Carmike Cinemas Reports Profitable 2010 Q3 Results Theatre Level Cash Flow and Adjusted EBITDA Increase over 12% Screenvision Transaction Completed

on November 01, 2010
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"We're pleased to report significant year-over-year cash flow and earnings improvements in the third quarter, particularly given our reduced screen count compared to the same period in 2009. Nearly 85% of the top line revenue growth was retained in Theatre Level Cash Flow, a clear indication that costs were held in check and incremental revenues improved our profitability. We averaged 40 less screens in the quarter compared to last year and believe our strategy of closing underperforming locations and focusing on the patron movie-going experience is working. During the third quarter, Carmike's box office receipts increased 2.7% on a per screen basis, compared to the prior year period. Despite a solid 3-D slate of movies during the quarter, the mix of 2-D product did not perform as well in our markets. Certain high-grossing movies such as "Inception" and "Salt" performed well in large metropolitan markets but significantly underperformed in small towns," stated Carmike Cinemas President and Chief Executive Officer David Passman.

"During the third quarter, approximately 23 percent of our box office revenues came from 3-D presentations and with ten titles in the fourth quarter and more than 30 anticipated next year we are working to meet the increasing demand. We installed over 40 additional 3-D screens, finishing the period with 591 3-D-compatible auditoriums. We will also be opening more of our proprietary BigD brand, large format 3-D auditoriums throughout the coming months."

In aggregate, Carmike's patrons spent an average of $9.97 per visit during the third quarter, up 3.5 percent compared to the year-ago period. Average admissions rose 2.3 percent to $6.61, with 3-D premiums driving the year-over-year rise. Concessions and other revenue per patron also rose for the third consecutive quarter, increasing 6.0 percent to $3.36 compared to the prior year period.

Carmike Chief Financial Officer Richard B. Hare stated, "On the expense side, film exhibition costs improved 70 basis points to 55.2 percent of admissions revenues as a result of reduced film rent costs and a decline in advertising expenses, versus 55.9 percent in the year-ago period. General and administrative expenses rose to $4.4 million, primarily as a result of increases in legal and professional fees associated with our previously announced Screenvison transaction. Carmike's other theatre operating costs rose slightly, year-over-year, due primarily to a rise in occupancy costs and utility expenses, which was partially offset by reduced repair and maintenance costs."

Mr. Hare continued, "Quarterly interest expense rose to $8.8 million, versus $7.6 million from the prior year period, due to an increase in interest rates, partially offset by a decrease in average debt outstanding as we voluntarily pre-paid an additional $5 million in bank debt during the third quarter. We have made $25 million in bank debt prepayments for the first nine months of 2010, reducing our balance to $238 million at quarter-end."

"Subsequent to quarter-end, we completed an important transaction in which we extended and expanded our relationship with cinema advertising leader Screenvision. In addition to our regular periodic screen advertising payments, we will receive a $30 million up-front payment in the first quarter of 2011 and hold an approximate 20% ownership interest in the growth of Screenvision. We are excited about the new growth path Screenvision is embarking upon and we look forward to participating in the future growth and profits of that organization as digital cinema continues its rapid expansion," concluded Mr. Passman.

 

 

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