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Carmike Cinemas Inc. Reports Operating Results (10-Q)

November 01, 2010 | About:
10qk

10qk

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Carmike Cinemas Inc. (CKEC) filed Quarterly Report for the period ended 2010-09-30.

Carmike Cinemas Inc. has a market cap of $103.6 million; its shares were traded at around $8.01 with a P/E ratio of 804.8 and P/S ratio of 0.2. CKEC is in the portfolios of Jim Simons of Renaissance Technologies LLC, Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

Total revenue decreased approximately 0.1% to $376.4 million for the nine months ended September 30, 2010 compared to $376.9 million for the nine months ended September 30, 2009, due to a decrease in total attendance from 39.2 million for the 2009 period to 36.8 million for the 2010 period, partially offset by an increase in average admissions per patron from $6.45 for the 2009 period to $6.78 for the 2010 period and an increase in average concessions and other sales per patron from $3.20 for the 2009 period to $3.44 for the 2010 period.

Operating Income (loss). Operating income for the three months ended September 30, 2010 was $6.8 million as compared to operating loss of $12.9 million for the three months ended September 30, 2009. This fluctuation is primarily a result of an impairment charge of $17.2 million in the third quarter of 2009 and the factors described above. Operating income for the nine months ended September 30, 2010 increased to $18.6 million as compared to $4.1 million for the nine months ended September 30, 2009. As a percentage of revenues, operating income for the nine months ended September 30, 2010 was 4.9% as compared to 1.1% for the nine months ended September 30, 2009. These fluctuations are primarily a result of the impairment and separation agreement charges incurred in 2009 and the other factors described above.

Interest expense, net. Interest expense, net for the three months ended September 30, 2010 increased 15.8% to $8.8 million from $7.6 million for the three months ended September 30, 2009. The increase was primarily related to a combination of an increase in interest rates partially offset by a decrease in the average debt outstanding. Interest income, included in interest expense, net, was $59,000 for the three months ended September 30, 2010 as compared to $28,000 for the same period in 2009. Interest expense, net for the nine months ended September 30, 2010 increased 8.3% from $25.3 million for the nine months ended September 20, 2009 to $27.5 million. Interest costs in 2010 were also negatively impacted by interest costs of approximately $0.7million associated with underpayment of sales and use taxes related to prior years.

The accompanying condensed consolidated statements of operations separately show the results from discontinued operations through the respective dates of the theatre closings. Assets and liabilities associated with the discontinued operations have not been segregated from assets and liabilities from continuing operations as they are not material. We recorded a loss from discontinued operations, net of tax benefit, for the three months ended September 30, 2010 of $61,000 and income from discontinued operations, net of tax benefit, for the nine months ended September 30, 2010 of $50,000. For the three and nine months ended September 30, 2009 we recorded a loss of $146,000 and $620,000, respectively. The results from discontinued operations include a gain of zero and $284,000 for the three and nine months ended September 30, 2010, respectively, on disposal of assets, net of taxes, and a loss on disposal of assets of $106,000 for the three and nine months ended September 30, 2009.

At September 30, 2010, we had available borrowing capacity of $30 million under our revolving credit facility and approximately $4.5 million in cash and cash equivalents on hand as compared to $25.7 million in cash and cash equivalents at December 31, 2009. On January 27, 2010, we terminated our prior $50.0 million revolving credit facility and entered into our existing $30.0 million three year revolving credit facility. The material terms of our new revolving credit facility (including limitations on our ability to freely use all the available borrowing capacity) are described below in Credit Agreement and Covenant Compliance.

Net cash provided by operating activities was $11.9 million for the nine months ended September 30, 2010 compared to net cash provided by operating activities of $24.6 million for the nine months ended September 30, 2009. This decrease in our cash provided by operating activities was due primarily to a reduction in accounts payable and accrued expenses as compared to the prior period. Net cash used in investing activities was $6.7 million for the nine months ended September 30, 2010 compared to $7.1 million for the nine months ended September 30, 2009. The decrease in our net cash used in investing activities is primarily due to an increase in cash used for the purchases of property and equipment and a decrease in proceeds from sales of property and equipment. Capital expenditures were $10.9 million for the nine months ended September 30, 2010 and $10.2 million for the nine months ended September 30, 2009 primarily due to additional 3-D rollouts, Big D renovations, and theatre renovations. Net cash used in financing activities was $26.5 million for the nine months ended September 30, 2010 compared to $18.3 million for the nine months ended September 30, 2009. The increase in our net cash used in financing activities is primarily due to $25.0 million of unscheduled prepayments of long-term debt in the first nine months of 2010 as compared to $5.0 million of unscheduled prepayments of long-term debt in the first nine months of 2009 and the incurrence of $9.0 million of debt issuance costs in the first nine months of 2010.

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