Form 8-K REGAL ENTERTAINMENT GROU For: Jul 26

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): July 26, 2016

 

Regal Entertainment Group

(Exact Name of Registrant as Specified in Charter)

 

 

7132 Regal Lane, Knoxville, Tennessee 37918

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: 865-922-1123

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

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):

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  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 July 26, 2016, Regal Entertainment Group (“Regal”) announced its financial results for its second fiscal quarter ended June 30, 2016.  A copy of the press release is furnished to the United States Securities and Exchange Commission (the “Commission”) with this current report on Form 8-K as Exhibit 99.1.

 

Regal is also furnishing to the Commission as Exhibit 99.2 to this current report on Form 8-K certain other financial information for its last four completed fiscal quarters, including reconciliations to the most directly comparable GAAP financial measures of the non-GAAP financial measures included therein.

 

Item 8.01  Other Events.

 

On July 26, 2016, Regal’s board of directors declared a cash dividend in the amount of $0.22 per share of Class A and Class B common stock, payable on September 15, 2016 to the Class A and Class B common stockholders of record on September 2, 2016.

 

Item 9.01  Financial Statements and Exhibits.

 

(d)          Exhibits.

 

Exhibit No.		Exhibit Description
99.1		Press release furnished pursuant to Item 2.02
99.2		Reconciliations of Non-GAAP Financial Measures furnished pursuant to Item 2.02

 

2

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	REGAL ENTERTAINMENT GROUP
Date: July 26, 2016	By:	/s/ David H. Ownby
	Name:	David H. Ownby
	Title:	Executive Vice President and
		Chief Financial Officer

 

3

 

EXHIBIT INDEX

 

Exhibit No.		Exhibit Description
99.1		Press release furnished pursuant to Item 2.02
99.2		Reconciliations of Non-GAAP Financial Measures furnished pursuant to Item 2.02

 

4

Exhibit 99.1

 

 

 

Regal Entertainment Group Reports Results for

Second Quarter 2016 and Declares Quarterly Dividend

 

Knoxville, Tennessee — July 26, 2016 — Regal Entertainment Group (NYSE: RGC), a leading motion picture exhibitor, today announced second quarter 2016 results.

 

Total revenues for the second quarter ended June 30, 2016 were $785.9 million compared to total revenues of $862.8 million for the second quarter ended June 30, 2015.  Net income attributable to controlling interest in the second quarter of 2016 was $33.5 million, which included a $0.9 million after-tax loss on extinguishment of debt, compared to $53.4 million in the second quarter of 2015, which included a $3.6 million after-tax loss on extinguishment of debt.  Diluted earnings per share(1) was $0.21 for the second quarter of 2016 compared to $0.34 for the second quarter of 2015.  Adjusted diluted earnings per share(1) was $0.23 for the second quarter of 2016 compared to $0.38 for the second quarter of 2015.  Net cash provided by operating activities(4) was $58.0 million for the second quarter of 2016 and $187.7 million for the second quarter of 2015. Adjusted EBITDA(4) was $137.7 million for the second quarter of 2016 and $177.3 million for the second quarter of 2015. Reconciliations of non-GAAP financial measures are provided in the financial schedules accompanying this press release.

 

Regal’s Board of Directors also today declared a cash dividend of $0.22 per Class A and Class B common share, payable on September 15, 2016, to stockholders of record on September 2, 2016.  The Company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors depending on available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows as well as other relevant factors.

 

“In a challenging second quarter box office environment, we were pleased that our ongoing seating and concession initiatives had a positive impact on our operating metrics including new record highs in both average ticket price and concession sales per patron,” stated Amy Miles, CEO of Regal Entertainment Group. “With year-to-date industry box office results slightly ahead of last year’s record setting pace and an exciting film slate in the back half of the year, we remain optimistic regarding the potential for box office success in 2016.”

 

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. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the risk factors contained in the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016. All forward-looking statements are expressly qualified in their entirety by such factors.

 

Conference Call:

 

Regal Entertainment Group management will conduct a conference call to discuss second quarter 2016 results on July 26, 2016 at 4:30 p.m. (Eastern Time). Interested parties can listen to the call

 

 

live on the Internet through the Investor Relations section of the Company’s website: www.REGmovies.com or by dialing 877-407-0778 (Domestic) and 201-689-8565 (International). Please dial in to the call at least 5-10 minutes prior to the start of the call or go to the website at least 15 minutes prior to the call to download and install any necessary audio software. When prompted, ask for the Regal Entertainment Group conference call. A replay of the call will be available beginning approximately two hours following the call. Those interested in listening to the replay of the conference call should dial 877-660-6853 (Domestic) or 201-612-7415 (International) and enter conference call ID # 13625454.

 

About Regal Entertainment Group:

 

Regal Entertainment Group (NYSE: RGC) operates one of the largest and most geographically diverse theatre circuits in the United States, consisting of 7,307 screens in 564 theatres in 42 states along with Guam, Saipan, American Samoa and the District of Columbia as of June 30, 2016. The Company operates theatres in 46 of the top 50 U.S. designated market areas. We believe that the size, reach and quality of the Company’s theatre circuit not only provide its patrons with a convenient and enjoyable movie-going experience, but is also an exceptional platform to realize economies of scale in theatre operations.

 

Additional information is available on the Company’s website at www.REGmovies.com.

 

Financial Contact:

Kevin Mead

Regal Entertainment Group

Vice President Investor Relations and Planning
[email protected]

865-925-9685

 

Media Contact:

Ken Thewes

Regal Entertainment Group

Senior Vice President and Chief Marketing Officer
865-925-9539

 

 

Regal Entertainment Group

Consolidated Statements of Income Information

For the Fiscal Quarters and Two Quarters Ended 6/30/16 and 6/30/15

(in millions, except per share data)

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Revenues
Admissions		$	505.8		$	568.6		$	1,021.5		$	1,022.7
Concessions		235.5			247.7			465.6			445.9
Other operating revenues		44.6			46.5			85.9			85.5
Total revenues		785.9			862.8			1,573.0			1,554.1
Operating expenses
Film rental and advertising costs		278.9			314.7			556.4			549.0
Cost of concessions		30.0			34.4			58.8			60.4
Rent expense		106.3			106.6			213.8			210.3
Other operating expenses		214.8			214.7			426.3			416.9
General and administrative expenses (including share-based compensation of $2.3 and $2.2 for the quarters ended June 30, 2016 and June 30, 2015, respectively, and $4.1 and $3.9 for the two quarters ended June 30, 2016 and June 30, 2015, respectively)		20.9			19.3			42.1			37.9
Depreciation and amortization		56.9			54.0			112.6			108.2
Net loss on disposal and impairment of operating assets and other		1.5			4.0			5.8			5.9
Income from operations		76.6			115.1			157.2			165.5
Interest expense, net		32.3			33.2			64.8			63.2
Loss on extinguishment of debt		1.5			5.7			1.5			5.7
Earnings recognized from NCM		(2.9		)	(3.4		)	(15.2		)	(12.2		)
Equity in income of non-consolidated entities and other, net		(10.4		)	(7.9		)	(20.4		)	(17.0		)
Income before income taxes		56.1			87.5			126.5			125.8
Provision for income taxes		22.5			34.2			52.2			49.5
Net income		33.6			53.3			74.3			76.3
Noncontrolling interest, net of tax		(0.1		)	0.1			(0.1		)	0.2
Net income attributable to controlling interest		$	33.5		$	53.4		$	74.2		$	76.5
Diluted earnings per share(1)		$	0.21		$	0.34		$	0.47		$	0.49
Adjusted diluted earnings per share(1)		$	0.23		$	0.38		$	0.50		$	0.53
Weighted average number of diluted shares outstanding(2)		156.7			156.4			156.8			156.5

 

Consolidated Summary Balance Sheet Information

(dollars in millions)

(unaudited)

 

		As of June 30, 2016			As of December 31, 2015
Cash and cash equivalents		$	288.1		$	219.6
Total assets(3)		2,572.9			2,601.6
Total debt		2,344.9			2,342.4
Total stockholders’ deficit of Regal Entertainment Group		(872.4		)	(877.8		)

 

 

Operating Data

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Theatres at period end		564			569			564			569
Screens at period end		7,307			7,324			7,307			7,324
Average screens per theatre		13.0			12.9			13.0			12.9
Attendance (in thousands)		51,246			59,078			104,543			109,683
Average ticket price		$	9.87		$	9.62		$	9.77		$	9.32
Average concessions per patron		$	4.60		$	4.19		$	4.45		$	4.07

 

Reconciliation of Net Income Attributable to Controlling Interest to EBITDA to Net Cash Provided by Operating Activities

(dollars in millions)

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net income attributable to controlling interest		$	33.5		$	53.4		$	74.2		$	76.5
Interest expense, net		32.3			33.2			64.8			63.2
Provision for income taxes		22.5			34.2			52.2			49.5
Depreciation and amortization		56.9			54.0			112.6			108.2
EBITDA(4)		145.2			174.8			303.8			297.4
Interest expense, net		(32.3		)	(33.2		)	(64.8		)	(63.2		)
Provision for income taxes		(22.5		)	(34.2		)	(52.2		)	(49.5		)
Deferred income taxes		(0.4		)	(9.6		)	(4.6		)	(12.8		)
Changes in operating assets and liabilities		(46.2		)	84.3			14.9			95.8
Loss on extinguishment of debt		1.5			5.7			1.5			5.7
Landlord contributions		21.6			3.2			43.8			14.1
Other items, net		(8.9		)	(3.3		)	(3.6		)	2.1
Net cash provided by operating activities		$	58.0		$	187.7		$	238.8		$	289.6

 

Reconciliation of EBITDA to Adjusted EBITDA

(dollars in millions)

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
EBITDA(4)		$	145.2		$	174.8		$	303.8		$	297.4
Net loss on disposal and impairment of operating assets and other		1.5			4.0			5.8			5.9
Share-based compensation expense		2.3			2.2			4.1			3.9
Loss on extinguishment of debt		1.5			5.7			1.5			5.7
Earnings recognized from NCM		(2.9		)	(3.4		)	(15.2		)	(12.2		)
Cash distributions from NCM		0.4			—			22.2			19.9
Cash distributions from other non-consolidated entities		—			2.0			—			2.0
Noncontrolling interest, net of tax and equity in income of non-consolidated entities and other, net		(10.3		)	(8.0		)	(20.3		)	(17.2		)
Adjusted EBITDA(4)		$	137.7		$	177.3		$	301.9		$	305.4

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(dollars in millions)

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net cash provided by operating activities		$	58.0		$	187.7		$	238.8		$	289.6
Capital expenditures		(58.3		)	(41.4		)	(89.4		)	(71.1		)
Proceeds from asset sales		—			—			1.3			—
Free cash flow(4)		$	(0.3	)	$	146.3		$	150.7		$	218.5

 

Reconciliation of Net Income Attributable to Controlling Interest to Adjusted Diluted Earnings Per Share

(dollars in millions, except per share data)

(unaudited)

 

		Quarter Ended						Two Quarters Ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net income attributable to controlling interest		$	33.5		$	53.4		$	74.2		$	76.5
Loss on extinguishment of debt, net of related tax effects of $0.6 for the quarter and two quarters ended June 30, 2016, and $2.1 for the quarter and two quarters ended June 30, 2015		0.9			3.6			0.9			3.6
Net loss on disposal and impairment of operating assets and other, net of related tax effects of $0.6 and $1.5 for the quarters ended June 30, 2016 and June 30, 2015, respectively, and $2.3 for the two quarters ended June 30, 2016 and June 30, 2015		0.9			2.5			3.5			3.6
Gain on sale of available for sale securities, net of tax		—			—			(0.6		)	—
Net income attributable to controlling interest, excluding loss on extinguishment of debt, net of related tax effects, net loss on disposal and impairment of operating assets and other, net of related tax effects and gains on sale of available for sale securities, net of tax		$	35.3		$	59.5		$	78.0		$	83.7
Weighted average number of diluted shares outstanding(2)		156.7			156.4			156.8			156.5
Adjusted diluted earnings per share(1)		$	0.23		$	0.38		$	0.50		$	0.53
Diluted earnings per share(1)		$	0.21		$	0.34		$	0.47		$	0.49

 

(1)         Diluted earnings per share is net income attributable to controlling interest divided by weighted average number of diluted shares outstanding. We have included adjusted diluted earnings per share, which is diluted earnings per share excluding loss on extinguishment of debt, net of related tax effects, net loss on disposal and impairment of operating assets and other, net of related tax effects and gain on sale of available for sale securities, net of tax, because we believe it provides investors with a useful industry comparative and is a financial measure used by management to assess the performance of our Company.

 

(2)         Represents reported weighted average number of diluted shares outstanding for purposes of computing diluted earnings per share and adjusted diluted earnings per share for the quarters and two quarters ended June 30, 2016 and June 30, 2015.

 

(3)         In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest, which intends to simplify the presentation of debt issuance costs. Prior to the issuance of ASU 2015-03, debt issuance costs were reported on the balance sheet as assets and amortized as interest expense. ASU 2015-03 requires that they be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability. The costs will continue to be amortized to interest expense using the effective interest method. ASU 2015-03 is to be applied retrospectively and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  The Company adopted this guidance during the quarter ended March 31, 2016.  Debt issuance costs associated with long-term debt, net of accumulated amortization, were $28.4 million and $30.7 million as of June 30, 2016 and December 31, 2015, respectively. The balance sheet as of December 31, 2015 has been recast to reflect the reclassification of debt issuances costs, net of accumulated amortization.

 

(4)         Adjusted EBITDA (net income attributable to controlling interest adjusted for interest expense, net, provision for income taxes, depreciation and amortization, net loss on disposal and impairment of operating assets and other, share-based compensation expense, loss on extinguishment of debt, earnings recognized from NCM, cash distributions from NCM, cash distributions from other non-

 

 

consolidated entities, noncontrolling interest, net of tax and equity in income of non-consolidated entities and other, net) was approximately $137.7 million for the quarter ended June 30, 2016. We believe EBITDA, Adjusted EBITDA and Free Cash Flow provide useful measures of cash flows from operations for our investors because EBITDA, Adjusted EBITDA and Free Cash Flow are industry comparative measures of cash flows generated by our operations and because they are financial measures used by management to assess the liquidity and performance of our Company. EBITDA, Adjusted EBITDA and Free Cash Flow are not measurements of liquidity or performance under U.S. generally accepted accounting principles and should not be considered in isolation or construed as a substitute for other operations data or cash flow data prepared in accordance with U.S. generally accepted accounting principles for purposes of analyzing our liquidity or performance.  In addition, not all funds depicted by EBITDA, Adjusted EBITDA and Free Cash Flow are available for management’s discretionary use. For example, a portion of such funds are subject to contractual restrictions and functional requirements to pay debt service, fund necessary capital expenditures and meet other commitments from time to time as described in more detail in the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016.  EBITDA, Adjusted EBITDA and Free Cash Flow, as calculated, may not be comparable to similarly titled measures reported by other companies.

 

Exhibit 99.2

Reconciliations

 

														Four
														Quarters Ended
		September 30,			December 31,			March 31,			June 30,			June 30,
		2015			2015			2016			2016			2016
Reconciliation of Net Income Attributable to Controlling Interest to EBITDA to Net Cash Provided by (Used in) Operating Activities
(dollars in millions)
(unaudited)
Net income attributable to controlling interest		$	21.9		$	55.0		$	40.7		$	33.5		$	151.1
Interest expense, net		33.3			33.1			32.5			32.3			131.2
Provision for income taxes		14.4			36.2			29.7			22.5			102.8
Depreciation and amortization		52.8			55.8			55.7			56.9			221.2
EBITDA (1)		122.4			180.1			158.6			145.2			606.3
Interest expense, net		(33.3		)	(33.1		)	(32.5		)	(32.3		)	(131.2		)
Provision for income taxes		(14.4		)	(36.2		)	(29.7		)	(22.5		)	(102.8		)
Deferred income taxes		(9.7		)	11.6			(4.2		)	(0.4		)	(2.7		)
Changes in operating assets and liabilities		(155.5		)	95.2			61.1			(46.2		)	(45.4		)
Loss on extinguishment of debt		—			—			—			1.5			1.5
Landlord contributions		13.4			4.7			22.2			21.6			61.9
Other items, net		4.2			(4.6		)	5.3			(8.9		)	(4.0		)
Net cash provided by (used in) operating activities		$	(72.9	)	$	217.7		$	180.8		$	58.0		$	383.6
Reconciliation of EBITDA to Adjusted EBITDA
(dollars in millions)
(unaudited)
EBITDA (1)		$	122.4		$	180.1		$	158.6		$	145.2		$	606.3
Net loss on disposal and impairment of operating assets and other		10.4			3.4			4.3			1.5			19.6
Share-based compensation expense		2.2			2.2			1.8			2.3			8.5
Loss on extinguishment of debt		—			—			—			1.5			1.5
Earnings recognized from NCM		(8.4		)	(10.4		)	(12.3		)	(2.9		)	(34.0		)
Cash distributions from NCM		9.3			10.8			21.8			0.4			42.3
Cash distributions from other non-consolidated entities		—			1.6			—			—			1.6
Noncontrolling interest, net of tax and equity in income of non-consolidated entities and other, net		(9.3		)	(12.0		)	(10.0		)	(10.3		)	(41.6		)
Adjusted EBITDA (1)		$	126.6		$	175.7		$	164.2		$	137.7		$	604.2
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow
(dollars in millions)
(unaudited)
Net cash provided by (used in) operating activities		$	(72.9	)	$	217.7		$	180.8		$	58.0		$	383.6
Capital expenditures		(55.1		)	(59.5		)	(31.1		)	(58.3		)	(204.0		)
Proceeds from asset sales		8.7			3.3			1.3			—			13.3
Free cash flow (1)		$	(119.3	)	$	161.5		$	151.0		$	(0.3	)	$	192.9

 

(1)         Adjusted EBITDA (net income attributable to controlling interest adjusted for interest expense, net, provision for income taxes, depreciation and amortization, net loss on disposal and impairment of operating assets and other, share-based compensation expense, loss on extinguishment of debt, earnings recognized from NCM, cash distributions from NCM, cash distributions from other non-consolidated entities, noncontrolling interest, net of tax and equity in income of non-consolidated entities and other, net) was approximately $604.2 million for the four quarters ended  June 30, 2016.  We believe EBITDA, Adjusted EBITDA and Free Cash Flow provide useful measures of cash flows from operations for our investors because EBITDA, Adjusted EBITDA and Free Cash Flow are industry comparative measures of cash flows generated by our operations and because they are financial measures used by management to assess the liquidity and performance of our Company.  EBITDA, Adjusted EBITDA and Free Cash Flow are not measurements of liquidity or performance under U.S. generally accepted accounting principles and should not be considered in isolation or construed as a substitute for other operations data or cash flow data prepared in accordance with U.S. generally accepted accounting principles for purposes of analyzing our liquidity or performance.  In addition, not all funds depicted by EBITDA, Adjusted EBITDA and Free Cash Flow are available for management’s discretionary use.  For example, a portion of such funds are subject to contractual restrictions and functional requirements to pay debt service, fund necessary capital expenditures and meet other commitments from time to time as described in more detail in the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016.  EBITDA, Adjusted EBITDA and Free Cash Flow, as calculated, may not be comparable to similarly titled measures reported by other companies.