Regal Entertainment Group (RGC)

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Regal Entertainment Group (RGC)

Q4 2009 Earnings Call

February 16, 2010 4:30 pm ET


Amy Miles - Chief Executive Officer

David Ownby - Executive Vice President, Chief Financial Officer and Treasurer

Don De Laria - Vice President of Investor Relations


Alexia Quadrani - JP Morgan Chase

George Hawkey - Barclays Capital

James Marsh - Piper Jaffray

Barton Crockett - Lazard Capital Markets

Aaron Watts - Deutsche Bank Securities

David Miller - Caris and Co.

Eric Handler - MKM Partners

Tony Wible - Janney Montgomery Scott

Ben Mogil - Thomas Weisel Partners

Matthew Harrigan - Wunderlich Securities

Joe Hovorka - Raymond James



Greetings, ladies and gentlemen, my name is Jenn and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regal Entertainment Group fourth quarter 2009 earnings release conference call. All lines have been placed on mute to prevent any background noise. After managements’ remarks, there will be question-and-answer period. (Operator Instructions)

I would now like to turn the call over to Don De Laria, Vice President of Investor Relations; please go ahead, sir.

Don De Laria

Good afternoon. Before we begin today, I’d like to remind our listeners that this conference call contains 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 other than statements of historical facts communicated during this conference call may constitute forward-looking statements.

These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company’s expectations are disclosed in the risk factors contained in the company’s Annual Report on Form 10-K dated March 2, 2009. All forward-looking statements are expressively qualified in their entirety by such factors.

Now I’ll turn the call over to Amy Miles.

Amy Miles

Thanks Don. Welcome and thank you for dialing into our fourth quarter conference call. Today, I will provide an overview of the industry and Regal’s fourth quarter results, and update regarding the status of DCIP and finally a brief recap of the 2009 fiscal year and a look ahead at the film slate for the remainder of the first quarter and the rest of 2010. Following my remarks, David Ownby will provide a summary review of our financial results and as always, we will complete the call with a question-and-answer session.

Now turning to the industry results, first and foremost, we’re happy to report that the box office success of Avatar and other films in the fourth quarter pushed industry box office for 2009 over the $10 billion mark for the first time in history. The total 2009 industry box office take at $10.6 billion represented a 10% increase over the prior year and benefited from both the wider availability of premium, movie-going experiences and from an estimated 5% to 6% growth in industry attendance.

The industry results were driven by both high grossing tent pole titles and by the depth for the film slate. Seven films released in 2009 reached $250 million in domestic box office revenue and that compares favorably to only three films in 2008 and a total of 32 films grossed at least $100 million domestically.

A significant portion of the industry growth for the year was generated during the fourth quarter as box office revenue increased by over 19% as compared to the same period last year. Industry highlights for the fourth quarter included a record November box office, which included two key films, the Twilight: New Moon that ultimately grossed just under $300 million and The Blind Side that ultimately grossed just under $250 million.

During the fourth quarter, the movie-going publics continued preference for the premium experience was again evident, as more than 70% of the opening weekend grossed for both A Christmas Carol and Avatar was generated by 3D and IMAX strengths. Finally, the quarter ended with the phenomenal success of Avatar, which grossed over $275 million in 2009 and just earlier this month passed Titanic to the kind of the highest-grossing film of all times and that’s both domestically and internationally.

We are obviously very pleased with the industry box office results for both the fourth quarter and the full year and believe they clearly demonstrate both the continued consumer demand for out-of-home entertainment and the resiliency of the moving-going experience in a difficult economic environment.

Now turning to Regal’s result, Regal also benefited from the strong industry box office and achieved growth and admissions revenue, total revenue and adjusted EBITDA for the fourth fiscal quarter and for the fiscal 2009 year. It is important to note that we achieved these results, despite the negative impact of the shift in our fiscal calendar. As a reminder, both our fourth quarter and full year contained one last week in 2009 than they did in 2008. David will provide additional details with respect to the impact of the calendar shift in just a few movements.

Looking specifically at the fourth quarter, our admissions revenue increased by over 10% versus the prior year and exceeded last year’s record fourth quarter by almost $50 million. The increase was driven by an 8% increase in our average ticket price, combined with a 2% increase in attendance.

Our results continue to benefit from the popularity of premium content and from our decision to install additional digital screens ahead of the completion of the DCIP financing and 14% of our admissions revenue were generated by our RealD, 3D, and IMAX screens. Additionally, I’m very pleased to report, that our fourth quarter box office increase was in line with the industry increase reported by Box Office Mojo for the periods that corresponds our fiscal calendar.

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