A one-time $46 million charge for closure of “non-performing” theaters increased Cineplex Odeon Corp.’s net loss to $42.4 million in the fourth quarter, it said Tuesday, from a loss of $9.8 million a year earlier.
Excluding the impact of the charge, Cineplex slashed its loss to $1.4 million. Even more notably, earnings before interest, taxes, depreciation and amortization (cash flow) rose 75% to $17.1 million on 20% higher revenue of $146 million.
The earnings growth was due both to the “release of commercially successful film product” and the opening of 161 new screens late in the quarter, Cineplex said in a statement. Cineplex had 1,723 screens as of Jan. 31.
A Cineplex spokesman said the exhib did not have figures on revenue or cash flow growth adjusted for the opening of new screens, although he said that even on a “same-screen” basis the company showed strong growth.
The quarterly result brought Cineplex’s full-year loss to $62 million, double the 1996 loss of $31 million. Excluding the one-time charge, however, the 1997 loss was halved to $15.8 million.
Cineplex disclosed the charge last month in the proxy statement sent to shareholders for this month’s meeting to vote on Cineplex’s merger with Sony Corp.’s Loews Theaters. Cineplex revealed Tuesday that closure of the underperforming theaters would improve its cash flow by about $7 million a year.
Cineplex did not disclose how many theaters were being closed but a spokesman said fewer than 100 screens were affected by the charge. Cineplex stock was trading down 12¢ to $1.56 late Tuesday.