Cinemark Reports Results for Fourth Quarter and Fiscal Year 2007
PLANO, Texas--(BUSINESS WIRE)--
Cinemark Holdings, Inc. (NYSE: CNK), a leading motion picture exhibitor, today reported results for the three months and year ended December 31, 2007.
Cinemark Holdings, Inc.'s admissions revenues increased 2.6% to $252.4 million and concession revenues increased 2.7% to $118.6 million for the three months ended December 31, 2007, primarily related to a 7.5% increase in average ticket prices and a 7.3% increase in concession revenues per patron. Total revenues for the three months ended December 31, 2007 increased to $393.3 million.
Adjusted EBITDA for the three months ended December 31, 2007 decreased 8.2% to $83.8 million from $91.3 million for the three months ended December 31, 2006. The Company's Adjusted EBITDA margin was 21.3% for the three months ended December 31, 2007. Reconciliations of non-GAAP financial measures are provided in the financial schedules accompanying this press release.
"Cinemark delivered consistent revenue growth and industry-leading financial performance in 2007 due to the efficient operation of our theaters, our continued focus on organic expansion in domestic and international markets and the integration of the Century Theatres," stated Alan Stock, Cinemark's Chief Executive Officer. "We are pleased with our worldwide performance for the quarter and experienced another quarter of outperformance with our international business. For 2008, we believe there is a solid slate of movies in the pipeline. Additionally, we operate in an industry that provides one of the lowest cost forms of out-of-home entertainment, and in light of a weakening economy, we expect our industry to show resilience as it has exhibited in past recessionary periods. We remain dedicated to improving our profitability, developing our new theatre pipeline, and positioning Cinemark to capitalize on industry innovations, such as digital cinema, to return value to shareholders over the long term."
Net loss before taxes for the three months ended December 31, 2007 was $11.6 million. As a result of the interim period income tax allocations required under U.S. generally accepted accounting principles ("GAAP"), the Company recorded income tax expense of $42.2 million for the three months ended December 31, 2007. The impact of the interim period income tax allocation combined with asset impairment charges of $26.2 million for the three months ended December 31, 2007 were the primary reasons for the Company's net loss after taxes of $53.8 million. The effective tax rate for the three months ended December 31, 2007 was (364.8%). The Company's effective tax rate for the year ended December 31, 2007 was 55.7%. Excluding goodwill impairment charges of approximately $67.7 million, which are not deductible for income tax purposes, the Company's effective tax rate for the year ended December 31, 2007 was approximately 41.7%.
Cinemark Holdings, Inc.'s revenues for the year ended December 31, 2007 increased 37.9% to $1,682.8 million from $1,220.6 million for the year ended December 31, 2006. During the year ended December 31, 2007, admissions revenues increased 43.0% and concession revenues increased 37.4%. The increases were primarily related to a 19.3% increase in attendance; a 20.0% increase in average ticket prices; and a 15.2% increase in concession revenues per patron, all of which were favorably impacted by the acquisition of Century Theatres, Inc. that occurred on October 5, 2006. On a pro forma basis giving effect to the Century Acquisition as if it had occurred on January 1, 2006, the Company's total revenues for the year ended December 31, 2007 increased 4.4%, admissions revenues increased 5.6% and concession revenues increased 6.0%. The increases were primarily related to increases in average ticket price and concession revenues per patron.
Adjusted EBITDA for the year ended December 31, 2007 increased 38.8% to $376.9 million from $271.6 million for the year ended December 31, 2006. The Company's Adjusted EBITDA margin was 22.4% for the year ended December 31, 2007. Reconciliations of non-GAAP financial measures are provided in the financial schedules accompanying this press release.
Net income for the year ended December 31, 2007 was $88.9 million compared to net income of $0.8 million for the year ended December 31, 2006.
During the year ended December 31, 2007, the Company repurchased approximately $332.1 million aggregate principal amount of its 9% senior subordinated notes, primarily utilizing the proceeds received upon the sale of shares in connection with the National CineMedia, Inc. initial public offering, and repurchased $69.2 million aggregate principal amount at maturity of its 9 3/4% senior discount notes utilizing the proceeds from its initial public offering. The Company recorded a loss on early retirement of debt of approximately $13.5 million related to these note repurchases.
On December 31, 2007, the Company's aggregate screen count was 4,665, with screens in the United States, Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Colombia. As of December 31, 2007, the Company had signed commitments to open 13 new theatres with 147 screens during 2008 and open five new theatres with 78 screens subsequent to 2008.
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 call can be accessed live over the phone by dialing (800) 374-1346, or for international callers, (706) 679-3149. The passcode is 36984398. A replay will be available shortly after the call and can be accessed by dialing (800) 642-1687, or for international callers, (706) 645-9291. The passcode for the replay is 36984398. The replay will be available until March 8, 2008.
About Cinemark Holdings, Inc.
Headquartered in Plano, TX, Cinemark is a leader in the motion picture exhibition industry. As of December 31, 2007, Cinemark operates 408 theatres and 4,665 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America. For more information go to www.cinemark.com.
Forward-looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements relating to future revenues, expenses and profitability, the future development and expected growth of our business, projected capital expenditures, attendance at movies generally or in any of the markets in which we operate, the number or diversity of popular movies released and our ability to successfully license and exhibit popular films, national and international growth in our industry, competition from other exhibitors and alternative forms of entertainment and determinations in lawsuits in which we are defendants. You can identify forward-looking statements by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In evaluating forward-looking statements, you should carefully consider the risks and uncertainties described in the "Risk Factors" section or other sections in the Company's 424(b)(1) prospectus filed April 24, 2007 and quarterly reports on Form 10-Q. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Cinemark Holdings, Inc.
Financial and Operating Summary
(unaudited, in thousands)
Pro Forma
Three months ended Years ended Year ended
December
December 31, December 31, 31,
-----------------------------------------
2007 2006 2007 2006 2006 (1)
--------- --------- ---------- ---------- ----------
Statement of
Operations Data:
Revenues
Admissions $ 252,422 $ 246,092 $1,087,480 $ 760,275 $1,029,881
Concession 118,644 115,575 516,509 375,798 487,416
Other 22,218 29,838 78,852 84,521 94,807
----------------------------------------- ----------
Total
revenues 393,284 391,505 1,682,841 1,220,594 1,612,104
----------------------------------------- ----------
Cost of
operations
Film rentals
and
advertising 135,517 130,982 589,717 405,987 546,144
Concession
supplies 18,403 17,157 81,074 59,020 75,359
Facility lease
expense 52,889 48,246 212,730 161,374 206,950
Other theatre
operating
expenses 89,243 83,498 364,569 263,424 345,388
General and
administrative
expenses 21,787 21,810 79,518 67,768 84,619
Termination of
profit
participation
agreement - - 6,952 - -
Depreciation
and
amortization 38,289 34,947 151,716 99,470 141,416
Impairment of
long-lived
assets 26,168 23,338 86,558 28,537 28,943
(Gain) loss on
sale of assets
and other (2,336) 2,345 (2,953) 7,645 7,706
----------------------------------------- ----------
Total cost of
operations 379,960 362,323 1,569,881 1,093,225 1,436,525
----------------------------------------- ----------
Operating income 13,324 29,182 112,960 127,369 175,579
Interest
expense (2) (33,830) (42,220) (145,596) (109,328) (168,051)
Gain on NCM
transaction - - 210,773 - -
Gain on
Fandango
transaction - - 9,205 - -
Loss on early
retirement of
debt (1,920) (5,782) (13,456) (8,283) (8,283)
Distributions
from NCM 5,745 - 11,499 - -
Other income 5,114 1,600 15,497 3,768 3,727
----------------------------------------- ----------
Income (loss)
before taxes (11,567) (17,220) 200,882 13,526 2,972
Income taxes 42,198 3,109 111,962 12,685 6,520
----------------------------------------- ----------
Net income (loss) $(53,765) $(20,329) $ 88,920 $ 841 $ (3,548)
========================================= ==========
Net Earnings
(Loss) Per
Share:
Basic $ (0.50) $ (0.22) $ 0.87 $ 0.01 $ (0.04)
========================================= ==========
Diluted $ (0.50) $ (0.22) $ 0.85 $ 0.01 $ (0.04)
========================================= ==========
Other Financial
Data:
Adjusted EBITDA
(3) $ 83,800 $ 91,330 $ 376,938 $ 271,615
Adjusted EBITDA
margin 21.3% 23.3% 22.4% 22.3%
Other Operating
Data:
Attendance
(patrons):
Domestic 34,891 37,156 151,712 118,714 155,981
International 12,669 12,621 60,958 59,550 59,550
----------------------------------------- ----------
Worldwide 47,560 49,777 212,670 178,264 215,531
========================================= ==========
Average screen
count (month
end average):
Domestic 3,631 3,516 3,581 2,695
International 1,001 955 977 933
-----------------------------------------
Worldwide 4,632 4,471 4,558 3,628
=========================================
As of As of
December 31, December 31,
2007 2006
------------ ------------
Balance Sheet Data:
Cash and cash equivalents $ 338,043 $ 147,099
Theatre properties and equipment, net 1,314,066 1,324,572
Total assets 3,296,892 3,171,582
Long-term debt, including current portion 1,523,745 1,911,653
Stockholders' equity 1,019,203 689,297
Segment Information
(unaudited, in thousands)
Three months ended Years ended
December 31, December 31,
-------------------------------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Revenues
U.S. $ 318,207 $ 328,955 $1,352,042 $ 936,684
International 75,663 63,074 333,624 285,854
Eliminations (586) (524) (2,825) (1,944)
-------------------------------------------
Total Revenues $ 393,284 $ 391,505 $1,682,841 $1,220,594
===========================================
Adjusted EBITDA (3)
U.S. $ 72,195 $ 82,771 $ 309,800 $ 217,845
International 11,605 8,559 67,138 53,770
-------------------------------------------
Total Adjusted EBITDA $ 83,800 $ 91,330 $ 376,938 $ 271,615
===========================================
Capital Expenditures
U.S. $ 28,649 $ 20,855 $ 110,496 $ 80,786
International 7,606 8,324 35,808 26,295
-------------------------------------------
Total Capital
Expenditures $ 36,255 $ 29,179 $ 146,304 $ 107,081
===========================================
Reconciliation of Adjusted EBITDA
(unaudited, in thousands)
Three months ended Years ended
December 31, December 31,
---------------------------------------
2007 2006 2007 2006
--------- --------- ---------- --------
Net income (loss) $(53,765) $(20,329) $ 88,920 $ 841
Income taxes 42,198 3,109 111,962 12,685
Interest expense (2) 33,830 42,220 145,596 109,328
Gain on NCM transaction -- -- (210,773) --
Gain on Fandango transaction -- -- (9,205) --
Loss on early retirement of
debt 1,920 5,782 13,456 8,283
Other income (5,114) (1,600) (15,497) (3,768)
Termination of profit
participation agreement - - 6,952 -
Depreciation and
amortization 38,289 34,947 151,716 99,470
Impairment of long-lived
assets 26,168 23,338 86,558 28,537
(Gain) loss on sale of
assets and other (2,336) 2,345 (2,953) 7,645
Deferred lease expenses (4) 1,373 605 5,979 4,717
Amortization of long-term
prepaid rents (4) 321 197 1,146 1,013
Share based awards
compensation expense (5) 916 716 3,081 2,864
---------------------------------------
Adjusted EBITDA (3) $ 83,800 $ 91,330 $ 376,938 $271,615
=======================================
(1) Pro forma financial and operating data for the year ended December 31, 2006 gives effect to the Century acquisition as if it had occurred on January 1, 2006. Pro forma data for the year ended December 31, 2006 represents Cinemark's historical data for the year ended December 31, 2006 plus Century's historical data for the period from January 1, 2006 to October 4, 2006. Pro forma adjustments have been made to eliminate the impact of the change of control payment made to Century's management at the time of the acquisition, to reflect additional depreciation and amortization expense related to the increase in long-lived assets to fair value pursuant to purchase accounting and to reflect the increase in interest expense related to the changes in the Company's debt structure that occurred as a result of the acquisition.
(2) Includes amortization of debt issue costs and excludes capitalized interest.
(3) Adjusted EBITDA as calculated in the chart above represents net income (loss) before income taxes, interest expense, gain on NCM transaction, gain on Fandango transaction, loss on early retirement of debt, other income, termination of profit participation agreement, depreciation and amortization, impairment of long-lived assets, (gain) loss on sale of assets and other, changes in deferred lease expense, amortization of long-term prepaid rents and share based awards compensation expense. Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net income (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and liquidity, estimate our value and evaluate our ability to service debt. In addition, we use Adjusted EBITDA for incentive compensation purposes. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenues.
(4) Non-cash expense included in facility lease expense.
(5) Non-cash expense included in general and administrative expenses.
Source: Cinemark Holdings, Inc.
Released March 6, 2008