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Carmike Cinemas 10-Q 2013

Documents found in this filing:

  1. 10-Q
  2. Ex-10.1
  3. Ex-31.1
  4. Ex-31.2
  5. Ex-32.1
  6. Ex-32.2
  7. Ex-32.2
Form 10-Q
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-14993

 

 

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   31901-2109
(Address of Principal Executive Offices)   (Zip Code)

(706) 576-3400

(Registrant’s Telephone Number, Including Area Code)

 

 

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of the issuer’s common stock, as of the latest practicable date.

Common Stock, par value $0.03 per share — 17,841,895 shares outstanding as of April 24, 2013.


Table of Contents

TABLE OF CONTENTS

 

     Page  

PART I. FINANCIAL INFORMATION

  

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

     3   

CONDENSED CONSOLIDATED BALANCE SHEETS

     3   

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

     4   

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

     5   

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     6   

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     27   

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     34   

ITEM 4. CONTROLS AND PROCEDURES

     34   

PART II. OTHER INFORMATION

  

ITEM 1. LEGAL PROCEEDINGS

     36   

ITEM 1A. RISK FACTORS

     36   

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     36   

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     36   

ITEM 4. MINE SAFETY DISCLOSURES

     36   

ITEM 5. OTHER INFORMATION

     36   

ITEM 6. EXHIBITS

     37   

EXHIBIT INDEX

     37   

SIGNATURES

     38   

EX-31.1 SECTION 302 CERTIFICATION OF CEO

  

EX-31.2 SECTION 302 CERTIFICATION OF CFO

  

EX-32.1 SECTION 906 CERTIFICATION OF CEO

  

EX-32.2 SECTION 906 CERTIFICATION OF CFO

  


Table of Contents

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

CARMIKE CINEMAS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except share and per share data)

 

     March 31,     December 31,  
     2013     2012  
     (Unaudited)        

Assets:

    

Current assets:

    

Cash and cash equivalents

   $ 63,642      $ 68,531   

Restricted cash

     9        293   

Accounts receivable

     5,461        6,555   

Inventories

     3,550        4,186   

Deferred income tax asset

     3,639        2,896   

Prepaid expenses and other current assets

     15,741        10,936   
  

 

 

   

 

 

 

Total current assets

     92,042        93,397   
  

 

 

   

 

 

 

Property and equipment:

    

Land

     51,876        51,876   

Buildings and building improvements

     335,141        335,738   

Leasehold improvements

     143,711        141,758   

Assets under capital leases

     44,970        44,970   

Equipment

     236,780        235,223   

Construction in progress

     6,654        5,185   
  

 

 

   

 

 

 

Total property and equipment

     819,132        814,750   

Accumulated depreciation and amortization

     (377,882     (369,823
  

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     441,250        444,927   

Goodwill

     44,577        44,577   

Investments in unconsolidated affiliates (Note 10)

     6,231        7,682   

Deferred income tax asset

     100,541        100,012   

Other

     19,872        21,072   

Intangible assets, net of accumulated amortization

     1,035        1,061   
  

 

 

   

 

 

 

Total assets

   $ 705,548      $ 712,728   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity:

    

Current liabilities:

    

Accounts payable

   $ 29,208      $ 32,141   

Accrued expenses

     40,228        40,049   

Current maturities of capital leases and long-term financing obligations

     4,547        4,422   
  

 

 

   

 

 

 

Total current liabilities

     73,983        76,612   
  

 

 

   

 

 

 

Long-term liabilities:

    

Long-term debt, less current maturities

     209,565        209,548   

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

     219,746        220,725   

Deferred revenue

     32,695        32,984   

Other

     25,371        23,425   
  

 

 

   

 

 

 

Total long-term liabilities

     487,377        486,682   
  

 

 

   

 

 

 

Commitments and contingencies (Note 7)

    

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, 18,309,979 shares issued and 17,841,895 shares outstanding at March 31, 2013, and 18,244,179 shares issued and 17,786,949 shares outstanding at December 31, 2012

     542        540   

Treasury stock, 468,084 and 457,230 shares at cost at March 31, 2013 and December 31, 2012, respectively

     (11,914     (11,740

Paid-in capital

     350,375        349,666   

Accumulated deficit

     (194,815     (189,032
  

 

 

   

 

 

 

Total stockholders’ equity

     144,188        149,434   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 705,548      $ 712,728   
  

 

 

   

 

 

 

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

 

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CARMIKE CINEMAS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share data)

 

     Three Months Ended
March 31,
 
     2013     2012  
     (Unaudited)     (Unaudited)  

Revenues:

    

Admissions

   $ 81,522      $ 82,690   

Concessions and other

     48,571        47,276   
  

 

 

   

 

 

 

Total operating revenues

     130,093        129,966   

Operating costs and expenses:

    

Film exhibition costs

     43,264        43,243   

Concession costs

     5,969        5,566   

Other theatre operating costs

     57,959        52,132   

Lease termination charges (Note 12)

     3,063        —     

General and administrative expenses

     6,015        5,000   

Depreciation and amortization

     10,234        7,767   

Loss on sale of property and equipment

     80        248   

Impairment of long-lived assets

     204        1,486   
  

 

 

   

 

 

 

Total operating costs and expenses

     126,788        115,442   
  

 

 

   

 

 

 

Operating income

     3,305        14,524   

Interest expense

     12,298        8,263   
  

 

 

   

 

 

 

(Loss) income before income tax and loss from unconsolidated affiliates

     (8,993     6,261   

Income tax (benefit) expense (Note 4)

     (4,297     2,407   

Loss from unconsolidated affiliates (Note 10)

     (1,015     (543
  

 

 

   

 

 

 

(Loss) income from continuing operations

     (5,711     3,311   

Loss from discontinued operations (Note 6)

     (72     (79
  

 

 

   

 

 

 

Net (loss) income

   $ (5,783   $ 3,232   
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     17,547        12,824   

Diluted

     17,547        12,942   

Net (loss) income per common share (Basic and Diluted):

    

(Loss) income from continuing operations

   $ (0.33   $ 0.26   

Loss from discontinued operations, net of tax

     —          (0.01
  

 

 

   

 

 

 

Net (loss) income

   $ (0.33   $ 0.25   
  

 

 

   

 

 

 

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

 

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CARMIKE CINEMAS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Three Months Ended
March 31,
 
     2013     2012  
     (Unaudited)     (Unaudited)  

Cash flows from operating activities:

    

Net (loss) income

   $ (5,783   $ 3,232   

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

    

Depreciation and amortization

     10,234        7,803   

Amortization of debt issuance costs

     362        596   

Impairment on long-lived assets

     204        1,486   

Deferred income taxes

     (1,272     —     

Stock-based compensation

     711        463   

Loss from unconsolidated affiliates

     1,326        897   

Other

     117        107   

Loss on sale of property and equipment

     91        290   

Changes in operating assets and liabilities:

    

Accounts receivable and inventories

     1,870        (764

Prepaid expenses and other assets

     (3,907     (523

Accounts payable

     (103     (2,721

Accrued expenses and other liabilities

     (1,171     (1,011

Lease termination charges

     3,063        —     

Distributions from unconsolidated affiliates

     82        98   
  

 

 

   

 

 

 

Net cash provided by operating activities

     5,824        9,953   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (8,508     (5,990

Release of restricted cash

     284        301   

Theatre acquisition

     (1,349     (702

Proceeds from sale of property and equipment

     5        58   
  

 

 

   

 

 

 

Net cash used in investing activities

     (9,568     (6,333
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Debt activities:

    

Short-term borrowings

     —          5,000   

Repayment of short-term borrowings

     —          (5,000

Repayments of long-term debt

     —          (511

Repayments of capital lease and long-term financing obligations

     (971     (436

Purchase of treasury stock

     (174     —     
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,145     (947
  

 

 

   

 

 

 

(Decrease) increase in cash and cash equivalents

     (4,889     2,673   

Cash and cash equivalents at beginning of period

     68,531        13,616   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 63,642      $ 16,289   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    

Cash paid during the period for:

    

Interest

   $ 7,911      $ 7,559   

Income taxes

   $ 176      $ —     

Non-cash investing and financing activities:

    

Non-cash purchase of property and equipment

   $ 1,590      $ 1,078   

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

 

5


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CARMIKE CINEMAS, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2013 and 2012

(unaudited)

(in thousands except share and per share data)

NOTE 1—BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Carmike Cinemas, Inc. (referred to as “we”, “us”, “our”, and the “Company”) has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). This information reflects all adjustments which in the opinion of management are necessary for a fair presentation of the balance sheet as of March 31, 2013 and December 31, 2012 and the results of operations and cash flows for the three month periods ended March 31, 2013 and 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. That report includes a summary of our critical accounting policies. There have been no material changes in our accounting policies during the first three months of 2013.

The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.

Accounting Estimates

In the preparation of financial statements in conformity with GAAP, management must make certain estimates, judgments and assumptions. These estimates, judgments and assumptions are made when accounting for items and matters such as, but not limited to, depreciation, amortization, asset valuations, impairment assessments, lease classification, employee benefits, income taxes, reserves and other provisions and contingencies. These estimates are based on the information available when recorded. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are recognized in the period they are determined.

Discontinued Operations

The results of operations for theatres that have been disposed of or classified as held for sale are eliminated from the Company’s continuing operations and classified as discontinued operations for each period presented within the Company’s condensed consolidated statements of operations. Theatres are reported as discontinued operations when the Company no longer has continuing involvement in the theatre operations and the cash flows have been eliminated, which generally occurs when the Company no longer has operations in a given market. See Note 6 – Discontinued Operations.

Impairment of Long-Lived Assets

Long-lived assets are tested for recoverability whenever events or circumstances indicate that the assets’ carrying values may not be recoverable. The Company performs its impairment analysis at the individual theatre-level, the lowest level of independent, identifiable cash flow. Management reviews all available evidence when assessing long-lived assets for impairment, including negative trends in theatre-level cash flow, the impact of competition, the age of the theatre, and alternative uses of the assets. The Company’s evaluation of negative trends in theatre-level cash flow considers the seasonality of the business, with significant revenues and cash flow generated in the summer and year-end holiday season. Absent any unusual circumstances, management evaluates new theatres for potential impairment only after a theatre has been open and operational for a sufficient period of time to allow its operations to mature.

For those assets that are identified as potentially being impaired, if the undiscounted future cash flows from such assets are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the asset’s fair value. The fair value of the assets is primarily estimated using the discounted future cash flow of the assets with consideration of other valuation techniques and using assumptions consistent with those used by market participants. Significant judgment is involved in estimating cash flows and fair value; significant assumptions include attendance levels, admissions and concessions pricing, and the weighted-average cost of capital. Management’s estimates are based on historical and projected operating performance.

 

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Fair Value Measurements

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term maturities of these assets and liabilities.

The fair value of the Senior Secured Notes and Credit Facility described in Note 3 – Debt is estimated based on quoted market prices at the date of measurement.

Comprehensive Income

The Company has no other comprehensive income items.

Recent Accounting Pronouncements

There have been no new accounting pronouncements issued or effective through the three months ended March 31, 2013 that had or are expected to have a significant impact on the Company’s condensed consolidated financial statements.

NOTE 2—IMPAIRMENT OF LONG-LIVED ASSETS

For the three months ended March 31, 2013, impairment charges aggregated to $204. The impairment charges were primarily the result of the continued deterioration of previously impaired theatres. The Company recorded impairment charges of $1,486 during the three months ended March 31, 2012 which were primarily the result of the Company’s plan to replace an owned theatre prior to the end of its useful life.

The estimated aggregate fair value of the long-lived assets impaired during the three months ended March 31, 2013 was approximately $538. These fair value estimates are considered Level 3 estimates within the fair value hierarchy prescribed by Accounting Standards Codification (“ASC 820”) Fair Value Measurements, and were derived primarily from discounting estimated future cash flows. Future cash flows for a particular theatre are based on historical cash flows for that theatre, after giving effect to future attendance fluctuations, and are projected through the remainder of its lease term or useful life. The Company projects future attendance fluctuations of (10%) to 10%. The risk-adjusted rate of return used to discount these cash flows ranges from 10% to 15%.

NOTE 3—DEBT

The Company’s debt consisted of the following on the dates indicated:

 

     March 31,
2013
    December 31,
2012
 

Senior secured notes

   $ 210,000      $ 210,000   

Revolving credit facility

     —          —     

Original issue discount

     (435     (452
  

 

 

   

 

 

 

Total debt

     209,565        209,548   

Current maturities

     —          —     
  

 

 

   

 

 

 

Total long-term debt

   $ 209,565      $ 209,548   
  

 

 

   

 

 

 

Senior Secured Notes

In April 2012, the Company issued $210,000 aggregate principal amount of 7.375% Senior Secured Notes due May 15, 2019 (the “Senior Secured Notes”). The proceeds were used to repay the Company’s $265,000 senior secured term loan that was due in January 2016 with a then outstanding balance of $198,700. Interest is payable on the Senior Secured Notes on May 15 and November 15 of each year.

The Senior Secured Notes are fully and unconditionally guaranteed by each of the Company’s existing subsidiaries and will be guaranteed by any future domestic wholly-owned restricted subsidiaries of the Company. Debt issuance costs and other transaction fees of $8,600 are included in other non-current assets and amortized over the life of the debt as interest expense. The Senior Secured Notes are secured, subject to certain permitted liens, on a second priority basis by substantially all of the Company’s and the guarantors’ current and future property and assets (including the capital stock of the Company’s current subsidiaries), other than certain excluded assets.

At any time prior to May 15, 2015, the Company may redeem up to 35% of the aggregate principal amount of the Senior Secured Notes with the proceeds of certain equity offerings at a redemption price equal to 107.375% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest to, but excluding the redemption date; provided, however, that at least 65% of the

 

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aggregate principal amount of the Senior Secured Notes are outstanding immediately following the redemption. In addition, at any time prior to May 15, 2015, the Company may redeem all or a portion of the Senior Secured Notes by paying a “make-whole” premium calculated as described in the indenture governing the Senior Secured Notes (the “Indenture”). The Company has not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and risks of this embedded derivative are clearly and closely related to the economic characteristics of the underlying debt.

At any time on or after May 15, 2015, the Company may redeem all or a portion of the Senior Secured Notes at redemption prices calculated based on a percentage of the principal amount of the Senior Secured Notes being redeemed, plus accrued and unpaid interest, if any, to the redemption date, depending on the date on which the Senior Secured Notes are redeemed. These percentages range from between 100.00% and 105.53%.

Following a change of control, as defined in the Indenture, the Company will be required to make an offer to repurchase all or any portion of the Senior Secured Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest to, but excluding, the date of repurchase.

Revolving Credit Facility

In April 2012, the Company also entered into a new $25,000 revolving credit facility (the “Credit Facility”) with an interest rate of LIBOR (subject to a 1.00% floor) plus a margin of 4.50%, or Base Rate (subject to a 2.00% floor) plus a margin of 3.50%, as the Company may elect. In addition, the Company is required to pay commitment fees on the unused portion of the Credit Facility at the rate of 0.50% per annum. The termination date of the Credit facility is April 27, 2016. The $25,000 revolving credit facility replaced the prior $30,000 revolving credit facility that was scheduled to mature in January 2013.

The Credit Facility includes a sub-facility for the issuance of letters of credit totaling up to $10,000. The Company’s obligations under the Credit Facility are guaranteed by each of the Company’s existing and future direct and indirect wholly-owned domestic subsidiaries, and the obligations of the Company and such guarantors in respect of the Credit Facility are secured by first priority liens on substantially all of the Company’s and such subsidiaries’ current and future property and assets, other than certain excluded assets pursuant to the first lien guarantee and collateral agreement by and among the Company, such guarantors and Wells Fargo Bank, National Association, as collateral trustee. In addition, the Credit Facility contains provisions to accommodate the incurrence of up to $150,000 in future incremental borrowings. While the Credit Facility does not contain any commitment by the lenders to provide this incremental indebtedness, the Credit Facility describes how such debt (if provided by the Company’s existing or new lenders) would be subject to various financial and other covenant compliance requirements and conditions at the time the additional debt is incurred. There was no outstanding balance on the revolving credit facility at March 31, 2013.

The fair value of the Senior Secured Notes at March 31, 2013 and December 31, 2012 is estimated based on quoted market prices as follows:

 

     As of March 31,      As of December 31,  
     2013      2012  

Carrying amount, net

   $ 210,000       $ 210,000   

Fair value

   $ 229,950       $ 226,800   

Debt Covenants

The Indenture and the Credit Facility include covenants which, among other things, limit the Company’s ability, and the ability of its subsidiaries, to:

 

   

incur additional indebtedness or guarantee obligations;

 

   

issue certain preferred stock or redeemable stock;

 

   

pay dividends beyond certain calculated thresholds, repurchase or make distributions in respect of the Company’s capital stock or make other restricted payments;

 

   

make certain investments;

 

   

sell, transfer or otherwise convey certain assets;

 

   

create or incur liens or other encumbrances;

 

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prepay, redeem or repurchase subordinated debt prior to stated maturities;

 

   

designate the Company’s subsidiaries as unrestricted subsidiaries;

 

   

consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets;

 

   

enter into a new or different line of business; and

 

   

enter into certain transactions with the Company’s affiliates.

The restrictive covenants are subject to a number of important exceptions and qualifications set forth in the Indenture and the Credit Facility.

The Indenture provides for customary events of default. If any event of default occurs and is continuing, subject to certain exceptions, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately, together with any accrued and unpaid interest, if any, to the acceleration date. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, such amounts with respect to the Senior Secured Notes will be due and payable immediately without any declaration or other act on the part of the trustee or the holders of the Senior Secured Notes.

The Credit Facility contains further limitations on the Company’s ability to incur additional indebtedness and liens. In addition, to the extent the Company incurs certain specified levels of additional indebtedness, further limitations under the Credit Facility will become applicable under covenants related to sales of assets, sale-leaseback transactions, investment transactions, and the payment of dividends and other restricted payments. If the Company draws on the Credit Facility, the Company will be required to maintain a first lien leverage ratio as defined (the “Leverage Ratio”) not more than 2.75 to 1.00. The Credit Facility also contains certain representations and warranties, other affirmative and negative covenants, and events of default customary for secured revolving credit facilities of this type.

The Company’s failure to comply with any of these covenants, including compliance with the Leverage Ratio, will be an event of default under the Credit Facility, in which case the administrative agent may, with the consent or at the request of lenders holding a majority of the commitments and outstanding loans, terminate the Credit Facility and declare all or any portion of the obligations under the Credit Facility due and payable. Other events of default under the Credit Facility include:

 

   

the Company’s failure to pay principal on the loans when due and payable, or its failure to pay interest on the loans or to pay certain fees and expenses (subject to applicable grace periods);

 

   

the occurrence of a change of control (as defined in the Credit Facility);

 

   

a breach or default by the Company or its subsidiaries on the payment of principal of any other indebtedness in an aggregate amount greater than $10,000;

 

   

breach of representations or warranties in any material respect;

 

   

failure to perform other obligations under the Credit Facility and the security documents for the Credit Facility (subject to applicable cure periods); or

 

   

certain bankruptcy or insolvency events.

In the event of a bankruptcy or insolvency event of default, the Credit Facility will automatically terminate, and all obligations thereunder will immediately become due and payable.

As of March 31, 2013, the Company was in compliance with all of the financial covenants in its Indenture and Credit Facility.

NOTE 4—INCOME TAXES

The Company’s effective income tax rate is based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year’s taxable income as new information becomes available, including actual year-to-date financial results. Included in the Company’s estimates are the effects of the American Taxpayer Relief Act of 2012 which did not have a significant impact on the Company’s income tax provision. This continual estimation process

 

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often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating the tax positions.

The effective tax rate from continuing operations for the three months ended March 31, 2013 and 2012 was 42.9% and 42.2%, respectively. The Company’s tax rate for the three months ended March 31, 2013 differs from the statutory tax rate primarily due to state income taxes, permanent tax items and changes in uncertain tax positions. The Company’s tax rates for the three months ended March 31, 2012 differ from the statutory tax rate primarily due to temporary differences between the financial reporting basis and tax basis of its assets and liabilities and the inability to recognize an associated deferred tax benefit, due to the Company’s assessment that the realization of its deferred tax assets was unlikely. The Company released its valuation allowance against its deferred tax assets at December 31, 2012. The Company believes that the effective tax rate for the three months ended March 31, 2013 and future periods will more closely reflect the statutory tax rate.

The Company experienced an “ownership change” within the meaning of Section 382(g) of the Internal Revenue Code (“IRC”) of 1986, as amended, during the fourth quarter of 2008. The ownership change has and will continue to subject the Company’s pre-ownership change net operating loss carryforwards to an annual limitation, which will significantly restrict its ability to use them to offset taxable income in periods following the ownership change. In general, the annual use limitation equals the aggregate value of the Company’s stock at the time of the ownership change multiplied by a specified tax-exempt interest rate.

The Company determined that at the date of the ownership change, it had a net unrealized built-in loss (“NUBIL”). The NUBIL is determined based on the difference between the fair market value of the Company’s assets and their tax basis at the ownership change. Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subjected to the same limitation as the net operating loss carryforwards. Because the annual limitation is applied first against the realized built-in losses (“RBILs”), the Company does not expect to utilize any of its net operating loss carryforwards during the five year recognition period. The amount of the disallowed RBILs could increase if the Company disposes of assets with built-in losses at the date of the ownership change during the recognition period. As a result of the 2008 ownership change, the Company is limited to an approximate $1.7 million annual limitation on its ability to utilize its pre-change net operating loss (“NOLs”) and recognized built-in losses. The recognition period ends at October 15, 2013.

An ownership change was also deemed to have occurred during the second quarter of 2012. The Company does not believe this change will further limit its ability to utilize its net operating loss carryforwards or certain other deductions.

At March 31, 2013 and December 31, 2012, the Company’s net deferred tax assets, net of IRC Section 382 limitations, were $104,180 and $102,908, respectively. As of each reporting date, the Company assesses whether it is more likely than not that its deferred tax assets will be recovered from future taxable income, taking into account such factors as earnings history, taxable income in the carryback period, reversing temporary differences, projections of future taxable income, the finite lives of certain deferred tax assets and the impact of IRC Section 382 limitations. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. When sufficient evidence exists that indicates that recovery is not more likely than not, a valuation allowance is established against the deferred tax assets, increasing the Company’s income tax expense in the period that such conclusion is made. After reviewing all positive and negative evidence at March 31, 2013 and December 31, 2012, the Company determined that it was more likely than not that its deferred tax asset balance would be recovered from future taxable income. The Company’s determination not to record a valuation allowance involves significant estimates and judgments. If future results are significantly different from these estimates and judgments, the Company may be required to record a valuation allowance against its deferred tax assets.

As of March 31, 2013 and December 31, 2012, the amount of unrecognized tax benefits was $2,678, all of which would affect the Company’s annual effective tax rate, if recognized. This unrecognized tax benefit is primarily associated with the Company’s non-forfeitable ownership interest in SV Holdco, LLC (see Note 9 - Screenvision Exhibition, Inc.). The Company has recognized a tax basis for these units that is lower than their carrying value for financial statement purposes. However, as this tax position may not be sustained upon examination, the Company has recorded a related liability for this uncertain tax position.

NOTE 5—EQUITY BASED COMPENSATION

In March 2004, the Board of Directors adopted the Carmike Cinemas, Inc. 2004 Incentive Stock Plan (the “2004 Incentive Stock Plan”). The Company’s Compensation and Nominating Committee (or similar committee) may grant stock options, stock grants, stock units, and stock appreciation rights under the 2004 Incentive Stock Plan to certain eligible employees and to outside directors. As of March 31, 2013, there were 1,153,602 shares available for future grants under the 2004 Incentive Stock Plan. The Company’s policy is to issue new shares upon exercise of options and the issuance of stock grants.

 

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The Company also issues restricted stock awards to certain key employees and directors. Generally, the restricted stock vests over a one to three year period and compensation expense is recognized over the one to three year period equal to the grant date fair value of the shares awarded. As of March 31, 2013, the Company also had 361,603 shares of performance-based awards outstanding which are dependent on the achievement of EBITDA targets that vest over a three-year period. As of March 31, 2013, 236,803 shares of these performance-based stock awards have been earned due to the achievement of EBITDA targets. Performance-based stock awards are recognized as compensation expense over the vesting period based on the fair value on the date of grant and the number of shares ultimately expected to vest. The Company has determined the achievement of the performance target for the unearned awards is probable.

The Company’s total stock-based compensation expense was approximately $711 and $463 for the three months ended March 31, 2013 and 2012, respectively. Stock-based compensation expense is included in general and administrative expenses in the consolidated statement of operations. As of March 31, 2013, the Company had approximately $5,638 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s plans. This cost is expected to be recognized as stock-based compensation expense over a weighted-average period of approximately 2.4 years. This expected cost does not include the impact of any future stock-based compensation awards.

Options – Service Condition Vesting

The Company currently uses the Black-Scholes option pricing model to determine the fair value of its stock options for which vesting is dependent only on employees providing future service. Such stock options vest equally over a three-year period, except for options granted to members of the Board of Directors that vest immediately upon issuance. The stock options expire 10 years after the grant date. The Company’s stock-based compensation expense is recorded based on an estimated forfeiture rate of 5%.

No options were granted during the first three months of 2013 or 2012. The following table sets forth the summary of option activity for stock options with service vesting conditions as of March 31, 2013:

 

     Shares     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Life (Yrs.)
     Aggregate
Intrinsic
Value
 

Outstanding at January 1, 2013

     747,500      $ 12.32         5.92      

Granted

     —        $ —           

Exercised

     —        $ —           

Expired

     —        $ —           

Forfeited

     (50,000   $ 21.79         
  

 

 

   

 

 

    

 

 

    

 

 

 

Outstanding at March 31, 2013

     697,500      $ 11.64         6.09       $ 5,857   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable on March 31, 2013

     641,662      $ 12.03         5.92       $ 5,244   
  

 

 

   

 

 

    

 

 

    

 

 

 

Expected to vest March 31, 2013

     53,244      $ 7.14         8.01       $ 585   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

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Restricted Stock

The following table sets forth the summary of activity for restricted stock grants, including performance-based awards, for the three months ended March 31, 2013:

 

     Shares     Weighted
Average
Grant
Date Fair
Value
 

Nonvested at January 1, 2013

     458,981      $ 10.85   

Granted

     193,600      $ 15.66   

Vested

     (72,000   $ 10.92   

Forfeited

     —        $ —     
  

 

 

   

Nonvested at March 31, 2013

     580,581      $ 12.45   
  

 

 

   

NOTE 6—DISCONTINUED OPERATIONS

Theatres are generally considered for closure due to an expiring lease, underperformance, or the opportunity to better deploy invested capital. During the three months ended March 31, 2013 and 2012, the Company closed seven and four theatres, respectively. With respect to the closures during the three months ended March 31, 2013 and 2012, the Company classified one theatre and three theatres, respectively, as discontinued operations. The Company reported the results of these operations, including gains and losses on disposal, as discontinued operations. The operations and cash flows of these theatres have been eliminated from the Company’s continuing operations, and the Company will not have any continuing involvement in their operations.

All activity during the three months ended March 31, 2013 included in the accompanying consolidated statements of operations has been reclassified to separately reflect the results of operations from theatres closed in 2013 and considered discontinued operations through the respective date of the theatre closings. Assets and liabilities associated with the discontinued operations have not been segregated from assets and liabilities from continuing operations as they are not material.

The following table sets forth the summary of activity for discontinued operations for the three months ended March 31, 2013 and 2012:

 

     Three Months Ended
March 31,
 
           2013                 2012        

Revenue from discontinued operations

   $ 23      $ 941   
  

 

 

   

 

 

 

Operating loss before income taxes

   $ (111   $ (85

Income tax benefit from discontinued operations

     45        32   

Loss on disposal, before income taxes

     (11     (42

Income tax benefit on disposal

     5        16   
  

 

 

   

 

 

 

Loss from discontinued operations

   $ (72   $ (79
  

 

 

   

 

 

 

NOTE 7—COMMITMENTS AND CONTINGENCIES

Contingencies

The Company, in the normal course of business, is involved in routine litigation and legal proceedings, such as personal injury claims, employment matters, contractual disputes and claims alleging Americans with Disabilities Act violations. Currently, there is no pending litigation or proceedings that the Company believes will have a material adverse effect, either individually or in the aggregate, on its business or its financial position, results of operations or cash flow.

NOTE 8—NET INCOME (LOSS) PER SHARE

Basic net income (loss) per common share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed using the weighted-average number of common shares and common stock equivalents outstanding. As a result of the Company’s net losses, all common stock equivalents aggregating 1,410,412 for the three months ended March 31, 2013 were excluded from the calculation of diluted loss per share given their anti-dilutive effect. Common stock equivalents totaling 270,000 for the three months ended March 31, 2012, were excluded from the calculation of diluted earnings per share because of a decline in the average market price of the common stock compared to the price on the grant date.

 

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NOTE 9—SCREENVISION EXHIBITION, INC.

On October 14, 2010, the Company finalized the modification of its long-term exhibition agreement (the “Modified Exhibition Agreement”) with Screenvision Exhibition, Inc. (“Screenvision”), the Company’s exclusive provider of on-screen advertising services. The Modified Exhibition Agreement extends the Company’s exhibition agreement with Screenvision, which was set to expire on July 1, 2012, for an additional 30 year term through July 1, 2042 (“Expiration Date”).

In connection with the Modified Exhibition Agreement, the Company received a cash payment of $30,000 from Screenvision in January 2011. In addition, on October 14, 2010, the Company received, for no additional consideration, Class C membership units representing, as of that date, approximately 20% of the issued and outstanding membership units of SV Holdco, LLC (“SV Holdco”). SV Holdco is a holding company that owns and operates the Screenvision business through a subsidiary entity. SV Holdco has elected to be taxed as a partnership for U.S. federal income tax purposes.

In September 2011, the Company made a voluntary capital contribution of $718 to SV Holdco. The capital contribution was made to maintain the Company’s relative ownership interest following an acquisition by Screenvision and additional capital contributions by other owners of SV Holdco. The Company received Class A membership units representing less than 1% of the issued and outstanding membership units of SV Holdco in return for the Company’s capital contribution.

As of March 31, 2013, the Company held Class C and Class A membership units representing approximately 19% of the total issued and outstanding membership units of SV Holdco. As of March 31, 2013, the carrying value of the Company’s ownership interest in SV Holdco is $5,298 and is included in investments in unconsolidated affiliates in the consolidated balance sheets. For book purposes, the Company has accounted for its investment in SV Holdco, LLC, a limited liability company for which separate accounts of each investor are maintained, as an equity method investment pursuant to Accounting Standards Codification 970-323-25-6.

The Company’s Class C membership units are intended to be treated as a “profits interest” in SV Holdco for U.S. federal income tax purposes and thus do not give the Company an interest in the other members’ initial or subsequent capital contributions. As a profits interest, the Company’s Class C membership units are designed to represent an equity interest in SV Holdco’s future profits and appreciation in assets beyond a defined threshold amount, which equaled $85,000 as of October 14, 2010. The $85,000 threshold amount represented the agreed upon value of initial capital contributions made by the members to SV Holdco and is subject to adjustment to account for future capital contributions made to SV Holdco. Accordingly, the threshold amount applicable to the Company’s Class C membership units equaled $88,000 as of March 31, 2013.

The Company will also receive additional Class C membership units (“bonus units”), all of which will be subject to forfeiture, or may forfeit some of its initial Class C membership units, based upon changes in the Company’s future theatre and screen count. However, the Company will not forfeit more than 25% of the Class C membership units it received in October 2010, and the Company will not receive bonus units in excess of 33% of the Class C membership units it received in October 2010. Any bonus units and the initial Class C membership units subject to forfeiture will each become non-forfeitable on the Expiration Date, or upon the earlier occurrence of certain events, including (1) a change of control or liquidation of SV Holdco or (2) the consummation of an initial public offering of securities of SV Holdco. The Company’s Class C units in SV Holdco LLC that are subject to forfeiture, and any bonus units that may be awarded in future periods, will not be recognized in its consolidated financial statements until such units become non-forfeitable. Upon recognition, the Company will record its investment in any additional Class C and bonus units and will recognize revenue equal to the then estimated fair value of such units. The non-forfeitable ownership interest in SV Holdco was recorded at an estimated fair value of $6,555 which was determined using the Black Scholes Model. The Company has applied the equity method of accounting for the non-forfeitable units and for financial reporting purposes began recording the related percentage of the earnings or losses of SV Holdco in its consolidated statement of operations since October 14, 2010. The Company’s non-forfeitable Class C and Class A membership units represented approximately 15% of the total issued and outstanding membership units of SV Holdco as of March 31, 2013 and December 31, 2012.

For financial reporting purposes, the gains from both the $30,000 cash payment to the Company and its non-forfeitable membership units in SV Holdco ($36,555 in the aggregate) have been deferred and will be recognized as concessions and other revenue on a straight line basis over the remaining term of the Modified Exhibition Agreement. The Company has included in concessions and other revenue in the consolidated statement of operations amounts related to Screenvision of approximately $2,007 and $2,253 for the three months ended March 31, 2013 and 2012, respectively. The Company reclassifies certain amounts from Screenvision included in concessions and other revenue to earnings from unconsolidated affiliates. The amount reclassified is based on the Company’s non-forfeitable ownership percentage of SV Holdco membership units, represents an intercompany gain to the Company and totaled approximately $354 and $397 for the three months ended March 31, 2013 and 2012, respectively. The Company has included in accounts receivable in the consolidated balance sheets amounts due from Screenvision of $1,073 and $2,030 at March 31, 2013 and December 31, 2012, respectively.

 

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A summary of changes in investments in unconsolidated affiliates and deferred revenue for the Company’s equity method investment in SV Holdco for the three months ended March 31, 2013 is as follows:

 

Investments in unconsolidated affiliates    SV Holdco  

Balance at January 1, 2013

   $ 6,740   

Equity earnings of SV Holdco

     (1,442
  

 

 

 

Balance at March 31, 2013

   $ 5,298   
  

 

 

 

 

Deferred revenue    SV Holdco  

Balance at January 1, 2013

   $ 34,141   

Amortization of up-front payment

     (237

Amortization of Class C units

     (52
  

 

 

 

Balance at March 31, 2013

   $ 33,852   
  

 

 

 

NOTE 10—INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Our investments in affiliated companies accounted for by the equity method consist of our ownership interest in Screenvision, as discussed in Note 9 – Screenvision Exhibition, Inc., and interests in other joint ventures.

Combined financial information of the unconsolidated affiliated companies accounted for by the equity method is as follows:

 

     As of March 31,  
     2013  

Assets:

  

Current assets

   $ 25,048   

Noncurrent assets

     156,628   
  

 

 

 

Total assets

   $ 181,676   
  

 

 

 

Liabilities:

  

Current liabilities

   $ 32,927   

Noncurrent liabilities

     73,985   
  

 

 

 

Total liabilities

   $ 106,912   
  

 

 

 

 

     Three Months Ended  
     March 31,
2013
    March 31,
2012
 

Results of operations:

    

Revenue

   $ 17,788      $ 23,245   

Net income

   $ (9,353   $ (8,299

A summary of activity in income from unconsolidated affiliates for the three months ended March 31, 2013 and 2012 is as follows:

 

     March 31,  
Income from unconsolidated affiliates    2013     2012  

Income (loss) from unconsolidated affiliates

   $ (1,369   $ (940

Elimination of intercompany revenue

     354        397   
  

 

 

   

 

 

 

Loss from unconsolidated affiliates

   $ (1,015   $ (543
  

 

 

   

 

 

 

 

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Table of Contents

NOTE 11—THEATRE ACQUISITIONS

On November 15, 2012, the Company completed its acquisition of 16 entertainment complexes and 251 screens in seven U.S. states (the “Theatres”) pursuant to the terms of the Membership Interest 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. The Company subsequently acquired all of the ownership interests of the Acquisition Sub. The acquisition supports the Company’s growth strategy. In consideration for the acquisition, the Company paid $22,213 in cash including $3,213 in working capital adjustments. The Company paid $1,349 of the working capital adjustment during the three months ended March 31, 2013. In addition, the Company assumed approximately $110,243 of financing obligations, after accounting adjustments, to reflect the acquisition date fair value of such obligations. The purchase price was paid using cash on hand.

NOTE 12—LEASE TERMINATION CHARGES

For the three months ended March 31, 2013, the Company has recorded lease termination charges of $3,063 primarily related to the closure of an underperforming theatre prior to the end of its lease term. The remaining lease term of the theatre is approximately six years. In accordance with ASC 420, Exit or Disposal Cost Obligations, the Company has recorded a liability of $2,413 representing the present value of the future contractual commitments for the base rents, taxes and maintenance. The current portion of the liability is included in accrued expenses and the long-term portion of the liability is included with other long-term liabilities in the accompanying consolidated balance sheets.

The Company has also recorded lease termination charges of $650 in connection with the early termination of a lease agreement for a new build-to-suit theatre.

NOTE 13—GUARANTOR SUBSIDIARIES

The Company filed a registration statement which became effective in 2010. The registration statement registers certain securities, including debt securities which may be issued and guaranteed by certain of the Company’s subsidiaries and may be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended.

The Company may sell debt securities pursuant to the registration statement and if so, it is expected that such securities would be fully and unconditionally guaranteed, on a joint and several basis, by the following 100% directly or indirectly owned subsidiaries: Eastwynn Theatres, Inc., George G. Kerasotes Corporation, GKC Indiana Theatres, Inc., GKC Michigan Theatres, Inc., GKC Theatres, Inc., and Military Services, Inc. The financial information included for the non-guarantor subsidiaries is primarily related to entities acquired in the Rave acquisition in November 2012. Therefore, the Company is providing the following condensed consolidating financial statement information as of March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 and 2012 in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered:

 

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CONDENSED CONSOLIDATING BALANCE SHEET

 

     As of March 31, 2013  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Assets:

          

Current assets:

          

Cash and cash equivalents

   $ 48,615      $ 12,625      $ 2,402      $ —        $ 63,642   

Restricted cash

     9        —          —          —          9   

Accounts receivable

     4,853        336        3,562        (3,290     5,461   

Inventories

     793        2,336        421        —          3,550   

Deferred income tax asset

     3,203        436        —          —          3,639   

Prepaid expenses and other assets

     10,503        1,559        3,679        —          15,741   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     67,976        17,292        10,064        (3,290     92,042   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment:

          

Land

     12,080        39,796        —          —          51,876   

Buildings and building improvements

     45,581        222,483        67,077        —          335,141   

Leasehold improvements

     19,213        108,686        15,812        —          143,711   

Assets under capital leases

     8,675        36,295        —          —          44,970   

Equipment

     64,883        159,141        12,756        —          236,780   

Construction in progress

     1,688        4,967        (1     —          6,654   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total property and equipment

     152,120        571,368        95,644        —          819,132   

Accumulated depreciation and amortization

     (79,184     (295,216     (3,482     —          (377,882
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     72,936        276,152        92,162        —          441,250   

Intercompany receivables

     98,363        —          4,841        (103,204     —     

Investments in subsidiaries

     152,897        129        —          (153,026     —     

Goodwill

     —          8,087        36,490        —          44,577   

Intangible assets, net of accumulated amortization

     —          1,035        —          —          1,035   

Investments in unconsolidated affiliates

     5,298        933        —          —          6,231   

Deferred income tax asset

     56,753        43,390        398        —          100,541   

Other assets

     13,520        5,956        396        —          19,872   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 467,743      $ 352,974      $ 144,351      $ (259,520   $ 705,548   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity:

          

Current liabilities:

          

Accounts payable

   $ 24,283      $ 6,729      $ 1,486      $ (3,290   $ 29,208   

Accrued expenses

     23,410        10,395        6,423        —          40,228   

Current maturities of capital leases and long-term financing obligations

     464        2,209        1,874        —          4,547   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     48,157        19,333        9,783        (3,290     73,983   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Long-term liabilities:

          

Long-term debt, less current maturities

     209,565        —          —          —          209,565   

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

     27,777        84,168        107,801        —          219,746   

Intercompany liabilities

     —          103,204        —          (103,204     —     

Deferred revenue

     32,695        —          —          —          32,695   

Other

     5,361        13,580        6,430        —          25,371   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     275,398        200,952        114,231        (103,204     487,377   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

          

Preferred stock

     —          —          —          —          —     

Common stock

     542        1        —          (1     542   

Treasury stock

     (11,914     —          —          —          (11,914

Paid-in capital

     350,375        237,800        22,213        (260,013     350,375   

Accumulated deficit

     (194,815     (105,112     (1,876     106,988        (194,815
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     144,188        132,689        20,337        (153,026     144,188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 467,743      $ 352,974      $ 144,351      $ (259,520   $ 705,548   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

 

     As of December 31, 2012  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Assets:

          

Current assets:

          

Cash and cash equivalents

   $ 49,093      $ 14,870      $ 4,568      $ —        $ 68,531   

Restricted cash

     293        —          —          —          293   

Accounts receivable

     5,058        874        5,250        (4,627     6,555   

Inventories

     926        2,823        437        —          4,186   

Deferred income tax asset

     3,203        —          —          (307     2,896   

Prepaid expenses and other current assets

     3,426        5,173        2,337        —          10,936   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     61,999        23,740        12,592        (4,934     93,397   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment:

          

Land

     12,080        39,796        —          —          51,876   

Buildings and building improvements

     45,571        223,090        67,077        —          335,738   

Leasehold improvements

     19,200        107,111        15,447        —          141,758   

Assets under capital leases

     8,675        36,295        —          —          44,970   

Equipment

     64,167        158,333        12,723        —          235,223   

Construction in progress

     1,352        3,833        —          —          5,185   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total property and equipment

     151,045        568,458        95,247        —          814,750   

Accumulated depreciation and amortization

     (77,302     (291,132     (1,389     —          (369,823
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     73,743        277,326        93,858        —          444,927   

Intercompany receivables

     92,801        —          7,002        (99,803     —     

Investments in subsidiaries

     157,522        126        —          (157,648     —     

Goodwill

     —          8,087        36,490        —          44,577   

Intangible assets, net of accumulated amortization

     —          1,061        —          —          1,061   

Investments in unconsolidated affiliates

     6,740        942        —          —          7,682   

Deferred income tax asset

     57,247        42,765        —          —          100,012   

Other assets

     14,299        6,026        747        —          21,072   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 464,351      $ 360,073      $ 150,689      $ (262,385   $ 712,728   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity:

          

Current liabilities:

          

Accounts payable

   $ 24,071      $ 9,704      $ 2,993      $ (4,627   $ 32,141   

Accrued expenses

     14,601        17,250        8,505        (307     40,049   

Current maturities of capital leases and long-term financing obligations

     442        2,169        1,811        —          4,422   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     39,114        29,123        13,309        (4,934     76,612   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Long-term liabilities:

          

Long-term debt, less current maturities

     209,548        —          —          —          209,548   

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

     27,876        84,557        108,292        —          220,725   

Intercompany liabilities

     —          99,803        —          (99,803     —     

Deferred revenue

     32,984        —          —          —          32,984   

Other

     5,395        11,487        6,543        —          23,425   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     275,803        195,847        114,835        (99,803     486,682   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

          

Preferred stock

     —          —          —          —          —     

Common stock

     540        1        —          (1     540   

Treasury stock

     (11,740     —          —          —          (11,740

Paid-in capital

     349,666        237,800        22,037        (259,837     349,666   

Accumulated deficit

     (189,032     (102,698     508        102,190        (189,032
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     149,434        135,103        22,545        (157,648     149,434   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 464,351      $ 360,073      $ 150,689      $ (262,385   $ 712,728   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

17


Table of Contents

 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

     Three Months Ended March 31, 2013  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues:

          

Admissions

   $ 11,244      $ 58,712      $ 11,566      $ —        $ 81,522   

Concessions and other

     13,977        34,808        6,256        (6,470     48,571   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     25,221        93,520        17,822        (6,470     130,093   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses:

          

Film exhibition costs

     6,037        30,901        6,326        —          43,264   

Concession costs

     901        4,278        790        —          5,969   

Other theatre operating costs

     9,849        46,079        8,501        (6,470     57,959   

General and administrative expenses

     5,429        570        16        —          6,015   

Lease termination charges

     —          3,063        —          —          3,063   

Depreciation and amortization

     1,879        6,262        2,093        —          10,234   

Loss on sale of property and equipment

     5        75        —          —          80   

Impairment of long-lived assets

     —          204        —          —          204   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     24,100        91,432        17,726        (6,470     126,788   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     1,121        2,088        96        —          3,305   

Interest expense

     2,025        6,157        4,116        —          12,298   

Equity in loss of subsidiaries

     4,801        —          —          (4,801     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax and (loss) income from unconsolidated affiliates

     (5,705     (4,069     (4,020     4,801        (8,993

Income tax benefit

     (1,008     (1,654     (1,635     —          (4,297

(Loss) income from unconsolidated affiliates

     (1,088     73        —          —          (1,015
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (5,785     (2,342     (2,385     4,801        (5,711

Income (loss) from discontinued operations

     2        (74     —          —          (72
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (5,783   $ (2,416   $ (2,385   $ 4,801      $ (5,783
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

     Three Months Ended March 31, 2012  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
     Eliminations     Consolidated  

Revenues:

         

Admissions

   $ 13,721      $ 68,969       $ —        $ 82,690   

Concessions and other

     14,798        38,791         (6,313     47,276   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating revenues

     28,519        107,760         (6,313     129,966   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating costs and expenses:

         

Film exhibition costs

     7,204        36,039         —          43,243   

Concession costs

     1,010        4,556         —          5,566   

Other theatre operating costs

     11,106        47,339         (6,313     52,132   

General and administrative expenses

     4,428        572         —          5,000   

Depreciation and amortization

     1,707        6,060         —          7,767   

Loss on sale of property and equipment

     21        227         —          248   

Impairment of long-lived assets

     9        1,477         —          1,486   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating costs and expenses

     25,485        96,270         (6,313     115,442   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     3,034        11,490         —          14,524   

Interest expense

     2,519        5,744         —          8,263   

Equity in loss of subsidiaries

     (3,372     —           3,372        —     
  

 

 

   

 

 

    

 

 

   

 

 

 

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

     3,887        5,746         (3,372     6,261   

Income tax (benefit) expense

     (97     2,504         —          2,407   

(Loss) income from unconsolidated affiliates

     (654     111         —          (543
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations

     3,330        3,353         (3,372     3,311   

Loss from discontinued operations

     (98     19         —          (79
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 3,232      $ 3,372       $ (3,372   $ 3,232   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

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Table of Contents

 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

 

     For the Three Months Ended March 31, 2013  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations      Consolidated  

Net cash provided by operating activities

   $ 7,831      $ (3,145   $ 1,138      $ —         $ 5,824   

Cash flows from investing activities:

           

Purchases of property and equipment

     (2,708     (5,403     (397     —           (8,508

Theatre acquisition

     —          —          (1,349     —           (1,349

Proceeds from sale of property and equipment

     5        —          —          —           5   

Other investing activities

     284        —          —          —           284   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     (2,419     (5,403     (1,746        (9,568

Cash flows from financing activities:

           

Repayments of capital leases and long-term financing obligations

     (103     (438     (430     —           (971

Purchase of treasury stock

     (174     —          —          —           (174

Intercompany receivable/payable

     (5,613     6,741        (1,128     —           —     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash (used in) provided by financing activities

     (5,890     6,303        (1,558     —           (1,145
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Increase in cash and cash equivalents

     (478     (2,245     (2,166     —           (4,889

Cash and cash equivalents at beginning of period

     49,093        14,870        4,568        —           68,531   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 48,615      $ 12,625      $ 2,402      $ —         $ 63,642   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

 

     For the Three Months Ended March 31, 2012  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Eliminations      Consolidated  

Net cash (used in) provided by operating activities

   $ (4,310   $ 14,263      $ —         $ 9,953   

Cash flows from investing activities:

         

Purchases of property and equipment

     (2,837     (3,153     —           (5,990

Purchase acquisition

     —          (702     —           (702

Proceeds from sale of property and equipment

     40        18        —           58   

Other investing activities

     301        —          —           301   
  

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     (2,496     (3,837        (6,333

Cash flows from financing activities:

         

Short-term borrowings

     5,000        —          —           5,000   

Repayments of short-term borrowings

     (5,000     —          —           (5,000

Repayments of long-term debt

     (511     —          —           (511

Intercompany receivable/payable

     7,745        (7,745     —           —     

Repayments of capital lease and long-term financing obligations

     (79     (357     —           (436
  

 

 

   

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     7,155        (8,102     —           (947
  

 

 

   

 

 

   

 

 

    

 

 

 

Increase in cash and cash equivalents

     349        2,324        —           2,673   

Cash and cash equivalents at beginning of period

     3,623        9,993        —           13,616   
  

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 3,972      $ 12,317      $ —         $ 16,289   
  

 

 

   

 

 

   

 

 

    

 

 

 

 

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Table of Contents

In June 2012, the Company issued in a registered exchange offer $210,000 aggregate principal amount of 7.375% Senior Secured Notes due May 15, 2019. The Senior Secured Notes are fully and unconditionally guaranteed, on a joint and several basis, by the following 100% directly or indirectly owned subsidiaries: Eastwynn Theatres, Inc., George G. Kerasotes Corporation, GKC Indiana Theatres, Inc., GKC Michigan Theatres, Inc., GKC Theatres, Inc., Military Services, Inc., Carmike Giftco, Inc., Carmike Reviews Holdings, LLC, Carmike Motion Pictures Birmingham, LLC, Carmike Motion Pictures Birmingham II, LLC, Carmike Motion Pictures Birmingham III, LLC, Carmike Motion Pictures Chattanooga, LLC, Carmike Motion Pictures Daphne, LLC, Carmike Motion Pictures Pensacola, LLC, Carmike Motion Pictures Pensacola II, LLC, Carmike Motion Pictures Indianapolis, LLC, Carmike Motion Pictures Huntsville, LLC, Carmike Motion Pictures Ft. Wayne, LLC, Carmike Motion Pictures Melbourne, LLC, Carmike Motion Pictures Peoria, LLC, Carmike Motion Pictures Port St. Lucie, LLC, Carmike Motion Pictures Orange Beach, LLC, Carmike Motion Pictures Allentown, LLC, Carmike Houston LP, LLC, Carmike Houston GP, LLC and Carmike Motion Pictures Houston, LLC. For the three months ended March 31, 2012, all subsidiaries were guarantors under the Senior Secured Notes as presented above in the condensed consolidated statement of operations and cash flows for the three months ended March 31, 2012. Therefore, the Company is providing the following condensed consolidating financial statement information as of March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered:

 

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Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

 

     As of March 31, 2013  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Eliminations     Consolidated  

Assets:

        

Current assets:

        

Cash and cash equivalents

   $ 48,615      $ 15,027      $ —        $ 63,642   

Restricted cash

     9        —          —          9   

Accounts receivable

     4,853        3,898        (3,290     5,461   

Inventories

     793        2,757        —          3,550   

Deferred income tax asset

     3,203        436        —          3,639   

Prepaid expenses and other assets

     10,503        5,238        —          15,741   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     67,976        27,356        (3,290     92,042   
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment:

        

Land

     12,080        39,796        —          51,876   

Buildings and building improvements

     45,581        289,560        —          335,141   

Leasehold improvements

     19,213        124,498        —          143,711   

Assets under capital leases

     8,675        36,295        —          44,970   

Equipment

     64,883        171,897        —          236,780   

Construction in progress

     1,688        4,966        —          6,654   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total property and equipment

     152,120        667,012        —          819,132   

Accumulated depreciation and amortization

     (79,184     (298,698     —          (377,882
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     72,936        368,314        —          441,250   

Intercompany receivables

     98,363        —          (98,363     —     

Investments in subsidiaries

     152,897        129        (153,026     —     

Goodwill

     —          44,577        —          44,577   

Intangible assets, net of accumulated amortization

     —          1,035        —          1,035   

Investments in unconsolidated affiliates

     5,298        933        —          6,231   

Deferred income tax asset

     56,753        43,788        —          100,541   

Other assets

     13,520        6,352        —          19,872   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 467,743      $ 492,484      $  (254,679   $ 705,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity:

        

Current liabilities:

        

Accounts payable

   $ 24,283      $ 8,215      $ (3,290   $ 29,208   

Accrued expenses

     23,410        16,818        —          40,228   

Current maturities of capital leases and long-term financing obligations

     464        4,083        —          4,547   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     48,157        29,116        (3,290     73,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Long-term liabilities:

        

Long-term debt, less current maturities

     209,565        —          —          209,565   

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

     27,777        191,969        —          219,746   

Intercompany liabilities

     —          98,363        (98,363     —     

Deferred revenue

     32,695        —          —          32,695   

Other

     5,361        20,010        —          25,371   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     275,398        310,342        (98,363     487,377   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

        

Preferred stock

     —          —          —          —     

Common stock

     542        1        (1     542   

Treasury stock

     (11,914     —          —          (11,914

Paid-in capital

     350,375        260,013        (260,013     350,375   

Accumulated deficit

     (194,815     (106,988     106,988        (194,815
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     144,188        153,026        (153,026     144,188   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 467,743      $ 492,484      $  (254,679   $ 705,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

23


Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

 

     As of December 31, 2012  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Eliminations     Consolidated  

Assets:

        

Current assets:

        

Cash and cash equivalents

   $ 49,093      $ 19,438      $ —        $ 68,531   

Restricted cash

     293        —          —          293   

Accounts receivable

     5,058        6,124        (4,627     6,555   

Inventories

     926        3,260        —          4,186   

Deferred income tax asset

     3,203        —          (307     2,896   

Prepaid expenses and other assets

     3,426        7,510        —          10,936   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     61,999        36,332        (4,934     93,397   
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment:

        

Land

     12,080        39,796        —          51,876   

Buildings and building improvements

     45,571        290,167        —          335,738   

Leasehold improvements

     19,200        122,558        —          141,758   

Assets under capital leases

     8,675        36,295        —          44,970   

Equipment

     64,167        171,056        —          235,223   

Construction in progress

     1,352        3,833        —          5,185   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total property and equipment

     151,045        663,705        —          814,750   

Accumulated depreciation and amortization

     (77,302     (292,521     —          (369,823
  

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net of accumulated depreciation

     73,743        371,184        —          444,927   

Intercompany receivables

     92,801        —          (92,801     —     

Investments in subsidiaries

     157,522        126        (157,648     —     

Goodwill

     —          44,577        —          44,577   

Intangible assets, net of accumulated amortization

     —          1,061        —          1,061   

Investments in unconsolidated affiliates

     6,740        942        —          7,682   

Deferred income tax asset

     57,247        42,765        —          100,012   

Other assets

     14,299        6,773        —          21,072   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 464,351      $ 503,760      $  (255,383   $ 712,728   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity:

        

Current liabilities:

        

Accounts payable

   $ 24,071      $ 12,697      $ (4,627   $ 32,141   

Accrued expenses

     14,601        25,755        (307     40,049   

Current maturities of capital leases and long-term financing obligations

     442        3,980        —          4,422   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     39,114        42,432        (4,934     76,612   
  

 

 

   

 

 

   

 

 

   

 

 

 

Long-term liabilities:

        

Long-term debt, less current maturities

     209,548        —          —          209,548   

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

     27,876        192,849        —          220,725   

Intercompany liabilities

     —          92,801        (92,801     —     

Deferred revenue

     32,984        —          —          32,984   

Other

     5,395        18,030        —          23,425   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     275,803        303,680        (92,801     486,682   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

        

Preferred stock

     —          —          —          —     

Common stock

     540        1        (1     540   

Treasury stock

     (11,740     —          —          (11,740

Paid-in capital

     349,666        259,837        (259,837     349,666   

Accumulated deficit

     (189,032     (102,190     102,190        (189,032
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     149,434        157,648        (157,648     149,434   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 464,351      $ 503,760      $  (255,383   $ 712,728   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

24


Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

     Three Months Ended March 31, 2013  
     Carmike
Cinemas, Inc.
    Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues:

        

Admissions

   $ 11,244      $ 70,278      $ —         $ 81,522   

Concessions and other

     13,977        41,064        (6,470     48,571   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     25,221        111,342        (6,470     130,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses:

        

Film exhibition costs

     6,037        37,227        —           43,264   

Concession costs

     901        5,068        —           5,969   

Other theatre operating costs

     9,849        54,580        (6,470     57,959   

General and administrative expenses

     5,429        586        —           6,015   

Lease termination charges

     —           3,063        —           3,063   

Depreciation and amortization

     1,879        8,355        —           10,234   

Loss on sale of property and equipment

     5        75        —           80   

Impairment of long-lived assets

     —           204        —           204   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     24,100        109,158        (6,470     126,788   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     1,121        2,184        —           3,305   

Interest expense

     2,025        10,273        —           12,298   

Equity in loss of subsidiaries

     4,801        —           (4,801     —      
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) before income tax and (loss) income from unconsolidated affiliates

     (5,705     (8,089     4,801        (8,993

Income tax benefit

     (1,008     (3,289