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8-K/A - FORM 8-K/A (AMENDMENT NO. 1) - CARMIKE CINEMAS INCd462845d8ka.htm
EX-99.2 - RAVE REVIEWS CINEMAS, L.L.C. AND SUBSIDIARIES AUDITED FINANCIAL STATEMENTS - CARMIKE CINEMAS INCd462845dex992.htm
EX-23.1 - CONSENT OF MONTGOMERY COSCIA GREILICH, LLP - CARMIKE CINEMAS INCd462845dex231.htm
EX-99.3 - RAVE REVIEWS CINEMAS, L.L.C. AND SUBSIDIARIES AUDITED FINANCIAL STATEMENTS - CARMIKE CINEMAS INCd462845dex993.htm

Exhibit 99.1

CARMIKE CINEMAS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 15, 2012, Carmike Cinemas, Inc. (“Carmike” or the “Company”) completed its acquisition of 16 entertainment complexes in seven U.S. states (the “Theatres”) pursuant to the terms of the Membership Interest Purchase Agreement (the “Purchase Agreement”) with Rave Reviews Cinemas, L.L.C (“Rave”) and Rave Reviews Holdings, LLC (“Acquisition Sub”) dated September 28, 2012. Prior to consummation of the acquisition, Rave transferred to the Acquisition Sub the Theatres and certain related assets and certain assumed liabilities, including the leases, related to the Theatres. Carmike subsequently acquired all of the ownership interests of the Acquisition Sub (the “Acquisition”). In consideration for the Acquisition, Carmike paid $20.9 million in cash, including $1.9 million in working capital adjustments. In addition, the Company assumed approximately $110.2 million of capital leases and financing obligations. The purchase price was paid using cash on hand.

The following unaudited pro forma condensed combined balance sheet as of September 30, 2012 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and for the year ended December 31, 2011 are based on the historical financial statements of the Company, adjusted to give effect to the Acquisition, including the acquisition of all of the membership interests of the Acquisition Sub and substantially all of the assets of Rave. The Acquisition did not include four Rave theatres.

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and for the year ended December 31, 2011 give pro forma effect to the Acquisition as if it had occurred on January 1, 2011. The unaudited pro forma condensed combined balance sheet as of September 30, 2012 assumes that the transaction was effective on September 30, 2012.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2011 was derived from the Company’s audited consolidated statement of operations for the year ended December 31, 2011 and from Rave’s audited consolidated statement of operations for the year ended December 29, 2011 (as restated).

The unaudited pro forma condensed combined balance sheet and statement of operations as of and for the nine months ended September 30, 2012 were derived from the Company’s unaudited condensed combined financial statements as of and for the nine months ended September 30, 2012 and from Rave’s unaudited condensed combined financial statements as of and for the nine months ended September 27, 2012.

The following unaudited pro forma condensed combined financial information is based on, and should be read in conjunction with:

 

   

The historical audited financial statements of the Company included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and filed with the Securities and Exchange Commission (“SEC”) on March 12, 2012;

 

   

The historical unaudited interim financial statements of the Company included in its quarterly report on Form 10-Q for the three and nine months ended September 30, 2012, and filed with the SEC on November 1, 2012;

 

   

The historical audited consolidated balance sheets of Rave as of December 29, 2011 and December 30, 2010, and the consolidated statements of operations and members’ deficit and cash flows for the years ended December 29, 2011, December 30, 2010 and December 31, 2009, all as restated, attached as Exhibit 99.2 to the current report on Form 8-K/A to which this unaudited pro forma combined condensed financial information is attached (the “Form 8-K/A”); and

 

   

The historical unaudited consolidated balance sheet of Rave as of September 27, 2012 and the consolidated statements of operations and members’ deficit and cash flows of Rave for the nine months ended September 27, 2012 and September 26, 2011, attached as Exhibit 99.3 to the Form 8-K/A.


The unaudited pro forma condensed combined financial information has been prepared by the Company using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The acquisition accounting is dependent on certain valuation and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. The assets and liabilities of Rave have been measured based on preliminary estimates using assumptions that the Company believes are reasonable. Differences between these estimates and the final acquisition accounting could occur, and those differences could have a material impact on the accompanying pro forma condensed combined financial statements. Carmike intends to complete the necessary valuation required to finalize the acquisition accounting as soon as practicable, but in no event later than one year following completion of the Acquisition.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations in future periods or the financial position or results of operations that actually would have been realized had the Company and Rave been a combined company during the specified periods. It also does not reflect any cost savings, operating synergies or revenue enhancements that the Company may achieve with respect to the combined company.


CARMIKE CINEMAS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2012

 

     Carmike
Historical
    Rave
Historical
    Pro Forma
Adjustments (Footnote 3)
    Carmike
Pro Forma
Combined
 
     (In Thousands, Except Share and Per Share Amounts)  
ASSETS         

Current assets:

        

Cash and cash equivalents

   $ 82,043      $ 2,583      $ (23,447 ) a    $ 61,179   

Restricted cash

     58        —          —          58   

Accounts receivable

     4,706        813        (168 ) b      5,351   

Inventories

     2,860        637        (147 ) b      3,350   

Prepaid expenses and other current assets

     9,878        714        (413 ) b, c      10,179   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     99,545        4,747        (24,175     80,117   
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment:

        

Land

     52,646        5,735        (5,735 ) b      52,646   

Buildings and building improvements

     269,016        126,534        (48,814 ) b, d      346,736   

Leasehold improvements

     121,853        —          —          121,853   

Assets under capital leases

     44,970        —          —          44,970   

Equipment

     220,801        49,669        (32,866 ) b, d      237,604   

Construction in progress

     7,466        —          —          7,466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total property and equipment

     716,752        181,938        (87,415     811,275   

Accumulated depreciation and amortization

     (365,258     (85,995     85,995  d      (365,258
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     351,494        95,943        (1,420     446,017   

Goodwill

     8,087        —          51,511  e      59,598   

Intangible assets, net of accumulated amortization

     1,088        —          —          1,088   

Investments in unconsolidated affiliates

     7,960        —          —          7,960   

Other assets

     21,020        844        (398 ) b, f      21,466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 489,194      $ 101,534      $ 25,518      $ 616,246   
  

 

 

   

 

 

   

 

 

   

 

 

 
LIABILITIES AND EQUITY         

Current liabilities:

        

Accounts payable

   $ 20,075      $ 4,797      $ (961 ) b    $ 23,911   

Accrued expenses

     36,671        7,586        (1,193 ) b, h      43,064   

Current maturities of long-term debt, capital leases and long-term financing obligations

     2,216        4,673        (2,376 ) g      4,513   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     58,962        17,056        (4,530     71,488   
  

 

 

   

 

 

   

 

 

   

 

 

 

Long-term liabilities:

        

Deferred revenue

     33,273        —          —          33,273   

Long-term debt, less current maturities

     209,530        —          —          209,530   

Capital leases and long-term financing obligations, less current maturities

     113,237        120,047        (12,101 ) b, i      221,183   

Other

     17,024        8,545        (1,965 ) j, k      23,604   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     373,064        128,592        (14,066     487,590   
  

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

        

Stockholders’ equity:

        

Preferred Stock, $1.00 par value per share: 1,000,000 shares authorized, no shares issued

     —          —          —          —     

Common Stock, $0.03 par value per share: 35,000,000 shares authorized, 18,238,847 shares issued and 17,781,617 shares outstanding at September 30, 2012

     539        —          —          539   

Treasury stock, 457,230 shares at cost at September 30, 2012

     (11,740     —          —          (11,740

Paid-in capital

     349,046        67,711        (67,711 ) l      349,046   

Accumulated deficit

     (280,677     (111,825     111,825  l      (280,677
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     57,168        (44,114     44,114        57,168   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 489,194      $ 101,534      $ 25,518      $ 616,246   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.


CARMIKE CINEMAS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

 

     Carmike
Historical
    Rave
Historical
Restated
    Pro Forma
Adjustments (Footnote 3)
    Carmike
Pro Forma
Combined
 
     (In Thousands, Except Per Share Amounts)  

Revenues:

        

Admissions

   $ 309,782      $ 82,500      $ (23,138 ) m    $ 369,144   

Concessions and other

     172,427        43,046        (13,310 ) m      202,163   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     482,209        125,546        (36,448     571,307   

Operating costs and expenses:

        

Film exhibition costs

     167,385        45,020        (12,607 ) m      199,798   

Concession costs

     19,895        5,131        (1,533 ) m      23,493   

Other theatre operating costs

     203,012        42,038        (11,806 ) m      233,244   

General and administrative expenses

     19,084        5,227        (5,227 ) n      19,084   

Severance agreement charges

     845        —          —          845   

Depreciation and amortization

     32,258        10,180        (1,298 ) o      41,140   

Loss on sale of property and equipment

     333        —          —          333   

Write-off of note receivable

     750        —          —          750   

Impairment of long-lived assets

     3,489        539        —          4,028   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     447,051        108,135        (32,471     522,715   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     35,158        17,411        (3,977     48,592   

Interest expense

     34,113        21,425        (4,935 ) q      50,603   

Other expense

     —          190        —          190   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income tax and income from unconsolidated affiliates

     1,045        (4,204     958        (2,201

Income tax expense (benefit)

     10,375        —          (1,282 ) r      9,093   

Income from unconsolidated affiliates

     1,797        —          —          1,797   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

   $ (7,533   $ (4,204   $ 2,240      $ (9,497
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     12,807            12,807   

Diluted

     12,807            12,807   

Net loss per common share (Basic and Diluted):

        
  

 

 

       

 

 

 

Net loss per common share

   $ (0.59       $ (0.74
  

 

 

       

 

 

 

The accompanying notes are an integral part of these financial statements.


CARMIKE CINEMAS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

 

     Carmike
Historical
     Rave
Historical
    Pro Forma
Adjustments (Footnote 3)
    Carmike
Pro Forma
Combined
 
     (In Thousands, Except Per Share Amounts)  

Revenues:

         

Admissions

   $ 250,423       $ 66,423      $ (18,486 ) m    $ 298,360   

Concessions and other

     143,888         34,927        (10,381 ) m      168,434   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     394,311         101,350        (28,867     466,794   

Operating costs and expenses:

         

Film exhibition costs

     136,126         36,552        (10,092 ) m      162,586   

Concession costs

     16,863         4,468        (1,299 ) m      20,032   

Other theatre operating costs

     158,465         32,536        (9,050 ) m      181,951   

General and administrative expenses

     15,826         4,129        (5,009 ) n, p      14,946   

Severance agreement charges

     588         —          —          588   

Depreciation and amortization

     24,028         7,409        (747 ) o      30,690   

Loss on sale of property and equipment

     948         —          —          948   

Impairment of long-lived assets

     3,371         607        —          3,978   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     356,215         85,701        (26,197     415,719   
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     38,096         15,649        (2,670     51,075   

Interest expense

     25,478         15,774        (4,861 ) q      36,391   

Loss on extinguishment of debt

     4,961         —          —          4,961   

Other expense

     —           62        —          62   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income tax

     7,657         (187     2,191        9,661   

Income tax expense

     3,822         —          792  r      4,614   

Income from unconsolidated affiliates

     958         —          —          958   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ 4,793       $ (187   $ 1,399      $ 6,005   
  

 

 

    

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

         

Basic

     15,775           —          15,775   

Diluted

     16,061           —          16,061   

Net income per common share (Basic)

   $ 0.30           $ 0.38   
  

 

 

        

 

 

 

Net income per common share (Diluted)

   $ 0.30           $ 0.37   
  

 

 

        

 

 

 

The accompanying notes are an integral part of these financial statements.


CARMIKE CINEMAS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

1. Basis of Presentation

The historical financial information is derived from the historical consolidated financial statements of Carmike and the historical consolidated financial statements of Rave. The unaudited pro forma condensed combined balance sheet as of September 30, 2012 has been prepared as if the Acquisition had occurred on September 30, 2012 and combines the historical balance sheet of Carmike as of September 30, 2012 and the historical balance sheet of Rave as of September 27, 2012. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2011 and the nine months ended September 30, 2012 have been prepared as if the Acquisition had occurred on January 1, 2011 and combine the historical results for Carmike, for the year ended December 31, 2011 and for the nine months ended September 30, 2012, and Rave, for the year ended December 29, 2011 and for the nine months ended September 27, 2012.

The unaudited pro forma condensed combined financial information has been prepared by the Company using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The acquisition accounting is dependent on certain valuation and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. The assets and liabilities of Rave have been measured based on preliminary estimates using assumptions that the Company believes are reasonable. Differences between these estimates and the final acquisition accounting could occur, and those differences could have a material impact on the accompanying pro forma condensed combined financial statements. Carmike intends to complete the necessary valuation required to finalize the acquisition accounting as soon as practicable, but in no event later than one year following completion of the Acquisition.

 

2. Assets Acquired and Liabilities Assumed at Fair Value

The Company prepared the allocation of the fair values of the assets acquired and liabilities assumed in the September 30, 2012 pro forma condensed combined balance sheet based on management’s best estimates of the fair value of assets acquired and liabilities assumed.

The following table summarizes the purchase price and purchase price allocation based on the fair value of net assets acquired (amounts in thousands):

 

Cash

   $ 19,000   

Leases and financing obligations assumed

     110,243   
  

 

 

 

Purchase price

     129,243   

Working capital adjustment

     1,864   
  

 

 

 

Total purchase price

   $ 131,107   
  

 

 

 

Accounts receivable

   $ 645   

Inventory

     490   

Other current assets

     301   

Property and equipment

     94,523   

Other assets

     446   

Current liabilities

     (10,229

Other liabilities

     (6,580
  

 

 

 

Net assets acquired

     79,596   

Goodwill

     51,511   
  

 

 

 

Total

   $ 131,107   
  

 

 

 


For the purpose of these pro forma condensed combined financial statements, the carrying value of all assets acquired, except for property and equipment and goodwill, and all liabilities assumed, approximates fair value.

 

3. Pro Forma Adjustments

The pro forma financial information does not give effect to any synergies that may be realized as a result of the Acquisition. The unaudited pro forma combined balance sheets and statements of operations reflect the effect of the following pro forma adjustments:

 

  (a) Adjustment to reflect the $20,864, inclusive of preliminary working capital adjustment, paid by the Company in connection with the Acquisition and cash balances totaling $2,583 held by Rave as of the closing date not included in the Acquisition.

 

  (b) Adjustment to reflect the net book value of assets and liabilities associated with the four Rave theatres not acquired.

 

  (c) Adjustment to reflect the note receivable of $348 due from one of Rave’s former officers which was not included in the Acquisition.

 

  (d) Adjustment to increase the net book value of buildings and building improvements and equipment by $26,000 and $800, respectively, to reflect the acquisition date fair value and to reset accumulated depreciation to $0.

 

  (e) Adjustment to reflect the excess of purchase price over the estimated fair value of the net assets acquired.

 

Total purchase price

     $ 131,107   

Accounts receivable

   $ 645     

Inventory

     490     

Prepaid and other assets

     301     

Property and equipment

     94,523     

Other assets

     446     

Accounts payable

     (3,836  

Accrued expenses

     (6,393  

Other liabilities

     (6,580  
  

 

 

   

Net assets acquired

     $ 79,596   
    

 

 

 

Goodwill

     $ 51,511   
    

 

 

 

 

  (f) Adjustment to reflect the elimination of deferred financing fees of $359 as a result of fair value accounting.

 

  (g) Adjustment to reflect the elimination of Rave debt of $1,000 that was settled in conjunction with the Acquisition and the elimination of the current portion of accrued straight-line and deferred rent credits of $1,376 as a result of fair value accounting.

 

  (h) Adjustment to reflect the accrual of acquisition-related expenses of $1,200 incurred in connection with and contingent upon the closing of the Acquisition and the elimination of $997 of Rave deferred revenue.


  (i) Adjustment to reflect the increase in the fair value of capital leases and long-term financing obligations of $9,536.

 

  (j) Adjustment to reflect the elimination of straight-line and deferred rent credits of $8,545 as a result of fair value accounting.

 

  (k) Adjustment to record the fair value of $6,580 associated with an unfavorable operating lease acquired in the Acquisition.

 

  (l) Adjustment to reflect the elimination of Rave stockholders’ equity.

 

  (m) Adjustment to reflect corporate revenues and expenses associated with the four Rave theatres not acquired.

 

  (n) Adjustment to reflect the elimination of Rave’s corporate general and administrative expenses as the Acquisition only included the assets, employees and operations of the 16 acquired theatres and none of Rave’s corporate assets or management personnel or functions. The Company does not expect to incur any incremental future operating costs of significance to incorporate these theatres into its circuit.

 

  (o) Adjustment to reflect depreciation expense for the adjusted asset base and depreciable lives as determined per the fair value assessment. Depreciable lives range from three to twenty years.

 

  (p) Adjustment to reflect the elimination of $880 of acquisition-related expenses incurred by Carmike during the nine months ended September 30, 2012. The Company has removed these expenses from the unaudited pro forma combined condensed statement of income for the nine months ended September 30, 2012 on the basis that they are non-recurring. No adjustment was made for the twelve months ended December 31, 2011 as there were no such costs incurred prior to January 1, 2012.

 

  (q) Adjustment to reflect the elimination of interest expense of $424 and $240 for the year ended December 31, 2011 and nine months ended September 30, respectively, related to Rave debt settled in conjunction with the Acquisition. Also, the adjustment to reflect the reduction of interest expense of $4,511 and $4,621 for the year ended December 31, 2011 and nine months ended September 30, 2012, respectively, as a result of fair value accounting for assumed capital leases and financing obligations.

 

  (r) Adjustment to reflect the tax (benefit) expense that would have been incurred with respect to the Rave theatres. Pro forma tax expense was calculated using a rate of 39.5%. We do not expect a significant difference between pre-tax book income and taxable income. Furthermore, the acquisition of Rave would not have caused us to conclude that a full valuation allowance upon our deferred tax assets was no longer required.