UA Circuit loss swells to $98 million
One-time charge, lower earnings combine for hit
The 2,195-screen circuit said its cash flow -- earnings before interest, taxes, depreciation and amortization -- fell 8% to $87.9 million during the year on 3% lower revenues of $662.1 million.
But the bottom line was hit by $36.3 million in noncash charges for closure or sale of unprofitable theaters, as well as a $20.3 million charge for restructuring of UATC's entertainment center operations and an $8 million charge for costs of repaying debt early.
Plex problem
The cash-flow decline reflects the impact of the megaplex-building craze going on across the country that is putting up new plexes in competition with existing sites in many markets.
UATC CEO Kurt Hall said cash flow was hurt by "the unprecedented level of new theater construction in certain markets. This overscreening and fragmentation of attendance has put significant pressure on the operating margins and earnings of virtually all exhibitors."
Titanic's' wake
This industry problem is combined with comparisons to last year's fourth quarter when "Titanic" opened. The absence of a similar blockbuster in the March quarter is expected to lead to dramatic comparative declines in period earnings for most exhibs, Wall Street analysts predicted.
"It's bad," Hall agreed.
UATC noted that during the year, it sold or closed 32 theaters with 137 screens and opened 13 theaters with 157 screens as it gradually rebuilds its circuit.
