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: May
3, 2007
National
CineMedia, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-33296
|
20-5665602
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
file
number)
|
(IRS
employer
identification
no.)
|
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):
[
]
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
May 3,
2007, National CineMedia, Inc. issued a press release announcing its financial
results for the period ended March 29, 2007. 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 May 3,
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: May 3, 2007 |
By:
|
/s/
Ralph E. Hardy
Ralph
E.
Hardy
Executive
Vice
President, General Counsel and
Secretary
|
Exhibit
99.1
National
CineMedia, Inc. Announces First Quarter Fiscal 2007 Results
Centennial,
CO - May 3, 2007
- National
CineMedia, Inc. (NASDAQ: NCMI) (the Company), 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 first
fiscal quarter ended March 29, 2007.
The
Company
completed its initial public offering (IPO) of stock and NCM LLC completed
its
debt financing on February 13, 2007 and thus these historical results for
the
current quarter are divided into two periods, pre-IPO from December 29,
2006
thru February 12, 2007 for its predecessor NCM LLC, and post-IPO from February
13, 2007 thru March 29, 2007 for its consolidated results after acquisition
of
its interest in NCM LLC. The pre-IPO results do not reflect the agreements
and
transactions associated with the IPO and debt financing.
Total
revenue for the first quarter 2007 pre-IPO period was $23.6 million and
$32.4
million for the post-IPO period, compared to $27.4 million in the entire
first
quarter of 2006. Total advertising revenue for the first quarter 2007 pre-IPO
period was $20.6 million and $29.0 million for the post-IPO period, compared
to
$23.1 million in the entire first quarter of 2006. The year-over-year quarterly
increase in advertising revenue was driven by an increase in inventory
utilization or sell-thru and national CPMs (cost per thousand), initiation
of
payments associated with founding member beverage agreements, the conversion
of
founding member legacy contracts to NCM LLC contracts, and a 17.1% increase
in
the average number of theatre screens included in the NCM LLC network.
National
advertising inventory sell-thru was 66.2% compared to 46.7% in the first
quarter
of 2006 and average national advertising CPMs increased 6.8% from the first
quarter 2006.
Net
loss for
the first quarter 2007 pre-IPO was $4.2 million and net income for the
post-IPO
period was $1.0 million, compared to a net loss of $9.4 million in the
entire
first quarter of 2006. The improvement was due primarily to higher revenue
and
the decrease in payments to NCM LLC’s founding member theatre circuits after the
IPO, partially offset by higher advertising operating costs and selling
and
marketing costs associated with the increased revenue, higher interest
expense
post-IPO due to the debt financing, and increased costs associated with
being a
public company.
Commenting
on the Company’s 2006 results, Chairman and CEO Kurt Hall said, “I am very proud
of our management group and staff as we were able to successfully complete
our
IPO, while at the same time exceeding our first quarter internal revenue
and
EBITDA growth targets. Our continued focus on building market demand for
the
cinema medium and establishing new client relationships paid-off as we
increased
our national advertising sell-thru during the usually slow first quarter
period,
while also increasing national CPMs. We also made great progress expanding
our
meeting and events business with revenue up by over 120% over the first
quarter
of 2006.”
Mr.
Hall
concluded by saying, “We remain optimistic about the remainder of the year and
the future of the cinema advertising medium. We continue to expand and
strengthen our theatre network and marketers continue to move media budgets
to
new more effective mediums, such as NCM’s.”
Pro
Forma Financial Information
In
connection with the completion of the Company’s initial public offering of
stock, the Company acquired its 44.8% interest in NCM LLC and the Company
and
NCM LLC entered into several new agreements (the “IPO Transaction”). The Company
and NCM LLC’s founding members (AMC, Cinemark and Regal) entered into the
amended LLC operating agreement and NCM LLC entered into the restated exhibitor
services agreements, 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, set forth below
is
pro forma financial information for the first quarter of fiscal 2006 and
2007
that reflects the IPO Transaction as if it had become effective on December
30,
2005. All pro forma amounts exclude payments from AMC associated with the
Loews
integration agreement as those amounts are recorded directly to the equity
accounts.
Total
pro
forma revenue for the first quarter grew 51.1% to $62.1 million. Pro forma
advertising revenue increased 45.7% to $55.8 million. Meetings and events
pro
forma revenue increased 121.4% to $6.2 million, due in part to the success
of
New York Metropolitan Opera events. Pro forma adjusted EBITDA more than
doubled
to $25.7 million from $12.5 million in the first quarter of 2006. Pro forma
adjusted EBITDA as a percentage of total pro forma revenue increased to
41.4%,
from 30.5% in the first quarter of 2006.
Dividend
Policy
As
previously disclosed, the Company intends to distribute over time a substantial
portion of the distributions from NCM LLC 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. The Company 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.
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 (866) 290-0916 or for international participants (913)
312-1226. 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. 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 first quarter of 2007
ended
March 29, 2007 and the comparable period of 2006 is included for informational
purposes only and does not purport to reflect the Company’s and NCM LLC’s
results of operations that would have occurred had they 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
the Company’s public filings with the Securities and Exchange Commission. The
pro forma financial information should not be relied upon as being indicative
of
the Company’s and NCM LLC’s results of operations had the transactions
contemplated in connection with the IPO Transaction 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 the Company believes it provides the most meaningful basis for
comparison between periods.
About
National CineMedia, Inc.
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. (NYSE: CNK) 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 approximately 14,000 screens of which approximately 12,200 are
part of
the Company’s Digital Content Network (DCN). NCM LLC’s DCN covers 154 Designated
Market Areas® (49 of the top 50). During 2006, approximately 550 million patrons
attended movies shown in theatres owned by the NCM LLC founding members
(excluding Loews). 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 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.
|
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
|
|
Nikki
Sacks
|
Lauren
Leff
|
|
|
800-844-0935
|
212-931-8107
|
|
|
investors@ncm.com
|
lauren.leff@ncm.com
|
NATIONAL
CINEMEDIA, INC.
Statement
of Operations
unaudited
|
($
in millions, except per share data)
|
|
Pre-IPO
Period
|
Post-IPO
Period
|
|||||||
|
|
Quarter
|
December
29,
|
February
13,
|
|||||||
|
|
Ended
|
2006
thru
|
2007
thru
|
|||||||
|
|
March
30, 2006
|
February
12, 2007
|
March
29, 2007
|
|||||||
|
(predecessor)
|
(predecessor)
|
|||||||||
|
REVENUE:
|
|
|
|
|||||||
|
Advertising
|
$
|
23.1
|
$
|
20.6
|
$
|
29.0
|
||||
|
Administrative
fees—founding members
|
1.5
|
0.1
|
-
|
|||||||
|
Meetings
and events
|
2.8
|
2.9
|
3.3
|
|||||||
|
Other
|
-
|
-
|
0.1
|
|||||||
|
Total
revenue
|
27.4
|
23.6
|
32.4
|
|||||||
|
|
||||||||||
|
EXPENSES:
|
||||||||||
|
Advertising
operating costs
|
1.4
|
1.1
|
1.0
|
|||||||
|
Meetings
and events operating costs
|
0.9
|
1.4
|
1.8
|
|||||||
|
Network
Costs
|
3.1
|
1.7
|
1.9
|
|||||||
|
Circuit
share/Theatre access fees—founding members
|
16.2
|
14.4
|
5.5
|
|||||||
|
Selling
and marketing costs
|
8.6
|
5.2
|
5.0
|
|||||||
|
Administrative
costs
|
3.5
|
2.8
|
2.7
|
|||||||
|
Severance
plan costs
|
1.9
|
0.4
|
0.5
|
|||||||
|
Depreciation
and amortization
|
1.2
|
0.7
|
0.4
|
|||||||
|
Other
costs
|
-
|
-
|
0.3
|
|||||||
|
Total
expenses
|
36.8
|
27.7
|
19.1
|
|||||||
|
OPERATING
INCOME / (LOSS)
|
(9.4
|
)
|
(4.1
|
)
|
13.3
|
|||||
|
Interest
expense—net
|
-
|
0.1
|
8.2
|
|||||||
|
INCOME
/ (LOSS) BEFORE INCOME TAXES
|
(9.4
|
)
|
(4.2
|
)
|
5.1
|
|||||
|
Income
taxes
|
-
|
-
|
1.9
|
|||||||
|
Minority
interest—net
|
-
|
-
|
2.2
|
|||||||
|
NET
INCOME / (LOSS)
|
$
|
(9.4
|
)
|
$
|
(4.2
|
)
|
$
|
1.0
|
||
|
Earnings
per share:
|
||||||||||
|
Basic
|
$
|
0.02
|
||||||||
|
Diluted
|
$
|
0.02
|
||||||||
Selected
Balance Sheet Data
unaudited
($
in millions)
|
|
December
28,
|
March
29,
|
|||||
|
|
2006
|
2007
|
|||||
|
Cash
and Cash Equivalents
|
$
|
6.7
|
$
|
12.6
|
|||
|
Receivables,
net
|
63.9
|
51.8
|
|||||
|
Property
and Equipment, net
|
12.6
|
13.2
|
|||||
|
Total
Assets
|
90.0
|
398.5
|
|||||
|
Borrowings
|
10.0
|
776.0
|
|||||
|
Members'
Equity
|
3.5
|
-
|
|||||
|
Stockholders'
Equity (Deficit)
|
-
|
(588.8
|
)
|
||||
NATIONAL
CINEMEDIA, INC. (Historical)
Operating
Data
unaudited
|
Quarter
|
Quarter
|
|
|
|
Ended
|
Ended
|
|
|
March
30, 2006
|
March
29, 2007
|
|
|
|
|
|
Founding
Member Screens at Period End(1)
|
12,145
|
13,068
|
|
|
|
|
|
Total
Screens at Period End(2)
|
13,215
|
13,995
|
|
|
|
|
|
Digital
Screens at Period End(3)
|
10,652
|
12,214
|
|
|
|
|
|
Founding
Member Attendance for Period(4) (in millions)
|
118.6
|
130.3
|
|
Capital
Expenditures (in millions)
|
$1.3
|
$1.7
|
(1)
Represents the total number of screens within our advertising network operated
by NCM LLC’s founding members. Excludes Loews screens for all periods presented.
Excludes Century operated screens for the quarter ended March 30, 2006.
(2)
Represents the sum of founding member screens and network affiliate screens.
(3)
Represents the total number of screens which are connected to the digital
content network.
(4)
Represents the total attendance within NCM LLC’s advertising network in theatres
operated by the founding members. Founding member attendance for the Pre-IPO
Period December 29, 2006 thru February 12, 2007 was 67.3 million, and founding
member attendance for the Post-IPO Period February 13, 2007 thru March
29, 2007
was 63.0 million. Excludes Loews attendance for all periods presented.
Excludes
Century attendance for the quarter ended March 30, 2006.
NATIONAL
CINEMEDIA, INC. (Pro Forma)
Quarterly
Results of Operations
unaudited
(in
millions, except advertising revenue per founding member
attendee)
|
Quarter
|
Quarter
|
|
|
Ended
|
Ended
|
|
|
|
March
30, 2006
|
March
29, 2007
|
|
|
||
|
Advertising
Revenue
|
$38.3
|
$55.8
|
|
Total
Revenue
|
41.1
|
62.1
|
|
Operating
Income
|
9.4
|
22.9
|
|
|
|
|
|
Founding
Member Attendance
|
118.6
|
130.3
|
|
Advertising
Revenue /
Founding
Member Attendee
|
$0.32
|
$0.43
|
|
|
|
|
|
EBITDA
|
$10.6
|
$24.0
|
|
Adjusted
EBITDA
|
12.5
|
25.7
|
|
Adjusted
EBITDA Margin
|
30.5%
|
41.4%
|
NATIONAL
CINEMEDIA, INC.
Pro
Forma Statement of Operations
unaudited
($
in millions, except per share data)
|
|
Quarter
Ended March 30, 2006 Historical
|
Contractual
Adjustments
|
Transaction
Adjustments
|
Quarter
Ended March 30, 2006 Pro Forma, As Adjusted
|
|||||||||
|
Revenue:
|
|
|
|
|
|||||||||
|
Advertising
|
$
|
23.1
|
$
|
15.2
|
$
|
-
|
$
|
38.3
|
|||||
|
Administrative
fee - founding members
|
1.5
|
(1.5
|
)
|
-
|
-
|
||||||||
|
Meetings
and events
|
2.8
|
-
|
-
|
2.8
|
|||||||||
|
Other
|
-
|
-
|
-
|
-
|
|||||||||
|
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 - founding members
|
16.2
|
(5.1
|
)
|
-
|
11.1
|
||||||||
|
Selling
and marketing
|
8.6
|
-
|
-
|
8.6
|
|||||||||
|
Administrative
|
3.5
|
-
|
-
|
3.5
|
|||||||||
|
Severance
plan costs
|
1.9
|
-
|
-
|
1.9
|
|||||||||
|
Depreciation
and amortization
|
1.2
|
-
|
-
|
1.2
|
|||||||||
|
Other
|
-
|
-
|
-
|
-
|
|||||||||
|
TOTAL
EXPENSES
|
36.8
|
(5.1
|
)
|
-
|
31.7
|
||||||||
|
Operating
Income/(Loss)
|
(9.4
|
)
|
18.8
|
-
|
9.4
|
||||||||
|
Interest
expense
|
-
|
-
|
16.2
|
16.2
|
|||||||||
|
Income/(Loss)
before income taxes
|
(9.4
|
)
|
18.8
|
(16.2
|
)
|
(6.8
|
)
|
||||||
|
Income
taxes
|
-
|
-
|
(2.7
|
)
|
(2.7
|
)
|
|||||||
|
Minority
interest—net
|
-
|
-
|
(1.3
|
)
|
(1.3
|
)
|
|||||||
|
NET
INCOME/(LOSS)
|
$
|
(9.4
|
)
|
$
|
18.8
|
$
|
(12.2
|
)
|
$
|
(2.8
|
)
|
||
|
Earnings/(loss)
per share:
|
|||||||||||||
|
Basic
|
$
|
(0.07
|
)
|
||||||||||
|
Diluted
|
$
|
(0.07
|
)
|
||||||||||
NATIONAL
CINEMEDIA, INC.
Pro
Forma Statement of Operations
unaudited
($
in millions, except per share data)
|
|
Pre-IPO
period December 29, 2006 thru February 12, 2007 Historical
|
Post-IPO
period February 13, 2007 thru March 29, 2007 Historical
|
Contractual
Adjustments
|
Transaction
Adjustments
|
Quarter
Ended March 29, 2007 Pro Forma, As
Adjusted
|
|||||||||||
|
Revenue:
|
||||||||||||||||
|
Advertising
|
$
|
20.6
|
$
|
29.0
|
$
|
6.2
|
$
|
-
|
$
|
55.8
|
||||||
|
Administrative
Fee - founding members
|
0.1
|
-
|
(0.1
|
)
|
-
|
-
|
||||||||||
|
Meetings
and Events
|
2.9
|
3.3
|
-
|
-
|
6.2
|
|||||||||||
|
Other
|
-
|
0.1
|
-
|
-
|
0.1
|
|||||||||||
|
TOTAL
REVENUE
|
23.6
|
32.4
|
6.1
|
-
|
62.1
|
|||||||||||
|
|
||||||||||||||||
|
Expenses:
|
||||||||||||||||
|
Advertising
operating costs
|
1.1
|
1.0
|
-
|
-
|
2.1
|
|||||||||||
|
Meetings/Events
operating costs
|
1.4
|
1.8
|
-
|
-
|
3.2
|
|||||||||||
|
Network
costs
|
1.7
|
1.9
|
-
|
-
|
3.6
|
|||||||||||
|
Circuit
share/Theatre access fee - founding members
|
14.4
|
5.5
|
(7.7
|
)
|
-
|
12.2
|
||||||||||
|
Selling
and Marketing
|
5.2
|
5.0
|
-
|
-
|
10.2
|
|||||||||||
|
Administrative
|
2.8
|
2.7
|
-
|
0.1
|
5.6
|
|||||||||||
|
Severance
plan costs
|
0.4
|
0.5
|
-
|
-
|
0.9
|
|||||||||||
|
Depreciation
and amortization
|
0.7
|
0.4
|
-
|
-
|
1.1
|
|||||||||||
|
Other
|
-
|
0.3
|
-
|
-
|
0.3
|
|||||||||||
|
TOTAL
EXPENSES
|
27.7
|
19.1
|
(7.7
|
)
|
0.1
|
39.2
|
||||||||||
|
Operating
Income/(Loss)
|
(4.1
|
)
|
13.3
|
13.8
|
(0.1
|
)
|
22.9
|
|||||||||
|
Interest
expense
|
0.1
|
8.2
|
-
|
8.1
|
16.4
|
|||||||||||
|
Income/(Loss)
before income taxes
|
(4.2
|
)
|
5.1
|
13.8
|
(8.2
|
)
|
6.5
|
|||||||||
|
Income
taxes
|
-
|
1.9
|
-
|
0.7
|
2.6
|
|||||||||||
|
Minority
interest, net
|
-
|
2.2
|
-
|
0.9
|
3.1
|
|||||||||||
|
NET
INCOME/(LOSS)
|
$
|
(4.2
|
)
|
$
|
1.0
|
$
|
13.8
|
$
|
(9.8
|
)
|
$
|
0.8
|
||||
|
Earnings
per share:
|
||||||||||||||||
|
Basic
|
$
|
0.02
|
||||||||||||||
|
Diluted
|
$
|
0.02
|
||||||||||||||
Notes
to the
Pro Forma Consolidated Statements of Operations:
| 1. |
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 amended exhibitor
services
agreements, based on the actual revenue generated from those
legacy
contracts and the reversal of the related legacy contract administrative
fees historically recorded by NCM LLC. 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,
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. Under the terms of the prior exhibitor service
agreements with the 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.
|
| 2. |
Transaction
adjustments represent interest expense, including amortization
of deferred
financing fees, over the term of the new senior secured credit
facility of
approximately $0.5 million per quarter or $1.9 million per year.
Interest
expense also includes the impact of an interest rate hedge agreement
covering approximately 75% of the outstanding balance on the
term loan. In
addition, an adjustment to reflect minority interest expense
is included,
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., including amortization
of
the payable related to the tax sharing agreement of approximately
$2.8
million per quarter or $11.3 million per year.
|
| 3. |
Basic
earnings per share is calculated on the assumption that the 42,000,000
shares sold in the offering are outstanding over the entire period.
Diluted earnings per share is calculated assuming that the unit
option
shares, as converted and unvested shares of restricted stock
are
outstanding during periods corresponding to their original issuance
date
(after application of the treasury stock method). The convertible
common
membership units of the founding members (which aggregate 51,850,951
shares) are not included as they are antidilutive, due to inclusion
in
interest expense of non-cash amortization of the tax payable
to founding
members which is not deducted by the
LLC.
|
NATIONAL
CINEMEDIA, INC. (Pro Forma)
Reconciliation
of Net Income (Loss) to EBITDA to Adjusted EBITDA
unaudited
($
in millions)
The
following table reconciles net income (loss) to EBITDA, adjusted EBITDA
and
adjusted EBITDA margin on a pro forma basis for the period
presented:
|
Quarter
|
Quarter
|
||||||
|
Ended
|
Ended
|
||||||
|
|
March
30, 2006
|
March
29, 2007
|
|||||
|
|
|||||||
|
Net
income (Loss)
|
$
|
(2.8
|
)
|
$
|
0.8
|
||
|
Income
taxes
|
(2.7
|
)
|
2.6
|
||||
|
Minority
interest
|
(1.3
|
)
|
3.1
|
||||
|
Interest
expense
|
16.2
|
16.4
|
|||||
|
Depreciation
and amortization
|
1.2
|
1.1
|
|||||
|
EBITDA
|
$
|
10.6
|
$
|
24.0
|
|||
|
Severance
plan costs
|
1.9
|
0.9
|
|||||
|
Share-based
payment costs (1)
|
-
|
0.8
|
|||||
|
Adjusted
EBITDA
|
$
|
12.5
|
$
|
25.7
|
|||
|
Adjusted
EBITDA margin
|
30.5
|
%
|
41.4
|
%
|
|||
| 1. |
Share-based
payment costs are included in network operations, selling and
marketing
and administrative expense in the accompanying pro forma financial
statements.
|