NATIONAL CINEMEDIA operates the largest digital in theatre network in North America that allows them to distribute advertisements and other content for our advertising meetings and events businesses utilizing our proprietary digital content network. They have long term exhibitor services agreements with our founding members Cinemark and Regal the three largest motion picture exhibition companies in the U.S.and multi year agreements with several other theatre operators whom they refer to as network affiliates. The network affiliate agreements grant them exclusive rights subject to limited exceptions to sell advertising on their theatre screens. National Cinemedia Inc. has a market cap of $638.5 million; its shares were traded at around $15.16 with a P/E ratio of 22.7 and P/S ratio of 1.7. The dividend yield of National Cinemedia Inc. stocks is 4.3%.
Highlight of Business Operations:As disclosed in the Companys Form 8-K filed with the Securities and Exchange Commission (SEC) on November 5, 2009, the Company is filing this amendment to its Annual Report on Form 10-K for the fiscal year ended January 1, 2009, originally filed with the SEC on March 6, 2009 to restate its presentation of noncontrolling interest. During the fiscal year ended January 1, 2009, the Company presented noncontrolling interest, net of tax, in the Consolidated Statement of Operations based on the founding members proportionate share of outstanding membership units applied to the subsidiarys consolidated net income. However, after review of Emerging Issues Task Force (EITF) No. 95-7, Implementation Issues Related to the Treatment of Minority Interests in Certain Real Estate Investment Trusts, the Company determined that the pronouncement was applicable to its presentation of minority interest. EITF 95-7 states that while the minority interest balance is negative, which was the case during 2008, the minority interest charge in the Consolidated Statement of Operations should have been the greater of (1) the minority interest holders share of the operating partnerships earnings for the year (if any) or (2) the amount of distributions to the minority interest holder during the year. During the fourth quarter of the fiscal year ended January 1, 2009, the Company had a $16.3 million pre-tax non-cash charge related to an ineffective hedging instrument (as discussed in Note 1 to the Consolidated Financial Statements) as well as a $11.5 million pre-tax non-cash charge related to an investment in an affiliate (as discussed in Note 12 to the Consolidated Financial Statements). Without these discrete, non-operating charges in the fourth quarter of 2008, the founding members proportionate share of the subsidiarys income before noncontrolling interests would have been higher and the guidance of EITF 95-7 would not have been applicable. As a result, the Company has restated its Consolidated Statement of Operations to include $14.9 million of distributions to noncontrolling interests in excess of their proportionate share of earnings, with a corresponding credit to additional paid in capital (deficit). The restatement has no effect on cash distributions paid to the members of the subsidiary, including amounts paid to the Company.
Read the The complete ReportNCMI is in the portfolios of Ron Baron of Baron Funds.