Exhib to lay off 100, close three U.S. offices
NEW YORK — AMC Entertainment announced layoffs and a major restructuring Wednesday, making it the latest in a string of exhibitors scrambling to boost profits and slash spending.
AMC said its operating offices in New Jersey, Florida and Los Angeles will be consolidated into its Kansas City, Mo., corporate headquarters and about 100 people laid off, resulting in annual savings of about $20 million — about a 40% decrease in general and administrative expenses.
The revamp will result in a $12 million charge for the fiscal second quarter ending today, the company said.
Industry cutting back
The streamlining comes two weeks after General Cinema Theaters shuttered its regional offices in Chicago and Los Angeles, and laid of 40 people to save about $10 million a year. GC and a number of others have been feeling the effects of overbuilding and overspending in an intensely competitive environment. As they build new megaplexes, the groups are also paying to shut down less profitable and older facilities.
United Artists Theatres Co., which has been struggling for months to stay afloat, said earlier this week that it obtained certain waivers and amendments to a $450 million bank loan that will enable it to keep its doors open. The Denver group’s business plan consists of highly selective spending in core markets and selling nonstrategic theaters.
GC also is trying sell some facilities, but the market for older properties has been grim. Many in the business find it more cost-effective to build state-of-the-art sites from the ground up rather than buy old theaters and convert them. Still, theater owners and Wall Street analysts see consolidation as inevitable.
AMC chairman and CEO Peter Brown called the changes at his company crucial to enhance AMC’s financial performance. “We feel we must update our organizational structure to strengthen the company’s foundation for the future,” he said in a statement.
AMC’s financials are stronger than some of its peers. For the first quarter, revenue rose 20% to $288 million and cash flow jumped 17% to $26 million. Its net loss widened to $11 million from $3 million, largely due to accounting adjustments, the company said.
AMC also noted that its North American film office will stay in Los Angeles.
The group operates 25 theaters with 2,792 screens in 23 states, Washington, D.C., Hong Kong, Japan, Portugal, Spain and Canada.