen (18) months after Closing Date, and no audit of the inventories,
properties, financial condition, records or other matters relating to the
Seller shall limit, affect or impair the ability of the Buyer to rely upon the
representations, warranties and agreements of the Seller set forth herein.
11.02. Assignment. This Agreement shall not be assignable by either
party hereto without the written consent of the other, and shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, assignees and legal representatives.
11.03. Public Announcements. Except as required by law, neither party
shall make any public announcement concerning this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, such consent not to be unreasonably withheld.
11.04. Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia, USA.
11.05. Amendment. This Agreement may be amended, supplemented or
interpreted at any time by written instrument executed by the parties hereto.
11.06. Expenses; Brokers and Finders Fees. Except for Seller's
engagement of Wilson Capital Corporation, whose fees shall be paid by Seller,
Seller and Buyer agree that there are no brokers or finders fees or commissions
payable to any person employed by Seller or Buyer in connection with the
transactions contemplated by this Agreement, and Seller and Buyer will
indemnify each other with respect thereto, and hold each other harmless
therefrom. Each party hereto shall pay its or his or her own expenses incident
to this Agreement and the transactions contemplated hereby, including all
28
<PAGE> 29
fees and expenses of their counsel, whether or not such transaction shall be
consummated.
11.07. Further Assurances. The parties hereto agree and acknowledge that
certain computations, exchange and notification of information and other
actions may be required from time to time, and after the date hereof through
and after the Closing Date with respect to this Agreement. The parties hereto,
and their respective representatives, shall use their best efforts to cooperate
with one another in the expeditious completion of all such computations,
notifications and actions required. Without limiting the generality of the
foregoing, Seller agrees to use its best efforts to assist Buyer with respect
to the resolution of any matters arising in connection with or affecting the
title of the Seller to any of the Property. Seller shall execute and deliver
any and all documents, and will cause any and all other action to be taken,
either before or after the Closing which may be necessary or proper to effect
or evidence the provisions of this Agreement, and the transactions
contemplated hereby.
11.08. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have duly been given if
delivered, or if mailed by United States or Canadian Registered Mail, prepaid,
to the parties or their assignees, at the following addresses (or such other
addresses as shall be given in writing by the parties to one another), or sent
via telecopier to the parties at the telecopier number set forth below:
BUYER:
John O. Barwick, III
Carmike Cinemas, Inc.
1301 - 1st Avenue
Columbus, GA 31901
TELEPHONE : 706/576-3415
FAX : 706/576-3419
With a copy to:
F. Lee Champion, III
Champion & Champion
1030 Second Avenue
Columbus, GA 31901
TELEPHONE : 706/324-4477
FAX : 706/324-0470
SELLER:
Fox Theatres Corporation
ATTN: Donald M. Fox
825 Berkshire Boulevard
Wyomissing, PA 19610
29
<PAGE> 30
With a copy to:
William A. Newman
Blumenthal & Lynne
488 Madison Avenue
New York, NY 10022
TELEPHONE : 212/758-0190
FAX : 212/752-0097
11.09. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy. The election of any one remedy by a party hereto shall not constitute
a waiver of the right to pursue other available remedies.
11.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the
same instrument.
11.11. Entire Agreement. This Agreement, the Exhibits hereto, and the
certificates, Schedules and other documents delivered pursuant hereto are
incorporated by reference herein, contain the entire agreement between the
parties concerning the transaction contemplated herein, and supersede all prior
agreements or understandings between the parties hereto relating to the subject
matter hereof. No oral representation, agreement or understanding made by any
party hereto shall be valid or binding upon such party or any other party
hereto. The parties hereto agree that the Letter of Intent dated January 4,
1996 between the parties is superseded hereby.
11.12. Additional Documents. The parties hereto will at any time after
the date hereof sign, execute and deliver, or cause others so to do, all such
powers of attorneys, deeds, assignments, documents and instruments, and do or
cause to be done all such other acts and things as may be necessary or proper
to carry out the transactions contemplated by this Agreement.
11.13. Captions and Section Headings. The captions and section headings
used herein are for convenience only, and are not a part of this Agreement, and
shall not be used in construing it.
11.14. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the arbitration rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
30
<PAGE> 31
11.15. Schedules. To the extent that identical information may be
required by two or more Schedules hereto, such information need be supplied on
only one Schedule if appropriate cross-references are made on such other
Schedules, or if the information is readily available on another Schedule, or
in the Agreement.
11.16. Bulk Transfer. The parties hereby waive the applicable provisions
of the Uniform Commercial Code relating to Bulk Transfers in the states in
which the Property is located, and Seller hereby indemnifies Buyer from
Seller's failure to comply with such provisions.
ARTICLE XII
BUYER'S MANAGEMENT OF CERTAIN
OF SELLER'S THEATRES
At Seller's option, Buyer and Seller will enter into a Management
Agreement in form substantially as set forth on Exhibit "K" attached hereto
whereby Buyer will manage the Festival 8 Theatre, Pompano Beach, FL, the
Sunrise 8 Theatre, Sunrise, FL, the Fox White Marlin Theatre, Ocean City, MD
and the Fox East Theatre, Redding, PA. Seller will hold Buyer harmless for any
of Buyer's actions in operating said theatres, other than gross negligence, and
Seller agrees to pay and be wholly responsible for payments of rent and other
lease related costs to Landlords, and generation of reports to said Landlords.
ARTICLE XIII
AGREEMENT REGARDING FOX WHITE MARLIN
THEATRE, OCEAN CITY, MD, AND FOX EAST
THEATRE, REDDING, PA
Seller covenants and agrees that from and after the Closing, and through
the expiration of the Leases and any extensions thereof, neither the Fox White
Marlin Theatre, Ocean City, MD, nor the Fox East Theatre, Redding, PA will be
operated as "First Run", nor shall said Theatres be expanded or additional
screens added thereto. Seller will deliver to Buyer at Closing an agreement
in recordable form evidencing the foregoing prohibition, which shall be
recorded to provide notice thereof to any subsequent purchasers of Seller's
leasehold interest in said Theatres.
31
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
on the day and year first above written.
SELLER:
Signed, sealed and delivered FOX THEATRES CORPORATION
by SELLER in the presence of
BY: /s/
/s/ Mary F. Stewart -----------------------------
- ---------------------------- Title: President
Witness ---------------------
/s/ Deborah A. Kochel ATTEST: /s/ Betsy Breneaser
- ---------------------------- --------------------------
Notary Public Title: Assistant Secretary
---------------------
[Notary Seal]
(Corporate Seal)
BUYER:
Signed, sealed and delivered CARMIKE CINEMAS, INC.
in the presence of:
BY:
- ---------------------------- ---------------------------
Witness President
- ---------------------------- ATTEST:
Notary Public -----------------------
Secretary
(Corporate Seal)
Signed, sealed and delivered EASTWYNN THEATRES, INC.
in the presence of:
- ---------------------------- BY:
Witness ---------------------------
President
- ---------------------------- ATTEST:
Notary Public -----------------------
Secretary
(Corporate Seal)
32
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
CARMIKE CINEMAS, INC.
<TABLE>
<CAPTION>
Years Ended December 3l
---------------------------------------
1995 1994 1993
-------- --------- ----------
(In thousands, except per share data)
<S> <C> <C> <C>
PRIMARY:
Average shares outstanding 11,161 8,312 7,756
Net effect of dilutive stock
options and warrants based
on the treasury stock method
using average market price 99 165 161
-------- --------- ----------
Totals 11,260 8,477 7,917
======== ========= ==========
Income before cumulative
effect of change in accounting $ 13,087 $ 16,953 $ 11,861
Cumulative effect of change in accounting -0- -0- 390
-------- --------- ----------
NET INCOME $ 13,087 $ 16,953 $ 12,251
======== ========= ==========
Earnings per share:
Income before cumulative
effect of change in accounting $ 1.16 $ 2.00 $ 1.50
Cumulative effect of change in accounting -0- -0- .05
-------- --------- ----------
NET INCOME PER SHARE $ 1.16 $ 2.00 $ 1.55
======== ========= ==========
</TABLE>
Note: Fully diluted calculation is not presented because dilution is less than
3%.
<PAGE> 1
EXHIBIT 13
(PHOTO)
1995 was a momentous year in the history of Carmike, as during this
period, we became the largest circuit in the United States in terms of number
of theatres and screens operated.
While this is a milestone and a great achievement, it is not the ultimate
goal of the Company. We intend to continue our growth strategy with a goal of
5000 screens.
During 1995 we added 377 screens through acquisitions. We also accelerated
our construction program by building and opening 113 new screens during the
year. The majority of these were complexes housing 10 auditoriums each. In 1996
we plan to open 200-250 screens through our construction program.
We feel the future holds much promise for Carmike. We enter 1996 with a
strong balance sheet and the ability to continue our growth strategy.
/s/ Carl L. Patrick, Sr. /s/ Michael. W. Patrick
- ------------------------ -----------------------
Carl L. Patrick, Sr. Michael W. Patrick
Chairman President
<PAGE> 2
(PHOTO)
Supervision of the finances of the Company is in the capable hands of John
O. Barwick, III (right), Vice President-Finance. He is responsible for all the
financial affairs of the Company, including financial reporting, acquisitions,
banking and shareholder relations. J.D. Bradley (left) is the Budget Director.
The top grossing film of 1995 was "Batman Forever" starring Val Kilmer,
Tommy Lee Jones, Jim Carrey and Nicole Kidman. The film grossed nearly $185
million in 1995. (pictured at left) Jim Carrey as the Riddler.
<PAGE> 3
(PHOTO)
Our proprietary computer system, "IQ Zero," which we believe is the
best in the industry, is custom designed for Carmike. Supervising this
operation is Larry Adams, Vice President-Informational Systems (standing,
left). Pictured with Larry is Controller, Matt Citrin and Human Resources
Director, Sadie Harper.
"Apollo 13," directed by Ron Howard and starring Tom Hanks, Kevin
Bacon, Bill Paxton, Gary Sinise and Ed Harris, brought in over $184 million in
1995, making it the second highest grossing picture of the year. (pictured at
left) Bill Paxton, Kevin Bacon and Tom Hanks.
<PAGE> 4
(PHOTO)
Fred Van Noy, Vice President-General Manager, has the responsibility of
supervising the operation of all of Carmike's screens. He is assisted in this
task by four Division Managers and 17 Distict Managers..
Marilyn Grant, Vice President-Advertising has the task of letting the
public know in advance what is playing on all Carmike screens through an
extensive advertising program. She works closely with all the film companies in
selling their pictures on our screens.
Bringing toys to life with the aid of computer animation, Disney's "Toy
Story" brought in over $146 million making it the third highest grossing film
of 1995. (pictured at left) Characters from "Toy Story".
<PAGE> 5
(PHOTO)
Carmike has grown almost ten fold in its short history. Lamar Fields, Vice
President - Development (center) has the primary responsibility for all
construction, leases and insurance. Assisting Lamar in his many duties is his
capable staff, which includes Brenda Blum and George Wilcox.
An Academy Award(R) winning score and beautiful animation in Disney's
classic style, brought "Pocahontas" to life. Making over $141 million,
Pocahontas became the fourth highest grossing film of 1995. (pictured at right)
Characters from "Pocahontas".
<PAGE> 6
The film that plays in the theatres is by far the most important
ingredient in our operation and the cost of film is by far our biggest single
item of expense.
Heading this department is Vice President-Film, Anthony Rhead (second
from left) and his three film buyers, (left to right) Larry Collins, Bob
Scarborough, and Tom Sawyer. They supervise the buying and booking of all
pictures that play on Carmike's screens throughout the country.
In his second outing as Ace Ventura, Jim Carrey ventured from Mongolia to
the wilds of Africa and brought in over $104 million making "Ace Ventura 2 -
When Nature Calls" the fifth highest grossing film of 1995. (pictured at right)
Jim Carrey as "Ace Ventura".
<PAGE> 7
Whether it's popcorn, Coca-Cola(TM) or candy, our Vice President -
Concessions, Matt Shirley (left), makes it happen. He is responsible for the
purchase and sale of our concession items and the satisfaction of the customer.
Matt performs a very important job for Carmike.
While film is our most important product, it cannot be completely enjoyed
without the proper environment, and Jim Davis (right), our Vice
President-Technical, has the responsibility. He insures that the seats, air
conditioning, heating and the projection and sound equipment all contribute to
a relaxing and enjoyable experience.
Combining computer animation with live-action footage brought ghostly
characters to life and made "Casper" the sixth highest grossing film of 1995
making over $100 million. (pictured at right) Bill Pullman and ghostly co-stars
from "Casper".
<PAGE> 8
Of primary concern to Carmike, is the comfort of our patrons. That is why
we are a leader in the industry. We are continually looking for new ways to
improve the cinamatic experience. We incorporate Lucasfilm's THX(R) Digital
surround sound systems into the design of our new comlexes. These complexes
are regulary tested by sound engineers to ensure that the strictest sound
quality standards are met.
Carmike uses high quality seats to provide the utmost in comfort to our
patrons.
At Carmike we are committed to bringing the movies to life.
(PHOTO)
(pictured at right) Carmike Cinemas 7; Columbus, Georgia
(pictured below) Peachtree Cinemas 8; Columbus, Georgia
<PAGE> 9
(PHOTO)
SOUTHERN DIVISION
LOUIS HOURANY
DIVISION MANAGER
(pictured at bottom left)
DISTRICT MANAGERS
VICTOR ALLEN
HORACE RICHARDSON
DAVID SAVAGE
DAVID THILGES
WESTERN DIVISION
GARY GREEN
DIVISION MANAGER
(pictured at top left)
DISTRICT MANAGERS
GENE HOMER
SHARON SALINAS
TOBY BRISTER
PHIL CARDIN
GARY KRANNACKER
MIDWESTERN DIVISION
SHIRLEY BARNES
DIVISION MANAGER
(pictured at bottom right)
DISTRICT MANAGERS
ED ARMSTRONG
MIKE GARFIELD
DEBRA TRIPLITT
NORTHEASTERN DIVISION
KEN LEHMAN
DIVISION MANAGER
(pictured at top right)
DISTRICT MANAGERS
BOB JOHNSON
RANDY BOLEMAN
MICHAEL LUBENSKY
JAMES HAWBECKER
<PAGE> 10
Board of Directors and Shareholders
Carmike Cinemas, Inc.
We have audited the accompanying consolidated balance sheets of Carmike
Cinemas, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Carmike Cinemas,
Inc. and subsidiaries at December 31, 1995 and 1994 and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note I to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.
Ernst & Young LLP
Columbus, Georgia
February 6, 1996
<PAGE> 11
<TABLE>
<CAPTION>
(in thousands, except for share data)
December 31
1995 1994
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 11,345 $ 17,872
Short-term investments . . . . . . . . . . . . . . . . . . $ 7,502 $ 4,815
Recoverable construction allowances under capital leases $ 4,300 $ 1,100
Accounts and notes receivable $ 7,911 $ 2,714
Inventories. . . . . . . . . . . . . . . . . . . . . . . . $ 2,936 $ 1,939
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . $ 5,632 $ 5,025
--------- ---------
TOTAL CURRENT ASSETS $ 39,626 $ 33,465
OTHER ASSETS
Investments in and advances to partnerships $ 4,973 $ 4,631
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,331 $ 2,375
--------- ---------
$ 7,304 $ 7,006
PROPERTY AND EQUIPMENTNNotes B, C, D and F
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,841 $ 31,835
Buildings and improvements . . . . . . . . . . . . . . . . $ 119,504 $ 88,500
Leasehold improvements . . . . . . . . . . . . . . . . . . $ 133,273 $ 107,155
Leasehold interests. . . . . . . . . . . . . . . . . . . . $ 49,758 $ 42,581
Equipment . . . . . . . . . . . . . . . . . . . . . . . . $ 143,029 $ 111,780
--------- ---------
$ 484,405 $ 381,851
Accumulated depreciation and amortization $(112,554) $ (87,880)
--------- ---------
$ 371,851 $ 293,971
EXCESS OF PURCHASE PRICE OVER NET
ASSETS OF BUSINESSES ACQUIRED. . . . . . . . . . . . . . . $ 59,231 $ 43,156
--------- ---------
$ 478,012 $ 377,598
========= =========
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,873 $ 23,478
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,102 $ 11,327
Current maturities of long-term debt, senior notes
and capital lease obligations . . . . . . . . . . . . . . . . . . . . . $ 12,205 $ 9,352
-------- --------
TOTAL CURRENT LIABILITIES $ 56,180 $ 44,157
LONG-TERM DEBT, less current maturities-Note D. . . . . . . . . . . . . . . . . $ 79,214 $ 3,495
SENIOR NOTES-Note E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $107,792 $118,182
CAPITAL LEASE OBLIGATIONS, less current maturities-Note F . . . . . . . . . . . $ 27,996 $ 19,245
CONVERTIBLE SUBORDINATED DEBT-Note C. . . . . . . . . . . . . . . . . . . . . . $ 3,303 $ 3,051
DEFERRED INCOME TAXES-Note I. . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,433 $ 17,512
SHAREHOLDERS' EQUITY-Notes D, E, G, and H
Class A Common Stock, $.03 par value, authorized 22,500,000 shares,
issued and outstanding 9,745,101 and 9,738,101 shares, respectively $ 292 $ 292
Class B Common Stock, $.03 par value, authorized 5,000,000 shares,
issued and outstanding 1,420,700 shares. . . . . . . . . . . . . . . . . $ 43 $ 43
Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,814 $ 99,763
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 84,945 $ 71,858
-------- --------
185,094 171,956
-------- --------
$478,012 $377,598
======== --------
</TABLE>
See accompanying notes.
<PAGE> 13
<TABLE>
<CAPTION>
(in thousands, except for per share data) Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . $253,691 $232,134 $167,294
Concessions and other. . . . . . . . . . . . . . . . . . . . . $111,058 $ 95,485 $ 74,504
-------- -------- --------
$364,749 $327,619 $241,798
Costs and Expenses:
Film exhibition costs. . . . . . . . . . . . . . . . . . . . . $135,654 $123,610 $ 90,874
Concession costs . . . . . . . . . . . . . . . . . . . . . . . $ 14,959 $ 12,241 $ 9,406
Other theatre operating costs. . . . . . . . . . . . . . . . . $143,682 $118,905 $ 86,498
General and administrative . . . . . . . . . . . . . . . . . $ 5,482 $ 5,092 $ 4,710
Depreciation and amortization. . . . . . . . . . . . . . . . . $ 27,216 $ 22,544 $ 16,255
-------- -------- --------
$326,993 $282,392 $207,743
-------- -------- --------
OPERATING INCOME $ 37,756 $ 45,227 $ 34,055
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . $ 16,031 $ 17,028 $ 14,282
-------- -------- --------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES $ 21,725 $ 28,199 $ 19,773
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,638 $ 11,246 $ 7,912
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES $ 13,087 $ 16,953 $ 11,861
Cumulative effect of change in accounting for
income taxes Note-I . . . . . . . . . . . . . . . . . . . . . -0- -0- 390
-------- -------- --------
NET INCOME $ 13,087 $ 16,953 $ 12,251
======== ======== ========
Weighted average common shares outstanding . . . . . . . . . . . $ 11,260 $ 8,477 $ 7,917
======== ======== ========
Earnings per share:. . . . . . . . . . . . . . . . . . . . . . .
Income before cumulative effect of change in
accounting for income taxes. . . . . . . . . . . . . . . . . $ 1.16 $ 2.00 $ 1.50
Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . -0- -0- .05
-------- -------- --------
NET INCOME PER SHARE $ 1.16 $ 2.00 $ 1.55
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE> 14
<TABLE>
<CAPTION>
(in thousands) Years Ended December 31
1995 1994 1993
---- ---- ----
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,087 $ 16,953 $ 12,251
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . $ 27,216 $ 22,544 $ 16,255
Deferred income taxes . . . . . . . . . . . . . . . . . . 921 1,674 691
Gain on sales of property and equipment (723) (122) (932)
Changes in operating assets and liabilities:
Accounts and notes receivable (5,197) 1,692 (909)
Inventories . . . . . . . . . . . . . . . . . . . . . . (997) (376) (300)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . (607) (1,399) (911)
Accounts payable. . . . . . . . . . . . . . . . . . . . 1,395 2,721 2,929
Accrued expenses. . . . . . . . . . . . . . . . . . . . 7,775 3,597 (2,908)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 42,870 47,284 26,166
INVESTING ACTIVITIES
Purchases of property and equipment . . . . . . . . . . . . . (58,035) (29,096) (33,466)
Purchases of assets from other theatre operators. . . . . . . (64,485) (51,050) (11,200)
Acquisition of remaining interest in Westwynn Theatres, Inc..
net of cash acquired . . . . . . . . . . . . . . . . . . . -0- -0- (8,774)
Proceeds from sales of property and equipment . . . . . . . . 2,232 860 1,466
Decrease (increase) in:
Short-term investments. . . . . . . . . . . . . . . . . . . (2,687) 17,189 (3,506)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . (458) (2,493) (1,304)
NET CASH USED IN INVESTING ACTIVITIES (123,433) (64,590) (56,784)
-------- -------- --------
FINANCING ACTIVITIES
Debt:
Additional borrowings . . . . . . . . . . . . . . . . . . . 392,689 110,950 29,275
Repayments. . . . . . . . . . . . . . . . . . . . . . . . . (315,504) (146,468) (5,656)
Issuance of Class A Common Stock 51 61,147 806
Due from lessor under capital leases (3,200) (1,100) -0-
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 74,036 24,529 24,425
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,527) 7,223 (6,193)
Cash and cash equivalents at beginning of year. . . . . . . . . 17,872 10,649 16,842
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 11,345 $ 17,872 $ 10,649
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE> 15
<TABLE>
<CAPTION>
Class A Class B
Common Stock Common Stock
--------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1992 6,632 $199 1,421 $43
Issuance of Class A Common Stock
on exercise of stock options. . . . . . . . . . 93 2 -0- -0-
Issuance of Treasury shares-Note C. . . . . . . . -0- -0- -0- -0-
Net income. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
----- ---- ----- ---
BALANCES AT DECEMBER 31, 1993 6,725 $201 1,421 $43
Issuance of Class A Common Stock:
Public offering . . . . . . . . . . . . . . . . 2,705 81 -0- -0-
Exercise of warrant . . . . . . . . . . . . . . 250 8 -0- -0-
Exercise of stock options . . . . . . . . . . . 58 2 -0- -0-
Net income. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
----- ---- ----- ---
BALANCES AT DECEMBER 31, 1994 9,738 292 1,421 43
ISSUANCE OF CLASS A COMMON STOCK
ON EXERCISE OF STOCK OPTION . . . . . . . . . . 7 -0- -0- -0-
NET INCOME. . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
----- ---- ----- ---
BALANCES AT DECEMBER 31, 1995 9,745 $292 1,421 $43
===== ==== ===== ===
</TABLE>
See accompanying notes.
<PAGE> 16
<TABLE>
<CAPTION>
Class A Common Stock
in Treasury
Paid-in Retained --------------------
Capital Earnings Shares Amount Total
------- -------- ------ ------ -----
<S> <S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1992 $35,519 $42,654 500 $(2,687) $ 75,728
Issuance of Class A Common Stock
on exercise of stock options. . . . . . . . . . 804 -0- -0- -0- 806
Issuance of Treasury shares-Note C. . . . . . . . $ 3,298 -0- (330) 1,773 5,071
Net income. . . . . . . . . . . . . . . . . . . . -0- 12,251 -0- -0- 12,251
------- ------- ---- ------- --------
BALANCES AT DECEMBER 31, 1993 39,621 54,905 170 (914) 93,856
Issuance of Class A Common Stock:
Public offering . . . . . . . . . . . . . . . . 56,784 -0- (170) 914 57,779
Exercise of warrant . . . . . . . . . . . . . . 2,867 -0- -0- -0- 2,875
Exercise of stock options . . . . . . . . . . . 491 -0- -0- -0- 493
Net income. . . . . . . . . . . . . . . . . . . . -0- 16,953 -0- -0- 16,953
------- ------- ---- ------- --------
BALANCES AT DECEMBER 31, 1994 99,763 71,858 -0- -0- 171,956
ISSUANCE OF CLASS A COMMON STOCK
ON EXERCISE OF STOCK OPTION . . . . . . . . . . 51 -0- -0- -0- 51
NET INCOME. . . . . . . . . . . . . . . . . . . . -0- 13,087 -0- -0- 13,087
------- ------- ---- ------- --------
BALANCES AT DECEMBER 31, 1995 $99,814 $84,945 -0- -0- $185,094
======= ======= ==== ======= ========
</TABLE>
<PAGE> 17
December 31, 1995
NOTE A-SIGNIFICANT ACCOUNTING POLICIES
The primary business of the Company is the operation of motion picture theatres
which generate revenues principally through admissions and concessions sales.
Such revenues are received in cash at the point of sale.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
OPERATING AGREEMENTS: The Company jointly owns or leases certain theatres which
it operates under the terms of operating agreements related to the other
participants' undivided interest in such theatres. The Company consolidates the
results of operations of these theatres in the accompanying Consolidated
Statements of Income.
CASH EQUIVALENTS: Cash equivalents are highly liquid investments consisting
primarily of money market accounts and investment grade, short-term debt
instruments and have maturities at the date of purchase of less than three
months. The Company limits the amount of its credit exposure to any one
commercial issue of debt instruments. Cash equivalents are stated at cost
which represents the deposit amount plus interest credited to the account.
Deposits with banks are federally insured in limited amounts.
SHORT-TERM INVESTMENTS: Short-term investments consist principally of U.S.
Government securities with maturity dates less than one year from date of
purchase and are stated at cost which approximates market.
INVENTORIES: Inventories, principally concessions and theatre supplies, are
stated at the lower of cost (first-in, first-out method) or market.
INVESTMENT IN PARTNERSHIPS: The Company is a partner in four partnerships
which operate motion picture theatres. The investments in these partnerships
are accounted for by the equity method whereby the cost of the investment is
adjusted to reflect the Company's equity in the earnings or losses of the
partnership less withdrawals made by the Company. The Company's equity in the
earnings of these partnerships amounted to approximately $405,000, $568,000 and
$744,000 for each of the years in the period ended December 31, 1995.
PROPERTY AND EQUIPMENT: Property and equipment are carried at cost.
Depreciation is computed by the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes. Amortization of
assets recorded under capital leases is included with depreciation expense in
the accompanying Consolidated Statements of Income.
ACCRUED EXPENSES: Accrued expenses include accrued property taxes of
approximately $2.7 million and $2.6 million at December 31, 1995 and 1994,
respectively.
ADVERTISING: The Company expenses advertising costs when incurred.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements
and accompanying notes. Actual results could differ from those estimates.
EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED: The excess of
purchase price over the net assets of businesses acquired is amortized on a
straight-line basis over a 40 year period.
In the event that facts and circumstances indicate that the excess of purchase
price over net assets of businesses acquired may be impaired, an evaluation of
continuing value would be performed. If an evaluation is required, the
estimated future undiscounted cash flows associated with this asset would be
compared to its carrying amount to determine if a write down to market value or
discounted cash flow value is required.
BENEFIT PLANS: The Company has a non-qualified deferred compensation plan for
certain of its executive officers. Under this plan, the Company contributes ten
percent of the employeeOs taxable compensation to a trust designated for the
employee. The Company also has a discretionary benefit plan for certain
non-executive employees. Contributions to this plan are at the
discretion of the Company's executive management.
Expenses related to these plans are not material to the Company's operations.
STOCK BASED COMPENSATION: The Company grants stock options for a fixed number
of shares to employees with an exercise price equal to the fair value of the
<PAGE> 18
shares at the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and accordingly, recognizes no compensation expense for the stock option
grants. The Company plans to continue to account for stock options in
accordance with APB Opinion No. 25.
EARNINGS PER COMMON SHARE: Primary earnings per common share are based on the
weighted average common shares outstanding, adjusted for the incremental shares
attributed to outstanding options to purchase common stock which are calculated
using the treasury stock method.
In November 1994, the Company sold 2,875,000 shares of its Class A
Common Stock pursuant to a public offering. Net proceeds of approximately $58.2
million were used, in part, to retire certain outstanding debt of the Company.
If the transaction had occurred as of January 1, 1994, the net earnings per
share would have been $1.80 per share for the year ended December 31, 1994.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:
In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement
No. 121 in the first quarter of 1996; how-
ever, the Company has not completed the calculations necessary to determine the
effect of adoption.
CHANGES IN PRESENTATION: Certain amounts in the accompanying financial
statements have been reclassified to conform with the 1995 presentation of the
financial statements.
NOTE B-ACQUISITIONS
The Company's acquisitions in 1995, 1994 and 1993 have been accounted for under
the purchase method of accounting. Under the purchase method of accounting, the
results of operations of the acquired businesses are included in the
accompanying consolidated financial statements as of their respective
acquisition dates. The assets and liabilities of acquired businesses are
included based on an allocation of the purchase price.
In separate transactions, the Company acquired
certain assets and businesses as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Approximate
Purchase Number Number
Price of of Effective
Seller (in thousands) Theatres Screens Date
- ------------------------------------- -------------- --------- ------- ---------------
<S> <C> <C> <C> <C>
1995
Carolina Cinema, Corp. $ 750 2 7 Feb. 10,1995
Theatre Developers, Inc. 1,200 1 8 Feb. 24, 1995
Floyd Theatres, Inc.
and affiliates 11,300 21 83 Mar. 17, 1995
Rocky Mountain Cinema
Partners 1,585 5 11 May 5, 1995
Plitt Theatres, Inc. $22,000 28 145 June 2, 1995
Midcontinent Theatres, Inc. $19,000 14 67 Oct. 13, 1995
Cinemark, USA 8,000 10 46 Nov. 10, 1995
Theatre Consulting
and Management 650 2 10 Nov. 10, 1995
------- -- ---
$64,485 83 377
======= == ===
1994
General Cinema Corp.
and subsidiaries $ 6,400 6 28 Jan. 21, 1994
General Cinema Corp.
of Louisiana 5,800 4 20 May 20, 1994
Cinema World, Inc. 38,100 38 176 May 20, 1994
$50,300 48 224
------- -- ---
1993
Manos Enterprises, Inc. $11,200 19 80 Nov. 19, 1993
======= == ===
- ----------------------------------------------------------------------------------------------
</TABLE>
The excess of purchase price over net assets of businesses acquired has been
recorded as an intangible asset. Amounts recorded were $16.7 million in 1995,
$18.7 million in 1994, and $3.2 million in 1993.
Pro-forma results have not been preseneted for those acquisitions which were
not significant during the year presented. The pro-forma unaudited results of
operations below do not purport to represent what the Company's actual results
of operations would have been had acquisitions occurred on January 1 of the
year presented and should not serve as a forecast of the Company's operating
results for any future periods.
<PAGE> 19
Unaudited pro-forma results for the 1995 acquisitions of Floyd
Theatres, Inc., Plitt Theatres, Inc., Midcontinent Theatres, Inc., and
Cinemark, USA are as follows (in thousands, except for per share data):
<TABLE>
<CAPTION>
- -------------------------------------------
Year Ended December 31
1995 1994
---- ----
<S> <C> <C>
Revenues. . . . . . $390,605 $384,016
======== ========
Net income. . . . . $ 11,545 $ 18,157
======== ========
Earnings per share. $ 1.03 $ 2.14
======== ========
- -------------------------------------------
</TABLE>
The above pro-forma income statement data gives effect to the 1995 acquisitions
of assets as if those acquisitions had occurred at January 1, 1994.
Unaudited pro-forma results of the 1994 acquisition of Cinema World, Inc. are
as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Year Ended December 31
1994 1993
---- ----
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . $341,022 $278,836
======== ========
Net income. . . . . . . . . . . . . . $ 17,456 $ 12,663
======== ========
Earnings per share before cumulative
effect of change in accounting. . . . $ 2.06 $ 1.60
======== ========
- -----------------------------------------------------------
</TABLE>
The above pro-forma income statement data gives effect to the acquisition of
assets from Cinema World, Inc. as if the acquisition had occurred at January 1,
1993.
The pro-forma adjustments for the 1995 and 1994 acquisitions are based upon
available information and certain assumptions that management believes
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 admin-
istrative costs the Company estimates it would have
incurred over the applicable time period.
b. Depreciation expense was adjusted to reflect
depreciation based upon the Company's allocation
of the acquisition purchase price.
c. Interest expense has been adjusted to reflect debt
incurred at borrowing rates of 6.0% for 1995 and
5% for 1994.
d. Income taxes have been adjusted to reflect the
Company's effective tax rate.
NOTE C-ACQUISITION OF
WESTWYNN THEATRES, INC.
Effective August 29, 1991, the Company along with certain former shareholders
of Excellence Theatres 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. In connection with the formation of Westwynn and the
acquisition of the assets of Excellence, the Company invested $2.8 million in
cash and contributed to Westwynn certain operating theatres and land with a
book value of $6.48 million. In exchange, the Company received 6,400 shares of
Westwynn's Senior Preferred Stock, 4,625 shares of Westwynn's 9% Junior
Preferred Stock and three operating theatres with an appraised value of
approximately $1.2 million. Both the Senior and Junior Preferred Stock were
non-voting and had preference in liquidation to all other classes of Westwynn
capital stock. The Company recorded its investment in Westwynn at the book
value of the assets and cash contributed to Westwynn even though the appraised
value of the equity securities and property received exceeded that amount. The
Company accounted for its investment in Westwynn under the cost method. During
the year ended December 31, 1993, the Company recognized income of $207,000,
relating to its ownership of Westwynn's 9% Junior Preferred Stock.
On June 22, 1993, the Company agreed in principle to a transaction (effective
June 11, 1993) ("the Westwynn Transaction") to purchase the remaining
securities of Westwynn that it did not previously own for a purchase price of
approximately $19.78 million (net of liabilities assumed). The Westwynn
Transaction was closed on July 23, 1993. In connection with the Westwynn
Transaction, the Company issued 330,000 shares of its Class A Common Stock (out
of shares previously held as Treasury Stock), a $4.0 million face value zero
coupon convertible subordinated note maturing June 1, 1998 (fair market value
of approximately $3.3 million and $3.1 million at December 31, 1995 and 1994,
respectively) and paid $11,780,000 in cash for the retirement of Westwynn
subordinated notes and the purchase of certain Westwynn equity securities.
<PAGE> 20
The excess of the purchase price over the net assets acquired
(approximately $16 million) has been recorded as an intangible asset. The
Westwynn Transaction has been accounted for using the purchase method and,
accordingly, the purchase price has been allocated to the tangible and
intangible assets acquired based on their estimated fair value at the date of
acquisition. The results of operations of Westwynn are included in the
accompanying consolidated income statements from the effective date. Westwynn
operated 92 theatres (355 screens) at June 11, 1993.
The pro-forma unaudited results of operations for the year ended December 31,
1993, assuming consummation of the Westwynn Transaction as of January 1, 1993,
are as follows (in thousands, except for per share data):
Total revenues. . . . . . . . . . . . $263,418
========
Net income. . . . . . . . . . . . . . $ 11,559
========
Earnings per share before cumulative
effect of change in accounting. . . $ 1.42
========
The pro-forma results include adjustments to reflect (i) loss of interest
income from use of investments or the incurrence of interest expense to fund
the Westwynn Transaction; (ii) depreciation and amortization of assets
acquired; (iii) elimination of certain general and administrative costs; and
(iv) the income tax effect of such pro-forma adjustments.
The Company managed the operations of Westwynn through June 11, 1993
pursuant to a management agreement (the "Management Agreement"). During the
term of the Management Agreement, the Company had the sole responsibility and
sole and exclusive authority to manage and operate Westwynn, subject to the
general supervision of the board of directors of Westwynn and certain
contractual limitations relating to the ability to enter into debt and non-film
rental agreements, authorization of capital expenditures and construction of
new theatres or to discontinue operations of existing theatres. The Company
earned management fees of $790,000 for the year ended December 31, 1993, from
Westwynn and its predecessor.
NOTE D-LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
December 31
1995 1994
---- ----
<S> <C> <C>
Revolving credit facility $76,500 $ -0-
Industrial Revenue Bonds; payable
in equal installments through May
2006, with interest ranging from
3.90% to 8.25% . . . . . . . . . 2,942 3,175
Term Loan 875 1,750
Other indebtedness -0- 471
------- -----
80,317 5,396
Less current maturities (1,103) (1,901)
------- -----
$79,214 $3,495
======= =====
- ----------------------------------------------------------------------
</TABLE>
On May 4, 1994, the Company entered into a credit agreement (the
"Agreement") with four banks to provide a revolving line of credit of up
to $100 million for working capital, acquisitions and other general corporate
purposes. The Agreement has a three year revolving credit period, which can be
extended, upon the mutual consent of the Company and the banks, for one year
periods and will convert to a four year term loan at the end of the revolving
credit period. The Company has the option to borrow at rates based on either
the bank base rate or LIBOR + .4375% (effective rate of 6.27% at December 31,
1995) and is required to pay annual fees of .125% on the full amount of the
facility and annual fees of .075% on the unused part of the commitment. The
interest rate, facility fees and commitment fees are subject to adjustment
based upon the Company's ratio of total debt to defined cash flows. At December
31, 1995, the Company had $76.5 million outstanding under this facility. The
Company has classified all amounts as long-term in the accompanying
Consolidated Balance Sheet. The agreement contains certain restrictive
provisions which, among other things, limit additional indebtedness of the
Company, limit dividend and other defined restricted payments, require that
certain debt to capitalization ratios be maintained and require minimum levels
of cash flows.
The Company has an Amended and Restated Term Loan Agreement (the "Term Loan")
which provides for payment of equal quarterly installments of principal of
$291,667 plus accrued interest through July 1996. The interest rate at December
31, 1995 has been fixed at 9.72% through July 1996. The Term Loan contains
certain restrictive provisions which, among other things, limit additional
indebtedness and require the Company to maintain minimum levels of net worth
and cash flows.
<PAGE> 21
On May 1, 1996, the holders of the Industrial Revenue Bonds have the
right to require the Company to repurchase, for the then outstanding principal
amount, all bonds still outstanding at such date. The Company, if the bonds are
called, will replace the bonds with other long-term debt.
Interest paid and interest capitalized were as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31 Interest Paid Interest Capitalized
- ---------------------- ------------- --------------------
<S> <C> <C>
1995. . . . . . . . . . $13,264 $794
1994. . . . . . . . . . $16,398 $408
1993. . . . . . . . . . $15,562 $515
- --------------------------------------------------------------------------------
</TABLE>
Aggregate principal payments on long-term debt as of December 31, 1995 are as
follows (in thousands):
<TABLE>
<S> <C>
1996. . . . . . . . . . . . . $ 1,103
1997. . . . . . . . . . . . . $76,743
1998. . . . . . . . . . . . . $ 252
1999. . . . . . . . . . . . . $ 263
2000. . . . . . . . . . . . . $ 263
Thereafter. . . . . . . . . . $ 1,693
-------
$80,317
=======
</TABLE>
NOTE E-SENIOR NOTES
The Company has outstanding various unsecured notes payable to institutional
investors (collectively the "Senior Notes") as follows (in thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------
December 31
1995 1994
----- -----
<S> <C> <C>
10.53% Senior Notes, due 2005. . . $ 68,182 $75,000
7.90% Senior Notes, due 2002 . . . 25,000 25,000
7.52% Senior Notes, due 2003 . . . 25,000 25,000
-------- -------
118,182 125,000
Less current maturities. . . . . . (10,390) (6,818)
-------- -------
$107,792 $118,182
======== ========
- ------------------------------------------------------------
</TABLE>
The 7.52% Senior Notes provide for annual principal payments of $3.6
million beginning March 1, 1997 through maturity. The 7.9% Senior Notes provide
for annual principal payments of $3.6 million beginning March 1, 1996 through
maturity. The 10.53% Senior Notes provide for annual principal payments of $6.8
million beginning June 1, 1995 through maturity. Loan fees of approximately
$908,000 applicable to the 10.53% Senior Notes were capitalized and are being
amortized over the life of the 10.53% Senior Notes.
The agreements pursuant to which each of the above Senior Notes were issued
contain certain restrictive provisions which, among other things, limit
additional indebtedness of the Company and require minimum levels of net worth
and cash flows.
NOTE F-LEASES
Certain of the Company's theatres and equipment are leased under
non-cancellable leases expiring in various years through 2023. The theatre
leases generally provide for the payment of fixed monthly rentals, contingent
rentals based on a percentage of revenue over a specified amount, and the
payment of property taxes, common area maintenance, insurance and repairs. The
Company, at its option, can renew a substantial portion of its theatre leases,
at the then fair rental rate, for various periods with the maximum renewal
period totaling 40 years.
Property and equipment includes the following amounts related to capital lease
assets (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31
1995 1994
---- ----
<S> <C> <C>
Buildings and improvements. . . . . . . $31,140 $22,668
Equipment . . . . . . . . . . . . . . . 2,877 3,872
------- -------
34,017 26,540
Less accumulated amortization . . . . . (8,804) (7,809)
------- -------
$25,213 $18,731
======= =======
- --------------------------------------------------------------------------
</TABLE>
Future minimum payments, by year and in aggregate, under capital leases and
non-cancelable operating leases with terms over one year as of December 31,
1995 are as follows (in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Operating Leases Capital Leases
---------------- --------------
<S> <C> <C>
1996. . . . . . . . . $ 40,135 $ 4,177
1997. . . . . . . . . 37,909 4,181
1998. . . . . . . . . 36,498 4,186
1999. . . . . . . . . 33,097 4,070
2000. . . . . . . . . 31,806 4,026
Thereafter. . . . . . 214,750 54,299
-------- -------
Total minimum lease payments 394,195 74,939
========
Less amounts representing interest . . . . . . . . (46,231)
-------
Present value of future minimum
lease payments . . . . . . . . . . . . . . . . . 28,708
Less current maturities. . . . . . . . . . . . . . (712)
-------
$27,996
=======
- -------------------------------------------------------------
</TABLE>
<PAGE> 22
Rent expense for each of the three years in the period ended December 31, 1995
was approximately $45.6 million, $36.1 million and $26.1 million, respectively.
NOTE G-STOCK OPTION PLAN
The Company has a Stock Option Plan covering 700,000 shares of Class A Common
Stock. Key employees may be granted options at terms (purchase price,
expiration date and vesting schedule) established at the date of grant by a
committee of the Company's Board of Directors. Options granted through December
31, 1995, have been at a price which is approximately equal to fair market
value on the date of the grant.
Changes in outstanding stock options were as follows (in thousands):
<TABLE>
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Exercise Price Per Share
------------------------
$6.00 $8.50 $9.00 $18.00 Total
----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Stock options outstanding
at December 31, 1992 5 210 58 -0- (273)
Exercised (4) (54) (35) -0- (93)
--- --- --- ---- ----
Stock options outstanding
at December 31, 1993 1 156 23 -0- 180
Issued -0- -0- -0- 143 143
Exercised -0- (56) (2) -0- (58)
--- --- --- ---- ----
Stock options outstanding
at December 31, 1994 1 100 (21) 143 265
Exercised -0- (7) -0- -0- (7)
--- --- --- ---- ----
Stock options outstanding
at December 31, 1995 1 93 (21) (143) (258)
=== === === ==== ====
</TABLE>
The Company had 160,000 shares available for grant as of December 31, 1995 and
1994.
At December 31, 1995, all the above options were exercisable except for the
$18.00 options which become exercisable on March 16, 1997.
NOTE H SHAREHOLDERS' EQUITY
The Company's authorized capital consists of 22.5 million shares of Class A
Common Stock, $.03 par value, 5 million shares of Class B Common Stock, $.03
par value, and 1 million shares of Preferred Stock, $1.00 par value. Each
share of Class A Common Stock entitles the holder to one vote per share, whereas
a share of Class B Common Stock entitles the holder to ten votes per share. Each
share of Class B Common Stock is entitled to cash dividends, when declared, in
an amount equal to 85% of the cash dividends payable on each share of Class A
Common Stock. Additionally, Class B Common Stock is convertible at any time by
the holder into an equal number of shares of Class A Common Stock.
In connection with the Westwynn acquisition (see Note C), the Company issued a
$4 million face value zero coupon convertible subordinated note (the
"Convertible Note") maturing June 1, 1998 and convertible, at the holder's
option, into 100,000 shares of Carmike Class A Common Stock.
The Company has shares of Class A Common Stock reserved for future issuance as
follows (in thousands):
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
December 31
1995 1994
---- ----
<S> <C> <C>
Stock option plan 418 425
Convertible Note 100 100
Conversion rights of Class B Common Stock 1,421 1,421
----- -----
1,939 1,946
===== =====
</TABLE>
NOTE I-INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rate and laws that will be in effect when the differences
are expected to reverse. The change in the deferred income tax liability at
January 1, 1993, results primarily from recording deferred taxes relative to
differences between the tax bases of property and equipment and their book
bases in accordance with Statement 109. These differences arose in connection
with prior purchase business combinations.
The cumulative effect of the change increased net income by $390,000, or $.05
per share in the first quarter of 1993.
The provision for income taxes is summarized as follows (in thousands):
<TABLE>
- -----------------------------------------------------------------------------------
<CAPTION>
Years Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current
Federal $6,255 $ 7,165 $5,241
State 1,462 1,860 1,590
Deferred 921 2,221 1,081
------ ------ ------
$8,638 $11,246 $7,912
====== ======= ======
</TABLE>
<PAGE> 23
Significant components of the Company's deferred tax liabilities (assets) are
as follows (in thousands):
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
December 31
1995 1994
---- ----
<S> <C> <C>
Financial statement bases of property
and equipment over tax bases $18,135 $18,142
Westwynn net operating loss
carry forward (1,121) (1,971)
Deferred rent (1,171) (747)
Income taxes payable for prior years 2,518 1,672
Other 72 416
------- -------
$18,433 $17,512
======= =======
</TABLE>
A reconciliation of income taxes at the federal income tax rate and income
taxes as reflected in the consolidated financial statements follows (in
thousands):
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income taxes at
statutory rates $7,604 $9,870 $6,821
Plus state income taxes,
net of federal tax benefit 1,071 1,523 1,197
------ ------ ------
8,675 11,393 8,018
Tax exempt interest -0- (70) (246)
Amortization of excess of
purchase price over net
assets of business acquired 79 79 114
Impact of change in tax rate
on temporary differences -0- -0- 330
Other items, net (116) (156) (304)
------ ------- -------
$8,638 $11,246 $7,912
====== ======= ======
</TABLE>
Income taxes paid in each of the three years in the period ended December 31,
1995, were approximately $3,650,000, $8,724,000 and $8,306,000, respectively.
NOTE J-FINANCIAL INSTRUMENTS
Concentrations of credit risk: Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist principally of
cash investments and short-term investments.
The Company maintains cash and cash equivalents and short-term investments and
certain other financial instruments with various financial institutions. These
financial institutions are located in the southeast and Company policy is
designed to limit exposure to any one institution. The Company performs periodic
evaluations of the relative credit standing of those financial institutions that
are considered in the Company's investment strategy.
Short-term Investments: The Company's short-term investments consist of U.S.
Treasury Notes with maturities of less than one year. The carrying value
approximates market at December 31, 1995 and 1994.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance sheet
for cash and cash equivalents approximates their fair value.
Accounts receivable and accounts payable: The carrying amounts reported in
the balance sheet for accounts receivable and accounts payable approximated
their fair value.
Long-term debt: The carrying amounts of the Company's long-term debt borrowings
approximate their fair value. The fair values of the Company's long-term debt
are estimated using discounted cash flow analyses, based on the Company's
current incremental borrowing rates for similar types of borrowing arrangements.
Senior Notes: The cumulative fair value of the Company's Senior Notes at
December 31, 1995 is estimated to be approximately $124,700,000. This
estimate is based on a discounted cash flow analysis using the Company's
current incremental borrowing rates for similar types of agreements. The
Company does not anticipate settlement of this debt at fair value and currently
intends to hold the Senior Notes through maturity.
<PAGE> 24
NOTE K-QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
(In thousands except for per share data)
- -----------------------------------------------------------------------------------------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTALS
------------ ----------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Total revenues . . . . . . . . . . $63,898 $91,233 $112,421 $97,197 $364,749
Operating income . . . . . . . . . 244 10,899 17,133 9,480 37,756
Net income (loss) . . . . . . . . (2,058) 4,161 7,840 3,144 13,087
Net income (loss) per common share (.18) .37 .70 .28 1.16
YEAR ENDED DECEMBER 31, 1994
Total revenues . . . . . . . . . . $67,432 $68,085 $108,999 $83,103 $327,619
Operating income . . . . . . . . . 6,770 7,143 21,477 9,837 45,227
Net income . . . . . . . . . . . . 1,655 1,613 10,284 3,401 16,953
Net income per common share . . . .20 .20 1.25 .36 2.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Net income per common share calculations for each of the above quarters are
based on the weighted average number of shares outstanding for each period and
the sum of the quarters may not necessarily equal the net income per common
share amount for the year.
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of Years Ended December 31, 1995
and December 31, 1994
Total revenues for the year ended December 31, 1995 increased 11.3% to
$364,749,000 from $327,619,000. This increase consists of a $21,557,000
increase in admissions and a $15,573,000 increase in concessions and other.
Overall attendance increased 8.9% due to the additional screens in operation
which were acquired in 1994 and 1995 (see Note B of Notes to Consolidated
Financial Statements); however, attendance for 1995 on a same screen comparison
decreased 7.9%, reflecting fewer blockbuster type movies in 1995. Average
admission prices increased .5% to $3.91 and average concession sales per patron
increased 8.2% from $1.46 to $1.58.
Cost of theatre operations (film exhibition costs, concession costs and other
theatre operating costs) increased 15.5% to $294,295,000 due to the increased
number of screens in operation and the increase in attendance. As a percentage
of revenues, cost of theatre operations increased from 77.8% of total
revenues to 80.7% of total revenues. This percentage increase is due primarily
to a higher level of occupancy expense and, to a lesser degree, salaries
included in this expense category that do not fluctuate proportionately with
decreases in attendance levels.
General and administrative costs increased 7.7% from $5,092,000 to $5,482,000
in 1995 reflecting additional general and administrative costs incurred to
properly integrate the new screens acquired in 1994 and 1995. As a percentage
of revenues, general and administrative costs decreased from 1.6% of total
revenues to 1.5%.
Depreciation and amortization increased 20.7% to $27,216,000 from $22,544,000
as a result of the increased screens in operation which were acquired in 1994
and 1995 (see Note B of Notes to Consolidated Financial Statements) combined
with the additional screens added through internal construction. As a
percentage of total revenues, depreciation and amortization increased from 6.8%
of total revenues to 7.5% of total revenues.
Interest expense decreased 5.9% to $16,031,000 from $17,028,000 in 1994. This
decrease reflects a lower average amount of debt outstanding for most of 1995.
Comparison of Years Ended December 31, 1994
and December 31, 1993
Total revenues for the year ended December 31, 1994 increased 35.5% to
$327,619,000 from $241,798,000. This increase consists of a $64,840,000
increase in admissions and a $20,981,000 increase in concessions and other.
Overall attendance increased 31.1% due to the additional screens in operation
which were acquired in 1993 and 1994 (see Notes B and C of Notes to
Consolidated Financial Statements). Average admission prices increased 5.7% to
$3.89 and average concession sales per patron increased from $1.45 to $1.46.
Cost of theatre operations (film rentals, concession costs, and other theatre
operating costs) increased 36.4% to $254,756,000 due to the increased number of
screens in operation and the increase in attendance. As a percentage of
revenues, cost of theatre operations increased from 77.2% of total revenues to
77.8% of total revenues. This percentage increase is due primarily to a higher
level of occupancy expense included in cost of theatre operations. Excluding
occupancy expense, cost of theatre operations as a percentage of revenues
increased from 66.5% of total revenues to 66.7%.
General and administrative costs increased 8.1% from $4,710,000 in 1993 to
$5,092,000 in 1994 reflecting primarily additional salary cost. As a percentage
of revenues, general and administrative costs decreased from 1.9% of total
revenues to 1.6%.
Depreciation and amortization increased 38.7% to $22,544,000 from $16,255,000
as a result of the additional screens in operation which were acquired in 1993
and 1994 (see Notes B and C of Notes to Consolidated Financial Statements)
combined with the additional screens added through internal construction. As a
percentage of total revenues, depreciation and amortization increased from 6.7%
of total revenues to 6.9% of total revenues.
Interest expense increased 19.2% to $17,028,000 from $14,282,000 in 1993. This
increase reflects a higher average amount of debt outstanding for most of 1994,
which was partially offset by lower interest rates under the Company's new
revolving credit facility.
<PAGE> 26
SEASONALITY AND INFLATION
The major film distributors generally release those films which they anticipate
to be the most successful during the summer and holiday seasons. Consequently,
the Company has historically generated higher revenues during such periods.
Inflation has not had a significant impact on the operations of the Company in
any of the periods discussed above.
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 and acquisitions typically have been financed with
internally generated cash and by debt financings, including borrowings under
the Company's revolving credit facility.
The Company believes that its capital needs for theatre construction and
possible acquisitions should be satisfied by internally generated cash flow,
cash and cash equivalents and short-term investments on hand, borrowings under
the revolving credit line (see Note D of Notes to Consolidated Financial
Statements), additional sale of debt and/or equity securities, additional bank
financing and other forms of long-term debt and, where appropriate, future
lease financing. At March 15, 1996, the Company had approximately $9.2 million
in cash and short-term investments on hand and approximately $13 million was
available under the Company's revolving credit facility.
<PAGE> 27
<TABLE>
<CAPTION>
(in thousands, except for per share and operating data)
YEARS ENDED DECEMBER 31
1995 (1) 1994 (1) 1993 (1)(2)(3) 1992 1991
-------- -------- -------------- ----- -----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions............................. $253,691 $232,134 $167,294 $119,408 $ 99,110
Concessions and other.................. 111,058 95,485 74,504 52,570 46,686
-------- -------- -------- -------- --------
TOTAL REVENUES 364,749 327,619 241,798 171,978 145,796
Costs and Expenses:
Film exhibition costs................. 135,654 123,610 90,874 63,826 53,320
Concession costs...................... 14,959 12,241 9,406 7,815 6,575
Other theatre operating costs......... 143,682 118,905 86,498 63,563 53,105
General and administrative............ 5,482 5,092 4,710 3,897 3,828
Depreciation and amortization......... 27,216 22,544 16,255 11,134 9,437
-------- -------- -------- -------- --------
326,993 282,392 207,743 150,235 126,265
-------- -------- -------- -------- --------
OPERATING INCOME 37,756 45,227 34,055 21,743 19,531
Interest expense........................... 16,031 17,028 14,282 11,623 9,914
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES 21,725 28,199 19,773 10,120 9,617
Income taxes............................... 8,638 11,246 7,912 4,008 3,902
-------- -------- -------- -------- --------
NET INCOME $ 13,087 $ 16,953 $ 11,861 $ 6,112 $ 5,715
======== ======== ======== ======== ========
Earnings per common share.................. $ 1.16 $ 2.00 $ .80 $ .75 $ 1.16
======== ======== ======== ======== ========
Weighted average common shares outstanding. 11,260 8,477 7,917 7,672 7,648
======== ======== ======== ======== ========
OPERATING DATA:
Theatres (at end of period).......... 519 445 409 302 265
Screens (at end of period)........... 2,383 1,942 1,701 1,215 1,033
Average screens per theatre.......... 4.6 4.4 4.2 4.0 3.9
Total attendance (thousands)......... 64,496 59,660 45,493 34,415 29,126
BALANCE SHEET DATA:
(at end of year)
Cash and cash equivalents............ $ 11,345 $ 17,872 $ 10,649 $ 16,842 $ 9,528
Total assets......................... 478,012 377,598 327,024 230,291 184,058
Total long-term debt (4)............. 218,305 143,973 180,636 120,234 91,605
Shareholders' equity................. 185,094 171,956 93,856 75,728 69,177
</TABLE>
(1) See Note B of Notes to Consolidated Financial Statements with respect to
acquisitions.
(2) See Note C of Notes to Consolidated Financial Statements with respect to
the acquisition of Westwynn Theatres, Inc.
(3) Excludes $390,000 cumulative effect of change in accounting for income
taxes.
(4) Less current maturities. Includes senior notes, capital lease obligations
and convertible subordinated debt (see Notes C, D, E and F of Notes to
Consolidated Financial Statements).
<PAGE> 28
DIRECTORS
C.L. PATRICK
Chairman of the Board
Carmike Cinemas, Inc.
Columbus, Georgia
MICHAEL W. PATRICK
President and Chief Executive Officer
Carmike Cinemas, Inc.
Columbus, Georgia
JOHN W. JORDAN, II
Managing Partner
The Jordan Company
New York, New York
CARL L. PATRICK, JR.
Certified Public Accountant/Attorney
Director, Summit Bank Corporation
and Co-Chairman
PGL Entertainment Corporation
Atlanta, Georgia
CARL E. SANDERS
Chairman
Troutman Sanders, Attorneys
Atlanta, Georgia
DAVID ZALAZNICK
Partner
The Jordan Company
New York, New York
OFFICERS
C.L. PATRICK
Chairman of the Board
MICHAEL W. PATRICK
President & Chief Executive Officer
JOHN O. BARWICK, III
Vice President - Finance, Treasurer
& Chief Financial Officer
FRED W. VAN NOY
Vice President - General Manager
LARRY M. ADAMS
Vice President - Informational Systems
& Secretary
ANTHONY J. RHEAD
Vice President - Film
P. LAMAR FIELDS
Vice President - Development
H. MADISON SHIRLEY
Vice President - Concessions
& Assistant Secretary
MARILYN B. GRANT
Vice President - Advertising
JAMES R. DAVIS
Vice President - Technical
GENERAL OFFICES
Carmike Cinemas, Inc.
Carmike Plaza
1301 First Avenue
Columbus, Georgia 31901-2109
GENERAL INFORMATION
Carmike Cinemas, Inc. is the largest motion picture exhibitor in the United
States, operating 519 theatres with an aggregate of 2,383 screens in markets
located primarily in the Southeast, the Northeast, the Midwest and the West.
During 1995, the Company opened ten new theatres (100 screens), added thirteen
screens to existing complexes and purchased eighty-three multiplex theatres
with a total of 377 screens.
STOCK TRADING INFORMATION
Carmike Cinemas, Inc. Class A Common Stock trades on the New York Stock
Exchange under the symbol "CKE. " The following table sets forth for the
periods indicated the high and low sales prices of a share of Class A Common
Stock as reported by the New York Stock Exchange:
<TABLE>
<CAPTION>
1995 1994
-----------------------------------------------------
Quarter Ended High Low High Low
- ------------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
March $23 3/8 $19 1/2 $19 1/8 $16 3/8
June $25 1/2 $18 3/4 $22 3/8 $17 3/8
September $25 1/8 $19 1/4 $23 1/4 $16 5/8
December $24 1/4 $20 1/4 $24 3/8 $19 5/8
</TABLE>
The Company has declared no dividends and intends to employ future earnings in
the expansion of its business. (See Notes D and E of Notes to Consolidated
Financial Statements with respect to restrictions on dividends.)
On March 12, 1996, the Class A Common Stock was held of record by 783
shareholders; the Company believes that such number substantially understates
the beneficial holders of its Class A Common Stock. As of the same date, the
Class B Common Stock was held of record by twelve shareholders. There is no
public trading market for the Class B Common Stock of the Company.
SHAREHOLDER SERVICES
Shareholders desiring to change the name, address, or ownership of stock, to
report lost certificates or to consolidate accounts should contact the transfer
agent:
Synovus Trust Company
Corporate Trust Department
P.O. Box 120
Columbus, Georgia 31902
706/649-2058
FORM 10-K
A copy of the Company's 1995 Annual Report on Form 10-K, filed with the
Securities and Exchange Commission, is available at no charge to each
shareholder upon written request to:
John O. Barwick, III
Vice President - Finance
Carmike Cinemas, Inc.
P.O. Box 391
Columbus, Georgia 31902-0391
<PAGE> 1
EXHIBIT 21
CARMIKE CINEMAS, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
SUBSIDIARY % OWNED INCORPORATION
- ---------- ------- -------------
<S> <C> <C>
Wooden Nickel Pub, Inc. 100% Delaware
Eastwynn Theatres, Inc. 100% Alabama
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Carmike Cinemas, Inc. of our report dated February 6, 1996, included in
the 1995 Annual Report to Shareholders of Carmike Cinemas, Inc. and
subsidiaries.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-13723 and Form S-8 No. 33-48011) pertaining to the
stock option plan of Carmike Cinemas, Inc. and subsidiaries of our report dated
February 6, 1996, with respect to the consolidated financial statements of
Carmike Cinemas, Inc. and subsidiaries incorporated by reference in the Annual
Report (Form 10-K) for the year ended December 31, 1995.
/s/ Ernst & Young LLP
Columbus, Georgia
March 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CARMIKE CINEMAS FOR THE YEAR ENDED DECEMBER 31,1995, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 11,345
<SECURITIES> 7,502
<RECEIVABLES> 7,911
<ALLOWANCES> 0
<INVENTORY> 2,936
<CURRENT-ASSETS> 39,626
<PP&E> 484,405
<DEPRECIATION> 112,554
<TOTAL-ASSETS> 478,012
<CURRENT-LIABILITIES> 56,180
<BONDS> 0
335
0
<COMMON> 0
<OTHER-SE> 184,759
<TOTAL-LIABILITY-AND-EQUITY> 478,012
<SALES> 111,058
<TOTAL-REVENUES> 364,749
<CGS> 14,959
<TOTAL-COSTS> 294,295
<OTHER-EXPENSES> 32,698
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,031
<INCOME-PRETAX> 21,725
<INCOME-TAX> 8,638
<INCOME-CONTINUING> 13,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,087
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
