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National CineMedia, Inc. Reports Results for Fiscal Third Quarter

  National CineMedia, Inc. Reports Results for Fiscal Third Quarter

    ~ Updates Full Year 2012 Outlook and Provides Fourth Quarter Outlook ~

                    ~ Announces Quarterly Cash Dividend ~

Business Wire

CENTENNIAL, Colo. -- November 01, 2012

National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the managing member and
owner of 48.6% of National CineMedia, LLC (NCM LLC), the operator of the
largest digital in-theatre network in North America, today announced
consolidated results for the fiscal third quarter and nine months ended
September 27, 2012.

Total revenue for the third quarter 2012 increased 5.7% to $143.7 million from
$136.0 million for the comparable quarter last year. Advertising revenue for
the third quarter 2012 was $138.0 million, an increase of 8.5% from $127.2
million for the comparable quarter last year. Fathom Events revenue decreased
35.2% to $5.7 million for the third quarter 2012 from $8.8 million for the
comparable quarter last year due to the wind-down of the Fathom Business
Events division. Adjusted OIBDA increased 6.4% to $85.1 million for the third
quarter 2012 from $80.0 million for the comparable quarter last year. Net
income for the third quarter of 2012 was $16.7 million, or $0.30 per diluted
share, compared to net income of $16.8 million, or $0.31 per diluted share for
the third quarter of 2011.

For the nine months ended September 27, 2012, total revenue grew 3.8% to
$332.9 million compared to $320.8 million for the nine months ended September
29, 2011. Advertising revenue for the nine months ended September 27, 2012 was
$305.6 million, an increase of 7.3% from $284.9 million for the comparable
period last year. Fathom Events revenue decreased 24.0% to $27.3 million for
the nine months ended September 27, 2012 from $35.9 million for the comparable
period last year due primarily to the wind-down of the Fathom Business Events
division. For the nine months ended September 27, 2012, Adjusted OIBDA
increased 1.0% to $162.9 million from $161.3 million for the comparable period
in 2011. Net income for the nine months ended September 27, 2012 was $13.9
million, or $0.25 per diluted share, compared to net income of $24.8 million,
or $0.45 per diluted share for the comparable nine month period of 2011. The
net income decrease was primarily due to the charge related to the loss on
swap terminations and write-off of debt issuance costs in the second quarter
of 2012. Excluding these items, net income for the nine months ended September
27, 2012 would have been $22.7 million, or $0.41 per diluted share.

The Company announced today that its Board of Directors has authorized the
Company’s third quarter cash dividend of $0.22 per share of common stock. The
dividend will be paid on November 29, 2012, to stockholders of record on
November 15, 2012. 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.

“Once again Q3 marked another record quarter for us with revenue of $143.7
million and Adjusted OIBDA of $85.1 million, representing growth of 5.7% and
6.4%, respectively, over a very strong Q3 2011. These results reflect the
continued expansion of our network and broadening of our national client base,
offset somewhat by lower Q3 local advertising revenue,” said Kurt Hall, NCM’s
Chairman and CEO.

Mr. Hall continued, “Looking ahead, the late Q4 scatter market is shaping up
to be a bit more challenging than we had originally anticipated as brands are
cautiously monitoring inconsistent economic data and several uncertainties
that could impact future economic activity. Even with this somewhat softer
media marketplace, our national revenue growth for the year is still expected
to be strong at 5% to 9%. With our upfront and other strategies to increase
our inventory utilization and the expansion of our network in full swing, we
are well positioned to grow in 2013 and beyond as we will have a relatively
consistent cost structure for the next few years.”

2012 Outlook

For the fourth quarter of 2012, the Company expects total revenue to be in the
range of $112.0 million to $122.0 million, or a decrease of 2% to an increase
of 6% compared to the total revenue for the fourth quarter of 2011 of $114.6
million, and Adjusted OIBDA to be in the range of $52.0 million to $62.0
million, or a decrease of 17% to a decrease of 2% compared to the Adjusted
OIBDA for the fourth quarter of 2011 of $63.0 million.

For the full year 2012, the Company expects total revenue in the range of
$445.0 million to $455.0 million, or an increase of 2% to 5% compared to total
revenue for the full year of 2011 of $435.4 million, and Adjusted OIBDA in the
range of $215.0 million to $225.0 million, or a decrease of 4%, to
approximately flat compared to Adjusted OIBDA for the full year of 2011 of
$224.3 million.

Conference Call

The Company will host a conference call and audio webcast with investors,
analysts and other interested parties Thursday, November 1, 2012 at 5:00 P.M.
Eastern time. The live call can be accessed by dialing 1-877-407-9039 or for
international participants 1-201-689-8470. 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.

The replay of the conference call will be available until midnight Eastern
Time, November 15, 2012, by dialing 1-877-870-5176 or for international
participants 1-858-384-5517, and conference ID 402801.

About National CineMedia, Inc.

NCM operates NCM Media Networks, a leading integrated media company reaching
U.S. consumers in movie theaters, online and through mobile technology. The
NCM Cinema Network and NCM Fathom present cinema advertising and events across
the nation’s largest digital in-theater network, comprised of theaters owned
by AMC Entertainment Inc., Cinemark Holdings, Inc. (NYSE: CNK), Regal
Entertainment Group (NYSE: RGC) and other leading regional theater circuits.
NCM’s theater advertising network covers 183 Designated Market Areas^® (49 of
the top 50) and includes over 19,300 screens (over 18,400 digital). During
2011, over 680 million patrons (on an annualized basis) attended movies shown
in theaters in which NCM currently has exclusive cinema advertising agreements
in place. The NCM Fathom Events live digital broadcast network (“DBN”) is
comprised of over 720 locations in 170 Designated Market Areas^® (including
all of the top 50). The NCM Interactive Network offers 360-degree integrated
marketing opportunities in combination with cinema, encompassing 41
entertainment-related websites, online widgets and mobile applications.
National CineMedia, Inc. (NASDAQ: NCMI) owns a 48.6% interest in and is the
managing member of National CineMedia LLC. For more information, visit
www.ncm.com. (NCMI-F)

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; 9) changes in
interest rates, and 10) changes in accounting principles. In addition, the
outlook provided does not include the impact of any future unusual or
infrequent transactions; unidentified restructuring charges; sales and
acquisitions of operating assets and investments; any future noncash
impairments of goodwill, intangible and fixed assets; amounts related to
securities litigation; or the related impact of taxes that may occur from time
to time due to management decisions and changing business circumstances. The
Company is currently unable to forecast precisely the timing and/or magnitude
of any such amounts or events. Please refer to the Company's Securities and
Exchange Commission filings for further information about these and other
risks.

                                                          
NATIONAL CINEMEDIA, INC.

Condensed Consolidated Statements of Income

Unaudited

($ in millions, except per share data)
                                                                             
                         Quarter       Quarter       Nine          Nine
                         Ended         Ended         Months        Months
                         Sept. 27,     Sept. 29,     Ended         Ended
                         2012          2011          Sept. 27,     Sept. 29,
                                                     2012          2011
REVENUE:
Advertising
(including revenue
from founding
members of $10.0,      $  138.0      $  127.2      $  305.6      $  284.9
$10.6, $30.0 and
$29.6 million
respectively)
Fathom Events              5.7        8.8        27.3       35.9
Total                      143.7      136.0      332.9      320.8
                                                                             
OPERATING EXPENSES:
Advertising                 11.0          8.4           23.7          17.8
operating costs
Fathom Events               4.5           6.4           20.0          24.7
operating costs
Network costs               5.1           4.6           15.3          14.3
Theatre access
fees—founding               16.3          15.2          48.3          42.1
members
Selling and                 15.7          15.6          45.7          45.1
marketing costs
Administrative and          8.0           6.7           24.6          23.6
other costs
Depreciation and           5.0        5.1        14.9       14.0
amortization
Total                      65.6       62.0       192.5      181.6
                                                                             
OPERATING INCOME           78.1       74.0       140.4      139.2
                                                                             
NON-OPERATING
EXPENSES:
Interest on                 14.3          13.9          42.7          35.3
borrowings
Interest income             (0.1)         (0.1)         (0.3)         (0.2)
Accretion of
interest on the
discounted payable
to                          4.1           2.4           11.1          10.9
founding members
under tax sharing
agreement
Change in derivative        0.6           1.9           0.2           2.7
fair value
Loss on swap                −             −             26.7          −
terminations
Other non-operating        −          1.5        2.4        1.5
expense
Total                      18.9       19.6       82.8       50.2
                                                                             
INCOME BEFORE INCOME       59.2       54.4       57.6       89.0
TAXES
                                                                             
Income tax expense         10.2       8.5        8.8        13.2
                                                                             
CONSOLIDATED NET            49.0          45.9          48.8          75.8
INCOME
Less: Net income
attributable to            32.3       29.1       34.9       51.0
noncontrolling
interests
NET INCOME
ATTRIBUTABLE TO NCM,     $  16.7     $  16.8     $  13.9       24.8
INC.
                                                                             
EARNINGS PER SHARE:
Basic                    $  0.31       $  0.31       $  0.26       $  0.46
Diluted                  $  0.30       $  0.31       $  0.25       $  0.45
                                                                             

                                                        
NATIONAL CINEMEDIA, INC.

Selected Balance Sheet Data

Unaudited ($ in millions)
                                                             
                                          Sept. 27, 2012     December 29, 2011
Cash and cash equivalents                 $   60.2           $    65.9
Short and long-term marketable                22.2                32.2
securities
Receivables, net                              126.0               98.6
Property and equipment, net                   26.1                24.6
Total Assets                                  828.0               820.2
Long-term borrowings                          850.0               794.0
Total equity/(deficit)                        (347.7  )           (346.8   )
Total Liabilities and Equity                  828.0               820.2
                                                             

                                                          
NATIONAL CINEMEDIA, INC.

Operating Data

Unaudited
                                                                             
                         Quarter       Quarter
                         and           and
                         Nine          Nine
                         Months        Months
                         Ended         Ended
                         Sept. 27,     Sept. 27,
                         2012          2011
Total Screens at         19,328        18,365
Period End (1)
                                                                             
Founding Member
Screens at Period        15,238        15,241
End (2)
                                                                             
Total Digital
Screens at Period        18,431        17,349
End (3)
                                                                             
                         Quarter       Quarter       Nine          Nine
                                                     Months        Months
                         Ended         Ended         Ended         Ended
                         Sept. 27,     Sept. 29,     Sept. 27,     Sept. 29,
                         2012          2011          2012          2011
Total Attendance for
Period (4)               175.2         180.3         519.2         489.1

(in millions)
                                                                             
Founding Member
Attendance for
Period (5)               145.1         154.7         434.4         427.4

(in millions)
                                                                             
Capital Expenditures     $2.9          $3.3          $7.8          $9.6
(in millions)
                                                                             

(1) Represents the total screens within NCM LLC’s advertising network.

(2) Represents the sum of founding member screens.

(3) Represents the total number of screens that are connected to the digital
content network.

(4) Represents the total attendance within NCM LLC’s advertising network.

(5) Represents the total attendance within NCM LLC’s advertising network in
theatres operated by the founding members.

                                                          
NATIONAL CINEMEDIA, INC.

Operating Data

Unaudited

(In millions, except advertising revenue per attendee and per share data)
                                                                             
                         Quarter       Quarter       Nine          Nine
                                                     Months        Months
                         Ended         Ended         Ended         Ended
                         Sept. 27,     Sept. 29,     Sept. 27,     Sept. 29,
                         2012          2011          2012          2011
                                                                             
Advertising Revenue      $138.0        $127.2        $305.6        $284.9
Total Revenue            143.7         136.0         332.9         320.8
Operating Income         78.1          74.0          140.4         139.2
                                                                             
Total Attendance         175.2         180.3         519.2         489.1
Advertising Revenue      $0.788        $0.705        $0.589        $0.582
/ Attendee
                                                                             
OIBDA                    $83.1         $79.1         $155.3        $153.2
Adjusted OIBDA           85.1          80.0          162.9         161.3
Adjusted OIBDA           59.2%         58.8%         48.9%         50.3%
Margin
                                                                             
Earnings Per Share –     $0.31         $0.31         $0.26         $0.46
Basic
Earnings Per Share –     $0.30         $0.31         $0.25         $0.45
Diluted
                                                                             

            (See attached tables for the non-GAAP reconciliation)

                           NATIONAL CINEMEDIA, INC.
                           Non-GAAP Reconciliations
                                  Unaudited

OIBDA, Adjusted OIBDA and Adjusted OIBDA Margin

Operating Income Before Depreciation and Amortization (OIBDA), Adjusted OIBDA
and Adjusted OIBDA margin are not financial measures calculated in accordance
with generally accepted accounting principles (GAAP) in the United States.
OIBDA represents operating income (loss) before depreciation and amortization
expense. Adjusted OIBDA excludes from OIBDA non-cash share based payment
costs. Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA by total
revenue. These non-GAAP financial measures are used by management to evaluate
operating performance, to forecast future results and as a basis for
compensation. The Company believes these are important supplemental measures
of operating performance because they eliminate items that have less bearing
on its operating performance and so highlight trends in its core business that
may not otherwise be apparent when relying solely on GAAP financial measures.
The Company believes the presentation of these measures is relevant and useful
for investors because it enables them to view performance in a manner similar
to the method used by the Company’s management, helps improve their ability to
understand the Company’s operating performance and makes it easier to compare
the Company’s results with other companies that may have different
depreciation and amortization policies and non-cash share based compensation
programs, or different interest rates or debt levels or income tax rates. A
limitation of these measures, however, is that they exclude depreciation and
amortization, which represent a proxy for the periodic costs of certain
capitalized tangible and intangible assets used in generating revenues in the
Company’s business. In addition, Adjusted OIBDA has the limitation of not
reflecting the effect of the Company’s share based payment costs. OIBDA or
Adjusted OIBDA should not be regarded as an alternative to operating income,
net income or as indicators of operating performance, nor should they be
considered in isolation of, or as substitutes for financial measures prepared
in accordance with GAAP. The Company believes that operating income is the
most directly comparable GAAP financial measure to OIBDA. Because not all
companies use identical calculations, these non-GAAP presentations may not be
comparable to other similarly titled measures of other companies.

The following table reconciles operating income to OIBDA and Adjusted OIBDA
for the periods presented (dollars in millions):

                                                          
                  Quarter          Quarter          Nine           Nine
                                                    Months         Months
                  Ended            Ended            Ended          Ended
                  Sept. 27,        Sept. 29,        Sept. 27,      Sept. 29,
                  2012             2011             2012           2011
Operating         $  78.1          $  74.0          $  140.4       $ 139.2
income
Depreciation
and                 5.0          5.1          14.9      14.0  
amortization
OIBDA                83.1             79.1             155.3         153.2
Share-based
compensation        2.0          0.9          7.6       8.1   
costs (1)
Adjusted          $  85.1       $  80.0       $  162.9    $ 161.3 
OIBDA
Total Revenue     $  143.7      $  136.0      $  332.9    $ 320.8 
Adjusted            59.2   %      58.8   %      48.9  %    50.3  %
OIBDA margin
                                                                             
Adjusted          $  85.1          $  80.0          $  162.9       $ 161.3
OIBDA
Consolidated
Theatres            −            −            −         0.8   
Payments
Adjusted
OIBDA after
Consolidated      $  85.1       $  80.0       $  162.9    $ 162.1 
Theatres
Payments
                                                                             

      Share-based compensation costs are included in network operations,
(1)  selling and marketing and administrative expense in the accompanying
      financial statements.
      

Outlook (in millions)

                                                    
                                 Quarter Ending          Year Ending
                                                      
                                 December 27, 2012       December 27, 2012
                                 Low       High        Low       High
Operating Income                 $ 45.3      $ 54.6      $ 185.8     $ 195.1
Depreciation and                  4.9      5.1      19.8     20.0
amortization
OIBDA                              50.2        59.7        205.6       215.1
Share-based compensation          1.8      2.3      9.4      9.9
costs (1)
Adjusted OIBDA                   $ 52.0    $ 62.0    $ 215.0   $ 225.0
Total Revenue                    $ 112.0   $ 122.0   $ 445.0   $ 455.0
                                                                             

      Share-based compensation costs are included in network operations,
(1)  selling and marketing and administrative expense in the accompanying
      financial statements.
      

Net Income and Earnings Per Share Excluding the Loss on Swap Terminations and
the Write-off of Debt Issuance Costs

Net income excluding the loss on swap terminations and the write-off of debt
issuance costs and earnings per share excluding the loss on swap terminations
and the write-off of debt issuance costs are not financial measures calculated
in accordance with generally accepted accounting principles (GAAP) in the
United States. Net income excluding the loss on swap terminations and the
write-off of debt issuance costs and earnings per share excluding the loss on
swap terminations and the write-off of debt issuance costs are calculated
using reported net income and earnings per share and adding back the charge
related to the loss on swap terminations and the write-off of debt issuance
costs. These non-GAAP financial measures are used by management as an
additional tool to evaluate operating performance. The Company believes these
are important supplemental measures of operating performance because they
eliminate items that have less bearing on its operating performance and so
highlight trends in its core business that may not otherwise be apparent when
relying solely on GAAP financial measures. The Company believes the
presentation of these measures is relevant and useful for investors because it
enables them to view performance in a manner similar to a method used by the
Company’s management and helps improve their ability to understand the
Company’s operating performance. Net income excluding the loss on swap
terminations and the write-off of debt issuance costs should not be regarded
as an alternative to net income and earnings per share excluding the loss on
swap terminations and the write-off of debt issuance costs should not be
regarded as an alternative to earnings per share or as indicators of operating
performance, nor should they be considered in isolation of, or as substitutes
for financial measures prepared in accordance with GAAP. The Company believes
that net income and earnings per share are the most directly comparable GAAP
financial measures. Because not all companies use identical calculations,
these presentations may not be comparable to other similarly titled measures
of other companies.

The following table reconciles net income and earnings per share as reported
to net income excluding the loss on swap terminations and the write-off of
debt issuance costs and earnings per share excluding the loss on swap
terminations and the write-off of debt issuance costs for the periods
presented (dollars in millions):

                                                         
                                           Nine Months        Nine Months
                                           Ended              Ended
                                           Sept. 27, 2012     Sept. 29, 2011
Net income as reported                     $ 13.9             $  24.8
                                                                             
Loss on swap terminations                    26.7                -
Write-off of debt issuance costs             2.5                 -
Effect of noncontrolling interest            (15.0      )        -
(51.4% and 51.3%, respectively)
Effect of provision for income taxes        (5.4       )     -
(38% effective rate)
Net effect of loss on swap
terminations and write-off of                8.8                 -
debt issuance costs
                                                           
Net income excluding loss on swap
terminations and                           $ 22.7          $  24.8
write-off of debt issuance costs
                                                                             
Weighted Average Shares Outstanding as
reported
Basic                                        54,344,944          53,842,731
Diluted                                      55,005,678          54,644,814
                                                                             
Weighted Average Shares Outstanding as
adjusted
Basic                                        54,344,944          53,842,731
Diluted                                      55,005,678          54,644,814
                                                                             
Basic earnings per share as reported       $ 0.26             $  0.46
Net effect of loss on swap
terminations and write-off                  0.16            -
of debt issuance costs
Basic earnings per share excluding
loss on swap                               $ 0.42          $  0.46
terminations and write-off of debt
issuance costs
                                                                             
Diluted earnings per share as reported     $ 0.25             $  0.45
Net effect of loss on swap
terminations and write-off of debt          0.16            -
issuance costs
Diluted earnings per share excluding
loss on swap                               $ 0.41          $  0.45
terminations and write-off of debt
issuance costs

Contact:

National CineMedia, Inc.
Investor Contact:
David Oddo, 800-844-0935
investors@ncm.com
or
Media Contact:
Lauren Leff, 303-957-1709
lauren.leff@ncm.com
 
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