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Regal Entertainment Group Reports Operating Results (10-Q)

May 10, 2011 | About:
10qk

10qk

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Regal Entertainment Group (RGC) filed Quarterly Report for the period ended 2011-03-31.

Regal Entertainment Group has a market cap of $2.16 billion; its shares were traded at around $13.96 with a P/E ratio of 51.7 and P/S ratio of 0.8. The dividend yield of Regal Entertainment Group stocks is 6%.

Highlight of Business Operations:

Total concessions revenues decreased $33.7 million, or 18.2%, to $151.3 million in the Q1 2011 Period, from $185.0 million in the Q1 2010 Period. Average concessions revenues per patron during the Q1 2011 Period increased 3.5%, to $3.27, from $3.16 for the Q1 2010 Period. The decrease in total concessions revenues during the Q1 2011 Period was attributable to the aforementioned decrease in attendance during the period, partially offset by an increase in average concessions revenues per patron. The increase in average concessions revenues per patron for the Q1 2011 Period was primarily a result of selective price increases effected subsequent to the end of the Q1 2010 Period and an increase in popcorn sales volume during the Q1 2011 Period.

During the Q1 2011 Period, depreciation and amortization expense decreased $4.2 million, or 7.5%, to $52.0 million, from $56.2 million in the Q1 2010 Period. The decrease in depreciation and amortization expense during the Q1 2011 Period as compared to the Q1 2010 Period was primarily due to a $3.4 million reduction in depreciation related to the replacement of 35mm film projectors with digital projection systems during fiscal 2010 and the Q1 2011 Period.

Income from operations decreased $37.9 million, or 79.6%, to $9.7 million during the Q1 2011 Period, from $47.6 million in the Q1 2010 Period. The net decrease in income from operations during the Q1 2011 Period as compared to the Q1 2010 Period was primarily attributable to the decrease in total revenues, partially offset by a reduction in certain variable operating expense line items described above and a lower loss on disposal and impairment of operating assets ($6.7 million and $13.1 million, respectively, for the Q1 2011 Period and Q1 2010 Period).

During the Q1 2011 Period, net interest expense increased $3.0 million, or 8.3%, to $39.0 million, from $36.0 million in the Q1 2010 Period. The increase in net interest expense during the Q1 2011 Period was principally due to incremental interest expense associated with the issuance of the $275.0 million 91/8% Senior Notes in August 2010 and a shift in our debt portfolio resulting from the Q1 2011 Period issuance of $250.0 million in aggregate principal of our 91/8% Senior Notes, of which $234.6 million was used to repay a portion of our Amended Senior Credit Facility. These items were partially offset by a reduction in interest expense resulting

The Company received $16.4 million and $19.4 million, respectively, in cash distributions from National CineMedia (including payments received under the tax receivable agreement described in Note 4 to the 2010 Audited Consolidated Financial Statements) during the Q1 2011 Period and Q1 2010 Period. Approximately $2.9 million and $3.3 million, respectively, of these cash distributions received during the Q1 2011 Period and the Q1 2010 Period were recognized as a reduction in our investment in National CineMedia. The remaining amounts were recognized in equity earnings during each of these periods and have been included as a component of Earnings recognized from NCM in the accompanying unaudited condensed consolidated financial statements. The decrease in earnings recognized from National CineMedia during the Q1 2011 Period as compared to the Q1 2010 Period was primarily attributable to slightly lower earnings of National CineMedia.

On March 10, 2010, DCIP executed definitive agreements and related financing transactions in connection with the conversion to digital projection. DCIPs financing raised $660.0 million, consisting of $445.0 million in senior bank debt, $135.0 million in additional junior capital and approximately $80.0 million in equity contributions (consisting of cash and existing digital projection systems) from us, AMC and Cinemark. Concurrent with closing, the Company entered into the Digital Cinema Agreements with Kasima, LLC, and made the DCIP Contributions. After giving effect to the DCIP Contributions, the Company holds a 46.7% economic interest in DCIP as of March 31, 2011, while continuing to maintain a one-third voting interest along with each of AMC and Cinemark. Since the Company determined that it is not the primary beneficiary of DCIP or any of its subsidiaries, it will continue to account for its investment in DCIP under the equity method of accounting.

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