TORONTO, ONTARIO--(Marketwire - Nov. 10, 2011) -
NOT FOR RELEASE OVER US NEWSWIRE SERVICES
Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for the third quarter of 2011.
| Third Quarter Results | |||
| Third quarter 2011 |
Third quarter 2010 |
Period over Period Change (i) |
|
| Total Revenues | $276.7 million | $268.3 million | 3.1% |
| Attendance | 18.5 million | 18.8 million | -1.6% |
| Other Revenues | $32.1 million | $31.1 million | 3.3% |
| Net Income (ii) | $25.7 million | $20.1 million | 28.2% |
| Adjusted EBITDA | $57.4 million | $55.1 million | 4.3% |
| Adjusted EBITDA Margin | 20.8% | 20.5% | 0.3% |
| Adjusted Free Cash Flow per Share/Distributable Cash Per Unit | $0.713 | $0.773 | -7.8% |
| First Nine Months Results | |||
| Nine months ended September 30, 2011 |
Nine months ended September 30, 2010 |
Period over Period Change (i) |
|
| Total Revenues | $756.5 million | $765.9 million | -1.2% |
| Attendance | 51.0 million | 53.3 million | -4.3% |
| Other Revenues | $89.4 million | $79.7 million | 12.2% |
| Net Income (ii) | $38.3 million | $46.0 million | -16.7% |
| Adjusted EBITDA | $133.1 million | $131.1 million | 1.5% |
| Adjusted EBITDA Margin | 17.6% | 17.1% | 0.5% |
| Adjusted Free Cash Flow per Share/Distributable Cash Per Unit | $1.610 | $1.779 | -9.5% |
| (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 nine months ended September 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 nine months ended September 30, 2010 for items that are no longer fair valued in 2011. |
"Cineplex's revenues this quarter represent the strongest quarterly revenues ever recorded by the company," said Ellis Jacob, President and CEO, Cineplex Entertainment. "All three revenue areas generated growth during the period resulting in new quarterly records for box office revenues, up 3.3% to $162.5 million, concession revenues up 2.8% to $82.1 million, and other revenues up 3.3% to $32.1 million. This resulted in total revenues increasing 3.1% to $276.7 million which culminated in new all-time highs for net income of $25.7 million, up 28.2%, and adjusted EBITDA of $57.4 million, an increase of 4.3%."
"With the CDCP financing complete, the digital projector roll-out accelerated with the installation of 188 digital projectors during the quarter bringing our digital conversion rate to 50% of the circuit as of September 30th. We are on track to complete our digital projection roll-out during 2012. Other achievements during the quarter included the opening of a new seven screen theatre in Victoria, BC which included our 23rd UltraAVX auditorium, and a new IMAX theatre in Windsor, Ontario. We entered a new five year credit agreement which will result in interest cost savings and increased financial flexibility going forward. SCENE, our entertainment loyalty program, reached approximately 3.2 million members during the quarter and continues to exceed our expectations. We are very pleased with these record results which continue to demonstrate growth in our business," said Jacob.
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.
Third Quarter and Year to Date Results
Cineplex's results for the three and nine months ended September 30, 2011 as compared to the Fund's results for the three and nine months ended September 30, 2010 are presented below.
Total revenues
Total revenues for the three months ended September 30, 2011 increased $8.4 million (3.1%) to $276.7 million as compared to the prior year period. Total revenues for the nine months ended September 30, 2011 decreased $9.4 million (1.2%) to $756.5 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 | Third Quarter | Year to Date | ||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||
| Box office revenues | $ | 162,522 | $ | 157,330 | 3.3% | $ | 443,613 | $ | 459,730 | -3.5% | ||||||
| Attendance | 18,542 | 18,847 | -1.6% | 50,989 | 53,271 | -4.3% | ||||||||||
| Box office revenue per patron | $ | 8.77 | $ | 8.35 | 5.0% | $ | 8.70 | $ | 8.63 | 0.8% | ||||||
| Canadian industry revenues (1) | 2.4% | -4.5% | ||||||||||||||
| Same store box office revenues | $ | 159,454 | $ | 156,118 | 2.1% | $ | 426,946 | $ | 450,371 | -5.2% | ||||||
| Same store attendance | 18,223 | 18,672 | -2.4% | 49,161 | 52,103 | -5.6% | ||||||||||
| % Total box from 3D, UltraAVX & IMAX | 35.4% | 25.6% | 38.3% | 28.8% | 28.7% | 0.3% | ||||||||||
| (1) | The Motion Picture Theatre Associations of Canada ("MPTAC") reported that the Canadian exhibition industry reported a box office increase of 3.4% for the period from July 1, 2011 to September 29, 2011 as compared to the period from July 2, 2010 to September 30, 2010. On a basis consistent with Cineplex's calendar reporting period (July 1 to September 30), the Canadian industry box office increase is estimated to be 2.4%. The Motion Picture Theatre Associations of Canada ("MPTAC") reported that the Canadian exhibition industry reported a box office decrease of 4.2% for the period from December 31, 2010 to September 29, 2011 as compared to the period from January 1, 2010 to September 30, 2010. On a basis consistent with Cineplex's calendar reporting period (January 1 to September 30), the Canadian industry box office decrease is estimated to be 4.5%. |
| Box office continuity | Third Quarter | Year to Date | ||||||
| In thousands | Box Office | Attendance | Box Office | Attendance | ||||
| 2010 as reported | $ 157,330 | 18,847 | $ 459,730 | 53,271 | ||||
| Same store attendance change | (3,756) | (449) | (25,433) | (2,942) | ||||
| Impact of same store BPP change | 7,093 | - | 2,008 | - | ||||
| New and acquired theatres | 3,067 | 319 | 10,042 | 1,069 | ||||
| Disposed and closed theatres | (1,212) | (175) | (2,734) | (409) | ||||
| 2011 as reported | $ 162,522 | 18,542 | $ 443,613 | 50,989 | ||||
Third Quarter
| Q3 2011 Top Cineplex Films | % Total Box | Q3 2010 Top Cineplex Films | % Total Box | |||||
| 1 | Harry Potter and the Deathly Hallows 2 (i)(ii) | 14.8% | 1 | Inception (ii) | 13.0% | |||
| 2 | Transformers: Dark of the Moon (i)(ii) | 9.6% | 2 | Despicable Me (i) | 7.8% | |||
| 3 | The Smurfs (i) | 6.0% | 3 | The Twilight Saga: Eclipse (ii) | 7.4% | |||
| 4 | Captain America: The First Avenger (i) | 5.6% | 4 | Toy Story 3 (i)(ii) | 5.5% | |||
| 5 | Rise of the Planet of the Apes | 5.6% | 5 | Salt | 4.7% | |||
| i = Film screened in 3D. | |
| ii = Film screened in IMAX. |
Box office revenues increased $5.2 million, or 3.3%, to $162.5 million during the third quarter of 2011, compared to $157.3 million recorded in the same period in 2010. This increase was primarily due to a 5.0% increase in BPP, partially offset by a 1.6% decrease in attendance.
BPP increased $0.42, from $8.35 in the third quarter of 2010 to $8.77 in the same period in 2011 mainly due to premium-priced product (3D, UltraAVX and IMAX) accounting for 35.4% of box office revenues in the current quarter, up from 25.6% in the prior year period. The increase in the percentage of box office revenues from premium priced product was due to the top two films of the quarter, which accounted for 24.4% of total box office revenues during the period, being screened in both 3D and IMAX, as well as the impact of UltraAVX installations, as there were two UltraAVX screens installed by the end of the third quarter of 2010 and 23 installed at the end of the current quarter.
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 third quarter.
Year to Date
| Year to Date 2011 Top Cineplex Films | % Total Box | Year to Date 2010 Top Cineplex Films | % Total Box | |||||
| 1 | Harry Potter and the Deathly Hallows 2 (i)(ii) | 5.7% | 1 | Avatar (i)(ii) | 9.1% | |||
| 2 | Transformers: Dark of the Moon (i)(ii) | 4.3% | 2 | Alice in Wonderland (i)(ii) | 5.0% | |||
| 3 | Pirates of the Caribbean: On Stranger Tides (i)(ii) | 3.1% | 3 | Inception (ii) | 4.5% | |||
| 4 | The Hangover 2 | 2.7% | 4 | Toy Story 3 (i)(ii) | 4.0% | |||
| 5 | Bridesmaids | 2.6% | 5 | Iron Man 2 (ii) | 3.4% | |||
| i = Film screened in 3D. | |
| ii = Film screened in IMAX. |
Box office revenues for the first nine months of 2011 were $443.6 million, 3.5% lower than the prior year period. Cineplex's top grossing film during the current period, Harry Potter and the Deathly Hallows Part 2 accounted for 5.7%, or $25.3 million of Cineplex's box office revenue, compared to 9.1%, or $42.0 million for Avatar in the prior year period. The tough comparator to Avatar during the first quarter was partially offset by the higher box office revenues recorded in the second and third quarters of 2011 compared to the prior year periods.
BPP for the first nine months of 2011 increased $0.07, from $8.63 in 2010 to $8.70 in the same period in 2011. This increase was primarily due to the film product during the 2011 period catering to more mature audiences, as the top five films during the period included two mature-themed comedies and fewer films catering primarily to children, whereas the prior year period featured Toy Story 3 and Alice in Wonderland which both attracted a higher percentage of child admissions than the current year films.
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 | Third Quarter | Year to Date | ||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||
| Concession revenues | $ | 82,114 | $ | 79,870 | 2.8% | $ | 223,477 | $ | 226,435 | -1.3% | ||||||
| Attendance | 18,542 | 18,847 | -1.6% | 50,989 | 53,271 | -4.3% | ||||||||||
| Concession revenue per patron | $ | 4.43 | $ | 4.24 | 4.5% | $ | 4.38 | $ | 4.25 | 3.1% | ||||||
| Same store concession revenues | $ | 80,861 | $ | 79,394 | 1.8% | $ | 215,963 | $ | 222,191 | -2.8% | ||||||
| Same store attendance | 18,223 | 18,672 | -2.4% | 49,161 | 52,103 | -5.6% | ||||||||||
| Concession revenue continuity | Third Quarter | Year to Date | |||||||
| In thousands | Concession | Attendance | Concession | Attendance | |||||
| 2010 as reported | $ | 79,870 | 18,847 | $ | 226,435 | 53,271 | |||
| Same store attendance change | (1,910) | (449) | (12,547) | (2,942) | |||||
| Impact of same store CPP change | 3,377 | - | 6,319 | - | |||||
| New and acquired theatres | 1,253 | 319 | 4,505 | 1,069 | |||||
| Disposed and closed theatres | (476) | (175) | (1,235) | (409) | |||||
| 2011 as reported | $ | 82,114 | 18,542 | $ | 223,477 | 50,989 | |||
Third Quarter
Concession revenues increased 2.8% as compared to the prior year quarter, due to the 4.5% increase in CPP, offset by the 1.6% decrease in attendance. CPP increased from $4.24 in the third quarter of 2010 to $4.43 in the same period in 2011, and represents a third quarter record for Cineplex. Cineplex believes that revised concession offerings (including Poptopia) as well as process improvements designed to increase the speed of service contributed to this increased CPP period over the period. The third quarter of 2011 was the first full quarter where SCENE members could earn SCENE points on concession combo purchases.
While the 10% SCENE discount and SCENE points issued on concession combo purchases have 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 1.3% as compared to the prior year period, due to the 4.3% decrease in attendance, offset by the 3.1% increase in CPP. CPP increased from $4.25 in the first nine months of 2010 to $4.38 in the same period in 2011. This represents the highest CPP Cineplex has recorded through the first nine 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 | Third Quarter | Year to Date | ||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||
| Media | $ | 22,190 | $ | 23,498 | -5.6% | $ | 62,575 | $ | 56,996 | 9.8% |
| Games | 2,492 | 1,396 | 78.5% | 5,456 | 3,644 | 49.7% | ||||
| Other | 7,390 | 6,167 | 19.8% | 21,386 | 19,073 | 12.1% | ||||
| Total | $ | 32,072 | $ | 31,061 | 3.3% | $ | 89,417 | $ | 79,713 | 12.2% |
Other revenues increased 3.3% from $31.1 million in the third quarter of 2010 to $32.1 million in the same period in 2011. This increase was due to higher games and other revenues, offset by lower media revenues. Media revenues for the third quarter of 2011 were $22.2 million, down $1.3 million, or 5.6%, when compared to the prior year period. The decrease was primarily due to lower full-motion and digital pre-show revenues, due to reduced spending by the automotive manufacturers during the period as a result of the impact of the March 2011 tsunami in Japan which resulted in these companies deferring their advertising commitments.
The games revenue increase is primarily due to the acquisition of NWS in the second quarter of 2011 ($1.2 million) and therefore is not included in the prior year comparative. 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 12.2% from $79.7 million in the first nine months of 2010 to $89.4 million during the same period in 2011. Media revenues for the first nine months of 2011 were up $5.6 million, or 9.8%, from the prior year period. This increase was primarily due to higher CDM revenues ($4.2 million) as well as higher full motion and digital pre-show revenues ($1.6 million). CDM includes the results of CDS which was acquired during the third quarter of 2010 and is therefore not fully reflected in the prior period comparative. The increase in games revenue was primarily due to the acquisition of NWS and the addition of the two new XSCAPE centres (SilverCity Oakville which opened in March 2011, and SilverCity Cross Iron Mills which opened on June 30, 2010 and therefore not fully reflected in the prior year comparative). 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 | Third Quarter | Year to Date | |||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||
| Film cost | $ | 85,320 | $ | 81,038 | 5.3% | $ | 230,647 | $ | 245,468 | -6.0% | |||||
| Film cost percentage | 52.5% | 51.5% | 1.9% | 52.0% | 53.4% | -2.6% | |||||||||
Third 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 third quarter of 2011 compared to the prior year period was due to the increase in box office revenue and the 1.9% increase in film cost percentage. The increase in film cost percentage is primarily due to the settlement rate on certain strong performing titles during the third quarter of 2010 being lower than the average film settlement rate.
Year to Date
The year to date decrease in film cost was due to the 3.5% decrease in box office revenues and the 2.6% 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 first half of 2010 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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Concession cost | $ | 16,817 | $ | 16,368 | 2.7% | $ | 46,722 | $ | 48,146 | -3.0% | ||
| Concession cost percentage | 20.5% | 20.5% | 0.0% | 20.9% | 21.3% | -1.9% | ||||||
| Concession margin per patron | $ | 3.52 | $ | 3.37 | 4.5% | $ | 3.47 | $ | 3.35 | 3.6% | ||
Third 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 2.8% increase in concession revenues. The concession cost percentage of 20.5% was in line with the prior year period. The concession margin per patron increased from $3.37 in the third quarter of 2010 to $3.52 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 1.3% decrease in concession revenues and the 1.9% 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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Amortization of property, equipment and leaseholds | $ | 14,372 | $ | 21,494 | -33.1% | $ | 44,574 | $ | 54,824 | -18.7% | ||
| Amortization of intangible assets and other | 2,241 | 2,260 | -0.8% | 6,729 | 8,523 | -21.0% | ||||||
| Amortization expenses as reported | $ | 16,613 | $ | 23,754 | -30.1% | $ | 51,303 | $ | 63,347 | -19.0% | ||
The decrease in amortization of property, equipment and leaseholds of $7.1 million primarily relates to the Fund recording an impairment charge of $3.9 million in amortization of property, equipment and leaseholds during the third quarter of 2010. Additionally, certain valuation adjustments that arose as part of Cineplex's acquisition of the Partnership were fully amortized during the third quarter of 2010 which contributed to the lower amortization in the 2011 period. The transfer of digital projection equipment to CDCP in June 2011 and lower depreciation relating to 35 millimeter projectors due to the circuit's conversion to digital also contributed to the decrease in amortization of property, equipment and leaseholds.
The year to date decreases of $10.3 million for the amortization of property equipment and leaseholds was due to the $3.9 million impairment charge and the fully amortized valuation adjustments discussed above. The $1.8 million decrease for intangible assets are primarily due to certain intangible assets becoming fully amortized during the second quarter of 2010.
Loss (gain) on disposal of assets
The following table shows the movement in the loss (gain) on disposal of assets during the quarter and the year to date (in thousands of Canadian dollars):
| Loss (gain) on disposal of assets | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Loss (gain) on disposal of assets | $ | 487 | $ | (95) | NM | $ | 4 | $ | 1,414 | -99.7% | ||
Third Quarter
The loss on disposal of assets represents the loss recorded on certain assets that were sold or otherwise disposed of. For the third quarter of 2011, Cineplex recorded a loss of $0.5 million on the disposal of assets. Disposal of assets resulted in a gain of $0.1 million for the third quarter of 2010.
Year to Date
For the nine months ended September 30, 2011, disposal of assets resulted in a loss of $4 thousand, comprised of losses recorded on assets that were sold or otherwise disposed of, offset by a gain recorded on the sale of a theatre during the second quarter of 2011 ($1.4 million) and a nominal gain recorded on the transfer of digital projection assets to CDCP. For the nine months ended September 30, 2010, disposal of assets resulted in a loss of $1.4 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 ancillary businesses; 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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Theatre occupancy expenses | $ | 41,040 | $ | 40,334 | 1.8% | $ | 123,855 | $ | 121,394 | 2.0% | ||
| Other operating expenses | 65,620 | 60,455 | 8.5% | 182,193 | 174,231 | 4.6% | ||||||
| General and administrative expenses | 12,068 | 14,326 | -15.8% | 43,459 | 43,286 | 0.4% | ||||||
| Total other costs | $ | 118,728 | $ | 115,115 | 3.1% | $ | 349,507 | $ | 338,911 | 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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Rent | $ | 27,707 | $ | 27,307 | 1.5% | $ | 83,247 | $ | 81,825 | 1.7% | ||
| Other occupancy | 13,636 | 13,394 | 1.8% | 42,091 | 40,616 | 3.6% | ||||||
| Non-recurring legal contingency | - | - | NM | - | 297 | NM | ||||||
| One-time items (i) | (303) | (367) | -17.4% | (1,483) | $ | (1,344) | 10.3% | |||||
| Total | $ | 41,040 | $ | 40,334 | 1.8% | $ | 123,855 | $ | 121,394 | 2.0% | ||
| (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 In thousands |
Third Quarter Occupancy |
Year to Date Occupancy |
|||
| 2010 as reported | $ | 40,334 | $ | 121,394 | |
| Impact of new theatres | 893 | 2,854 | |||
| Impact of disposed theatres | (123) | (951) | |||
| Same store rent change | (195) | 218 | |||
| Non-recurring items | 63 | (104) | |||
| Other | 68 | 444 | |||
| 2011 as reported | $ | 41,040 | $ | 123,855 | |
Third Quarter
Theatre occupancy expenses increased $0.7 million during the third quarter of 2011 compared to the prior year period. This increase was primarily due to the impact of new and acquired theatres net of the impact of disposed theatres.
Year to Date
The increase in theatre occupancy expenses of $2.5 million for the first nine months of 2011 compared to the prior year period was primarily due to the impact of new and acquired theatres net of the impact of disposed theatres, as well as an increase in same-store rent expense.
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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Other operating expenses | $ | 65,620 | $ | 60,455 | 8.5% | $ | 182,193 | $ | 174,231 | 4.6% | ||
| Other operating continuity | Third Quarter | Year to Date | |||
| In thousands | Other Operating | Other Operating | |||
| 2010 as reported | $ | 60,455 | $ | 174,231 | |
| Impact of new theatres | 885 | 3,343 | |||
| Impact of disposed theatres | (449) | (1,125) | |||
| Same store payroll change | (64) | (514) | |||
| Marketing change | 881 | (106) | |||
| Media | 573 | 3,299 | |||
| Theatre refurbishment payment | 1,014 | 1,014 | |||
| Other | 2,325 | 2,051 | |||
| 2011 as reported | $ | 65,620 | $ | 182,193 | |
Third Quarter
Other operating expenses increased $5.2 million during the third quarter of 2011 compared to the prior year period. Higher marketing costs ($0.9 million) and higher media costs ($0.6 million) due to the growth of CDM during the period, and the net impact of new and disposed theatres ($0.4 million) contributed to the increase. Also contributing to the increase was a $1.0 million termination payment paid to a landlord to refurbish theatre space for a disposed theatre. The $2.3 million increase in Other includes a $1.0 million increase in technology royalty costs during the period, the impact of NWS ($0.9 million) which was acquired in the second quarter of 2011 and not included in the prior year comparative, as well as increased utility costs ($0.7 million). Payroll costs were marginally lower than the prior year due to lower theatre attendance, partially offset by the impact of minimum wage increases implemented throughout 2010. Total theatre payroll accounted for 43.2% of total other operating expenses in the third quarter of 2011, compared to 46.5% in the prior year period.
Year to Date
For the nine months ended September 30, 2011, other operating expenses are $8.0 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 ($3.3 million) primarily due to the acquisition of CDS during July 2010, as CDS expenses are included in the full 2011 period and not fully reflected in the prior year comparative, as well as the net impact of new and disposed theatres ($2.2 million) and the $1.0 termination payment discussed above. The Other category includes the impact of NWS ($1.3 million) and higher utility costs ($1.2 million). These increases were partially offset by lower same-store payroll of $0.5 million due to the lower business volumes, as well as $0.5 million decrease in other expenses during the period. Total theatre payroll accounted for 44.7% of total other operating expenses in the first nine months of 2011, compared to 46.2% 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 | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| G&A excluding LTIP and Option plan expense | $ | 9,589 | $ | 9,926 | -3.4% | $ | 30,053 | $ | 29,780 | 0.9% | ||
| LTIP | 1,626 | 2,749 | -40.9% | 6,039 | 9,326 | -35.2% | ||||||
| Option plan | 853 | 1,651 | -48.3% | 7,367 | 4,180 | 76.2% | ||||||
| G&A expenses as reported | $ | 12,068 | $ | 14,326 | -15.8% | $ | 43,459 | $ | 43,286 | 0.4% | ||
Third Quarter
G&A expenses decreased $2.3 million during the third quarter of 2011 compared to the same period in the prior year. This decrease was due to a $0.8 million decrease in option expense during the period, and a $1.1 million decrease in LTIP expense. Cineplex's share price decreased from $26.72 at June 30, 2011 to $26.30 at September 30, 2011, contributing to the decrease in the option plan expense. During the third quarter of 2010, the share price increased from $19.50 at June 30, 2010 to $20.78 at September 30, 2010, resulting in the higher expense in that period.
Year to Date
G&A expenses for the first nine months of 2011 were $0.2 million higher than the prior year period. The $3.2 million increase in the option plan expense during the period was offset by the $3.3 million decrease in LTIP expense during the period. The option plan expense increase is primarily due to a higher proportion of options of the 2009 (strike price $14.00) and 2011 (strike price $23.12) issuances now being vested compared to a year ago. 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 nine months of 2011 compared to the prior year period.
Share of (income) loss of joint ventures
Cineplex's joint ventures in the third quarter and first nine 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 third quarter and first nine 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 (income) loss of joint ventures | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| Share of loss of CDCP | $ | 65 | $ | - | NM | $ | 2,218 | $ | - | NM | ||
| Share of (income) loss of SCENE | (1,494) | 828 | NM | (3,342) | 2,754 | NM | ||||||
| Share of (income) loss of other joint ventures | (57) | (128) | -55.5% | 32 | (371) | NM | ||||||
| Total (income) loss of joint ventures | $ | (1,486) | $ | 700 | NM | $ | (1,092) | $ | 2,383 | NM | ||
Third Quarter
The income recorded in the third quarter of 2011 is primarily related to an adjustment to SCENE's outstanding points balance due to certain members having their points expired during the third quarter of 2011 due to inactivity in the program. This was the result of a change in terms and conditions of the program communicated earlier in 2011 with the completion of the notice period occurring during the third quarter of 2011.
Year to Date
The movement from a loss of $2.4 million in the first nine months of 2010 to income of $1.1 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. Additionally, during the third quarter of 2011, points were expired for certain members as discussed above. The $2.2 million share of loss of CDCP is related to start-up costs relating to CDCP.
EBITDA and adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2011 as compared to the three and nine months ended September 30, 2010 (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
| EBITDA | Third Quarter | Year to Date | ||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||
| EBITDA | $ | 56,889 | $ | 51,536 | 10.4% | $ | 130,850 | $ | 126,630 | 3.3% | ||
| Adjusted EBITDA | $ | 57,441 | $ | 55,070 | 4.3% | $ | 133,072 | $ | 131,136 | 1.5% | ||
| Adjusted EBITDA margin | 20.8% | 20.5% | 0.3% | 17.6% | 17.1% | 0.5% | ||||||
Adjusted EBITDA for the third quarter of 2011 increased $2.4 million, or 4.3%, as compared to the prior year period. This increase was primarily due to the increased revenues during the period and the increased contribution from the SCENE joint venture during the period. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 20.8%, up from 20.5% in the prior year period.
Adjusted EBITDA for the nine months ended September 30, 2011 increased $1.9 million, or 1.5%, as compared to the prior year period. The increase is primarily due to the higher media revenues in 2011 compared to the 2010 period more than offsetting the impact of the lower box office and concession revenues due to the lower theatre attendance. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 17.6%, up from 17.1% 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 third quarter of 2011, adjusted free cash flow per share was $0.713 as compared to distributable cash per unit of $0.773 in the third quarter of 2010. The declared dividend per share and the declared distribution per unit were $0.323 and $0.315, respectively, during these periods. The payout ratios for these periods were 45% and 41%, respectively. For the first nine months of 2011, adjusted free cash flow per share was $1.610 as compared to distributable cash per unit of $1.779 in the first nine months of 2010. The declared dividend per share and the declared distribution per unit were $0.958 and $0.945, respectively, during these periods. The payout ratios for these periods were 60% and 53%, 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, November 10, 2011 |
| 10:00 a.m. Eastern Time |
In order to participate in the conference call, please dial 416-644-3414 or outside of Toronto dial 1-800-814-4859 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 4480932 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 4480932#. The replay will begin at 12:00 p.m. Eastern Time on Thursday, November 10, 2011 and end at 11:59 p.m. Eastern Time on Thursday, November 17, 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) | |||||
| September 30, | December 31, | ||||
| 2011 | 2010 | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 63,279 | $ | 85,343 | |
| Trade and other receivables | 35,779 | 57,950 | |||
| Inventories | 4,431 | 3,767 | |||
| Prepaid expenses and other current assets | 8,624 | 3,848 | |||
| 112,113 | 150,908 | ||||
| Property, equipment and leaseholds | 382,999 | 413,657 | |||
| Deferred income taxes | 12,287 | 25,689 | |||
| Interests in joint ventures | 26,621 | 92 | |||
| Intangible assets | 86,620 | 93,397 | |||
| Goodwill | 608,929 | 608,929 | |||
| $ | 1,229,569 | $ | 1,292,672 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses | $ | 65,808 | $ | 83,700 | |
| Share or unit-based compensation | 2,494 | 14,307 | |||
| Dividends or distributions payable | 6,284 | - | |||
| Income taxes payable | 11,929 | 87 | |||
| Deferred revenue | 51,585 | 82,027 | |||
| Capital lease obligations | 2,368 | 2,242 | |||
| Fair value of interest rate swap agreements | 668 | 5,482 | |||
| 141,136 | 187,845 | ||||
| Non-current liabilities | |||||
| Share or unit-based compensation | 8,164 | 8,014 | |||
| Long-term debt | 232,345 | 233,588 | |||
| Fair value of interest rate swap agreements | 611 | 3,298 | |||
| Capital lease obligations | 27,093 | 28,885 | |||
| Post-employment benefit obligations | 4,741 | 4,534 | |||
| Other liabilities | 100,700 | 98,964 | |||
| Deficiency interest in joint venture | 7,702 | 12,338 | |||
| Convertible debentures | 79,010 | 116,481 | |||
| Liability for exchangeable interests | - | 3,851 | |||
| 460,366 | 509,953 | ||||
| 601,502 | 697,798 | ||||
| Equity | |||||
| Share capital | 762,849 | - | |||
| Unit capital | - | 710,121 | |||
| Deficit | (130,276) | (113,120) | |||
| Accumulated other comprehensive loss | (4,506) | (3,534) | |||
| Contributed surplus | - | 1,407 | |||
| 628,067 | 594,874 | ||||
| $ | 1,229,569 | $ | 1,292,672 | ||
| Cineplex Inc. | ||||||||
| Interim Consolidated Statements of Operations | ||||||||
| (Unaudited) | ||||||||
| (expressed in thousands of Canadian dollars) | ||||||||
| Three months | Three months | Nine months | Nine months | |||||
| ended | ended | ended | ended | |||||
| September 30, | September 30, | September 30, | September 30, | |||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Revenues | ||||||||
| Box office | $ | 162,522 | $ | 157,330 | $ | 443,613 | $ | 459,730 |
| Concessions | 82,114 | 79,870 | 223,477 | 226,435 | ||||
| Other | 32,072 | 31,061 | 89,417 | 79,713 | ||||
| 276,708 | 268,261 | 756,507 | 765,878 | |||||
| Expenses | ||||||||
| Film cost | 85,320 | 81,038 | 230,647 | 245,468 | ||||
| Cost of concessions | 16,817 | 16,368 | 46,722 | 48,146 | ||||
| Depreciation and amortization | 16,613 | 23,754 | 51,303 | 63,347 | ||||
| Loss (gain) on disposal of assets | 487 | (95) | 4 | 1,414 | ||||
| Other costs | 118,728 | 115,115 | 349,507 | 338,911 | ||||
| 237,965 | 236,180 | 678,183 | 697,286 | |||||
| Income before undernoted | 38,743 | 32,081 | 78,324 | 68,592 | ||||
| Share of (income) loss of joint ventures | (1,486) | 700 | (1,092) | 2,385 | ||||
| Change in fair value of financial instruments | - | 3,629 | - | 3,092 | ||||
| Interest expense | 6,275 | 5,848 | 17,886 | 17,320 | ||||
| Interest income | (381) | (162) | (804) | (335) | ||||
| Income before income taxes | 34,335 | 22,066 | 62,334 | 46,130 | ||||
| Provision for income taxes | ||||||||
| Current | 5,973 | - | 12,011 | 3 | ||||
| Deferred | 2,625 | 1,996 | 11,994 | 99 | ||||
| 8,598 | 1,996 | 24,005 | 102 | |||||
| Net income | $ | 25,737 | $ | 20,070 | $ | 38,329 | $ | 46,028 |
| Cineplex Inc. | ||||||||
| Interim Consolidated Statements of Comprehensive Income | ||||||||
| (Unaudited) | ||||||||
| (expressed in thousands of Canadian dollars) | ||||||||
| Three months | Three months | Nine months | Nine months | |||||
| ended | ended | ended | ended | |||||
| September 30, | September 30, | September 30, | September 30, | |||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Net income | $ | 25,737 | $ | 20,070 | $ | 38,329 | $ | 46,028 |
| Other comprehensive (loss) income | ||||||||
| Changes in fair value of interest rate contracts | (242) | 298 | 1,281 | 680 | ||||
| Associated deferred income taxes (recovery) | 12 | (513) | 2,253 | (1,749) | ||||
| Other comprehensive (loss) income | (254) | 811 | (972) | 2,429 | ||||
| Comprehensive income | $ | 25,483 | $ | 20,881 | $ | 37,357 | $ | 48,457 |
| Cineplex Inc. | ||||||||||||
| Interim Consolidated Statements of Changes in Equity | ||||||||||||
| (Unaudited) | ||||||||||||
| (expressed in thousands of Canadian dollars) | ||||||||||||
| For the nine months ended September 30, 2011 | ||||||||||||
| Unit capital |
Share capital |
Contri- buted Surplus |
Accum- ulated other compre- hensive loss |
Deficit | Total | |||||||
| Balance - January 1, 2011 | $ | 710,121 | $ | - | $ | 1,407 | $ | (3,534) | $ | (113,120) | $ | 594,874 |
| Effect of corporate conversion | (710,121) | 744,760 | (1,407) | - | - | 33,232 | ||||||
| Net income | - | - | - | - | 38,329 | 38,329 | ||||||
| Other comprehen -sive loss |
- | - | - | (972) | - | (972) | ||||||
| Dividends declared | - | - | - | - | (55,485) | (55,485) | ||||||
| Long-term incentive plan obligation | - | (2,504) | - | - | - | (2,504) | ||||||
| Long-term incentive plan shares | - | 1,888 | - | - | - | 1,888 | ||||||
| Issuance of shares on conversion of debentures | 19,080 | 19,080 | ||||||||||
| Shares repurchased and cancelled | - | (375) | - | - | - | (375) | ||||||
| Balance - September 30, 2011 | $ | - | $ | 762,849 | $ | - | $ | (4,506) | $ | (130,276) | $ | 628,067 |
| For the nine months ended September 30, 2010 | |||||||||||||||
| Unit capital |
Share capital |
Contri- buted surplus |
Accum- ulated other compre- hensive loss |
Deficit | Total | ||||||||||
| Balance - January 1, 2010 | $ | 703,706 | $ | - | $ | - | $ | (7,501) | $ | (91,396) | $ | 604,809 | |||
| Net income | - | - | - | - | 46,028 | 46,028 | |||||||||
| Other comprehen- sive income |
- | - | - | 2,429 | - | 2,429 | |||||||||
| Distributions declared | - | - | - | - | (53,861) | (53,861) | |||||||||
| Long-term incentive plan units | (1,063) | - | 1,407 | - | - | 344 | |||||||||
| Issuance of units on conversion of debentures | 3,163 | - | - | - | - | 3,163 | |||||||||
| Issuance of units under the exchange agreement | 1,599 | - | - | - | - | 1,599 | |||||||||
| Balance - September 30, 2010 | $ | 707,405 | $ | - | $ | 1,407 | $ | (5,072) | $ | (99,229) | $ | 604,511 | |||
| Cineplex Inc. | ||||||||||||
| Interim Consolidated Statements of Cash Flows | ||||||||||||
| (Unaudited) | ||||||||||||
| (expressed in thousands of Canadian dollars) | ||||||||||||
| Three months ended September 30, 2011 |
Three months ended September 30, 2010 |
Nine months ended September 30, 2011 |
Nine months ended September 30, 2010 |
|||||||||
| Cash provided by (used in) | ||||||||||||
| Operating activities | ||||||||||||
| Net income | $ | 25,737 | $ | 20,070 | $ | 38,329 | $ | 46,028 | ||||
| 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 | 16,613 | 23,754 | 51,303 | 63,347 | ||||||||
| Amortization of tenant inducements, rent averaging liabilities and fair value lease contract liabilities | (1,074) | (988) | (2,944) | (2,685) | ||||||||
| Amortization of debt issuance costs | 237 | 194 | 701 | 573 | ||||||||
| Loss (gain) on disposal of assets | 487 | (95) | 4 | 1,414 | ||||||||
| Deferred income taxes | 2,625 | 1,996 | 11,994 | 99 | ||||||||
| Interest rate swap agreements - non-cash interest | 1,279 | (176) | 1,143 | (568) | ||||||||
| Non-cash share or unit-based compensation | 37 | 587 | 293 | 1,884 | ||||||||
| Change in fair value of financial instruments | - | 3,629 | - | 3,092 | ||||||||
| Accretion of convertible debentures | 251 | 351 | 1,078 | 998 | ||||||||
| Net change in interests in joint ventures | 578 | 1,534 | (2,860) | 3,447 | ||||||||
| Tenant inducements | 1,535 | 1,221 | 5,585 | 2,228 | ||||||||
| Changes in operating assets and liabilities | (181) | (12,634) | (21,101) | (33,530) | ||||||||
| Net cash provided by operating activities | 48,124 | 39,443 | 83,525 | 86,327 | ||||||||
| Investing activities | ||||||||||||
| Proceeds from sale of assets | 82 | 863 | 1,822 | 2,213 | ||||||||
| Purchases of property, equipment and leaseholds | (12,224) | (14,839) | (40,803) | (38,409) | ||||||||
| Deposits for business acquisitions | - | 3,970 | - | - | ||||||||
| Acquisition of businesses, net of cash acquired | - | (3,781) | (3,280) | (4,803) | ||||||||
| Additional equity funding of CDCP | (210) | - | (378) | - | ||||||||
| Net cash used in investing activities | (12,352) | (13,787) | (42,639) | (40,999) | ||||||||
| Financing activities | ||||||||||||
| Dividends or distributions paid | (18,804) | (17,973) | (49,201) | (53,837) | ||||||||
| Borrowings under credit facility | - | 22,000 | 27,000 | 37,000 | ||||||||
| Repayment of credit facility | - | (22,000) | (27,000) | (37,000) | ||||||||
| Payments under capital leases | (566) | (504) | (1,666) | (1,484) | ||||||||
| Acquisition of long-term incentive plan shares or units | - | - | (9,793) | (9,620) | ||||||||
| Deferred financing fees | (1,915) | - | (1,915) | - | ||||||||
| Purchase of shares for cancellation | (375) | - | (375) | - | ||||||||
| Net cash used in financing activities | (21,660) | (18,477) | (62,950) | (64,941) | ||||||||
| Increase (decrease) in cash and cash equivalents during the period | 14,112 | 7,179 | (22,064) | (19,613) | ||||||||
| Cash and cash equivalents - Beginning of period | 49,167 | 67,854 | 85,343 | 94,646 | ||||||||
| Cash and cash equivalents - End of period | $ | 63,279 | $ | 75,033 | $ | 63,279 | $ | 75,033 | ||||
| Supplemental Information | ||||||||||||
| Cash paid for interest | $ | 3,674 | $ | 3,999 | $ | 13,762 | $ | 14,710 | ||||
| Cash paid for income taxes - net | $ | - | $ | 17 | $ | 65 | $ | 30 | ||||
| Cineplex Inc. | |||||||||
| Consolidated Supplemental Information | |||||||||
| (Unaudited) | |||||||||
| (expressed in thousands of Canadian dollars) | |||||||||
| Reconciliation to Adjusted EBITDA | |||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||
| Net income | $ | 25,737 | $ | 20,070 | $ | 38,329 | $ | 46,028 | |
| Depreciation and amortization (i) | 16,660 | 23,784 | 51,434 | 63,515 | |||||
| Interest expense | 6,275 | 5,848 | 17,886 | 17,320 | |||||
| Interest income | (381) | (162) | (804) | (335) | |||||
| Current income tax expense | 5,973 | - | 12,011 | 3 | |||||
| Deferred income tax expense | 2,625 | 1,996 | 11,994 | 99 | |||||
| EBITDA | 56,889 | 51,536 | 130,850 | 126,630 | |||||
| Change in fair value of financial instruments | - | 3,629 | - | 3,092 | |||||
| Loss (gain) on disposal of assets | 487 | (95) | 4 | 1,414 | |||||
| CDCP equity loss (ii) | 65 | - | 2,218 | - | |||||
| Adjusted EBITDA | $ | 57,441 | $ | 55,070 | $ | 133,072 | $ | 131,136 | |
| (i) Includes the depreciation and amortization incurred by the joint ventures (2011 - $47 for three months and $131 for nine months, 2010 - $30 for three months and $168 for nine 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 September 30, | Nine months ended September 30, | ||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||
| Theatre occupancy expenses | $ | 41,040 | $ | 40,334 | $ | 123,855 | $ | 121,394 | |
| Other operating expenses | 65,620 | 60,455 | 182,193 | 174,231 | |||||
| General and administrative expenses | 12,068 | 14,326 | 43,459 | 43,286 | |||||
| Total other costs | $ | 118,728 | $ | 115,115 | $ | 349,507 | $ | 338,911 | |
| 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 | Nine months ended | |||||||||
| September 30, | September 30, | |||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||
| Cash provided by operating activities | $ | 48,124 | $ | 39,443 | $ | 83,525 | $ | 86,327 | ||
| Less: Total capital expenditures (i) | (12,142) | (14,839) | (38,981) | (38,409) | ||||||
| Standardized free cash flow/Standardized distributable cash | 35,982 | 24,604 | 44,544 | 47,918 | ||||||
| Add/(Less): | ||||||||||
| Changes in operating assets and liabilities (ii) | 181 | 12,634 | 20,942 | 33,530 | ||||||
| Changes in operating assets and liabilities of joint ventures (ii) | (2,064) | (834) | 1,927 | (1,062) | ||||||
| Tenant inducements (iii) | (1,535) | (1,221) | (5,585) | (2,228) | ||||||
| Principal component of capital lease obligations | (566) | (504) | (1,666) | (1,484) | ||||||
| New build capital expenditures and other (iv) | 8,166 | 10,210 | 29,931 | 27,256 | ||||||
| Share of profit (loss) of joint ventures, net of non-cash depreciation (v) | 1,598 | (660) | 3,441 | (2,196) | ||||||
| Cash invested in CDCP (v) | (159) | - | (378) | - | ||||||
| Adjusted free cash flow/Distributable cash | $ | 41,603 | $ | 44,229 | $ | 93,156 | $ | 101,734 | ||
| Less: Exchangeable interests share of distributable cash | - | (133) | - | (387) | ||||||
| Adjusted free cash flow/Distributable cash available to shareholders/unitholders | $ | 41,603 | $ | 44,096 | $ | 93,156 | $ | 101,347 | ||
| Average number of shares/units outstanding | 58,323,750 | 57,060,387 | 57,857,376 | 56,979,233 | ||||||
| Adjusted free cash flow per share/Distributable cash per unit | $ | 0.713 | $ | 0.773 | $ | 1.610 | $ | 1.779 | ||
| (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 third 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