Tax cuts and a desire for stability may have been among the catalysts for Regal Entertainment Group's ( RGC) announcement Thursday of a special $5 dividend for shareholders of its class A and class B common stock.

Not that it mattered to investors; the company's shares jumped 67 cents, or 3.1%, to $22.60.

Matt Harrigan, an analyst at Janco Partners, said Regal's second special dividend in a year takes advantage of recent tax cuts, and also indicates that the nation's largest movie theater chain will be consolidating and settling down, rather than trying to go after rival theater chains. Regal issued a $7.15 special dividend last summer.

"The capital structure clearly is safe and sane," after several years in which the theater chain was buffeted by buyout and takeover bids that eventually saw Colorado investor Philip Anschutz wrest control of the company from buyout firms Kohlberg Kravis Roberts and Hicks Muse Tate and Furst.

The elimination of the dividend tax, part of President Bush's sweeping tax cut program, was likely a contributing factor to Regal's payout.

In a statement offering few details, the company said the dividend is subject to board approval and "previously announced financing transactions."

"Changes in the dividend laws have certainly affected a lot of areas," he said. "But they can't do this sort of dividend every year."

The cinema chain also said it "expects that the amount of its future quarterly dividend will, at a minimum, be maintained at the current level of 18 cents a share."

Harrigan said that despite quarterly fluctuations in movie attendance, Regal has high free cash flow and suggests its plan for future quarterly dividends indicates that it may not seek to acquire an industry rival, despite sweeping speculation about industry consolidation.

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