Cineplex Galaxy Income Fund
TSX : CGX.UN

Cineplex Galaxy Income Fund

August 06, 2008 06:45 ET

Cineplex Galaxy Income Fund Reports Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 6, 2008) -

NOT FOR RELEASE OVER US NEWSWIRE SERVICES

Cineplex Galaxy Income Fund (the "Fund") (TSX:CGX.UN) today released the financial results of Cineplex Entertainment Limited Partnership (the "Partnership") for the second quarter of 2008.

Year to Date June 30, 2008 Results




---------------------------------------------------------------------------
Six months ended Six months ended Period over
June 30, 2008 June 30, 2007 Period Change
---------------------------------------------------------------------------
Total Revenues $ 399.2 million $ 378.5 million +5.5%
---------------------------------------------------------------------------
Attendance 30.3 million 28.9 million +4.6%
---------------------------------------------------------------------------
Other Revenue $ 37.2 million $ 33.5 million +11.3%
---------------------------------------------------------------------------
Net Income $ 4.4 million $ 4.5 million -2.4%
---------------------------------------------------------------------------
Adjusted EBITDA $ 59.8 million $ 59.7 million +0.1%
---------------------------------------------------------------------------
Adjusted EBITDA Margin 15.0% 15.8% -0.8%
---------------------------------------------------------------------------
Distributable Cash
Per Unit $ 0.7309 $ 0.7131 +2.5%
---------------------------------------------------------------------------


Second Quarter Results



---------------------------------------------------------------------------
Three months ended Three months ended Period over
June 30, 2008 June 30, 2007 Period Change
---------------------------------------------------------------------------
Total Revenues $ 209.3 million $ 199.9 million +4.7%
---------------------------------------------------------------------------
Attendance 15.6 million 15.1 million +3.9%
---------------------------------------------------------------------------
Other Revenue $ 20.9 million $ 20.1 million +4.3%
---------------------------------------------------------------------------
Net Income $ 5.0 million $ 8.3 million -39.0%
---------------------------------------------------------------------------
Adjusted EBITDA $ 33.6 million $ 35.0 million -4.1%
---------------------------------------------------------------------------
Adjusted EBITDA Margin 16.0% 17.5% -1.5%
---------------------------------------------------------------------------
Distributable Cash
Per Unit $ 0.4029 $ 0.4337 -7.1%
---------------------------------------------------------------------------


"Cineplex' box office, concession and other revenues were all ahead this quarter versus last year which is especially compelling considering that Q2 2007 was a record setting quarter for us," said Ellis Jacob, President and CEO Cineplex Entertainment. "Total revenues were up 4.7% to $209.3 million, with concession revenues up 3.7%, other revenues up 4.3% and attendance up 3.9%. Cineplex Media revenue was up 1.8% this quarter, and 15.1% on a year to date basis and remains in line with our previously announced full year growth target of 15%. Our strategic focus has been to grow attendance and purchase incidence both in terms of theatre visits and concession purchases and these results reflect the success of that strategy." Jacob continued, "Our management team is focused on driving results from our existing business while simultaneously investing in our future growth via our expanding SCENE loyalty program, our Cineplex Media business, and our interactive business cineplex.com. We believe this investment in our future comes with current costs that will deliver strong results and enhance overall revenues for the future. As a result of this continued investment in growth, and certain other specific items, net income was negatively impacted during the quarter."

"We are also pleased to announce that our SCENE program reached the 1 million member mark on July 22, only 14 months after its national launch," said Jacob. "This is quite an achievement considering our 12 month target was 500,000 members. Our guests have clearly embraced the program because they continue to earn and redeem points regularly for movies, concession items and promotional programs."

For the three months ended June 30, 2008 adjusted EBITDA decreased 4.1% to $33.6 million. Adjusted EBITDA margin was 16.0% compared to 17.5% in the prior period. The decrease was primarily due to an increase in film cost as a percentage of box office revenue due to the mix of film product during the quarter, higher Long Term Incentive Plan costs, incremental costs related to new business initiatives and the introduction of point of sale gift cards in major retail outlets.

Net income for the three months ended June 30, 2008 decreased $3.3 million to $5.0 million as a result of the above factors and increased amortization expense of $0.7 million due to new and acquired theatres, higher interest expense of $0.5 million primarily due to an increase in non-cash interest expense relating to the accounting for interest rate swaps of $1.6 million partially offset by a reduction in cash interest expenses of $0.9 million and the benefit related to a non-controlling interest of $0.6 million in the prior year.

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, gains or losses on disposal of theatre assets and income or losses from discontinued operations. 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

Box office revenues for the three months ended June 30, 2008 increased $6.3 million, or 5.2%, to $126.4 million. Canadian industry box office was up approximately 1.6% (source: Motion Picture Theatre Associations of Canada) for the second quarter of 2008 due to the strong performance of Iron Man, Indiana Jones and the Kingdom of the Crystal Skull, Sex and the City, and stronger overall film product in the second quarter of 2008 as compared to the prior year. Box office revenues are primarily dependent on paid attendance to the Partnership's theatres, which was 15.6 million patrons in the second quarter of 2008, an increase of 3.9% over the second quarter of 2007. The average box office revenue per patron of the Partnership increased $0.10 from $7.98 in the second quarter of 2007 to $8.08 in 2008. The acquisition of the three Cinema City branded locations, second run theatres which employ a discounted ticket price strategy, reduced the Partnership's average box office revenue per patron for the second quarter of 2008. Excluding the three Cinema City locations purchased in July 2007 and therefore not included in the prior year comparatives, the average box office per patron of the Partnership was $8.17. This increase in box office revenue per patron is driven by a higher proportion of ticket sales to adults during the period as compared to 2007, where the top three films during the period (Spiderman 3, Shrek the Third and Pirates of the Caribbean: At World's End) drove relatively more child ticket sales. The increase in box office revenues was due to higher average ticket prices at same-store locations ($2.7 million), increased same store attendance levels ($0.7 million), and an increase due to new and acquired theatres ($3.0 million), offset by the impact of disposed theatres ($0.1 million). Further impacting the box office per patron was the introduction of the "Big Ticket Tuesday" program in some locations during the second quarter of 2007, the Partnership's discounted admission and concession offering available in certain markets, as well as the offering of reward admissions under the SCENE loyalty program.

Concession revenues for the three months ended June 30, 2008 increased $2.2 million, or 3.7%, to $62.0 million. The increase was due to increased same store attendance levels ($0.4 million) and additional revenues from the operation of new and acquired theatres ($2.0 million), offset by decreased average concession revenues per patron at same-store locations ($0.1 million) and by the impact of disposed theatres ($0.1 million). The average concession revenue per patron of the Partnership was $3.97 for both the three months ended June 30, 2008 and 2007. The average concession revenue per patron for the three months ended June 30, 2007 benefited from the top three films in the period (discussed above) which catered to the strong concession purchasing family demographic. The average concession revenue per patron for the three months ended June 30, 2008 was affected by the film product, which catered to more mature audiences which tend not to be as strong concession purchasers, but benefited from price increases on certain products effective June 1, 2008. Excluding the three Cinema City locations, and the impact of the SCENE loyalty program, the average concession revenue per patron was $4.04.

The SCENE loyalty program was implemented during 2007 to drive incremental attendance and concession purchase incidence. Benefits of the program are reflected in box office and concession revenue respectively. Membership in the SCENE loyalty program as at June 30, 2008 was approximately 942,000, an increase of approximately 182,000 during the quarter and 324,000 year-to-date. Management believes concession revenue has increased due to the higher attendance associated with the introduction of the "Big Ticket Tuesday" program as well as the 10% discount offered to members of the SCENE loyalty program which drives increased sales incidence among SCENE members. SCENE announced on July 22, 2008 that it had reached the one million member mark.

Other revenues for the three months ended June 30, 2008 increased $0.9 million over the same period in 2007, or 4.3%, to $20.9 million. Media revenue increased 1.8% in the second quarter of 2008 over the same period in the prior year and increased 15.1% over the prior year for the six months ended June 30, 2008. Media results for the second quarter of 2007 were driven by the strong media demand as a result of the highly anticipated May 2007 blockbuster franchise films Spiderman 3, Shrek the Third and Pirates of the Caribbean: At World's End resulting in a difficult quarterly comparative. Games revenue decreased 13.0% due to the slate of films targeting more mature audiences in the second quarter of 2008 compared to the films drawing family audiences in the same period in the prior year. Other revenues increased 16.0% due to higher breakage revenues associated with increased sales of gift cards and corporate coupons as compared to the prior period.

Film cost for the three months ended June 30, 2008 increased $4.3 million to $67.7 million due to the mix of film product during the quarter. Film cost varies primarily with box office revenue. As a percentage of box office revenue, film cost was 53.6% for the three months ended June 30, 2008 and 52.8% for the three months ended June 30, 2007.

Cost of concessions for the three months ended June 30, 2008 increased $0.7 million to $13.7 million. Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in cost of concessions was due to increased same-store concession sales ($0.3 million) and the additional costs from the operation of new and acquired theatres ($0.4 million). As a percentage of concession revenues, cost of concessions increased from 21.7% for the three months ended June 30, 2007, to 22.0% for the three months ended June 30, 2008. This increase was driven by the 10% discount offered to members of the SCENE loyalty program, which accounted for a 0.25% increase in the cost of concessions during the second quarter of 2008 as compared to the prior year, and the slate of films catering to more mature audiences driving the sale of lower margin concession items.

Occupancy expense for the three months ended June 30, 2008 increased $0.7 million to $37.7 million. The increase was primarily due to incremental costs associated with new and acquired theatres ($1.2 million), offset by the impact of disposed theatres ($0.5 million). Occupancy expense for the three months ended June 30, 2008 includes $1.3 million in one-time benefits related to the settlement of lease related amounts. A similar amount was included in the three months ended June 30, 2007. The impact of changes in same-store rent and real estate taxes was nominal.

Other operating expenses for the three months ended June 30, 2008 increased $3.7 million to $46.7 million. The increase in other operating expenses was due to the incremental impact of costs associated with new and acquired theatres ($1.3 million), operating costs associated with the SCENE loyalty program and development costs of the Partnership's interactive business ($0.4 million) and increased operating costs ($2.2 million) due to variable costs and inflationary increases and increased business volumes including increased card costs and commissions relating to the increased sales of gift cards and coupons, minimum wage increases, as well as increased utility costs due to rising energy prices, partially offset by the impact of disposed theatres ($0.2 million). The costs related to operating and growing the SCENE loyalty program and the development costs of the Partnership's interactive business were $1.9 million in the second quarter of 2008.

General and administrative costs increased $1.5 million to $9.9 million for the three months ended June 30, 2008, primarily as a result of increased costs under the Partnership's Long Term Incentive Plan ("LTIP") ($0.8 million), higher pension costs resulting from the Partnership's defined benefit plan's lower than expected return on plan assets ($0.2 million) and increased direct costs ($0.5 million). The Partnership's defined benefit pension plan is in the process of being wound up.

The Partnership reported income before undernoted ("adjusted EBITDA") for the three and six months ended June 30, 2008 of $33.6 million and $59.8 million, respectively, as compared to income before undernoted of $35.0 million and $59.7 million for the three and six months ended June 30, 2007. This change was due to the aggregate effect of the factors described above.

Distributable Cash

For the second quarter, distributable cash per unit was $0.4029 as compared to $0.4337 reported in the second quarter of 2007. The declared distributions per unit for this period were $0.3100 and $0.2958 for the same period in 2007.

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

Headquartered in Toronto, Canada, Cineplex Entertainment LP owns, leases or has a joint-venture interest in 132 theatres with 1,337 screens serving approximately 61 million guests annually. Cineplex Entertainment LP is the largest motion picture exhibitor in Canada operating theatres with the following brands: Cineplex Odeon, Galaxy and Famous Players (including Coliseum, Colossus and SilverCity), Cinema City and Scotiabank Theatres. The units of Cineplex Galaxy Income Fund, which owns approximately 76% of Cineplex Entertainment LP, are traded on the Toronto Stock Exchange (symbol CGX.UN). For more information, visit us at 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 second quarter. Ellis Jacob, Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call. The teleconference call is scheduled for:



Wednesday, August 6th, 2008
10:00 a.m. Eastern Time


In order to participate in the conference call, please dial (416) 644-3416 or outside of Toronto dial 1-800-733-7560 at least five to ten minutes prior to 10:00 a.m. Eastern Time on Wednesday, August 6th, 2008.

- 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 21278048#. The replay will begin at 12:00 p.m. ET on Wednesday, August 6th, 2008 and end at 11:59 p.m. ET on Wednesday, August 13, 2008.

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

- Thank you in advance for your interest and participation.




Cineplex Entertainment Limited Partnership
Consolidated Supplemental Information
(Unaudited)
-----------------------------------------------
(expressed in thousands of Canadian dollars)

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

Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
---------------------- ----------------------

Net income $ 5,040 $ 8,264 $ 4,382 $ 4,489

Amortization 17,138 16,478 34,012 32,752
Interest on long-term
debt and capital lease
obligations 7,148 6,604 13,988 14,110
Interest on loan from
Cineplex Galaxy Trust 3,500 3,500 7,000 7,000
Interest income (89) (223) (375) (475)
Income tax recovery (188) (20) (601) (485)
---------------------- ----------------------

EBITDA 32,549 34,603 58,406 57,391

Non-controlling interest - (561) - (561)
Loss on disposal of
theatre assets 1,043 1,002 1,354 2,869
---------------------- ----------------------
Adjusted EBITDA $ 33,592 $ 35,044 $ 59,760 $ 59,699
---------------------- ----------------------
---------------------- ----------------------



Cineplex Entertainment Limited Partnership
Consolidated Supplemental Information
(Unaudited)
---------------------------------------------
(expressed in thousands of Canadian dollars,
except number of units and per unit data)


For the three months For the six months
ended June 30, ended June 30,
2008 2007 2008 2007
--------- ------------ --------- ------------
Cash provided by
(used in)
operating activities $ 18,180 $ 11,539 $ 23,460 $ (2,552)
Less: Total capital
expenditures (6,810) (9,480) (14,627) (14,408)
--------- ------------ --------- ------------

Standardized
distributable cash 11,370 2,059 8,833 (16,960)

Less:
Changes in operating
assets and
liabilities (i) 5,560 15,195 18,118 43,786
Tenant inducements (ii) (447) (2,535) (2,265) (3,152)
Principal component of
capital lease
obligations (392) (364) (776) (721)

Add:
New build capital
expenditures and
other (iii) 2,992 6,506 9,975 9,939
Interest on loan from
Cineplex Galaxy
Trust (iv) 3,500 3,500 7,000 7,000
Non cash components
in operating
assets and liabilities
(v) 444 405 889 826
Expenses funded through
integration and
restructuring
reserve (vi) - 21 - 37
--------- ------------ --------- ------------
Distributable cash $ 23,027 $ 24,787 $ 41,774 $ 40,755
--------- ------------ --------- ------------
--------- ------------ --------- ------------

Number of LP Units
outstanding (vii) 57,150,687 57,150,421 57,150,687 57,150,421
Distributable cash
per LP Unit $ 0.4029 $ 0.4337 $ 0.7309 $ 0.7131


(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 for use to
fund Board approved projects. Certain integration related capital
expenditures are funded out of reserve funds established on November
26, 2003 and July 22, 2005.
(iv) Subject to "Catch-up Payment" provision and is considered part of
distributable cash.
(v) 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
accretion of the liability component of the Class C LP Units and
amortization of deferred gains on sale-leaseback transactions.
(vi) Amounts financed by the $25.0 million reserve set up upon
completion of the acquisition of Famous Players are not considered
a use of distributable cash.
(vii) Excluding the unconverted Class C LP Units.




Cineplex Entertainment Limited Partnership
Interim Consolidated Balance Sheets
(Unaudited)
----------------------------------------------
(expressed in thousands of Canadian dollars)

June 30, December 31,
2008 2007

Assets

Current assets
Cash and cash equivalents $ 18,212 $ 42,906
Accounts receivable 34,971 45,322
Inventories 3,304 3,026
Prepaid expenses and other
current assets 9,814 4,584
Due from related parties 6 6
----------------------------
66,307 95,844

Property, equipment and
leaseholds 405,196 420,884

Fair value of interest
rate swap agreements 811 1,523

Future income taxes 6,423 5,825

Deferred charges 1,019 1,085

Intangible assets 50,039 52,815

Goodwill 200,037 200,037
----------------------------
$ 729,832 $ 778,013
----------------------------
----------------------------


June 30, December 31,
2008 2007

Liabilities

Current liabilities
Accounts payable and
accrued expenses $ 68,590 $ 80,779
Distributions payable 4,834 4,548
Income taxes payable 50 65
Deferred revenue 52,828 64,610
Capital lease obligations
- current portion 1,639 1,581
----------------------------
127,941 151,583

Long-term debt 232,560 232,265

Fair value of interest
rate swap agreements 1,036 -

Capital lease obligations
-- long-term portion 33,997 34,831

Due to Cineplex Galaxy Trust 100,000 100,000

Accrued pension benefit
liability 1,369 1,109

Other liabilities 149,150 150,162

Class C Limited Partnership
units -- liability
component 103,554 102,231
----------------------------
749,607 772,181
Partners' (Deficiency)
Equity (19,775) 5,832
-----------------------------
$ 729,832 $ 778,013
----------------------------
----------------------------





Cineplex Entertainment Limited Partnership
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,
2008 2007 2008 2007
Revenue
Box office $ 126,357 $ 120,066 $ 243,180 $ 232,953
Concessions 62,031 59,792 118,752 112,116
Other 20,936 20,083 37,233 33,468
---------------------- ----------------------
209,324 199,941 399,165 378,537
---------------------- ----------------------
Expenses
Film cost 67,706 63,445 126,638 120,322
Cost of concessions 13,657 12,955 25,310 23,378
Occupancy 37,714 37,023 76,037 73,655
Other operating 46,712 43,042 91,964 84,696
General and administrative 9,943 8,432 19,456 16,787
-------------------- --------------------
175,732 164,897 339,405 318,838
-------------------- --------------------

Income before undernoted 33,592 35,044 59,760 59,699

Amortization 17,138 16,478 34,012 32,752

Loss on disposal of
theatre assets 1,043 1,002 1,354 2,869
Interest on long-term
debt and capital
lease obligations 7,148 6,604 13,988 14,110
Interest on loan from
Cineplex Galaxy Trust 3,500 3,500 7,000 7,000
Interest income (89) (223) (375) (475)
---------------------- ----------------------
Income before income
taxes and non-
controlling interest 4,852 7,683 3,781 3,443
---------------------- ----------------------
Provision for (recovery of)
income taxes
Current 1 5 (4) 11
Future (189) (25) (597) (496)
---------------------- ----------------------
(188) (20) (601) (485)
---------------------- ----------------------
Income before
non-controlling
interest 5,040 7,703 4,382 3,928
Non-controlling interest - (561) - (561)
---------------------- ----------------------
Net income $ 5,040 $ 8,264 $ 4,382 $ 4,489
---------------------- ----------------------
---------------------- ----------------------


Cineplex Entertainment Limited Partnership
Interim Consolidated Statements of Partners'
(Deficiency) Equity and Comprehensive Income
(Unaudited)
---------------------------------------------
(expressed in thousands of Canadian dollars)

For the six months ended June 30, 2008

Accumulated
distributions in Accumulated
excess of other
Accumulated Accumulated accumulated comprehensive
earnings distributions earnings income (loss)


Balance -
December
31, 2007 $ 84,338 $ (194,026) $ (109,688) $ 974


Distributions
declared - (27,862) (27,862) -

Investment in
Cineplex Galaxy
Income Fund
units - - - -


LTIP compensation
obligation - - - -


Net income 4,382 - 4,382 -

Other
comprehensive
loss - interest
rate swap
agreements - - - (364)

Comprehensive
income - - - -
---------------------------------------------------------------------------
Balance -
June 30,
2008 $ 88,720 $ (221,888) $ (133,168) $ 610
--------------------------------------------------------------------------
--------------------------------------------------------------------------

For the six months ended June 30, 2008 (continued from above)
---------------------------
Formation of Total
Partners' Partnership Partners' Comprehensive
capital deficit deficiency income

Balance -
December
31, 2007 $ 262,341 $ (147,795) $ 5,832 $ -

Distributions
declared - - (27,862) -
Investment
in Cineplex
Galaxy Income
Fund units (3,691) - (3,691) -

LTIP compensation
obligation 1,928 - 1,928 -

Net income - - 4,382 4,382

Other
comprehensive
loss - interest
rate swap
agreements - - (364) (364)
-----------


Comprehensive
income - - - $ 4,018
-------------
---------------------------------------------------------------------------
Balance -
June 30,2008 $ 260,578 $ (147,795) $ (19,775)
----------------------------------------------------------
----------------------------------------------------------

The sum of accumulated distributions in excess of accumulated earnings and
accumulated other comprehensive loss as at June 30, 2008 is $132,558.

For the six months ended June 30, 2007

Accumulated
distributions in Accumulated
excess of other
Accumulated Accumulated accumulated comprehensive
earnings distributions earnings income
Balance -
January 1,
2007 $ 57,867 $ (140,405) $ (82,538) $ 2,427
Distributions
declared - (26,330) (26,330) -
Investment in
Cineplex Galaxy
Income Fund
units - - - -
LTIP compensation
obligation - - - -
Net income 4,489 - 4,489 -
Other
Comprehensive
income - interest
rate swap
agreements - - - 1,924

Comprehensive
income - - - -
--------------------------------------------------------------------------
Balance -
June 30,
2007 $ 62,356 $ (166,735) $ (104,379) $ 4,351
--------------------------------------------------------------------------
--------------------------------------------------------------------------

For the six months ended June 30, 2007 (continued from above)
--------------------------
Formation of Total
Partners' Partnership Partners' Comprehensive
capital deficit equity income
Balance -
January 1,
2007 $ 262,774 $ (147,795) $ 34,868 $ -
Distributions
declared - - (26,330) -
Investment in
Cineplex Galaxy
Income Fund
units (1,677) - (1,677) -
LTIP compensation
obligation 899 - 899 -
Net income - - 4,489 4,489
Other
comprehensive
income - interest
rate swap
agreements - - 1,924 1,924
-----------
Comprehensive
income - - - $ 6,413
-------------
---------------------------------------------------------------------------
Balance -
June 30,
2007 $ 261,996 $ (147,795) $ 14,173
---------------------------------------------------------
---------------------------------------------------------

The sum of accumulated distributions in excess of accumulated earnings and
accumulated other comprehensive loss as at June 30, 2007 is $100,028.


Cineplex Entertainment Limited Partnership
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,
2008 2007 2008 2007
Cash provided by
(used in)
Operating activities
Net income $ 5,040 $ 8,264 $ 4,382 $ 4,489
Adjustments to reconcile
net loss to net cash
provided by
(used in) operating
activities
Amortization of property,
equipment and leaseholds,
deferred charges and
intangible assets 17,138 16,478 34,012 32,752
Amortization of tenant
inducements, rent averaging
liabilities and fair value
lease contract liabilities (763) (522) (1,517) (969)
Amortization of debt
issuance costs 148 264 295 450
Loss on disposal of
theatre assets 1,043 1,002 1,354 2,869
Future income taxes (189) (25) (597) (496)
Cash flow hedges
- non cash interest 876 (701) 1,384 (452)
Non-controlling interest - (561) - (561)
Tenant inducements 447 2,535 2,265 3,152
Changes in operating
assets and liabilities (5,560) (15,195) (18,118) (43,786)
--------------------- ---------------------
--------------------- ---------------------
18,180 11,539 23,460 (2,552)
--------------------- ---------------------
--------------------- ---------------------
Investing activities
Proceeds from sale of
theatre assets 741 2 2,399 2,477
Purchases of property,
equipment and leasholds (6,810) (9,480) (14,627) (14,408)

Theatre shutdown payment (300) - (300) (1,445)
Lease guarantee payment
and acquisition of
theatre assets - - - (4,500)
Acquisition of Famous
branded magazines - - (387) (406)
--------------------- ---------- ---------
--------------------- ---------- ---------
(6,369) (9,478) (12,915) (18,282)
--------------------- ---------- ---------
--------------------- ---------- ---------
Financing activities
Distributions paid (13,931) (13,165) (27,576) (26,090)
Borrowings under
credit facility 10,000 17,000 10,000 38,000
Repayment of credit
facility (10,000) (12,000) (10,000) (23,000)
Payments under
capital leases (392) (364) (776) (721)
Investment in Cineplex
Galaxy Income Fund units - - (6,887) (2,702)
--------------------- ---------------------
--------------------- ---------------------
(14,323) (8,529) (35,239) (14,513)
--------------------- ---------------------
--------------------- ---------------------
Decrease in cash and
cash equivalents during
the period (2,512) (6,468) (24,694) (35,347)

Cash and cash equivalents
- Beginning of period 20,724 27,504 42,906 56,383
--------------------- ---------------------
--------------------- ---------------------
Cash and cash equivalents
- End of period $ 18,212 $ 21,036 18,212 $ 21,036
--------------------- ---------------------
--------------------- ---------------------
Supplemental Information
Cash paid for interest $ 6,848 $ 8,111 13,773 $ 16,488
Class C LP distributions
paid and classified
as interest 3,160 3,161 3,160 3,161
Cash paid for income
taxes - net 15 5 15 11


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
    Website: www.cineplex.com