S&P Raises Outlook On Carmike Cinemas To Stable

CHICAGO (AP) — Standard & Poor's Ratings Services on Monday raised its outlook on Carmike Cinemas Inc., citing the movie theater chain's recent box office receipts and debt reduction.

S&P affirmed its ratings on the Columbus, Ga.-based company, including the "B-" corporate credit rating, a non-investment grade, or "junk" rating.

The outlook revision reflects Carmike's improved cushion for meeting its obligations under its outstanding debt, S&P credit analyst Jeanne Mathewson said. "We believe that the company's cushion of compliance could increase further if strong box office and operating performance continue," the analyst wrote.

The corporate credit rating takes into account the company's high leverage, its less-modern theaters compared to peers and the nature of the U.S. movie screening industry. "The rating also reflects the company's exposure to the fluctuating popularity of Hollywood films and regions of operation with narrower film preferences," Mathewson wrote. S&P is concerned about the growth of entertainment alternatives that pressure movie attendance. "Carmike's good competitive positions in many of its smaller markets do not offset these negative risk factors."

Carmike operates 250 theaters and nearly 2,300 screens in 36 states, with a focus on small and mid-sized communities.

In afternoon trading, Carmike shares fell 45 cents, or 5.1 percent, to $8.41 amid a broad market decline. The stock has changed hands between $1 and $9.99 in the past 52 weeks.