Cineplex Galaxy Income Fund
TSX : CGX.UN

Cineplex Galaxy Income Fund

August 13, 2009 06:15 ET

Cineplex Galaxy Income Fund Reports Record Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2009) -

NOT FOR RELEASE OVER US NEWSWIRE SERVICES

Cineplex Galaxy Income Fund (the "Fund") (TSX:CGX.UN) today released its financial results for the second quarter of 2009.



Second Quarter Results
----------------------

----------------------------------------------------------------------------
Three months Three months Period over
ended June 30, ended June 30, Period Change
2009 2008
----------------------------------------------------------------------------
Total Revenues $248.6 million $209.3 million +18.8%
----------------------------------------------------------------------------
Attendance 18.2 million 15.6 million +16.2%
----------------------------------------------------------------------------
Other Revenue $23.0 million $20.9 million +9.9%
----------------------------------------------------------------------------
Net Income $19.9 million $6.0 million +231.0%
----------------------------------------------------------------------------
Adjusted EBITDA $44.7 million $32.6 million +37.0%
----------------------------------------------------------------------------
Adjusted EBITDA Margin 18.0% 15.6% +2.4%
----------------------------------------------------------------------------
Distributable Cash Per Unit $0.628 $0.403 +55.8%
----------------------------------------------------------------------------



Year to Date June 30, 2009 Results
----------------------------------

----------------------------------------------------------------------------
Six months Six months Period over
ended June 30, ended June 30, Period Change
2009 2008
----------------------------------------------------------------------------
Total Revenues $459.6 million $399.2 million +15.2%
----------------------------------------------------------------------------
Attendance 34.1 million 30.3 million +12.7%
----------------------------------------------------------------------------
Other Revenue $40.6 million $37.2 million +9.1%
----------------------------------------------------------------------------
Net Income $23.6 million $3.8 million +528.4%
----------------------------------------------------------------------------
Adjusted EBITDA $74.6 million $57.7 million +29.3%
----------------------------------------------------------------------------
Adjusted EBITDA Margin 16.2% 14.5% +1.7%
----------------------------------------------------------------------------
Distributable Cash Per Unit $1.009 $0.731 +38.0%
----------------------------------------------------------------------------
Period over period change calculated based on thousands of dollars except
percentage and per unit values.


"Cineplex's second quarter revenue represented the highest quarterly revenue recorded by the Fund since its inception," said Ellis Jacob, President and CEO, Cineplex Entertainment. "We also established a new second quarter Adjusted EBITDA record of $44.7 million, representing a 37% increase over the same period in 2008 and a record quarterly Concession per patron (CPP) of $4.09, which is one of the highest for the North American exhibition industry," said Jacob.

Jacob said, "The catalysts behind our success this quarter include a strong film slate comprised of both traditional and 3D films, as well as the affordable escape that Cineplex delivers to our guests. People love going to the movies for both entertainment and an escape, as evidenced by our record second quarter attendance and the continued growth of our SCENE loyalty program which reached 1.76 million members in the second quarter."

EBITDA 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 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 non-controlling interests, extraordinary gains and gains or losses on disposal of assets. 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 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 distributable cash, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com.

Second Quarter Results

The results of the Fund for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008 are presented below.

Total revenues

Total revenues for the three months ended June 30, 2009 increased $39.3 million to $248.6 million. A discussion of the factors affecting the changes in box office, concession and other revenues for the periods compared to the same periods in 2008 is provided below.

Box office revenues

The following table highlights the movement in box office revenues, attendance and box office revenues per patron ("BPP") for the quarter and the year to date (in thousands of dollars, except attendance and per patron data):



----------------------------------------------------------------------------
Box office revenues Second Quarter Year to Date June 30
-------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Box office revenues $ 151,383 $ 126,357 19.8% $ 281,660 $ 243,180 15.8%
Attendance 18,156 15,630 16.2% 34,122 30,275 12.7%
Box office revenue
per patron $ 8.34 $ 8.08 3.1% $ 8.25 $ 8.03 2.8%
Canadian industry
revenues (1) 15.0% 14.1%
Same store box
office revenues $ 145,390 $ 123,891 17.4% $ 271,326 $ 239,072 13.5%
Same store
attendance 17,470 15,265 14.4% 32,908 29,609 11.1%

----------------------------------------------------------------------------
(1) The Motion Picture Theatre Associations of Canada ("MPTAC") reported
that the Canadian exhibition industry reported a box office increase of
23.3% for the period from April 3, 2009 to July 2, 2009 as compared to the
period from March 28, 2008 to June 26, 2008. On a basis consistent with the
Fund's calendar reporting period (April 1st to June 30th), the Canadian
industry box office increase is estimated to be 15.0%.
----------------------------------------------------------------------------



----------------------------------------------------------------------------
Box office continuity Second Quarter Year to Date June 30
Box Box
In thousands Office Attendance Office Attendance
----------------------------------------------------------------------------
2008 as reported $126,357 15,630 $243,180 30,275
Same store attendance 17,896 2,205 26,637 3,300
Same store BPP change 3,603 - 5,617 -
New and acquired theatres 4,715 538 8,504 974
Disposed and closed theatres (1,188) (217) (2,278) (427)
----------------------------------------------------------------------------
2009 as reported $151,383 18,156 $281,660 34,122
----------------------------------------------------------------------------
----------------------------------------------------------------------------



----------------------------------------------------------------------------
Top Cineplex Films - Second Quarter 2009 compared to Second Quarter 2008
----------------------------------------------------------------------------
% Total % Total
Q2 2009 Top Cineplex Films Box Q2 2008 Top Cineplex Films Box
----------------------------------------------------------------------------
1 Star Trek 9.5% 1 Iron Man 12.5%
2 Up 8.9% 2 Indiana Jones and the 12.0%
Kingdom of the Crystal
Skull
3 Transformers: Revenge of the 7.2% 3 Sex and the City 7.4%
Fallen
4 X-Men Origins: Wolverine 6.8% 4 Kung Fu Panda 6.4%
5 Angels & Demons 6.3% 5 The Chronicles of Narnia: 5.4%
Prince Caspian
----------------------------------------------------------------------------


The Fund reported its highest-ever second quarter box office revenues in 2009 despite challenging economic conditions in Canada. The $151.4 million in box office also represents the highest quarterly box office revenues recorded by the Fund since its inception. The increase in box office revenues as compared to the prior year was due to strong film performance throughout the period, starting with Fast and Furious and Monsters vs. Aliens performing very well in April, a month that traditionally has not featured strong releases. The month of May had major blockbusters released each weekend, including four of the top five films during the quarter (Star Trek, Up, X-Men Origins: Wolverine and Angels & Demons). June continued with the strong performing comedy release The Hangover and finished with the highly anticipated sequel Transformers: Revenge of the Fallen. The strong film product throughout the quarter led to increased attendance of 16.2% as compared to the prior year period, resulting in a 19.8% increase in box office revenues as compared to the second quarter of 2008.

Box office revenue per patron increased $0.26 (3.1%) from $8.08 in the second quarter of 2008 to $8.34 in the second quarter of 2009. The success of 3D films such as Up and Monsters vs. Aliens, as well as IMAX releases including Star Trek, Transformers: Revenge of the Fallen, Monsters vs. Aliens and Night at the Museum: Battle of the Smithsonian increased the Fund's overall box office revenue per patron, as these films are priced at a premium over regular ticket prices. These premium priced products also contributed to the Fund outperforming the industry results as the Fund's circuit contains the largest proportion of 3D systems in Canada. Select ticket price increases implemented in November 2008 also contributed to this increase.

Concession revenues

The following table highlights the movement in concession revenues, attendance and box office revenues per patron for the quarter and the year to date (in thousands of dollars, except per patron amounts):



----------------------------------------------------------------------------
Concession revenues Second Quarter Year to Date June 30
----------------------------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Concession revenues $ 74,225 $ 62,031 19.7% $ 137,351 $ 118,752 15.7%
Attendance 18,156 15,630 16.2% 34,122 30,275 12.7%
Concession revenue per
patron $ 4.09 $ 3.97 3.0% $ 4.03 $ 3.92 2.6%
Same store concession
revenues $ 71,150 $ 60,521 17.6% $ 132,028 $ 116,151 13.7%
Same store attendance 17,470 15,265 14.4% 32,908 29,609 11.1%

----------------------------------------------------------------------------



----------------------------------------------------------------------------
Concession revenue
continuity Second Quarter Year to Date June 30
In thousands Concession Attendance Concession Attendance
----------------------------------------------------------------------------
2008 as reported $ 62,031 15,630 $ 118,752 30,275
Same store attendance 8,742 2,205 12,941 3,300
Same store CPP change 1,887 - 2,936 -
New and acquired theatres 2,375 538 4,306 974
Disposed and closed theatres (810) (217) (1,584) (427)
--------------------------------------------------- -----------------------
2009 as reported $ 74,225 18,156 $ 137,351 34,122
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Concession revenues increased 19.7% as compared to the prior period, due to the 16.2% increase in attendance and a 3.0%, or $0.12, increase in the average concession revenue per patron, which increased from $3.97 in the second quarter of 2008 to $4.09 in the second quarter of 2009. This $4.09 represents the Fund's highest ever quarterly CPP. This increase in CPP is due to price increases on certain products that were implemented on June 1, 2008 and therefore are not fully reflected in the prior period, as well as process improvements designed to increase the speed of service, and an improved product offering mix designed to encourage consumers to make purchases outside of the core concession offerings.

Management believes that concession revenues will continue to be dependent on overall theatre attendance and that the current economic conditions will not have a material impact on concession revenues.

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 dollars):



----------------------------------------------------------------------------
Other revenues Second Quarter Year to Date June 30
---------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Media $ 16,318 $ 14,119 15.6% $ 26,941 $ 24,493 10.0%
Games 1,168 1,173 -0.4% 2,336 2,540 -8.0%
Other 5,523 5,644 -2.1% 11,350 10,200 11.3%
----------------------------------------------------------------------------
Total $ 23,009 $ 20,936 9.9% $ 40,627 $ 37,233 9.1%
----------------------------------------------------------------------------
----------------------------------------------------------------------------


During the second quarter of 2009, media revenue increased $2.2 million to $16.3 million. This $2.2 million increase included a $1.4 million increase in non-cash barter revenue and a $0.8 million increase in cash-settled media revenue. Rather than settling cash-based transactions, during 2008 the Fund entered into a number of cross-promotional non-cash barter agreements with certain promotional partners to provide radio and television promotions to the Fund's business initiatives. During the second quarter of 2009 the Fund recognized $1.4 million in media revenue and $1.7 million in marketing costs related to these transactions. Other revenues were down slightly due to lower theatre rental income during the second quarter of 2009 as compared to the prior year period.

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 dollars, except film cost percentage):



----------------------------------------------------------------------------
Film cost Second Quarter Year to Date June 30
---------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Film cost $ 81,372 $ 67,706 20.2% $ 147,312 $ 126,638 16.3%
Film cost
percentage 53.8% 53.6% 0.3% 52.3% 52.1% 0.4%

----------------------------------------------------------------------------


Film cost varies primarily with box office revenue. The quarterly increase was due to the 19.8% increase in box office revenues and the slightly higher film settlement rate during the quarter. Film cost percentage was up marginally as compared to the prior year, due to the mix of film product during the quarter resulting in a slightly higher film cost percentage.

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 dollars, except concession cost percentage):



----------------------------------------------------------------------------
Cost of concessions Second Quarter Year to Date June 30
-------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Concession cost $ 15,172 $ 13,657 11.1% $ 28,096 $ 25,310 11.0%
Concession cost
percentage 20.4% 22.0% -7.2% 20.5% 21.3% -4.0%

----------------------------------------------------------------------------


Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in concession cost period over period was due to the 16.2% increase in attendance, partially offset by the lower concession cost percentage. This decrease in concession cost percentage was due to the higher proportion of films catering to the family demographic in 2009 as compared to the prior period, as families tend to purchase concession items with higher margins.

Occupancy expense

The following table highlights the movement in occupancy expenses for the quarter and the year to date, including non-recurring one-time benefits of lease-related amounts recognized during the period (in thousands of dollars):



----------------------------------------------------------------------------
Occupancy expense Second Quarter Year to Date June 30
-------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Occupancy expenses $ 38,868 $ 38,637 0.6% $ 79,018 $ 77,984 1.3%
One-time benefits $ (720) $ (1,335) -46.1% $ (947) $ (2,213) -57.2%

----------------------------------------------------------------------------


The $0.2 million increase in occupancy expenses was primarily due to the incremental costs associated with new and acquired theatres ($1.0 million) and lower one-time benefits of lease-related amounts recognized in 2009 as compared to the prior period ($0.6 million), offset by the impact of disposed and closed theatres ($0.7 million) and lower rent and real estate taxes ($0.7 million).

Other operating expenses

The following table highlights the movement in other operating expenses during the quarter and the year to date (expressed in thousands of dollars):



----------------------------------------------------------------------------
Other operating expenses Second Quarter Year to Date June 30
--------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

Other operating expenses $ 55,795 $ 46,712 19.4% $106,516 $91,964 15.8%

----------------------------------------------------------------------------


Other operating expenses increased $9.1 million due to the incremental impact of new and acquired theatres ($1.5 million), increased theatre payroll due to minimum wage increases and increased theatre staffing in response to higher theatre attendance in the second quarter of 2009 as compared to the same period in 2008 ($4.5 million), additional marketing costs ($1.7 million) primarily arising from the non-cash barter agreements previously discussed, costs related to expanded service offerings such as the elimination of charges for online ticketing and 3D technology licensing payments ($1.6 million) and other costs relating to higher business volumes during the quarter ($0.3 million). These increases were offset by the impact of disposed and closed theatres ($0.5 million).

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 the Fund's total Long-Term Incentive Plan ("LTIP") and unit option plan costs, and G&A net of these costs (expressed in thousands of dollars):



----------------------------------------------------------------------------
G&A expenses Second Quarter Year to Date June 30
--------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------

G&A excluding LTIP and
option plan expense $ 9,999 $ 8,534 17.2% $ 18,654 $ 16,257 14.7%
LTIP $ 2,297 $ 1,464 56.9% $ 4,977 $ 3,308 50.5%
Option plan $ 441 $ - NM $ 478 $ - NM
----------------------------------------------------------------------------
G&A costs as reported $ 12,737 $ 9,998 27.4% $ 24,109 $ 19,565 23.2%
----------------------------------------------------------------------------
----------------------------------------------------------------------------


General and administrative costs increased $2.7 million as a result of increased costs under the LTIP and option plans ($1.3 million) and increased direct costs ($1.4 million). The direct costs increased due to a $0.6 million increase in head office payroll, and higher professional fees ($0.8 million). Professional fees during the quarter include costs relating to the secondary offering of Fund Units completed by the Fund and Onex during April 2009 ($0.4 million), as well as costs relating to the Fund's ongoing project to prepare for the 2011 conversion for reporting under current Canadian GAAP to reporting under IFRS ($0.3 million).

The Fund reported income before undernoted ("adjusted EBITDA") for the three and six months ended June 30, 2009 of $44.7 million and $74.6 million, respectively, as compared to income before undernoted of $32.6 million and $57.7 million, respectively, for the prior year periods. These changes were due to the aggregate effect of the factors described above.

Distributable Cash

For the three months ended June 30, 2009, distributable cash per Fund unit was $0.628 as compared to $0.403 for the three months ended June 30, 2008. The declared distributions per Fund unit for the current period were $0.315 and $0.310 for the same period in 2008. The payout ratios were 50% and 77%, respectively, for the three months ended June 30, 2009 and 2008. During the twelve months ended June 30, 2009 and 2008, the Fund generated distributable cash of $2.133 and $1.741, respectively, as compared to declared distributions of $1.260 and $1.210, respectively. The payout ratios for these periods were approximately 59% and 70%, respectively.

Presentation

Prior to 2009, Cineplex presented and discussed the results of Cineplex Entertainment Limited Partnership (the "Partnership") as the Fund equity accounted for its investment in the Partnership prior to Q2 2007 and, as such, the consolidated financial statements of the Fund did not provide comparative results on a line-by-line basis. As a result of the Fund's step acquisitions in the Partnership, there are differences in the valuation bases of certain assets and liabilities between the Fund and the Partnership. These valuation differences give rise to differences in certain non-cash expenses (primarily included in the occupancy category) which result in differences in reported results between the Fund and the Partnership. In its filed Management's Discussion and Analysis, the Fund provides a reconciliation of the Fund and the Partnership reported results. For Q2 2009, the Fund reported Adjusted EBITDA of $44.7 million, an increase of 37.0% over the prior year's amount of $32.6 million. For Q2 2009, the Partnership reported Adjusted EBITDA of $45.8 million, an increase of 36.3% over the prior year's amount of $33.6 million.

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 and 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 Entertainment, its financial or operating results or its securities.

About Cineplex Entertainment LP

As the largest motion picture exhibitor in Canada, Cineplex Entertainment LP owns, leases or has a joint-venture interest in 129 theatres with 1,328 screens serving more than 63.5 million guests annually. Headquartered in Toronto, Canada, Cineplex Entertainment operates theatres from British Columbia to Quebec and is the largest exhibitor of digital, 3D and IMAX projection technologies in the country. Proudly Canadian and with a workforce of more than 10,000 employees, the company operates the following top tier brands: Cineplex Odeon, Galaxy, Famous Players, Colossus, Coliseum, SilverCity, Cinema City and Scotiabank Theatres. The units of Cineplex Galaxy Income Fund, which owns approximately 99.6% of Cineplex Entertainment LP, are traded on the Toronto Stock Exchange (symbol CGX.UN). For more information, visit www.cineplex.com.

Further information can be found in the disclosure documents filed by the Fund with the Canadian securities regulatory authorities, available at www.sedar.com.

You are cordially invited to participate in a teleconference call with the management of the Partnership (TSX:CGX.UN) to review our quarterly results. Ellis Jacob, Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call. The teleconference call is scheduled for:



Thursday, August 13th, 2009
10:00 a.m. Eastern Time


In order to participate in the conference call, please dial (416) 644-3416 or outside of Toronto dial 1-800-732-9307 at least five to ten minutes prior to 10:00 a.m. Eastern Time.

- 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 21310582#. The replay will begin at 12:00 p.m. Eastern Time on Thursday, August 13th, 2009 and end at 11:59 p.m. Eastern Time on Thursday, August 20th, 2009.

- Note that media will be participating in the call in listen-only mode.

- Thank you in advance for your interest and participation.



Cineplex Galaxy Income Fund
Interim Consolidated Supplemental Information
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)

Reconciliation to Adjusted EBITDA
---------------------------------

Three months Six months ended
ended June 30, June 30,
2009 2008 2009 2008
------------------ -------------------

Net income $ 19,892 $ 6,010 $ 23,595 $ 3,755

Amortization 19,733 21,365 40,597 42,467
Interest and accretion expense on
convertible debentures 1,848 1,823 3,684 3,663
Interest on long-term debt and
capital lease obligations 3,829 4,916 8,043 9,505
Interest income (76) (96) (201) (393)
Provision for (recovery of) income
taxes 450 (2,215) (280) (683)
------------------ -------------------

EBITDA 45,676 31,803 75,438 58,314

Non-controlling interest 163 (232) 320 (1,964)
Extraordinary gain (992) - (992) -
(Gain) loss on disposal of assets (174) 1,043 (179) 1,354
------------------ -------------------

Adjusted EBITDA $ 44,673 $ 32,614 $ 74,587 $ 57,704
------------------ -------------------
------------------ -------------------



Cineplex Galaxy Income Fund
Interim Consolidated Supplemental Information
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars, except number of units and per
unit data)

Distributable Cash
------------------


For the three months ended For the six months ended
June 30, June 30,
2009 2008 2009 2008
------------ ------------- ------------- -------------
Cash provided by
operating
activities $ 42,989 $ 21,694 $ 61,546 $ 30,485
Less: Total capital
expenditures (10,581) (6,810) (23,138) (14,627)
------------ ------------- ------------- -------------

Standardized
distributable cash 32,408 14,884 38,408 15,858

Less:
Changes in operating
assets and
liabilities (i) (1,114) 6,163 9,267 19,334
Tenant inducements
(ii) (2,492) (447) (7,052) (2,265)
Principal component
of capital
lease obligations (422) (392) (835) (776)

Add:
New build capital
expenditures and
other (iii) 7,697 2,992 18,239 9,975
Non-cash components
in operating
assets and
liabilities (iv) (172) (162) (339) (324)
------------ ------------- ------------- -------------

Distributable cash $ 35,905 $ 23,038 $ 57,688 $ 41,802
------------ ------------- ------------- -------------
------------- -------------

Less:
Non-controlling
interests
share of
distributable cash (381) (5,537) (1,454) (10,091)
------------ ------------- ------------- -------------

Distributable cash
available to
Fund unitholders $ 35,524 $ 17,501 $ 56,234 $ 31,711
------------ ------------- ------------- -------------

Average number of
Fund units
outstanding 56,544,125 43,414,217 55,710,361 43,354,771
Distributable cash
per Fund unit $ 0.628 $ 0.403 $ 1.009 $ 0.731

(i) Changes in operating assets and liabilities are not considered a
source or use of distributable cash.

(ii) Tenant inducements received are for the purpose of funding new theatre
capital expenditures and are not considered a source of distributable
cash.

(iii) New build capital expenditures and other represent expenditures on
Board approved projects as well as any expenditures for digital
equipment anticipated to be reimbursed by a third-party digital
integrator, and exclude maintenance capital expenditures. The
Partnership's revolving credit facility is available to the Fund for
use to fund Board approved projects.

(iv) Certain non-cash components of other assets and liabilities are
indirectly excluded from distributable cash to the extent they reflect
permanent, not timing differences. Such items include the amortization
of deferred gains on sale-leaseback transactions and non-cash pension
adjustments relating to the Fund's acquisition of the Partnership.



Cineplex Galaxy Income Fund
Interim Consolidated Balance Sheets

--------------------------------------------
(expressed in thousands of Canadian dollars)

June 30, December 31,
2009 2008
(unaudited)

Assets

Current assets
Cash and cash equivalents $ 36,134 $ 44,585
Accounts receivable 32,166 45,507
Inventories 2,952 4,014
Prepaid expenses and other current assets 9,018 3,733
------------ ---------------

80,270 97,839

Property, equipment and leaseholds 443,845 455,885

Future income taxes 21,263 13,099

Deferred charges 887 953

Intangible assets 110,558 117,476

Goodwill 600,564 600,564

-----------------------------
$ 1,257,387 $ 1,285,816
-----------------------------
-----------------------------



June 30, December 31,
2009 2008
(unaudited)

Liabilities

Current liabilities

Accounts payable and accrued expenses $ 81,259 $ 86,140
Distributions payable 6,001 6,001
Income taxes payable 46 48
Deferred revenue 56,503 76,929

Capital lease obligations - current portion 1,846 1,700

-----------------------------
145,655 170,818

Long-term debt 233,158 232,861

Fair value of interest rate swap 15,887 20,628

Capital lease obligations - long-term
portion 32,151 33,131

Accrued pension benefit liability 1,193 932

Other liabilities 113,845 108,380

Convertible debentures - liability
component 100,368 99,834

-----------------------------

642,257 666,584

Non-controlling interests 3,114 149,860

Unitholders' equity 612,016 469,372
-----------------------------

$ 1,257,387 $ 1,285,816
-----------------------------
-----------------------------



Cineplex Galaxy Income Fund
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,
2009 2008 2009 2008

Revenues
Box office $ 151,383 $ 126,357 $ 281,660 $ 243,180
Concessions 74,225 62,031 137,351 118,752
Other 23,009 20,936 40,627 37,233
-------------------------- ---------------------------
248,617 209,324 459,638 399,165
-------------------------- ---------------------------

Expenses
Film cost 81,372 67,706 147,312 126,638
Cost of concessions 15,172 13,657 28,096 25,310
Occupancy 38,868 38,637 79,108 77,984
Other operating 55,795 46,712 106,516 91,964
General and
administrative 12,737 9,998 24,019 19,565
-------------------------- ---------------------------
203,944 176,710 385,051 341,461
-------------------------- ---------------------------

Income before
undernoted 44,673 32,614 74,587 57,704

Amortization 19,733 21,365 40,597 42,467
(Gain) loss on
disposal of assets (174) 1,043 (179) 1,354

Interest and
accretion expense on
convertible
debentures 1,848 1,823 3,684 3,663

Interest on long-term
debt and capital
lease obligations 3,829 4,916 8,043 9,505
Interest income (76) (96) (201) (393)

-------------------------- ---------------------------
Income before income
taxes and non-
controlling interests 19,513 3,563 22,643 1,108
-------------------------- ---------------------------

Provision for
(recovery of) income
taxes
Current 2 1 9 (4)
Future 448 (2,216) (289) (679)
-------------------------- ---------------------------
450 (2,215) (280) (683)
-------------------------- ---------------------------

Income before
extraordinary gain
and
non-controlling
interests 19,063 5,778 22,923 1,791
Extraordinary gain 992 - 992 -

Income before
non-controlling
interests 20,055 5,778 23,915 1,791
Non-controlling
interests 163 (232) 320 (1,964)
-------------------------- ---------------------------

Net income $ 19,892 $ 6,010 $ 23,595 $ 3,755
-------------------------- ---------------------------
-------------------------- ---------------------------



Cineplex Galaxy Income Fund
Interim Consolidated Statements of Unitholders' Equity and Comprehensive
Income
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)

For the six months ended June 30, 2009

Accumulated
distributions Accumulated
in excess of other
Accumulated Accumulated accumulated comprehensive
income distributions income loss

Balance -
December
31, 2008 $ 102,535 $ (190,881) $ (88,346) $ (13,683)

Issuance of
units under
exchange
agreement - - - -
LTIP
compensation
obligation - - - -
LTIP fund
units - - - -
Distributions
declared - (35,364) (35,364) -
Net income 23,595 - 23,595 -
Other
comprehensive
income -
interest rate
swap
agreements - - - 4,876

Comprehensive
income for
the period - - - -
--------------------------------------------------------------
Balance -
June 30,
2009 $ 126,130 $ (226,245) $ (100,115) $ (8,807)
--------------------------------------------------------------

--------------------------------
Total
Unitholders' Unitholders' Comprehensive
capital equity income

Balance - December
31, 2008 $ 571,401 $ 469,372 $ -

Issuance of units under
exchange agreement 150,519 150,519 -
LTIP compensation
obligation 1,930 1,930 -
LTIP fund units (2,912) (2,912) -
Distributions declared - (35,364) -
Net income - 23,595 23,595
Other comprehensive
income - interest rate
swap agreements - 4,876 4,876
---------------

Comprehensive
income for the period - - $ 28,471
-----------------------------------------------
---------------
Balance - June 30,
2009 $ 720,938 $ 612,016
-------------------------------



The sum of the accumulated distributions in excess of accumulated income and
accumulated other comprehensive loss as at June 30, 2009 is $108,922.

For the six months ended June 30, 2008

Accumulated
distributions Accumulated
in excess of other
Accumulated Accumulated accumulated comprehensive
income distributions income income

Balance -
December
31, 2007 $ 73,532 $ (137,082) $ (63,550) $ 290

Issuance of
units under
exchange
agreement - - - -
LTIP
compensation
obligation - - - -
LTIP fund
units - - - -
Distributions
declared - (26,448) (26,448) -
Net income 3,755 - 3,755 -
Other
comprehensive
loss -
interest
rate swap
agreements - - - (276)

Comprehensive
income for
the period - - - -
--------------------------------------------------------------
Balance -
June 30,
2008 $ 77,287 $ (163,530) $ (86,243) $ 14
--------------------------------------------------------------

--------------------------------
Total
Unitholders' Unitholders' Comprehensive
capital equity income

Balance - December
31, 2007 $ 570,728 $ 507,468 $ -

Issuance of units under
exchange agreement 2,139 2,139 -
LTIP compensation
obligation 1,464 1,464 -
LTIP fund units (3,691) (3,691) -
Distributions declared - (26,448) -
Net income - 3,755 3,755
Other comprehensive
loss - interest rate swap
agreements - (276) (276)
----------------

Comprehensive
income for the period - - $ 3,479
------------------------------------------------
----------------
Balance - June 30,
2008 $ 570,640 $ 484,411
------------------------------

The sum of the accumulated distributions in excess of accumulated income and
accumulated other comprehensive income as at June 30, 2008 is $86,229.



Cineplex Galaxy Income Fund
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,
2009 2008 2009 2008

Cash provided by
(used in)
Operating
activities
Net income $ 19,892 $ 6,010 $ 23,595 $ 3,755
Adjustments to
reconcile net
income to net
cash provided
by operating
activities
Amortization of
property,
equipment and
leaseholds,
deferred charges
and intangible
assets 19,733 21,365 40,597 42,467
Amortization of
tenant
inducements,
rent averaging
liabilities and
fair value lease
contract
liabilities (141) 160 (169) 429
Amortization of
debt issuance
costs 148 148 297 295
(Gain) loss on
disposal of
theatre assets (174) 1,043 (179) 1,354
Future income
taxes 448 (2,216) (289) (679)
Cash flow hedges
- non-cash
interest 38 876 48 1,384
Extraordinary
gain (992) - (992) -
Non-controlling
interests 163 (232) 320 (1,964)
Accretion of
convertible
debentures 268 256 533 513
Tenant
inducements 2,492 447 7,052 2,265
Changes in
operating assets
and liabilities 1,114 (6,163) (9,267) (19,334)
----------------------------- ---------------------------
42,989 21,694 61,546 30,485
----------------------------- ---------------------------
Investing
activities
Proceeds from
sale of assets 396 741 396 2,399
Purchases of
property,
equipment and
leaseholds (10,581) (6,810) (23,138) (14,627)
Cash acquired in
exchanges of LP
units - - 639 -
Theatre shutdown
payment - (300) - (300)
Acquisition of
Famous branded
magazines - - (231) (387)
Acquisition of
Onsite Media
Network Inc.,
net of cash
acquired (1,660) - (1,660) -
----------------------------- ---------------------------
(11,845) (6,369) (23,994) (12,915)
----------------------------- ---------------------------
Financing
activities
Distributions
paid (17,758) (13,241) (33,951) (26,213)
Distributions
paid by the
Partnership to
non-controlling
interests (244) (4,190) (2,054) (8,363)
Borrowings under
credit facility 9,000 10,000 27,000 10,000
Repayment of
credit facility (9,000) (10,000) (27,000) (10,000)
Acquisition of
LTIP fund units - - (9,163) (6,887)
Payments under
capital leases (422) (392) (835) (776)
----------------------------- ---------------------------
(18,424) (17,823) (46,003) (42,239)
----------------------------- ---------------------------

Increase
(decrease) in
cash and cash
equivalents
during the
period 12,720 (2,498) (8,451) (24,669)

Cash and cash
equivalents -
Beginning of
period 23,414 22,083 44,585 44,254
----------------------------- ---------------------------
Cash and cash
equivalents -
End of year $ 36,134 $ 19,585 $ 36,134 $ 19,585
----------------------------- ---------------------------
----------------------------- ---------------------------
Supplemental
Information
Cash paid for
interest $ 6,352 $ 6,498 $ 9,129 $ 9,923
Cash paid for
income taxes -
net 6 15 11 15
Cash received
for interest 76 98 194 378

Contact Information

  • Cineplex Galaxy Income Fund
    Gord Nelson
    Chief Financial Officer
    (416) 323-6602
    or
    Cineplex Galaxy Income Fund
    Pat Marshall
    Vice President Communications and Investor Relations
    (416) 323-6648