Independent Exhibitors Film Bulletin (1956)

DANGER IN LIQUIDATION (Continued from Page 31) nately, the film shortage situation has gradually been alleviated since the turn of the year. Most Hollywood producers have made available to exhibitors a larger number of highly promising features. We therefore believe that >, National Theatres' earnings in the March period recovered to the 26c a share level attained in the corresponding period a year ago. On February 24th, a Federal Judge signed an order permitting National Theatres to engage in the production, distribution, and exhibition of "Cinemiracle" processed pictures. Cinemircale, a 3-panel projected system developed by National Theatres, involves the filming of pictures by means of a single unit comprising three cameras, and the projection of the film by three synchronized projection machines from a single booth. Under the federal order, the company is granted, for a period extending Sy2 years from the date of the first public exhibition in the U.S. of a "Cinemiracle" picture, the exclusive right to exploit the process. During that time, National may produce 16 pictures. National Theatres has not yet announced any definite plan for the production of pictures in this new system. It has indicated previously, however, that it would arrange with Mr. Louis de Rochemont, producer of "Cinerama BUSINESS: Stanley Warner controls 290 operating theatres located mainly in the Northeast. In 1953 formed partnership with Cinerama Productions Inc. to exploit Cinerama process. Now operating 15 Cinerama theatres. In 1954 acquired International Latex Corp., manu REPORT: Stanley Warner has successfully launched the opening of "Seven Wonders of the World", the third picture to be made in Cinerama process. Since its premiere in New York and Philadelphia, the picture has been outperforming its predecessors "This is Cinerama" and "Cinerama Holiday", both of which features have already broken numerous all-time box office records in the motion picture industry. The company plans to open "Seven Wonders" in at least 6 of the 15 permanent Cinerama theatres in the United States and Canada within the next few months. Preparations for showing Cinerama pictures in theatres other than the 15 permanent ones are also being arranged. With the perfection of a mobile projection unit, the company is now able to present these wide-screen films in medium sized cities on a relatively shorter run basis. On April 2nd, "This is Cinerama" made its initial appearance in Atlanta, Ga. Public acceptance there has been excellent. The same picture will open in Oklahoma City on May 21st, and in many other domestic as well as foreign cities during the months ahead. While all facets of Stanley Warner's business have been making and will probably continue to make steady progress, the addition of the new Cinerama theatres alone is expected to give a strong boost to over-all revenues. The additional revenues from new theatres may not find early reflection in earnings, however. Stanley Warner has been applying the greater part of gross operating profits from Cinerama showings against its theatre conversion expenses and picture production costs, and has thus been de Holiday", to film the first Cinemiracle feature. Judging by the remarkable audience-drawing power of other wide screen processes, such as Cinerama and Todd-AO, we believe National Theatres will be able to take full advantage of this recent court order. Within the hypothesized 1959-61 economy, average revenues for National are projected to $75 million annually, earnings to $1.65 a share and dividends to 85c. Capitalize on a 6.1% yield basis and at an earnings multiple of 8.4, consistent with industry wide norms, such results woul command an average price of 14, 70% above the current. ADVICE: The present common stock of National Theatres has not been trading long enough to enable us to compute a Value Line Rating by multiple correlation analysis. Reference to general market capitalization ratios, however, suggests that the stock is currently undervalued. The estimated yield of 6.1% during the next 12 months is significantly higher than the average return provided by all dividend-paying stocks under review. Moreover, to the years 1959-61, the stock has an appreciation potentiality of 70%, more than three times the average gain visualized for all stocks. For speculative accounts seeking good income and interesting appreciation potentiality, this issue merits consideration at this time. We classify the stock in Group II (Underpriced). S. Rosen own 328,000. Employs 6,000, has 18,000 stockholders. Incorporated: Delaware. Address 1585 Broadway, New York 36, New York. Stock traded: NYSE. ferring earnings until all its investments in the Cinerama venture have been recovered. By the end of this year, this recoupment program (excluding the costs of making "Seven Wonders") will probably be completed, and a substandial portion of gross theatre operating profits may then be carried down to the pre-tax income level. We accordingly look for a significant expansion in earnings in the 1957 fiscal year, which begins next September 1st. By the end of this decade, the rapidly growing International Latex Division, a wholly owned subsidiary, will probably be contributing importantly to over-all earnings. Assuming that the public's enthusiasm for Cinerama pictures will continue over the next few years, we project average annual revenues in the hypothesized 1959-61 economy to $130 million, earnings to $3.90 and dividends to $2.20. Capitalized at 9 times earnings to yield 6.3%, in line with industry-wide norms, such results would command a price of 35. ADVICE: Stanley Warner is currently classified in Group II (Underpriced). The estimated current yield of 6.9% is considerably more generous than the average 5.0% return provided by all dividend-paying stocks under survey. Of particular interest is the stock's 3 to 5-year appreciation potentiality of 119%, compared to only 21% projected for the market as a whole. While this C+ quality issue may not be suitable for investment grade portfolios, it appears of interest to risk-taking accounts seeking good income and extraordinary appreciation potentiality. STANLEY WARNER facturer of consumer rubber goods under Playtex label. Ordinary theatre revenues $50 million, Cinerama theatres $15 million, Playtex products $30 million. Directors own 330,206 shares of stock 115% of total) of which President S. H. Fabian and Exec. Vice President Pag* 32 Film BULLETIN May 14, 1956