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8-K - 8-K - AMC ENTERTAINMENT INC | a2199384z8-k.htm |
EX-2.1 - EX-2.1 - AMC ENTERTAINMENT INC | a2199384zex-2_1.htm |
EX-10.3 - EX-10.3 - AMC ENTERTAINMENT INC | a2199384zex-10_3.htm |
EX-99.1 - EX-99.1 - AMC ENTERTAINMENT INC | a2199384zex-99_1.htm |
EX-10.2 - EX-10.2 - AMC ENTERTAINMENT INC | a2199384zex-10_2.htm |
EX-10.1 - EX-10.1 - AMC ENTERTAINMENT INC | a2199384zex-10_1.htm |
EX-99.3 - EX-99.3 - AMC ENTERTAINMENT INC | a2199384zex-99_3.htm |
EX-10.4 - EX-10.4 - AMC ENTERTAINMENT INC | a2199384zex-10_4.htm |
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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
We derived the following unaudited pro forma condensed financial information by applying pro forma adjustments attributable to the Kerasotes Acquisition to our historical consolidated financial statements and the Kerasotes financial statements included in this Form 8-K. The unaudited pro forma balance sheet gives pro forma effect to the Kerasotes Acquisition as if it had occurred on April 1, 2010. The unaudited pro forma condensed statement of operations data for the 52 weeks ended April 1, 2010 gives effect to the Kerasotes Acquisition as if it had occurred on April 3, 2009. We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed financial information.
The unaudited pro forma condensed financial information is for illustrative and informational purposes only and should not be considered indicative of the results that would have been achieved had the transactions been consummated on the dates or for the periods indicated and do not purport to represent consolidated balance sheet data or statement of operations data or other financial data as of any future date or any future period.
The unaudited pro forma condensed financial information should be read in conjunction with the information contained in "Selected Historical Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements and accompanying notes appearing elsewhere in our Annual Report on Form 10-K for the period ended April 1, 2010 and the Kerasotes financial statements included in this Form 8-K.
1
AMC ENTERTAINMENT INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF APRIL 1, 2010
(dollars in thousands)
|
|
|
As of April 1, 2010 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
AMCE Historical as of April 1, 2010 |
Kerasotes Historical as of March 31, 2010 |
Purchase Price Pro Forma Adjustments(a) |
Pro Forma Adjustments(b) |
AMCE Pro Forma Kerasotes Acquisition |
||||||||||||
Assets |
|||||||||||||||||
Cash and equivalents |
$ | 495,343 | $ | | $ | (271,421) | (1) | $ | (6,047) | (1) | $ | 217,875 | |||||
Current assets |
98,857 | 39,807 | (26,685) | (2) | | 111,979 | |||||||||||
Property, net |
863,532 | 132,035 | 93,495 | (2) | (41,151) | (3) | 1,047,911 | ||||||||||
Intangible assets, net |
148,432 | 26,357 | 21,643 | (2) | (350) | (3) | 196,082 | ||||||||||
Goodwill |
1,814,738 | 24,153 | 60,397 | (2) | | 1,899,288 | |||||||||||
Other long-term assets |
232,275 |
|
|
|
232,275 |
||||||||||||
Total assets |
$ | 3,653,177 | $ | 222,352 | $ | (122,571 | ) | $ | (47,548 | ) | $ | 3,705,410 | |||||
Liabilities and Stockholder's Equity |
|||||||||||||||||
Current liabilities |
$ | 451,028 | $ | 45,395 | $ | (8,961) | (2) | $ | | $ | 487,462 | ||||||
Corporate borrowings: |
|||||||||||||||||
8% Senior Subordinated Notes due 2014 |
299,227 | | | | 299,227 | ||||||||||||
11% Senior Subordinated Notes due 2016 |
325,000 | | | | 325,000 | ||||||||||||
8.75% Senior Notes due 2019 |
586,252 | | | | 586,252 | ||||||||||||
Senior Secured Term Loan Facility due 2013 |
615,875 | | | | 615,875 | ||||||||||||
Capital and financing lease obligations |
53,323 | 16,718 | (4,171) | (2) | | 65,870 | |||||||||||
Other long-term liabilities |
561,913 | 138,493 | (87,693) | (2) | (14,781) | (3) | 597,932 | ||||||||||
Total liabilities |
2,892,618 | 200,606 | (100,825 | ) | (14,781 | ) | 2,977,618 | ||||||||||
Stockholder's Equity: |
|||||||||||||||||
Common Stock |
| | | | | ||||||||||||
Additional paid-in capital |
828,687 | | | | 828,687 | ||||||||||||
Accumulated other comprehensive loss |
(3,176 | ) | | | | (3,176 | ) | ||||||||||
Accumulated earnings (deficit) |
(64,952 | ) | 21,746 | (21,746) | (2) | (32,767) | (2) | (97,719 | ) | ||||||||
Stockholder's equity (deficit) |
760,559 | 21,746 | (21,746 | ) | (32,767 | ) | 727,792 | ||||||||||
Total liabilities and Stockholder's Equity |
$ | 3,653,177 | $ | 222,352 | $ | (122,571 | ) | $ | (47,548 | ) | $ | 3,705,410 | |||||
- (a)
- "Purchase
Price Pro Forma Adjustments" reflect the purchase of Kerasotes, including the allocation of purchase price to the assets and liabilities acquired
in connection with the Kerasotes Acquisition.
- (b)
- "Pro Forma Adjustments" reflect all other adjustments related to the Kerasotes Acquisition.
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
2
AMC ENTERTAINMENT INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED APRIL 1, 2010
(dollars in thousands)
|
Fifty-two weeks ended April 1, 2010 | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
AMCE 52 Weeks Ended April 1, 2010 Historical |
Kerasotes Year Ended Dec. 31, 2009 Historical |
Kerasotes Three Months Ended Mar. 31, 2010 Historical |
Kerasotes Three Months Ended Mar. 31, 2009 Historical |
Kerasotes Twelve Months Ended Mar. 31, 2010 Historical |
Kerasotes Acquisition Pro Forma Adjustments |
AMCE Pro Forma Kerasotes Acquisition |
|||||||||||||||
Revenues |
$ | 2,417,739 | $ | 325,964 | $ | 79,723 | $ | 76,283 | $ | 329,404 | $ | (62,611) | (3) | $ | 2,684,532 | |||||||
Cost of operations |
1,612,260 | 210,990 | 53,942 | 50,428 | 214,504 | (41,684) | (3) | 1,785,080 | ||||||||||||||
Rent |
440,664 | 45,212 | 11,640 | 11,336 | 45,516 | (11,365) | (3) | 478,090 | ||||||||||||||
|
3,275 | (4) | ||||||||||||||||||||
General and administrative: |
||||||||||||||||||||||
M&A costs |
2,280 | | | | | | 2,280 | |||||||||||||||
Management fee |
5,000 | | | | | | 5,000 | |||||||||||||||
Other |
57,858 | 17,011 | 3,973 | 4,017 | 16,967 | | 74,825 | |||||||||||||||
Depreciation and amortization |
188,342 | 21,894 | 4,628 | 5,252 | 21,270 | (1,540) | (3) | 215,762 | ||||||||||||||
|
7,690 | (4) | ||||||||||||||||||||
Impairment of long-lived assets |
3,765 | | | | | | 3,765 | |||||||||||||||
Total costs and expenses |
2,310,169 | 295,107 | 74,183 | 71,033 | 298,257 | (43,624 | ) | 2,564,802 | ||||||||||||||
Other expense |
(2,559 | ) | | | | | | (2,559 | ) | |||||||||||||
Interest expense |
132,110 | 4,150 | 744 | 1,042 | 3,852 | (3,852) | (4) | 132,110 | ||||||||||||||
Equity in earnings of non-consolidated entities |
(30,300 | ) | | | | | | (30,300 | ) | |||||||||||||
Investment (income) expense |
(205 | ) | 3,291 | 569 | 715 | 3,145 | (2,947) | (4) | (7 | ) | ||||||||||||
Total other expense |
99,046 | 7,441 | 1,313 | 1,757 | 6,997 | (6,799 | ) | 99,244 | ||||||||||||||
Earnings (loss) from continuing operations before income taxes |
8,524 | 23,416 | 4,227 | 3,493 | 24,150 | (12,188 | ) | 20,486 | ||||||||||||||
Income tax provision (benefit) |
(68,800 | ) | | | | | 4,500 | (5) | (64,300 | ) | ||||||||||||
Earnings from continuing operations |
$ | 77,324 | $ | 23,416 | $ | 4,227 | $ | 3,493 | $ | 24,150 | $ | (16,688 | ) | $ | 84,786 | |||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
3
AMC ENTERTAINMENT INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
- (1)
- Reflects the estimated cash sources and uses of funds in connection with the Kerasotes Acquisition as summarized below. The estimated purchase price is preliminary and subject to working capital and other adjustments.
Source of Funds
|
Amount | Users of Funds | Amount | ||||||
---|---|---|---|---|---|---|---|---|---|
|
(thousands of dollars) |
|
(thousands of dollars) |
||||||
Company Cash |
$ | 277,468 | Closing date payment amount |
$ | 176,086 | (a) | |||
|
Total payoff amount-Kerasotes lender |
74,710 | (a) | ||||||
|
Escrow payment |
20,625 | (a) | ||||||
|
Estimated transaction costs |
3,631 | (b) | ||||||
|
Swap termination costs |
1,798 | (b) | ||||||
|
Eligible seller employee bonus amount |
618 | (b) | ||||||
|
$ | 277,468 | $ | 277,468 | |||||
- (a)
- Represents
amounts which are expected to be capitalized in connection with the Kerasotes Acquisition.
- (b)
- Represents amounts that are expected to be expensed in connection with the Kerasotes Acquisition.
- (2)
- Pro forma adjustments have been made to stockholder's equity as follows in connection with the Kerasotes Acquisition:
|
Purchase Price Pro Forma Adjustments (thousands of dollars) |
|||
---|---|---|---|---|
Elimination of Kerasotes' accumulated earnings |
$ | (21,746 | ) | |
|
Pro Forma Adjustments (thousands of dollars) |
|||
---|---|---|---|---|
Divestitures |
$ | (26,720) | (a) | |
Acquisition-related transaction expenses |
(6,047 | ) | ||
|
$ | (32,767 | ) | |
- (a)
- Represents the net book value of assets and liabilities expected to be disposed of to gain U.S. Department of Justice approval for the Kerasotes Acquisition. We expect sales proceeds to approximate $58.5 million, but have not included them in our pro forma adjustments in our statement of operations pursuant to Article 11 of Regulation S-X. See Note 3 below.
The acquisition of Kerasotes is being treated as a purchase with the Company as the accounting acquirer in accordance with ASC Topic 805 Business Combinations. The following is a summary of the preliminary allocation of the purchase price to the estimated fair values of assets and liabilities acquired from Kerasotes. Our allocations of purchase price were based on management's judgment
4
after evaluating several factors, including bid prices from potential buyers and a preliminary valuation assessment. Our allocation of purchase price is preliminary and subject to changes, which could be significant.
|
Amounts | |||
---|---|---|---|---|
|
(thousands of dollars) |
|||
Current assets |
$ | 13,122 | ||
Property, net |
225,530 | |||
Intangible assets, net |
48,000 | |||
Goodwill |
84,550 | |||
Current liabilities |
(36,434 | ) | ||
Capital and financing lease obligations |
(12,547 | ) | ||
Other long-term liabilities |
(50,800 | ) | ||
Total estimated purchase price |
$ | 271,421 | ||
- (a)
- a
write down of Current assets to eliminate amounts due from Kerasotes of $26.7 million;
- (b)
- a
write up of Property, net of $93.5 million to reflect the estimated fair value of furniture, fixtures and equipment, leasehold improvements and
real estate;
- (c)
- a
write up of Intangible assets, net of $21.6 million comprised principally of reversal of favorable leases of $26 million previously
recognized by Kerasotes, offset by write ups for the Showplace tradename of $5.0 million, write ups for noncompete agreements with Kerasotes management of $7.3 million and write ups for
the estimated fair value of favorable leases of $35.3 million;
- (d)
- a
write down of Current liabilities of $8.9 million, primarily comprised of write downs of the current portion of pre-acquisition
intercompany balances of $0.9 million and estimated dormancy of deferred revenues of $0.7 million and the write down of the current portion of deferred gain of $7.3 million;
- (e)
- a
reversal of the deferred rent component of developer reimbursements for two theatres for $4.2 million; and
- (f)
- a
write down of Other long-term liabilities of $87.7 million, comprised of a write off of pre-acquisition intercompany
balances of $19.9 million, write downs of the Kerasotes deferred gain from sale-leaseback transactions of $111.2 million and the write down of Kerasotes deferred rent and
other liabilities of $7.4 million offset by write ups of $50.9 million to reflect the estimated fair value of unfavorable leases acquired from Kerasotes.
Our preliminary allocation of purchase price consisted primarily of:
- (3)
- Reflects the exclusion of revenues and expenses and disposition of assets and liabilities for theatres expected to be disposed of in connection with the approval of the Kerasotes Acquisition by the U.S. Department of Justice:
|
52 Weeks Ended April 1, 2010 |
|||
---|---|---|---|---|
|
(thousands of dollars) |
|||
Revenues |
$ | 62,611 | ||
Cost of operations |
41,684 | |||
Rent |
11,365 | |||
Depreciation & amortization |
1,540 |
5
|
As of April 1, 2010 |
|||
---|---|---|---|---|
|
(thousands of dollars) |
|||
Property, net |
$ | 41,151 | ||
Intangible assets, net |
350 | |||
Other long-term liabilities |
(14,781 | ) | ||
Net Assets |
$ | 26,720 | ||
- (4)
- Pro forma adjustments are made to the Unaudited Pro Forma Condensed Consolidated Financial Statement of Operations for purchase accounting to reflect the following:
|
52 weeks ended April 1, 2010 |
Estimated Useful Life |
Balance Sheet Classification |
|||||
---|---|---|---|---|---|---|---|---|
|
(thousands of dollars) |
|||||||
Depreciation and Amortization: |
||||||||
Remove Kerasotes historical amount |
$ | (21,270 | ) | |||||
Buildings, FF&E and leasehold improvements |
25,200 | 7 | Property, net | |||||
Favorable leases |
2,300 | 15 | Intangibles, net | |||||
Non-compete agreements |
1,460 | 5 | Intangibles, net | |||||
Tradename |
| Indefinite | Intangibles, net | |||||
Goodwill |
| Indefinite | Goodwill | |||||
|
$ | 7,690 | ||||||
Rent: |
||||||||
Kerasotes amortization of deferred gain on sale-leaseback transactions |
$ | 7,275 | ||||||
Unfavorable leases |
(4,000 | ) | ||||||
|
$ | 3,275 | ||||||
Interest Expense: |
||||||||
Interest expense to Kerasotes Showplace Theatres, LLC |
$ | (3,852 | ) | |||||
|
$ | (3,852 | ) | |||||
Investment Income: |
||||||||
Kerasotes expense related to interest rate swap |
$ | (2,947 | ) | |||||
|
$ | (2,947 | ) | |||||
- (5)
- Represents the expected income tax impact of the Kerasotes Acquisition in U.S. tax jurisdictions at the expected state and federal rate of approximately 37.5%.
6
AMC ENTERTAINMENT INC. UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF APRIL 1, 2010 (dollars in thousands)
AMC ENTERTAINMENT INC. UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FIFTY-TWO WEEKS ENDED APRIL 1, 2010 (dollars in thousands)
AMC ENTERTAINMENT INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS