<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
PROSPECTUS File No. 333-3397
2,500,000 SHARES
[REGAL CINEMAS LOGO]
COMMON STOCK
The shares of Common Stock offered hereby are being sold by Regal Cinemas,
Inc. (the "Company"). The Company's Common Stock is traded on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market") under the symbol "REGL."
On June 4, 1996, the last reported sale price of the Common Stock on the Nasdaq
National Market was $46.625 per share.
SEE "RISK FACTORS" APPEARING ON PAGES 7 THROUGH 8 FOR MATTERS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $46.25 $2.12 $44.13
- ------------------------------------------------------------------------------------------------
Total(3)..................................... $115,625,000 $5,300,000 $110,325,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $350,000 payable by the Company.
(3) The Company has granted to the Underwriters an over-allotment option to
purchase up to 375,000 additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, total Price to Public will be $132,968,750, total
Underwriting Discount will be $6,095,000, and total Proceeds to Company
will be $126,873,750. See "Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares will be
available for delivery on or about June 10, 1996.
---------------------
J.C. BRADFORD & CO.
MONTGOMERY SECURITIES
WHEAT FIRST BUTCHER SINGER
June 5, 1996
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE
COMPANY'S COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE
10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"). SEE "UNDERWRITING."
2
<PAGE> 3
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Prospectus. This summary is not intended to be
complete and is qualified in its entirety by reference to, and should be read in
conjunction with, the detailed information appearing elsewhere or incorporated
by reference in this Prospectus. Except as otherwise noted, all information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
All share and per share data contained herein have been restated to give
retroactive effect to the Company's 50% stock dividends in each of December 1994
and December 1995.
THE COMPANY
Regal Cinemas, Inc. (the "Company" or "Regal") is the eighth largest motion
picture exhibitor in the United States based upon the number of screens in
operation. At May 14, 1996, the Company operated 128 multi-screen theatres with
an aggregate of 1,006 screens. Regal also had 14 new theatres with 162 screens
under construction and 19 screens under construction at existing theatres. Regal
has subsequently consummated two acquisitions of 17 theatres with 129 screens.
The Company's strategy is to develop, acquire and operate multi-screen
theatres in mid-size metropolitan markets and suburban growth areas of larger
metropolitan markets. The Company averages 7.9 screens per location, as compared
to an average of 4.8 screens per location for the industry and 5.4 screens per
location for the five largest U.S. motion picture exhibitors, as of May 1, 1995.
Management believes that the Company's multi-screen theatres, substantially all
of which show first run movies, promote increased attendance and maximize
operating efficiencies through reduced labor costs and improved utilization of
theatre capacity. Centralized decision making, including accounting, film
licensing and concession purchasing, as well as management incentives based on
controlling theatre-level costs, contribute to the Company's cost-efficient
operations.
The Company's growth has come through the acquisition of existing theatres
and the development of new theatres. Since its inception through May 14, 1996,
Regal has acquired a net of 98 theatres with 630 screens, which has served to
establish and enhance the Company's presence in selected geographic markets.
Regal anticipates that its future growth will result from the development of new
theatres, the addition of screens to existing theatres, strategic acquisitions
of theatre circuits and the development of entertainment concepts that
complement the Company's theatres. The Company currently plans to develop 150 to
175 screens annually for the next several years. The Company intends to locate
theatres in markets that it believes are underscreened because of changing
demographic trends or that are served by older theatre facilities or by theatres
having an insufficient number of screens. The Company seeks to locate each
theatre where it will be the sole or dominant exhibitor within a particular
geographic film licensing zone. Management believes that approximately 66% of
the Company's theatres are located in film licensing zones in which Regal is the
sole exhibitor.
Regal emphasizes patron satisfaction by providing convenient locations,
comfortable seating, spacious neon-enhanced lobby and concession areas and a
wide variety of film selections. Regal's theatre complexes feature clean, modern
auditoriums with high quality projection and digital stereo surround-sound
systems. Regal's theatres typically contain auditoriums having 100 to 500 seats,
allowing the Company to exhibit films profitably for longer periods by shifting
films from larger to smaller auditoriums within the same complex to accommodate
changing attendance levels. In addition, the Company promotes patron loyalty
through specialized marketing programs for its theatres and feature films.
To complement the Company's theatre development, Regal opened its first
FunScape(TM) comprehensive entertainment complex in Chesapeake, Virginia in
August 1995 and its second FunScape in Rochester, New York in February 1996.
Each complex includes a 13 screen theatre and a 50,000 square foot comprehensive
family entertainment center. The Company currently has two additional FunScape
complexes under construction and may seek to develop additional FunScape
complexes at strategic locations.
3
<PAGE> 4
RECENT DEVELOPMENTS
Recent Acquisitions
Georgia State Theatres, Inc. Merger. Regal has acquired Georgia State
Theatres, Inc. ("GST") for 940,142 shares of Regal Common Stock in a pooling of
interests transaction. GST, headquartered in Atlanta, Georgia, has 10 first run
theatres with 68 screens, including one drive-in theatre, located in the
metropolitan Atlanta, Georgia area and a partnership in Gainesville, Georgia.
The parties closed the transaction and effected the merger (the "GST Merger") on
May 30, 1996.
Krikorian Asset Acquisition. Regal has entered into an agreement to
acquire assets consisting of eight theatres with 69 screens in California (the
"Krikorian Acquisition") from an individual, George Krikorian, and corporations
controlled by him (collectively, "Krikorian"). On May 31, 1996, the Company
consummated the acquisition of seven of the theatres with 61 screens for
consideration of 428,038 shares of Regal Common Stock and approximately $12.9
million in cash. The Company anticipates closing the acquisition of the eighth
theatre upon satisfaction of certain conditions to closing applicable to that
theatre. The aggregate consideration for the transaction is anticipated to be
approximately 470,000 shares of Regal Common Stock and approximately $14.1
million in cash.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered....................................... 2,500,000 shares
Common Stock to be outstanding after the offering.......... 21,392,559 shares(1)
Use of proceeds............................................ To repay indebtedness
Nasdaq National Market symbol.............................. REGL
</TABLE>
- ---------------
(1) Excludes 2,026,407 shares of Common Stock reserved for issuance upon
exercise of options granted pursuant to the Company's existing stock option
plans and 156,512 shares issuable upon the exercise of outstanding
warrants.
4
<PAGE> 5
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
The summary consolidated financial data set forth below as of and for each
of the fiscal years ended December 30, 1993, December 29, 1994 and December 28,
1995, and as of and for each of the three-month periods ended March 30, 1995 and
March 28, 1996, are derived from the financial statements of Regal. Regal began
operations in 1990 and operates on a fiscal year ending on the Thursday closest
to December 31. This information should be read in conjunction with the
historical financial statements and notes thereto contained in the Regal Annual
Report on Form 10-K/A with respect to the fiscal years and contained in the
Regal Quarterly Report on Form 10-Q with respect to the three-month periods,
which are incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Information by Reference."
The pro forma summary financial data set forth below have been prepared on
a consolidated basis based upon the historical financial statements of Regal and
GST. The pro forma information gives effect to the GST Merger accounted for as a
pooling of interests, based upon conversion of 940,142 shares of Regal Common
Stock for all shares of GST Common Stock outstanding. In addition, the pro forma
statement of income data and pro forma operating data give effect to the
Krikorian Acquisition as if the acquisition had occurred at the beginning of the
periods presented. Pro forma balance sheet data as of March 28, 1996, also give
effect to the Krikorian Acquisition.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
FISCAL YEAR ENDED FISCAL YEAR THREE MONTHS ENDED THREE
------------------------------------------ ENDED --------------------- MONTHS ENDED
DECEMBER 30, DECEMBER 29, DECEMBER 28, DECEMBER 28, MARCH 30, MARCH 28, MARCH 28,
1993 1994 1995 1995 1995 1996 1996
------------ ------------ ------------ ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA(1):
Revenues................. $119,905 $159,665 $190,093 $226,043 $36,701 $52,243 $ 59,505
Operating income......... 14,096 19,464 32,967 36,166 4,762 8,541 8,882
Income before
extraordinary item..... 6,436 9,620 17,685 18,488(2) 2,372 4,472 4,549(2)
Extraordinary item net of
tax:
Gain (loss) on
extinguishment of
debt................. 190 (1,752) (448) -- --
------------ ------------ ------------ --------- ---------
Net income............... 6,626 7,868 17,237 2,372 4,472
Preferred stock
dividends.............. (430) (50) -- -- --
------------ ------------ ------------ --------- ---------
Net income applicable to
common stock........... $ 6,196 $ 7,818 $ 17,237 $ 2,372 $ 4,472
============ ============ ============ ========= =========
Earnings per common
share:
Primary................ $ .50 $ .46 $ .96 $ .95(3) $ .13 $ .24 $ .23(3)
Fully diluted.......... $ .46 $ .46 $ .95 $ .94(3) $ .13 $ .24 $ .23(3)
Weighted average shares
and equivalents
outstanding:
Primary................ 12,320 16,832 18,042 19,506 17,973 18,334 19,744
Fully diluted.......... 14,320 16,947 18,156 19,620 17,973 18,402 19,812
OPERATING DATA(1)(4):
Theatre locations........ 94 117 125 143 119 125 143
Screens.................. 630 803 972 1,109 832 979 1,116
Average screens per
location............... 6.7 6.9 7.8 7.8 7.0 7.8 7.8
Theatre level cash flow
(in thousands)(5)...... $ 26,753 $ 38,554 $ 51,429 $ 58,030 $ 8,278 $13,514 $ 14,575
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 28, 1996
---------------------------
PRO FORMA
ACTUAL AS ADJUSTED(6)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.......................................................... $244,564 $284,993
Total long-term debt, including current maturities.................... 105,050 12,475
Total shareholders' equity............................................ 106,860 234,847
</TABLE>
- ---------------
(1) 1993 and 1994 results are restated to give retroactive effect to the
Company's mergers with Litchfield Theatres, Inc. in 1994 (the "Litchfield
Merger") and Neighborhood Entertainment, Inc. in 1995 (the "Neighborhood
Merger"), each of which were accounted for as a pooling of interests. 1995
results are restated to give retroactive effect to the Neighborhood Merger.
5
<PAGE> 6
(2) The pro forma consolidated statements of income do not reflect certain
estimated non-recurring charges aggregating approximately $1.5 million
(approximately $1.1 million after tax) with respect to expenses associated
with the GST Merger, costs associated with refinancing GST's indebtedness
and amounts payable under compensation arrangements with certain GST
officers. Regal expects that those expenses will be reflected in its
results of operations for the period in which the GST Merger is
consummated.
(3) Pro forma primary and fully diluted per share data are based on pro forma
income from continuing operations.
(4) Theatre locations and screens are stated at the end of the respective
periods.
(5) Theatre level cash flow represents total revenues less film rental and
booking costs, cost of concessions and theatre operating expenses. Theatre
level cash flow is included because the Company believes that certain
investors find it useful in analyzing companies in the motion picture
exhibition industry.
(6) Adjusted to reflect the sale by the Company of 2,500,000 shares of Common
Stock offered hereby and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
6
<PAGE> 7
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, the following factors should be considered carefully in
evaluating an investment in the Common Stock offered hereby.
Growth Rate and Integration of Acquisitions. Regal has experienced
substantial growth since its formation through the acquisition of existing
theatres and development of new theatres. During 1995, the Company added a net
of 169 screens. In addition, the Company recently completed two acquisitions of
17 theatres with an aggregate of 129 screens. See "Business -- Recent
Acquisitions." Given the magnitude of these acquisitions, there can be no
assurance that the challenge of assimilating the acquisitions and managing the
larger overall business operations will not have an adverse effect on Regal's
results of operations, especially in the short term. See "Business -- Growth
Strategy."
Expansion Plans. Regal's continued ability to expand will depend on a
number of factors, including the selection and availability of suitable
locations, the hiring and training of skilled management and personnel, the
availability of adequate financing and other factors, some of which are beyond
the control of the Company. There is no assurance that Regal will be able to
open all of its planned new theatres or that, if opened, those theatres can be
operated profitably. See "Business -- Growth Strategy."
Dependence on Films. The ability of Regal to operate successfully depends
upon a number of factors, the most important of which is the availability of
marketable motion pictures. Poor relationships with distributors, a disruption
in the production of motion pictures or poor commercial success of motion
pictures could have a material adverse effect upon Regal's business. See
"Business -- Film Licensing."
Fluctuations in Quarterly Results of Operations. Regal's revenues have
been seasonal, coinciding with the timing of releases of motion pictures by the
major distributors. Generally, the most marketable motion pictures have been
released during the summer and the Thanksgiving through year-end holiday season.
The unexpected emergence of a hit film during other periods can alter the
traditional trend. The timing of such releases can have a significant effect on
Regal's results of operations, and the results of one quarter are not
necessarily indicative of results for the next quarter.
Competition. The motion picture exhibition industry is highly competitive,
particularly with respect to licensing films, attracting patrons and finding new
theatre sites. There are a number of well-established competitors. Many of
Regal's competitors have been in existence significantly longer than Regal and
may be better established in the markets where Regal's theatres are or may be
located.
In recent years, alternative motion picture exhibition delivery systems
have been developed for the exhibition of filmed entertainment, including cable
and satellite television, video cassettes and pay per view. An expansion of such
delivery systems could have a material adverse effect upon Regal's business. See
"Business -- Competition."
Dependence on Senior Management. Regal's success depends upon the
continued contributions of its senior management, including Michael L. Campbell,
Chairman and Chief Executive Officer of the Company. The loss of the services of
one or more of Regal's senior management could have a material adverse effect
upon its business and development. Regal's loan agreement provides that Mr.
Campbell or a successor reasonably acceptable to Regal's lenders must be
employed as Chief Executive Officer. Regal has an employment agreement with Mr.
Campbell.
Volatility of Market Price. From time to time, there may be significant
volatility in the market price for the Common Stock. Quarterly operating results
of Regal or of other motion picture exhibitors, changes in general conditions in
the economy, the financial markets or the motion picture industry, natural
disasters or other developments affecting Regal or its competitors could cause
the market price of the Common Stock to fluctuate substantially. In addition, in
recent years the stock market has experienced extreme price and volume
fluctuations. This volatility has had a significant effect on the market prices
of securities issued by many companies for reasons unrelated to their operating
performance.
7
<PAGE> 8
Legislative Initiatives. The Clinton Administration continues to analyze
and propose new legislation that could adversely impact the entire business
community. Minimum wage increases, if passed, could increase Regal's operating
costs. Regal would attempt to offset increased costs through additional
improvements in operating efficiencies and ticket and concession price
increases.
Risks Associated with the 1996 Summer Olympic Games. The Olympics are
being held in and around Atlanta, Georgia in the summer of 1996. The Company
believes that the Olympics may have an adverse impact on the motion picture
exhibition industry generally during that time frame as well as on the Company's
theatre locations in Atlanta, Georgia particularly. The Company currently has 16
theatres in the Atlanta, Georgia area, including 10 theatres acquired in the GST
Merger. Summer months generally constitute one of the heaviest periods of
attendance at movies. To the extent that the Olympics detract from theatre
attendance generally, there could be an adverse impact on the Company's business
during one of its busiest seasons. The traffic congestion, scheduling conflicts
and other factors associated with the Olympics could result in a reduction in
attendance for the Company's Atlanta area theatres during the summer of 1996.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the Nasdaq National Market under
the symbol "REGL." The following table sets forth, for the periods indicated,
the high and low sale prices for the Common Stock as reported by the Nasdaq
National Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994
First Quarter.......................................... $12.00 $ 9.00
Second Quarter......................................... 14.78 10.44
Third Quarter.......................................... 17.11 11.78
Fourth Quarter......................................... 17.33 14.56
1995
First Quarter.......................................... $17.50 $11.33
Second Quarter......................................... 22.67 15.50
Third Quarter.......................................... 28.67 19.50
Fourth Quarter......................................... 28.75 24.00
1996
First Quarter.......................................... $37.88 $26.75
Second Quarter (through June 4, 1996).................. 47.75 36.25
</TABLE>
On June 4, 1996, the last reported sale price for the Company's Common
Stock on the Nasdaq National Market was $46.625 per share. At May 31, 1996,
there were approximately 300 holders of record of the Company's Common Stock.
The Company has never declared or paid a cash dividend on its Common Stock.
It is the present policy of the Board of Directors to retain all earnings to
support operations and to finance expansion; therefore, the Company does not
anticipate declaring or paying cash dividends on the Common Stock in the
foreseeable future. The declaration and payment of dividends in the future will
be determined based on a number of factors, including the Company's earnings,
financial condition and requirements, restrictions in financing agreements and
other factors deemed relevant by the Board of Directors. Pursuant to the
Company's credit facility, the Company is limited on the payment of material
cash dividends on its outstanding Common Stock.
8
<PAGE> 9
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby are estimated to be $110.0 million ($126.5 million if the Underwriters'
over-allotment option is exercised in full) after deducting the estimated
underwriting discount and offering expenses payable by the Company. The Company
will utilize the net proceeds to repay amounts outstanding under its credit
facility (the "Credit Facility"). The indebtedness under the Credit Facility has
been incurred primarily to finance acquisitions and to construct theatres.
Borrowings thereunder currently bear interest at 6.69%, which is the London
Interbank Offered Rate (LIBOR) plus 1.25%, and the facility matures in June
2001. Currently, the borrowings under the Credit Facility are $138.0 million.
Upon application of the net proceeds of the offering to repay a portion of the
Credit Facility, the balance of the Credit Facility will continue to be
available for borrowing pursuant to the terms thereof.
CAPITALIZATION
The following table sets forth the current indebtedness and capitalization
of the Company as of March 28, 1996, the pro forma current indebtedness and
capitalization of the Company after giving effect to the GST Merger and the
Krikorian Acquisition, and as adjusted to reflect the sale by the Company of the
2,500,000 shares of Common Stock offered hereby and the application of the
estimated net proceeds therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF MARCH 28, 1996
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term debt..................... $ 8,600 $ 11,900 $ --
======== ========= ===========
Total long-term debt, excluding current maturities....... $ 96,450 $110,550 $ 12,475
-------- --------- -----------
Shareholders' equity:
Preferred Stock, no par value; 1,000,000 shares
authorized, none outstanding........................ -- -- --
Common Stock, no par value, 50,000,000 shares
authorized; 17,524,379 shares issued and
outstanding; 18,934,521 shares issued and
outstanding, pro forma; 21,434,521 shares issued and
outstanding, pro forma as adjusted(1)............... 74,167 88,919 198,894
Retained earnings...................................... 32,693 35,953 35,953
-------- --------- -----------
Total shareholders' equity..................... 106,860 124,872 234,847
-------- --------- -----------
Total capitalization...................... $203,310 $235,422 $ 247,322
======== ========= ===========
</TABLE>
- ---------------
(1) Excludes (i) 2,026,407 shares of Common Stock reserved for issuance upon
exercise of options granted pursuant to the Company's existing stock option
plans at a weighted average exercise price of $13.10 per share and (ii)
156,512 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants to purchase Common Stock.
9
<PAGE> 10
BUSINESS
Regal is the eighth largest motion picture exhibitor in the United States
based upon the number of screens in operation. Since its founding, Regal's
growth has come through the acquisition of a net of 98 theatres with 630
screens, the development of 30 theatres with 336 screens and the addition of 40
screens to existing theatres, through May 14, 1996. Operations began with the
acquisition of Regal's first theatre in January 1990. At May 14, 1996, Regal
operated 128 multi-screen theatres with an aggregate of 1,006 screens. Regal
also had 14 new theatres with 162 screens under construction and 19 screens
under construction at existing theatres. Regal has subsequently consummated two
acquisitions of 17 theatres with 129 screens.
INDUSTRY OVERVIEW
The domestic motion picture exhibition industry is comprised of
approximately 300 exhibitors, 120 of which operate 10 or more total screens. At
May 1, 1995, the five largest exhibitors operated approximately 34% of the total
screens in operation with no one exhibitor operating more than 9% of the total
screens. From 1986 through 1995 the net number of screens in operation in the
United States increased from approximately 21,000 to approximately 27,000 and
admissions revenues increased from approximately $3.9 billion to approximately
$5.4 billion. In an effort to realize greater operating efficiencies, operators
of multi-theatre circuits have emphasized the development of larger multi-screen
complexes. This trend is evidenced by the increase in the average number of
screens per location for the industry from approximately 3.5 screens in 1986 to
approximately 4.8 screens in 1995.
Theatrical motion picture exhibition is the primary launch vehicle for
filmed entertainment. Management believes that the emergence of new forms of
home entertainment, such as cable and satellite television, video cassettes and
pay per view, has not adversely affected theatre admissions or the number of
films released for theatrical exhibition. Overall attendance has remained
relatively stable over the past ten years, with no single year varying more than
approximately 10% from the industry average of 1.1 billion during that period.
Management believes the number of films released for theatrical exhibition will
remain relatively stable or increase because a film's initial theatrical
exhibition success establishes the value of the film throughout its life cycle
in ancillary markets.
In recent years, there has been an increasing consolidation of the major
film production companies. During 1995, films distributed by the eight largest
film production companies accounted for approximately 91% of the domestic
admissions revenues and included 49 of the top 50 grossing films. Films are
licensed through film distributors, who typically establish geographic film
licensing zones and allocate each available film to one theatre within that
zone. See "Film Licensing."
Historically, the motion picture exhibition industry has experienced some
seasonality, as major film distributors generally have released the films
expected to have the greatest commercial appeal during the summer and the
Thanksgiving through year-end holiday season. The seasonality of motion picture
exhibition, however, has become less pronounced in recent years as studios have
begun to release major motion pictures somewhat more evenly throughout the year.
OPERATING STRATEGY
The following are the key elements of the Company's operating strategy:
- Multi-Screen Theatres. The Company's multi-screen theatres enable it to
offer a diverse selection of films; stagger movie starting times;
increase management's flexibility in determining the number of weeks that
a film will run and the size of the auditorium in which it is shown; and
serve patrons from common support facilities. These factors result in
increased attendance, improved utilization of theatre seating capacity
and operating efficiencies.
- Cost Control. Regal has designed prototype theatres adaptable to a
variety of locations, which management believes result in construction
and operating cost savings. The shifting of films to smaller auditoriums
within a theatre to accommodate changing attendance levels allows the
Company to exhibit films for extended periods, resulting in lower film
rental costs as a percentage of admission
10
<PAGE> 11
revenues. In addition, a significant component of theatre level
management's compensation is based on controlling operating expenses at
the theatre level.
- Patron Satisfaction/Quality Control. Regal's theatres are conveniently
located and are modern, high quality facilities that offer a wide variety
of films. To maintain quality and consistency within the Company's
theatres, Regal conducts regular inspections of each theatre and operates
a "mystery shopper" program. To enhance the movie going experience, the
Company invests in high quality projection and stereo sound equipment,
including the latest digital stereo surround-sound systems.
- Centralized Corporate Decision Making/Decentralized
Operations. Functions centralized through the Company's corporate office
include film licensing and concession purchasing, as well as decisions on
theatre construction and configuration. Cost controls at the theatre
level include close monitoring of concession, advertising and payroll
expenses. Regal devotes significant resources to training its theatre
managers, who are responsible for most aspects of its theatres'
day-to-day operations.
- Marketing. Regal actively markets its theatres through grand opening
promotions, including "VIP" preopening parties, direct mail campaigns,
television commercials in certain markets and promotional activities,
such as live music, spotlights and skydivers, which frequently generate
media coverage. Regal develops patron loyalty through a number of
marketing programs such as a summer children's film series in which
children's films are shown at reduced rates during the morning hours.
Regal also utilizes special marketing programs for specific films and
concession items.
GROWTH STRATEGY
The following are the key elements of the Company's growth strategy:
- Develop New Theatres in Existing and Target Markets. The Company
currently has 14 theatres with 162 screens under construction, and
currently plans to develop 150 to 175 screens annually for the next
several years. Regal generally will seek to develop multi-screen theatres
with at least 12 to 16 screens in both its existing markets and in other
mid-sized metropolitan markets and suburban growth areas of larger
metropolitan markets. Management will continue to locate theatres in
areas that are underscreened because of changing demographic trends or
that are served by older theatre facilities or by theatres having an
insufficient number of screens. Regal targets theatre locations with high
visibility and convenient roadway access in geographic film licensing
zones in which it will be the sole exhibitor. Regal continually reviews
potential sites for theatres, including both new construction and the
conversion of existing retail space.
- Add Screens to Existing Theatres. To enhance profitability and maintain
competitiveness at existing theatres, the Company will continue to add
additional screens where appropriate. The Company currently has 19
screens under construction at existing theatre facilities and anticipates
the addition of 15 to 25 screens to certain of its recently acquired
theatres. The addition of screens to existing theatres is designed not to
disrupt operations at the theatres.
- Acquire Theatres. While management believes that a significant portion
of its future growth will come through the development of new theatres,
Regal will continue to consider strategic acquisitions of complementary
theatres or theatre circuits at which Regal can improve profitability and
increase screen counts. Since its inception through May 14, 1996, Regal
has acquired a net of 98 theatres with 630 screens, which has served to
establish and enhance the Company's presence in selected geographic
markets.
- Develop Complementary Theatre Concepts. To complement the Company's
theatre development, Regal opened its first FunScape comprehensive family
entertainment complex in Chesapeake, Virginia, in August 1995 and its
second FunScape in Rochester, New York in February 1996. Each complex
includes a 13 screen theatre and a 50,000 square foot comprehensive
family entertainment center. The Company currently has two additional
FunScape complexes under construction and may seek to develop additional
FunScape complexes at strategic locations.
11
<PAGE> 12
THEATRE OPERATIONS
As of May 14, 1996, Regal operated 128 multi-screen theatres with an
aggregate of 1,006 screens in 18 states. Regal averages 7.9 screens per
location, as compared to an average of 4.8 screens per location for the industry
and an average for the five largest domestic motion picture exhibitors of
approximately 5.4 screens at May 1, 1995. Multi-screen theatres enable the
Company to offer a wide selection of films attractive to a diverse group of
patrons residing within the drawing area of a particular theatre complex. Varied
auditorium seating capacities within the same theatre enable the Company to
reduce film rental costs by exhibiting films for a longer period of time by
shifting films to smaller auditoriums to meet changing attendance levels. In
addition, operating efficiencies are realized through the economies of having
common box office, concession, projection, lobby and restroom facilities, which
enable the Company to spread certain costs, such as payroll, advertising and
rent, over a higher revenue base. Staggered movie starting times also minimize
staffing requirements, reduce lobby congestion and contribute to more desirable
parking and traffic flow patterns.
Regal has designed prototype theatres, adaptable to a variety of locations,
which management believes result in construction and operating cost savings.
Regal's multi-screen theatre complexes, which typically contain auditoriums
having from 100 to 500 seats each, feature wall-to-wall screens, digital stereo
surround-sound, multi-station concessions, computerized ticketing systems, plush
seating with cup holders, neon-enhanced interiors and exteriors, and video game
areas adjacent to the theatre lobby. In addition, the Company updates its
theatres as needed to maintain clean, comfortable and modern facilities.
Management believes that maintaining a theatre circuit consisting primarily of
modern multi-screen theatres also enhances the Company's ability to license
commercially successful modern films from distributors. See "Film Licensing."
Functions centralized at the Company's corporate office include site
selection, lease negotiation, theatre design and construction, coordination of
film selection, concession purchasing, advertising and financial and accounting
activities. Regal's theatre operations are under the supervision of its
Executive Vice President and are divided into two geographic divisions, each of
which is headed by a Vice President supervising several district theatre
supervisors. The district theatre supervisors are responsible for implementing
the Company's operating policies and supervising the managers of the individual
theatres, who are responsible for most of the day-to-day operations of the
Company's theatres. Regal seeks theatre managers with experience in the motion
picture exhibition industry and requires all new managers to complete a training
program at designated training theatres. The program is designed to encompass
all phases of theatre operations, including the Company's philosophy, management
strategy, policies, procedures and operating standards.
Management closely monitors the Company's operations and cash flow through
daily reports generated from computerized box office terminals located in each
theatre. These reports permit the Company to maintain an accurate and immediate
count of admissions by film title and show times and provide management with the
information necessary to manage effectively and efficiently the Company's
theatre operations. To maintain quality and consistency within the Company's
theatre circuit, the district supervisors regularly inspect each theatre, and
the Company operates a "mystery shopper" program, which involves unannounced
visits by unidentified customers who report on the quality of service, film
presentation and cleanliness at individual theatres. Regal has implemented an
incentive compensation program for theatre level management which rewards
managers for controlling theatre level operating expenses while complying with
the Company's operating standards.
In addition to revenues from box office admissions, Regal receives revenues
from concession sales and video games located adjacent to the theatre lobby.
Concession sales constituted 28.4% of total revenues for 1995. Regal emphasizes
prominent and appealing concession stations designed for rapid service and
efficiency. Although popcorn, candy and soft drinks remain the best selling
concession items, the Company's theatres offer a wide range of concession
choices. Regal continually seeks to increase concession sales through optimizing
product mix, introducing special promotions from time to time and training staff
to cross sell products. In addition to traditional concession stations, certain
of the Company's existing theatres and theatres currently under development
feature specialty concession cafes serving items such as cappuccino, fruit
juices,
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<PAGE> 13
cookies and muffins, soft pretzels and ice cream. Management negotiates directly
with manufacturers for many of its concession items to ensure adequate supplies
and to obtain competitive prices.
Regal 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 grouping for all of the
Company's theatres located in the newspaper's circulation area. Primary
multi-media advertising campaigns for major film releases are carried out and
paid for by the film distributors.
The Company conducts marketing efforts throughout the year to promote
specific films, concession items and its theatre complexes. Regal markets its
new theatres through grand opening promotions, including "VIP" preopening
parties, direct mail campaigns, radio and television commercials in certain
markets and promotional activities such as live music, spotlights and skydivers,
which frequently generate media coverage. Regal's theatres also exhibit previews
of coming attractions and films presently playing on the Company's other screens
in the same market area.
Regal operates 10 discount theatres with an aggregate of 62 screens, which
exhibit second run movies and charge lower admission prices (typically $1.50).
These movies are the same high quality features shown at all of Regal's
theatres. The terminology "second run" is an industry term for the showing of
movies after they have been shown for varying periods of time at other theatres.
Regal believes that the increased attendance resulting from lower admission
prices and the lower film rental costs of second run movies compensate for the
lower admission prices and slightly higher operating costs as a percentage of
admission revenues at the Company's discount theatres. The design, construction
and equipment in the Company's discount theatres are of the same high quality as
its first run theatres. Regal's discount theatres generate theatre level cash
flows similar to its first run theatres. Management does not anticipate an
increase in the percentage of discount theatres in its theatre circuit.
As of May 14, 1996, Regal operated 87 of its 128 theatres pursuant to lease
agreements, owns the land and buildings for 26 theatres and operates pursuant to
ground leases at 15 theatre locations. Of the 128 theatres operated by Regal as
of May 14, 1996, 98 were acquired as existing theatres and 30 have been
developed by Regal.
FILM LICENSING
Regal licenses films from distributors on a film-by-film and
theatre-by-theatre basis. Film buyers negotiate directly with film distributors
on behalf of the Company. Prior to negotiating for a film license, the Company
and its film buyers evaluate the prospects for upcoming films. Criteria
considered for each film include cast, director, plot, performance of similar
films, estimated film rental costs and expected Motion Picture Association of
America rating. Successful licensing depends greatly upon the exhibitor's
knowledge of trends and historical film preferences of the residents in markets
served by each theatre, as well as on the availability of commercially
successful motion pictures. Currently, Tri-State Theatre Service, Inc., an
independent film booking agency which is controlled by a director of the Company
("Tri-State"), provides film licenses for Regal. In November 1995, Regal
determined to have film licensing services performed internally. The Company's
head film buyer is an employee of the Company, and several Tri-State film buyers
will relocate to Knoxville and become employees of Regal. Tri-State will
continue to provide consulting services on film recognition and strategy.
Films are licensed from film distributors owned by major film production
companies and from independent film distributors that generally distribute films
for smaller production companies. Film distributors typically establish
geographic film licensing zones and allocate each available film to one theatre
within that zone. Film zones generally encompass a radius of three to five miles
in metropolitan and suburban markets, depending primarily upon population
density. Regal believes that approximately 66% of its theatres are now located
in film licensing zones in which they are now the sole exhibitors, permitting
the Company to exhibit many of the most commercially successful films in these
zones.
In film zones where Regal is the sole exhibitor, the Company obtains film
licenses by selecting a film from among those offered and negotiating directly
with the distributor. In film zones where there is competition, a distributor
will either require the exhibitors in the zone to bid for a film or will
allocate its films
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<PAGE> 14
among the exhibitors in the zone. When films are licensed under the allocation
process, a distributor will choose which exhibitor is offered a movie, and then
that exhibitor will negotiate film rental terms directly with the distributor
for the film. Over the past several years, distributors have generally used the
allocation rather than bidding process to license their films. When films are
licensed through a bidding process, exhibitors compete for licenses based upon
economic terms. Regal currently does not bid for films in any of its markets,
although it may be required to do so in the future. Although Regal predominantly
licenses "first run" films, if a film has substantial remaining potential
following its first run, the Company may license it for a "second run." Film
distributors establish second run availability on a national or market-by-market
basis after the release from first run theatres.
Film licenses entered into in either a negotiated or bidding process
typically specify rental fees based on the higher of a gross receipts formula or
theatre admissions revenue formula. Under a gross receipts formula, the
distributor receives a specified percentage of box office receipts, with the
percentage declining over the term of the film run. First run film rental fees
usually begin at 70% of admission revenues and gradually decline to as low as
30% over a period of four to seven weeks. Second run film rental fees typically
begin at 35% of admission revenues and often decline to 30% after the first
week. Under a theatre admissions revenue formula, the distributor receives a
specified percentage of the excess of admission revenues over a negotiated
allowance for theatre expenses. In addition, Regal is occasionally required to
pay non-refundable guarantees of film rental fees or to make refundable advance
payments of film rental fees or both in order to obtain a license for a film.
Rental fees paid by the Company generally are adjusted subsequent to the
exhibition of a film in a process known as settlement. The commercial success of
a film relative to original distributor expectations is the primary factor taken
into account in the settlement process; secondarily, the past performance of
other films in a specific theatre is a factor. To date the settlement process
has not resulted in material adjustments in the film rental fees accrued by the
Company.
Regal's business is dependent upon the availability of marketable motion
pictures and its relationships with distributors. Many distributors provide
quality first run movies to the motion picture exhibition industry; however,
eight distributors accounted for approximately 91% of industry admission
revenues during 1995, and 49 of the top 50 grossing films. No single distributor
dominates the market. Disruption in the production of motion pictures by the
major studios and/or independent producers or lack of commercial success of
motion pictures would have a material adverse effect upon the Company's
business. Regal licenses films from each of the major distributors and believes
that its and Tri-State's relationships with distributors are good. From year to
year, the revenues attributable to individual distributors will vary widely
depending upon the number and quality of films each distributes. Based on
industry statistics, Regal believes that in 1995 no single distributor accounted
for more than 20% of the films licensed by the Company, or films producing more
than 20% of the Company's admission revenues.
ENTERTAINMENT CENTER
To complement the Company's theatre development, Regal opened its first
FunScape comprehensive entertainment complex located in Chesapeake, Virginia in
August 1995 and its second FunScape in Rochester, New York in February 1996.
Each complex includes a 13 screen theatre and a 50,000 square foot comprehensive
family entertainment center. The theatre facility exhibits first run films, is
equipped with the latest Dolby and DTS digital sound systems, and features an
oversized lobby with two concession stands and a specialty cafe. A food court
connects the theatres to the entertainment center and features nationally
recognized brand name pizza, taco, sandwich and dessert restaurants.
The entertainment center generally will feature a 36-hole, tropical-themed
miniature golf course, a children's soft play and exercise area, multi-level
laser tag, video batting cages, a video golf course, helmet type and motion
simulator virtual reality units and a high-tech video arcade. In addition, the
center contains eight party rooms for various social gatherings. The two-level
family entertainment center is totally enclosed and under roof for year-round
operation.
Each theatre and entertainment center totals approximately 95,000 square
feet, and management believes the facility is a comprehensive entertainment
destination. The Company currently has two additional FunScape complexes under
construction and may seek to develop additional FunScape complexes at strategic
14
<PAGE> 15
locations. The $4.5 to $5.0 million estimated cost of construction of each
entertainment center is comparable to the cost of constructing the adjacent
theatre complex. The Company is financing the construction of entertainment
centers and the attached theatre facilities through cash flow from operations
and borrowings available under its Credit Facility.
COMPETITION
The motion picture exhibition industry is highly competitive, particularly
with respect to licensing films, attracting patrons and finding new theatre
sites. Theatres operated by national and regional circuits and by smaller
independent exhibitors compete with the Company's theatres. Management believes
that the principal competitive factors with respect to film licensing include
licensing terms, the seating capacity, location and reputation of an exhibitor's
theatres, the quality of projection and sound equipment at the theatres and the
exhibitor's ability and willingness to promote the films. Competition for
patrons is dependent upon factors such as the availability of popular films, the
location of theatres, the comfort and quality of theatres and ticket prices.
Regal believes that it competes favorably with respect to each of these factors.
There are approximately 300 participants in the domestic motion picture
exhibition industry. Industry participants vary substantially in size, from
small independent operators of a single screen theatre to large national chains
of multi-screen theatres affiliated with entertainment conglomerates. Many of
the Company's competitors have been in existence significantly longer than Regal
and may be better established in certain of the markets where the Company's
theatres are located.
Certain of Regal's competitors also have sought to increase the number of
theatres and screens in operation. Such increases may cause certain local
markets or portions thereof to become overscreened, resulting in a negative
impact on the earnings of the theatres involved and thus on the Company's
theatres in those markets. Concurrent with the increase in the number of
screens, there has been a reduction in the number of theatre locations and a
consolidation among exhibitors. At May 1, 1995, the five largest motion picture
exhibition companies operated approximately 34% of the total screens, the
largest of which operated less than 9% of the total screens.
The motion picture exhibition industry faces competition from a number of
motion picture exhibition delivery systems. In recent years alternative delivery
systems have been developed for the exhibition of filmed entertainment,
including cable television, video cassettes and pay per view. While the impact
of such delivery systems on movie theatres is difficult to determine precisely,
there can be no assurance that they will not adversely impact attendance at the
Company's theatres. Movie theatres also face competition from other forms of
entertainment competing for the public's leisure time and disposable income.
RECENT ACQUISITIONS
Georgia State Theatres, Inc. Merger. On May 30, 1996, Regal consummated
the acquisition of Georgia State Theatres, Inc. for 940,142 shares of Regal
Common Stock in a pooling of interests transaction. GST, headquartered in
Atlanta, Georgia, has 10 first run theatres with 68 screens, including one
drive-in theatre, located in the metropolitan Atlanta, Georgia area and a
partnership in Gainesville, Georgia.
Krikorian Asset Acquisition. Regal has entered into an agreement to
acquire assets consisting of eight theatres with 69 screens in California from
an individual, George Krikorian, and corporations controlled by him. On May 31,
1996, the Company consummated the acquisition of seven of the theatres with 61
screens for consideration of 428,038 shares of Regal Common Stock and
approximately $12.9 million in cash. The Company anticipates closing the
acquisition of the eighth theatre upon satisfaction of certain conditions to
closing applicable to that theatre. The aggregate consideration for the
Krikorian Acquisition is anticipated to be approximately 470,000 shares of Regal
Common Stock and approximately $14.1 million in cash. Although the Company's
operations have historically focused on the eastern United States, the Company
believes that the theatres in California provide an opportunity for the Company
to establish a presence on the West Coast and expand its operations nationally.
In addition, this acquisition includes a sufficient number of theatres and
screens to give the Company a sufficient presence to cover the incremental costs
of managing theatres on the West Coast.
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<PAGE> 16
MANAGEMENT
The following table sets forth certain information concerning the directors
and executive officers of the Company as of the date of this Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITION (EXPIRATION OF TERM AS A DIRECTOR)
- ----------------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Michael L. Campbell................ 42 Chairman of the Board, Chief Executive Officer, President
and Director (1996)
R. Neal Melton..................... 36 Vice President Construction-Equipment, Secretary and
Director (1996)
Gregory W. Dunn.................... 36 Executive Vice President
Robert A. Engel, Jr................ 43 Vice President Film and Advertising
Lewis Frazer III................... 31 Vice President, Chief Financial Officer and Treasurer
R. Keith Thompson.................. 34 Vice President Corporate Development and Assistant
Secretary
Susan Seagraves.................... 39 Corporate Controller
Philip D. Borack................... 60 Director (1997)
Michael E. Gellert(2).............. 64 Director (1997)
J. David Grissom(2)................ 57 Director (1998)
William H. Lomicka(1).............. 59 Director (1997)
Herbert S. Sanger, Jr.(2).......... 59 Director (1998)
Jack Tyrrell(1).................... 49 Director (1998)
</TABLE>
- ---------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
Under the terms of the Company's Restated Charter, the members of the Board
of Directors are divided into three classes, each of which serves a term of
three years. Each class is to consist, as nearly as practicable, of one-third of
the total number of directors constituting the Board of Directors. Executive
officers of the Company are elected on an annual basis and serve at the
discretion of the Board of Directors.
Michael L. Campbell founded the Company in November 1989 and has served as
Chairman of the Board, President and Chief Executive Officer since inception.
Prior thereto, Mr. Campbell was the Chief Executive Officer of Premiere Cinemas
Corporation ("Premiere"), which he co-founded in 1982, and served in such
capacity until Premiere was sold in October 1989. Mr. Campbell serves on the
Executive Committee of the Board of Directors of the National Association of
Theatre Owners.
R. Neal Melton has served as Vice President Construction-Equipment,
Secretary and a director since 1990. Prior to joining the Company, Mr. Melton
co-founded Premiere with Mr. Campbell and served as Senior Vice President,
Secretary and a director of Premiere from 1982 through 1989.
Gregory W. Dunn has served as Executive Vice President since 1995. From
1991 to 1995, Mr. Dunn was Vice President Marketing and Concessions. From 1989
to 1991, Mr. Dunn was the Purchasing and Operations Manager for Goodrich Quality
Theaters, a Grand Rapids, Michigan based theatre chain. From 1986 to 1989, he
was a film buyer for Tri-State Theatre Service, Inc.
Robert A. Engel, Jr. has served as Vice President Film and Advertising
since 1990. From 1987 through 1989, Mr. Engel was Vice President of Operations
at Premiere and from 1971 to 1987 he worked at Associated Theaters of Kentucky
in various capacities, rising to Vice President of Operations and Film Buying.
Lewis Frazer III is a certified public accountant and has served as Vice
President, Chief Financial Officer and Treasurer since February 1993. From May
1992 to February 1993, Mr. Frazer served as Controller. Prior
16
<PAGE> 17
to joining the Company, he served from 1990 to 1992 as Corporate Controller for
Kel-San, Inc., an affiliate of Institutional Jobbers. From June 1986 to July
1990, Mr. Frazer was an auditor with Coopers & Lybrand. Mr. Frazer serves as a
member of the CFO Committee of the National Association of Theatre Owners.
R. Keith Thompson has served as Vice President Corporate Development since
February 1993 and as Assistant Secretary since 1991. Prior thereto, he served as
Vice President Finance since joining the Company in 1991. From June 1984 to July
1991, Mr. Thompson was a Vice President of Corporate Lending at PNC Commercial
Corporation.
Susan Seagraves has served as Corporate Controller since January 1994 when
she joined the Company. Ms. Seagraves is a certified public accountant, a
certified management accountant and a fellow of health care management. From
1990 through 1993, Ms. Seagraves was an adjunct faculty member of Tusculum
College and Bristol University and from 1988 to 1990 she served as Associate
Executive Director of the Thompson Cancer Survival Center. From 1980 to 1988,
Ms. Seagraves was in public accounting.
Philip D. Borack has served as director of Regal since 1989. Since 1971,
Mr. Borack has served as President of Tri-State Theatre Service, Inc. See
"Business -- Film Licensing."
Michael E. Gellert has served as a director of Regal since 1990. Mr.
Gellert has served as the general partner of Windcrest Partners, a New York
investment partnership, since 1967. From 1958 to 1989, Mr. Gellert was
associated with Drexel Burnham Lambert and its predecessors and served as an
Executive Director. Mr. Gellert is a director of Devon Energy Corp., an
independent energy company; The Harvey Group, Inc., a retailer of consumer
electronics; Humana, Inc., a provider of managed care health plans; Seacor
Holdings, Inc., an owner and operator of marine vessels for oil exploration and
development; and Premier Parks, Inc., an owner and operator of mid-sized theme
parks.
J. David Grissom has served as a director of Regal since 1990. Mr. Grissom
is the Chairman and founder of Mayfair Capital, Inc., a private investment firm
founded in 1989. Prior thereto, he served as Chairman and Chief Executive
Officer of Citizens Fidelity Corporation, a bank holding company, from 1978 to
1989 and served as Vice Chairman of PNC Bank Corp. from 1987 to 1989. Mr.
Grissom serves as a director of Providian Corporation, an insurance holding
company; Churchill Downs, Inc.; LG&E Energy Corp., a diversified energy company;
and Columbia/HCA Healthcare Corporation, a health services company.
William H. Lomicka has served as a director of Regal since 1990. Since
1989, he has served as President of Mayfair Capital, Inc. From September 1988
through April 1989, Mr. Lomicka served as acting President of Citizens Security
Life Insurance Company. He was Secretary of Economic Development of the
Commonwealth of Kentucky from 1987 to 1988. From 1986 to 1987 he was President
of Old South Life Insurance Company. Mr. Lomicka serves as a director of Vencor,
Inc., an owner and operator of acute care hospitals, and Advocat Inc., a
long-term care management company, and Trans Advisor Funds, Inc., an open-end
investment company.
Herbert S. Sanger, Jr. has served as a director of Regal since 1990. Mr.
Sanger is a partner in the Knoxville, Tennessee law firm of Wagner, Myers &
Sanger, P.C., and has been a member of the firm since November 1986. Mr. Sanger
was an attorney for the Tennessee Valley Authority ("TVA") from 1961 to 1986,
serving as TVA's general counsel from 1975 to 1986.
Jack Tyrrell has served as a director of Regal since 1991. Mr. Tyrrell is a
managing general partner of Lawrence, Tyrrell, Ortale & Smith, a venture capital
firm founded in 1985, and is a general partner of Richland Ventures, L.P., a
venture capital firm formed in 1994. He also serves as a managing general
partner of Lawrence, Tyrrell, Ortale & Smith II, L.P. Mr. Tyrrell serves as a
director of Premier Parks, Inc., an owner and operator of mid-sized theme parks,
and National Health Investors, Inc., an investor in income-producing health care
facilities.
17
<PAGE> 18
UNDERWRITING
Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co., Montgomery Securities and Wheat, First Securities, Inc, as representatives
of the several underwriters (the "Representatives") have agreed, severally, to
purchase from the Company, the number of shares of Common Stock set forth below
opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
J.C. Bradford & Co........................................................ 833,334
Montgomery Securities..................................................... 833,333
Wheat, First Securities, Inc.............................................. 833,333
---------
Total...................................................... 2,500,000
========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions therein set forth, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company has been advised that the Underwriters propose initially to
offer the shares of Common Stock to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $1.25 per share. The Underwriters may allow
and such dealers may reallow a concession not in excess of $0.10 per share to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed by the Underwriters.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days from the date of this Prospectus, to purchase up to an
aggregate of 375,000 additional shares of Common Stock to cover over-allotments.
To the extent the Underwriters exercise this option, each of the Underwriters
will have a firm commitment to purchase approximately the same percentage
thereof which the number of shares of Common Stock to be purchased by it shown
in the above table bears to the total and the Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the shares of Common Stock offered hereby. If
purchased, the Underwriters will sell such additional shares on the same terms
as those on which the shares are being offered.
In connection with this offering, certain Underwriters may engage in
passive market making transactions in the Common Stock on the Nasdaq National
Market immediately prior to the commencement of sales in the offering in
accordance with Rule 10b-6A under the Exchange Act. Passive market making
consists of displaying bids on the Nasdaq National Market limited by the bid
prices of independent market makers and purchases limited by such prices and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market makers'
average daily trading volume in the Common Stock during a specified period and
must be discontinued when such limit is reached. Passive market making may
stabilize the market price of the Common Stock at a level above that which might
otherwise prevail and, if commenced, may be discontinued at any time.
The Company, its executive officers and directors have agreed that they
will not, without the prior written consent of the Representatives, issue, sell,
transfer, assign or otherwise dispose of any shares of the Common Stock or
options, warrants, or rights to acquire Common Stock owned by them prior to
August 1, 1996.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters and controlling persons, if any, against certain liabilities,
including liabilities under the Securities Act, or will contribute to payments
which the Underwriters or any such controlling persons may be required to make
in respect thereof.
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<PAGE> 19
EXPERTS
The consolidated financial statements of Regal at December 28, 1995 and
December 29, 1994, and for each of the three years in the period ended December
28, 1995 incorporated by reference herein from the Company's Annual Report on
Form 10-K/A for the year ended December 28, 1995, the consolidated financial
statements of GST at December 28, 1995 and December 29, 1994 and for each of the
three years in the period ended December 28, 1995, incorporated by reference
herein and the combined historical summaries of net theatre assets acquired and
direct theatre operating revenues and expenses of Krikorian at and for the year
ended December 31, 1995 incorporated by reference herein, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as stated in their reports
thereon incorporated by reference herein and are incorporated by reference in
reliance upon the authority of said firm as experts in accounting and auditing.
The report of Coopers & Lybrand L.L.P. with respect to Regal's consolidated
financial statements makes reference to the fact that separate financial
statements of Litchfield Theatres, Ltd. reflected in Regal's Consolidated
Statements of Income, Changes in Shareholders' Equity and Cash Flows for the
year ended December 30, 1993 were audited and reported on separately by Deloitte
& Touche LLP, independent auditors. The report of Deloitte & Touche LLP,
independent auditors, has been incorporated herein by reference from the
Company's Annual Report on Form 10-K/A for the year ended December 28, 1995 and
is incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. The report of
Coopers & Lybrand L.L.P. with respect to Regal's consolidated financial
statements also makes reference to the fact that separate financial statements
of Neighborhood Entertainment, Inc. included in the Consolidated Balance Sheet
as of December 29, 1994 and the Consolidated Statements of Income, Changes in
Shareholders' Equity and Cash Flows for the years ended December 30, 1993 and
December 29, 1994, were audited by Ernst & Young LLP, independent auditors, as
stated in their report dated March 21, 1995. Such financial statements of
Neighborhood Entertainment, Inc. are included in the consolidated financial
statements of Regal in reliance upon said report given upon the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of Common Stock offered hereby will be passed
upon for the Company by Bass, Berry & Sims PLC, Nashville, Tennessee. Certain
legal matters with respect to the shares of Common Stock offered hereby will be
passed upon for the Underwriters by Waller Lansden Dortch & Davis, Nashville,
Tennessee.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048.
Copies of such material may be obtained at the prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Common Stock is quoted for trading on the Nasdaq National Market and
reports, proxy statements and other information concerning the Company may be
inspected at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement, including the exhibits
and schedules. The Registration Statement, together with its exhibits and
schedules thereto, may
19
<PAGE> 20
be inspected, without charge, at the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549, and also at the regional offices of the
Commission listed above. Copies of such material may also be obtained from the
Commission upon the payment of prescribed fees.
Statements contained in the Prospectus as to any contracts, agreements or
other documents filed as an exhibit to or incorporated by reference in the
Registration Statement are qualified in all respects to the copy of such
contract, agreement or other document filed as an exhibit to the Registration
Statement for a full statement of the provisions thereof.
The Company's principal offices are located at 7132 Commercial Park Drive,
Knoxville, Tennessee 37918 and its telephone number is (423) 922-1123.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
are incorporated herein by reference:
(1) Annual Report on Form 10-K for the fiscal year ended December 28,
1995, as amended by Form 10-K/A as filed on April 29, 1996;
(2) Current Report on Form 8-K dated May 1, 1996;
(3) Current Report on Form 8-K dated May 9, 1996;
(4) Quarterly Report on Form 10-Q for the three months ended March 28,
1996 as filed on May 13, 1996; and
(5) The Registration Statement on Form 8-A with respect to Regal Common
Stock dated May 12, 1994, as amended by Form 8-A/A dated June 21,
1994 and Form 8-A/A dated September 12, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering contemplated hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such earlier statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated into the Prospectus by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to Lewis Frazer III, Chief Financial Officer, Regal Cinemas, Inc., 7132
Commercial Park Drive, Knoxville, Tennessee 37918, telephone number (423)
922-1123.
20
<PAGE> 21
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NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OF
COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO WHOM IT IS UNLAWFUL TO MAKE SUCH
SOLICITATION OR OFFER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Price Range of Common Stock and
Dividend Policy..................... 8
Use of Proceeds....................... 9
Capitalization........................ 9
Business.............................. 10
Management............................ 16
Underwriting.......................... 18
Experts............................... 19
Legal Matters......................... 19
Available Information................. 19
Incorporation of Certain Documents By
Reference........................... 20
</TABLE>
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2,500,000 SHARES
[REGAL CINEMAS LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
J.C. Bradford & Co.
Montgomery Securities
Wheat First Butcher Singer
June 5, 1996
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<PAGE> 22
Appendix A Omitted Graphic and Image Material
The following is a narrative description of graphic and image material
contained in the printed version of the prospectus which has been omitted from
the version filed electronically.
Inside front cover:
1. A map of the United States depicting the Company's screen count
in states where it has theatres. The screen counts are
presented as screens in operation, screens under construction,
screens in announced acquisitions and total screens.
2. A collage of pictures depicting (i) an outside view of the
front of a Regal theatre facility, (ii) a specialty cafe inside
a Regal theatre lobby, (iii) a wide angle view of a Regal theatre
lobby, (iv) an outside view of the entrance to a FunScape and (v)
an inside view of a Regal theatre featuring stadium-style seating.
3. The following text accompanies the pictures described above:
The Company's theatre's and FunScape locations are bright and
inviting, acting as destination points which can expand the
geographic territory of a given market zone.
Prominent and appealing concession stands are designed for
rapid service and efficiency. Through optimizing product mix,
special promotions and cross selling, the Company seeks to maximize
concession revenues.
In many of the Company's theatres, patrons can enjoy specialty
cafes serving non-traditional theatre fare, such as cappuccino,
fruit juices, bottled water, cookies and muffins, soft pretzels and
ice cream.
Stadium-style seating in many of the Company's new theatres
offers the latest in customer comfort and viewing enjoyment.
Inside back cover:
1. A drawing depicting the layout of a typical FunScape centered
among a series of pictures depicting the various features of a
FunScape. Each picture is connected by a broken line to the
section of the layout that it depicts. The following areas of a
FunScape are depicted:
"Stop-N-Play" life size game board, high-tech arcade and
virtual reality, "Krazy Kars," birthday party rooms, "Star" motion
thrill theatre (depicted from inside and outside), "Bridge Street"
eatery (depicted twice), 36 hole miniature golf course, kiddie
redemption arcade and "Power Sports" video batting cages.
2. The following text accompanies the pictures described above:
FunScape is a complete, one-stop family entertainment center.
It features a multi-screen movie theatre adjacent to a family
entertainment facility and branded food court. The complex is a
destination that offers entertainment for patrons of all ages. For
younger children, the park includes a soft play area that
incorporates both physical and creative play. Teens and adults can
enjoy a variety of activities ranging from miniature golf to
virtual reality experiences. The park is totally enclosed for year
round operation.
FunScape debuted in August 1995 in Chesapeake, Virginia, and a
second FunScape opened in Rochester, New York in February 1996.
Two FunScapes are under construction, in Syracuse, New York and
Brandywine, Delaware, and an additional FunScape unit construction
is anticipated to begin in 1996.
3. An external view of the front of a Regal theatre facility.
