Cost-cutting shows results
NEW YORK — A cost-cutting program last year helped United Artists Theater Circuit turn an operating profit of $7.2 million in the fourth quarter, compared with a loss of $5 million a year earlier, UATC said Monday, before the impact of an asset write-down.
The quarterly result brought UATC’s full-year operating income, which is before interest and taxes, to $33.5 million, compared with $10.2 million in 1996. Revenue rose 1% to $686.3 million, reflecting the closure of about one-tenth of the circuit’s theaters.
UATC wrote off $36 million on underperforming theaters, in line with a new accounting standard. After the writedown, interest and taxes, UATC said it lost $27 million, still a substantial improvement from the $45.8 million loss in 1996.
The improvement largely reflected the impact of a cost-cutting program implemented earlier this year, which cut UATC’s corporate expenses 31% to $24.3 million. UATC said its earnings were also helped by an increase in the number of films released during the year, “as well as the success of those films,” although film rental costs increased somewhat.
UATC, currently the second-biggest exhib, recently took itself off the market after Hicks, Muse, Tate & Furst’s proposed $850 million acquisition of the company fell apart. The circuit has returned to a strategy it announced last summer for the closure of underperforming theaters and renovation or construction of new theaters in key markets such as New York.
Hall noted in a statement that UATC had closed or sold 44 theaters with a total of 170 screens during the year and opened 13 new complexes with 132 screens. It also sold its international theater investments for a total of $42.5 million, helping the company reduce its net debt by more than $39 million.
Hall said UATC’s average revenue per screen rose 13.5% during the year, which provides some adjustment for the shrinkage of the circuit during the year, although figures for the fourth quarter were not available.
UATC plans to open another 10 new complexes with 119 screens this year and to rebuild or expand 11 theaters with 113 screens.
The first quarter of this year is expected to be relatively strong, given the longevity of pics like “Titanic.” Hall noted that Easter falls in April this year, later than last year, which would hurt the comparative first-quarter numbers.