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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 31, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
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Commission File Number 0-14993
CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1469127
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1301 First Avenue, Columbus, Georgia 31901
(Address of principal Executive Offices) (Zip Code)
(706) 576-3400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------------
Class A Common Stock, par value $.03 per share New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K
As of March 17, 1998, 9,926,087 shares of Class A Common Stock, par value $.03
per share, were outstanding and the aggregate market value of the shares of
the Class A Common Stock held by non-affiliates of the registrant was
approximately $310,000,000.00.
As of March 17, 1998, 1,420,700 shares of Class B Common Stock, par value $.03
per share, were outstanding, all of which shares are held by affiliates of the
registrant.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Specified portions of Carmike Cinemas, Inc.'s Annual Report to
Shareholders for the fiscal year ended December 31, 1997 are incorporated
by reference into Part II and Part IV.
(2) Specified portions of Carmike Cinemas, Inc.'s Proxy Statement relating to
the 1998 Annual Meeting of Shareholders are incorporated by reference
into Part III.
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PART I
Item 1. Business
(a) General Development of Business
Carmike Cinemas, Inc. (herein referred to as the "Company" or "Carmike"), a
corporation organized under the laws of the State of Delaware, is engaged in
the motion picture exhibition business. The Company was incorporated in April
1982 in connection with the leveraged buy-out of the Company's predecessor, the
Martin Theatres circuit, by present management of the Company. The principal
executive offices of the Company are located at 1301 First Avenue, Columbus,
Georgia 31901-2109, and its telephone number at that location is (706)
576-3400.
The following are several of the more significant events which have taken
place since December 31, 1996:
(i) Acquisitions during 1997
During 1997, the Company acquired First International Theatres, which
operated 19 theatres with an aggregate of 104 screens in five states. The
total consideration of $16.8 million was a combination of cash and the issuance
of an aggregate of 128,986 shares of the Company's Class A Common Stock. The
excess of the purchase price over net assets of the business acquired was
approximately $6.1 million in 1997 and has been recorded as an intangible
asset.
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(ii) New Theatre Openings and Additions to Existing Theatres
During 1997, the Company opened or expanded the following theatres:
THEATRE LOCATION SCREENS
------- -------- -------
NEW COMPLEXES
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Parkplace 16 Morrisville, NC 16
Wynnsong 12 Birmingham, AL 12
Carmike 10 Lafayette, LA 10
Razorback 10 Little Rock, AR 10
Wynnsong 10 Montgomery, AL 10
Carmike 12 Provo, UT 12
Carmike 10 Midlothian, VA 10
Carmike 12 Snellville, GA 12
Carmike 12 Wilmington, NC 12
Wynnsong 12 Winston-Salem, NC 12
Hickory 8 Nashville, TN 8
Summitt 16 Birmingham, AL 16
---
Total 140
HOLLYWOOD CONNECTIONS
---------------------
Hollywood Connection Columbus, GA 10
Hollywood Connection Goshen, IN 6
---
Total 16
ADDITIONS TO EXISTING COMPLEXES
-------------------------------
Midco 9 Aberdeen, SD 4
Starlite 7 Chubbuck, ID 4
Blue Ridge 14 Raleigh, NC 4
Cinema 7 Washington, NC 4
Sikes 10 Wichita Falls, TX 4
Oakwood 12 Eau Claire, WI 6
Bordeaux 7 Fayetteville, NC 4
---
Total 30
---
Total New Screens 186
===
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(iii) Development of Entertainment Complexes
The Company opened its first "entertainment complex," which offers a
broad spectrum of entertainment in addition to movie exhibition, on May 23,
1997. Known as the "Hollywood Connection(R)", this complex encompasses
127,000 square feet on an 11 acre site in Columbus, Georgia. The complex
includes a 10-screen theatre equipped with Lucasfilm's THX(R) Digital surround
systems and stadium seating, an indoor roller skating rink, an 18-hole themed
putting golf course, a bumper car attraction, a state-of-the-art games arcade,
a restaurant and a laser tag arena.
The Company also entered into a joint venture agreement (the
"Agreement") with Wal-Mart in 1997 to open additional Hollywood Connections(R)
in locations vacated by Wal-Mart. Under the terms of this Agreement, the joint
venture will lease the facility from Wal-Mart on the same terms and conditions
that Wal-Mart is paying to its landlord. Carmike and Wal-Mart will then each
contribute 50% of the capital necessary to convert the location into a
Hollywood Connection(R) and Carmike will then manage the operations for a fee,
with net pretax profits to be shared equally. At present, one such Hollywood
Connection(R) has been opened by the joint venture in Goshen, Indiana and two
other locations are currently under construction - one in Valparaiso, Indiana,
which is scheduled to open in May, 1998, and the other in DeKalb, Illinois,
which is scheduled to open in July, 1998. The Company is currently working
with Wal-Mart to identify and construct additional locations.
(b) Narrative Description of Business
(i) Theatre Operations
The Company is currently the largest motion picture exhibitor
in the United States in terms of number of theatres and screens operated. As
of December 31, 1997, the Company operated 520 theatres with an aggregate of
2,720 screens located in 36 states. See "Competition" herein regarding recent
and proposed acquisitions and consolidations in the movie exhibition industry.
The Company's screens are located principally in communities where the Company
is the sole or leading exhibitor. For the year ended December 31, 1997,
aggregate attendance at the Company's theatres was approximately 75.3 million
people.
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The Company's theatres are located in the following states:
STATE THEATRES SCREENS
----- -------- -------
Alabama 29 188
Arkansas 13 96
Colorado 13 72
Delaware 2 12
Florida 28 146
Georgia 38 226
Idaho 10 28
Illinois 2 6
Indiana 1 6
Iowa 22 118
Kansas 3 13
Kentucky 11 53
Louisiana 4 27
Maryland 3 15
Michigan 2 10
Minnesota 13 54
Missouri 1 8
Montana 15 59
Nebraska 9 32
New Mexico 1 2
New York 1 8
North Carolina 68 357
North Dakota 9 45
Ohio 8 43
Oklahoma 15 68
Pennsylvania 42 205
South Carolina 27 149
South Dakota 8 50
Tennessee 44 257
Texas 25 112
Utah 13 60
Virginia 14 78
Washington 2 2
West Virginia 6 33
Wisconsin 11 60
Wyoming 7 22
--- -----
520 2,720
=== =====
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The Company's theatre operations are under the supervision of its Vice
President - General Manager and are divided into four geographic divisions,
each of which is headed by a division manager. The division managers are
responsible for implementing Company operating policies and supervising the
Company's eighteen operating districts. Each operating district has a district
manager who is responsible for overseeing the day-to-day operations of the
Company's theatres. Corporate policy development, strategic planning, site
selection and lease negotiation, theatre design and construction, concession
purchasing, film licensing, advertising, and financial and accounting
activities are centralized at the corporate headquarters of the Company. See
"Film Licensing" with respect to the Company's film licensing operations.
Nearly all of the Company's 2,720 screens are located in multi-screen
theatres, with over 93% of the Company's screens being located in theatres
having three or more screens. The Company's average number of screens per
theatre is 5.2, and the Company intends to increase this ratio through the
construction of larger multi-plex theatres. Multi-plex theatres enable the
Company to present a variety of films appealing to several segments of the
movie-going public while serving patrons from common support facilities (such
as the box office, concession areas, restrooms and lobby). This strategy
enhances attendance, utilization of theatre capacity and operating efficiencies
(relating to theatre staffing, performance scheduling and space and equipment
utilization), and thereby enhances revenues and profitability. Staggered
scheduling of starting times minimizes staffing requirements for crowd control,
box office and concession services while reducing congestion at the concession
area. The Company's theatres are housed predominantly in modern facilities
equipped with quality projection and sound equipment.
From time to time, the Company converts marginally profitable theatres to
"Discount Theatres" for the exhibition of films that have previously been shown
on a first-run basis. Increased attendance at these theatres following these
conversions, combined with a lower film rental cost, normally improves such
theatres' operating profitability. The Company also operates certain theatres
for the exhibition of first-run films at a reduced admission price. These
theatres are typically in a smaller market where the Company is the only
exhibitor in the market. At present, the Company operates 132 of its theatres
(441 screens) as Discount Theatres.
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The Company also sells gift certificates and offers a discount ticket plan to
attract groups of patrons to its theatres.
The Company's revenues are generated primarily from box office receipts and
concession sales. Additional revenues, which are not material, are generated
from electronic video games installed in the lobbies of some of the Company's
theatres and on-screen advertising.
The Company relies upon advertisements and movie schedules published in
newspapers to inform its patrons of film selections and show times. Newspaper
advertisements are typically displayed in a single group for all the Company's
theatres located in the newspaper's circulation area. In addition, the Company
utilizes radio spots and promotions to further market its films. Major
distributors frequently share the cost of newspaper and radio advertising. The
Company also exhibits in its theatres previews of coming attractions and films
presently playing on the Company's other screens in the same market area.
The Company's proprietary computer system, I.Q. Zero, which is presently
installed in approximately 100% of its theatres (representing approximately
100% of its screens), allows Carmike to centralize most theatre-level
administrative functions at its corporate headquarters, creating significant
operating leverage. I.Q. Zero allows corporate management to monitor ticket
and concession sales and box office and concession staffing on a daily basis.
The Company's integrated MIS, centered around I.Q. Zero, also coordinates
payroll, tracks theatre invoices and generates operating reports analyzing film
performance and theatre profitability. Accordingly, there is active
communication between the theatres and corporate headquarters, which allows
senior management to react to vital profit and staffing information on a daily
basis and perform the majority of the theatre-level administrative functions,
thereby enabling the theatre manager to focus on the day-to-day operations of
the theatre.
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(ii) Film Licensing
Carmike obtains licenses to exhibit films by directly negotiating
with or, in rare circumstances, submitting bids to film distributors. The
Company licenses films through its booking office located in Columbus, Georgia.
The Company's Vice President - Film, in consultation with the Company's
President, directs the Company's motion picture bookings.
Prior to negotiating or bidding for a film license, the Company's Vice
President - Film and film booking personnel evaluate the prospects for upcoming
films. The criteria considered for each film include cast, director, plot,
performance of similar films, estimated film rental costs and expected MPAA
rating. Successful licensing depends greatly upon the availability of
commercially popular motion pictures, knowledge of the tastes of residents in
markets served by each theatre and insight into the trends in those tastes.
The Company maintains a database that includes revenue information on films
previously exhibited in its markets. This historical information is then
utilized by the Company to match new films with particular markets so as to
maximize revenues.
Film licenses typically specify rental fees based on the higher of a
gross box office receipts formula or an adjusted gross box office receipts
formula. Under a gross box office receipts formula, the distributor receives a
specified percentage of box office receipts, with the percentage declining over
the term of the run. The Company's film rental fees typically begin at 60% of
admission revenues and gradually decline to as low as 30% over a period of four
to eight weeks. Under an adjusted gross box office receipts formula (commonly
known as a "90/10" clause), the distributor receives a specified percentage
(i.e., 90%) of the excess of box office receipts over a negotiated amount for
house expenses. In addition, the Company is occasionally required to pay
non-refundable guarantees of film rentals, to make advance payments of film
rentals, or both, in order to obtain a license for a film. Although not
specifically contemplated by the provisions of film licenses, the terms of film
licenses generally are adjusted or re-negotiated subsequent to exhibition of
the film in relation to its success.
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Film licensing zones are geographic areas (generally encompassing a
radius of three to five miles) established by film distributors where any given
film is allocated to only one theatre within that area. In film licensing
zones where the Company has little or no competition, the Company obtains film
licenses by selecting a film from among those offered and negotiating directly
with the distributor. In competitive film licensing zones, a distributor will
either require the exhibitors in the zone to bid for a film or will allocate
its films among the exhibitors in the zone. When films are licensed under the
allocation process, a distributor will choose which exhibitor is offered a
movie and then that exhibitor will negotiate film rental terms directly with
the distributor for the film. Over the past several years, distributors have
generally used the allocation rather than the bidding process to license their
films. When films are licensed through a bidding process, exhibitors compete
for licenses based upon economic terms. The Company currently does not bid for
films in any of its film licensing zones.
The Company predominantly licenses "first-run" films. If a film has
substantial remaining potential following its first-run, the Company may
license it for a subsequent run (a "sub-run"). Although average daily sub-run
attendance is often less than average daily first-run attendance, sub-run film
cost is generally less than first-run film cost. Additionally, sub-runs enable
the Company to exhibit a variety of films during periods in which there are few
new releases.
The Company's business is dependent upon the availability of
marketable pictures and its relationships with distributors. While there are
numerous distributors which provide quality first-run movies to the motion
picture exhibition industry, the following seven major distributors accounted
for approximately 91% of the Company's admission revenues during 1997 - Buena
Vista, Warner Brothers, Fox, Paramount, Universal, Sony and New Line. No
single distributor dominates the market. Disruption in the production of
motion pictures by the major studios and/or independent producers or poor
performance of motion pictures could have an adverse effect on the business of
the Company. The Company licenses films from a number of distributors and
believes that its relationships with distributors generally are satisfactory.
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(iii) Competition
The Company's operations are subject to varying degrees of competition
with respect to licensing films, attracting patrons, obtaining new theatre
sites or acquiring theatre circuits. In markets where it is not the sole
exhibitor, the Company competes against regional and independent operators as
well as the larger theatre circuit operators. A number of significant
acquisitions and consolidations in the movie exhibition industry have been
announced or proposed in recent months. For example, according to press
reports, the proposed merger of Sony's Loews theatres with Cineplex Odeon,
which was announced in September 1997, is expected to result in a combined
company with over 2,700 screens in 450 locations. In December 1997, the firm
of Kohlberg Kravis Roberts & Co. ("KKR") consummated its acquisition of Act III
Theatres. In early 1998, KKR and Hicks, Muse, Tate & Furst, Inc. ("Hicks
Muse") announced a joint agreement to acquire Regal Cinemas and to subsequently
combine Regal Cinemas with Act III and with United Artists, which Hicks Muse
had proposed to acquire. Hicks Muse subsequently withdrew its offer to acquire
United Artists; however, a combination of Regal Cinemas with Act III Theatres
would result in a combined company with approximately 3,175 screens in 390
locations. The Company cannot predict what impact such consolidations may have
on the Company's future results of operations.
The Company believes that the principal competitive factors with
respect to film licensing include licensing terms, seating capacity, location
and prestige of an exhibitor's theatres, quality of projection and sound at the
theatres and the exhibitor's ability and willingness to promote the films. The
competition for patrons is dependent upon factors such as the availability of
popular films, location of the theatres, patron comfort, quality of projection
and sound and the ticket prices. The Company believes that its admission
prices are competitive with admission prices of competing theatres.
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The Company's theatres face competition from a number of motion
picture exhibition delivery systems, such as pay television, pay-per-view and
home video systems. The impact of such delivery systems on the motion picture
exhibition industry is difficult to determine precisely, and there can be no
assurance that existing or future delivery systems will not have an adverse
impact on attendance. The Company believes that its strongest competition is
from other forms of entertainment competing for the public's outside-the-home
leisure time and disposable income.
(iv) Seasonality
The major film distributors generally release during the summer and
holiday seasons, primarily Thanksgiving and Christmas, those films which they
anticipate to be the most successful. Consequently, the Company has
historically generated higher revenues during such periods.
(v) Regulatory Environment
The distribution of motion pictures is in large part regulated by
federal and state antitrust laws and has been the subject of numerous antitrust
cases. Certain consent decrees resulting from such cases bind certain major
motion picture distributors and require the motion pictures of such
distributors to be offered and licensed to exhibitors, including the Company,
on a theatre-by-theatre basis. Consequently, exhibitors such as the Company
cannot assure themselves of a supply of motion pictures by entering into
long-term arrangements with major distributors but must compete for licenses on
a film-by-film and theatre-by-theatre basis.
The Federal Americans With Disabilities Act (the "ADA"), which became
effective in 1992, prohibits discrimination on the basis of disability in
public accommodations and employment. The Company constructs new theatres to
be accessible to the disabled and believes that it is otherwise in substantial
compliance with all applicable regulations relating to accommodating the needs
of the disabled. The Company does not currently anticipate that ongoing
compliance with the ADA and the regulations thereunder will require the Company
to expend substantial funds.
(vi) Employees
At December 31, 1997, the Company had approximately 10,500 employees,
of which 71 are covered by collective bargaining agreements. The Company
considers its relations with its employees to be good.
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(c) Cautionary Notice Regarding Forward-Looking Statements
With the exception of historical information, certain statements in this
Annual Report on Form 10-K and in documents incorporated by reference herein,
including matters discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, without
limitation, statements that may predict, forecast, indicate or imply future
results, performance or achievements by the Company, and may include words such
as "expect," "anticipate," "intend," "plan," "believe," "estimate" and words or
phrases of similar meaning. Such forward-looking statements are not guarantees
of future performance and are subject to assumptions, risks, uncertainties and
other factors that may cause actual results of the Company to differ materially
from historical results or from any results expressed or implied by such
forward-looking statements. Many of such factors are beyond the Company's
ability to control or predict, and readers are cautioned not to put undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update or revise any forward-looking statements contained in this
Report, whether as a result of new information, future events or otherwise.
Factors That May Affect Future Performance
In addition to other factors and matters discussed elsewhere herein,
factors that, in the view of the Company, could cause actual results to differ
materially from those discussed in forward-looking statements are set forth
below.
(i) Expansion Plans
Theatre acquisitions and new theatre openings have greatly expanded
the Company's operations in the past, and the Company intends to continue to
pursue a strategy of expansion that will involve the development of new
theatres, potential acquisitions of existing theatres and theatre circuits, and
expansion of existing facilities. There is significant competition for
potential site locations and existing theatre and theatre circuit acquisition
opportunities. As a result of such competition, the Company may be unable to
acquire attractive site locations or existing theatres or theatre circuits on
terms the Company considers acceptable. The development of new theatres
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involves certain risks, including the possibility of construction cost overruns
and delays, uncertainty of site acquisition costs and availability,
uncertainties as to market potential, zoning and tax law considerations, market
deterioration and the emergence of market competition from unexpected sources.
Additionally, expansion of the Company's operations, whether through theatre
development or acquisitions, involves the risk that the Company might not
effectively manage such growth as effectively as it has in the past.
(ii) Dependence upon Motion Picture Production and Performance
The Company's business is dependent both upon the availability of
suitable motion pictures for exhibition in its theatres and the performance of
such pictures in the Company's markets. Accordingly, the Company's results of
operations will vary from period to period based upon the quantity and quality
of the motion pictures it exhibits. A disruption in the production of motion
pictures or lack of motion pictures could have a material adverse effect on the
Company's business.
(iii) Seasonality
The Company's revenues have been seasonal, coinciding with the timing
of major releases of motion pictures by the major distributors. Generally, the
most marketable motion pictures have been released during the summer and the
Thanksgiving through year-end holiday season, and motion picture exhibitors
have had proportionately higher revenues during such periods. The seasonality
of motion picture exhibition revenue has become less pronounced in recent years
as studios have begun to release major motion pictures more evenly throughout
the year, and the unexpected emergence of a hit film during other periods can
also alter the traditional trend. The timing of motion picture releases can
have a significant impact on the Company's results of operations, and the
results of one quarter are not necessarily indicative of results for the next
quarter. During fiscal year 1997, the percentages of the Company's total box
office revenue by quarter were as follows: first quarter 24.2%; second quarter
23.7%; third quarter 27.8%; and fourth quarter 24.3%.
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(iv) Dependence Upon Senior Management
The Company's success depends in part on the continued contribution of
its senior management, including Michael W. Patrick, the Company's President,
and John O. Barwick, III, Senior Vice President-Finance. The loss of the
services of one or more members of the Company's senior management could have a
material adverse effect upon the Company's business and development. The
Company has an employment agreement with Michael W. Patrick.
(v) Competition
The Company's operations are subject to varying degrees of competition
with respect to licensing films, attracting patrons, obtaining new theatre
sites and acquiring theatre circuits. There have been a number of recent
consolidations in the movie exhibition industry, and the impact of such
consolidations could have an adverse effect on the Company's business. In
addition, the Company's theatres face competition from a number of motion
picture exhibition delivery systems, such as pay television, pay-per-view and
home video systems. While the impact of such delivery systems on the motion
picture industry is difficult to determine precisely, there can be no assurance
that they will not have an adverse impact on attendance. Movie theatres also
face competition from other forms of entertainment competing for the public's
leisure time and disposable income.
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Item 2. Properties
At December 31, 1997, 87 of the Company's 520 theatres were owned by the
Company, 366 were leased pursuant to building leases, 60 were leased pursuant
to ground leases, and 7 were subject to shared ownership or shared leasehold
interests with various unrelated third parties.
The Company's leases are generally entered into on a long-term basis. See
Note E of Notes to Consolidated Financial Statements incorporated by reference
in Item 8 herein for information with respect to the Company's lease
commitments.
The Company owns its headquarters building in Columbus, Georgia. The
Company occupies all of this modern five-story office building, which has
approximately 48,500 square feet. The Company's interest in the building is
encumbered by a Deed to Secure Debt and Security Agreement in favor of the
Downtown Development Authority of Columbus, Georgia.
Item 3. Legal Proceedings
From time to time, the Company is involved in routine litigation and legal
proceedings in the ordinary course of its business, such as personal injury
claims, employment matters and contractual disputes. Currently, the Company
does not have pending any litigation or proceedings that management believes
will have a material adverse effect, either individually or in the aggregate,
upon the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
last quarter of the year ended December 31, 1997.
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Executive Officers of the Registrant
[Included pursuant to Regulation S-K,
Item 401(b), Instruction 3]
The following sets forth certain information regarding the executive
officers of the Company. For purposes of this section, references to the
Company include the Company's predecessor, Martin Theatres, Inc.
C. L. Patrick, age 79, who has served as Chairman of the Board of Directors
of the Company since April 1982, joined the Company in 1945, became its General
Manager in 1948 and served as President of the Company from 1969 to 1970. He
served as President of Fuqua Industries, Inc. ("Fuqua") from 1970 to 1978, and
as Vice Chairman of the Board of Directors of Fuqua from 1978 to 1982. Mr.
Patrick is a director emeritus of Columbus Bank & Trust Company.
Michael W. Patrick, age 47, has served as President of the Company since
October 1981, a director of the Company since April 1982 and Chief Executive
Officer since March 29, 1989. He joined the Company in 1970 and served in a
number of operational and film booking and buying capacities prior to becoming
President. Mr. Patrick is the son of Mr. C. L. Patrick. Mr. Patrick is a
director of Columbus Bank & Trust Company. He also serves as a director of the
Will Rogers Institute.
John O. Barwick, III, age 48, joined the Company as Controller in July 1977
and was elected Treasurer and Chief Financial Officer in August 1981. In
August 1982, he became Vice President - Finance of the Company and in December
1997 was elected Senior Vice President-Finance. Prior to joining the Company,
Mr. Barwick was a certified public accountant with Ernst & Ernst, a predecessor
of the accounting firm of Ernst & Young LLP, from 1973 to 1977. Mr. Barwick
is also a director of First Union National Bank of Columbus and a Trustee of
the Columbus State University Athletic Fund.
Anthony J. Rhead, age 56, joined the Company in June 1981 as manager of the
booking office in Charlotte, North Carolina. In July 1983, Mr. Rhead became
Vice President - Film of the Company and in December 1997 was elected Senior
Vice President-Film. Prior to joining the Company, he worked as a film booker
for Plitt Theatres, Inc. from 1973 to 1981.
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Larry M. Adams, age 54, joined the Company as Data Processing Manager in
July 1973. In August 1982, he became Vice President - Informational Systems in
August 1988 and in December 1997 he became Senior Vice President-Information
Systems.
Fred W. Van Noy, age 41, joined the Company in 1975. He served as a
District Manager from 1984 to 1985 and as Western Division Manager from 1985 to
1988, when he became Vice President - General Manager. In December 1997 he was
elected to his present position as Senior Vice President-Operations.
Prentiss Lamar Fields, age 43, joined the Company in January 1983 as
Director of Real Estate. He served in this position until 1985 when he became
Vice President - Development. In December 1997 he was elected to his present
position of Senior Vice President-Real Estate.
H. Madison Shirley, age 46, joined the Company in 1976 as a theatre
manager. He served as a District Manager from 1983 to 1987 and as Director of
Concessions from 1987 until 1990. He became Vice President - Concessions in
1990 and Senior Vice President-Concessions and Assistant Secretary in December
1997.
Forrest Lee Champion, III, age 47, joined the Company in February 1998 as
Senior Vice President and General Counsel. Prior to joining the Company, Mr.
Champion practiced law with the firm of Champion and Champion.
Marilyn Grant, age 50, joined the Company in 1975 as a bookkeeper. She
served as Advertising Coordinator from 1984 to 1985 and became the Director of
Advertising in 1985. In August 1990, she was elected to her present position
as Vice President - Advertising.
James R. Davis, age 59, joined the Company in 1990 as Technical Director.
He served in this position until December 1995, when he was elected to his
present position as Vice President-Technical.
Phillip A. Smitley, age 38, joined the Company in April 1997 as Controller.
In January, 1998 he was elected to his present position of Assistant Vice
President and Controller. Prior to joining the Company, Mr. Smitley was
Divisional Controller-Transportation of Burnham Service Corporation, a trucking
company.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Information regarding the market for the Company's common equity and
related stockholder matters is incorporated by reference to the inside back
cover of the Company's 1997 Annual Report to Shareholders.
Item 6. Selected Financial Data
Selected financial data for the five years ended December 31, 1997 is
incorporated by reference to page 27 of the Company's 1997 Annual Report to
Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's discussion and analysis of financial condition and results of
operations of the Company is incorporated by reference to pages 24 through 26
of the Company's 1997 Annual Report to Shareholders.
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference to pages
12 through 23 of the Company's 1997 Annual Report to Shareholders.
Information as to quarterly results of operations for the year ended
December 31, 1997 is incorporated by reference to page 22 of the Company's 1997
Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the Company is incorporated by
reference to the section entitled "Election of Directors" in the Proxy
Statement relating to the 1998 Annual Meeting of Shareholders of the Company
(hereinafter, the "1998 Proxy Statement").
Information regarding the executive officers of the Company is set forth in
Part I of this Report on Form 10-K pursuant to General Instruction G(3) of Form
10-K.
Item 11. Executive Compensation
Information regarding executive compensation is incorporated by reference
to the section entitled "Executive Compensation and Other Information"
contained in the 1998 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference to the
sections entitled "Security Ownership of Certain Beneficial Holders" and
"Security Ownership of Management" contained in the 1998 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is
incorporated by reference to the section entitled "Certain Relationships and
Related Transactions" contained in the 1998 Proxy Statement.
19
20
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) and (2) Financial Statements and Financial Statement Schedules
The following consolidated financial statements of Carmike
Cinemas, Inc. included in the Company's 1997 Annual Report to
Shareholders are incorporated by reference in Item 8:
Consolidated balance sheets--December 31, 1997 and 1996
Consolidated statements of operations--Years ended
December 31, 1997, 1996 and 1995
Consolidated statements of shareholders' equity--Years
ended December 31, 1997, 1996 and 1995
Consolidated statements of cash flows--Years ended
December 31, 1997, 1996 and 1995
Notes to consolidated financial statements--December 31,
1997
Report of Independent Auditors
Financial statement schedules are omitted because they are not
applicable or not required under the related instructions, or because the
required information is shown either in the consolidated financial statements
or in the notes thereto.
20
21
(a)(3) Listing of Exhibits
Exhibit
Number
- - ------
3(a)(i) Restated Certificate of Incorporation of the Company (filed as Exhibit 3(a) to
the Company's Form 10-Q for the fiscal quarter ended June 30, 1995, and
incorporated herein by reference).
3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation (filed as
Exhibit 3(b) to the Company's Form 10-Q for the quarter ended June 30, 1995,
and incorporated herein by reference).
3(b) By-laws of the Company (filed as Exhibit 3(b) to the Company's Form 10-K for the
fiscal year ended December 31, 1987 (the "1987 Form 10-K"), and incorporated
herein by reference).
4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to 10.53% Senior
Notes due 2005 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter
ended June 30, 1990, and incorporated herein by reference).
4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to 7.90% Senior
Notes due 2002 (filed as Exhibit 4(c) to the Company's Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference).
4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to 7.52% Senior
Notes due 2003 (filed as Exhibit 4 to the Company's Form 10-Q for the fiscal quarter
ended March 31, 1993, and incorporated herein by reference).
4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed as Exhibit 4(e)
to the Company's 1993 Form 10-K, and incorporated herein by reference).
4(e) Credit Agreement dated as of October 17, 1997 among Carmike Cinemas, Inc., various
banks and Wachovia Bank, N.A., as Agent (filed as Exhibit 4 to the
Company's Form 10-Q for the quarter ended September 30, 1997, and incorporated
herein by reference).
10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended, together with
form of Stock Option Agreement (filed as Exhibit 10(a) to the Company's Form 10-K
for the year ended December 31, 1990, and incorporated herein by reference).
21
22
(a)(3)(Continued)
Exhibit
Number
- - ------
10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial
Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985
(filed as Exhibit 10(d) to Amendment No. 1 to the Company's Registration
Statement on Form S-1, No. 33-8007 on October 10, 1986, and incorporated
herein by reference).
10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick and
the Company, as amended on October 31, 1986 and January 1, 1990 (filed as
Exhibit 10(e) to the Company's Registration Statement on Form S-1, Commission
File No. 33-33558, and incorporated herein by reference).
10(d) Employment Agreement dated January 1, 1993 by and between Michael W. Patrick
and the Company (filed as Exhibit 10(e) to the Company's 1992 Form 10-K and
incorporated herein by reference).
10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986, by and between C.L.P.
Equipment and the Company (filed as Exhibit 10(h) to the Company's Registration
Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
10(f) Equipment Lease Agreement dated December 17, 1982 by and between Michael W.
Patrick and the Company (Kingsport, Tennessee) (filed as Exhibit 10(i) to the
Company's Registration Statement on Form S-1, No. 33-8007, and incorporated
herein by reference).
10(g) Equipment Lease Agreement dated January 29, 1983 by and between Michael W.
Patrick and the Company (Valdosta, Georgia) (filed as Exhibit 10(j) to the Company's
Registration Statement on Form S-1, No. 33-8007, and incorporated herein by reference).
10(h) Equipment Lease Agreement dated November 23, 1983 by and between Michael W.
Patrick and the Company (Nashville (Belle Meade), Tennessee) (filed as Exhibit 10(k)
to the Company's Registration Statement on Form S-1, No. 33-8007, and incorporated
herein by reference).
10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael W.
Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l) to the Company's
Registration Statement on Form S-1, No. 33-8007, and incorporated herein by
reference).
22
23
(a)(3)(Continued)
Exhibit
Number
- - ------
10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W. Patrick
and the Company (Muskogee and Stillwater, Oklahoma) (filed as Exhibit 10(m) to the
Company's Registration Statement on Form S-1, No. 33-8007, and incorporated
herein by reference).
10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L. Patrick
and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n) to the Company's
Registration Statement on Form S-1, No. 33-8007, and incorporated herein by
reference).
10(l) Summary of Extensions of Equipment Lease Agreements, which are Exhibits 10(f),
10(g), 10(h), 10(i), and 10(k) (filed as Exhibit 10(o) to the 1987 Form 10-K and
incorporated herein by reference).
10(m) Summary of Extensions of the Equipment Lease Agreements, which are Exhibits 10(f),
10(g), 10(h), 10(i), and 10(k) as extended as shown in Exhibit 10(m) (filed as Exhibit
10(n) to the Company's Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease
Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to the
Company's Form 10-K for the year ended December 31, 1991 and incorporated
herein by reference).
10(o) Carmike Cinemas, Inc. Deferred Compensation Agreement and Trust Agreement dated
as of January 1, 1990 (filed as Exhibit 10(u) to the Company's Form 10-K for the year
ended December 31, 1990, and incorporated herein by reference).
10(p) Carmike Cinemas, Inc. 1998 Class A Stock Option Plan, together with form of Stock
Option Agreement.
10(q) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox Theatres
Corporation, Carmike Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 2(l)
to the Company's Form 10-K for the fiscal year ended December 31, 1995, and
incorporated herein by reference).
23
24
(a)(3)(Continued)
Exhibit
Number
- - ------
10(r) Stock Purchase Agreement dated as of June 27, 1997 by and between the shareholders of
Morgan Creek Theatres, Inc.; shareholders of SB Holdings, Inc.; members of RDL
Consulting Limited Liability Company; Morgan Creek Theaters, Inc.; SB Holdings, Inc.;
RDL Consulting Limited Liability Company; First International Theatres; Carmike
Cinemas, Inc. and Eastwynn Theatres, Inc. (filed as Exhibit 2 to the Company's Form
10-Q for the fiscal quarter ended June 30, 1997, and incorporated herein by reference).
13 Those sections of the 1997 Annual Report to Shareholders of Carmike Cinemas, Inc.
incorporated by reference in Items 5, 6, 7 and 8 hereof.
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (for SEC use only).
24
25
(b) Reports on Form 8-K
During the fiscal quarter ended December 31, 1997, the Company
did not file any reports on Form 8- K.
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statements Schedules
None.
25
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CARMIKE CINEMAS, INC.
Date: March 27, 1998 By: /s/ Michael W. Patrick
----------------------
Michael W. Patrick
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature
---------
Title Date
----- ----
/s/ C. L. Patrick Chairman of the Board March 27, 1998
- - ------------------------------
C. L. Patrick
/s/ Michael W. Patrick President and Chief March 27, 1998
- - ------------------------------ Executive Officer, Director
Michael W. Patrick
/s/ John O. Barwick, III Senior Vice President-Finance, March 27, 1998
- - ------------------------------ Treasurer (Chief Financial Officer,
John O. Barwick, III Chief Accounting Officer)
/s/ Carl L. Patrick, Jr. Director March 27, 1998
- - ------------------------------
Carl L. Patrick, Jr.
/s/ Carl E. Sanders Director March 27, 1998
- - ------------------------------
Carl E. Sanders
/s/ John W. Jordan, II Director March 27, 1998
- - ------------------------------
John W. Jordan, II
/s/ David W. Zalaznick Director March 27, 1998
- - ------------------------------
David W. Zalaznick
26
27
CARMIKE CINEMAS, INC.
EXHIBIT INDEX
Report on Form 10-K for the fiscal year Ended December 31, 1997
Page Number
Exhibit in Manually
Number Description Signed Original
- - ------ ----------- ---------------
3(a)(i) Restated Certificate of Incorporation of the Company (filed
as Exhibit 3(a) to the Company's Form 10-Q for the fiscal
quarter ended June 30, 1995, and incorporated herein by
reference).
3(a)(ii) Certificate of Amendment of Restated Certificate of Incorporation
(filed as Exhibit 3(b) to the Company's Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by reference).
3(b) By-Laws of the Company (filed as Exhibit 3(b) to the Company's
Form 10-K for the fiscal year ended December 31, 1987 (the "1987
Form 10-K"), and incorporated herein by reference).
4(a) Note Purchase Agreement dated as of June 1, 1990 with respect to
10.53% Senior Notes due 2005 (filed as Exhibit 4 to the Company's
Form 10-Q for the fiscal quarter ended June 30, 1990, and
incorporated herein by reference).
4(b) Note Purchase Agreement dated as of March 1, 1992 with respect to
7.90% Senior Notes due 2002 (filed as Exhibit 4(c) to the Company's
Form 10-K for the year ended December 31, 1991, and incorporated
herein by reference).
4(c) Note Purchase Agreement dated as of April 15, 1993 with respect to
7.52% Senior Notes due 2003 (filed as Exhibit 4 to the Company's
Form 10-Q for the fiscal quarter ended March 31, 1993, and
incorporated herein by reference).
28
Page Number
Exhibit in Manually
Number Description Signed Original
- - ------ ----------- ---------------
4(d) Zero Coupon Convertible Subordinated Note due June 1, 1998 (filed
as Exhibit 4(e) to the Company's 1993 Form 10-K, and incorporated
herein by reference).
4(e) Credit Agreement dated as of October 17, 1997 among Carmike Cinemas,
Inc., various banks and Wachovia Bank, N.A., as Agent (filed as
Exhibit 4 to the Company's Form 10-Q for the quarter ended September
30, 1997, and incorporated herein by reference).
10(a) 1986 Carmike Cinemas, Inc. Class A Stock Option Plan, as amended,
together with form of Stock Option Agreement (filed as Exhibit 10(a)
to the Company's Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference).
10(b) Downtown Development Authority of Columbus, Georgia $4,500,000 Industrial
Development Revenue Bonds (Martin Theatres, Inc. Project), Series 1985
(filed as Exhibit 10(d) to Amendment No. 1 to the Company's
Registration Statement on Form S-1, No. 33-8007 on October 10, 1986,
and incorporated herein by reference).
10(c) Employment Agreement dated August 30, 1986 by and between C. L. Patrick
and the Company, as amended on October 31, 1986 and January 1, 1990
(filed as Exhibit 10(e) to the Company's Registration Statement on Form
S-1, Commission File No. 33-33558, and incorporated herein by
reference).
10(d) Employment Agreement dated January 1, 1993 by and between Michael W.
Patrick and the Company (filed as Exhibit 10(e) to the Company's 1992
Form 10-K and incorporated herein by reference).
29
Page Number
Exhibit in Manually
Number Description Signed Original
- - ------ ----------- ---------------
10(e) Aircraft Lease dated July 1, 1983, as amended June 30, 1986,
by and between C.L.P. Equipment and the Company (filed as Exhibit
10(h) to the Company's Registration Statement on Form S-1, No.
33-8007, and incorporated herein by reference).
10(f) Equipment Lease Agreement dated December 17, 1982 by and between
Michael W. Patrick and the Company (Kingsport, Tennessee) (filed
as Exhibit 10(i) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(g) Equipment Lease Agreement dated January 29, 1983 by and between
Michael W. Patrick and the Company (Valdosta, Georgia) (filed as
Exhibit 10(j) to the Company's Registration Statement on Form S-1,
No. 33-8007, and incorporated herein by reference).
10(h) Equipment Lease Agreement dated November 23, 1983 by and between
Michael W. Patrick and the Company (Nashville (Belle Meade), Tennessee)
(filed as Exhibit 10(k) to the Company's Registration Statement on Form
S-1, No. 33-8007, and incorporated herein by reference).
10(i) Equipment Lease Agreement dated December 17, 1982 by and between Michael
W. Patrick and the Company (Opelika, Alabama) (filed as Exhibit 10(l)
to the Company's Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
10(j) Equipment Lease Agreement dated July 1, 1986 by and between Michael W.
Patrick and the Company (Muskogee and Stillwater, Oklahoma) (filed as
Exhibit 10(m) to the Company's Registration Statement on Form S-1, No.
33-8007, and incorporated herein by reference).
10(k) Equipment Lease Agreement dated December 17, 1982 by and between C. L.
Patrick and the Company (Eastridge, Tennessee) (filed as Exhibit 10(n)
to the Company's Registration Statement on Form S-1, No. 33-8007, and
incorporated herein by reference).
30
Page Number
Exhibit in Manually
Number Description Signed Original
- - ------ ----------- ---------------
10(l) Summary of Extensions of Equipment Lease Agreements, which are
Exhibits 10(f), 10(g), 10(h), 10(i), and 10(k) (filed as Exhibit
10(o) to the 1987 Form 10-K and incorporated herein by reference).
10(m) Summary of Extensions of the Equipment Lease Agreements, which are
Exhibits 10(f), 10(g), 10(h), 10(i) and 10(k) as extended as shown in
Exhibit 10(m) (filed as Exhibit 10(n) to the Company's Form 10-K for
the year ended December 31, 1991 and incorporated herein by reference).
10(n) Summary of Extensions of Aircraft Lease Agreement and Equipment Lease
Agreement which are Exhibits 10(e) and 10(k) (filed as Exhibit 10(o) to
the Company's Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
10(o) Carmike Cinemas, Inc. Deferred Compensation Agreement and Trust
Agreement dated as of January 1, 1990 (filed as Exhibit 10(u) to the
Company's Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference).
10(p) Carmike Cinemas, Inc. 1998 Class A Stock Option Plan, together with
form of Stock Option Agreement.
10(q) Asset Purchase Agreement dated as of January 25, 1996 by and between Fox
Theaters Corporation, Carmike Cinemas, Inc. and Eastwynn
Theaters, Inc.(filed as Exhibit 2(l) to the Company's Form 10-K for
the fiscal year ended December 31, 1995, and incorporated herein by
reference).
31
Page Number
Exhibit in Manually
Number Description Signed Original
- - ------ ----------- ---------------
10(r) Stock Purchase Agreement dated as of June 27, 1997 by and between
the shareholders of Morgan Creek Theatres, Inc.; shareholders of SB
Holdings, Inc.; members of RDL Consulting Limited Liability Company;
Morgan Creek Theaters, Inc.; SB Holdings, Inc.; RDL Consulting Limited
Liability Company; First International Theatres; Carmike Cinemas, Inc.
and Eastwynn Theatres, Inc. (filed as Exhibit 2 to the Company's Form
10-Q for the fiscal quarter ended June 30, 1997, and incorporated
herein by reference).
13 Those sections of the 1997 Annual Report to Shareholders of Carmike
Cinemas, Inc. which are incorporated by reference in Items 5, 6, 7 and
8 hereof.
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (for SEC use only).