KNOXVILLE, Tenn., Feb 4, 2003 (BUSINESS WIRE) --
Signs Definitive Stock Purchase Agreement to Acquire Certain Assets of Hoyts Cinemas Corporation and Declares Quarterly Dividend of $0.15 per share
Regal Entertainment Group (NYSE:RGC), a leading motion picture exhibitor owning and operating the largest theatre circuit in the United States under the Regal Cinemas, United Artists Theatres and Edwards Theatres brands and its media company, Regal CineMedia, today announced year end and fourth quarter 2002 results on both a combined historical and pro forma combined basis as described herein, the definitive stock purchase agreement to acquire certain assets of Hoyts Cinemas Corporation and declared a quarterly dividend of $0.15 per share.
Pro forma combined revenue for the quarter ended December 26, 2002 totaled $547.3 million, a 9.1% increase over the fourth quarter of 2001. Pro forma combined net income increased 119% to $31.7 million in the fourth quarter of 2002 compared to $14.5 million in the comparable quarter of 2001 and pro forma combined earnings per diluted share, excluding merger and restructuring expenses (net of related tax effect), increased 118% to $0.24 for the fourth quarter of 2002 compared to $0.11 during the fourth quarter of 2001. Pro forma combined earnings before interest, taxes, depreciation & amortization (EBITDA) and before merger and restructuring expenses (1) increased 23.2% to $107.8 million and represented a pro forma EBITDA margin of 19.7%.
Pro forma combined revenue for fiscal 2002 totaled $2,266.4 million, a 12.6% increase over fiscal 2001. Pro forma combined net income increased 167% to $150.2 million in fiscal 2002 compared to $56.3 million in fiscal 2001 and pro forma combined earnings per diluted share, excluding merger and restructuring expenses (net of related tax effect), increased 190% to $1.19 in fiscal 2002 compared to $0.41 during fiscal 2001. Pro forma combined earnings before interest, taxes, depreciation & amortization (EBITDA) and before merger and restructuring expenses (1) increased 37.1% to $481.1 million and represented a pro forma EBITDA margin of 21.2%.
Combined historical revenue for the quarter ended December 26, 2002 totaled $547.3 million compared to $240.3 million in the comparable quarter of 2001. Combined historical net income for the fourth quarter of 2002 was $31.7 million compared to $6.8 million in the comparable quarter of 2001 and combined historical earnings per diluted share for the fourth quarter of 2002 were $0.23 compared to $0.27 during the comparable quarter of 2001. The historical combined operating results for the 2001 period reflect the operations of United Artists Theatre Group and Edwards Theatres and exclude the operating results of Regal Cinemas (see note 2). Amounts attributable to equity interests owned by other parties are reflected as minority interest.
Combined historical revenue for fiscal 2002 totaled $2,140.2 million compared to $556.9 million in fiscal 2001. Combined historical net income for fiscal 2002 was $89.0 million compared to $4.9 million in fiscal 2001 and combined historical earnings per diluted share for fiscal 2002 were $0.79 compared to $0.28 during fiscal 2001. The historical combined operating results for the 2001 periods reflect the operations of United Artists Theatre Group and Edwards Theatres and exclude the operating results of Regal Cinemas (see note 2). Amounts attributable to equity interests owned by other parties are reflected as minority interest.
Regal also today announced that it has entered into a definitive stock purchase agreement pursuant to which Regal will acquire certain assets of Hoyts Cinemas Corporation for a combination of cash and stock valued at approximately $200 million and the assumption of certain capital leases. Regal expects to acquire 52 of the 97 Hoyts theatres representing 554 screens. The proposed acquisition will enhance Regal's presence in the Northeast United States and provide Regal with representation in the Boston designated market area (DMA), the only top 10 DMA where the Company had no theatres. The theatres involved in the proposed acquisition comprise approximately 60% of Hoyts' screens and generate in excess of 80% of Hoyts' cash flow. Regal expects the transaction to close during the first half of 2003.
Regal's Board of Directors also today declared a cash dividend of $0.15 per Class A and Class B common share, payable on March 14, 2003, to stockholders of record on February 25, 2003. The Company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors depending on available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows as well as other relevant factors.
"Fiscal 2002 was a blockbuster year for Regal," stated Mike Campbell, CEO of Regal Entertainment Group's theatre operations and Co-CEO of Regal Entertainment Group. "We have proven our ability to combine solid industry fundamentals with industry leading theatre operations to produce exciting growth opportunities, strong free cash flow and a dividend to shareholders. While comparisons to a record 2002 will be challenging, we expect our existing business model coupled with the proposed acquisition of Hoyts will allow us to achieve additional synergies, generate significant free cash flow for our business and continue to provide a dividend for our investors" Campbell continued.
During the fourth quarter, Regal CineMedia ("RCM"), a subsidiary of Regal Entertainment Group, was primarily focused on the launch of the digital pre-show program. At year end, the digital content network had been expanded to include approximately 2,000 screens and 575 plasma screens representing theatres in 15 designated market areas, including nine of the top 10 markets. Regal CineMedia entered into two pre-show programming and marketing relationships during the fourth quarter, The National Broadcasting Company (NBC) and Turner Broadcasting Systems, Inc. (TBS) and just recently entered into two similar relationships with, Vivendi Universal Entertainment (VUE) and Convex, owner of the "How Stuff Works" publishing brand. Kurt Hall, Chief Executive Officer of Regal CineMedia and Co-CEO of Regal Entertainment Group stated, "We have made significant progress in creating new revenue and cash flow sources for Regal Entertainment Group and look forward to continuing the positive momentum that our digital network is generating for the Regal CineMedia businesses during 2003."
Forward-looking Statements:
This press release includes "forward-looking statements" within the meaning of Section 26A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's prospectus dated May 8, 2002. All forward-looking statements are expressly qualified in their entirety by such factors.
Conference Call:
Regal Entertainment Group management will conduct a conference call to discuss fourth quarter 2002 results on February 4, 2003 at 9:30AM Eastern Time. Interested parties can listen to the call live on the Internet through the investor relations section of the Company's Web site: www.regalcinemas.com, or by dialing (888) 462-4030 (Domestic) and (706) 643-3791 (International). Please dial in to the call at least 5 - 10 minutes prior to the start of the call or go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. When prompted, ask for either the Regal Entertainment Group conference call or conference #6339249. A replay of the call will be available beginning approximately two hours following the call. Those interested in listening to the replay of the conference call should dial 800-642-1687 (Domestic) and (706) 645-9291 (International) and enter the conference ID #6339249.
About Regal Entertainment Group
Regal Entertainment Group (NYSE:RGC) is the largest motion picture exhibitor in the world. The Company's theatre circuit, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres, operates 5,663 screens in 524 locations in 36 states. This geographically diverse circuit represents over 20% of domestic box office receipts and includes theatres in 41 of the top 50 U.S. Designated Market Areas as well as prime locations in growing suburban markets. We believe that the size, reach and quality of the Company's theatre circuit provides its patrons with a convenient and exceptional movie-going experience.
Regal CineMedia is a wholly owned subsidiary of Regal Entertainment Group focusing on the expansion and development of advertising and new uses for REG's theatre assets, while at the same time enhancing the movie-going experience. The Regal CineMedia marketing, sales and advertising group develops in-theatre advertising and promotions and digital out-of-home advertising via video screens in fast service restaurants. Regal CineMedia operates other divisions that focus on meetings and special productions in a theatre environment, including the presentation of live sports and entertainment events, as well as the sale of group tickets and gift certificates.
Additional information is available on the Company's Web site at www.regalcinemas.com or www.regalcinemedia.com.
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Combined Historical Statements of Operations
For the Fiscal Quarters and Years Ended 12/26/02 and 1/3/02 (2)
(dollars in millions, except per share data)
Fiscal Fiscal
Quarter Quarter Year Year
Ended Ended Ended Ended
Dec. 26, Jan. 3, Dec. 26, Jan. 3,
2002 2002 2002 2002
------- ------ -------- ------
Revenues:
Admissions $370.8 $165.4 $1,453.7 $382.5
Concessions 143.8 65.4 588.3 153.3
Other operating revenues 32.7 9.5 98.2 21.1
------- ------ -------- ------
Total revenues 547.3 240.3 2,140.2 556.9
Operating expenses:
Film and advertising 204.0 91.9 790.3 212.9
Cost of concessions 21.3 8.2 84.4 18.1
Other operating expenses 199.4 92.5 757.1 227.5
General and administrative
expenses 14.8 10.2 65.1 21.4
Merger and restructuring
expenses 2.4 (0.5) 18.9 --
Depreciation and amortization 35.9 17.8 134.4 42.6
Loss on disposal and impairment
of operating assets 3.0 1.1 6.4 0.3
------- ------ -------- ------
Operating income 66.5 19.1 283.6 34.1
Interest expense, net 14.9 8.0 61.7 21.4
Minority interest in earnings of
consolidated subsidiaries (1.2) (0.8) 13.4 (0.4)
Other expense (income), net (0.1) 1.6 -- 4.6
------- ------ -------- ------
Income before income taxes
and extraordinary item 52.9 10.3 208.5 8.5
Provision for income taxes 21.2 3.5 89.8 3.6
------- ------ -------- ------
Income before extraordinary item 31.7 6.8 118.7 4.9
Extraordinary item -- -- 1.5 --
------- ------ -------- ------
Net income 31.7 6.8 117.2 4.9
Loss on redemption of preferred
stock -- -- (28.2) --
------- ------ -------- ------
Net income available to
common shareholders $31.7 $6.8 $89.0 $4.9
======= ====== ======== ======
Diluted earnings per share $0.23 $0.27 $0.79 $0.28
Weighted average number of diluted
shares outstanding (thousands) 136,933 25,503 112,284 17,368
Regal Entertainment Group
Combined Historical Summary Balance Sheet Information (2)
(dollars in millions)
As of As of
December 26, 2002 January 3, 2002
----------------- ---------------
Cash and cash equivalents $276.0 $68.0
Total assets 2,351.3 1,122.7
Total debt 678.4 438.9
Stockholders' equity 1,270.7 383.0
Regal Entertainment Group
Pro Forma Combined Statements of Operations
For the Fiscal Quarters and Years Ended 12/26/02 and 12/27/01
(dollars in millions, except operating and per share data)
Fiscal Fiscal
Quarter Quarter Year Year
Ended Ended Ended Ended
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
2002 2001 2002 2001
------- ------- -------- --------
Revenues:
Admissions $370.8 $342.0 $1,541.5 $1,390.6
Concessions 143.8 136.4 622.8 547.6
Other operating revenues 32.7 23.2 102.1 75.3
------- ------- -------- --------
Total revenues 547.3 501.6 2,266.4 2,013.5
Operating expenses:
Film and advertising 204.0 195.4 833.8 763.1
Cost of concessions 21.3 20.8 88.9 81.8
Rent expense 64.1 60.6 255.1 245.8
Other operating expenses 135.3 120.4 540.7 505.5
------- ------- -------- --------
Total operating expenses 424.7 397.2 1,718.5 1,596.2
General and administrative
expenses 14.8 16.9 66.8 66.5
Merger and restructuring expenses 2.4 -- 21.8 --
Depreciation and amortization 35.9 38.3 141.6 145.8
Loss on disposal and
impairment of operating assets 3.0 9.4 7.0 49.7
------- ------- -------- --------
Operating income 66.5 39.8 310.7 155.3
Interest expense, net 14.9 15.2 60.3 60.8
Other expense (income), net (1.3) 0.4 (1.1) 1.6
------- ------- -------- --------
Income before income taxes 52.9 24.2 251.5 92.9
Provision for income taxes 21.2 9.7 101.3 36.6
------- ------- -------- --------
Net income $31.7 $14.5 $150.2 $56.3
======= ======= ======== ========
Diluted earnings per share $0.23 $0.11 $1.10 $0.41
Diluted earnings per share,
excluding merger and
restructuring expenses, net of
related tax effect $0.24 $0.11 $1.19 $0.41
Weighted average number of
diluted shares (thousands): 136,933 136,069 136,509 136,069
EBITDA(1) $105.4 $87.5 $459.3 $350.8
EBITDA excluding merger
and restructuring expenses(1) $107.8 $87.5 $481.1 $350.8
Operating Data:
Theatres at period end 524 556
Screens at period end 5,663 5,876
Average screens per theatre 10.8 10.6
Attendance (in thousands) 59,968 57,825
Average ticket price $6.18 $5.91
Average concessions per patron $2.40 $2.36
(1) EBITDA represents operating income before depreciation and
amortization expense, loss on disposal and impairment of operating
assets, and merger and restructuring expenses. We have included
EBITDA in this data because we believe it to be a measure commonly
used by investors to analyze and compare companies in our
industry. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be
considered in isolation or construed as a substitute for net
income or other operations data or cash flow data prepared in
accordance with generally accepted accounting principles for
purposes of analyzing our profitability or liquidity. In addition,
not all funds depicted by EBITDA are available for management's
discretionary use. For example, a portion of such funds are
subject to contractual restrictions and functional requirements to
pay debt service, fund necessary capital expenditures and meet
other commitments from time to time as described in more detail in
the Company's prospectus dated May 8, 2002. EBITDA, as we
calculate it, may not be comparable to similarly titled measures
reported by other companies.
(2) Regal Entertainment Group's historical combined operating results
for the 2002 period include the results of operations for Regal
Cinemas Corporation for all periods subsequent to January 29, 2002
and include the results of operations for United Artists Theatre
Group and Edwards Theatres for all periods. The historical
combined operating results for the 2001 periods reflect the
operations of United Artists Theatre Group and Edwards Theatres
and exclude the operating results of Regal Cinemas. During 2002,
Regal Entertainment Group adopted the fiscal year end of Regal
Cinemas. As a result, the historical combined results of
operations for the 2001 fiscal year reflect a fiscal year end of
January 3, 2002 and the pro forma combined results of operations
for the 2001 fiscal year reflect a fiscal year end of December 27,
2001. Amounts attributable to equity interests owned by other
parties are reflected as minority interest.
Pro Forma Results
We have presented unaudited pro forma combined results of operations for the three month and twelve month periods ended December 26, 2002 and December 27, 2001 because (i) our combined historical results do not include a full twelve months of operating results for Regal Cinemas Corporation or United Artists Theatre Group for the twelve months ended December 26, 2002, (ii) our combined historical results do not include a full three months or full twelve months of operating results for Regal Cinemas Corporation, Edwards Theatres or United Artists for the three month period or twelve month period ended December 27, 2001, and (iii) our capital structure changed significantly during the Company's quarter ended June 27, 2002. We believe the unaudited pro forma combined results of operations presented herein are more useful in understanding our current operations.
Regal Entertainment Group's unaudited pro forma combined results of operations assumes (i) a full three months and a full twelve months of operating results for all subsidiaries, (ii) the contribution by Anschutz and the exchange by several minority shareholders of their equity interests in our subsidiaries, (iii) the issuance of $150 million of indebtedness and the repayment of Edwards Theatres indebtedness and the redemption of preferred stock and (iv) the effects of the Company's initial public offering. Such information is presented for comparative purposes only and does not purport to represent what our results of operations would actually have been had these transactions occurred on the date indicated or to project our results of operations for any future period or date. The basis for the Company's pro forma results is detailed in its prospectus dated May 8, 2002.
CONTACT:
Regal Entertainment Group, Knoxville
Financial Contact:
Don De Laria, 865/925-9685
don.delaria@regalcinemas.com
or
Media Contact:
Dick Westerling, 865/925-9539
dick.westerling@regalcinemas.com
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