2012 Digital Media Conference

CARMIKE
CINEMAS
BMO Capital Markets
2012 Digital Media Conference
November 2012
DISCLAIMER
This 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 our ticket and concession price increases, our cost control measures, our strategies and operating goals as well
as the closing and operating impact of the Rave transaction, our film slate for 2012 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 and the indenture governing its 7.375% Senior Secured Notes
due 2019;
 Our ability to operate at expected levels of cash flow;
 Our ability to meet our contractual obligations, including all outstanding financing commitments;
 Financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital;
 The availability of suitable motion pictures for exhibition in our markets;
 Competition in our markets;
 Competition with other forms of entertainment;
 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, 2011 and our quarterly reports
on form 10-Q 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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COMPANY OVERVIEW
1
STRICTLY CONFIDENTIAL
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CARMIKE OVERVIEW
 4th largest U.S. exhibitor
— 232 theatres / 2,242 screens
 Diversified portfolio with theatres in 35 states
WA
1
OR
1
MT
6
ID
2
CO
5
 Leading digital and 3D platform poised for
growth in 3D-driven film slate
States with 1 – 9 Theatres
— 748 3-D screens
States with 10 – 19 Theatres
— 14 Big D large format auditoriums
States with 20+ Theatres
 Strengthened Balance Sheet through operating
and financial discipline
MO
1
OK
10
IL
9
AR
7
OH
4
IN
3
KY
5
PA
19
WV
VA
2
4
DE
1
NC
22
TN
20
AL
13
TX
9
NY
1
MI
12
IA
5
KS
1
NM
1
— 2,119 digital screens
 New growth initiatives include 30-year
agreement with Screenvision, alternative
content, Big D theatre format and VIP Ovation
Club offering
WI
3
NE
2
UT
3
 Favorable recent attendance trends vs. industry
 Improving operating metrics driven by
concessions and cost-cutting measures
undertaken
MN
6
SD
5
WY
1
 America’s Hometown Theatre
— Target small to mid-size non-urban markets
ND
4
GA
25
SC
10
FL
9
SUMMARY OF SITES
Shared, 4
Owned
Owned, 58
Leased
Leased, 170
Shared
Ownership
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SMALL MARKET BENEFITS
 10-12 screens ideal
SMALLER FOOTPRINT
LIMITED LOCAL
ENTERTAINMENT
OPTIONS & COMPETITION
 Offer entertainment in a family-friendly setting
 Small town America’s favorite theatre
 Presence in locations with minimal entertainment alternatives
 3-D / digital strategy
SIMPLE EFFICIENT
STRATEGY
 High concession margins
 Enhanced cash flow per screen
 Connectivity with audience base
UNIQUE HOLLYWOOD
FOCUS
 Focus on event films, family animation, sequels ideal for hometown
audiences
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DIGITAL AND 3-D EXHIBITION PIONEER
CARMIKE IS A LEADER IN THE DEPLOYMENT OF DIGITAL AND 3-D CINEMA
Digital Overview
 2,119 screens converted to digital including 100% of first-run screens and 95% of total
 New Big D DIGITAL Entertainment Experience
 Carmike’s digital large screen format debuted in Columbus, GA - Q3 ’10
– Current footprint includes:
– Columbus, GA
– St. Clairsville, OH
– Franklin, TN
– Missoula, MT
– Canton, GA
– Pottstown, PA
– Savannah, GA
– Winder, GA
– Tyler, TX
– Maryville, TN
– Billings, MT
– Apple Valley, MN
– Chattanooga, TN
– Myrtle Beach, SC
 National 3-D footprint:
– 748 3-D capable screens (at 9/30/12)
3-D Overview
– 35% penetration of digital footprint
 3-D is an important revenue driver for Carmike
– Over 20% of box receipts from 3-D titles in some quarters
– 3-D genre is well-suited for Carmike’s markets (animation, family, action)
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SIGNIFICANT DIGITAL UPSIDE
FOCUS ON DIGITAL FORMAT HAS POSITIONED CARMIKE TO
CAPITALIZE ON GROWING DIGITAL OPPORTUNITIES
HISTORICAL AND UPCOMING 2-D RELEASES
 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 3-D, Kenny Chesney, Dave Matthews,
Foo Fighters)
RECENT AND UPCOMING 3-D RELEASES
— Opera and ballet (Emerging Pictures relationship)
— Pay-per-view events
— Live sports (BCS Championship, NCAA Final Four,
NBA Skills, FIFA World Cup)
— Religious (Fox Faith)
 On-screen advertising (Screenvision) – 3-D format, lobby ads,
mobile, etc.
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MOVIE-GOING…MOST POPULAR AND BEST VALUE
Most Popular Out-of-Home
Entertainment Experience
Most Attractive Value Proposition
Annual attendance (mm)
1,364
Ticket Price per Patron
$71
$49
$50
Basketball
(NBA)
Hockey
(NHL)
$36
$24
347
$7
80
Cinemas
Theme
Parks
Baseball
(MLB)
22
21
18
Basketball
(NBA)
Hockey
(NHL)
Football
(NFL)
Cinemas
Baseball
(MLB)
Theme
Parks
Football
(NFL)
Source: 2008 MPAA, Pricewaterhouse Coopers
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NEW BUILD-TO-SUIT THEATRES
 Three new build-to-suit theatres opened since December
2011
— West Pottstown, PA
— Winder, GA
— Maryville, TN
 All new build-to-suit theatres contain one BIG D auditorium
West Pottstown, PA
 Feature single point-of-sale for tickets and concessions
 Third party ‘build-to-suit’ theatres require less upfront
investment for Carmike
 Entered into agreement with Entertainment Properties Trust
in Q1 2012 to identify and develop future theatre sites
 Digital entertainment complexes featuring stadium seating
 More new build-to-suit theatres announced
Winder, GA
— Jacksonville, NC
— Cleveland, TN
— Decatur, AL
— Champaign, IL
— Sandestin, FL
— Winchester, VA
Maryville, TN
— Colorado Springs, CO
— El Paso, TX
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ACQUISITIONS
Recent Acquisitions:
 MNM Theatres
 October 2011
 Atlanta, GA area
 Destinta Theatres
 March 2012
 Clarion, PA
 Rave Review Cinemas, LLC
 Announced September 2012
 16 theatres; 251 screens
Opportunities:
 Current infrastructure can support 300 theatres
and 3,000 screens
 Take advantage of exhibitors unable to finance
digital expansion
 Company is currently positioned to take
advantage of accretive acquisitions after
completion of equity offering and debt refinancing
in April 2012
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RAVE REVIEWS CINEMAS
 Rave Circuit
— 16 Theatres and 251 screens located across 7 states (13 individual markets)
— 7 IMAX screens
— Average theatre age of only 8 years
 Opportunities
— #1 or #2 in market share in 12 of 13 markets
— Good geographic fit with Carmike’s existing circuit
— Forge new partnership with IMAX
 Financial Overview
— $23.6 million TTM EBITDA1
— $19 million purchase price and assumption of $100.4 million in capital leases and financing obligations 2
1.
2.
Represents EBITDA on a pro forma basis for the twelve months ended June 28, 2012
Lease obligations are subject to customary accounting adjustments to reflect the acquisition date fair value of such
obligations.
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THEATRE MANAGEMENT STRATEGY
 Focus on details “through the eyes of our patrons”
— Refreshing our circuit
— Clean facilities
— Friendly and well-trained associates
— Appropriate number of employees per theatre to achieve
better customer experience
 Performing general maintenance on older theatres
— Helps compete with other entertainment attractions in
Carmike markets
 Theatre utilization
— Alternative content – leveraging digital platform
— Staggered show times
 Opening larger, state-of-the art theatres averaging ~12
screens
— Third party ‘build-to-suit’ theatres require less upfront
investment for Carmike
— Digital entertainment complexes featuring stadium
seating
 Closing under-performing theatres, exiting expired leases
— Most are smaller theatres with fewer/non-digital screens
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CONCESSIONS SUCCESS
 Excellent, industry-leading margins
—Eleven straight quarter-over-quarter per cap increases
 Streamlined concession offerings
—Focus on highest margin products such as:
— Coca-Cola/fountain drinks, popcorn (including flavored), nachos, cotton candy and select candy
offerings (M&M products)
 Driving more revenue
—Up-selling patrons with combo / value pricing
— Reusable/refillable popcorn buckets – leads to repeat visits/loyalty
—Stimulus Tuesdays (still going strong after 3 years)
— Special Stimulus Tuesday discounted concession offerings
—Single point-of-sale for tickets and concessions – pilot program
—Promotions – including specialized tie-ins, bounce-backs, etc.
—Ovation Room (VIP Auditorium in Chattanooga, TN – nation’s first ‘Green’ theatre)
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SCREENVISION AGREEMENT
30 YEAR AGREEMENT WITH ADVERTISING PARTNER SCREENVISION PROVIDES FURTHER GROWTH OPPORTUNITIES
 Extended long-term on-screen exclusive exhibition agreement with cinema advertising leader for additional 30 years
— Carmike has been Screenvision customer for ~20 years
— Current deal enhances partnership and provides Carmike with equity upside
 Carmike received $30 million pre-tax cash payment on 1/4/11
— Prepaid bank debt with $15 million of proceeds, further deleveraging balance sheet
 Carmike received 20% ownership interest in Screenvision profits and growth; which can go as high as 25% or as low as 15%
depending on screen count, while also giving Carmike rights to distributions upon a monetization event of Screenvision
 Perfectly aligned partnership
— Screenvision has similar small-town footprint to Carmike
— Local advertiser focus yields synergies
 New relationship forged with respected media investor Shamrock Capital
 Cinema advertising regarded as one of the fastest growing media segments in the United States
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FINANCIAL SUMMARY
2
STRICTLY CONFIDENTIAL
15
THEATRE OPERATIONS – YTD 2012
REVENUE MIX
1
COSTS AND EXPENSES
Depreciation and
Amortization, 7%
G&A, 4%
Concessions
and Other
36%
Film Exhibition,
38%
Admissions
64%
Other Theatre
Operating2 ,
46%
2
Concession,
5%
Notes:
1 As percentage of total revenue for YTD 9/30/2012
2 Other theatre operating costs include labor, utilities, occupancy and facility lease expenses
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Q3 AND YTD 2012 FINANCIAL UPDATE
Three Months Ended
September 30,
2012
2011
($ in millions)
Financial Summary
Total Revenue
Theatre Level Cash Flow
Adjusted EBITDA
Adjusted Net (Loss) Income
$
Operating Statistics
Average Theatres
Average Screens
Average Attendance Per Screen
Average Admissions Per Patron
$
Average Concessions / other Per Patron $
Total Attendance (in thousands)
Debt Summary
Total Debt
Net Debt
127.5 $
24.2
19.4
2.3
133.3
26.6
22.1
3.1
233
2,244
5,504
6.52 $
3.81 $
12,353
235
2,217
6,013
6.49
3.57
13,332
Nine Months Ended
September 30,
2012
2011
$
$
$
Q3 Variance
($)
(%)
YTD Variance
($)
(%)
394.3 $
82.9
68.1
11.3
360.3
67.5
53.8
(7.6)
$ (5.8)
(2.4)
(2.7)
(0.8)
(4.4%)
(9.0%)
(12.2%)
(25.8%)
$ 34.0 9.4%
15.4 22.8%
14.3 26.6%
18.9 N/M
235
2,256
16,449
6.76 $
3.88 $
37,117
236
2,221
16,106
6.51
3.63
35,776
(2)
27
(509)
$0.03
$0.24
(979)
(0.9%)
1.2%
(8.5%)
0.5%
6.7%
(7.3%)
(1)
35
343
$ 0.25
$ 0.25
1,341
September 30, December 31,
2012
2011
$
325.0 $
315.4
242.9
301.8
(0.4%)
1.6%
102.1%
3.8%
6.9%
3.7%
$ 9.6 3.0%
(58.9) (19.5%)
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TOTAL DEBT AND BANK DEBT (unaudited)
(in thousands)
September 30, December 31,
2012
2011
December 31,
2010
Current Maturities of Long-Term Debt, Capital Leases
and Long-Term Financing Obligations
Long-Term Debt Less Current Maturities
$2,216
$3,959
$4,240
209,530
196,880
233,092
Capital Leases and Long-Term Financing Obligations
113,237
114,608
116,036
Total Debt
$324,983
$315,447
$353,368
Less Cash and Cash Equivalents
(82,043)
(13,616)
(13,066)
Net Debt
$242,940
$301,831
$340,302
$34,113
$35,985
Interest Expense
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Q2 FINANCING TRANSACTIONS
Public Equity Offering
 Completed a public equity offering under its
current shelf registration on April 11, 2012
 Issued 4.6 million shares, including the
underwriters’ overallotment at $13/share
 Net proceeds totaled $56.2 million
Debt Refinancing
 Issued $210 million bonds on April 27, 2012 to
replace its existing term loan ($199.7 million
when refinanced)
 Net proceeds of $202.8 million after bond
issuance costs
 Fewer covenant restrictions with notes resulting
in increased flexibility to pursue capital
expenditures, acquisitions, dividends, etc.
 Entered into a new $25 million revolving credit
facility to replace its existing $30 million
revolving credit facility
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KEY FINANCIAL TAKEAWAYS
 Strengthened balance sheet to continue to pursue growth opportunities (upgrade equipment, new builds, acquisitions, etc.)
vs. paying dividends or repurchasing stock
— Raised $56 million through public offering in April 2012
— Achieved goal of $200 million bank debt at year-end; Refinanced debt in April 2012 to provide more flexibility
— Want to take advantage of the expiring window of opportunity to go digital that some smaller circuits are either unwilling or
unable to do
 Concessions success with industry-leading margins
— Eleven straight quarters of higher per caps
— Creative experimentation with promotions and merchandising strategies to up-sell patrons and foster loyalty/repeat visits
 Continue focus on ‘details matter’ strategy
— Improving attendance metrics and encouraging repeat business with customer-centric attitude
 High margins and free cash flow conversion to serve as catalysts to strengthen balance sheet and pre-pay existing debt
 Screenvision partnership, strategic new builds / closures and improved pricing
 Further capitalize upon digital/3-D circuit advantages
— Admission premiums, programming flexibility, high-quality image/sound, alternative content, etc.
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Q&A SESSION
Thank You!
Investor Relations contacts:
Richard Hare, CFO
Carmike Cinemas
(706)576-3415
[email protected]
Robert Rinderman
JCIR
212/835-8500
[email protected]
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