Download Regal CineMedia + - Media Corporate IR Net

September 2004
New York & Boston Non-Deal Roadshow
Mike Campbell, Co-Chairman & Co-CEO
Kurt Hall, Co-Chairman & Co-CEO
Amy Miles, CFO
Forward-looking Statements
This presentation 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 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 16, 2004. All forward-looking statements are expressly qualified in their entirety by such factors.
This presentation contains references to “Adjusted EBITDA” (earnings before interest, taxes, depreciation and amortization
expense, loss on debt extinguishment, merger and restructuring expenses and amortization of deferred stock compensation, gain
on disposal and impairment of operating assets, minority interest in earnings of consolidated subsidiaries and other, net) was
approximately $553.4 million, or 21.9% of total revenues, for the four quarters ended July 1, 2004. 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 performance and liquidity of our Company. EBITDA, Adjusted EBITDA
and Free Cash Flow are not measurements of financial performance or liquidity under accounting principles generally accepted in
the United States of America and should not be considered in isolation or construed as a substitutes for net income or other
operations data or cash flow data prepared in accordance with accounting principles generally accepted in the United States of
America for purposes of analyzing our profitability or liquidity. 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 2003 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 16, 2004. EBITDA, Adjusted EBITDA and Free Cash Flow, as calculated, may not be
comparable to similarly titled measures reported by other companies. Regal Entertainment Group has provided a reconciliation of
net cash provided by operating activities and operating income to EBITDA and Adjusted EBITDA on its Web site at
www.REGmovies.com. All forward-looking statements are expressly qualified in their entirety by such factors.
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Agenda:
Regal Overview
Steady Industry Growth Trends and Solid
Fundamentals
Proven Business Strategy Generates Free
Cash Flow
Regal CineMedia Generating Incremental
Free Cash Flow
Financial Overview & Summary
2
Regal Overview
Largest Domestic Motion Picture Exhibitor
Trailing 4 Quarters Ended July 1, 2004
Revenue
$2.5 billion
Adjusted EBITDA
$553 million
Adj. EBITDA margin
21.9%
Attendance
265 million
Free Cash Flow
$312 million
Free Cash Flow Per Share
4
$2.12
National Footprint & Modern Assets
5
• 544 Theatres
5
• 6,053 Screens
37
3
4
1
22
7
3
4
9
13
2
25
1
13
14
3
11
23
11
2
2
8
25
24
7
83
2
52
9
16
8
10
47
6
13
4
• 11.1 Screens/Theatre
• 17% of U.S. Screens
13
2
• 61% Stadium Seating
• 85% of Screens in
sole exhibitor zones
• 45 of Top 50 Markets
As of 7/1/04
$2 Billion Invested Since 1997 =
Modern Asset Base & Significant Free Cash Flow
5
Industry Leading Margins
LTM Adj.
EBITDA
LTM Adj.
Free Cash FCF
EBITDA Margin(2)
Flow
Margin(3)
Regal
$553
Comparable Avg.(1)
-
21.9%
17.9%
$312
-
12.3%
7.3%
Focus on efficient theatre operations
Lower rent and occupancy costs
Effective cost controls
Utilize scale to negotiate national contracts
Regal CineMedia provides margin accretion
Industry Leading Margins = Increased Free Cash Flow
(1)
(2)
(3)
Comparable average includes AMC Entertainment Inc., Carmike Cinemas, Inc. & Cinemark, Inc. for the fiscal
twelve month or 52/53 week period ending closest to June 30, 2004.
Adj. EBITDA is presented “as calculated” by Regal and AMC in their quarterly financial reports and is calculated
for Carmike and Cinemark as Income from operation + depreciation & amortization.
Free cash flow = Cash provided by operating activities – capital expenditures + proceeds from asset sales.
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Steady Industry Growth Trends &
Solid Fundamentals
Steady Box Office Growth Trends
Steady Box Office Growth
Box Office Growth
$10
(billions)
Avg. 6.2% growth per year
$9
Attendance
$8
$7
Avg. 2.7% growth per year
$6
Ticket & Concession Prices
Avg. 2-3% growth per year
$5
$4
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
$3
Box Office Revenue
Source: NATO & Nielsen EDI
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Industry Screen Count
Improved supply dynamics
50
8.0%
48
6.0%
46
4.0%
44
2.0%
42
0.0%
40
-2.0%
38
-4.0%
36
Year-to-Year Chg.
9
Attendance/Screen
Attendance/Screen (000s)
10.0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Replacement cycle is
increasing screens per
theatre and enhancing
margins
Expect growth in screens
to return to historical
replacement model
(2-3% per annum)
Regal’s model works
regardless of pace of
rationalization
Source: NATO
Indoor Screen % Change from
Year-to-Year
Screen count down from
peak = increased
attendance/screen
Decline in seats increases
utilization
Proven Business Strategy Generates
Free Cash Flow
Proven Business Strategy
Focus on efficient theatre operations
Industry leading margins
Selective investment in asset base
Return Value to Shareholders
$5.65 per share paid in 2003
$5.86 per share paid in 2004(1)
Quarterly dividend has increased substantially
From $0.00 to $0.15 (beginning Dec. 2003)
From $0.15 to $0.18 (beginning March 2004)
From $0.18 to $0.20 (beginning Sept. 2004)
From $0.20 to $0.30 (beginning Dec. 2004)
Recently announced $50 million share repurchase program
Evaluate accretive acquisitions
Regal CineMedia opportunities
(1) Includes dividends paid through 9/15/04 plus $0.30 per share dividend expected to be paid in December 2004.
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Prudent Acquisition Strategy
Regal’s Focus
High quality assets
Accretive to cash flows and earnings
Significant near term synergies
Recent transactions:
Hoyts
Signature & others
Transaction
Value
EBITDA
Pre
Post
Year (millions) (millions) Synergy Synergy
2003
$223
$43
5.2x
4.1x
2004
$226
$37
6.1x
5.2x
Combination of Regal, United Artists and Edwards =
$25-$35 million in synergies
Proven acquisition integration process with 16 successful
acquisitions since 1995
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“Recreating the Motion Picture Theatre
to Enhance Free Cash Flow”
Digital Content Network
First of its kind in-theatre
Digital Content Network
(“DCN”) capable of
% Rev.
showing:
On-screen advertising 80-85%
Digital Content Distribution
As of 7/1/04:
Screens:
Theatres:
Plasma:
Markets:
Big Screen Concerts
CineMeetings
CineEducation
Other Digital Content
5,085
420
1,271
78
15-20%
Unparalleled National Presence
265+ Million Annual Attendance
25 of Top 25 Markets
45 of Top 50 Markets
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Cinema Advertising = Free Cash Flow
Revolutionizing cinema advertising
Delivery method
Distribution/production cost
Targeting capability
Entertainment value
Consumer recall
% National advertisers
in cinema
Regal’s margin
15
Old
Slides
New
Digital
High
Low
Limited
Low
Low
High
High
4-6x TV
Few
<=30%
Growing
50%+
Big Screen Concerts
Big stars
Big hits
Big concerts
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RCM Business Model Highlights
2004 First half results
RCM Revenue
% Increase
$43 million
+59%
% Advertising
% CineMeetings and other
75%
25%
Inventory sell-through
76%
+12%
CPM Rate
+13%
High margin advertising contributing to
EBITDA Margins
CineMeetings and other businesses
exceeding internal budgets
Generating incremental free cash flow
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Financial Overview & Summary
Strong Revenue and EBITDA Performance
EBITDA*
Revenue*
($ in millions)
($ in millions)
$3,000
6,600
$600
28%
$544.4
$550
$2,490
$2,600
$2,267
$2,200
$1,800
26%
$2,527
6,200
6,045
$500
$481.1
24%
$450
$2,014
$1,819
5,911
$553.0
21.2%
6,053
21.9%
21.9%
22%
$400
5,876
5,800
5,663
$350.8
$350
$300
$1,400
20%
$293.5
17.4%
18%
5,400
$250
$1,000
$200
$600
5,000
2000
2001
Revenue
2002
2003
16%
16.1%
$150
14%
2000
LTM
2001
EBITDA
Ending Screen Count
*Pro Forma for the combination of Regal, Edwards and UA. Excludes
results of theatres closed in connection with reorganizations
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2002
2003
Margin
LTM
Cash is King
($ in millions)
Income from operations
+ Changes in working capital items and other
Net cash provided by operating activities
- Capital expenditures
+ Proceeds from asset sales
Free cash flow
Free cash flow / share
Free cash flow / Adj. EBITDA
Price / free cash flow
Free cash flow yield
Dividend yield(1)
(1)
LTM
7/1/04
$388.7
11.3
400.0
(129.6)
41.9
$312.3
$2.12
56%
8.9x
11.2%
6.34%
Closing price as of 9/13/04 = $18.94
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Building Blocks for Growth
Drivers
Revenue Growth
Cost Control
Regal CineMedia
Accretive
Acquisitions
6.2% box office growth results from attendance
growth of approx. 2.7% and price increases of 2-3%
Industry leading theatre operations
Generate incremental free cash flow and
increase margins
Pursue accretive acquisitions
FCF and Capital Structure
Free Cash Flow
Dividend
Strong margins = Significant Free Cash Flow
Attractive cash dividend yield
(1) Source: NATO
(2) Source: Company Estimate
21
Regal Monthly Stock Price & Total Return
$0.20
$34.00
$32.00
$30.00
$28.00
$26.00
$24.00
$22.00
$20.00
$18.00
$16.00
$5.00
Stock Price
Total Return
$0.18
$0.15
$5.05
Note: Total return assumes gross dividends invested in additional shares of Regal stock
22
8/9/2004
5/9/2004
2/9/2004
11/9/2003
8/9/2003
5/9/2003
2/9/2003
11/9/2002
8/9/2002
5/9/2002
$0.15
Investment Highlights
=
+
+
+
Deliver
Shareholder
Value
Regal CineMedia
Generates Free Cash Flow
Proven Business Strategy
Steady Industry Growth & Solid Fundamentals
Based on stock price as of 9/10/04. Total return based on reinvesting gross dividend in
shares of common stock. Annual equivalent return with reinvested dividends = 24%
23
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