by Paul Bond •Jan 13, 2018 ~At tha' Palace we never quit...We never
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[Welcome to Tha’ Palace!]: Summer doesn't encourage moviegoing as much in
Europe as it does in the U.S., and AMC should have said so, according to a
class action lawsuit.
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AMC is the largest movie exhibitor in the world, in part due to a slew
of acquisitions, many of which are companies operating screens outside of the
United States. It's those international theaters that have piqued the interest
of some investors and their attorneys.
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"Our business is highly seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons," AMC said in regulatory filings around the time it was acquiring Carmike Cinemas and U.K.-based Odeon & UCI Cinemas more than a year ago.
"Our business is highly seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons," AMC said in regulatory filings around the time it was acquiring Carmike Cinemas and U.K.-based Odeon & UCI Cinemas more than a year ago.
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But the plaintiffs claim the disclosure is "materially
inaccurate" because "AMC's newly acquired international operations
generally experience lower attendance during the summer months."
The lawsuit was filed in the U.S. District Court in New York by the
Hawaii Structural Ironworkers Pension Trust Fund and on behalf of others
similarly situated, and it not only names AMC but also several financial
institutions, along with CEO Adam Aron, CFO Craig Ramsey, chief accounting
officer Chris Cox and a slew of AMC board members.
The lawsuit notes that on an Aug. 4 earnings call, Aron said the second
quarter, which includes a portion of summer, "is often the smallest
quarter of the year in Europe," which the plaintiffs say contradicts
language disclosed in regulatory filings.
The lawsuit says Wall Street analysts told clients that AMC missed its
quarterly financial projections during that Aug. 4 earnings release, and one of
them blamed its "mismodeling" on weak international results.
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At the end of 2016, notes the lawsuit, AMC was operating 8,393 screens
in the U.S. and 2,265 screens in the U.K. and Europe.
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Beyond the issue of seasonality differences between the U.S. and other countries, the lawsuit contends that AMC misled investors in other ways, such as failing to disclose prior to its acquisition of Carmike that the rival exhibitor was losing market share.
Beyond the issue of seasonality differences between the U.S. and other countries, the lawsuit contends that AMC misled investors in other ways, such as failing to disclose prior to its acquisition of Carmike that the rival exhibitor was losing market share.
AMC executives also overestimated the number of Carmike customers who
would join the AMC Stubs loyalty program and didn't disclose how the shutting
down of two of Carmike's largest theaters for about 15 months during renovation
would hurt the bottom line, according to the lawsuit.
AMC was not available to comment on the lawsuit. Its shares closed Friday at $14.45, down more than 50 percent in the past year.
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Contributing Author: Paul Bond
Twitter: @thapalace
LinkedIN: thapalace
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