AMC Entertainment Inc. Reports Results for Fourth Quarter and FY 2004.Business Editors KANSAS CITY, Mo.--(BUSINESS WIRE)--June 9, 2004 AMC Entertainment Inc. (AMEX: AEN), one of the world's leading theatrical exhibition companies, today announced results for its fourth quarter and for its fiscal year 2004. Additionally, the Company announced that it will record non-cash restatements to certain prior year financial statements as discussed below. Revenues for the fourth quarter, which is comprised of the 13 weeks ended April 1, 2004, were $403 million, down 9 percent from revenues of $444 million in last year's fourth quarter, which consisted of the 14-week period ending April 3, 2003. For fiscal 2004, a 52-week period, revenues were $1.8 billion. Revenues for fiscal 2003, a 53-week period, were also $1.8 billion. Net loss for common shares for the fourth quarter was $42.8 million ($1.16 per diluted share), compared to net loss for common shares as restated of $31.1 million (86 cents per diluted share) last year. Fourth quarter earnings were impacted by a $13.9 million expense for redemption of senior subordinated notes due 2009 and 2011. For fiscal 2004, net loss for common shares was $51.0 million ($1.39 per diluted share), compared to net loss for common shares as restated of $56.7 million ($1.56 per diluted share) last year. Adjusted EBITDA for the fourth quarter was $45.5 million, compared to Adjusted EBITDA of $52.1 million for the fourth quarter of fiscal 2003. For fiscal 2004, Adjusted EBITDA was a fiscal year record $248 million, a 7 percent increase over Adjusted EBITDA of $231 million last year. "Our record fiscal year Adjusted EBITDA reflects the continued successful execution of our strategic plan," said Peter Brown, chairman and chief executive officer. "We are pleased with the margin improvement we achieved in a year of flat industry revenues, and believe that our industry-leading asset quality positions us well to capitalize on a very promising summer film lineup." Highlights of fiscal 2004 included: -- Record adjusted EBITDA of $248 million. -- Continued margin improvement: fiscal year Adjusted EBITDA margin increased more than 96 basis points to 13.9 percent of revenues. -- Continued improvement in the quality of the AMC Theatres portfolio with the opening of 114 new megaplex screens, the disposition of 142 screens, and the successful acquisition and integration of three Megastar Theatres totaling 48 screens. -- Free cash flow increased 48 percent to $103 million. -- Strengthened balance sheet: continued credit profile improvement and $333 million in cash. As noted, the Company will restate its prior year provisions for income taxes and will record non-cash valuation allowances against deferred tax assets relating to operating losses incurred in certain foreign jurisdictions. The expected restatements result from reevaluation by the Company and its independent auditors of applicable accounting guidance related to income taxes. In addition, the Company will record immaterial non-cash adjustments for contingent rent expense under one of its lease agreements that will impact fiscal years 2001 through 2003. The restatements are expected to increase (decrease) net loss for common shares by approximately $1.6 million in fiscal 1999, $2.4 million in fiscal 2000, less than $0.1million million in fiscal 2001, ($1.1) million in fiscal 2002 and $9.2 million in fiscal 2003. The restatements are expected to increase (decrease) net loss for common shares by approximately ($0.8) million, $3.4 million, and ($0.2) million for the interim periods of fiscal 2003. The restatements are expected to decrease net earnings for common shares by approximately $1.3 million, increase net loss for common shares by $1.0 million and decrease net earnings for common shares by $6.5 million for the interim periods in fiscal 2004. Loss from discontinued operations, net of income tax benefit will be reduced by $2.1 million in fiscal 2002 and increased by $2.5 million in fiscal 2004 resulting from a change in timing of a tax deduction between these fiscal years. The restatements primarily effect the income tax provision and as a result, there will be a cumulative reduction in the deferred tax asset of approximately $17 million through January 1, 2004. The estimated effects of the restatements are preliminary and subject to final audit. The Company intends to file restated financial statements for the effected periods as promptly as possible, including restated interim quarterly financial information. In addition, the Company is responding to an SEC comment letter, issued pursuant to its pending registration statement on its senior subordinated notes due 2014, concerning the possible reclassification of its outstanding Series A Convertible Preferred Stock out of stockholders' equity. The Company is in the process of resolving this matter with the SEC. Such non-cash reclassification, if made, would not have an impact on previously reported or current earnings or the Company's ongoing operations. This release contains non-GAAP financial measures as defined by Regulation G of the Securities and Exchange Commission. As required, the attached financial summary contains a discussion of management's use of these measures and reconciliations to the most directly comparable GAAP measures. In addition, reconciliations of GAAP and non-GAAP financial measures are available on the Company's web site, www.amctheatres.com. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, the financial measures prepared in accordance with GAAP. The financial measures as determined by management may not be comparable to the same financial measures as reported by other companies. As used herein, GAAP refers to generally accepted accounting principles in the United States of America. Investors will have the opportunity to listen to the earnings conference call and view the supporting slide presentation at 9 a.m. CDT on Thursday, June 10, through the website www.amctheatres.com. Listeners can also access the call by dialing (877) 307-8182, or (706) 643-7523 for international callers. A replay of the call will be available on the website and by phone through Thursday, June 24. The telephone replay can be accessed by calling (800) 642-1687, or (706) 645-9291 for international callers, and entering the conference ID number 7884612. AMC Entertainment Inc. is a leader in the theatrical exhibition industry. Through its circuit of AMC Theatres, the Company operates 232 theatres with 3,554 screens in the United States, Canada, France, Hong Kong, Japan, Portugal, Spain and the United Kingdom. Its Common Stock trades on the American Stock Exchange under the symbol AEN. The Company, headquartered in Kansas City, Mo., has a website at www.amctheatres.com. Any forward-looking statements contained in this release, which reflect management's best judgment based on factors currently known, involve risks and uncertainties. Actual results could differ materially from those anticipated in the forward-looking statements included herein as a result of a number of factors, including among others the Company's ability to enter into various financing programs, the performance of films licensed by the Company, competition, construction delays, the ability to open or close theatres and screens as currently planned, domestic and international political, social and economic conditions, demographic changes, increases in demand for real estate, changes in real estate, zoning and tax laws, unforeseen changes in operating requirements, the Company's ability to identify suitable acquisition candidates and to successfully integrate acquisitions into its operations and results of significant litigation.
AMC ENTERTAINMENT INC.
FINANCIAL SUMMARY
(In thousands, except per share and other data)
Thirteen/Fourteen Fifty-two/Fifty-
Weeks Ended three Weeks Ended
------------------ --------------------
April 1, April 3, April 3, April 3,
2004 2003 2004 2003
(restated) (restated)
(1) (1)
--------- ---------- -------- ----------
Statement of Operations
Data
--------------------------
Admissions $276,594 $306,747 $1,219,393 $1,212,204
Concessions 100,831 113,256 456,990 468,578
Other theatre 14,162 12,021 53,983 48,600
NCN and other 11,135 12,409 52,454 55,693
--------- --------- ----------- -----------
Total revenues 402,722 444,433 1,782,820 1,785,075
Film exhibition costs 138,705 160,171 649,380 660,982
Concession costs 11,311 13,084 51,259 54,912
Theatre operating expense 103,131 112,565 419,619 438,605
Rent 78,787 78,314 314,024 300,377
NCN and other 11,336 14,075 46,847 52,444
General and administrative
expense:
Stock-based
compensation 7,025 495 8,727 2,011
Other 13,950 14,112 53,864 66,093
Preopening expense 693 349 3,858 3,227
Theatre and other closure
expense 256 120 4,068 5,416
Depreciation and
amortization 34,953 33,755 124,572 126,994
Impairment of long-lived
assets 16,272 19,563 16,272 19,563
Disposition of assets and
other gains (109) (353) (2,590) (1,385)
--------- --------- ----------- -----------
Total costs and expenses 416,310 446,250 1,689,900 1,729,239
Other expense 13,947 - 13,947 -
Interest expense 21,513 20,892 77,717 77,800
Investment income (1,138) (979) (2,861) (3,502)
--------- --------- ----------- -----------
Total other expense 34,322 19,913 88,803 74,298
--------- --------- ----------- -----------
Income (loss) from
continuing operations
before income taxes (47,910) (21,730) 4,117 (18,462)
Income tax provision
(benefit) (16,900) 2,700 11,000 10,000
--------- --------- ----------- -----------
Loss from continuing
operations (31,010) (24,430) (6,883) (28,462)
Loss from discontinued
operations, net of income
tax benefit - (358) (3,831) (1,084)
--------- --------- ----------- -----------
Net loss $(31,010) $(24,788) $(10,714) $(29,546)
========= ========= =========== ===========
Preferred dividends 11,750 6,268 40,277 27,165
--------- --------------------- -----------
Net loss for common shares $(42,760) $(31,056) $(50,991) $(56,711)
========= ========= =========== ===========
Basic earnings (loss) per
share:
Loss per share from
continuing operations $(1.16) $(.85) $(1.28) $(1.53)
========= ========= =========== ===========
Loss per share from
discontinued
operations $- $(.01) $(.11) $(.03)
========= ========= =========== ===========
Net loss per share $(1.16) $(.86) $(1.39) $(1.56)
========= ========= =========== ===========
Diluted loss per share:
Loss per share from
continuing operations $(1.16) $(.85) $(1.28) $(1.53)
========= ========= =========== ===========
Loss per share from
discontinued
operations $- $(.01) $(.11) $(.03)
========= ========= =========== ===========
Net loss per share $(1.16) $(.86) $(1.39) $(1.56)
========= ========= =========== ===========
Average shares
outstanding:
Basic and
diluted 36,863 36,302 36,715 6,296
========= ======= ======== ========
Thirteen/Fourteen Fifty-two/Fifty-three
Weeks Ended Weeks Ended
------------------- -----------------------
April 1, April 3, April 1, April 3,
2004 2003 2004 2003
---------- ---------- --------- -----------
(restated) (restated)
(1) (1)
Other Financial Data:
Net cash provided by
(used in) operating
activities $ (2,211) $ 14,874 $183,278 $ 128,747
Net cash provided by
(used in) investing
activities 44,530 (31,264) (69,378) (137,201)
Net cash provided by
(used in) financing
activities (20,338) 20,591 (24,613) 33,437
Adjusted EBITDA (2) 45,502 52,112 247,827 230,912
After tax cash flow (2) 22,014 21,563 133,673 122,112
Net capital expenditures
(3) (41,536) 16,411 31,100 52,982
Free cash flow (4) 63,550 5,152 102,573 69,130
Other Data:
Screen additions 18 - 114 95
Screen acquisitions - - 48 641
Screen dispositions 37 40 142 111
Average screens -
continuing operations 3,537 3,494 3,494 3,498
Attendance - continuing
operations
(in thousands) 41,625 47,949 186,989 197,363
Number of screens
operated (period end) 3,544 3,524
Number of theatres
operated (period end) 232 239
Screens per theatre
circuit wide 15.3 14.7
April 1, April 3,
2004 2003
-------- ---------
(restated)
(1)
Balance Sheet Data:
Cash and equivalents $333,248 $244,412
Corporate borrowings 686,431 668,661
Capital and financing lease
obligations 61,281 59,101
Net debt (5) 414,464 483,350
Stockholders' equity 280,604 279,719
Total shares (6) 79,647 76,481
(1) We will restate our prior year provisions for income taxes and
will record non-cash valuation allowances against deferred tax
assets relating to operating losses incurred in certain foreign
tax jurisdictions. In addition, we will record immaterial non-cash
adjustments for contingent rentals under one lease impacting
fiscal years 2001 through 2003. The estimated effects of the
restatements are preliminary and subject to final audit.
(2) We have included Adjusted EBITDA and After tax cash flow because
we believe they provide investors with additional information to
measure our performance and liquidity, estimate our value and
evaluate our ability to service debt. In addition, we use Adjusted
EBITDA for incentive compensation purposes.
(3) We have included Net capital expenditures because we believe it
provides investors with additional information concerning our net
cash requirements for property, excluding acquisitions.
(4) Represents After tax cash flow less Net capital expenditures. We
have included Free cash flow because we believe it provides
investors with additional information concerning the resources
available for strategic opportunities including, among others, to
invest in the business, make acquisitions and strengthen the
balance sheet.
(5) Represents corporate borrowings and capital and financing lease
obligations less cash and equivalents. We have included Net debt
because we believe it provides investors with additional
information to estimate our value and evaluate our leverage.
(6) Represents outstanding shares of Common Stock and Class B Stock
and incremental shares issuable under stock options and stock
awards, using the treasury stock method, and upon the conversion
of Series A Convertible Preferred Stock to Common Stock.
The following tables provide reconciliations of our non-GAAP financial measures to their most directly comparable GAAP measures.
Thirteen/Fourteen Fifty-two/Fifty-
Weeks Ended three Weeks Ended
------------------ -------------------
April 1, April 3, April 1, April 3,
2004 2003 2004 2003
-------- -------- -------- --------
(restated) (restated)
(1) (1)
Adjusted EBITDA
Reconciliation
(In thousands)
Net loss $(31,010)$(24,788) $(10,714) $(29,546)
Loss from discontinued
operations, net of income tax
benefit - 358 3,831 1,084
Interest expense 21,513 20,892 77,717 77,800
Income tax provision (benefit) (16,900) 2,700 11,000 10,000
Depreciation and amortization 34,953 33,755 124,572 126,994
Impairment of long-lived
assets 16,272 19,563 16,272 19,563
Investment income (1,138) (979) (2,861) (3,502)
Stock-based compensation
expense and special
compensation expense 7,025 495 8,727 21,261
Theatre and other closure
expense 256 120 4,068 5,416
Disposition of assets and
other gains (109) (353) (2,590) (1,385)
Preopening expense 693 349 3,858 3,227
Other expense 13,947 - 13,947 -
-------- ------- -------- ---------
Adjusted EBITDA $45,502 $52,112 $247,827 $230,912
======== ======= ======== =========
Thirteen/Fourteen Fifty-two/Fifty-
Weeks Ended three Weeks Ended
------------------ -------------------
April 1, April 3, April 1, April 3,
2004 2003 2004 2003
-------- -------- -------- --------
After Tax Cash Flow and Free
Cash Flow Reconciliation (In
thousands)
Net cash provided by (used in)
operating activities $(2,211) $14,874 $183,278 $128,747
Disposition of assets and
other gains 109 353 2,590 1,385
Loss on sale - discontinued
operations - - (5,591) -
Changes in working capital
items and other 19,299 7,524 (26,831) (1,832)
Deferred taxes excluding
benefit for impairment of
long-lived assets 4,817 (1,188) (19,773) (6,188)
-------- ------- -------- ---------
After tax cash flow 22,014 21,563 133,673 122,112
======== ======= ======== =========
Less net capital expenditures ( 41,536) 16,411 31,100 52,982
-------- ------- -------- ---------
Free cash flow $63,550 $5,152 $102,573 $69,130
======== ======= ======== =========
Thirteen/Fourteen Fifty-two/Fifty-
Weeks Ended three Weeks Ended
------------------ -------------------
April 1, April 3, April 1, April 3,
2004 2003 2004 2003
-------- -------- -------- --------
Net Capital Expenditures
Reconciliation
(In thousands)
Net cash provided by (used in)
investing activities $44,530 $(31,264) $(69,378)$(137,201)
Acquisition of GC Companies,
Inc., net of cash acquired
and proceeds from sale of
venture capital investments 2,075 (95) 2,075 47,314
Acquisition of Gulf States
Theatres - 14 - 752
Acquisition of MegaStar
Theatres 325 - 13,374 -
Payment on disposal -
discontinued operations - - 5,252 -
Purchase of leased furniture,
fixtures and equipment - - 15,812 7,052
Proceeds from disposition of
long-term assets (7,343) (617) (9,289) (5,494)
Other, net 1,949 3,794 11,054 4,983
Construction project costs
reimbursed by landlord for
financing activities - 11,757 - 29,612
-------- ------- -------- ---------
Net capital expenditures $41,536 $(16,411) $(31,100) $(52,982)
======== ======= ======== =========
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