Moody's cuts Carmike outlook to negative

Moody's Investors Service said it changed the outlook for Carmike Cinemas Inc. to negative from positive following the announcement that Carmike does not expect to file its 2005 10-K report by the extended March 31 deadline. The B2 corporate family rating, B1 senior secured bank facility rating and Caa1 rating on Carmike's senior subordinated notes were affirmed.

The change in outlook reflects Moody's expectation that an upgrade over the next 12 to 18 months is unlikely due to both weaker-than-anticipated fundamental performance, concerns over financial reporting and accounting and the company's upcoming need to seek waivers for the requirement to file timely financial statements from its bank lenders.

Moody's said the ratings reflect the company's high financial risk, including leverage of 6.1x; sensitivity to the film industry's ability to consistently supply compelling product; lack of scale and concerns over the company's ability to hire and retain sufficient financial staff.

Carmike's dominant position in its targeted smaller markets and strong concession margins somewhat mitigate these risks, the agency said.

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