Carmike Cinemas (CKEC) acquires GKC Theatres

Carmike Cinemas (CKEC) has reached an agreement to acquire GKC Theaters for $66 million dollars.  Here are some details:

About GKC Theatres:

• What GKC stands for:  George
  Kerasotes Corporation
• Locations:  Illinois, Michigan, Indiana
  and Wisconsin
• Number of theaters: 30
• Number of screens: 263
• Theater level cash flow (2004): $12.8 million

About CKEC (as of 2/28/05):

• Number of states: 36
• Number of theaters: 280
• Number of screens: 2,173

GKC's theater level cash flow calculation:

 

Operating income: $6.7M
+ General and admin. expenses: $3.5M
+ Depreciation and amortization: $2.4
+ Operating lease buyout: $0.2
Theater level cash flow: $12.8

Valuation:

Purchase price: $66M
Theater level cash flow: $12.8M
P/TLCF: 5.16x

Quote from Michael Patrick, Chairman and CEO of CKEC: 

Carmike believes this family controlled circuit represents
a significant
opportunity for us to increase our presence in small town
markets in four
states where we currently have a limited presence.

We believe we can add GKC Theatres to our existing
portfolio
without adding significant general and administrative expenses.

We expect to continue to expand our presence
in small market
America by taking advantage of organic growth in underserved
markets and
opportunities to acquire other exhibitors as our industry
continues to
consolidate.

Quick comment:  This deal fits perfectly with CKEC's previously stated goals of acquiring theater chains in small-to-mid-sized, non-urban towns at or below 6x theater level cash flow.