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(Nasdaq: CKEC)(Nasdaq: CKEC)
Investor PresentationInvestor PresentationNovember 2010November 2010
www.carmike.comwww.carmike.com
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Disclosure Regarding Forward-Looking StatementsThis presentation contains forward-looking statements within the meaning of the federal securities laws. Statements that are
not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words, “believes,” “expects,” “anticipates,” “plans,” “estimates” or similar expressions. Examples of forward-looking statements in this presentation include the potential sale-leaseback transactions, the potential disposition of assets, the estimated value of our real estate, the amount of proceeds from these transactions, our ticket and concession price increases, our cost control measures, our strategies and operating goals, our plans regarding debt reduction, our film slate for 2010 and future years, and our capital expenditure and theater expansion/closing plans. These statements are based on beliefs and assumptions of management, which in turn are based on currently available information. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include, but are not limited to:
•the inability to consummate the transactions described in this presentation on terms favorable to us;•the inability to satisfy any conditions to closing or to complete any related financing in connection with the transactions described in this presentation•our ability to comply with covenants contained in our senior secured credit agreement; •our ability to operate at expected levels of cash flow; •the availability of suitable motion pictures for exhibition in our markets; •competition in our markets; •competition with other forms of entertainment; •identified material weaknesses in internal control over financial reporting; •the effect of our leverage on our financial condition; and •other factors, including the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Reports on Form 10-Q for the quarter ended September 30, 2010 under the caption “Risk Factors.”
We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of these in light of new information or future events.
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Carmike Overview• 4th largest U.S. exhibitor
• 240 theatres / 2,241 screens / 36 states
• America’s Hometown Theatre• Target small to mid-size non-urban
markets with populations of 100,000 or less
• Digital and 3-D leadership• 2,111 digital screens • 591 3-D screens• Introduced BigD large format
• New relationship with leading cinema ad provider Screenvision (10/10)
• Cash infusion• Participation in future growth/profits
Leased Facilities 174 72.5% Owned Facilities 61 25.4%Shared Ownership 5 2.1%
240 100.0%
OR1
OR1
KS1
KS1
MI13MI13
OK10
OK10
IL10IL10
IN3
IN3
TN21TN21
KY5
KY5
PA18PA18
UT3
WA 1 MT
6
WY 1
ID 2
CO6
NM1
TX 9
NE2
SD5
IA5
MO1
WI3
MN6
ND5
NC 24
SC10
GA22
FL9
AL13
AR8
NY1
DE1WV
2
OH5
VA6
CA 1
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Small Market Benefits
10-12 screens are ideal
Small town America’s favorite theatre
High concession margins and enhanced cash flow per screen
Ideal for hometown audiences
• Smaller footprint
• Limited local entertainment options and competition
• Simple, efficient strategy of popcorn (gourmet/flavored), soda, candy and movie
• Hollywood focus on event films, family, animation and sequels (i.e. 3-D!)
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Digital and 3-D Exhibition Pioneer
• Leader in deployment of digital and 3-D cinema
• 2,111 screens converted to digital, or 100% of first-run screens
• One of the largest national 3-D footprints: • 200 theatres with 591 3-D capable screens
• 28% penetration of digital footprint• All digitized theatres have at least two 3-D auditoriums…some contain as
many as six• According to NATO, we had ~12% of 3-D screens in the US (at 6/30/10)
• New BigD Ultimate Entertainment Experience Launched• Carmike’s digital large screen format debuted in Columbus, GA - Q3 ’10• Plans to open up to two dozen BigD auditoriums by 12/11
• Digital and 3-D build-out largely funded by partners
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Digital Advantages• Superior picture quality, brightness and color – no degradation over time• Revenue drivers
• Improved programming flexibility• Limit “sell outs”• Increases revenue and customer satisfaction
• 3-D content• Alternative content
• Concerts (U2-3D, Kenny Chesney)• Pay-per view events• Sports & live events (BCS Championship, NCAA Final Four, NBA Skills, FIFA
World Cup)• Religious (Fox Faith)• Michael Jackson Memorial Service
• On-screen advertising (Screenvision) – 3-D format, lobby ads, mobile, etc.• Enhanced merchandising opportunities
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3-D Benefits
• 3-D content is important revenue driver• 23% of CKEC Q3 box from 3-D titles (~30% in Q2)
• 3-D film genre well-suited to CKEC markets• Animation, family, action
• Increased attendance per screen• 2-4x levels of 2-D, on average
• ‘Up’ and ‘Monsters v. Aliens’ had 9:1 3-D to 2-D ratios
• Higher ticket prices• $3.00+ premium up-charge in 2/3 of theatres; remainder have $2.50 average
• Growing base of 3-D titles and special events• 23 films slated for release in ’10, 30+ in ’11 and studios shifting 2-D to 3-D
• DCIP funding provides larger digital footprint for alternative content
Premium Ticket Prices
Increased Attendance
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Movie-going…Most Popular and Best Value
Most Popular Out-of-Home Most Popular Out-of-Home Entertainment Experience Entertainment Experience
8022 21 18
347
1,364
Cinemas ThemeParks
Baseball(MLB)
Basketball(NBA)
Hockey(NHL)
Football(NFL)
Most Attractive Value PropositionMost Attractive Value Proposition
Annual attendance (mm)
Source: MPAA, Pricewaterhouse Coopers
Ticket Price per Patron
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Recent and Upcoming 3-D Release Pipeline
2010Releases
2011Releases
2009 3-D releases totaled 13 movies, 2010 has 23 3-D titles and 2011 has 30+ in the pipeline
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Long-Term Agreement With Screenvision
Summary of terms:• Extends long-term exclusive exhibition agreement with cinema advertising
leader for 30-year term• Same terms as previous
• Carmike has been Screenvision customer for ~20 years
• Carmike receives $30mm pre-tax cash payment on 1/1/11• Expects to pre-pay bank debt with proceeds, further de-levering balance sheet
• Carmike receives ownership interest in Screenvision profits and growth
• Screenvision has similar small-town footprint to Carmike• Local advertiser focus yields synergies
• New relationship forged with respected media investor, Shamrock Capital
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Carmike’s Concessions Strategy Success
• Excellent, industry-leading margins• Three straight quarters of impressive per cap growth
• Streamlined concession offerings • Focus on highest margin products such as:
• Soda, popcorn, nachos, and select candy offerings
• Driving more revenue• Combo / value pricing
• Stimulus Tuesdays• Introduced gourmet, flavored popcorn in 2009
• Tastes great!• Experimenting with new products (cotton candy) that also offer high margins• Ovation Room (VIP Auditorium in Chattanooga, TN – first ‘Green’ theatre)
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Theatre (Portfolio) Management• Focus on details “through the eyes of our patrons”
• Refreshing our circuit• Clean facilities• Friendly and well-trained associates• Increase number of employees per theatre to achieve better customer experience
• Performing general maintenance on older theatres• Helps compete with other attractions in Carmike markets• Incremental expense incurred in ‘09
• Theatre utilization• Alternative content – leveraging digital platform• Staggered show times
• Closing underperforming theatres, expired leases• Most are smaller theatres with fewer/non-digital screens
• Opening larger, state-of-the art theatres averaging ~12 screens • Third party ‘build-to-suit’ theatres require less upfront investment • Digital entertainment complexes featuring stadium seating
FINANCIALS*
* Includes non-GAAP measures* Includes non-GAAP measures
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Q3’10 Business Update
Quarter Summary…• Total revenue increased to $124.8mm; adjusted EBITDA was $14.4mm; theatre
level cash flow was $18.8 mm
• Average admissions per patron rose 2.3% to $6.61; average concessions and other increased 6.0% to $3.36
• Q3 ‘10 average revenue per patron rose 3.5% to $9.97
• Per screen attendance up slightly (forty fewer screens)
• Made voluntary term loan debt payments of $5mm
• $25mm in aggregate pre-paid over nine months ended 9/30/10
• Average screens per theater rose to 9.4 - ongoing rationalization of older, under-performing assets – closing theatres and exiting leases; opening new, state-of-the-art multiplexes via build-to-suit
• Closed 78 theatres since 1/06
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Theater Operations as of 9/30/10
REVENUESREVENUES COSTS & EXPENSESCOSTS & EXPENSES11
1 For quarter ended 9/30/102 Other theatre operating costs include labor, utilities, occupancy and facility lease expenses
Box Office66%
Concessions & Other34%
Summary Financial Data (unaudited)
Three Months Ended September 30,
Three Months Ended September 30,
Twelve Months Ended December 31,
Twelve Months Ended December 31,
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and non-recurring charges.
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(2) Adjusted net income (loss) is defined as net income (loss) plus impairment of long-lived assets, loss on extinguishment of debt, plus sales and use tax audit assessment and separation agreement charges.
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Nine Months Ended September 30,
Nine Months Ended September 30,
(in millions) 2010 2009 2010 2009 2009 2008
Total Revenue $124.8 $122.3 $376.4 $377.0 $514.7 $472.7
Theatre level cash flow 18.8 16.7 60.6 64.3 95.4 91.4
Adjusted EBITDA (1) 14.4 12.8 46.9 52.6 79.3 72.1
Adjusted net (loss) income (2) 0.8 (3.5) (1.9) 0.8 7.6 (5.1)
Theatre Performance Statistics
Three Months Ended September 30,
Three Months Ended September 30,
Twelve Months Ended December 31,
Twelve Months Ended December 31,
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Nine Months Ended September 30,
Nine Months Ended September 30,
2010 2009 2010 2009 2009 2008Average Theatres 240 246 242 248 247 256Average Screens 2,244 2,284 2,266 2,286 2,285 2,309Average attendance per screen 5,576 5,567 16,252 17,129 23,070 21,598Average admissions per patron $6.61 $6.46 $6.78 $6.45 $6.52 $6.32Average concessions/other per patron $3.36 $3.17 $3.44 $3.20 $3.21 $3.24Total attendance (in thousands) 12,511 12,713 36,831 39,164 52,702 49,872
Three Months Ended September 30,
Three Months Ended September 30,
Twelve Months Ended December 31,
Twelve Months Ended December 31,
Theatre Level Cash Flow (unaudited)
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1) Operating income is defined as operating revenues less operating expenses which includes film exhibition, concession, theatre operating, G&A, separation agreement, and gain or loss on sale of PP&E.
Nine Months Ended September 30,
Nine Months Ended September 30,
(in thousands) 2010 2009 2010 2009 2009 2008
Operating income1 (loss) $6,839 ($12,921) $18,555 $4,140 $22,380 ($440)
Separation agreement charges - - - 5,462 5,462 -
(Gain) loss on sale of property and equipment (658) (128) (649) (378) (425) (1,369)
Impairment of long-lived assets 220 17,188 3,944 17,188 17,554 36,339
Depreciation and amortization 8,000 8,658 24,096 26,085 34,324 37,552
Adjusted EBITDA $14,401 $12,797 $46,946 $52,597 $79,295 $72,082
General and administrative expenses 4,365 3,879 13,669 11,744 16,139 19,358
Theatre level cash flow $18,766 $16,676 $60,615 $64,341 $95,434 $91,440
Total Debt and Bank Debt (unaudited)
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September
30,December
31,December
31,
2010 2009 2008
Bank debt $235,977 $250,786 $273,516 Capital leases and long-term
financing obligations116,208 116,684 117,059
Total debt 352,185 367,470 390,575
Less cash and cash equivalents (4,510) (25,696) (10,867)
Net debt $347,675 $341,774 $379,708
(in millions)
Interest Expense, net 8.8 33.1 40.7
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Strategic Initiatives to Enhance Balance Sheet
Digital screen implementation
Suspension of cash dividend
Limited capex spend
Locationrationalization
Debt repayment
G&A reduction
Carmike has undertaken several initiatives to improve cash flow and further strengthen its capital structure position
• Improves revenue (increased exhibition options and 3-D) and cost efficiency
• Allows for cash allocation to repay term loan principal
• Only theater chain to complete its digital roll-out, limiting need for significant future capex
• Rationalized asset base by purging underperforming and non-strategic locations
• Carmike seeks to improve its future capital position through repayment of outstanding term loans
• Carmike has lowered general and administrative costs
Stated objective is to improve free cash flow generation and continue to reduce leverage
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Key Takeaways
• Continue to utilize free cash to voluntarily pre-pay bank debt and de-lever• Goal of $200 mm bank debt in reach
• Further capitalize upon digital/3-D circuit advantages• Admission premiums, flexibility for exhibitor, high-quality image/sound, alternative content, etc.
• New Screenvision relationship provides key benefits• Cash infusion and participation in growth/profits of leading cinema ad business
• Continue focus on ‘details matter’ strategy• Improving attendance metrics and encourage repeat business with customer-centric attitude
• Open additional, state-of-the art entertainment complexes via ‘build-to-suit’ strategy
• Pent-up demand for new development in U.S. as real estate environment improves
• Expand BigD Footprint• Carmike’s proprietary large screen format should play well in small-town America
Thank you!
Investor Relations contacts:
Richard Hare, CFO
Carmike Cinemas
(706)576-3415
Robert Rinderman
Jaffoni & Collins
212/835-8500
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