COLUMBUS, Ga.-- Carmike Cinemas, Inc. today announced it has made a voluntary $10 million pre-payment to reduce its bank debt. During the trailing twelve months, the Company has made approximately $33 million of payments against its outstanding debt. The Company continues to focus on operating performance improvements and selling surplus property in order to deleverage its balance sheet.
In light of the continuing challenging conditions in the credit markets and the wider economy, the Company’s Board of Directors has suspended Carmike’s quarterly dividend. Over the past four quarters Carmike’s dividend payments amounted to approximately $9 million. Going forward the Company plans to allocate its capital primarily to reducing its overall leverage.
Reflecting the $10 million payment, Carmike’s bank debt at September 30, 2008 declined to approximately $285 million compared to $295 million and $302 million at June 30, 2008 and December 31, 2007, respectively. Reflecting the anticipated 2008 third quarter operating results and recent debt reduction payments, the Company remains in compliance with all credit facility covenants at September 30, 2008.
Michael W. Patrick, Chief Executive Officer of Carmike, commented, “Given current economic and capital market uncertainties, our Board has determined that the most prudent use of our free cash flow at this time is in deleveraging our balance sheet. Debt reduction will further reduce interest expense and support our goal of creating long-term shareholder value.
“In addition to our focus on debt reduction as an avenue to enhance shareholder value, as the industry’s leader in digital cinema and 3-D, we are well positioned to benefit from the growing slate of upcoming 3-D film releases. 3-D has already demonstrated its ability to stimulate higher attendance, per patron revenue and margins. Importantly, we believe the films being produced in 3-D, which are predominantly in the family, action or animated genres, are ideally suited for our markets. While our digital and 3-D readiness has delivered initial financial benefits in 2008, we look forward to an increasingly active 3-D release schedule, with a growing slate of titles and the release schedule accelerating in the second half of 2009 and beyond. With an industry-leading base of 428 3-D screens, Carmike is uniquely positioned to benefit from the 3-D trend.”