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

November 02, 2009 | About:
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10qk

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Carmike Cinemas Inc. (CKEC) filed Quarterly Report for the period ended 2009-09-30.

Carmike Cinemas is one of the largest motion picture exhibitors in the United States. Carmike targets small to mid-size non-urban markets. Carmike Cinemas Inc. has a market cap of $126.62 million; its shares were traded at around $9.83 with a P/E ratio of 196.6 and P/S ratio of 0.27.

Highlight of Business Operations:

Total revenue increased approximately 0.1% to $122.4 million for the three months ended September 30, 2009 compared to $122.2 million for the three months ended September 30, 2008, due to an increase in average admissions per patron from $6.23 in the third quarter of 2008 to $6.46 for the third quarter of 2009, offset by a decrease in average concessions and other sales per patron from $3.22 for the third quarter of 2008 to $3.17 for the third quarter of 2009 and a decrease in total attendance from 13.0 million in the third quarter of 2008 to 12.7 million for the third quarter of 2009.

Impairment of long-lived assets. Impairment of long-lived assets for the three and nine months ended September 30, 2009 increased to $17.2 million compared to zero for the three and nine months ended September 30, 2008. The 2009 impairment charges relating to continuing operations were $17.2 million and impairment charges relating to discontinued operations were $260,000. The impairment charges primarily affect seven theatres with 85 screens and were primarily the result of (1) deterioration in full-year operating results due to competition entering the market, resulting in $16.2 million in impairment charges; (2) a decrease in the fair market value of 35 millimeter projectors, resulting in $762,000 in impairment charges; (3) excess seat and equipment inventory from our theatre closures, resulting in $197,000 in impairment charges; and (4) previously impaired theatres with negative cash flow, resulting in $82,000 in impairment charges.

Operating Income (loss). Operating loss for the three months ended September 30, 2009 was $12.9 million as compared to operating income of $10 million for the three months ended September 30, 2008. 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, 2009 decreased to $4.2 million as compared to $24.2 million for the nine months ended September 30, 2008. As a percentage of revenues, operating income for the nine months ended September 30, 2009 was 1.1% as compared to 6.8% for the nine months ended September 30, 2008. These fluctuations are primarily a result of the separation agreement charges, an impairment charge of $17.2 million in the third quarter of 2009 and the other factors described above.

Interest expense, net. Interest expense, net for the three months ended September 30, 2009 decreased to $7.6 million from $9.8 million for the three months ended September 30, 2008. The decrease is primarily related to a combination of lower average outstanding debt and a reduction in interest rates. Interest income, included in interest expense net, was $28,000 for the three months ended September 30, 2009 as compared to $78,000 for the same period in 2008. Interest expense, net for the nine months ended September 30, 2009 decreased to $25.3 million from $31.0 million for the nine months ended September 30, 2008. The decrease is primarily related to a combination of lower average outstanding debt and a reduction in interest rates.

The accompanying condensed consolidated statements of operations separately show the results of operations 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 for the three months ended September 30, 2009 of $156,000 as compared to a loss of $367,000 for the three months ended September 30, 2008. The results from discontinued operations include a loss of $106,000 on disposal of assets for the three months ended September 30, 2009 and do not include a gain or loss for the three months ended September 30, 2008. We recorded a loss from discontinued operations for the nine months ended September 30, 2009 of $639,000 as compared to a loss of $605,000 for the nine months ended September 30, 2008. The results from discontinued operations include a loss of $106,000 on disposal of assets for the nine months ended September 30, 2009 as compared to a gain of $490,000 for the nine months ended September 30, 2008.

Net cash provided by operating activities was $24.6 million for the nine months ended September 30, 2009 compared to $9.4 million for the nine months ended September 30, 2008. This increase in our cash provided by operating activities was due primarily to a reduction in accounts receivable and an increase in accounts payable and accrued expenses as compared to the prior period. Net cash used in investing activities was $7.1 million for the nine months ended September 30, 2009 compared to $2.1 million of net cash provided for the nine months ended September 30, 2008. The increase 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 and a decrease in proceeds from sales of investments. Capital expenditures were $10.2 million for the nine months ended September 30, 2009 and $7.0 million for the nine months ended September 30, 2008 primarily due to the opening of four new theatres in the first three quarters of 2009 as compared to no theatre openings in the first three quarters of 2008. Net cash used in financing activities was $18.3 million for the nine months ended September 30, 2009 compared to $25.6 million for the nine months ended September 30, 2008. The decrease in our net cash used in financing activities is primarily due to no dividends being paid in 2009 as compared to $6.7 million of dividends paid in the first three quarters of 2008.

Read the The complete ReportCKEC is in the portfolios of John Keeley of Keeley Fund Management.

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