TORONTO, ONTARIO--(Marketwire - Aug. 11, 2011) -
NOT FOR RELEASE OVER US NEWSWIRE SERVICES
Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for the second quarter of 2011.
Second Quarter Results
---------------------------------------------------------------------------- Period over Second quarter Second quarter Period Change 2011 2010 (i) ---------------------------------------------------------------------------- Total Revenues $ 258.4 million $ 242.4 million 6.6% ---------------------------------------------------------------------------- Attendance 17.2 million 16.5 million 3.8% ---------------------------------------------------------------------------- Other Revenues $ 31.1 million $ 26.6 million 17.0% ---------------------------------------------------------------------------- Net Income (ii) $ 13.4 million $ 22.2 million -39.4% ---------------------------------------------------------------------------- Adjusted EBITDA $ 44.4 million $ 41.4 million 7.2% ---------------------------------------------------------------------------- Adjusted EBITDA Margin 17.2% 17.1% 0.1% ---------------------------------------------------------------------------- Adjusted Free Cash Flow per Share/Distributable Cash Per Unit $ 0.503 $ 0.544 -7.5% ----------------------------------------------------------------------------
First Six Months Results
---------------------------------------------------------------------------- Period over Six months ended Six months ended Period Change June 30, 2011 June 30, 2010 (i) ---------------------------------------------------------------------------- Total Revenues $ 479.8 million $ 497.6 million -3.6% ---------------------------------------------------------------------------- Attendance 32.4 million 34.4 million -5.7% ---------------------------------------------------------------------------- Other Revenues $ 57.3 million $ 48.7 million 17.9% ---------------------------------------------------------------------------- Net Income (ii) $ 12.6 million $ 26.0 million -51.5% ---------------------------------------------------------------------------- Adjusted EBITDA $ 75.6 million $ 76.1 million -0.6% ---------------------------------------------------------------------------- Adjusted EBITDA Margin 15.8% 15.3% 0.5% ---------------------------------------------------------------------------- Adjusted Free Cash Flow per Share/Distributable Cash Per Unit $ 0.895 $ 1.006 -11.0% ---------------------------------------------------------------------------- (i) Period over Period change calculated based on thousands of dollars except percentage and per share/unit values. (ii) Cineplex's results for the three and six months ended June 30, 2011 were negatively impacted by changes in income tax expense due to Cineplex's conversion to a Corporation on January 1, 2011. Also impacting net income is the impact of the fair value of financial instruments that affected net income in the three and six months ended June 30, 2010 for items that are no longer fair valued in 2011.
"Cineplex delivered another quarter of solid results with total revenues up 6.6% and adjusted EBITDA up 7.2% versus the second quarter last year," said Ellis Jacob, President and CEO, Cineplex Entertainment. "Excluding share-based compensation, adjusted EBITDA grew by 15.7% compared to the second quarter of last year. All three revenue areas generated growth during the quarter - box office revenues increased 5.2% to $151.1 million; concession revenues increased 5.5% to $76.2 million; and other revenues increased 17.0% to $31.1 million. Net income decreased $8.8 million to $13.4 million primarily as a result of three items totalling $15.9 million. These included a $9.3 million increase in income tax expense and a $4.4 million change in the fair value of financial instrument items related to the company's conversion to a corporation on January 1, 2011, in addition to a $2.2 million share of loss of joint ventures related to the start-up of the Canadian Digital Cinema Partnership ("CDCP"). On a YTD basis, adjusted EBITDA of $75.6 million is on track with last year's second quarter YTD of $76.1 million, which included the tremendous success of Avatar."
"Other achievements during the second quarter included the completion of financing for CDCP, enabling us to complete the deployment of digital projectors throughout the balance of our circuit by the end of 2012," said Jacob. "Cineplex Media continued to grow during the quarter increasing revenue by 16.2%, primarily due to increased contributions from Cineplex Digital Solutions. SCENE, our entertainment loyalty program, reached the 3 million member milestone in early July, continuing to exceed our expectations. Our concession business continued to grow with CPP increasing from $4.36 to $4.44, representing a new quarterly record. We added five new UltraAVX auditoriums bringing our total UltraAVX locations to 22, and we also acquired New Way Sales Games Ltd., one of our games suppliers for $3.3 million. We are very pleased with the results and continue to have strong growth from all of our business areas."
EBITDA, adjusted free cash flow and distributable cash are not measures recognized by generally accepted accounting principles ("GAAP") and do not have standardized meanings in accordance with such principles. Therefore, EBITDA, adjusted free cash flow and distributable cash may not be comparable to similar measures presented by other issuers. EBITDA is calculated by adding back to net income, income tax expense, amortization and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for gains and losses on disposal of assets, the change in fair value of financial instruments and the share of loss of the Canadian Digital Cinema Partnership ("CDCP"). Adjusted free cash flow is a non-GAAP measure generally used by Canadian corporations, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Distributable cash is a non-GAAP measure generally used in Canadian open-ended trusts, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Management uses adjusted EBITDA, adjusted free cash flow and distributable cash to evaluate performance primarily because of the significant effect certain unusual or non-recurring charges and other items have on EBITDA from period to period. For a detailed reconciliation of net income to EBITDA and adjusted EBITDA and from cash used in operating activities to adjusted free cash flow and distributable cash, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com.
Adoption of International Financial Reporting Standards
Cineplex has commenced reporting under International Financial Reporting Standards ("IFRS") with the release of its first quarter 2011 results. Subject to certain transitional elections disclosed in our unaudited interim consolidated financial statements, Cineplex has consistently applied the same accounting policies under IFRS in its opening IFRS balance sheet at January 1, 2010 and throughout all periods presented, as if these accounting policies under IFRS had always been in effect.
In addition to the disclosure in the notes to the unaudited interim consolidated financial statements, we have provided a summary of the quarterly results under IFRS in the tables following.
Second Quarter and Year to Date Results
Cineplex's results for the three and six months ended June 30, 2011 as compared to the Fund's results for the three and six months ended June 30, 2010 are presented below.
Total revenues
Total revenues for the three months ended June 30, 2011 increased $16.0 million (6.6%) to $258.4 million as compared to the prior year period. Total revenues for the six months ended June 30, 2011 decreased $17.8 million (3.6%) to $479.8 million as compared to the prior year period. A discussion of the factors affecting the changes in box office, concession and other revenues for the periods is provided on the following pages.
Box office revenues
The following table highlights the movement in box office revenues, attendance and BPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance reported in thousands of patrons, and per patron amounts, unless otherwise noted):
---------------------------------------------------------------------------- Box office revenues Second Quarter Year to Date ------------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Box office revenues $151,135 $143,608 5.2% $281,091 $302,400 -7.0% Attendance 17,175 16,549 3.8% 32,447 34,424 -5.7% Box office revenue per patron $ 8.80 $ 8.68 1.4% $ 8.66 $ 8.78 -1.4% Canadian industry revenues(1) 3.2% -8.3% Same store box office revenues $147,314 $142,304 3.5% $270,611 $297,532 -9.0% Same store attendance 16,767 16,356 2.5% 31,281 33,787 -7.4% % Total box from 3D, UltraAVX and IMAX 26.8% 25.9% 0.9% 24.9% 30.1% -5.2% ---------------------------------------------------------------------------- (1) The Motion Picture Theatre Associations of Canada ("MPTAC") reported that the Canadian exhibition industry reported a box office increase of 1.7% for the period from April 1, 2011 to June 30, 2011 as compared to the period from April 2, 2010 to July 1, 2010. On a basis consistent with Cineplex's calendar reporting period (April 1 to June 30), the Canadian industry box office increase is estimated to be 3.2%. The Motion Picture Theatre Associations of Canada ("MPTAC") reported that the Canadian exhibition industry reported a box office decrease of 8.3% for the period from December 31, 2010 to June 30, 2011 as compared to the period from January 1, 2010 to July 1, 2010. On a basis consistent with Cineplex's calendar reporting period (January 1 to June 30), the Canadian industry box office decrease is estimated to be substantially the same amount. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Box office continuity Second Quarter Year to Date In thousands Box Office Attendance Box Office Attendance ---------------------------------------------------------------------------- 2010 as reported $ 143,608 16,549 $ 302,400 34,424 Same store attendance change 3,573 411 (22,070) (2,506) Impact of same store BPP change 1,437 - (4,851) - New and acquired theatres 3,481 361 7,135 763 Disposed and closed theatres (964) (146) (1,523) (234) ---------------------------------------------------------------------------- 2011 as reported $ 151,135 17,175 $ 281,091 32,447 ----------------------------------------------------------------------------
Second quarter
---------------------------------------------------------------------------- % Total % Total Q2 2011 Top Cineplex Films Box Q2 2010 Top Cineplex Films Box ---------------------------------------------------------------------------- 1 Pirates of the Caribbean: 8.9% 1 Iron Man 2 (ii) 11.0% On Stranger Tides (i)(ii) 2 The Hangover 2 7.7% 2 Shrek Forever After 8.9% (i)(ii) 3 Fast Five (ii) 7.7% 3 How to Train your Dragon 6.7% (i)(ii) 4 Thor (i)(ii) 7.5% 4 Clash of the Titans (i) 6.6% 5 Bridesmaids 6.7% 5 Toy Story 3 (i)(ii) 6.6% ---------------------------------------------------------------------------- i = Film screened in 3D. ii = Film screened in IMAX.
Box office revenues increased $7.5 million, or 5.2%, to $151.1 million during the second quarter of 2011, compared to $143.6 million recorded in the same period in 2010. This increase was primarily due to a 3.8% increase in attendance, mainly due to the success of the latest installments in several strong film franchises. The top three films during the second quarter of 2011 are the latest sequels in successful franchises.
BPP increased $0.12, from $8.68 in the second quarter of 2010 to $8.80 in the same period in 2011 due to premium-priced product (3D, UltraAVX and IMAX) accounting for 26.8% of box office revenues in the current quarter, up from 25.9% in the prior year period. Film product during the second quarter of 2011 catered to mature audiences more than the product in the prior year period, contributing to the BPP increase. The increase in the percentage of box office revenues from premium priced product was due to the 22 UltraAVX installations which began on June 30, 2010 and continued through the second quarter of 2011, partially offset by slightly lower 3D and IMAX revenues compared to the prior year period, due to two films in the top five during the second quarter of 2011 not being screened in either IMAX or 3D (The Hangover 2 and Bridesmaids), whereas all of the top five films in the prior year period were screened in 3D with four of those films screened in IMAX.
Cineplex's investment in digital and 3D technology over the last three years has positioned it to take advantage of the price premiums offered on 3D product. This investment in 3D technology, as well as other premium-priced technology such as UltraAVX, contributed to Cineplex outperforming the Canadian industry during the second quarter.
Year to Date
---------------------------------------------------------------------------- Year to Date 2011 Top % Total Year to Date 2010 Top % Total Cineplex Films Box Cineplex Films Box ---------------------------------------------------------------------------- 1 Pirates of the Caribbean: 4.8% 1 Avatar (i)(ii) 13.9% On Stranger Tides (i)(ii) 2 The Hangover 2 4.2% 2 Alice in Wonderland 7.6% (i)(ii) 3 Fast Five (ii) 4.1% 3 Iron Man 2 (ii) 5.2% 4 Thor (i)(ii) 4.0% 4 Shrek Forever After 4.2% (i)(ii) 5 Bridesmaids 3.6% 5 How to Train your Dragon 4.1% (i)(ii) ---------------------------------------------------------------------------- i = Film screened in 3D. ii = Film screened in IMAX.
Box office revenues for the first six months of 2011 were $281.1 million or 7.0% lower than the prior year period. The 2010 period included Avatar which became the highest grossing film of all-time, and accounted for 13.9%, or $42.0 million of Cineplex's box office revenue in the prior year period, compared to 4.8%, or $13.5 million, for Cineplex's top grossing film during the current period, Pirates of the Caribbean: On Stranger Tides. The tough comparator to Avatar during the first quarter was partially offset by the higher box office revenues recorded in the second quarter of 2011 compared to the second quarter of 2010.
BPP for the first six months of 2011 decreased $0.12, from $8.78 in 2010 to $8.66 in the same period in 2011. This decrease was primarily due to the decrease in revenues from premium-priced product. Premium-priced offerings accounted for 30.1% of the Fund's box office revenue in the 2010 period, compared to 24.9% in the current period. All five of the top five films in 2010 were screened in IMAX, and four of those were screened in 3D (2011 - three of the top five in IMAX and two in 3D).
Concession revenues
The following table highlights the movement in concession revenues, attendance and CPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance and same store attendance reported in thousands of patrons, and per patron amounts):
---------------------------------------------------------------------------- Concession revenues Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Concession revenues $ 76,209 $ 72,236 5.5% $141,363 $146,565 -3.5% Attendance 17,175 16,549 3.8% 32,447 34,424 -5.7% Concession revenue per patron $ 4.44 $ 4.36 1.8% $ 4.36 $ 4.26 2.3% Same store concession revenues $ 74,412 $ 71,620 3.9% $136,667 $144,427 -5.4% Same store attendance 16,767 16,356 2.5% 31,281 33,787 -7.4% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Concession revenue continuity Second Quarter Year to Date In thousands Concession Attendance Concession Attendance ---------------------------------------------------------------------------- 2010 as reported $ 72,236 16,549 $ 146,565 34,424 Same store attendance change 1,798 411 (10,713) (2,506) Impact of same store CPP change 994 - 2,952 - New and acquired theatres 1,639 361 3,318 763 Disposed and closed theatres (458) (146) (759) (234) ---------------------------------------------------------------------------- 2011 as reported $ 76,209 17,175 $ 141,363 32,447 ----------------------------------------------------------------------------
Second Quarter
Concession revenues increased 5.5% as compared to the prior year quarter, due to the 3.8% increase in attendance and the 1.8% increase in CPP. CPP increased from $4.36 in the second quarter of 2010 to $4.44 in the same period in 2011, and represents a quarterly record for Cineplex. Cineplex believes that revised concession offerings as well as process improvements designed to increase the speed of service that were implemented throughout 2010 contributed to this increased CPP period over period.
While the 10% SCENE discount has a negative impact on CPP, Cineplex believes that this program drives incremental visits and concession purchases, resulting in higher overall concession revenues.
Year to Date
Concession revenues decreased 3.5% as compared to the prior year period, due to the 5.7% decrease in attendance, offset by the 2.3% increase in CPP. CPP increased from $4.26 in the first six months of 2010 to $4.36 in the same period in 2011. This represents the highest CPP Cineplex has recorded through the first six months of a given year.
Other revenues
The following table highlights the movement in media, games and other revenues for the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Other revenues Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Media $ 22,446 $ 19,324 16.2% $ 40,385 $ 33,498 20.6% Games 1,729 1,067 62.0% 2,964 2,248 31.9% Other 6,888 6,168 11.7% 13,996 12,906 8.4% ---------------------------------------------------------------------------- Total $ 31,063 $ 26,559 17.0% $ 57,345 $ 48,652 17.9% ----------------------------------------------------------------------------
Other revenues increased 17.0% from $26.6 million in the second quarter of 2010 to $31.1 million in the same period in 2011. Media revenues for the second quarter of 2011 were $22.4 million, up $3.1 million, or 16.2%, from the prior year period. The increase is primarily due to higher CDM revenues ($2.8 million). During the second quarter of 2011, CDM includes the results of CDS which was acquired during the third quarter of 2010 and is therefore not included in the prior period comparative.
The games revenue increase is primarily due to the acquisition of NWS in May 2011 ($0.4 million) and therefore is not included in the prior year comparative. The addition of XSCAPE Entertainment Centres at SilverCity CrossIron Mills Cinemas in Calgary, Alberta, which opened on June 30, 2010, and SilverCity Oakville Cinemas in Oakville, Ontario, which opened in March 2011 also contributed to this increase. The increase in Other is primarily due to higher breakage revenues associated with increased sales of gift cards and coupons.
Year to Date
Other revenues increased 17.9% from $48.7 million in the first six months of 2010 to $57.3 million during the same period in 2011. Media revenues for the first six months of 2011 were up $6.9 million, or 20.6%, from the prior year period. This increase was primarily due to higher CDM revenues ($4.0 million) as well as higher full motion and digital pre-show revenues ($3.8 million). The increase in games revenue was primarily due to the acquisition of NWS in May 2011 and the addition of the two new XSCAPE centres. The increase in the other category is primarily due to higher breakage revenues associated with increased sales of gift cards and coupons.
Film cost
The following table highlights the movement in film cost and film cost as a percentage of box office revenue ("film cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except film cost percentage):
---------------------------------------------------------------------------- Film cost Second Quarter Year to Date ------------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Film cost $ 79,783 $ 77,909 2.4% $145,327 $164,430 -11.6% Film cost percentage 52.8% 54.3% 51.7% 54.4% ----------------------------------------------------------------------------
Second Quarter
Film cost varies primarily with box office revenue, and can vary from quarter to quarter based on the relative strength of the titles exhibited during the period. The increase in the second quarter of 2011 compared to the prior year period was due to the increase in attendance, partially offset by the 1.5% decrease in film cost percentage. The decrease in film cost percentage is primarily due to the settlement rate on certain strong performing titles during the second quarter of 2011 being lower than the average film settlement rate.
Year to Date
The year to date decrease in film cost was due to the 7.0% decrease in box office revenues and the 2.7% decrease in film cost percentage during the period. The decrease in the film cost percentage as compared to the prior year period is primarily due to the settlement rate on certain strong performing titles during the 2010 period being higher than the average settlement rate.
Cost of concessions
The following table highlights the movement in concession cost and concession cost as a percentage of concession revenues ("concession cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except concession cost percentage and concession margin per patron):
---------------------------------------------------------------------------- Cost of concessions Second Quarter Year to Date ------------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Concession cost $ 16,257 $ 14,985 8.5% $ 29,905 $ 31,778 -5.9% Concession cost percentage 21.3% 20.7% 21.2% 21.7% Concession margin per patron $ 3.49 $ 3.46 0.9% $ 3.44 $ 3.33 3.3% ----------------------------------------------------------------------------
Second Quarter
Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in concession cost as compared to the prior year period was due to the 5.5% increase in concession revenues and the 0.6% increase in concession cost percentage. The concession margin per patron increased from $3.46 in the second quarter of 2010 to $3.49 in the same period in 2011, reflecting the impact of the higher CPP during the period.
Year to Date
The decrease in concession cost during the period was due to the 3.5% decrease in concession revenues and the 0.5% decrease in the concession cost percentage. Changes in Cineplex's reduced price Tuesday program resulted in a decrease in concession cost percentage, partially offset by the impact of issuing SCENE points on concession combos which began in June 2011.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization expenses during the quarter and year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Amortization expenses Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Amortization of property, equipment and leaseholds $ 15,078 $ 16,928 -10.9% $ 30,202 $ 33,330 -9.4% Amortization of intangible assets and other $ 2,240 2,788 -19.7% 4,488 6,263 -28.3% ---------------------------------------------------------------------------- Amortization expenses as reported $ 17,318 $ 19,716 -12.2% $ 34,690 $ 39,593 -12.4% ----------------------------------------------------------------------------
The decrease in amortization of property, equipment and leaseholds of $1.9 million primarily relates to certain valuation adjustments that arose as part of Cineplex's acquisition of the Partnership becoming fully amortized subsequent the second quarter of 2010. The transfer of digital projection equipment to CDCP during June 2011 also contributed to the decrease in amortization of property, equipment and leaseholds. The $0.5 million decrease in amortization of intangible assets and other was due to certain intangible assets becoming fully amortized during the second quarter of 2010. The year to date decreases of $3.1 million for the amortization of property equipment and leaseholds and $1.8 million decrease for intangible assets are primarily due to the fully amortized assets discussed above.
(Gain) loss on disposal of assets
The following table shows the movement in the (gain) loss on disposal of assets during the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- (Gain) loss on disposal of assets Second Quarter Year to Date ------------------------------------------------------ 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- (Gain) loss on disposal of assets $ (1,020) $ 745 NM $ (483) $ 1,509 NM ----------------------------------------------------------------------------
Second Quarter
The gain on disposal of assets represents the gain recorded on the sale of a theatre during the three months ended June 30, 2011 ($1.4 million) and a nominal gain recorded on the transfer of digital projection assets to CDCP. These gains were partially offset by the loss on assets that were sold or otherwise disposed of, including the loss recognized on the write off of the net book value of the portion or component of existing equipment that is replaced or improved, with the replacement or improved asset being recorded as a new asset. Disposal of assets resulted in a loss of $0.7 million for the second quarter of 2010.
Year to Date
For the six months ended June 30, 2011, disposal of assets resulted in a gain of $0.5 million, comprised of the gain on the sale of the theatre and transfer of assets to CDCP described above, net of losses recorded on assets that were sold or otherwise disposed of. For the six months ended June 30, 2010, disposal of assets resulted in a loss of $1.5 million.
Other costs
Other costs include three main sub-categories of expenses, including theatre occupancy expenses, which capture the rent and associated occupancy costs for Cineplex's various operations; other operating expenses, which include the costs related to running Cineplex's theatres; and general and administrative expenses, which includes costs related to managing Cineplex's operations, including the head office expenses. Please see the discussions below for more details on these categories. The following table highlights the movement in other costs for the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Other costs Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Theatre occupancy expenses $ 41,274 $ 40,442 2.1% $ 82,815 $ 81,060 2.2% Other operating expenses 60,341 55,355 9.0% 116,573 113,776 2.5% General and administrative expenses 15,688 11,488 36.6% 31,391 28,960 8.4% ----------------------------------------------------- Total other costs $117,303 $107,285 9.3% $230,779 $223,796 3.1% ----------------------------------------------------------------------------
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Theatre occupancy expenses Second Quarter Year to Date ------------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Rent $ 27,964 $ 27,330 2.3% $ 55,540 $ 54,518 1.9% Other occupancy 14,056 13,537 3.8% 28,455 27,222 4.5% Non-recurring legal contingency - 164 NM - 297 NM One-time items (746) (589) 26.7% (1,180) $ (977) 20.8% ---------------------------------------------------------------------------- Total $ 41,274 $ 40,442 2.1% $ 82,815 $ 81,060 2.2% ---------------------------------------------------------------------------- (i) One-time items include amounts related to both theatre rent and other theatre occupancy costs. They are isolated here to illustrate Cineplex's theatre rent and other theatre occupancy costs net or these one-time, non-recurring items. ---------------------------------------------------------------------------- Theatre occupancy continuity Second Quarter Year to Date In thousands Occupancy Occupancy ---------------------------------------------------------------------------- 2010 as reported $ 40,442 $ 81,060 Impact of new theatres 981 2,066 Impact of disposed theatres (458) (817) Same store rent change 399 370 Non-recurring items (160) (170) Other 70 306 ---------------------------------------------------------------------------- 2011 as reported $ 41,274 $ 82,815 ----------------------------------------------------------------------------
Second Quarter
Theatre occupancy expenses increased $0.8 million during the second quarter of 2011 compared to the prior year period. This increase was primarily due to the net impact of new and disposed theatres ($0.5 million) and higher same-store rent expense ($0.4 million).
Year to Date
The increase in theatre occupancy expenses of $1.8 million for the first six months of 2011 compared to the prior year period was due to the net impact of new and disposed theatres ($1.2 million) and higher same-store rent expenses ($0.4 million).
Other operating expenses
The following table highlights the movement in other operating expenses during the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Other operating expenses Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Other operating expenses $ 60,341 $ 55,355 9.0% $116,573 $113,776 2.5% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Other operating continuity Second Quarter Year to Date In thousands Other Operating Other Operating ---------------------------------------------------------------------------- 2010 as reported $ 55,355 $ 113,776 Impact of new theatres 1,175 2,487 Impact of disposed theatres (428) (676) Same store payroll change 1,230 (471) Marketing change 319 (989) Media 1,662 2,727 Other 1,028 (281) ---------------------------------------------------------------------------- 2011 as reported $ 60,341 $ 116,573 ----------------------------------------------------------------------------
Second Quarter
Other operating expenses increased $5.0 million during the second quarter of 2011 compared to the prior year period primarily as a result of higher business volumes in the 2011 period. Media cost of sales increased $1.7 million, primarily due to the acquisition of CDS during July 2010, as CDS expenses are included in the second quarter of 2011 and not included in the comparative period. Higher same store payroll costs of $1.2 million also contributed to the increase, due to higher business volumes at the theatres as well as the impact of minimum wage increases implemented throughout 2010. Total theatre payroll accounted for 46.2% of total other operating expenses in the second quarter of 2011, compared to 47.3% in the prior year period. The net impact of new and disposed theatres contributed $0.7 million to the overall increase. The $1.0 million increase in Other includes $0.4 million in costs associated with NWS, which was acquired during the second quarter of 2011 and not included in the prior year's comparative.
Year to Date
For the six months ended June 30, 2011, other operating expenses are $2.8 million higher than the prior year period, despite the lower business volumes in the 2011 period compared to the prior year. The increase is due to higher media cost of sales ($2.7 million) as a result of CDS expenditures being included in 2011 but not 2010, as well as the net impact of new and disposed theatres ($1.8 million). These increases were partially offset by lower same-store payroll of $0.5 million due to the lower business volumes, as well as a $1.0 million decrease in marketing expenses during the period. Total theatre payroll accounted for 45.4% of total other operating expenses in the first six months of 2011, compared to 45.9% in the prior year period.
General and administrative expenses
The following table highlights the movement in general and administrative ("G&A") expenses during the quarter and the year to date, including share and unit based compensation costs, and G&A net of these costs (in thousands of Canadian dollars):
---------------------------------------------------------------------------- G&A expenses Second Quarter Year to Date ------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- G&A excluding LTIP and Option Plan expense $ 9,928 $ 9,528 4.2% $ 20,464 $ 19,854 3.1% LTIP 1,835 2,002 -8.3% 4,413 6,577 -32.9% Option plan 3,925 (42) NM 6,514 2,529 157.6% ------------------------------------------------------- G&A expenses as reported $ 15,688 $ 11,488 36.6% $ 31,391 $ 28,960 8.4% ----------------------------------------------------------------------------
Second Quarter
G&A expenses increased $3.9 million during the second quarter of 2011 compared to the same period in the prior year. This increase was due to a $4.0 million increase option expense during the period, offset by a $0.2 million decrease in LTIP expense. Cineplex's share price increased from $23.16 at March 31, 2011 to $26.72 at June 30, 2011, contributing to the increase in the option plan expense. During the second quarter of 2010, the share price decreased from $20.30 at March 31, 2010 to $19.50 at June 30, 2010, resulting in the small recovery recorded in that period.
Year to Date
G&A expenses for the first six months of 2011 were $2.4 million higher than the prior year period, primarily due to the $4.0 million increase in the option plan expense during the period, partially offset by the $2.2 million decrease in LTIP expense during the period. The option plan expense increased as Cineplex's stock price increased from $22.41 at December 31, 2010 to $26.72 at June 30, 2011; whereas the Fund's unit price increased a smaller percentage, from $18.33 at December 31, 2009 to $19.50 at June 30, 2010. The LTIP plan prior to 2011 had one-third of the award vest in the first year, with an additional one-third vesting on the second and third anniversaries of the award. The related expense is recognized using a graded vesting method, whereby a higher proportion of the expense is recognized over the first year of the award. The 2011 LTIP plan vests over three years with the entire payout occurring at the end of the three-year period, resulting in a lower proportion of vesting in the first and second years of the award resulting from a straight-line recognition of the overall expense. This difference in vesting has contributed to the lower cost in the first half of 2011 compared to the prior year period.
Share of loss of joint ventures
Cineplex's joint ventures in the second quarter and first six months of 2011 include its share of one theatre in Quebec, one IMAX screen in Ontario, its interest in SCENE LP and its interest in CDCP. The Fund's joint ventures in the second quarter and first six months of 2010 include its share of four theatres in Quebec, one IMAX screen in Ontario and its interest in SCENE LP. The following table highlights the movement in the share of loss of joint ventures during the quarter and the year to date (in thousands of Canadian dollars):
---------------------------------------------------------------------------- Share of loss of joint ventures Second Quarter Year to Date ----------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- Share of loss of joint ventures $ 2,867 $ 892 221.4% $ 394 $ 1,685 -76.6% ----------------------------------------------------------------------------
Second Quarter
The increase in the loss over the prior year quarter is due to $2.2 million of start-up costs relating to CDCP recognized during the second quarter of 2011. CDCP commenced operations at the end of June 2011, and will begin collecting revenues in the third quarter of 2011.
Year to Date
The movement from a loss of $1.7 million in the first six months of 2010 to a loss of $0.4 million in the current period is primarily due to breakage revenue recognized by SCENE LP. Based on an analysis of point issuance and redemption activity during the first three years of the program, SCENE established a breakage rate and recognized revenue relating to breakage for the first time during the first quarter of 2011. This change in its accounting estimate for breakage resulted in a program-to-date adjustment to its outstanding points liability during the first quarter. The $2.2 million of start-up costs relating to CDCP recognized during the second quarter of 2011 partially offset the impact of the gain recorded for SCENE during the period.
Adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for the three and six months ended June 30, 2011 as compared to the three and six months ended June 30, 2010 (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
---------------------------------------------------------------------------- EBITDA Second Quarter Year to Date ------------------------------------------------------------- 2011 2010 Change 2011 2010 Change ---------------------------------------------------------------------------- EBITDA $ 43,260 $ 45,105 -4.1% $ 73,961 $ 75,094 -1.5% Adjusted EBITDA $ 44,393 $ 41,404 7.2% $ 75,631 $ 76,066 -0.6% Adjusted EBITDA margin 17.2% 17.1% 0.1% 15.8% 15.3% 0.5% ----------------------------------------------------------------------------
Adjusted EBITDA for the second quarter of 2011 increased $3.0 million, or 7.2%, as compared to the prior year period. The increase is primarily due to the higher box office and concession revenues due to the higher theatre attendance during the period. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 17.2%, up from 17.1% in the prior year period.
Adjusted EBITDA for the six months ended June 30, 2011 decreased $0.4 million, or 0.6%, as compared to the prior year period. The decrease is primarily due to the lower box office and concession revenues due to the lower theatre attendance during the first quarter more than offsetting the higher attendance in the second quarter as compared to the prior year. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 15.8%, up from 15.3% in the prior year period. The increase is due to the higher media revenues in the 2011 period, which generate higher margins than exhibition revenues.
Adjusted Free Cash Flow
For the second quarter of 2011, adjusted free cash flow per share was $0.503 as compared to distributable cash per unit of $0.544 in the second quarter of 2010. The declared dividend per share and the declared distribution per unit were $0.320 and $0.315, respectively, during these periods. The payout ratios for these periods were 64% and 58%, respectively. For the first six months of 2011, adjusted free cash flow per share was $0.895 as compared to distributable cash per unit of $1.006 in the first six months of 2010. The declared dividend per share and the declared distribution per unit were $0.635 and $0.630, respectively, during these periods. The payout ratios for these periods were 71% and 63%, respectively.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in our Annual Information Form and in this news release. Those risks and uncertainties include adverse factors generally encountered in the film exhibition industry such as poor film product and unauthorized copying; the risks associated with national and world events, including war, terrorism, international conflicts, natural disasters, extreme weather conditions, infectious diseases, changes in income tax legislation; and general economic conditions. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex Inc., Cineplex Galaxy Income Fund or Cineplex Entertainment Limited Partnership, their financial or operating results or their securities.
About Cineplex Inc.
Cineplex is the largest motion picture exhibitor in Canada and owns, leases or has a joint-venture interest in 130 theatres with 1,351 screens serving approximately 70 million guests annually. Headquartered in Toronto, Canada, Cineplex operates theatres from British Columbia to Quebec and is the exclusive provider of UltraAVX and the largest exhibitor of digital 3D and IMAX projection technologies in the country. Proudly Canadian and with a workforce of approximately 10,000 employees, the company operates the following top tier brands: Cineplex Odeon, Galaxy, Famous Players, Colossus, Coliseum, SilverCity, Cinema City and Scotiabank Theatres. Cineplex shares are traded on the Toronto Stock Exchange ("TSX") under the symbol "CGX". For more information, visit www.cineplex.com.
Further information can be found in the disclosure documents filed by Cineplex with the securities regulatory authorities, available at www.sedar.com.
You are cordially invited to participate in a teleconference call with the management of Cineplex (TSX:CGX) to review our quarterly results. Ellis Jacob, President and Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call. The teleconference call is scheduled for:
Thursday, August 11, 2011 10:00 a.m. Eastern Time
In order to participate in the conference call, please dial 416-644-3416 or outside of Toronto dial 1-800-814-4860 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 4458040 to access the call.
-- If you cannot participate in the live mode, a replay will be available. Please dial 416-640-1917 or 1-877-289-8525 and enter code 4458040#. The replay will begin at 12:00 p.m. Eastern Time on Thursday, August 11, 2011 and end at 11:59 p.m. Eastern Time on Thursday, August 18, 2011. -- Note that media will be participating in the call in listen-only mode. -- Thank you in advance for your interest and participation. Cineplex Inc. Interim Consolidated Balance Sheets (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) June 30, 2011 December 31, 2010 Assets Current assets Cash and cash equivalents $ 49,167 $ 85,343 Trade and other receivables 40,691 57,950 Inventories 4,384 3,767 Prepaid expenses and other current assets 10,487 3,848 -------------------------------------- 104,729 150,908 Property, equipment and leaseholds 382,895 413,657 Deferred income taxes 14,925 25,689 Interests in joint ventures 29,220 92 Intangible assets 88,860 93,397 Goodwill 608,929 608,929 -------------------------------------- $ 1,229,558 $ 1,292,672 -------------------------------------- -------------------------------------- Liabilities Current liabilities Accounts payable and accrued expenses $ 66,751 $ 83,700 Share or unit-based compensation 3,447 14,307 Dividends or distributions payable 6,252 - Income taxes payable 6,059 87 Deferred revenue 56,176 82,027 Capital lease obligations 2,325 2,242 Fair value of interest rate swap agreements 5,750 5,482 --------------------------------------- 146,760 187,845 Non-current liabilities Share or unit-based compensation 6,530 8,014 Long-term debt 234,033 233,588 Fair value of interest rate swap agreements 1,280 3,298 Capital lease obligations 27,701 28,885 Post-employment benefit obligations 4,644 4,534 Other liabilities 99,028 98,964 Deficiency interest in joint venture 9,935 12,338 Convertible debentures 84,549 116,481 Liability for exchangeable interests - 3,851 --------------------------------------- 614,460 697,798 Equity Share capital 756,527 - Unit capital - 710,121 Deficit (137,177) (113,120) Accumulated other comprehensive loss (4,252) (3,534) Contributed surplus - 1,407 --------------------------------------- 615,098 594,874 --------------------------------------- $ 1,229,558 $ 1,292,672 --------------------------------------- -------------------------------------- Cineplex Inc. Interim Consolidated Statements of Operations (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three months Three months Six months Six months ended ended ended ended June 30, June 30, June 30, June 30, 2011 2010 2011 2010 Revenues Box office $ 151,135 $ 143,608 $ 281,091 $ 302,400 Concessions 76,209 72,236 141,363 146,565 Other 31,063 26,559 57,345 48,652 ------------------------------------------------------- 258,407 242,403 479,799 497,617 ------------------------------------------------------- Expenses Film cost 79,783 77,909 145,327 164,430 Cost of concessions 16,257 14,985 29,905 31,778 Depreciation and amortization 17,318 19,716 34,690 39,593 (Gain) loss on disposal of assets (1,020) 745 (483) 1,509 Other costs 117,303 107,285 230,779 223,796 ------------------------------------------------------- 229,641 220,640 440,218 461,106 ------------------------------------------------------- Income before undernoted 28,766 21,763 39,581 36,511 Share of loss of joint ventures 2,867 892 394 1,685 Change in fair value of financial instruments - (4,446) - (537) Interest expense 5,912 5,793 11,611 11,472 Interest income (191) (89) (423) (173) ------------------------------------------------------- Income before income taxes 20,178 19,613 27,999 24,064 ------------------------------------------------------- Provision for (recovery of) income taxes Current 6,038 3 6,038 3 Deferred 700 (2,556) 9,369 (1,897) ------------------------------------------------------- 6,738 (2,553) 15,407 (1,894) ------------------------------------------------------- Net income $ 13,440 $ 22,166 $ 12,592 $ 25,958 ------------------------------------------------------- ------------------------------------------------------- Cineplex Inc. Interim Consolidated Statements of Comprehensive Income (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three months Three months Six months Six months ended ended ended ended June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010 Net income $ 13,440 $ 22,166 $ 12,592 $ 25,958 ----------------------------------------------------------- Other comprehensive income (loss) Changes in fair value of interest rate contracts 604 (852) 1,523 382 Associated deferred income taxes (recovery) 168 (1,163) 2,241 (1,236) ----------------------------------------------------------- Other comprehensive income (loss) 436 311 (718) 1,618 ----------------------------------------------------------- Comprehensive income $ 13,876 $ 22,477 $ 11,874 $ 27,576 ----------------------------------------------------------- ----------------------------------------------------------- Cineplex Inc. Interim Consolidated Statements of Changes in Equity (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) For the six months ended June 30, 2011 Contributed Unit capital Share capital Surplus Balance - January 1, 2011 $ 710,121 $ - $ 1,407 Effect of corporate conversion (710,121) 744,760 (1,407) Net income - - - Other comprehensive loss - - - Dividends declared - - - Long-term incentive plan obligation - (3,410) - Long-term incentive plan shares - 1,888 - Issuance of shares on conversion of debentures - 13,289 - ----------------------------------------------------- Balance - June 30, 2011 $ - $ 756,527 $ - ----------------------------------------------------- Accumulated other comprehensive loss Deficit Total Balance - January 1, 2011 $ (3,534) $ (113,120) $ 594,874 Effect of corporate conversion - - 33,232 Net income - 12,592 12,592 Other comprehensive loss (718) - (718) Dividends declared - (36,649) (36,649) Long-term incentive plan obligation - - (3,410) Long-term incentive plan shares - - 1,888 Issuance of shares on conversion of debentures - - 13,289 ----------------------------------------------------- Balance - June 30, 2011 $ (4,252) $ (137,177) $ 615,098 ----------------------------------------------------- For the six months ended June 30, 2010 Contributed Unit capital Share capital surplus Balance - January 1, 2010 $ 703,706 $ - $ - Net income - - - Other comprehensive income - - - Distributions declared - - - Long-term incentive plan units (1,063) - 1,407 Issuance of units on conversion of debentures 1,598 - - Issuance of units under the exchange agreement 1,599 - - ----------------------------------------------------- Balance - June 30, 2010 $ 705,840 $ - $ 1,407 ----------------------------------------------------- Accumulated other comprehensive loss Deficit Total Balance - January 1, 2010 $ (7,501) $ (91,396) $ 604,809 Net income - 25,958 25,958 Other comprehensive income 1,618 - 1,618 Distributions declared - (35,880) (35,880) Long-term incentive plan units - - 344 Issuance of units on conversion of debentures - - 1,598 Issuance of units under the exchange agreement - - 1,599 ----------------------------------------------------- Balance - June 30, 2010 $ (5,883) $ (101,318) $ 600,046 ----------------------------------------------------- Cineplex Inc. Interim Consolidated Statements of Cash Flows (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three months Three months Six months Six months ended ended ended ended June 30, June 30, June 30, June 30, 2011 2010 2011 2010 Cash provided by (used in) Operating activities Net income $ 13,440 $ 22,166 $ 12,592 $ 25,958 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of property, equipment and leaseholds, deferred charges and intangible assets 17,318 19,716 34,690 39,593 Amortization of tenant inducements, rent averaging liabilities and fair value lease contract liabilities (820) (937) (1,870) (1,697) Amortization of debt issuance costs 231 191 464 379 (Gain) loss on disposal of assets (1,020) 745 (483) 1,509 Deferred income taxes 700 (2,556) 9,369 (1,897) Interest rate swap agreements - non- cash interest (40) (166) (136) (392) Non-cash share or unit-based compensation 38 (114) 256 1,297 Change in fair value of financial instruments - (4,446) - (537) Accretion of convertible debentures 517 335 827 647 Net change in interests in joint ventures (970) 1,582 (3,438) 1,913 Tenant inducements 1,195 598 4,050 1,007 Changes in operating assets and liabilities (3,041) (11,235) (20,920) (20,896) ------------------------------------------------------- Net cash provided by operating activities 27,548 25,879 35,401 46,884 ------------------------------------------------------- Investing activities Proceeds from sale of assets 1,733 - 1,740 1,350 Purchases of property, equipment and leaseholds (16,158) (13,378) (28,579) (23,570) Deposits for business acquisitions - (3,970) - (3,970) Acquisition of businesses, net of cash acquired (3,280) (1,022) (3,280) (1,022) Additional equity funding of CDCP (168) - (168) - ------------------------------------------------------- Net cash used in investing activities (17,873) (18,370) (30,287) (27,212) ------------------------------------------------------- Financing activities Dividends or distributions paid (18,327) (17,940) (30,397) (35,864) Borrowings under credit facility 12,000 10,000 27,000 15,000 Repayment of credit facility (12,000) (10,000) (27,000) (15,000) Payments under capital leases (555) (495) (1,100) (980) Acquisition of long- term incentive plan shares or units - - (9,793) (9,620) ------------------------------------------------------- Net cash used in financing activities (18,882) (18,435) (41,290) (46,464) ------------------------------------------------------- Decrease in cash and cash equivalents during the period (9,207) (10,926) (36,176) (26,792) Cash and cash equivalents - Beginning of period 58,374 78,780 85,343 94,646 ------------------------------------------------------- Cash and cash equivalents - End of period $ 49,167 $ 67,854 $ 49,167 $ 67,854 ------------------------------------------------------- Supplemental Information Cash paid for interest $ 6,324 $ 6,945 $ 10,088 $ 10,711 Cash paid for income taxes - net $ 65 $ 5 $ 65 $ 13 Cineplex Inc. Consolidated Supplemental Information (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Reconciliation to Adjusted EBITDA ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 --------------------------------------------------- Net income $ 13,440 $ 22,166 $ 12,592 $ 25,958 Depreciation and amortization (i) 17,361 19,788 34,774 39,731 Interest expense 5,912 5,793 11,611 11,472 Interest income (191) (89) (423) (173) Current income tax expense 6,038 3 6,038 3 Deferred income tax expense (recovery) 700 (2,556) 9,369 (1,897) --------------------------------------------------- EBITDA 43,260 45,105 73,961 75,094 Change in fair value of financial instruments - (4,446) - (537) (Gain) loss on disposal of assets (1,020) 745 (483) 1,509 CDCP equity loss (ii) 2,153 - 2,153 - --------------------------------------------------- Adjusted EBITDA $ 44,393 $ 41,404 $ 75,631 $ 76,066 --------------------------------------------------- (i) Includes the depreciation and amortization incurred by the joint ventures (2011 - $43 for three months and $84 for six months, 2010 - $72 for three months and $138 for six months) (ii) CDCP equity loss not included in adjusted EBITDA as CDCP is a limited- life financing vehicle that is funded by virtual print fees collected from distributors. Components of Other Costs ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 ------------------------------------------------ Theatre occupancy expenses $ 41,274 $ 40,442 $ 82,815 $ 81,060 Other operating expenses 60,341 55,355 116,573 113,776 General and administrative expenses 15,688 11,488 31,391 28,960 ------------------------------------------------ Total other costs $ 117,303 $ 107,285 $ 230,779 $ 223,796 ------------------------------------------------ Cineplex Inc. Consolidated Supplemental Information (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars, except number of shares/units and per share/unit data) Adjusted Free Cash Flow and Distributable Cash ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 ------------------------------------------------------- Cash provided by operating activities $ 27,548 $ 25,879 $ 35,401 $ 46,884 Less: Total capital expenditures (i) (14,425) (13,378) (26,839) (23,570) ------------------------------------------------------- Standardized free cash flow/ Standardized distributable cash 13,123 12,501 8,562 23,314 Add/(Less): Changes in operating assets and liabilities (ii) 3,041 11,235 20,920 20,896 Changes in operating assets and liabilities of joint ventures (ii) 3,837 (690) 3,832 (228) Tenant inducements (iii) (1,195) (598) (4,050) (1,007) Principal component of capital lease obligations (555) (495) (1,100) (980) New build capital expenditures and other (iv) 11,675 9,970 21,765 17,046 Share of profit (loss) of joint ventures, net of non-cash depreciation (v) (671) (809) 1,843 (1,536) Cash invested in CDCP (v) (219) - (219) - ------------------------------------------------------- Adjusted free cash flow/ Distributable cash $ 29,036 $ 31,114 $ 51,553 $ 57,505 ------------------------------------------------------- Less: Exchangeable interests share of distributable cash - (126) - (242) ------------------------------------------------------- Adjusted free cash flow/ Distributable cash available to shareholders/ unitholders $ 29,036 $ 30,988 $ 51,553 $ 57,263 ------------------------------------------------------- Average number of shares/units outstanding 57,770,425 56,974,020 57,620,340 56,937,983 Adjusted free cash flow per share/ Distributable cash per unit $ 0.503 $ 0.544 $ 0.895 $ 1.006 (i) For the 2011 adjusted free cash flow calculations, total capital expenditures are shown net of proceeds received on the sale of assets. (ii) Changes in operating assets and liabilities are not considered a source or use of distributable cash. (iii) Tenant inducements received are for the purpose of funding new theatre capital expenditures and are not considered a source of distributable cash. (iv) New build capital expenditures and other represent expenditures on Board approved projects as well as any expenditures for digital equipment that will be incorporated into CDCP, and exclude maintenance capital expenditures. The 2011 figures are net of proceeds on asset sales. The revolving credit facility was available to the Fund and is available to Cineplex to fund Board approved projects. (v) Excludes the share of loss of CDCP, as CDCP is a limited-life financing vehicle funded by virtual print fees collected from distributors. Cash invested into CDCP, as well as cash distributions received from CDCP, are considered to be uses and sources of adjusted free cash flow. Cineplex Inc. 2010 IFRS Quarterly Interim Consolidated Balance Sheets (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) March 31, June 30, September 30, December 31, 2010 2010 2010 2010 Assets Current assets Cash and cash equivalents $ 78,780 $ 67,854 $ 75,033 $ 85,343 Trade and other receivables 32,700 32,123 36,253 57,950 Inventories 3,588 3,774 3,726 3,767 Prepaid expenses and other current assets 9,066 13,611 10,619 3,848 --------------------------------------------------------- 124,134 117,362 125,631 150,908 Property, equipment and leaseholds 418,747 417,498 411,751 413,657 Deferred income taxes 23,469 27,185 25,556 25,689 Interests in joint ventures 1,651 808 216 92 Intangible assets 101,054 98,256 95,990 93,397 Goodwill 600,564 601,040 603,263 608,929 --------------------------------------------------------- $ 1,269,619 $ 1,262,149 $ 1,262,407 $ 1,292,672 --------------------------------------------------------- --------------------------------------------------------- Liabilities Current liabilities Accounts payable and accrued expenses $ 83,066 $ 76,099 $ 67,272 $ 83,700 Share or unit-based compensation 9,030 9,444 12,128 14,307 Dividends and distributions payable 6,001 6,009 6,017 - Income taxes payable 11 11 87 87 Deferred revenue 58,616 56,083 52,197 82,027 Capital lease obligations 2,064 2,125 2,186 2,242 Fair value of interest rate swap agreements 6,578 6,163 5,742 5,482 --------------------------------------------------------- 165,366 155,934 145,629 187,845 Non-current liabilities Share or unit-based compensation 3,959 4,294 5,848 8,014 Long-term debt 233,308 233,489 233,672 233,588 Fair value of interest rate swap agreements 4,290 5,224 5,039 3,298 Capital lease obligations 30,582 30,026 29,461 28,885 Post-employment benefit obligation 3,441 3,501 4,000 4,534 Other liabilities 106,475 106,334 107,589 98,964 Deficiency interest in joint venture 9,035 9,774 10,716 12,338 Convertible debentures 115,729 110,176 112,371 116,481 Liability for exchangeable interests 5,068 3,351 3,571 3,851 --------------------------------------------------------- 677,253 662,103 657,896 697,798 Equity Unit capital 702,681 705,840 707,405 710,121 Deficit (105,528) (101,318) (99,229) (113,120) Accumulated other comprehensive loss (6,194) (5,883) (5,072) (3,534) Contributed surplus 1,407 1,407 1,407 1,407 --------------------------------------------------------- 592,366 600,046 604,511 594,874 --------------------------------------------------------- $ 1,269,619 $ 1,262,149 $ 1,262,407 $ 1,292,672 --------------------------------------------------------- ---------------------------------------------------------
Please refer to the 2010 Canadian GAAP quarterly unaudited interim consolidated financial statements of the Fund filed on www.SEDAR.com.
This table should be read in conjunction with the 2011 second quarter unaudited interim consolidated financial statements of Cineplex, in particular note 4 to those financial statements which describes Cineplex's transition to IFRS.
Cineplex Inc. 2010 IFRS Quarterly Interim Consolidated Statements of Operations (Unaudited) ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Q1 Q2 Q3 Q4 2010 2010 2010 2010 Revenues Box office $ 158,792 $ 143,608 $ 157,330 $ 138,097 Concessions 74,329 72,236 79,870 68,292 Other 22,093 26,559 31,061 34,159 ------------------------------------------------------- 255,214 242,403 268,261 240,548 ------------------------------------------------------- Expenses Film cost 86,521 77,909 81,038 71,254 Cost of concessions 16,793 14,985 16,368 14,101 Depreciation and amortization 19,877 19,716 23,754 19,012 Loss (gain) on disposal of assets 764 745 (95) 990 Other costs 116,511 107,285 115,115 117,233 ------------------------------------------------------- 240,466 220,640 236,180 222,590 ------------------------------------------------------- Income before undernoted 14,748 21,763 32,081 17,958 Share of loss of joint ventures 793 892 700 1,271 Change in fair value of financial instruments 3,909 (4,446) 3,629 6,690 Interest expense 5,679 5,793 5,848 5,846 Interest income (84) (89) (162) (191) ------------------------------------------------------- Income before income taxes 4,451 19,613 22,066 4,342 ------------------------------------------------------- Provision for (recovery of) income taxes Current - 3 - 27 Deferred 659 (2,556) 1,996 (80) ------------------------------------------------------- 659 (2,553) 1,996 (53) ------------------------------------------------------- Net income $ 3,792 $ 22,166 $ 20,070 $ 4,395 ------------------------------------------------------- Adjusted EBITDA $ 34,662 $ 41,404 $ 55,070 $ 36,718 -------------------------------------------------------
Please refer to the 2010 Canadian GAAP quarterly unaudited interim consolidated financial statements of the Fund filed on www.SEDAR.com.
This table should be read in conjunction with the 2011 second quarter unaudited interim consolidated financial statements of Cineplex, in particular note 4 to those financial statements which describes Cineplex's transition to IFRS.
Contact Information:
Gord Nelson
Chief Financial Officer
(416) 323-6602
Cineplex Inc.
Pat Marshall
Vice President Communications and Investor Relations
(416) 323-6648
www.cineplex.com