<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2000
Commission file number: 333-52943
REGAL CINEMAS, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Tennessee 62-1412720
-------------------------------- -------------------------------
(State or Other Jurisdiction of (Internal Revenue Service
Incorporation or Organization) Employer Identification Number)
7132 Commercial Park Drive
Knoxville, TN 37918
---------------------------------------- -------------------------------
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, Including Area Code: 865/922-1123
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 and 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 [ ]
Common Stock outstanding - 216,756,461 shares at November 13, 2000
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
SEPTEMBER 28, DECEMBER 30,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 72,034 $ 40,604
Accounts receivable 2,182 2,752
Reimbursable construction advances 15,173 20,250
Inventories 5,318 5,050
Prepaid and other current assets 26,881 18,283
Assets held for sale 9,625 9,670
Deferred income tax asset 633 633
----------- -----------
Total current assets 131,846 97,242
PROPERTY AND EQUIPMENT:
Land 76,991 113,516
Buildings and leasehold improvements 1,171,762 999,012
Equipment 478,951 453,751
Construction in progress 27,622 75,879
----------- -----------
1,755,326 1,642,158
Accumulated depreciation and amortization (235,029) (185,409)
----------- -----------
Total property and equipment, net 1,520,297 1,456,749
GOODWILL, net of accumulated amortization of
$28,359 and $20,952, respectively 370,413 398,567
DEFERRED INCOME TAX ASSET 48,101 86,075
OTHER ASSETS 42,079 41,576
----------- -----------
TOTAL ASSETS $ 2,112,736 $ 2,080,209
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt, capital lease
obligations and lease financing arrangements $ 3,970 $ 6,537
Long-term debt callable under covenant provisions 1,019,750 --
Accounts payable 30,244 101,152
Accrued expenses 96,049 56,701
----------- -----------
Total current liabilities 1,150,013 164,390
LONG-TERM DEBT, less current maturities:
Long-term debt 803,894 1,679,217
Capital lease obligations 18,256 19,722
Lease financing arrangements 153,831 74,199
OTHER LIABILITIES 39,909 28,521
----------- -----------
TOTAL LIABILITIES 2,165,903 1,966,049
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par: 100,000,000 shares
authorized, none issued -- --
Common stock, no par: 500,000,000 shares
authorized; 216,756,461 and 216,873,501
shares issued and outstanding at
September 28, 2000 and December 30, 1999 199,661 199,778
Loans to shareholders (6,271) (6,388)
Retained deficit (246,557) (79,230)
----------- -----------
TOTAL SHAREHOLDERS'
EQUITY (DEFICIT) $ (53,167) $ 114,160
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT) $ 2,112,736 $ 2,080,209
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 3
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Admissions $ 213,789 $ 205,354 $ 556,564 $ 512,652
Concessions 85,862 84,139 226,388 213,282
Other operating revenue 15,938 15,548 39,446 40,155
--------- --------- --------- ---------
Total revenues 315,589 305,041 822,398 766,089
--------- --------- --------- ---------
OPERATING EXPENSES:
Film rental and advertising 118,973 114,669 303,539 287,424
Cost of concessions and other 14,293 12,175 36,153 30,881
Theatre operating expenses 117,880 100,631 330,411 280,700
General and administrative 10,429 8,650 26,764 24,779
Depreciation and amortization 24,844 22,823 68,202 65,915
Theatre closing costs 8,829 -- 21,696 --
Loss on disposal of
operating assets 424 -- 711 --
Loss on impairment of assets 26,748 -- 41,251 --
--------- --------- --------- ---------
Total operating expenses 322,420 258,948 828,727 689,699
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (6,831) 46,093 (6,329) 76,390
OTHER INCOME (LOSS):
Interest expense (47,199) (34,114) (129,795) (95,301)
Interest income 426 89 932 405
Other -- 1 -- 101
--------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES (53,604) 12,069 (135,192) (18,405)
BENEFIT (PROVISION)
FROM INCOME TAXES (59,719) (6,483) (32,135) 3,922
--------- --------- --------- ---------
NET INCOME (LOSS) $(113,323) $ 5,586 $(167,327) $ (14,483)
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
SEPTEMBER 28, SEPTEMBER 30,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(167,327) $ (14,483)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 68,202 65,915
Loss on impairment of assets 41,251 --
Loss on disposal of operating assets 711 --
Theatre closing costs 21,696 --
Deferred income taxes 37,974
Changes in operating assets and liabilities:
Accounts receivable 570 97
Inventories (268) (809)
Prepaids and other assets (9,053) (12,674)
Accounts payable (70,907) (6,717)
Accrued expenses and other liabilities 20,436 30,488
--------- ---------
Net cash provided by (used in) operating activities (56,715) 61,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (125,837) (342,500)
Proceeds from sales of fixed assets 63,266 --
Net change in reimbursable construction advances 5,077 (20,000)
Investment in goodwill and other assets -- (2,688)
--------- ---------
Net cash used in investing activities (57,494) (365,188)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long-term debt 177,000 290,000
Payments made on long-term debt (39,964) (5,498)
Termination of interest rate swaps 8,603 --
Exercise of warrants, options and compensation expense -- 172
--------- ---------
Net cash provided by financing activities 145,639 284,674
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 31,430 (18,697)
CASH AND CASH EQUIVALENTS, beginning of period 40,604 20,621
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 72,034 $ 1,924
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 THE COMPANY AND BASIS OF PRESENTATION
Regal Cinemas, Inc. and its wholly owned subsidiaries (the "Company"
or "Regal") operate multi-screen motion picture theatres principally
throughout the eastern and northwestern United States. The Company
formally operates on a fiscal year ending on the Thursday closest
to December 31.
The film exhibition industry continues to face severe financial
challenges due primarily to the rapid building of state of the art
theatre complexes which resulted in an unanticipated oversupply of
screens. The aggressive new build strategies generated significant
competition in once stable markets and rendered many older theatres
obsolete more rapidly than anticipated. This effect, together with the
fact many of these now obsolete theatres are leased under long-term
commitments, produced an oversupply of screens throughout the
exhibition industry at a rate much quicker than the industry could
effectively handle. This industry overcapacity coupled with declines in
national box office attendance has negatively affected the operating
results of the Company and many of its competitors. The exhibition
industry continues to report severe liquidity concerns, defaults under
credit facilities, renegotiations of financial covenants, as well as
several recently announced bankruptcy filings.
These industry dynamics have severely affected the Company, which
continues to experience deteriorating operating results. Additionally,
because the Company has funded expansion efforts over the past
several years primarily from borrowings under its credit facilities,
the Company's leverage has grown significantly over this time.
Consequently, the Company is currently in default of certain financial
covenants contained in its senior credit facilities and its equipment
financing term note. Accordingly, each of these lenders has the right
to accelerate the maturity of all of its outstanding indebtedness,
which together totals approximately $1.02 billion. The Company does not
have the ability to fund the accelerated maturity of this indebtedness.
The Company has engaged financial advisers and is currently evaluating
a longer-term financial plan to address various restructuring
alternatives and liquidity requirements. The financial plan will
provide for the closure of under-performing theatre sites, potential
sales of non-strategic assets and a potential restructuring,
recapitalization or a bankruptcy reorganization of the Company. In
light of the Company's current financial condition, doubt exists about
the Company's ability to continue operating under its existing capital
structure.
These financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of
assets or liabilities that may result from the outcome of these
uncertainties, except as disclosed in Note 2 with regard to long-term
debt.
The Company, without audit has prepared the condensed consolidated
balance sheet as of September 28, 2000, the condensed consolidated
statements of operations for the three and nine month periods ended
September 28, 2000 and September 30, 1999, and the condensed
consolidated statements of cash flows for the nine months ended
September 28, 2000 and September 30, 1999. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly in all material respects the
financial position, results of operations and cash flows for all
periods presented have been made. The December 30, 1999 information has
been derived from the audited December 30, 1999 consolidated balance
sheet of the Company.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
<PAGE> 6
These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report filed on Form 10-K dated March 29, 2000.
The results of operations for the three and nine month periods ended
September 28, 2000 are not necessarily indicative of the operating
results for the full year.
<PAGE> 7
2 LONG-TERM DEBT
Long-term debt at September 28, 2000 and December 30, 1999, consists of
the following (in thousands):
<TABLE>
<CAPTION>
SEPT. 28, DEC. 30,
(IN THOUSANDS) 2000 1999
<S> <C> <C>
$ 600,000 of the Company's senior subordinated notes due June 1, 2008,
with interest payable semiannually at 9.5%. Notes are redeemable, in
whole or in part, at the option of the Company at any time on or after
June 1, 2003, at the redemption prices (expressed as percentages of the
principal amount thereof) set forth below together with accrued and
unpaid interest to the redemption date, if redeemed during the 12 month
period beginning on June 1 of the years indicated:
REDEMPTION
YEAR PRICE
2003 104.750%
2004 103.167%
2005 101.583%
2006 and thereafter 100.000% $ 600,000 $ 600,000
$ 200,000 of the Company's senior subordinated debentures due December
15, 2010, with interest payable semiannually at 8.875%. Debentures are
redeemable, in whole or in part, at the option of the Company at any
time on or after December 15, 2003, at the redemption prices (expressed
as percentages of the principal amount thereof) set forth below
together with accrued and unpaid interest to the redemption date, if
redeemed during the 12 month period beginning on December 15 of the
years indicated:
REDEMPTION
YEAR PRICE
2003 104.750%
2004 103.328%
2005 101.219%
2006 101.109%
2007 and thereafter 100.000% 200,000 200,000
Term Loans 505,000 508,750
Revolving credit facility 495,000 370,000
Equipment financing note payable, payable in varying quarterly 19,750 --
installments through April 1, 2005, including interest at LIBOR plus
3.25% (10.10% at September 28, 2000), collateralized by related
equipment
Capital lease obligations, 11.5% to 14.0%, maturing in various
installments through 2024 20,463 21,311
Lease financing arrangements, 11.5%, maturing in
various installments through 2019 155,594 74,737
Other 3,894 4,877
----------- -----------
1,999,701 1,779,675
Less current maturities (3,970) (6,537)
Less potentially callable debt classified as current (1,019,750) --
----------- -----------
Total long-term obligations $ 975,981 $ 1,773,138
=========== ===========
</TABLE>
<PAGE> 8
CREDIT FACILITIES - The Company entered into credit facilities provided
by a syndicate of financial institutions. In August 1998, December
1998, and March 1999, such credit facilities were amended. These credit
facilities (the "Credit Facilities") now include a $500.0 million
Revolving Credit Facility (including the availability of Revolving
Loans, Swing Line Loans, and Letters of Credit) and three term loan
facilities: Term A, Term B, and Term C (the "Term Loans"). The Company
must pay an annual commitment fee ranging from 0.2% to 0.425%,
depending on the Company's Total Leverage Ratio, as defined in the
Credit Facilities, of the unused portion of the Revolving Credit
Facility. The Revolving Credit Facility expires in June 2005.
Outstanding borrowings under the Revolving Credit Facility were $495.0
million and $370.0 million as of September 28, 2000 and December 30,
1999, respectively.
Borrowings under the Term A Loan or the Revolving Credit Facility can
be made at the Base Rate plus a margin of 0% to 1%, or the LIBOR Rate,
plus .625% to 2.25%, both depending on the Total Leverage Ratio. The
Base Rate on revolving loans is the rate established by the
Administrative Agent in New York as its base rate for dollars loaned in
the United States. The LIBOR Rate is based on the length of loan. The
outstanding balance under the Term A Loan was $235.2 million at
September 28, 2000 and $237.6 million at December 30, 1999 with $2.4
million due annually through 2004 and the balance due in 2005.
Borrowings under the Term B Loan can be made at the Base Rate plus a
margin of 0.75% to 1.25% or the LIBOR Rate plus 2.0% to 2.5%, both
depending on the Total Leverage Ratio. The outstanding balance under
the Term B Loan was $137.5 million at September 28, 2000 and December
30, 1999, with the balance due in 2006.
Borrowings under the Term C Loan can be made at the Base Rate plus a
margin of 1.0% to 1.5% or the LIBOR Rate plus 2.25% to 2.75%, both
depending on the Total Leverage Ratio. The outstanding balance under
the Term C Loan was $132.3 million at September 28, 2000 and $133.7
million at December 30, 1999 with $1.35 million due annually through
2006, and the balance due in 2007.
A pledge of the stock of the Company's domestic subsidiaries
collateralizes the Credit Facilities. The Company's direct and indirect
U.S. subsidiaries guarantee payment obligations under certain of the
Credit Facilities.
The Credit Facilities contain customary covenants and restrictions on
the Company's ability to issue additional debt, pay dividends or engage
in certain activities and include customary events of default. In
addition, the Credit Facilities specify that the Company must meet or
exceed defined fixed charge coverage ratios and must not exceed defined
leverage ratios.
The Company is currently in technical default of certain financial
covenants contained in the Credit Facilities. The Company is also in
default of certain covenants contained in the equipment financing term
note agreement ("Equipment Financing"). Therefore, each of the lenders
has the ability to accelerate the maturity dates of the indebtedness,
which together totals approximately $1.02 billion. The Company does not
have the ability to fund the accelerated maturity of this indebtedness.
Accordingly, the Company has classified the Credit Facilities and
Equipment Financing as current liabilities in the accompanying balance
sheet as of September 28, 2000.
The Company has $600 million and $200 million of senior subordinated
notes due June 1, 2008 and December 15, 2010, respectively. A technical
covenant default under the Credit Facilities provides the bank
syndicate the right to block any and all payments to the holders of the
subordinated notes. Additionally, if the bank group exercised its
option to accelerate the maturity of the indebtedness under the
Company's Credit Facilities, the
<PAGE> 9
trustee of the senior subordinated notes would have the right to
accelerate the maturity of the indebtedness under the senior
subordinated notes indentures.
LEASE FINANCING ARRANGEMENTS - The Emerging Issues Task Force (EITF)
released in fiscal 1998, Issue No. 97-10, The Effect of Lessee
Involvement in Asset Construction. Issue No. 97-10 is applicable to
entities involved on behalf of an owner-lessor with the construction of
an asset that will be leased to the lessee when construction of the
asset is completed. Issue No. 97-10 requires the Company be considered
the owner (for accounting purposes) of these types of projects during
the construction period as well as when the construction of the asset
is completed. Therefore, the Company has recorded such leases as lease
financing arrangements on the accompanying balance sheet. As Issue
97-10 applies to construction projects committed to after May 21, 1998,
the Company will report a majority of the Company's construction
projects for leased theatre sites in the 2000 fiscal year as on balance
sheet financing.
INTEREST RATE SWAPS - In September 1998, the Company entered into
interest rate swap agreements for five year terms to hedge a portion of
the Credit Facilities variable interest rate risk. On September 22,
2000, the Company monetized the value of all of these contracts for
approximately $8.6 million. As the Company had accounted for these
swaps as interest rate hedges, the gain realized from the sale has been
deferred and will be amortized as a credit to interest expense over the
remaining original term of these swaps (through September 2003). The
current portion of this gain is included in accrued expenses and the
long-term portion in other liabilities.
3 INCOME TAXES
The Company periodically evaluates its deferred tax asset to determine
the need for any valuation allowance that may be appropriate in light
of the Company's projections for taxable income and the expiration
dates of the Company's net operating loss carryforwards. Based on the
results of its third quarter evaluation, the Company has recorded a
$78.1 million valuation allowance to reflect the determination that a
portion of the deferred tax asset may not be realized. The
establishment of this valuation allowance is included in the income tax
provision for the three and nine months ended September 28, 2000. The
Company will continue to review this valuation allowance on a periodic
basis and make adjustments as appropriate. The Company did not record a
valuation allowance in the prior year.
4 CAPITAL STOCK
Earnings per share information is not presented herein as the Company's
shares do not trade in a public market. After the Recapitalization, the
Company effected a stock split in the form of a stock dividend
resulting in a price per share of $5.00, which $5.00 per share price is
equivalent to the $31.00 per share consideration paid in the Merger.
The Company's common shares issued and outstanding throughout the
accompanying financial statements and notes reflect the retroactive
effect of the Recapitalization stock split.
5 LOSS ON IMPAIRMENT OF ASSETS
ASSET IMPAIRMENT - The Company periodically reviews the carrying value
of long-lived assets, including goodwill, for impairment based on
expected future cash flows. Such reviews are performed as part of the
Company's budgeting process and are performed on an individual theatre
level, the lowest level of identifiable cash flows. Factors considered
in management's estimate of future theatre cash flows include
historical operating results over complete operating cycles, current
and anticipated impacts of competitive openings in individual markets,
and anticipated sales or dispositions of theatres.
<PAGE> 10
Management uses the results of this analysis to determine whether
impairment has occurred. The Company measures the resulting impairment
loss as the amount by which the carrying value of the asset exceeds
fair value, which is estimated using discounted cash flows. Discounted
cash flows also include estimated proceeds for the sale of owned
properties in the instances where management intends to sell the
location. This analysis has resulted in the following impairment losses
being recognized:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- ------------------------------
SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30,
2000 1999 2000 1999
-------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Write-down of theatre
property and equipment $ 20,100 $ -- $21,849 $ --
Write-off of goodwill 6,648 -- 19,402 --
-------- -------- ------- --------
Total $ 26,748 $ -- $41,251 $ --
======== ======== ======= ========
</TABLE>
THEATRE CLOSING AND LOSS ON DISPOSAL COSTS - The Company's management
team continually evaluates the status of the Company's under-performing
locations. During the third quarter of 2000, the Company recorded $0.4
million as the net loss on disposal of these locations as well as the
write-off of certain costs incurred to develop sites, where the Company
has discontinued development. In conjunction with certain closed
locations, the Company has a reserve for lease termination costs of
$9.6 million at September 28, 2000. This reserve for lease termination
costs represents management's best estimate of the potential costs for
exiting these leases and are based on analyses of the properties,
correspondence with the landlord, exploratory discussions with
potential sublessees and individual market conditions.
The following is the activity in this reserve during 2000:
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 28,
2000
--------
<S> <C>
Beginning balance $ 4,269
Rent and other termination payments (11,995)
Additional theatre closings 18,935
Revision in prior estimates (1,563)
--------
Ending balance $ 9,646
========
</TABLE>
Theatre properties owned by the Company, that were closed during the
third quarter of 2000 and 1999 fiscal year, are classified as assets
held for sale on the accompanying balance sheets. Such assets are
recorded at the estimated net realizable value of the individual
locations.
6 CASH FLOW INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS) SEPTEMBER 28, SEPTEMBER 30,
2000 1999
-------- --------
<S> <C> <C>
Supplemental information on cash flows:
Interest paid $108,118 $ 77,805
Income taxes paid (refunds received), net 214 (4,815)
</TABLE>
NONCASH TRANSACTIONS:
SEPTEMBER 28, 2000:
Pursuant to EITF 97-10, the Company recorded lease financing
arrangements and net assets of $83.0 million.
The Company purchased and retired 23,408 shares of common stock valued
at $0.1 million in exchange for canceling notes receivables from
certain shareholders.
<PAGE> 11
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following analysis of the financial condition and results of operations of
Regal Cinemas, Inc. (the "Company") should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto included herein.
RESULTS OF OPERATIONS
The Company's revenues are generated primarily from admissions and concession
sales. Additional revenues are generated by electronic video games located
adjacent to the lobbies of certain of the Company's theatres and by on-screen
advertisements, and rebates from concession vendors. Direct theatre costs
consist of film rental and advertising costs, costs of concessions and theatre
operating expenses. Film rental costs are related to the popularity of a film
and the length of time since the film's release and generally decline as a
percentage of admission revenues the longer a film has been released. Because
certain concession items, such as fountain drinks and popcorn, are purchased in
bulk and not pre-packaged for individual servings, the Company is able to
improve its margins by negotiating volume discounts. Theatre operating expenses
consist primarily of theatre labor and occupancy costs. At September 28, 2000,
approximately 10.0% of the Company's employees were paid at the federal minimum
wage and, accordingly, the minimum wage largely determines the Company's labor
costs for those employees. Future increases in minimum wage requirements or
legislation requiring additional employer funding of health care, among other
things, may increase theatre operating expenses as a percentage of total
revenues.
<PAGE> 12
The following table sets forth for the fiscal periods indicated the percentage
of total revenues represented by certain items reflected in the Company's
consolidated statements of operations.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------ -----------------------------
SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES:
Admissions 67.7 67.3 67.7 66.9
Concessions 27.2 27.6 27.5 27.8
Other operating revenue 5.1 5.1 4.8 5.3
------ ------ ------ ------
Total revenues 100.0 100.0 100.0 100.0
------ ------ ------ ------
OPERATING EXPENSES:
Film rental and advertising 37.7 37.6 36.9 37.5
Cost of concessions and other 4.5 4.0 4.4 4.0
Theatre operating expenses 37.4 33.0 40.2 36.6
General and administrative 3.3 2.8 3.3 3.2
Depreciation and amortization 7.9 7.5 8.3 8.6
Theatre closing costs 2.8 -- 2.6 --
Loss on disposal of operating assets 0.1 -- 0.1 --
Loss on impairment of fixed assets 8.5 -- 5.0 --
------ ------ ------ ------
Total operating expenses 102.2 84.9 100.8 89.9
------ ------ ------ ------
OPERATING INCOME (LOSS) (2.2) 15.1 (0.8) 10.1
OTHER INCOME (LOSS):
Interest expense (15.0) (11.2) (15.8) (12.4)
Interest income 0.2 -- 0.2 --
Other -- -- -- --
------ ------ ------ ------
INCOME (LOSS) BEFORE
INCOME TAXES (17.0) 3.9 (16.4) (2.3)
BENEFIT (PROVISION)
FROM INCOME TAXES (18.9) (2.1) (3.9) 0.5
------ ------ ------ ------
NET INCOME (LOSS) (35.9) 1.8 (20.3) (1.8)
====== ====== ====== ======
</TABLE>
<PAGE> 13
THREE MONTHS ENDED SEPTEMBER 28, 2000 AND SEPTEMBER 30, 1999
TOTAL REVENUES - Total revenues for the third quarter of fiscal 2000
increased by 3.5% to $315.6 million from $305.0 million in the comparable 1999
period. This increase was primarily due to increased ticket prices. Box office
ticket prices for the third quarter of 2000 averaged $5.50, which was 10.0%
higher than the $5.00 average ticket price in the third quarter of 1999. Average
concession prices also were higher in the third quarter of 2000 ($2.21) versus
the third quarter in 1999 ($2.04). The higher prices per admission increased
revenue by $27.3 million which offset the effect of lower attendance in the
third quarter of 2000 (38.9 million admissions) as compared to the 1999 period
(41.1 million admissions) which produced a revenue shortfall of $16.8 million.
DIRECT THEATRE COSTS - Direct theatre costs increased by 10.4% to
$251.1 million in the third quarter 2000 from $227.5 million in the third
quarter of 1999. Direct theatre costs as a percentage of total revenues
increased to 79.6% in the 2000 period from 74.6% in the 1999 period. The
increase was primarily attributable to increased film costs ($4.7 million),
occupancy ($3.6 million), rent costs ($7.6 million), and other operating costs
($5.1 million). The increases primarily resulted from the additional theatre
locations opened by the Company in the last twelve months as well as the decline
in attendance in the 2000 period as compared to the 1999 period.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative
expenses increased by 20.6% to $10.4 million in the third quarter of 2000 from
$8.7 million in the third quarter 1999. As a percentage of total revenues,
general and administrative expenses increased to 3.3% in the 2000 period from
2.8% in the 1999 period. The increase was due to approximately $2.0 million in
additional legal and professional fees relating to the Company's restructuring
efforts.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization expense
increased in the third quarter of 2000 by 8.9% to $24.8 million from $22.8
million in the third quarter of 1999. The increase is due to the additional
depreciation resulting from the Company's expansion efforts offset by the
effects of asset write-offs due to theatre closing and asset impairment.
OPERATING INCOME (LOSS) - Operating income (loss) for the third quarter
2000 decreased to $(6.8) million from $46.1 million in the third quarter 1999.
The decrease is primarily due to theatre closing and impairment charges together
totaling $35.6 million.
INTEREST EXPENSE - Interest expense in the third quarter of 2000 was
$47.2 million up from $34.1 million in the third quarter of 1999. The increase
is primarily due to higher average borrowings as well as increased interest
rates.
INCOME TAXES - The provision from income taxes in the third quarter of
2000 was $59.7 million as compared to $6.5 million in the third quarter of 1999.
The increase is primarily due to the establishment of a valuation allowance for
a portion of the Company's deferred tax assets.
NET INCOME (LOSS) - The net loss in the third quarter of 2000 was
$113.3 million as compared to net income of $5.6 million in the third quarter
of 1999.
IMPAIRMENT AND OTHER DISPOSAL CHARGES - The Company periodically
reviews the carrying value of long-lived assets, including goodwill, for
impairment based on expected future cash flows. Such reviews are performed as
part of the Company's budgeting process and are performed on an individual
theatre level, the lowest level of identifiable cash flows. Factors considered
in management's estimate of future theatre cash flows include historical
operating results over complete operating cycles, current and anticipated
impacts of competitive openings in individual markets, and anticipated closings
or dispositions of theatres. Management uses the results of this analysis to
determine whether impairment has occurred. The resulting impairment loss is
measured as the amount by which the carrying value of the assets exceeds fair
value that is estimated using discounted cash flows. Discounted cash flows also
include estimated proceeds for the sale of owned properties in the instances
where management intends to sell the
<PAGE> 14
location. This analysis resulted in the recording of a $26.7 million impairment
charge during the third quarter of 2000. Additionally, the Company continuously
monitors and evaluates the performance of its theatres on a site-by-site basis.
As part of this analysis, the Company targets under-performing locations for
closure. During the third quarter of 2000, the Company recorded $0.4 million as
the net loss on disposal of certain of these locations. In conjunction with
certain closed locations, the Company recorded an expense for theatre closing
costs of $8.8 million, including lease termination costs. The reserve for lease
termination costs at September 28, 2000 of $9.6 million represents management's
best estimate of the potential costs for exiting these leases and are based on
analyses of the properties, correspondence with the landlord, exploratory
discussion with potential sublessees and individual market conditions.
NINE MONTHS ENDED SEPTEMBER 28, 2000 AND SEPTEMBER 30, 1999
TOTAL REVENUES - Total revenues for the nine-month period ending
September 28, 2000 increased by 7.4% to $822.4 million from $766.1 million in
the comparable period in 1999. This increase was primarily due to increased
ticket prices. Box office ticket prices for the nine-month period ending
September 28, 2000 averaged $5.32, which was 9.5% higher than the $4.86 average
ticket price for the same period in 1999. Concession prices also were higher in
the first nine months of 2000 ($2.16) versus the same period in 1999 ($2.02).
The higher prices per admission increased revenue by $63.4 million. The
increased per admission revenue was partially offset by lower attendance in the
first nine months of 2000 (104.7 million admissions) as compared to the 1999
period (105.5 million admissions). This decrease in attendance yielded a revenue
decrease of $6.0 million as compared to the 1999 period. There was also a $1.1
million shortfall of other revenue from primarily the Company's entertainment
centers.
DIRECT THEATRE COSTS - Direct theatre costs increased by 11.9% to
$670.1 million in the nine-month period ending September 28, 2000 from $599.0
million in the corresponding period in 1999. Direct theatre costs as a
percentage of total revenues increased to 81.5% in the 2000 period from 78.2% in
the 1999 period. The increase was primarily attributable to increased occupancy
and rent costs resulting from the additional theatre locations opened by the
Company in the last twelve months.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative
expenses increased 8.0% to $26.7 million nine-month period ending September 28,
2000 from $24.8 million in the first nine months of 1999. As a percentage of
total revenues, general and administrative expenses were 3.3% in the 2000 period
and 3.2% in the 1999 period. The increase was due to approximately $2.0 million
in additional legal and professional fees relating to the Company's
restructuring efforts.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization expense
increased nine-month period ending September 28, 2000 by 3.5% to $68.2 million
from $65.9 million in the corresponding period of 1999. The increase is due to
the additional depreciation resulting from the Company's expansion efforts
offset by reduced depreciation and amortization resulting from theatre closing
and asset impairment.
OPERATING INCOME (LOSS) - Operating loss for the nine-month period
ending September 28, 2000 was $6.3 million as compared to operating income of
$76.4 million in the corresponding period in 1999. The decrease is primarily due
to theatre closing and impairment charges together totaling $62.9 million.
INTEREST EXPENSE - Interest expense increased during nine-month period
ending September 28, 2000 to $129.8 million from $95.3 million in the
corresponding period of 1999. The increase is primarily due to higher average
borrowings as well as increased interest rates.
INCOME TAXES - The provision from income taxes during the nine-month
period ending September 28, 2000 was $32.1 million as compared to a $3.9 million
benefit for the same period in 1999. The increase is due primarily to the
establishment of a valuation allowance for a portion of the Company's deferred
tax assets.
<PAGE> 15
NET LOSS - The net loss for the nine-month period ending September 28,
2000 was $167.3 million as compared to $14.5 million for the first nine months
of 1999.
IMPAIRMENT AND OTHER DISPOSAL CHARGES - The Company periodically
reviews the carrying value of long-lived assets, including goodwill, for
impairment based on expected future cash flows. Such reviews are performed as
part of the Company's budgeting process and are performed on an individual
theatre level, the lowest level of identifiable cash flows. Factors considered
in management's estimate of future theatre cash flows include historical
operating results over complete operating cycles, current and anticipated
impacts of competitive openings in individual markets, and anticipated closings
or dispositions of theatres. Management uses the results of this analysis to
determine whether impairment has occurred. The resulting impairment loss is
measured as the amount by which the carrying value of the assets exceeds fair
value that is estimated using discounted cash flows. Discounted cash flows also
include estimated proceeds for the sale of owned properties in the instances
where management intends to sell the location. This analysis resulted in the
recording of a $41.3 million impairment charge during the first nine months of
2000. Additionally, the Company continuously monitors and evaluates the
performance of its theatres on a site by site basis. As part of this analysis,
the Company targets under-performing locations for closure. During the first
nine months of 2000, the Company recorded $0.7 million as the net loss on
disposal of certain of these locations. In conjunction with certain closed
locations, the Company recorded an expense for theatre closing costs of $21.7
million, including lease termination costs. The reserve for lease termination
costs at September 28, 2000 of $9.6 million represents management's best
estimate of the potential costs for exiting these leases and are based on
analyses of the properties, correspondence with the landlord, exploratory
discussion with potential sublesses and individual market conditions.
LIQUIDITY AND CAPITAL RESOURCES
The Company derives substantially all its revenues from admission
revenues and concession sales, and ancillary revenues.
The Company's capital requirements have historically arisen principally
due to new theatre openings, acquisitions of existing theatres, and the addition
of screens to existing theatres. The Company financed these capital requirements
with debt and to a lesser extent, internally generated cash. The Company's
Senior Credit Facilities provided for borrowings of up to $1,005.0 million in
the aggregate, consisting of the Revolving Credit Facility, which permits the
Company to borrow up to $500.0 million on a revolving basis and $505.0 million,
in the aggregate, of term loan borrowings under three separate term loan
facilities. As of September 28, 2000, the Company did not have the ability to
borrow additional amounts under these facilities. Under the Senior Credit
Facilities, the Company is required to comply with certain financial and other
covenants. The Company is currently in technical default of certain of these
financial covenants. The loans under the Senior Credit Facilities bear interest
at either a base rate (referred to as "Base Rate Loans") or adjusted LIBO rate
(referred to as "LIBO Rate Loans") plus, in each case, an applicable margin
determined depending upon the Company's Total Leverage Ratio (as defined in the
Senior Credit Facilities). Because of the Company's non-compliance with its
Senior Credit Facilities, the Company's outstanding LIBO Rate Loans will convert
to Base Rate Loans as they mature.
On May 27, 1998, an affiliate of Kohlberg Kravis Roberts & Co. L.P.
("KKR) and an affiliate of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse")
merged with and into the Company (the "Regal Merger"), with the Company
continuing as the surviving corporation. The consummation of the Regal Merger
resulted in a recapitalization ("Recapitalization") of the Company. In the
Recapitalization, the Company's existing holders of common stock received cash
for their shares of common stock, and KKR, Hicks Muse, DLJ Merchant Banking
Partners II, L.P. ("DLJ") and certain members of the Company's management
acquired the Company. In addition, in connection with the Recapitalization, the
Company canceled options and repurchased warrants held by certain directors,
management and employees of the Company (the
<PAGE> 16
"Option/Warrant Redemption"). The aggregate purchase price paid to effect the
Regal Merger and the Option/Warrant Redemption was approximately $1.2 billion.
The Regal Merger was financed by an offering of $400.0 million
aggregate principal amount of 9 1/2 % Senior Subordinated Notes due 2008 (the
"Original Notes"), initial borrowings of $375.0 million under the Company's
current senior credit facility (as amended, the "Senior Credit Facilities") and
$776.9 million in proceeds from the investment of KKR, Hicks Muse, DLJ and
management in the Company (the "Equity Investment"). In connection with the
Recapitalization, the Company made an offer to purchase (the "Tender Offer") all
$125.0 million aggregate principal amount of the previously outstanding 8 1/2 %
Senior Subordinated Notes due October 1, 2007, (the "Old Regal Notes"). In
conjunction with the Tender Offer, the Company also solicited consents to
eliminate substantially all of the covenants contained in the indenture relating
to the Old Regal Notes. The purchase price paid by the Company for the Old Regal
Notes was approximately $139.5 million, including a premium of approximately
$14.5 million.
The proceeds of the Original Note Offering, the initial borrowing under
the Company's Senior Credit Facilities and the Equity Investment were used: (i)
to fund the cash payments required to effect the Regal Merger and the
Option/Warrant Redemption; (ii) to repay and retire the Company's then existing
senior credit facilities; (iii) to repurchase the Old Regal Notes; and (iv) to
pay related fees and expenses.
On August 26, 1998, the Company acquired Act III Theatres, Inc. ("Act
III"). In the Act III merger, Act III became a wholly owned subsidiary of the
Company and each share of Act III's outstanding common stock was converted into
a right to receive one share of the Company's common stock. In connection with
the Act III merger, the Company amended its Senior Credit Facilities and
borrowed $383.3 million thereunder to repay Act III's then existing bank
borrowings and two senior subordinated promissory notes, each in the principal
aggregate amount of $75.0, which were owned by KKR and Hicks Muse.
On November 10, 1998, the Company issued $200.0 million aggregate
principal amount of 8 7/8% Senior Subordinate Notes due 2008 (the "Tack-On
Note") under the same indenture governing the Original Notes. The proceeds of
the Tack-On Note were used to repay and retire portions of the Senior Credit
Facilities.
On December 16, 1998, the Company issued an additional $200.0 million
aggregate principal amount of 9 1/2 % Senior Subordinated Debentures due 2010
(the "Regal Debentures"). The proceeds of the offering of the Regal Debentures
were used to repay all of the then outstanding indebtedness under the Revolving
Credit Facility and the excess was used for working capital purposes.
In April of 2000, the Company obtained $20.0 million of equipment
financing. The Company used the proceeds to repay the Revolving Credit Facility.
In addition, the Company closed $45.2 million of sale-leaseback financing during
its second and third quarters of 2000.
Interest payments on the Regal Notes and the Regal Debentures and
interest payments and amortization with respect to the Senior Credit Facilities
represent significant liquidity requirements for the Company. The Company had
interest expense of approximately $47.2 million for the three-month period ended
September 28, 2000. Due to the Company's non-compliance with its Senior Credit
Facilities, the lenders under the Senior Credit Facilities have the right under
the indenture governing the Regal Notes and Regal Debentures to prevent the
Company from making any and all payments under the Regal Notes and Regal
Debentures. Accordingly, no assurance can be made as to whether the Company
will be able to pay interest on the Regal Notes and Regal Debentures when such
interest payments are due.
As of September 28, 2000, the Company's new build program consists of
17 new theatres with 252 screens for the 2000 fiscal year. As of September 28,
2000, the Company has opened 15 theatres with 228 screens. The balance of the
2000 program is expected to be completed by the end of the Company's fourth
quarter and will be funded with available cash. The 2001 capital program
consists of 3 new theatres with 44 screens. However, absent additional sources
of capital
<PAGE> 17
the Company's current liquidity concerns severely impact our ability to execute
the 2001 capital program.
The Regal Notes, Regal Debentures and Senior Credit Facilities impose
certain restrictions on the Company's ability to make capital expenditures and
limit the Company's ability to incur additional indebtedness. Such restrictions
could limit the Company's ability to respond to market conditions, to provide
for unanticipated capital investments or to take advantage of business or
acquisition opportunities. The covenants contained in the Senior Credit
Facilities and/or the indentures governing the Regal Notes and the Regal
Debentures also, among other things, limit the ability of the Company to dispose
of assets, repay indebtedness or amend other debt instruments, pay
distributions, enter into sale and leaseback transactions, make loans or
advances and make acquisitions. Currently, under the terms of the indentures
governing the Regal Notes and Regal Debentures, the Company is prohibited from
incurring additional indebtedness (as defined in such indentures).
The Company currently is in technical default of certain financial
covenants contained in the Senior Credit Facilities and Equipment Financing (as
discussed in Note 2 of the Notes to Condensed Consolidated Financial
Statements). The Company reclassified all debt outstanding under the Credit
Facilities and Equipment Financing from long-term debt to current debt on the
Company's financial statements because of the covenant non-compliance. See Note
2 of the Notes to Condensed Consolidated Financial Statements.
As of September 28, 2000, the Company has adequate liquidity to fund
all of its outstanding obligations through the remainder of the 2000 fiscal year
from its available cash, excluding the long-term debt callable under covenant
provisions. However, absent additional sources of capital the Company's current
liquidity constraints severely impact the Company's ability to fund existing
liabilities over the next 12 month period.
OTHER
The film exhibition industry continues to face severe financial
challenges due primarily to the rapid building of state of the art theatre
complexes which resulted in an unanticipated oversupply of screens. The
aggressive new build strategies generated significant competition in once stable
markets and rendered many older theatres obsolete more rapidly than anticipated.
This effect, together with the fact that many of these now obsolete theatres are
leased under long-term commitments, produced an oversupply of screens throughout
the exhibition industry at a rate much quicker than the industry could
effectively handle. The industry overcapacity coupled with declines in national
box office attendance has negatively impacted the operating results of the
Company and many of its competitors. Domestic attendance levels have not
increased on a level with the unprecedented growth in domestic screens. Box
office and concession revenues have increased due to increased prices; however,
higher occupancy costs due to higher average number of screens per location have
partially offset the beneficial effect of the higher prices. In addition, film
costs to movie studios have increased due to shorter run times caused by the
oversupply of screens compared to the flat level of released films. The
cannibalization of older theatres, combined with the under-performance of many
new theatres have put pressure on industry-wide operating results, operating
margins, and certain covenant requirements under bank facilities. The exhibition
industry continues to report severe liquidity concerns, defaults under credit
facilities, renegotiations of financial covenants, as well as several recently
announced bankruptcy filings.
These industry dynamics have severely effected the Company, which
continues to experience deteriorating operating results. Additionally, because
the Company funded expansion efforts over the past several years primarily from
borrowings under its credit facilities, the Company's leverage has grown
significantly over this time. Consequently, the Company is currently in default
of certain financial covenants contained in its senior credit facilities and its
equipment financing term note. Accordingly, each of these lenders has the right
to accelerate the maturity of all of its outstanding indebtedness, which
together totals approximately $1.02 billion. The Company does not have the
ability to fund the accelerated maturity of this indebtedness.
<PAGE> 18
The Company has engaged financial advisers and is currently evaluating
a longer-term financial plan to address various restructuring alternatives and
liquidity requirements. The potential financial plan will provide for the
closure of under-performing theatre sites, potential sales of non-strategic
assets and a potential restructuring, recapitalization or a bankruptcy
reorganization of the Company. In light of the Company's current financial
condition, doubt exists about the Company's ability to continue operating under
its existing capital structure.
The Company anticipates it will incur significant legal and
professional fees and other restructuring costs due to the ongoing restructuring
of its business operations throughout the remainder of 2000 and during 2001.
INFLATION; ECONOMIC DOWNTURN
The Company does not believe that inflation has had a material impact
on its financial position or results of operations. In times of recession,
attendance levels experienced by motion picture exhibitors may be adversely
affected. For example, revenues declined for the industry in 1990 and 1991.
NEW ACCOUNTING PRONOUNCEMENTS
Emerging Issues Task Force (EITF) Issue No. 97-10, The Effect of Lessee
Involvement in Asset Construction, is applicable to entities involved on behalf
of an owner-lessor with the construction of an asset that will be leased to the
lessee when construction of the asset is completed. The consensus reached in
Issue No. 97-10 applies to construction projects committed to after May 21, 1998
and to those projects that were committed to on May 21, 1998 if construction did
not commence by December 31, 1999. Issue 97-10 has required the Company to be
considered the owner (for accounting purposes) of these types of projects during
the construction period as well as when construction of the asset is completed.
Subsequent to the issuance of Issue 97-10, the Company did not amend the leasing
arrangements which were historically recorded as off-balance sheet operating
leases as such amendments would have changed the economics of the lease
agreements. Management believes a change in the economics of the lease would
have been unfavorable to the Company. Therefore, the Company is required to
record such leases as lease financing arrangements (capital leases). The
application of the provisions of EITF Issue No. 97-10 did not result in the
recording of any leases or capital leases in 1998 but did result in the
recording of approximately $74.7 million of such leases as capital leases in
1999 and $83.0 million of such leases as capital leases during 2000. The
application of the provisions of EITF Issue No. 97-10 has resulted in payments
of $11.5 million that would have been shown as rent expense absent this
pronouncement.
RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. The Company does not anticipate that the adoption of this
Statement will have a significant effect on its results of operations or
financial position. The Company will adopt this Statement during the first
quarter of fiscal 2001.
SEC Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements", released in December 1999 provides guidance for applying
generally accepted accounting principles to selected revenue recognition issues.
The implementation of SAB No. 101 is required no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999. The Company does not
expect the application of SAB No. 101 to have a material impact on the Company's
financial statements.
<PAGE> 19
SEASONALITY
The Company's revenues are usually seasonal, coinciding with the timing
of releases of motion pictures by the major distributors. Generally, the most
marketable motion pictures are 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 movie releases can
have a significant effect on the Company's results of operations, and the
results of one quarter are not necessarily indicative of results for the next
quarter. 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.
RISK FACTORS
This Form 10-Q includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-Q, including, without
limitation, certain statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" may constitute forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in the risk factors (the "Cautionary Statements") as described in the
Company's Annual Report on Form 10-K filed March 29, 2000. All forward-looking
statements are qualified in their entirety by the Cautionary Statements.
In addition to the Cautionary Statements, the reader should refer to
the Company's Annual Report on Form 10-K ("Form 10-K"), filed March 29, 2000 for
additional guidance relating to the Company's risk factors. As noted in the
Company's Form 10-K, the Company has substantial indebtedness, lease commitments
and leverage.
<PAGE> 20
ITEM 3.
QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
During the third quarter, the Company monetized interest rate swap agreements
that had effectively converted $250.0 million of LIBOR floating rate debt to
fixed rate obligations with an interest rates of 5.32%. At September 28, 2000,
Regal maintained an interest rate swap agreement that converts $20.0 million of
LIBOR floating rate debt to a fixed rate obligation with an interest rate of
7.32% maturing in March 2003. Regal continually monitors its position and credit
rating of the interest swap counterparty. The fair value of the remaining
interest rate swap agreement is estimated based on quotes from dealers of these
instruments and represent the estimated amount the Company would expect to (pay)
or receive to terminate the agreement. The fair value of the Company's interest
rate swap agreement at September 28, 2000 was $(0.2) million.
<PAGE> 21
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
(27) Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
During the third quarter of fiscal 2000 ended September 28, 2000, the
Registrant filed no Current Reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGAL CINEMAS, INC.
Date: November 13, 2000 By: /s/ Michael L. Campbell
Michael L. Campbell, Chairman, President and
Chief Executive Officer
By: /s/ Amy Miles
Executive Vice President and
Chief Financial Officer
Exhibit Index
Item Description
---- -----------
(27) Financial Data Schedule (for SEC use only).
