Carmike Cinemas, Inc. (NASDAQ: CKEC), a leading entertainment, digital cinema and 3D motion picture exhibitor, today reported results for the three months ended June 30, 2010, as summarized below.
"The second quarter was marred by an industry-wide box office decline. While we take no pleasure in experiencing year over year box office declines, we are encouraged that Carmike's per screen attendance and admissions fared at or better than industry averages. We are pleased to report year over year increases in average admissions and concessions per patron. Consumer preference for 3D was strong, representing over 26% of Carmike's total Box Office for the quarter," stated Carmike Cinemas President and Chief Executive Officer David Passman.
"I'm also very pleased to announce the successful debut of Carmike's first large format auditorium, the BigD, with the July opening of Salt, starring Angelina Jolie," he said. "Patrons chose the BigD experience by a multiple of several times over the same movie in other auditoriums. The large format concept includes premium pricing, bigger screens, bigger, more luxurious seating and upgraded surround sound. We are targeting as many as two dozen BigD locations by 2011 year-end and are excited to bring this Ultimate Entertainment Experience to our theatres and loyal cinema-goers across the country."
"For the past several quarters we have been describing our goal to improve Carmike's performance relative to the industry. Patrons are responding well to the strategy of cleaner and friendlier theatres and more creative pricing and packaging of concessions, as evidenced by attendance per screen and spending per patron relative to industry metrics," added Mr. Passman.
In the aggregate, Carmike's patrons spent an average of $10.36 per visit during the second quarter, up 6.5 percent compared to the same period in 2009. Average admissions increased 6.0 percent to $6.89, with 3-D premiums driving the year-over-year rise. For the second consecutive quarterly period, concessions and other revenue per patron also rose, increasing 7.4 percent to $3.47.
Carmike Chief Financial Officer Richard B. Hare stated, "On the expense side, film exhibition costs declined 80 basis points to 56.8 percent of admissions revenues, versus 57.6 percent in the year-ago period. General and administrative expenses rose to $4.5 million due to increases in salaries and wages, incentive compensation and legal and professional fees. Carmike's other theatre operating costs for the quarter were negatively impacted by a $1 million charge as the result of a sales and use tax assessment primarily for the 2005 and 2006 tax years. Carmike's second quarter results also include a $3.2 million impairment charge related to operating performance of 12 theatres."
Mr. Hare continued, "Quarterly interest expense rose nine percent to $9.8 million due to an increase in interest rates, as well as the recording of interest costs associated with the aforementioned sales and use tax assessment. During the second quarter of 2010, we voluntarily pre-paid another $5 million in bank debt leaving our June 30 bank debt balance at $241.4 million. We have made prepayments totaling $20 million for the first half of 2010."
Mr. Passman commented, "The third quarter has gotten off to a better start industry wide, and we remain optimistic about the second half of the year.
"We have expanded our 3-D screen footprint to nearly 550, representing over 25% of our first run screens and expect to have a total of 600 by the end of September, which should accommodate customer demand and studio release schedules, which seem to be steadily growing with upcoming titles," he concluded.