Troubled United Artists Theater Co. said Monday it fell further into the red in the latest quarter as its net loss widened to $23.2 million from $12.6 million — due to competition, heavy interest expense and the cost of closing down underperforming theaters.
Revenue for the three months ended Sept. 30 eased 2.1% to $180 million, and cash flow dipped 11% to $27.6 million from $30 million. Net interest expense ate $17 million. The numbers were further eroded by $13.8 million in depreciation and amortization costs and a $16 million provision for asset impairments.
In the first nine months of the year, cash flow plunged to $49 million from $72 million, due, UA said, to attendance declines in the first quarter, and higher film rental costs.
UA president and chief operating officer Kurt Hall said the exhib’s revenue growth continues to be hampered by stadium theater openings in certain markets and a 5% decrease in the number of theaters UA operates due to sale or closure.
Still, he insisted, “We have made good progress on our business strategy to dispose of underperforming theaters, control operating costs and maximize the revenue and cash flow from our core markets.”
Hall cited a 1.1 percentage point increase in concession margins and an 8.5% decrease in corporate overhead during the quarter.
UA has sold or closed down 25 theaters (147 screens) and divested some real estate, measures that have eliminated $4.5 million in negative cash flow and are expected to generate about $2 million in net proceeds.
The Denver company, which recently negotiated new terms of credit with its bankers to enable it to stay in business, has also opened several new theaters and revamped others.
“I am hopeful that the industry has passed the peak of investments in new theater construction and that we can now begin to operate in a more rational and predictable environment,” Hall said.
A wave of theater building has increased competition across the country and eroded the profitability of many theater chains, which have been shutting down theaters right and left and trying to sell older locations. UA is among the most financially troubled of the group.