Sony Corp.’s Loews Theaters, now part of Loews Cineplex Entertainment Corp., sustained a 22% drop in net profit to $7.6 million in the year to Feb. 28, it said Tuesday.
Loews merged with Cineplex Odeon Corp. effective May 14 to form the third biggest exhib with 2,700 screens at 425 locations in Canada and the United States. But the figures released Tuesday cover only the 1,035 screens operated by Loews before the merger.
Loews’ theaters were vastly more profitable than Cineplex’s circuit, however, measured by cash flow (earnings before interest, taxes, depreciation and amortization) and Tuesday’s figures showed the profitability improved in fiscal 1998.
Loews said its revenue for the year to Feb. 28 rose 10.2% to $413.5 million, excluding theaters that are owned in partnerships with others. Cash flow rose 8% to $77 million.
Including screens operated in partnerships owned only 50% by the company, revenue was up 14% to $480.4 million and cash flow rose 10.7% to $86.6 million or $83.71 per screen compared with $81.62 a year earlier.
Cineplex’s circuit, in comparison, generated cash flow per screen of $32.81 in 1996, according to the company’s proxy statement for the merger.
Loews recorded a one-time charge against earnings of $7.8 million for closure of 10 “non-performing” theaters with 28 screens, which pushed the company into a loss of a $139,000 compared with a loss a year earlier of $180,000. In fiscal 1997 the company had also recorded a $10 million charge for theater closures.
Excluding these charges, the fiscal 1998 net profit was $7.6 million compared with $9.8 million a year earlier. The reduction was due largely to a 35% increase in overhead costs to $28.9 million, which a Loews spokeswoman attributed to costs related to the merger with Cineplex as well as costs for setting up an international group.
Loews stock fell 62¢ to $14.87 Tuesday.