National CineMedia, Inc. Reports Results for Fiscal Second Quarter 2013

  National CineMedia, Inc. Reports Results for Fiscal Second Quarter 2013

        ~ Provides Third Quarter and Updates Full Year 2013 Outlook ~

                    ~ Announces Quarterly Cash Dividend ~

Business Wire

CENTENNIAL, Colo. -- August 1, 2013

National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the managing member and
owner of 45.1% 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 second quarter ended June 27, 2013.

Total revenue for the second quarter 2013 increased 11.5% to $122.8 million
from $110.1 million for the comparable quarter last year. Advertising revenue
for the second quarter 2013 was $116.9 million, an increase of 15.4% from
$101.3 million for the comparable quarter last year. Fathom Events revenue
decreased 33.0% to $5.9 million for the second quarter 2013 from $8.8 million
for the comparable quarter last year. Adjusted OIBDA increased 24.9% to $66.2
million for the second quarter 2013 from $53.0 million for the comparable
quarter last year. Net income for the second quarter of 2013 was $9.5 million,
or $0.17 per diluted share, compared to a net loss of $1.9 million, or $0.03
per diluted share for the second quarter of 2012. Excluding the charges for
derivative related items, swap terminations and write-off of debt issuance
costs, net income for the second quarter of 2013 would have been $10.7
million, or $0.19 per diluted share, compared to $6.9 million, or $0.13 per
diluted share for the second quarter of 2012.

For the six months ended June 27, 2013, total revenue increased 8.4% to $205.0
million compared to $189.2 million for the six months ended June 28, 2012.
Advertising revenue for the six months ended June 27, 2013 was $190.6 million,
an increase of 13.7% from $167.6 million for the comparable period last year.
Fathom Events revenue decreased 33.3% to $14.4 million for the six months
ended June 27, 2013 from $21.6 million for the comparable period last year.
For the six months ended June 27, 2013, Adjusted OIBDA increased 22.5% to
$95.3 million from $77.8 million for the comparable period in 2012. Net income
for the six months ended June 27, 2013 was $8.5 million, or $0.15 per diluted
share, compared to net loss of $2.8 million, or $0.05 per diluted share for
the comparable six month period of 2012. Excluding the charges for derivative
related items, swap terminations and write-off of debt issuance costs, net
income for the first half of 2013 would have been $10.3 million, or $0.19 per
diluted share, compared to $5.9 million, or $0.11 per diluted share for the
first half of 2012.

The Company announced today that its Board of Directors has authorized the
Company’s second quarter cash dividend of $0.22 per share of common stock. The
dividend will be paid on August 29, 2013, to stockholders of record on August
15, 2013. The Company plans 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.

“Our record Q2 reflected the continued growth of our national and local
advertising businesses that benefited from the continued success of our
strategies to broaden our client base and digital theatre network,” said Kurt
Hall National CineMedia’s Chairman and CEO. Mr. Hall continued, ”We also
benefited from operating margin improvements resulting from the operating
leverage inherent in our business model, tight cost controls and several
theatre acquisitions by our founding member circuits.” Mr. Hall concluded,
“With the strength of our first half and strong proposal activity for the
second half, we also appear to be benefiting from the steady economic recovery
and the impact on the broader media marketplace of increasing DVR adoption and
programming fragmentation, making the selling proposition of our expanding
national network and engaging theatre environment stronger than ever.”

Supplemental Information

The payments made by Cinemark and AMC associated with Rave Theatres
integration payments were $0.9 million and $1.1 million for the quarter and
six months ended June 27, 2013. There were no integration payments during the
comparable periods in 2012. The integration payments were recorded as a
reduction of an intangible asset.

2013 Outlook

For the third quarter of 2013, the Company expects total revenue to be in the
range of $130.0 million to $138.0 million, or a decrease of 4% to 10% compared
to the total revenue for the third quarter of 2012 of $143.7 million, and
Adjusted OIBDA to be in the range of $73.0 million to $81.0 million, or a
decrease of 5% to 14% compared to the Adjusted OIBDA for the third quarter of
2012 of $85.1 million.

For the full year 2013, the Company reaffirms its outlook of total revenue in
the range of $455.0 million to $465.0 million, or an increase of 1% to 4%
compared to total revenue for the full year of 2012 of $448.8 million, and
updates its outlook of Adjusted OIBDA in the range of $230.0 million to $240.0
million, or an increase of 4% to 8% compared to Adjusted OIBDA for the full
year of 2012 of $221.2 million.

Conference Call

The Company will host a conference call and audio webcast with investors,
analysts and other interested parties Thursday, August 1, 2013 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, August 15, 2013, by dialing 1-877-870-5176 or for international
participants 1-858-384-5517, and conference ID 417985.

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 approximately 19,600 screens (approximately 18,800
digital). During 2012, over 710 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 approximately 750 locations in 173 Designated
Market Areas^® (including all of the top 50). The NCM Interactive Network
offers 360-degree integrated marketing opportunities in combination with
cinema, encompassing 37 entertainment-related websites, online widgets and
mobile applications. National CineMedia, Inc. (NASDAQ: NCMI) owns a 45.1%
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       Six Months     Six Months
                       Ended       Ended       Ended        Ended
                       June 27,      June 28,      June 27,       June 28,
                       2013          2012          2013           2012
REVENUE:                                      
Advertising
(including revenue
from founding
members of           $ 116.9       $ 101.3       $  190.6       $  167.6
$11.2, $10.2,
$20.1 and $20.0
million
respectively)
Fathom Events           5.9      8.8          14.4       21.6  
Total                   122.8    110.1        205.0      189.2 
                                                                             
OPERATING
EXPENSES:
Advertising              8.1         8.0              13.8           12.7
operating costs
Fathom Events            4.2         6.5              10.0           15.5
operating costs
Network costs            5.1         5.1              10.1           10.2
Theatre access
fees—founding            18.1        16.3             33.7           32.0
members
Selling and              15.7        15.5             31.1           30.0
marketing costs
Administrative and       7.4         8.4              15.1           16.6
other costs
Depreciation and        6.2      5.0          11.6       9.9   
amortization
Total                   64.8     64.8         125.4      126.9 
                                                                             
OPERATING INCOME        58.0     45.3         79.6       62.3  
                                                                             
NON-OPERATING
EXPENSES:
Interest on              12.8        14.3             26.1           28.4
borrowings
Interest income          (0.1  )     (0.1    )        (0.2  )        (0.2  )
Accretion of
interest on the
discounted payable
to                       3.4         4.0              6.8            7.0
founding members
under tax sharing
agreement
Change in
derivative fair          −           (0.8    )        −              (1.5  )
value
Amortization of
terminated               2.7         0.8              5.2            1.1
derivatives
Loss on swap             −           26.7             −              26.7
terminations
Other
non-operating           1.2      2.4          1.2        2.4   
expense
Total                   20.0     47.3         39.1       63.9  
                                                                             
INCOME (LOSS)
BEFORE INCOME           38.0     (2.0    )     40.5       (1.6  )
TAXES
                                                                             
Income tax expense      6.0      (1.1    )     6.6        (1.4  )
(benefit)
                                                                             
CONSOLIDATED NET         32.0        (0.9    )        33.9           (0.2  )
INCOME (LOSS)
Less: Net income
attributable to         22.5     1.0          25.4       2.6   
noncontrolling
interests
NET INCOME (LOSS)
ATTRIBUTABLE TO        $ 9.5      $ (1.9  )   $  8.5      $  (2.8  )
NCM, INC.
                                                                             
EARNINGS (LOSS)
PER SHARE:
Basic                  $ 0.17        $ (0.03 )     $  0.16        $  (0.05 )
Diluted                $ 0.17        $ (0.03 )     $  0.15        $  (0.05 )
                                                                             

                                                  
NATIONAL CINEMEDIA, INC.

Selected Balance Sheet Data

Unaudited ($ in millions)
                                                                         
                                   June 27, 2013       December 27, 2012
Cash and cash equivalents          $  55.2             $    72.4
Short-term marketable securities      39.9                  34.2
Receivables, net                      110.2                 98.5
Property and equipment, net           26.8                  25.7
Total Assets                          952.5                 810.5
Long-term borrowings                  884.0                 879.0
Total equity/(deficit)                (224.6  )             (356.4   )
Total Liabilities and Equity          952.5                 810.5

                                                
NATIONAL CINEMEDIA, INC.

Operating Data

Unaudited
                                                                             
                         Quarter        Quarter
                         and            and
                         Six Months     Six Months
                         Ended          Ended
                         June 27,       June 28,
                         2013           2012
Total Screens at         19,587         19,039
Period End (1) (6)
                                                                             
Founding Member
Screens at Period        16,357         15,232
End (2) (6)
                                                                             
Total Digital
Screens at Period        18,760         18,104
End (3)
                                                                             
                         Quarter        Quarter        Six        Six
                                                       Months       Months
                         Ended          Ended          Ended        Ended
                         June 27,       June 28,       June 27,     June 28,
                         2013           2012           2013         2012
Total Attendance for
Period (4)               187.2          175.0          341.7        344.0

(in millions)
                                                                             
Founding Member
Attendance for           160.7          146.7          289.5        289.3
Period (5) (6)
(in millions)
                                                                             
Capital Expenditures     $3.5           $2.5           $6.2         $4.9
(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.

(6) Excludes attendance associated with certain Cinemark Rave and AMC Rave
theatres for all periods presented.

                                                          
NATIONAL CINEMEDIA, INC.

Operating Data

Unaudited

(In millions, except advertising revenue per attendee and per share data)
                                                                             
                 Quarter          Quarter          Six Months      Six
                                                                   Months
                 Ended            Ended            Ended           Ended
                 June 27,         June 28,         June 27,        June 28,
                 2013             2012             2013            2012
                                                                             
Advertising      $  116.9         $  101.3         $  190.6        $ 167.6
Revenue
Total               122.8            110.1            205.0          189.2
Revenue
Operating           58.0             45.3             79.6           62.3
Income
                                                                             
Total
Attendance          187.2            175.0            341.7          344.0
(1)
Advertising
Revenue /        $  0.624         $  0.579         $  0.558        $ 0.487
Attendee
                                                                             
OIBDA            $  64.2          $  50.3          $  91.2         $ 72.2
Adjusted            66.2             53.0             95.3           77.8
OIBDA
Adjusted            53.9   %         48.1   %         46.5   %       41.1  %
OIBDA Margin
                                                                             
Earnings
(loss) Per       $  0.17          $  (0.03  )      $  0.16         $ (0.05 )
Share –
Basic
Earnings
(loss) Per       $  0.17          $  (0.03  )      $  0.15         $ (0.05 )
Share –
Diluted

(1) Represents the total attendance within NCM LLC’s advertising network.
Excludes attendance associated with certain Cinemark Rave and AMC Rave
theatres for all periods presented.

            (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 consolidated net income (loss) plus income tax
expense, interest and other costs and 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 consolidated net 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, or
calculations in the Company’s debt agreement.

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

                 Quarter        Quarter        Six         Six
                                                     Months        Months
                   Ended            Ended            Ended         Ended
                   June 27,         June 28,         June 27,      June 28,
                   2013             2012             2013          2012
Consolidated
net income         $  32.0          $  (0.9   )      $ 33.9        $ (0.2  )
(loss)
Income tax
expense               6.0              (1.1   )        6.6           (1.4  )
(benefit)
Interest and
other                 20.0             47.3            39.1          63.9
non-operating
costs
Depreciation
and                  6.2          5.0         11.6      9.9   
amortization
OIBDA                 64.2             50.3            91.2          72.2
Share-based
compensation         2.0          2.7         4.1       5.6   
costs (1)
Adjusted OIBDA     $  66.2       $  53.0       $ 95.3     $ 77.8  
Total Revenue      $  122.8      $  110.1      $ 205.0    $ 189.2 
Adjusted OIBDA       53.9   %      48.1   %     46.5  %    41.1  %
margin
                                                                             
Adjusted OIBDA     $  66.2          $  53.0          $ 95.3        $ 77.8
Rave Theatres        0.9          −           1.1       −     
Payments
Adjusted OIBDA
after Rave         $  67.1       $  53.0       $ 96.4     $ 77.8  
Theatres
Payments

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

                                                    
Outlook (in millions)
                                                                             
                                 Quarter Ending          Year Ending

                                 September 26, 2013      December 26, 2013
                                 Low       High        Low       High
Consolidated net income          $ 39.7      $ 44.8      $ 105.0     $ 108.0
Income tax expense                 7.5         8.5         19.0        20.0
Interest and other                 18.0        19.0        75.0        77.0
Depreciation and                  6.0      6.5      23.0     25.0
amortization
OIBDA                              71.2        78.8        222.0       230.0
Share-based compensation          1.8      2.2      8.0      10.0
costs (1)
Adjusted OIBDA                   $ 73.0    $ 81.0    $ 230.0   $ 240.0
Total Revenue                    $ 130.0   $ 138.0   $ 455.0   $ 465.0

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

Net Income (loss) and Earnings (loss) Per Share Excluding Derivative Related
Items, Swap Terminations and Debt Issuance Costs

Net income excluding derivative related items, swap terminations and debt
issuance costs and earnings per share excluding derivative related items, swap
terminations and debt issuance costs are not financial measures calculated in
accordance with generally accepted accounting principles (GAAP) in the United
States. Net income excluding derivative related items, swap terminations and
debt issuance costs and earnings per share excluding derivative related items,
swap terminations and debt issuance costs are calculated using reported net
income and earnings per share and adding back the charge related to the change
in derivative fair value, amortization of terminated derivatives, loss on swap
terminations and other non-operating expense. 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
derivative related items, swap terminations and debt issuance costs should not
be regarded as an alternative to net income and earnings per share excluding
derivative related items, swap terminations and 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 derivative related items, swap terminations and debt
issuance costs and income per share excluding derivative related items, swap
terminations and debt issuance costs for the periods presented (dollars in
millions):

                 Three Months     Three Months     Six Months       Six Months
                   Ended              Ended              Ended              Ended
                   June 27, 2013      June 28, 2012      June 27, 2013      June 28, 2012
Net income
(loss) as          $ 9.5              $ (1.9       )     $ 8.5              $ (2.8       )
reported
Change in
derivative           -                  (0.8       )       -                  (1.5       )
fair value
Amortization
of terminated        2.7                0.8                5.2                1.1
derivatives
Loss on swap         -                  26.7               -                  26.7
terminations
Write-off of
debt issuance        1.2                2.5                1.2                2.5
costs
                                                                                           
Effect of
noncontrolling
interest
(54.9%, 51.4%,       (2.1       )       (15.0      )       (3.5       )       (14.8      )
54.0%
and 51.3%,
respectively)
Effect of
provision for
income taxes        (0.6       )    (5.4       )    (1.1       )    (5.3       )
(38% effective
rate)
Net effect of
adjusting            1.2                8.8                1.8                8.7
items
                                                                   
Net income
excluding          $ 10.7          $ 6.9           $ 10.3          $ 5.9        
adjusting
items
                                                                                           
Weighted
Average Shares
Outstanding as
reported
Basic                55,062,723         54,442,398         54,837,169         54,291,816
Diluted              55,716,742         54,442,398         55,293,746         54,291,816
                                                                                           
Weighted
Average Shares
Outstanding as
adjusted
Basic                55,062,723         54,442,398         54,837,169         54,291,816
Diluted              55,716,742         55,051,319         55,293,746         54,951,208
                                                                                           
Basic earnings
(loss) per         $ 0.17             $ (0.03      )     $ 0.16             $ (0.05      )
share as
reported
Net effect of
adjusting           0.02           0.16           0.03           0.16       
items
Basic earnings
per share
excluding          $ 0.19          $ 0.13          $ 0.19          $ 0.11       
adjusting
items
                                                                                           
Diluted
earnings
(loss) per         $ 0.17             $ (0.03      )     $ 0.15             $ (0.05      )
share as
reported
Net effect of
adjusting           0.02           0.16           0.04           0.16       
items
Diluted
earnings per
share              $ 0.19          $ 0.13          $ 0.19          $ 0.11       
excluding
adjusting
items

Contact:

National CineMedia, Inc.
Investor Contact:
David Oddo, 800-844-0935
investors@ncm.com
or
Media Contact:
Amy Jane Finnerty, 212-931-8177
amy.finnerty@ncm.com
 
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