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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: August 9, 2007
National CineMedia, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-33296 20-5665602
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) 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):
|_| 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 August 9, 2007, National CineMedia, Inc. issued a press release
announcing its financial results for the quarter ended June 28, 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 August
9, 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: August 9, 2007 By: /s/ Ralph E. Hardy
------------------------------------
Ralph E. Hardy
Executive Vice President, General
Counsel and Secretary
Exhibit 99.1
National CineMedia, Inc. Reports Results for Second Quarter Fiscal
2007 and Announces First Quarterly Cash Dividend of $0.15 per Share
CENTENNIAL, Colo.--(BUSINESS WIRE)--Aug. 9, 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 consolidated results for the second fiscal quarter ended
June 28, 2007.
Total revenue for the second quarter 2007 increased 46.6% to $83.7
million from $57.1 million for the comparable quarter last year. Total
advertising revenue for the second quarter 2007 increased 52.8% to
$76.7 million from $50.2 million for the comparable quarter last year.
The year-over-year quarterly increase in advertising revenue was
driven by payments associated with founding member beverage
agreements, the conversion of founding member legacy contracts to NCM
LLC contracts, an increase in sales of branded content and a 6.9%
increase in the average number of theatre screens included in the NCM
LLC network. National advertising revenue including beverage agreement
revenue increased 54.1% over the second quarter of 2006. National
advertising inventory utilization was 82.5% compared to 83.9% for the
comparable quarter last year, and average national advertising CPMs
decreased 5.5% from the comparable quarter last year. These decreases
in national advertising utilization and CPM were primarily driven by
the delay of certain content partner and other advertising contracts
to the third and fourth quarters of 2007. Local and regional
advertising revenue increased 47.6% over the second quarter of 2006.
This growth was driven by a number of factors including a strong film
slate, increased number of average screens and improved sales
staffing. Meetings and events revenue increased 42.9% over the second
quarter of 2006 primarily due to the strong performance of the Fathom
events business.
Net income for the second quarter 2007 was $6.3 million, or $0.15
per diluted share, compared to a net loss of $1.2 million in the
comparable quarter last year. The improvement was due primarily to
higher revenue, the decrease in payments to NCM LLC's founding member
theatre circuits after the IPO and lower advertising operating and
network costs, partially offset by higher meeting and events operating
costs and selling and marketing costs associated with the increased
revenue, higher interest expense due to the debt financing incurred in
conjunction with the IPO, and increased administrative costs
associated with being a public company.
The Company also announced today that its Board of Directors has
authorized the Company's first cash dividend of $0.15 per share of
common stock, payable on September 6, 2007, to stockholders of record
on August 23, 2007. The Company intends to pay a regular quarterly
dividend for the foreseeable future at the discretion of the Board of
Directors dependent on available cash, anticipated cash needs, overall
financial condition, future prospects for earnings and cash flows as
well as other relevant factors.
Chairman and CEO Kurt Hall said, "Our Company had a very busy
quarter as we posted strong revenue growth and margin expansion,
completed the integration of Cinemark's Century theatres into our
sales process, completed a key network affiliate deal and made our
first investment to expand our network reach beyond cinema. We
continued to grow our revenue by expanding our advertising and
CineMeetings client base and through diversification of the content
distributed across our Fathom events network. We also continued to
expand our EBITDA margins through cost control and expense synergies
associated with our network expansion."
"With our business growing as expected, we are pleased to announce
the declaration of our first quarterly dividend of $0.15 per share,"
Mr. Hall continued. "This dividend reflects our growth and future
outlook. While we anticipate declaring future quarterly dividends,
they will be subject to our future operating results, business
expectations and Board approval."
Mr. Hall concluded, "We are encouraged by the outlook for our
business for the remainder of the year and beyond. Third and fourth
quarter advertising scatter market demand has been strong, and we have
made great progress expanding our digital network. The recent addition
of Kerasotes, combined with the Goodrich and Loews additions to our
advertising network later this year and next year, are key to our
effort to compete for an even larger share of national advertising
budgets."
Six Months Ended June 28, 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 six-moths ended June 28, 2007 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 June 28, 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.
For the six months ended June 28, 2007, total revenue was $116.2
million for the post-IPO period and $23.6 million for the pre-IPO
period, compared to $84.5 million in the entire six months ended June
29, 2006.
For the six months ended June 28, 2007 net income for the post-IPO
period was $7.4 million and the net loss for the pre-IPO period was
$4.2 million, compared to a net loss of $10.6 million in the entire
six month period ended June 29, 2006.
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 second quarter of
fiscal 2006 and first six months of fiscal 2006 and fiscal 2007 that
reflect 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. The actual amount related to the
Loews integration agreement for the quarter ended June 28, 2007 was
$2.8 and the pro forma amount for the six month period ended June 28,
2007 was $4.1 million.
Total revenue for the second quarter 2007 grew 14.7% to $83.7
million from total pro forma revenue of $73.0 million for the
comparable quarter last year. Advertising revenue increased 12.6% to
$76.7 million from pro forma advertising revenue of $68.1 million for
the comparable quarter last year due to the greater number of national
advertising impressions, sales of branded content segments and
increased local and regional advertising sales. Meetings and events
revenue increased 42.9% to $7.0 million from total pro forma meetings
and events revenue of $4.9 million, due to the success of several
events across various categories. Adjusted EBITDA grew 19.7% to $46.7
million from pro forma adjusted EBITDA of $39.0 in the second quarter
of 2006. Pro forma adjusted EBITDA as a percentage of total pro forma
revenue increased from 53.4% in the second quarter of 2006 to 55.8% in
the current quarter.
Net income for the second quarter of 2007 grew to $6.3 million
compared to pro forma net income for the second quarter of 2006 of
$4.6, an increase of 37.0%. Pro forma earnings per diluted share
increased 36.4% to $0.15 per share for the second quarter of 2007
compared to $0.11 per share for the second quarter of 2006.
Total pro forma revenue for the six months ended June 28, 2007
grew 27.9% to $145.9 million from $114.1 million for the comparable
period last year. Pro forma advertising revenue increased 24.6% to
$132.6 million from $106.4 million for the comparable period last
year. Meetings and events pro forma revenue increased 73.7% to $13.2
million. Pro forma adjusted EBITDA grew 40.6% to $72.4 million from
$51.4 million in the first six months of 2006. Pro forma adjusted
EBITDA as a percentage of total pro forma revenue increased from 45.1%
in the first six months of 2006 to 49.7% for the first six months of
2007.
Pro forma net income for the first half of 2007 grew to $7.2
million compared to pro forma net income for the second quarter of
2006 of $1.7, an increase of 323.5%. Pro forma earnings per basic and
diluted share increased 325.0% to $0.17 per share for the first six
months of 2007 compared to $0.04 per share for the first six months of
2006.
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 (888) 469-6384
or for international participants please dial (480) 629-9562 and enter
passcode 3761131. 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 half
of 2007 ended June 28, 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 over 14,000 screens of
which over 12,300 are part of the Company's Digital Content Network
(DCN). NCM LLC's DCN covers 156 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
(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.
NATIONAL CINEMEDIA, INC.
Statement of Operations
unaudited
($ in millions, except per share data)
Quarter Quarter
Ended Ended
June 28, 2007 June 29, 2006
-----------------------------
Revenue:
Advertising $ 76.7 $ 50.2
Administrative fees - founding
members - 2.0
Meetings and events 7.0 4.9
-----------------------------
TOTAL REVENUE 83.7 57.1
-----------------------------
Expenses:
Advertising operating costs 2.2 2.4
Meetings and events operating costs 3.9 2.1
Network costs 3.7 3.9
Circuit share costs/theatre access
fees - founding members 12.0 34.4
Selling and marketing costs 10.3 9.7
Administrative costs 5.3 3.8
Severance plan costs 0.5 0.8
Depreciation and amortization 1.3 1.1
Other 0.5 -
-----------------------------
TOTAL EXPENSES 39.7 58.2
-----------------------------
Operating Income/(Loss) 44.0 ( 1.1)
Interest expense, net 16.4 0.1
-----------------------------
Income/(Loss) before income taxes and
minority interest 27.6 (1.2)
Provision for income taxes 11.3 -
Minority interest, net 10.0 -
-----------------------------
NET INCOME/(LOSS) $ 6.3 $ (1.2)
=============================
Earnings per share:
Basic $ 0.15
Diluted $ 0.15
NATIONAL CINEMEDIA, INC.
Statement of Operations
unaudited
($ in millions, except per share data)
Period Period
February 13, December 29,
2007 2006 Six Months
through through Ended
June 28, February 12, June 29,
2007 2007 2006
-------------------------------------
Revenue:
Advertising $ 105.8 $ 20.6 $ 73.3
Administrative fees -
founding members - 0.1 3.5
Meetings and events 10.3 2.9 7.6
Other 0.1 - 0.1
-------------------------------------
TOTAL REVENUE 116.2 23.6 84.5
-------------------------------------
Expenses:
Advertising operating costs 3.2 1.1 3.8
Meetings and events
operating costs 5.7 1.4 3.1
Network costs 5.6 1.7 7.0
Circuit share costs/theatre
access fees - founding
members 17.5 14.4 50.6
Selling and marketing costs 15.4 5.2 18.3
Administrative costs 7.9 2.8 7.3
Severance plan costs 1.0 0.4 2.6
Depreciation and
amortization 1.8 0.7 2.3
Other 0.8 - -
-------------------------------------
TOTAL EXPENSES 58.9 27.7 95.0
-------------------------------------
Operating Income/(Loss) 57.3 (4.1) (10.5)
Interest expense, net 24.5 0.1 0.1
-------------------------------------
Income/(Loss) before income
taxes and minority interest 32.8 (4.2) (10.6)
Provision for income taxes 13.2 - -
Minority interest, net 12.2 - -
-------------------------------------
NET INCOME/(LOSS) $ 7.4 $ (4.2) $ (10.6)
=====================================
Earnings per share:
Basic $ 0.17
Diluted $ 0.17
NATIONAL CINEMEDIA, INC.
Selected Balance Sheet Data
Unaudited ($ in millions)
June 28, December 28,
2007 2006
Cash and cash equivalents $ 12.1 $ 6.7
Receivables, net 70.7 63.9
Property and Equipment, net 14.3 12.6
Total Assets 445.7 90.0
Borrowings 768.0 10.0
Members' Equity - 3.5
Stockholders' Equity/(Deficit) (559.2) -
NATIONAL CINEMEDIA, INC. (Historical)
Operating Data
unaudited
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 29, June 28, June 29, June 28,
2006 2007 2006 2007
-------- -------- ---------- ----------
Founding Member Screens at
Period End(1) 12,025 13,131 12,025 13,131
Total Screens at Period End(2) 13,095 14,137 13,095 14,137
Digital Screens at Period
End(3) 11,076 12,339 11,076 12,339
Founding Member Attendance for
Period(4)
(in millions) 133.9 137.7 252.6 268.0
Capital Expenditures (in
millions) $1.1 $2.2 $2.4 $3.9
(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.
(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. Excludes Loews
attendance for all periods presented.
NATIONAL CINEMEDIA, INC. (Pro Forma)
Quarterly Results of Operations
unaudited
(in millions, except advertising revenue per founding member attendee)
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 29, June 28, June 29, June 28,
2006 2007 2006 2007
--------- --------- ---------- ----------
Advertising Revenue $68.1 $76.7 $106.4 $132.6
Total Revenue 73.0 83.7 114.1 145.9
Operating Income 36.6 44.0 46.0 66.9
Founding Member Attendance 133.9 137.7 252.6 268.0
Advertising Revenue /
Founding Member Attendee $0.50 $0.56 $0.41 $0.49
EBITDA $37.7 $45.3 $48.3 $69.3
Adjusted EBITDA 39.0 46.7 51.4 72.4
Adjusted EBITDA Margin 53.4% 55.8% 45.1% 49.7%
NATIONAL CINEMEDIA, INC.
Pro Forma Statement of Operations
Quarter Ended June 29, 2006
($ in millions, except per share data)
Quarter
Ended
Quarter June 29,
Ended 2006
June 29, Pro Forma,
2006 Contractual Transaction As
Historical Adjustments Adjustments Adjusted
------------------------------------------------
Revenue:
Advertising $ 50.2 $ 17.9 $ - $68.1
Administrative fees
- founding members 2.0 (2.0) - -
Meetings and events 4.9 - - 4.9
Other - - - -
------------------------------------------------
TOTAL REVENUE 57.1 15.9 - 73.0
------------------------------------------------
Expenses:
Advertising
operating costs 2.4 - - 2.4
Meetings and events
operating costs 2.1 - - 2.1
Network costs 3.9 - - 3.9
Circuit share
costs/theatre
access fees -
founding members 34.4 (22.0) - 12.4
Selling and
marketing costs 9.7 - - 9.7
Administrative costs 3.8 - 0.2 4.0
Severance plan costs 0.8 - - 0.8
Depreciation and
amortization 1.1 - - 1.1
Other - - - -
------------------------------------------------
TOTAL EXPENSES 58.2 (22.0) 0.2 36.4
------------------------------------------------
Operating
Income/(Loss) (1.1) 37.9 (0.2) 36.6
Interest expense, net 0.1 - 16.1 16.2
------------------------------------------------
Income/(Loss) before
income taxes and
minority interest (1.2) 37.9 (16.3) 20.4
Provision for income
taxes - - 8.1 8.1
Minority interest, net - - 7.7 7.7
------------------------------------------------
NET INCOME/(LOSS) $ (1.2) $ 37.9 $(32.1) $ 4.6
================================================
Earnings per share:
Basic $0.11
Diluted $0.11
NATIONAL CINEMEDIA, INC.
Pro Forma Statement of Operations
Six Months Ended June 29, 2006
($ in millions, except per share data)
Six Months
Ended
Six Months June 29,
Ended 2006
June 29, Pro Forma,
2006 Contractual Transaction As
Historical Adjustments Adjustments Adjusted
-----------------------------------------------
Revenue:
Advertising $ 73.3 $ 33.1 $ - $106.4
Administrative fees
- founding members 3.5 (3.5) - -
Meetings and events 7.6 - - 7.6
Other 0.1 - - 0.1
-----------------------------------------------
TOTAL REVENUE 84.5 29.6 - 114.1
-----------------------------------------------
Expenses:
Advertising
operating costs 3.8 - - 3.8
Meetings and events
operating costs 3.1 - - 3.1
Network costs 7.0 - - 7.0
Circuit share
costs/theatre
access fees -
founding members 50.6 (27.1) - 23.5
Selling and
marketing costs 18.3 - - 18.3
Administrative costs 7.3 - 0.2 7.5
Severance plan costs 2.6 - - 2.6
Depreciation and
amortization 2.3 - - 2.3
Other - - - -
-----------------------------------------------
TOTAL EXPENSES 95.0 (27.1) 0.2 68.1
-----------------------------------------------
Operating
Income/(Loss) (10.5) 56.7 (0.2) 46.0
Interest expense, net 0.1 - 32.4 32.5
-----------------------------------------------
Income/(Loss) before
income taxes and
minority interest (10.6) 56.7 (32.6) 13.5
Provision for income
taxes - - 5.4 5.4
Minority interest, net - - 6.4 6.4
-----------------------------------------------
NET INCOME/(LOSS) $(10.6) $ 56.7 $(44.4) $ 1.7
===============================================
Earnings per share:
Basic $ 0.04
Diluted $ 0.04
NATIONAL CINEMEDIA, INC.
Pro Forma Statement of Operations
Six Months Ended June 28, 2007
($ in millions, except per share data)
Pre-IPO period Post-IPO period
December 29, February 13,
2006 through 2007 through
February 12, June 28, 2007
2007 Historical Historical
----------------------------------------
Revenue:
Advertising $ 20.6 $ 105.8
Administrative fees -
founding members 0.1 -
Meetings and events 2.9 10.3
Other - 0.1
----------------------------------------
TOTAL REVENUE 23.6 116.2
----------------------------------------
Expenses:
Advertising operating costs 1.1 3.2
Meetings and events
operating costs 1.4 5.7
Network costs 1.7 5.6
Circuit share costs/theatre
access fees - founding
members 14.4 17.5
Selling and marketing costs 5.2 15.4
Administrative costs 2.8 7.9
Severance plan costs 0.4 1.0
Depreciation and
amortization 0.7 1.8
Other - 0.8
----------------------------------------
TOTAL EXPENSES 27.7 58.9
----------------------------------------
Operating Income/(Loss) (4.1) 57.3
Interest expense, net 0.1 24.5
----------------------------------------
Income/(Loss) before income
taxes and minority interest (4.2) 32.8
Provision for income taxes - 13.2
Minority interest, net - 12.2
----------------------------------------
NET INCOME/(LOSS) $ (4.2) $ 7.4
========================================
Earnings per share:
Basic
Diluted
Six Months
Ended
June 28, 2007
Contractual Transaction Pro Forma,
Adjustments Adjustments As Adjusted
---------------------------------------
Revenue:
Advertising $ 6.2 $ - $132.6
Administrative fees -
founding members (0.1) - -
Meetings and events - - 13.2
Other - - 0.1
---------------------------------------
TOTAL REVENUE 6.1 - 145.9
---------------------------------------
Expenses:
Advertising operating costs - - 4.3
Meetings and events
operating costs - - 7.1
Network costs - - 7.3
Circuit share costs/theatre
access fees - founding
members (7.7) - 24.2
Selling and marketing costs - - 20.6
Administrative costs - 0.1 10.8
Severance plan costs - - 1.4
Depreciation and
amortization - - 2.5
Other - - 0.8
---------------------------------------
TOTAL EXPENSES (7.7) 0.1 79.0
---------------------------------------
Operating Income/(Loss) 13.8 (0.1) 66.9
Interest expense, net - 8.1 32.7
---------------------------------------
Income/(Loss) before income
taxes and minority interest 13.8 (8.2) 34.2
Provision for income taxes - 0.7 13.9
Minority interest, net - 0.9 13.1
---------------------------------------
NET INCOME/(LOSS) $13.8 $(9.8) $ 7.2
=======================================
Earnings per share:
Basic $ 0.17
Diluted $ 0.17
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.
CONTACT: National CineMedia, Inc.
Investor:
Nikki Sacks, 800-844-0935
investors@ncm.com
or
Media:
Lauren Leff, 303-957-1709
lauren.leff@ncm.com