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Regal Profit Is Flat as Takeover Offsets Weak Box Office

The movie theater chain posts a $47.1-million profit and drops plan to reduce its dividend.

July 23, 2003|From Reuters

Regal Entertainment Group, the nation's largest movie chain, reported flat second-quarter earnings Tuesday as gains from its recent acquisition of Hoyts Cinemas were offset by lower U.S. box-office results.

Still, the Knoxville, Tenn.-based company said it would keep its regular quarterly dividend at 15 cents a share, rather than cut it to 12 cents as the company announced in May.

Regal, which operates the Edwards, Regal and United Artists chains in Southern California, said it earned $47.1 million, or 33 cents a share, in the three months ended June 26. That compared with $46.5 million, or 34 cents, in the year-earlier period.

Analysts polled by Reuters Research had on average forecast Regal to post a profit of 33 cents a share.

Revenue climbed to $648 million from $607 million last year, largely because of the addition of the Hoyts theaters.

Jeff Logsdon, an analyst at Gerard Klauer Mattison, upgraded Regal's stock rating to "outperform," the firm's highest rating, due to the combination of a dividend-paying stock with a growth-oriented company.

"In our mind, that makes [Regal] very attractive," he said.

Logsdon also said Regal had done a good job of managing costs, especially at concession counters, and that it had done a good job of integrating the 50 Hoyts theaters it bought this year into Regal's chains.

Financial brokerage Harris Nesbitt also raised its investment rating on Regal to "outperform" from "neutral," citing improving "macro trends."

Regal shares rose 66 cents, or 3.8%, to $18.09 on the New York Stock Exchange.

In May, Regal said it would make a one-time payout of $5.05 to shareholders in a special dividend, and at that time it said it would lower its regular quarterly dividend to 12 cents a share.

Regal reversed itself Tuesday, reinstating the 15-cent regular quarterly dividend because, as Chief Executive Mike Campbell said in a conference call with analysts, business continues to perform well despite the flat movie box office.

"In addition to our solid financial performance, the integration of Hoyts is succeeding according to plan," Campbell said.

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