Carmike Cinemas, Inc., a leading entertainment, digital cinema and 3-D motion picture exhibitor, today reported results for the three and nine-month periods ended September 30, 2014, as summarized below.

“Aided by the impact of recent acquisitions, Carmike’s 2014 third quarter admissions receipts outperformed the U.S. exhibition industry by 1,000 basis points,” stated David Passman, Carmike Cinemas’ President and Chief Executive Officer. “On a per screen basis, Carmike’s admissions revenue decrease of approximately 13% was in-line with the reported industry box office decline of 13%. Despite lower attendance, Carmike’s Q3 concessions and other revenue rose and on a per cap basis increased over 6% versus the prior year period, marking our 19th consecutive quarterly increase for that key metric.

“The weaker than expected domestic box office and resulting attendance decline negatively impacted Carmike’s bottom line results and adjusted EBITDA due to our proportionately higher fixed cost structure. Our most recent acquisition – Digital Cinema Destinations Corp. (Digiplex) – closed in mid-August and as a result, Carmike’s Q3 operating and overhead costs rose due to the additional locations in our circuit. However, this came without a corresponding box office benefit as the second half of the third quarter typically generates lower box office receipts with the absence of high-profile movie releases.

“Nevertheless, Carmike continues to effectively execute its strategy of making attractive acquisitions and new-builds that expand our operating platform into complementary markets that we believe will further enhance long-term value. In this regard, over the past three years we have successfully acquired and integrated 740 screens onto Carmike’s growing platform, inclusive of our stock-for- stock purchase of Digiplex.

“As I stated on last quarter’s call, our board, management team and I all believe the prudent course of action is for Carmike to continue its active role as a major industry consolidator as we see a number of potential opportunities to acquire additional regional exhibitors. Our top priority is targeting transactions that we believe will add high quality assets to our footprint and also generate attractive levels of theatre level cash flow, providing for the optimal return on investment for all of Carmike’s stakeholders.

“Finally, as stated in yesterday’s press release, we are disappointed that the Department of Justice is seeking to block the proposed sale of Screenvision. Notwithstanding the outcome of this decision, we remain very pleased with our relationship with Screenvision,” concluded Mr. Passman.

Carmike Cinemas’ Chief Financial Officer Richard B. Hare stated, “Carmike’s total operating revenues for the quarter ended September 30, 2014 decreased minimally from the comparable 2013 period, reflecting a 2.1% reduction in admissions revenue, partially offset by a 1.0% increase in concessions and other revenues. Although our average screen count rose 13%, total attendance declined 5.8%, reflective of the challenging box office period. Average admissions per patron rose 3.4% to $6.98, partially offsetting the attendance decline impact and concessions and other revenues per patron also increased, from $4.09 to $4.35. Overall, combined Q3 2014 average per patron spending rose 4.5% to $11.33 per visit to our entertainment complexes.

“Film exhibition costs as a percentage of admissions revenues decreased by approximately 40 basis points to 54.6%. Concession costs as a percentage of concessions and other revenues decreased by approximately 170 basis points to 11.7% as a result of lower concession costs and higher rebates, versus the year-ago period.

“Although salaries and benefits rose 4.9% to $22.9 million due to our circuit growth, this increase was proportionally lower than the 13% rise in the number of average screens we operated during the quarter. Theatre occupancy costs rose $4.8 million to $21.8 million and other theatre operating costs rose $4.3 million to $31.4 million due primarily to our expanded circuit. General and administrative expenses were $8.4 million, versus $6.6 million in the 2013 period, due to legal and professional fees related to our acquisition and expansion initiatives. Quarterly interest expense was $12.8 million, due principally to the assumption of additional long-term lease obligations associated with the acquired Muvico screens.

“Adjusted EBITDA in Q3 2014 was $18.4 million and theatre level cash flow was $24.5 million. The aforementioned unfavorable box office environment and resulting lower attendance impacted Carmike’s financial results for the quarter. We will continue to exercise sensible cost management, especially on controllable expenses, to maximize our future organizational operating performance.

“At quarter-end we had $355.0 million of net debt, versus $311.4 million at December 31, 2013, reflecting an aggregate of capital leases and long-term financing obligations, plus senior notes. Carmike’s quarter-ending balance sheet included cash of $96.2 million,” concluded Mr. Hare.

Supplemental Financial Measures

Theatre level cash flow, EBITDA, adjusted EBITDA, adjusted net (loss) income, total debt and net debt are supplemental non-GAAP financial measures used by Carmike to evaluate its operating performance. Carmike defines theatre level cash flow as adjusted EBITDA, as defined below, plus general and administrative expenses. Carmike believes that theatre level cash flow is an important supplemental measure of operating performance for a motion picture exhibitor’s operations because it provides a measure of the core operations, rather than factoring in items such as general and administrative expenses and depreciation and amortization, among others. In addition, Carmike believes that theatre level cash flow, as defined, is a widely accepted measure of comparative operating performance in the motion picture exhibition industry. Adjusted net (loss) income is defined as net (loss) income plus impairment of long-lived assets, merger and acquisition-related expenses, lease termination charges, severance agreement charges and loss on sale of property and equipment, net of tax. Carmike believes adjusted net (loss) income is an important supplemental measure of operating performance for a motion picture exhibitor because it provides a measure of core operations. Total debt is defined as the sum of current maturities of capital leases and long-term financing obligations, long-term debt and capital leases and long-term financing obligations (less current maturities). Net debt is defined as total debt less cash and cash equivalents. EBITDA is defined as net (loss) income plus income tax (benefit) expense, interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus income from unconsolidated affiliates, loss from discontinued operations, merger and acquisition-related expenses, lease termination charges, severance agreement charges, loss on sale of property and equipment, and impairment of long-lived assets. Carmike believes that EBITDA and adjusted EBITDA are important supplemental measures of operating performance for a motion picture exhibitor’s operations because they provide measures of core operations.