Carmike Cinemas Reports 2016 Third Quarter Revenue Of $209.7 Million

Carmike Cinemas, Inc. (NASDAQ: CKEC) ("Carmike"), a leading entertainment, digital cinema, alternative content and 3-D motion picture exhibitor, today reported results for the three and nine-month periods ended September 30, 2016, as summarized below.
       
SUMMARY FINANCIAL DATA

(unaudited)
 
Three Months Ended

September 30
Nine Months Ended

September 30
(in millions) 2016   2015 2016   2015
Total revenue $ 209.7   $ 180.2 $ 620.6   $ 583.7
Operating income 8.0 2.8 32.5 41.7
Interest expense 12.4 12.3 37.1 37.6
Theatre level cash flow (1) 38.2 25.6 119.1 108.1
Net loss (1.4) (6.3) (0.8) (7.3)
Adjusted net income (loss) (1) 4.1 (4.6) 11.9 7.3
Adjusted EBITDA (1) 32.7 20.1 100.0 90.7
 
 
(in millions) Sept. 30, 2016 Dec. 31, 2015
Total debt (1) $ 462.4 $ 454.7
Net debt (1) $ 367.1 $ 352.2
 

(1)
 

Theatre level cash flow, adjusted net income (loss), adjusted EBITDA, total debt and net debt is supplemental non-GAAP financial measures. The most comparable GAAP measures are net loss and long-term debt. Reconciliations of theatre level cash flow and adjusted EBITDA to net loss and adjusted net income(loss) to net loss for the three and nine months ended September 30, 2016 and 2015, as well as a schedule of total debt and net debt as of September 30, 2016 and December 31, 2015, are included in the supplementary tables accompanying this news announcement.
 

"Carmike's third quarter operating revenue growth reflects the ongoing success of our theatre-level initiatives and strategies from both theatre acquisitions and organic growth, combined with the support of a favorable U.S. box office environment. While average ticket prices increased modestly versus the prior year period, third quarter 2016 attendance growth of 13% generated a 16% rise in operating revenues, as well as a 187% increase in operating income, resulting in adjusted EBITDA and theatre level cash flow growth of approximately 63% and 49%, respectively," stated David Passman, Carmike Cinemas' President and Chief Executive Officer.

"The continued progress of our food and beverage initiatives is reflected by the 7% increase in concessions and other spending per patron to a record third quarter level of $4.85, marking 27 consecutive reporting periods of year-over-year concessions and other per patron spending growth while maintaining healthy margins. Our team has long-term success in driving innovation at the concessions counter and our enhanced food and beverage offerings and unique dining concepts continue to generate positive results and growth for Carmike in this high-margin revenue category.

"In summary, Carmike's circuit of high quality theatres, Company-wide emphasis on providing best-in-class entertainment experiences to our guests and focus in maximizing high-margin concessions revenue opportunities remain important factors in our ability to deliver positive operating results over the long-term. We are extremely pleased with our third quarter financial results and are optimistic about our prospects for the remainder of 2016," concluded Mr. Passman.
       
THEATRE PERFORMANCE STATISTICS

(unaudited)
 
Three Months

Ended September 30
Nine Months

Ended September 30
2016   2015 2016   2015
Average theatres 272 269 274 271
Average screens 2,928 2,875 2,940 2,885
Average attendance per screen 5,898 5,320 16,624 16,859
Average admission per patron $ 7.30 $ 7.23 $ 7.59 $ 7.36
Average concessions/other sales per patron $ 4.85 $ 4.55 $ 5.11 $ 4.68
Total attendance (in thousands) 17,269 15,294 48,874 48,475
Total operating revenues (in thousands) $ 209,730 $ 180,241 $ 620,592 $ 583,674
     

Carmike Cinemas' Chief Financial Officer Richard B. Hare stated, "A favorable year-over-year industry box office comparison led to an approximate 10.9% increase in attendance per screen, resulting in a 13.9% increase in admissions revenue and a 20.3% increase in concessions and other revenue. Average admissions per patron increased 1.0% to $7.30, while guests spent an average of $12.15 per visit in the quarter, a 3.1% increase in combined per patron spending, compared to the prior year period.

"Carmike's 2016 third quarter film exhibition costs as a percentage of admissions revenues were 55.3%, compared to 55.5% in the third quarter of 2015. Concession costs as a percentage of concessions and other revenue decreased from 12.8% in Q3 2015 to 12.2% in Q3 2016, while salaries and benefits increased 5.3% to $27.1 million, theatre occupancy costs increased 10.9% to $26.6 million, and other theatre operating costs increased 9.5% to $37.9 million. The year-over-year rise in these three expense categories were primarily a result of Carmike's expanded circuit on the back of acquisitions and new theatre openings, as well as an increase in theatre-level staffing levels related to higher attendance. General and administrative expenses were $13.0 million for the third quarter of 2016, including $0.7 million of non-cash share-based compensation expense and $6.8 million of M&A related costs. Quarterly interest expense remained relatively flat at $12.4 million in Q3 2016. A net loss for the quarter of $1.4 million compares favorably to a net loss of $6.3 million in the prior year period. Adjusted EBITDA 1 increased 62.9% to $32.7 million, and theatre level cash flow 1 increased 49.3% to $38.2 million, as a result of attendance increases and the year-over-year rise in top-line revenue.

"Looking at our balance sheet, we continue to operate our business on solid financial footing with a healthy balance sheet that includes cash and cash equivalents totaling $95.4 million at September 30, 2016. Total debt as of September 30, 2016 was $462.4 million, compared with $454.7 million at December 31, 2015. Net debt 1 for the quarter was $367.1 million, compared with $352.2 million at December 31, 2015, reflecting a net leverage ratio of net debt to EBITDA 1 of approximately 2.5 times," concluded Mr. Hare.

As previously announced, in light of the proposed transaction with AMC Entertainment Holdings, Inc., Carmike will not hold a conference call or webcast to review its results for the third quarter of 2016. Management commentary discussing results for the third quarter of 2016 will be filed as an exhibit to our quarterly filing on Form 10-Q.

1. Non-GAAP financial measure. See reconciliation of non-GAAP financial measures.

About Carmike Cinemas ( www.carmike.com )

Carmike Cinemas, Inc. is a U.S. leader in digital cinema, 3-D cinema deployments and alternative programming and is one of the nation's largest motion picture exhibitors. Carmike has 271 theatres with 2,923 screens in 41 states. The circuit includes 56 premium large format (PLF) auditoriums featuring state-of-the-art technology and luxurious seating, including 33 "BigDs," 21 IMAX auditoriums and two MuviXL screens. As "America's Hometown Theatre Chain" Carmike's primary focus is mid-sized communities. Visit www.carmike.com for more information.

Important Additional Information Regarding the Merger Will Be Filed With The SEC

This press release may be deemed to be solicitation material in respect of the proposed merger (the "Merger") of Carmike with and into a wholly-owned subsidiary of AMC Entertainment Holdings, Inc. ("AMC"). In connection with the Merger, a Registration Statement on Form S-4 (the "Registration Statement") has been filed with the U.S. Securities and Exchange Commission (the "SEC") containing a prospectus with respect to the AMC Class A common stock to be issued in the Merger and a proxy statement of Carmike in connection with the reconvened special meeting of Carmike stockholders (the "Proxy Statement/Prospectus"). The proxy statement of Carmike contained in the Proxy Statement/Prospectus replaces the definitive proxy statement which Carmike previously filed with the SEC on May 23, 2016 and mailed to its stockholders on or about May 25, 2016. Each of AMC and Carmike intends to file other documents with the SEC regarding the Merger. The definitive Proxy Statement/Prospectus was mailed to stockholders of Carmike on or about October 13, 2016 and contains important information about the Merger and related matters.

BEFORE MAKING ANY INVESTMENT OR VOTING DECISION, CARMIKE'S STOCKHOLDERS ARE URGED TO READ CAREFULLY THE DEFINITIVE PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT AMC OR CARMIKE HAS FILED OR MAY FILE WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER, OR WHICH ARE INCORPORATED BY REFERENCE IN THE DEFINITIVE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.

Carmike's stockholders may obtain, free of charge, copies of the definitive Proxy Statement/Prospectus and Registration Statement and other relevant documents filed by AMC and Carmike with the SEC, at the SEC's website at www.sec.gov. In addition, Carmike's stockholders may obtain free copies of the Proxy Statement/Prospectus and other relevant documents filed by Carmike with the SEC from Carmike's website at http://www.carmikeinvestors.com.

This press release does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This press release is not a substitute for any prospectus, proxy statement or any other document that AMC or Carmike may file with the SEC in connection with the Merger.

Participants in the Solicitation

This press release does not constitute a solicitation of a proxy from any stockholder with respect to the Merger. However, each of AMC, Carmike and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Carmike's stockholders with respect to the Merger. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the Merger, by security holdings or otherwise, is set forth in the Proxy Statement/Prospectus. Additional information concerning AMC's directors and executive officers is set forth in the definitive proxy statement filed by AMC with the SEC on March 15, 2016 and in the Annual Report on Form 10-K filed by AMC with the SEC on March 8, 2016. These documents are available to Carmike stockholders free of charge from the SEC's website at www.sec.gov and from the investor relations section of AMC's website at amctheatres.com. Additional information concerning Carmike's directors and executive officers and their ownership of Carmike common stock is set forth in the proxy statement for Carmike's most recent annual meeting of stockholders, which was filed with the SEC on April 15, 2016 and in the Annual Report on Form 10-K filed by Carmike with the SEC on February 29, 2016. These documents are available to Carmike stockholders free of charge from the SEC's website at www.sec.gov and from Carmike's website at http://www.carmikeinvestors.com.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about Carmike's beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words, "believes," "expects," "anticipates," "plans," "estimates," "seeks" or similar expressions. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on beliefs and assumptions of Carmike's management, which in turn are based on currently available information. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond Carmike's ability to control or predict. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include, but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the amended and restated merger agreement; the inability to complete the Merger due to the failure to obtain Carmike stockholder or regulatory approval for the Merger or the failure to satisfy other conditions of the Merger within the proposed timeframe or at all; disruption in key business activities or any impact on Carmike's relationships with third parties as a result of the announcement of the Merger; the failure to obtain the necessary financing arrangements as set forth in the debt commitment letters delivered pursuant to the amended and restated merger agreement, or the failure of the Merger to close for any other reason; risks related to disruption of management's attention from Carmike's ongoing business operations due to the Merger; the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against Carmike and others relating to the amended and restated merger agreement; the risk that the pendency of the Merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the pendency of the Merger; the amount of the costs, fees, expenses and charges related to the Merger; adverse regulatory decisions; unanticipated changes in the markets for Carmike's business segments; general economic conditions in Carmike's regional and national markets; Carmike's ability to comply with covenants contained in the agreements governing Carmike's indebtedness; Carmike's ability to operate at expected levels of cash flow; financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital; Carmike's ability to meet its contractual obligations, including all outstanding financing commitments; the availability of suitable motion pictures for exhibition in Carmike's markets; competition in Carmike's markets; competition with other forms of entertainment; the effect of Carmike's leverage on its financial condition; prices and availability of operating supplies; the impact of continued cost control procedures on operating results; the impact of asset impairments; the impact of terrorist acts; changes in tax laws, regulations and rates; and financial, legal, tax, regulatory, legislative or accounting changes or actions that may affect the overall performance of Carmike's business.

Consider these factors carefully in evaluating the forward-looking statements. Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in Carmike's reports filed with the SEC, including Forms 10-K, Forms 10-Q and 8-K. Readers are cautioned not to place undue reliance on the forward-looking statements included in this press release, which speak only as of the date hereof. Carmike does not undertake to update any of these statements in light of new information or future events, except as required by applicable law.

     
CARMIKE CINEMAS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
Three Months

Ended September 30,
Nine Months

Ended September 30,
2016   2015 2016   2015
Revenues: (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Admissions $ 125,988 $ 110,633 $ 370,844 $ 356,975
Concessions and other 83,742     69,608   249,748     226,699  
Total operating revenues 209,730 180,241 620,592 583,674
Operating costs and expenses:
Film exhibition costs 69,731 61,376 208,354 202,348
Concession costs 10,209 8,938 29,714 26,688
Salaries and benefits 27,075 25,722 77,802 75,505
Theatre occupancy costs 26,627 24,019 79,381 71,353
Other theatre operating costs 37,914 34,620 106,201 99,730
General and administrative expenses 12,979 6,963 36,722 25,201
Depreciation and amortization 15,126 14,455 45,594 41,289
Loss (gain) on disposal of property and equipment 1,613 (41 ) 1,673 (3,365 )
Impairment of long-lived assets 409     1,388   2,669     3,258  
Total operating costs and expenses 201,683     177,440   588,110     542,007  
Operating income 8,047 2,801 32,482 41,667
Interest expense 12,363 12,309 37,131 37,617
Loss on extinguishment of debt -     -   -     17,550  
Loss before income tax and income from unconsolidated affiliates (4,316 ) (9,508 ) (4,649 ) (13,500 )
Income tax benefit (1,054 ) (2,212 ) (500 ) (3,226 )
Income from unconsolidated affiliates 1,843     1,039   3,358     2,963  
Net loss $

(1,419

)
  $

(6,257

)
$

(791

)
      $

(7,311

)
Weighted average shares outstanding:
Basic 24,600 24,510 24,578 24,394
Diluted 24,600 24,510 24,578 24,394
             
Net loss per common share (Basic and Diluted): $

(0.06

)
  $

(0.26

)
$

(0.03

)
  $  

(0.30

)
         
 
CARMIKE CINEMAS, INC. and SUBSIDIARIES
SUPPLEMENTARY NON-GAAP RECONCILIATIONS
THEATRE LEVEL CASH FLOW AND ADJUSTED EBITDA (Unaudited)
($ in thousands)
 

 
  Three Months Ended September 30,   Nine Months Ended September 30,
2016     2015     2016     2015  
Net loss $

(1,419

)
  $

(6,257

)
$

(791

)
  $

(7,311

)
Income tax benefit (1,054 ) (2,212 ) (500 ) (3,226 )
Interest expense 12,363 12,309 37,131 37,617
Depreciation and amortization 15,126     14,455     45,594     41,289  
EBITDA $ 25,016 $ 18,295 $ 81,434 $ 68,369
Income from unconsolidated affiliates (1,843 ) (1,039 ) (3,358 ) (2,963 )
Loss on extinguishment of debt 17,550
Loss (gain) on disposal of property and equipment 1,613 (41 ) 1,673 (3,365 )
Impairment of long-lived assets 409 1,388 2,669 3,258
Merger and acquisition-related expenses 6,845 296 14,453 2,749
Share-based compensation expense 704     1,199     3,105     5,057  
Adjusted EBITDA $ 32,744     $ 20,098     $ 99,976     $ 90,655  
General and administrative expenses 5,430     5,468     19,164     17,395  
Theatre level cash flow $ 38,174     $ 25,566     $ 119,140     $ 108,050  
   
TOTAL DEBT AND NET DEBT (Unaudited)
($ in thousands)
 
September 30, December 31,
2016   2015
Current maturities of capital leases and long-term financing obligations $ 13,273 $ 9,978
Long-term debt 224,066 223,406
Capital leases and long-term financing obligations, less current maturities 225,095     221,315  
Total debt $ 462,434 $ 454,699
Less cash and cash equivalents (95,368 )   (102,511 )
Net debt $ 367,066     $ 352,188  
 
   
ADJUSTED NET INCOME (LOSS) (Unaudited)
($ in thousands)
 
Three Months

Ended September 30,
Nine Months

Ended September 30,
2016     2015     2016     2015  
Net loss $

(1,419

)
  $

(6,257

)
$ (791 )   $

(7,311

)
Impairment of long-lived assets 409 1,388 2,669 3,258
Loss on extinguishment of debt - - - 17,550
Loss (gain) on disposal of property and equipment 1,613 (41 ) 1,673 (3,365 )
Merger and acquisition-related expenses 6,845 296 14,453 2,749
Share-based compensation expense 704 1,199 3,105 5,057
Tax effect of adjustments to net loss (4,020 )   (1,194 )   (9,198 )   (10,605 )
Adjusted net income (loss) $ 4,132     $

(4,609

)
  $ 11,911     $ 7,333  
Weighted average shares outstanding (basic) 24,600 24,510 24,578 24,394
Weighted average shares outstanding (diluted) 24,990 24,510 24,984 24,812
Adjusted net income (loss) per share (basic and diluted) $ 0.17 $

(0.19

)
$ 0.48 $ 0.30
 

(1) Adjustments to net loss for the three and nine months ended September 30, 2016 and 2015 are shown net of tax effect of 42.0%, which represents the estimated combined federal and state tax rates for each period.

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