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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Earliest Event Reported: March 19, 2007
National CineMedia, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-33296 20-5665602
(State or other (Commission file number) (IRS employer
jurisdiction identification no.)
of incorporation)
9110 E. Nichols Ave., Suite 200
Centennial, Colorado 80112-3405
(Address of principal executive offices, including zip code)
(303) 792-3600
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 210.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On March 19, 2007, National CineMedia, Inc. issued a press release
announcing its financial results for the quarter and fiscal year ended December
28, 2006. A copy of the press release is furnished as Exhibit 99.1 to this
report.
In accordance with General Instruction B.2 of Form 8-K, the information
in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed
to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or otherwise subject to the liability of that
section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
----------- -----------
99.1 Press Release of National CineMedia, Inc. dated
March 19, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL CINEMEDIA, INC.
Dated: March 19, 2007 By: /s/ Ralph E. Hardy
---------------------------------
Ralph E. Hardy
Executive Vice President, General
Counsel and Secretary
Exhibit 99.1
National CineMedia, Inc. Announces Financial Results
for the Fourth Quarter and Fiscal 2006
CENTENNIAL, Colo.--(BUSINESS WIRE)--March 19, 2007--National
CineMedia, Inc. (NASDAQ: NCMI), the managing member and owner of 44.8%
of National CineMedia, LLC (NCM LLC), the operator of the largest
digital in-theatre network in North America, today announced results
for the fourth quarter and fiscal year ended December 28, 2006.
Total revenue of NCM LLC for the fourth quarter increased to $74.1
million from $44.6 million, primarily driven by the conversion of
founding member legacy contracts to NCM LLC contracts, a 30.8%
increase in advertising network theatre screens and a large
CineMeetings multi-site event. National advertising inventory
utilization was 100.2% and CPMs (cost per thousand) decreased 2.8%
from the fourth quarter 2005. Net income increased to $0.7 million
from a loss of $3.0 million in 2005 due primarily to the higher
revenue, partially offset by increased payments to founding member
theatre circuits, higher severance costs and option plan costs, and
increased administrative costs associated with the digital cinema
initiative and preparing the Company for its IPO. The increase in
payments to founding members was driven by higher advertising revenue,
as 68% of NCM LLC's advertising revenue was paid to its founding
members in 2006, and 65% was paid in 2005.
Total revenue of NCM LLC for fiscal 2006 increased to $219.3
million from $98.8 million, primarily driven by the fact that the 2005
period only includes nine months due to the timing of the formation of
NCM LLC versus twelve months included in fiscal 2006, the conversion
of founding member legacy contracts to NCM LLC contracts, a 30.8%
increase in advertising network theatre screens and the successful
fourth quarter CineMeetings multi-site event. National advertising
inventory utilization was 79.3% for fiscal 2006 and CPMs increased
2.6% from fiscal 2005. The net loss for the year was $10.5 million
compared to a net loss of $6.9 million for the nine month period in
2005. The increase was due to the inclusion of the lower margin first
quarter in the 2006 annual results, increased payments to founding
member theatre circuits, higher severance and option plan costs, and
higher administrative costs associated with the digital cinema
initiative and preparing the Company for its IPO.
These historical results do not reflect the agreements and
transactions associated with the Company's initial public offering of
its stock and debt financing completed on February 13, 2007.
Commenting on the Company's 2006 results, Chairman and CEO Kurt
Hall said, "2006 was a transformational year for NCM LLC as we
expanded our national reach to over 14,000 screens with the addition
of Cinemark and Century, introduced our new FirstLook advertising pre
show to very positive theatre audience reviews, began to realize
incremental growth from our CineMeetings & Events businesses and
prepared for our IPO and debt financing that were completed in 2007.
With all this activity, I am very proud of our management team's
ability to deliver continued growth in 2006." Mr. Hall concluded,
"With our IPO now behind us, we are very focused on continued revenue
and EBITDA growth by maximizing opportunities presented by the current
favorable trends in the media marketplace."
Pro Forma Financial Information
In connection with the completion of the Company's initial public
offering of stock and debt financing, National CineMedia acquired a
44.8% interest in NCM LLC. National CineMedia and NCM LLC entered into
several new agreements, including amended and restated exhibitor
services agreements and an LLC operating agreement with its founding
members (AMC, Cinemark and Regal), the Loews integration agreement
with AMC and an $805.0 million senior secured credit facility with a
group of lenders. In order to facilitate additional comparative
analysis between periods we have provided annual pro forma financial
information that reflects these changes as if they had become
effective on December 30, 2004. Attached is a summary of the
historical and pro forma results for each quarter of fiscal year 2006.
All pro forma amounts exclude payments from AMC associated with the
Loews integration agreement. Such payments would have been $9.6
million during 2006 on a pro forma basis.
Total pro forma revenue for the full fiscal year 2006 grew 24.4%
to $275.7 million. Pro forma advertising revenue increased 20.5% to
$250.0 million. Meetings and events revenue increased 84.1% to $25.4
million, primarily due to the large fourth quarter CineMeetings event.
Pro forma adjusted EBITDA for the year grew 27.1% to $138.3 million.
Pro forma adjusted EBITDA as a percentage of total pro forma revenue
was 50.2%, a 110 basis point increase over 2005. Pro forma net income
doubled to $16.6 million from $8.2 million in 2005.
Dividend Policy
As previously disclosed, National CineMedia intends to distribute
over time a substantial portion of its free cash flow in the form of
quarterly dividends to its stockholders. Initially these quarterly
dividends are expected to be in the range of $0.10 to $0.12 per share.
National CineMedia expects to declare its first quarterly dividend
upon the completion of the second quarter of 2007 once approved by its
Board of Directors and depending on the Company's current earnings and
cash flows, anticipated cash needs, and future prospects.
Guidance
For the first quarter of 2007 National CineMedia expects total pro
forma revenue to increase approximately 45% over the comparable pro
forma revenue of $41.1 million in 2006. First quarter 2007 total pro
forma revenue is expected to be a higher percentage of the total 2007
pro forma revenue than it has been historically.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts and other interested parties today at 5:00 P.M.
Eastern time. The live call can be accessed by dialing (877) 502-9274
or for international participants (913) 981-5584. Participants should
register at least 15 minutes prior to the commencement of the call.
Additionally, a live audio webcast will be available to interested
parties at www.ncm.com under the Investor Relations section.
Participants should allow at least 15 minutes prior to the
commencement of the call to register, download and install necessary
audio software.
EBITDA and Adjusted EBITDA
EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-GAAP
financial measures used by management to measure operating
performance. EBITDA represents net income (loss) before net interest
expense, income tax benefit (provision), and depreciation and
amortization expense. Adjusted EBITDA excludes from EBITDA severance
plan costs, share based payment costs and deferred stock compensation.
Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by
total revenue. We believe EBITDA, adjusted EBITDA and adjusted EBITDA
margin are important supplemental measures of operating performance
because they eliminate items that have less bearing on our operating
performance and so highlight trends in our core business that may not
otherwise be apparent when relying solely on generally accepted
accounting principles, or GAAP, financial measures. Because not all
companies use identical calculations, these presentations may not be
comparable to other similarly titled measures of other companies.
Pro Forma Non-GAAP Information
The unaudited pro forma financial information for the fourth
quarter of 2006 and year-ended December 28, 2006 and the comparable
periods of 2005 is included for informational purposes only and does
not purport to reflect the results of operations of National CineMedia
and NCM LLC that would have occurred had National CineMedia operated
as a separate, independent company during the periods presented. The
historical results of NCM LLC have been affected by related party
transactions as discussed more fully in National CineMedia's public
filings with the Securities and Exchange Commission. The pro forma
financial information should not be relied upon as being indicative of
National CineMedia's and NCM LLC's results of operations had the
transactions contemplated in connection with the IPO Transactions been
completed on the dates assumed. The pro forma financial information
also does not project the results of operations for any future
periods. The pro forma information is included because National
CineMedia believes it provides the most meaningful basis for
comparison between periods.
About National CineMedia
NCM LLC operates the largest digital in-theatre network in North
America through long-term agreements with its founding members, AMC
Entertainment Inc., Cinemark USA, Inc. and Regal Entertainment Group
(NYSE: RGC), the three largest theatre operators in the U.S., and
through multi-year agreements with several other theatre operators.
NCM LLC produces and distributes its FirstLook pre feature program;
cinema and lobby advertising products; comprehensive meeting and event
services and other entertainment programming content. NCM LLC's
national network includes over 14,000 screens of which approximately
11,500 are part of the Company's Digital Content Network (DCN). NCM
LLC's national network is available in 154 Designated Market Areas(R)
(49 of the top 50). During 2006, approximately 550 million patrons
attended movies shown in theatres owned by the NCM LLC founding
members. National CineMedia, Inc. (NASDAQ: NCMI) owns a 44.8% interest
in and is the managing member of NCM LLC.
Forward Looking Statements
This press release contains various forward-looking statements
that reflect management's current expectations or beliefs regarding
future events, including statements regarding guidance for the first
quarter of 2007 and the dividend policy. Investors are cautioned that
reliance on these forward-looking statements involves risks and
uncertainties. Although the Company believes that the assumptions used
in the forward looking statements are reasonable, any of these
assumptions could prove to be inaccurate and, as a result, actual
results could differ materially from those expressed or implied in the
forward looking statements. The factors that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements are, among others, 1) the level of
expenditures on cinema advertising; 2) increased competition for
advertising expenditures; 3) technological changes and innovations; 4)
popularity of major motion picture releases and level of theatre
attendance; 5) shifts in population and other demographics that affect
theatre attendance; 6) our ability to renew or replace expiring
advertising and content contracts; 7) our need for additional funding,
risks and uncertainties relating to our significant indebtedness; 8)
fluctuations in operating costs; and 9) changes in interest rates, and
10) changes in accounting principles. Please refer to the Company's
Securities and Exchange Commission filings for further information
about these and other risks.
NATIONAL CINEMEDIA, LLC
Statement of Operations
($ in millions)
Period
March 29,
Year 2005 Quarter Quarter
Ended Through Ended Ended
December December December December
28, 29, 28, 29,
2006 2005 2006 2005
--------- ----------- --------- ---------
REVENUE:
Advertising $ 188.2 $ 56.0 $ 60.0 $ 31.4
Administrative fees--
Members 5.4 30.8 1.1 7.5
Meetings and events 25.4 11.7 12.9 5.6
Other 0.3 0.3 0.1 0.1
--------- ----------- --------- ---------
Total revenue 219.3 98.8 74.1 44.6
--------- ----------- --------- ---------
EXPENSES:
Advertising operating
costs 9.2 6.3 3.2 2.4
Meetings and events
operating costs 11.1 5.4 6.6 2.9
Circuit share costs--
Members 130.1 38.6 41.5 21.9
Network costs 14.7 9.2 4.2 3.5
Selling and marketing
costs 38.2 24.9 10.3 9.7
Administrative costs 16.4 9.8 5.0 3.7
Severance plan costs 4.2 8.5 0.8 2.4
Depreciation and
amortization 4.8 3.0 1.4 1.1
Other costs 0.6 - 0.2 -
--------- ----------- --------- ---------
Total expenses 229.3 105.7 73.2 47.6
--------- ----------- --------- ---------
OPERATING INCOME / (LOSS) (10.0) (6.9) 0.9 (3.0)
INTEREST EXPENSE--Net 0.5 - 0.2 -
--------- ----------- --------- ---------
NET INCOME / (LOSS) $ (10.5) $ (6.9) $ 0.7 $ (3.0)
========= =========== ========= =========
SELECTED BALANCE SHEET DATA
(audited)
($ in millions)
December 28, December 29,
2006 2005
------------ ---------------
Cash and Cash Equivalents $6.7 $-
Receivables, net $63.9 $36.6
Property and Equipment, net 12.6 10.0
Total Assets 90.0 48.8
Borrowings 10.0 1.3
Members' Equity 3.5 9.8
NATIONAL CINEMEDIA, INC.
Pro Forma Statement of Operations
($ in millions, except per share data)
December 28, December 29,
2006 2005*
------------ ------------
Revenue:
Advertising $ 250.0 $ 207.4
Administrative Fees--Members - -
Meetings and Events 25.4 13.8
Other 0.3 0.4
------------ ------------
TOTAL REVENUE 275.7 221.6
------------ ------------
Expenses:
Advertising Operating Costs 9.2 10.5
Meetings / Events Operating Costs 11.1 6.2
Network Costs 14.7 12.6
Circuit Share / Theatre
Access Fee--Members 49.1 36.5
Selling and Marketing 38.2 32.2
Administrative 17.0 14.8
Deferred Stock Compensation - 0.3
Severance Plan Costs 4.2 8.5
Depreciation and Amortization 4.8 4.3
Other 0.6 -
------------ ------------
TOTAL EXPENSES 148.9 125.9
------------ ------------
Operating Income 126.8 95.7
Interest Expense $ 65.0 $ 65.0
------------ ------------
Income Before Income Taxes 61.8 30.7
Income Taxes 24.7 12.3
Minority Interest, Net of Income Taxes 20.5 10.2
------------ ------------
NET INCOME $ 16.6 $ 8.2
EARNINGS PER SHARE:
Basic $ 0.39 $ 0.20
Diluted $ 0.40 $ 0.20
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 42,000,000 42,000,000
Diluted 93,876,553 93,850,951
* Includes pro forma results for NCM LLC for the nine months ended
December 29, 2005, and Regal CineMedia Corporation and National
Cinema Network for the three months ended March 31, 2005
Pro Forma Selected Balance Sheet Data
(in millions)
December 28,
2006
------------
Cash and Cash Equivalents $6.7
Receivables, net $ 63.9
Property and Equipment, net 12.6
Total Assets 333.5
Borrowings 735.0
Members' Equity (601.7)
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Operating Data
Nine Year Year Quarter
Months Ended Ended Quarter Ended
Ended Dec. Year Ended Dec. Ended Dec.
Dec. 29, 29, Dec. 28, 28, Dec. 28, 28,
2005 2005 2006 2006 2006 2006
Pro Pro Pro
Historical Forma Historical Forma Historical Forma
---------- -------- ---------- ------- ---------- -------
Founding
Member
Screens at
Period
End(1) 9,696 9,696 13,127 13,127 13,127 13,127
Total Screens
at Period
End(2) 10,766 10,766 14,081 14,081 14,081 14,081
Digital
Screens at
Period
End(3) 8,713 8,713 11,463 11,463 11,463 11,463
Founding
Member
Attendance
for
Period(4)
(in
millions) 299.3 395.2 514.1 514.1 129.7 129.7
Total
Advertising
Contract
Value (in
millions)
(5) $144.0 $203.7 $205.1 $245.1 $63.4 $73.6
Total
Advertising
Contract
Value per
Founding
Member
Attendee(5) $0.48 $0.52 $0.40 $0.48 $0.49 $0.57
Capital
Expenditures $5.9 $7.3 $6.6 $6.6 $2.3 $2.3
(1) Represents the total number of screens within our advertising
network operated by our founding members. Excludes Cinemark operated
screens for the period ended December 29, 2005. Excludes Loews
screens for all periods presented. Excludes Century screens for all
periods presented through October 2006.
(2) Represents the sum of founding member screens and network
affiliate screens.
(3) Represents the total number of screens which are connected to our
digital content network.
(4) Represents the total attendance within our advertising network in
theatres operated by our founding members. Excludes Cinemark
attendance for the period ended December 29, 2005. Excludes Loews
attendance for all periods presented. The Loews total attendance for
the three months and year ended December 28, 2006 was approximately
14.7 million and 63.2 million, respectively. Excludes Century
attendance through October 2006 for all periods presented. The
Century total attendance for the three months and year ended December
28, 2006 was approximately 11.2 million and 48.2 million,
respectively.
(5) Includes advertising revenue plus legacy contract value for all
historical periods. Excludes $3.7 million of revenue related to the
beverage concessionaire agreements for Cinemark in the pro forma
period ended December 29, 2005 as attendees for Cinemark were not
included during this period. Excludes $1.2 million and $4.9 million
of revenue related to the beverage concessionaire agreements for
Loews in the pro forma three months and year ended December 28, 2006.
Attendees for Loews were not included during these periods.
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Quarterly Results of Operations
(in millions, except total advertising contract value revenue per
founding member attendee)
Quarter Ended
----------------------------------------------
Historical March 28, June 28, September 28, December 28,
2006 2006 2006 2006
--------- -------- -------------- ------------
Advertising Revenue $23.1 $50.2 $54.9 $60.0
Total Revenue 27.4 57.1 60.7 74.1
Operating Income (Loss) (9.4) (1.1) (0.4) 0.9
Net Income (Loss) (9.4) (1.2) (0.6) 0.7
Founding Member
Attendance 118.6 134.0 131.8 129.7
Advertising Contract
Value $27.8 $56.5 $57.4 $63.4
Advertising Contract
Value/Attendee $0.23 $0.42 $0.44 $0.49
EBITDA ($8.2) - $0.7 $2.3
Adjusted EBITDA (6.3) 1.1 2.2 3.9
Adjusted EBITDA Margin NM 1.9% 3.6% 5.3%
Quarter Ended
----------------------------------------------
Pro Forma March 28, June 28, September 28, December 28,
2006 2006 2006 2006
--------- -------- -------------- ------------
Advertising Revenue $38.3 $68.1 $68.9 $74.7
Total Revenue 41.1 73.0 73.9 87.7
Operating Income 9.4 36.6 39.0 41.8
Net Income (Loss) (1.8) 5.5 6.0 6.9
Founding Member
Attendance 118.6 134.0 131.8 129.7
Advertising Contract
Value $37.1 $66.8 $67.6 $73.6
Advertising Contract
Value/Attendee $0.31 $0.50 $0.51 $0.57
EBITDA $10.6 $37.7 $40.1 $43.2
Adjusted EBITDA 12.5 39.0 41.8 45.0
Adjusted EBITDA Margin 30.5% 53.4% 56.5% 51.4%
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Reconciliation of Net Income to EBITDA to Adjusted EBITDA
($ in millions)
The following tables reconcile net income (loss) to EBITDA, adjusted
EBITDA and adjusted EBITDA margin on a historical and pro forma basis
for the periods presented:
Three
Nine Year Year Three Months
Months Ended Ended Months Ended
Ended Dec. Year Ended Dec. Ended Dec.
Dec. 29, 29, Dec. 28, 28, Dec. 28, 28,
2005 2005 2006 2006 2006 2006
Pro Pro Pro
Historical Forma Historical Forma Historical Forma
---------- ------- ---------- ------- ---------- -------
Net Income
(Loss) $(6.9) $8.2 $(10.5) $16.6 $0.7 $6.9
Income Taxes -- 12.3 -- 24.7 -- 10.2
Minority
Interest -- 10.2 -- 20.5 -- 8.4
Interest
Expense -- 65.0 0.5 65.0 0.2 16.3
Depreciation
and
Amortization 3.0 4.3 4.8 4.8 1.4 1.4
---------- ------- ---------- ------- ---------- -------
EBITDA (3.9) 100.0 (5.2) 131.6 2.3 43.2
---------- ------- ---------- ------- ---------- -------
Severance Plan
Costs 8.5 8.5 4.2 4.2 0.8 0.8
Share-based
Payment Costs -- -- 1.9 2.5 0.8 1.0
Deferred Stock
Compensation -- 0.3 -- -- -- --
---------- ------- ---------- ------- ---------- -------
Adjusted
EBITDA $4.6 $108.8 $0.9 $138.3 $3.9 $45.0
========== ======= ========== ======= ========== =======
Adjusted
EBITDA
Margin* 4.7% 49.1% 0.4% 50.2% 5.3% 51.4%
Quarter Quarter Quarter
Quarter Ended Quarter Ended Quarter Ended
Ended March Ended June Ended Sept.
March 30, 30, June 29, 29, Sept. 28, 28,
2006 2006 2006 2006 2006 2006
Pro Pro Pro
Historical Forma Historical Forma Historical Forma
---------- ------- ---------- ------- ---------- -------
Net Income
(Loss) $(9.4) $(1.8) $(1.2) $5.5 $(0.6) $6.0
Income Taxes -- (2.3) -- 8.1 -- 9.1
Minority
Interest -- (2.7) -- 6.8 -- 7.6
Interest
Expense -- 16.2 0.1 16.2 0.2 16.3
Depreciation
and
Amortization 1.2 1.2 1.1 1.1 1.1 1.1
---------- ------- ---------- ------- ---------- -------
EBITDA (8.2) 10.6 - 37.7 0.7 40.1
---------- ------- ---------- ------- ---------- -------
Severance Plan
Costs 1.9 1.9 0.8 0.8 0.7 0.7
Share-based
Payment Costs -- -- 0.3 0.5 0.8 1.0
Deferred Stock
Compensation -- -- -- -- -- --
---------- ------- ---------- ------- ---------- -------
Adjusted
EBITDA $(6.3) $12.5 $1.1 $39.0 $2.2 $41.8
========== ======= ========== ======= ========== =======
Adjusted
EBITDA
Margin* NM 30.5% 1.9% 53.4% 3.6% 56.5%
* Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by
total revenue.
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Quarter Quarter
Ended Ended March
March 30, 30, 2006
2006 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 23.1 $ 15.2 $ - $ 38.3
Administrative Fee
- Members 1.5 (1.5) - 0.0
Meetings and Events 2.8 - - 2.8
Other 0.0 - - 0.0
----------- ------------ ------------ ------------
TOTAL REVENUE 27.4 13.7 - 41.1
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 1.4 - - 1.4
Meetings/Events
Operating Costs 0.9 - - 0.9
Network Costs 3.1 - - 3.1
Circuit
Share/Theatre
Access Fee -
Members 16.3 (5.2) - 11.1
Selling and
Marketing 8.6 - - 8.6
Administrative 3.5 - - 3.5
Deferred Stock
Compensation 0.0 - - 0.0
Severance Plan
Costs 1.9 - - 1.9
Depreciation and
Amortization 1.2 - - 1.2
Other 0.0 - - 0.0
----------- ------------ ------------ ------------
TOTAL EXPENSES 36.9 (5.2) - 31.7
----------- ------------ ------------ ------------
Operating
Income/(Loss) (9.5) 18.9 - 9.4
Interest Expense 16.2 16.2
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes (9.5) 18.9 (16.2) (6.8)
Income Taxes - - (2.7) (2.7)
Minority Interest,
Net of Income Taxes - - (2.3) (2.3)
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ (9.5) $ 18.9 $ (11.2) $ (1.8)
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ (0.04)
Diluted $ (0.04)
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,850,951
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Quarter
Quarter Ended June
Ended June 29, 2006
29, 2006 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 50.2 $ 17.9 $ - $ 68.1
Administrative Fee
- Members 2.0 (2.0) - 0.0
Meetings and Events 4.9 - - 4.9
Other 0.0 - - 0.0
----------- ------------ ------------ ------------
TOTAL REVENUE 57.1 15.9 - 73.0
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 2.4 - - 2.4
Meetings/Events
Operating Costs 2.1 - - 2.1
Network Costs 3.9 - - 3.9
Circuit
Share/Theatre
Access Fee -
Members 34.4 (22.0) - 12.4
Selling and
Marketing 9.7 - - 9.7
Administrative 3.8 - 0.2 4.0
Deferred Stock
Compensation 0.0 - - 0.0
Severance Plan
Costs 0.8 - - 0.8
Depreciation and
Amortization 1.1 - - 1.1
Other 0.0 - - 0.0
----------- ------------ ------------ ------------
TOTAL EXPENSES 58.2 (22.0) 0.2 36.4
----------- ------------ ------------ ------------
Operating
Income/(Loss) (1.1) 37.9 (0.2) 36.6
Interest Expense 0.1 - 16.1 16.2
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes (1.2) 37.9 (16.3) 20.4
Income Taxes - - 8.1 8.1
Minority Interest,
Net of Income Taxes - - 6.8 6.8
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ (1.2) $ 37.9 $ (31.2) $ 5.5
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ 0.13
Diluted $ 0.13
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,882,497
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Quarter
Quarter Ended
Ended September
September 28, 2006
28, 2006 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 54.9 $ 14.0 $ - $ 68.9
Administrative Fee
- Members 0.8 (0.8) - 0.0
Meetings and Events 4.8 - - 4.8
Other 0.2 - - 0.2
----------- ------------ ------------ ------------
TOTAL REVENUE 60.7 13.2 - 73.9
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 2.2 - - 2.2
Meetings/Events
Operating Costs 1.5 - - 1.5
Network Costs 3.5 - - 3.5
Circuit
Share/Theatre
Access Fee -
Members 38.0 (26.4) - 11.6
Selling and
Marketing 9.6 - - 9.6
Administrative 4.1 - 0.2 4.3
Deferred Stock
Compensation 0.0 - - 0.0
Severance Plan
Costs 0.7 - - 0.7
Depreciation and
Amortization 1.1 - - 1.1
Other 0.4 - - 0.4
----------- ------------ ------------ ------------
TOTAL EXPENSES 61.1 (26.4) 0.2 34.9
----------- ------------ ------------ ------------
Operating
Income/(Loss) (0.4) 39.6 (0.2) 39.0
Interest Expense 0.2 16.1 16.3
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes (0.6) 39.6 (16.3) 22.7
Income Taxes 9.1 9.1
Minority Interest,
Net of Income Taxes 7.6 7.6
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ (0.6) $ 39.6 $ (33.0) $ 6.0
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ 0.14
Diluted $ 0.15
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,884,127
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Quarter
Quarter Ended
Ended December
December 28, 2006
28, 2006 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 60.0 $ 14.7 $ - $ 74.7
Administrative Fee
- Members 1.1 (1.1) - 0.0
Meetings and Events 12.9 - - 12.9
Other 0.1 - - 0.1
----------- ------------ ------------ ------------
TOTAL REVENUE 74.1 13.6 - 87.7
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 3.2 - - 3.2
Meetings/Events
Operating Costs 6.6 - - 6.6
Network Costs 4.2 - - 4.2
Circuit
Share/Theatre
Access Fee -
Members 41.5 (27.5) - 14.0
Selling and
Marketing 10.3 - - 10.3
Administrative 5.0 - 0.2 5.2
Deferred Stock
Compensation 0.0 - - 0.0
Severance Plan
Costs 0.8 - - 0.8
Depreciation and
Amortization 1.4 - - 1.4
Other 0.2 - - 0.2
----------- ------------ ------------ ------------
TOTAL EXPENSES 73.2 (27.5) 0.2 45.9
----------- ------------ ------------ ------------
Operating
Income/(Loss) 0.9 41.1 (0.2) 41.8
Interest Expense 0.2 16.1 16.3
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes 0.7 41.1 (16.3) 25.5
Income Taxes - - 10.2 10.2
Minority Interest,
Net of Income Taxes - - 8.4 8.4
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ 0.7 $ 41.1 $ (34.9) $ 6.9
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ 0.16
Diluted $ 0.16
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,885,689
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Year Ended
Year Ended December
December 28, 2006
28, 2006 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 188.2 $ 61.8 $ - $ 250.0
Administrative Fee
- Members 5.4 (5.4) - 0.0
Meetings and Events 25.4 - - 25.4
Other 0.3 - - 0.3
----------- ------------ ------------ ------------
TOTAL REVENUE 219.3 56.4 - 275.7
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 9.2 - - 9.2
Meetings/Events
Operating Costs 11.1 - - 11.1
Network Costs 14.7 - - 14.7
Circuit
Share/Theatre
Access Fee -
Members 130.2 (81.1) - 49.1
Selling and
Marketing 38.2 - - 38.2
Administrative 16.4 - 0.6 17.0
Deferred Stock
Compensation 0.0 - - 0.0
Severance Plan
Costs 4.2 - - 4.2
Depreciation and
Amortization 4.8 - - 4.8
Other 0.6 - - 0.6
----------- ------------ ------------ ------------
TOTAL EXPENSES 229.4 (81.1) 0.6 148.9
----------- ------------ ------------ ------------
Operating
Income/(Loss) (10.1) 137.5 (0.6) 126.8
Interest Expense 0.5 - 64.5 65.0
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes (10.6) 137.5 (65.1) 61.8
Income Taxes - - 24.7 24.7
Minority Interest,
Net of Income Taxes - - 20.5 20.5
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ (10.6) $ 137.5 $ (110.3) $ 16.6
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ 0.39
Diluted $ 0.40
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,876,553
NATIONAL CINEMEDIA, LLC (Historical) and
NATIONAL CINEMEDIA, INC. (Pro Forma)
Proforma Statement of Operations
($ in millions, except per share data)
Year Ended
Year Ended December
December 29, 2005
29, 2005 Contractual Transaction Pro Forma,
Historical Adjustments Adjustments As Adjusted
Revenue:
Advertising $ 84.9 $ 122.5 $ - $ 207.4
Administrative Fee
- Members 30.8 (30.8) - 0.0
Meetings and Events 13.8 - - 13.8
Other 0.4 - - 0.4
----------- ------------ ------------ ------------
TOTAL REVENUE 129.9 91.7 - 221.6
----------- ------------ ------------ ------------
Expenses:
Advertising
Operating Costs 10.5 - - 10.5
Meetings/Events
Operating Costs 6.2 - - 6.2
Network Costs 12.6 - - 12.6
Circuit
Share/Theatre
Access Fee -
Members 45.6 (9.1) - 36.5
Selling and
Marketing 32.2 - - 32.2
Administrative 14.8 - - 14.8
Deferred Stock
Compensation 0.3 - - 0.3
Severance Plan
Costs 8.5 - - 8.5
Depreciation and
Amortization 4.3 - - 4.3
Other 0.8 (0.8) - 0.0
----------- ------------ ------------ ------------
TOTAL EXPENSES 135.8 (9.9) - 125.9
----------- ------------ ------------ ------------
Operating
Income/(Loss) (5.9) 101.6 - 95.7
Interest Expense - - 65.0 65.0
----------- ------------ ------------ ------------
Income (Loss) Before
Income Taxes (5.9) 101.6 (65.0) 30.7
Income Taxes 0.3 (0.3) 12.3 12.3
Minority Interest,
Net of Income Taxes - - 10.2 10.2
----------- ------------ ------------ ------------
NET
INCOME/(LOSS)$ (6.2) $ 101.9 $ (87.5) $ 8.2
=========== ============ ============ ============
EARNINGS PER
SHARE:
Basic $ 0.20
Diluted $ 0.20
WEIGHTED
AVERAGE
SHARES
OUTSTANDING:
Basic 42,000,000
Diluted 93,850,951
Notes to the Pro Forma Condensed Consolidated Statements of
Operations:
1. Year ended December 29, 2005 historical results include the
historical operating results for NCM LLC for the nine months ended
December 29, 2005, and the historical operating results of our
predecessors RCM and NCN for the three months ended March 31, 2005.
2. Contractual adjustments represent the increase to advertising
revenue to reflect the pro forma assignment from the founding members
to NCM LLC of all legacy advertising contracts in accordance with the
exhibitor services agreements to be entered into in connection with
the completion of the offering, based on the actual revenue generated
from those legacy contracts, the reversal of the related legacy
contract administrative fees historically recorded by NCM LLC and the
increase in circuit share expense resulting from the increased
advertising revenue, computed at 65% for 2005 and 68% for 2006 as a
percentage of legacy contract revenue. Legacy advertising contracts
are those contracts signed by RCM and NCN prior to the formation of
NCM LLC. In addition, adjustments include the pro forma effect of the
revenue from the sale of additional theatre advertising inventory to
the founding members, in accordance with the exhibitor services
agreements entered into in connection with the completion of the
offering, in order for the founding members to fulfill their beverage
concessionaire agreement on-screen advertising commitments.
Contractual adjustments also include the change in circuit share
payments pursuant to the exhibitor services agreements to be entered
into in connection with the completion of the offering. Under the
terms of our prior contracts with our founding members, the circuit
share payments were based on varying percentages of advertising
revenue. Under the modified exhibitor services agreements, the theatre
access fee payments will initially be based on a per attendee and per
digital screen calculation.
3. Transaction adjustments represent interest expense, including
amortization of deferred financing fees, over the term of the new
senior secured credit facility. Interest expense also includes the
impact of an interest rate hedge agreement covering 75% of the
outstanding balance on the term loan. In addition, adjustment includes
amount to reflect minority interest expense, net of income tax
expense/(benefit), resulting from the founding members' ownership of
approximately 55.2% of the NCM LLC common membership units outstanding
immediately after the offering. Transaction adjustments also include
adjustments necessary to reflect federal and state income taxes on the
income allocated from NCM LLC to NCM Inc.
4. Basic earnings per share is calculated on the assumption that
the 42,000,000 shares sold in the offering are outstanding over the
entire period. Diluted earnings per share is calculated assuming that
(a) the unit option shares, as converted and unvested shares of
restricted stock are outstanding during periods corresponding to their
original issuance date (after application of the treasury stock
method), and (b) our founding members redeem all of their current NCM
LLC common membership units in exchange for an aggregate of 51,850,951
shares of common stock.
CONTACT: National CineMedia, Inc.
Investors:
Nikki Sacks, 800-844-0935
investors@ncm.com
or
Media:
Lauren Leff, 212-931-8107
lauren.leff@ncm.com