''I'm not at all thrilled with the second quarter,'' Hall told GlobeSt.com. ''The second quarter started out OK, and then we got hit in the head by June. June was just a really bad film month. If you look at the releases (on operating results) from all our other competitors, they all went through the same thing.''

Revenues in the second quarter dropped by 17.3% to $138.6 million from $167.5 million a year ago. One bright spot was that in the first half of the year, cash flow or EBITDA (earnings before interest, taxes, depreciation and amortization) decreased only 4%, thanks to improved operating margins. Second-quarter operating losses increased to $21.5 million from $3.8 million, primarily due to savings realized from closing unprofitable theaters and restructuring.

Meanwhile, Hall is continuing to work with senior banking lenders to recapitalize and restructure debt. He also has initiated discussions with a group that has acquired a large part of its subordinated debt. Denver-based Philip Anschutz, the richest man in Colorado and the chairman of Qwest Communications, heads the group. Publicity shy Anschutz and his partners also own a substantial office portfolio in Colorado. In addition, they own the Staples Stadium in Los Angeles, Los Angeles Lakers and Los Angeles Kings hockey team.

Hall believes the industry is in good shape from an underlying revenue standpoint. "The problem is that there are too many screens out there," he says. "It's the same old story."

So far this year, United Artists has closed 30 theaters, totaling 187 screens, and has targeted closings at another 48 theaters with a combined total of 311 screens. The company operates 1,816 screens in 248 locations. In the first six months, theater closings realized the company more than $4 million.

Because United Artists was one of the first movie exhibitors to begin an internal restructuring, Hall says the company should be well positioned to strengthen itself in key markets, improve the quality of its movie houses and regain market share. "I think July will be pretty good, but what the industry and we are really watching is August," he says. "I think August will be strong, but not as strong as last year, when we had the unexpected hits, 'Blair Witch' and the 'Sixth Sense

Instant Insights /

United Artists Takes Hit in Second Quarter; Talks Ongoing with Investor

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