Cineplex Inc.
TSX : CGX

Cineplex Inc.

August 11, 2011 06:15 ET

Cineplex Inc. Reports Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 11, 2011) -

NOT FOR RELEASE OVER US NEWSWIRE SERVICES

Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for the second quarter of 2011.

Second Quarter Results


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                                                                Period over 
                         Second quarter     Second quarter    Period Change 
                                   2011               2010              (i) 
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Total Revenues         $  258.4 million   $  242.4 million              6.6%
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Attendance                 17.2 million       16.5 million              3.8%
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Other Revenues         $   31.1 million   $   26.6 million             17.0%
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Net Income (ii)        $   13.4 million   $   22.2 million            -39.4%
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Adjusted EBITDA        $   44.4 million   $   41.4 million              7.2%
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Adjusted EBITDA Margin             17.2%              17.1%             0.1%
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Adjusted Free Cash                                                          
 Flow per                                                                   
 Share/Distributable                                                        
 Cash Per Unit         $          0.503   $          0.544             -7.5%
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First Six Months Results


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                                                                Period over 
                       Six months ended   Six months ended    Period Change 
                          June 30, 2011      June 30, 2010              (i) 
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Total Revenues         $  479.8 million   $  497.6 million             -3.6%
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Attendance                 32.4 million       34.4 million             -5.7%
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Other Revenues         $   57.3 million   $   48.7 million             17.9%
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Net Income (ii)        $   12.6 million   $   26.0 million            -51.5%
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Adjusted EBITDA        $   75.6 million   $   76.1 million             -0.6%
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Adjusted EBITDA Margin             15.8%              15.3%             0.5%
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Adjusted Free Cash                                                          
 Flow per                                                                   
 Share/Distributable                                                        
 Cash Per Unit         $          0.895   $          1.006            -11.0%
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(i)   Period over Period change calculated based on thousands of dollars    
      except percentage and per share/unit values.                          
(ii)  Cineplex's results for the three and six months ended June 30, 2011   
      were negatively impacted by changes in income tax expense due to      
      Cineplex's conversion to a Corporation on January 1, 2011. Also       
      impacting net income is the impact of the fair value of financial     
      instruments that affected net income in the three and six months ended
      June 30, 2010 for items that are no longer fair valued in 2011.       

"Cineplex delivered another quarter of solid results with total revenues up 6.6% and adjusted EBITDA up 7.2% versus the second quarter last year," said Ellis Jacob, President and CEO, Cineplex Entertainment. "Excluding share-based compensation, adjusted EBITDA grew by 15.7% compared to the second quarter of last year. All three revenue areas generated growth during the quarter - box office revenues increased 5.2% to $151.1 million; concession revenues increased 5.5% to $76.2 million; and other revenues increased 17.0% to $31.1 million. Net income decreased $8.8 million to $13.4 million primarily as a result of three items totalling $15.9 million. These included a $9.3 million increase in income tax expense and a $4.4 million change in the fair value of financial instrument items related to the company's conversion to a corporation on January 1, 2011, in addition to a $2.2 million share of loss of joint ventures related to the start-up of the Canadian Digital Cinema Partnership ("CDCP"). On a YTD basis, adjusted EBITDA of $75.6 million is on track with last year's second quarter YTD of $76.1 million, which included the tremendous success of Avatar."

"Other achievements during the second quarter included the completion of financing for CDCP, enabling us to complete the deployment of digital projectors throughout the balance of our circuit by the end of 2012," said Jacob. "Cineplex Media continued to grow during the quarter increasing revenue by 16.2%, primarily due to increased contributions from Cineplex Digital Solutions. SCENE, our entertainment loyalty program, reached the 3 million member milestone in early July, continuing to exceed our expectations. Our concession business continued to grow with CPP increasing from $4.36 to $4.44, representing a new quarterly record. We added five new UltraAVX auditoriums bringing our total UltraAVX locations to 22, and we also acquired New Way Sales Games Ltd., one of our games suppliers for $3.3 million. We are very pleased with the results and continue to have strong growth from all of our business areas."

EBITDA, adjusted free cash flow and distributable cash are not measures recognized by generally accepted accounting principles ("GAAP") and do not have standardized meanings in accordance with such principles. Therefore, EBITDA, adjusted free cash flow and distributable cash may not be comparable to similar measures presented by other issuers. EBITDA is calculated by adding back to net income, income tax expense, amortization and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for gains and losses on disposal of assets, the change in fair value of financial instruments and the share of loss of the Canadian Digital Cinema Partnership ("CDCP"). Adjusted free cash flow is a non-GAAP measure generally used by Canadian corporations, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Distributable cash is a non-GAAP measure generally used in Canadian open-ended trusts, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Management uses adjusted EBITDA, adjusted free cash flow and distributable cash to evaluate performance primarily because of the significant effect certain unusual or non-recurring charges and other items have on EBITDA from period to period. For a detailed reconciliation of net income to EBITDA and adjusted EBITDA and from cash used in operating activities to adjusted free cash flow and distributable cash, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com.

Adoption of International Financial Reporting Standards

Cineplex has commenced reporting under International Financial Reporting Standards ("IFRS") with the release of its first quarter 2011 results. Subject to certain transitional elections disclosed in our unaudited interim consolidated financial statements, Cineplex has consistently applied the same accounting policies under IFRS in its opening IFRS balance sheet at January 1, 2010 and throughout all periods presented, as if these accounting policies under IFRS had always been in effect.

In addition to the disclosure in the notes to the unaudited interim consolidated financial statements, we have provided a summary of the quarterly results under IFRS in the tables following.

Second Quarter and Year to Date Results

Cineplex's results for the three and six months ended June 30, 2011 as compared to the Fund's results for the three and six months ended June 30, 2010 are presented below.

Total revenues

Total revenues for the three months ended June 30, 2011 increased $16.0 million (6.6%) to $258.4 million as compared to the prior year period. Total revenues for the six months ended June 30, 2011 decreased $17.8 million (3.6%) to $479.8 million as compared to the prior year period. A discussion of the factors affecting the changes in box office, concession and other revenues for the periods is provided on the following pages.

Box office revenues

The following table highlights the movement in box office revenues, attendance and BPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance reported in thousands of patrons, and per patron amounts, unless otherwise noted):


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Box office                                                                  
 revenues              Second Quarter                  Year to Date         
               -------------------------------------------------------------
                    2011       2010   Change       2011       2010   Change 
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Box office                                                                  
 revenues       $151,135   $143,608      5.2%  $281,091   $302,400     -7.0%
Attendance        17,175     16,549      3.8%    32,447     34,424     -5.7%
Box office                                                                  
 revenue per                                                                
 patron         $   8.80   $   8.68      1.4%  $   8.66   $   8.78     -1.4%
Canadian                                                                    
 industry                                                                   
 revenues(1)                             3.2%                          -8.3%
Same store box                                                              
 office                                                                     
 revenues       $147,314   $142,304      3.5%  $270,611   $297,532     -9.0%
Same store                                                                  
 attendance       16,767     16,356      2.5%    31,281     33,787     -7.4%
% Total box                                                                 
 from 3D,                                                                   
 UltraAVX and                                                               
 IMAX               26.8%      25.9%     0.9%      24.9%      30.1%    -5.2%
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(1) The Motion Picture Theatre Associations of Canada ("MPTAC") reported    
that the Canadian exhibition industry reported a box office increase of 1.7%
for the period from April 1, 2011 to June 30, 2011 as compared to the period
from April 2, 2010 to July 1, 2010. On a basis consistent with Cineplex's   
calendar reporting period (April 1 to June 30), the Canadian industry box   
office increase is estimated to be 3.2%. The Motion Picture Theatre         
Associations of Canada ("MPTAC") reported that the Canadian exhibition      
industry reported a box office decrease of 8.3% for the period from December
31, 2010 to June 30, 2011 as compared to the period from January 1, 2010 to 
July 1, 2010. On a basis consistent with Cineplex's calendar reporting      
period (January 1 to June 30), the Canadian industry box office decrease is 
estimated to be substantially the same amount.                              
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Box office continuity         Second Quarter             Year to Date       
In thousands               Box Office  Attendance    Box Office  Attendance 
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2010 as reported          $   143,608      16,549   $   302,400      34,424 
Same store attendance                                                       
 change                         3,573         411       (22,070)     (2,506)
Impact of same store BPP                                                    
 change                         1,437           -        (4,851)          - 
New and acquired theatres       3,481         361         7,135         763 
Disposed and closed                                                         
 theatres                        (964)       (146)       (1,523)       (234)
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2011 as reported          $   151,135      17,175   $   281,091      32,447 
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Second quarter


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                             % Total                                % Total 
Q2 2011 Top Cineplex Films       Box   Q2 2010 Top Cineplex Films       Box 
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1  Pirates of the Caribbean:     8.9%   1 Iron Man 2 (ii)              11.0%
   On Stranger Tides (i)(ii)                                                
2  The Hangover 2                7.7%   2 Shrek Forever After           8.9%
                                          (i)(ii)                           
3  Fast Five (ii)                7.7%   3 How to Train your Dragon      6.7%
                                          (i)(ii)                           
4  Thor (i)(ii)                  7.5%   4 Clash of the Titans (i)       6.6%
5  Bridesmaids                   6.7%   5 Toy Story 3 (i)(ii)           6.6%
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      i = Film screened in 3D.                                              
      ii = Film screened in IMAX.                                           

Box office revenues increased $7.5 million, or 5.2%, to $151.1 million during the second quarter of 2011, compared to $143.6 million recorded in the same period in 2010. This increase was primarily due to a 3.8% increase in attendance, mainly due to the success of the latest installments in several strong film franchises. The top three films during the second quarter of 2011 are the latest sequels in successful franchises.

BPP increased $0.12, from $8.68 in the second quarter of 2010 to $8.80 in the same period in 2011 due to premium-priced product (3D, UltraAVX and IMAX) accounting for 26.8% of box office revenues in the current quarter, up from 25.9% in the prior year period. Film product during the second quarter of 2011 catered to mature audiences more than the product in the prior year period, contributing to the BPP increase. The increase in the percentage of box office revenues from premium priced product was due to the 22 UltraAVX installations which began on June 30, 2010 and continued through the second quarter of 2011, partially offset by slightly lower 3D and IMAX revenues compared to the prior year period, due to two films in the top five during the second quarter of 2011 not being screened in either IMAX or 3D (The Hangover 2 and Bridesmaids), whereas all of the top five films in the prior year period were screened in 3D with four of those films screened in IMAX.

Cineplex's investment in digital and 3D technology over the last three years has positioned it to take advantage of the price premiums offered on 3D product. This investment in 3D technology, as well as other premium-priced technology such as UltraAVX, contributed to Cineplex outperforming the Canadian industry during the second quarter.

Year to Date


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Year to Date 2011 Top         % Total  Year to Date 2010 Top        % Total 
 Cineplex Films                   Box  Cineplex Films                   Box 
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1  Pirates of the Caribbean:      4.8%  1 Avatar (i)(ii)               13.9%
   On Stranger Tides (i)(ii)                                                
2  The Hangover 2                 4.2%  2 Alice in Wonderland           7.6%
                                          (i)(ii)                           
3  Fast Five (ii)                 4.1%  3 Iron Man 2 (ii)               5.2%
4  Thor (i)(ii)                   4.0%  4 Shrek Forever After           4.2%
                                          (i)(ii)                           
5  Bridesmaids                    3.6%  5 How to Train your Dragon      4.1%
                                          (i)(ii)                           
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      i = Film screened in 3D.                                              
      ii = Film screened in IMAX.                                           

Box office revenues for the first six months of 2011 were $281.1 million or 7.0% lower than the prior year period. The 2010 period included Avatar which became the highest grossing film of all-time, and accounted for 13.9%, or $42.0 million of Cineplex's box office revenue in the prior year period, compared to 4.8%, or $13.5 million, for Cineplex's top grossing film during the current period, Pirates of the Caribbean: On Stranger Tides. The tough comparator to Avatar during the first quarter was partially offset by the higher box office revenues recorded in the second quarter of 2011 compared to the second quarter of 2010.

BPP for the first six months of 2011 decreased $0.12, from $8.78 in 2010 to $8.66 in the same period in 2011. This decrease was primarily due to the decrease in revenues from premium-priced product. Premium-priced offerings accounted for 30.1% of the Fund's box office revenue in the 2010 period, compared to 24.9% in the current period. All five of the top five films in 2010 were screened in IMAX, and four of those were screened in 3D (2011 - three of the top five in IMAX and two in 3D).

Concession revenues

The following table highlights the movement in concession revenues, attendance and CPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance and same store attendance reported in thousands of patrons, and per patron amounts):


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Concession revenues          Second Quarter              Year to Date       
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
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Concession revenues     $ 76,209 $ 72,236    5.5%  $141,363 $146,565   -3.5%
Attendance                17,175   16,549    3.8%    32,447   34,424   -5.7%
Concession revenue per                                                      
 patron                 $   4.44 $   4.36    1.8%  $   4.36 $   4.26    2.3%
Same store concession                                                       
 revenues               $ 74,412 $ 71,620    3.9%  $136,667 $144,427   -5.4%
Same store attendance     16,767   16,356    2.5%    31,281   33,787   -7.4%
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Concession revenue                                                          
 continuity                   Second Quarter             Year to Date       
In thousands               Concession  Attendance    Concession  Attendance 
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2010 as reported          $    72,236      16,549   $   146,565      34,424 
Same store attendance                                                       
 change                         1,798         411       (10,713)     (2,506)
Impact of same store CPP                                                    
 change                           994           -         2,952           - 
New and acquired theatres       1,639         361         3,318         763 
Disposed and closed                                                         
 theatres                        (458)       (146)         (759)       (234)
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2011 as reported          $    76,209      17,175   $   141,363      32,447 
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Second Quarter

Concession revenues increased 5.5% as compared to the prior year quarter, due to the 3.8% increase in attendance and the 1.8% increase in CPP. CPP increased from $4.36 in the second quarter of 2010 to $4.44 in the same period in 2011, and represents a quarterly record for Cineplex. Cineplex believes that revised concession offerings as well as process improvements designed to increase the speed of service that were implemented throughout 2010 contributed to this increased CPP period over period.

While the 10% SCENE discount has a negative impact on CPP, Cineplex believes that this program drives incremental visits and concession purchases, resulting in higher overall concession revenues.

Year to Date

Concession revenues decreased 3.5% as compared to the prior year period, due to the 5.7% decrease in attendance, offset by the 2.3% increase in CPP. CPP increased from $4.26 in the first six months of 2010 to $4.36 in the same period in 2011. This represents the highest CPP Cineplex has recorded through the first six months of a given year.

Other revenues

The following table highlights the movement in media, games and other revenues for the quarter and the year to date (in thousands of Canadian dollars):


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Other revenues               Second Quarter              Year to Date       
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
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Media                   $ 22,446 $ 19,324   16.2%  $ 40,385 $ 33,498   20.6%
Games                      1,729    1,067   62.0%     2,964    2,248   31.9%
Other                      6,888    6,168   11.7%    13,996   12,906    8.4%
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Total                   $ 31,063 $ 26,559   17.0%  $ 57,345 $ 48,652   17.9%
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Other revenues increased 17.0% from $26.6 million in the second quarter of 2010 to $31.1 million in the same period in 2011. Media revenues for the second quarter of 2011 were $22.4 million, up $3.1 million, or 16.2%, from the prior year period. The increase is primarily due to higher CDM revenues ($2.8 million). During the second quarter of 2011, CDM includes the results of CDS which was acquired during the third quarter of 2010 and is therefore not included in the prior period comparative.

The games revenue increase is primarily due to the acquisition of NWS in May 2011 ($0.4 million) and therefore is not included in the prior year comparative. The addition of XSCAPE Entertainment Centres at SilverCity CrossIron Mills Cinemas in Calgary, Alberta, which opened on June 30, 2010, and SilverCity Oakville Cinemas in Oakville, Ontario, which opened in March 2011 also contributed to this increase. The increase in Other is primarily due to higher breakage revenues associated with increased sales of gift cards and coupons.

Year to Date

Other revenues increased 17.9% from $48.7 million in the first six months of 2010 to $57.3 million during the same period in 2011. Media revenues for the first six months of 2011 were up $6.9 million, or 20.6%, from the prior year period. This increase was primarily due to higher CDM revenues ($4.0 million) as well as higher full motion and digital pre-show revenues ($3.8 million). The increase in games revenue was primarily due to the acquisition of NWS in May 2011 and the addition of the two new XSCAPE centres. The increase in the other category is primarily due to higher breakage revenues associated with increased sales of gift cards and coupons.

Film cost

The following table highlights the movement in film cost and film cost as a percentage of box office revenue ("film cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except film cost percentage):


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Film cost              Second Quarter                  Year to Date         
               -------------------------------------------------------------
                    2011       2010   Change       2011       2010   Change 
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Film cost       $ 79,783   $ 77,909      2.4%  $145,327   $164,430    -11.6%
Film cost                                                                   
 percentage         52.8%      54.3%               51.7%      54.4%         
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Second Quarter

Film cost varies primarily with box office revenue, and can vary from quarter to quarter based on the relative strength of the titles exhibited during the period. The increase in the second quarter of 2011 compared to the prior year period was due to the increase in attendance, partially offset by the 1.5% decrease in film cost percentage. The decrease in film cost percentage is primarily due to the settlement rate on certain strong performing titles during the second quarter of 2011 being lower than the average film settlement rate.

Year to Date

The year to date decrease in film cost was due to the 7.0% decrease in box office revenues and the 2.7% decrease in film cost percentage during the period. The decrease in the film cost percentage as compared to the prior year period is primarily due to the settlement rate on certain strong performing titles during the 2010 period being higher than the average settlement rate.

Cost of concessions

The following table highlights the movement in concession cost and concession cost as a percentage of concession revenues ("concession cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except concession cost percentage and concession margin per patron):


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Cost of                                                                     
 concessions           Second Quarter                  Year to Date         
               -------------------------------------------------------------
                    2011       2010   Change       2011       2010   Change 
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Concession cost $ 16,257   $ 14,985      8.5%  $ 29,905   $ 31,778     -5.9%
Concession cost                                                             
 percentage         21.3%      20.7%               21.2%      21.7%         
Concession                                                                  
 margin per                                                                 
 patron         $   3.49   $   3.46      0.9%  $   3.44   $   3.33      3.3%
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Second Quarter

Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in concession cost as compared to the prior year period was due to the 5.5% increase in concession revenues and the 0.6% increase in concession cost percentage. The concession margin per patron increased from $3.46 in the second quarter of 2010 to $3.49 in the same period in 2011, reflecting the impact of the higher CPP during the period.

Year to Date

The decrease in concession cost during the period was due to the 3.5% decrease in concession revenues and the 0.5% decrease in the concession cost percentage. Changes in Cineplex's reduced price Tuesday program resulted in a decrease in concession cost percentage, partially offset by the impact of issuing SCENE points on concession combos which began in June 2011.

Depreciation and amortization

The following table highlights the movement in depreciation and amortization expenses during the quarter and year to date (in thousands of Canadian dollars):


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Amortization expenses         Second Quarter             Year to Date       
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
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Amortization of                                                             
 property, equipment                                                        
 and leaseholds         $ 15,078 $ 16,928  -10.9%  $ 30,202 $ 33,330   -9.4%
Amortization of                                                             
 intangible assets and                                                      
 other                  $  2,240    2,788  -19.7%     4,488    6,263  -28.3%
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Amortization expenses                                                       
 as reported            $ 17,318 $ 19,716  -12.2%  $ 34,690 $ 39,593  -12.4%
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The decrease in amortization of property, equipment and leaseholds of $1.9 million primarily relates to certain valuation adjustments that arose as part of Cineplex's acquisition of the Partnership becoming fully amortized subsequent the second quarter of 2010. The transfer of digital projection equipment to CDCP during June 2011 also contributed to the decrease in amortization of property, equipment and leaseholds. The $0.5 million decrease in amortization of intangible assets and other was due to certain intangible assets becoming fully amortized during the second quarter of 2010. The year to date decreases of $3.1 million for the amortization of property equipment and leaseholds and $1.8 million decrease for intangible assets are primarily due to the fully amortized assets discussed above.

(Gain) loss on disposal of assets

The following table shows the movement in the (gain) loss on disposal of assets during the quarter and the year to date (in thousands of Canadian dollars):


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(Gain) loss on                                                              
 disposal of assets          Second Quarter              Year to Date       
                      ------------------------------------------------------
                           2011       2010 Change     2011       2010 Change
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(Gain) loss on                                                              
 disposal of assets    $ (1,020)  $    745     NM $   (483)  $  1,509     NM
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Second Quarter

The gain on disposal of assets represents the gain recorded on the sale of a theatre during the three months ended June 30, 2011 ($1.4 million) and a nominal gain recorded on the transfer of digital projection assets to CDCP. These gains were partially offset by the loss on assets that were sold or otherwise disposed of, including the loss recognized on the write off of the net book value of the portion or component of existing equipment that is replaced or improved, with the replacement or improved asset being recorded as a new asset. Disposal of assets resulted in a loss of $0.7 million for the second quarter of 2010.

Year to Date

For the six months ended June 30, 2011, disposal of assets resulted in a gain of $0.5 million, comprised of the gain on the sale of the theatre and transfer of assets to CDCP described above, net of losses recorded on assets that were sold or otherwise disposed of. For the six months ended June 30, 2010, disposal of assets resulted in a loss of $1.5 million.

Other costs

Other costs include three main sub-categories of expenses, including theatre occupancy expenses, which capture the rent and associated occupancy costs for Cineplex's various operations; other operating expenses, which include the costs related to running Cineplex's theatres; and general and administrative expenses, which includes costs related to managing Cineplex's operations, including the head office expenses. Please see the discussions below for more details on these categories. The following table highlights the movement in other costs for the quarter and the year to date (in thousands of Canadian dollars):


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Other costs                   Second Quarter             Year to Date       
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
----------------------------------------------------------------------------

Theatre occupancy                                                           
 expenses               $ 41,274 $ 40,442    2.1%  $ 82,815 $ 81,060    2.2%
Other operating                                                             
 expenses                 60,341   55,355    9.0%   116,573  113,776    2.5%
General and                                                                 
 administrative                                                             
 expenses                 15,688   11,488   36.6%    31,391   28,960    8.4%
                       -----------------------------------------------------
Total other costs       $117,303 $107,285    9.3%  $230,779 $223,796    3.1%
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Theatre occupancy expenses

The following table highlights the movement in theatre occupancy expenses for the quarter and the year to date (in thousands of Canadian dollars):


----------------------------------------------------------------------------
Theatre                                                                     
 occupancy                                                                  
 expenses              Second Quarter                  Year to Date         
               -------------------------------------------------------------
                    2011       2010   Change       2011       2010   Change 
----------------------------------------------------------------------------

Rent            $ 27,964   $ 27,330      2.3%  $ 55,540   $ 54,518      1.9%
Other occupancy   14,056     13,537      3.8%    28,455     27,222      4.5%
Non-recurring                                                               
 legal                                                                      
 contingency           -        164       NM          -        297       NM 
One-time items      (746)      (589)    26.7%    (1,180)  $   (977)    20.8%
----------------------------------------------------------------------------
Total           $ 41,274   $ 40,442      2.1%  $ 82,815   $ 81,060      2.2%
----------------------------------------------------------------------------

(i)   One-time items include amounts related to both theatre rent and other 
      theatre occupancy costs. They are isolated here to illustrate         
      Cineplex's theatre rent and other theatre occupancy costs net or these
      one-time, non-recurring items.                                        

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Theatre occupancy continuity              Second Quarter       Year to Date 
In thousands                                   Occupancy          Occupancy 
----------------------------------------------------------------------------
2010 as reported                        $         40,442   $         81,060 
Impact of new theatres                               981              2,066 
Impact of disposed theatres                         (458)              (817)
Same store rent change                               399                370 
Non-recurring items                                 (160)              (170)
Other                                                 70                306 
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2011 as reported                        $         41,274   $         82,815 
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Second Quarter

Theatre occupancy expenses increased $0.8 million during the second quarter of 2011 compared to the prior year period. This increase was primarily due to the net impact of new and disposed theatres ($0.5 million) and higher same-store rent expense ($0.4 million).

Year to Date

The increase in theatre occupancy expenses of $1.8 million for the first six months of 2011 compared to the prior year period was due to the net impact of new and disposed theatres ($1.2 million) and higher same-store rent expenses ($0.4 million).

Other operating expenses

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


----------------------------------------------------------------------------
Other operating                                                             
 expenses                    Second Quarter              Year to Date       
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
----------------------------------------------------------------------------

Other operating                                                             
 expenses               $ 60,341 $ 55,355    9.0%  $116,573 $113,776    2.5%
----------------------------------------------------------------------------

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Other operating continuity                Second Quarter       Year to Date 
In thousands                             Other Operating    Other Operating 
----------------------------------------------------------------------------
2010 as reported                        $         55,355   $        113,776 
Impact of new theatres                             1,175              2,487 
Impact of disposed theatres                         (428)              (676)
Same store payroll change                          1,230               (471)
Marketing change                                     319               (989)
Media                                              1,662              2,727 
Other                                              1,028               (281)
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2011 as reported                        $         60,341   $        116,573 
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Second Quarter

Other operating expenses increased $5.0 million during the second quarter of 2011 compared to the prior year period primarily as a result of higher business volumes in the 2011 period. Media cost of sales increased $1.7 million, primarily due to the acquisition of CDS during July 2010, as CDS expenses are included in the second quarter of 2011 and not included in the comparative period. Higher same store payroll costs of $1.2 million also contributed to the increase, due to higher business volumes at the theatres as well as the impact of minimum wage increases implemented throughout 2010. Total theatre payroll accounted for 46.2% of total other operating expenses in the second quarter of 2011, compared to 47.3% in the prior year period. The net impact of new and disposed theatres contributed $0.7 million to the overall increase. The $1.0 million increase in Other includes $0.4 million in costs associated with NWS, which was acquired during the second quarter of 2011 and not included in the prior year's comparative.

Year to Date

For the six months ended June 30, 2011, other operating expenses are $2.8 million higher than the prior year period, despite the lower business volumes in the 2011 period compared to the prior year. The increase is due to higher media cost of sales ($2.7 million) as a result of CDS expenditures being included in 2011 but not 2010, as well as the net impact of new and disposed theatres ($1.8 million). These increases were partially offset by lower same-store payroll of $0.5 million due to the lower business volumes, as well as a $1.0 million decrease in marketing expenses during the period. Total theatre payroll accounted for 45.4% of total other operating expenses in the first six months of 2011, compared to 45.9% in the prior year period.

General and administrative expenses

The following table highlights the movement in general and administrative ("G&A") expenses during the quarter and the year to date, including share and unit based compensation costs, and G&A net of these costs (in thousands of Canadian dollars):


----------------------------------------------------------------------------
G&A expenses                Second Quarter               Year to Date       
                     -------------------------------------------------------
                          2011     2010   Change       2011     2010 Change 
----------------------------------------------------------------------------

G&A excluding LTIP                                                          
 and Option Plan                                                            
 expense              $  9,928 $  9,528      4.2%  $ 20,464 $ 19,854    3.1%
LTIP                     1,835    2,002     -8.3%     4,413    6,577  -32.9%
Option plan              3,925      (42)      NM      6,514    2,529  157.6%
                     -------------------------------------------------------
G&A expenses as                                                             
 reported             $ 15,688 $ 11,488     36.6%  $ 31,391 $ 28,960    8.4%
----------------------------------------------------------------------------

Second Quarter

G&A expenses increased $3.9 million during the second quarter of 2011 compared to the same period in the prior year. This increase was due to a $4.0 million increase option expense during the period, offset by a $0.2 million decrease in LTIP expense. Cineplex's share price increased from $23.16 at March 31, 2011 to $26.72 at June 30, 2011, contributing to the increase in the option plan expense. During the second quarter of 2010, the share price decreased from $20.30 at March 31, 2010 to $19.50 at June 30, 2010, resulting in the small recovery recorded in that period.

Year to Date

G&A expenses for the first six months of 2011 were $2.4 million higher than the prior year period, primarily due to the $4.0 million increase in the option plan expense during the period, partially offset by the $2.2 million decrease in LTIP expense during the period. The option plan expense increased as Cineplex's stock price increased from $22.41 at December 31, 2010 to $26.72 at June 30, 2011; whereas the Fund's unit price increased a smaller percentage, from $18.33 at December 31, 2009 to $19.50 at June 30, 2010. The LTIP plan prior to 2011 had one-third of the award vest in the first year, with an additional one-third vesting on the second and third anniversaries of the award. The related expense is recognized using a graded vesting method, whereby a higher proportion of the expense is recognized over the first year of the award. The 2011 LTIP plan vests over three years with the entire payout occurring at the end of the three-year period, resulting in a lower proportion of vesting in the first and second years of the award resulting from a straight-line recognition of the overall expense. This difference in vesting has contributed to the lower cost in the first half of 2011 compared to the prior year period.

Share of loss of joint ventures

Cineplex's joint ventures in the second quarter and first six months of 2011 include its share of one theatre in Quebec, one IMAX screen in Ontario, its interest in SCENE LP and its interest in CDCP. The Fund's joint ventures in the second quarter and first six months of 2010 include its share of four theatres in Quebec, one IMAX screen in Ontario and its interest in SCENE LP. The following table highlights the movement in the share of loss of joint ventures during the quarter and the year to date (in thousands of Canadian dollars):


----------------------------------------------------------------------------
Share of loss of joint                                                      
 ventures                         Second Quarter               Year to Date 
                       -----------------------------------------------------
                            2011     2010 Change       2011     2010 Change 
----------------------------------------------------------------------------

Share of loss of joint                                                      
 ventures               $  2,867 $    892  221.4%  $    394 $  1,685  -76.6%
----------------------------------------------------------------------------

Second Quarter

The increase in the loss over the prior year quarter is due to $2.2 million of start-up costs relating to CDCP recognized during the second quarter of 2011. CDCP commenced operations at the end of June 2011, and will begin collecting revenues in the third quarter of 2011.

Year to Date

The movement from a loss of $1.7 million in the first six months of 2010 to a loss of $0.4 million in the current period is primarily due to breakage revenue recognized by SCENE LP. Based on an analysis of point issuance and redemption activity during the first three years of the program, SCENE established a breakage rate and recognized revenue relating to breakage for the first time during the first quarter of 2011. This change in its accounting estimate for breakage resulted in a program-to-date adjustment to its outstanding points liability during the first quarter. The $2.2 million of start-up costs relating to CDCP recognized during the second quarter of 2011 partially offset the impact of the gain recorded for SCENE during the period.

Adjusted EBITDA

The following table represents EBITDA and adjusted EBITDA for the three and six months ended June 30, 2011 as compared to the three and six months ended June 30, 2010 (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):


----------------------------------------------------------------------------
EBITDA                 Second Quarter                  Year to Date         
               -------------------------------------------------------------
                    2011       2010   Change       2011       2010   Change 
----------------------------------------------------------------------------

EBITDA          $ 43,260   $ 45,105     -4.1%  $ 73,961   $ 75,094     -1.5%
Adjusted EBITDA $ 44,393   $ 41,404      7.2%  $ 75,631   $ 76,066     -0.6%
Adjusted EBITDA                                                             
 margin             17.2%      17.1%     0.1%      15.8%      15.3%     0.5%
----------------------------------------------------------------------------

Adjusted EBITDA for the second quarter of 2011 increased $3.0 million, or 7.2%, as compared to the prior year period. The increase is primarily due to the higher box office and concession revenues due to the higher theatre attendance during the period. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 17.2%, up from 17.1% in the prior year period.

Adjusted EBITDA for the six months ended June 30, 2011 decreased $0.4 million, or 0.6%, as compared to the prior year period. The decrease is primarily due to the lower box office and concession revenues due to the lower theatre attendance during the first quarter more than offsetting the higher attendance in the second quarter as compared to the prior year. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 15.8%, up from 15.3% in the prior year period. The increase is due to the higher media revenues in the 2011 period, which generate higher margins than exhibition revenues.

Adjusted Free Cash Flow

For the second quarter of 2011, adjusted free cash flow per share was $0.503 as compared to distributable cash per unit of $0.544 in the second quarter of 2010. The declared dividend per share and the declared distribution per unit were $0.320 and $0.315, respectively, during these periods. The payout ratios for these periods were 64% and 58%, respectively. For the first six months of 2011, adjusted free cash flow per share was $0.895 as compared to distributable cash per unit of $1.006 in the first six months of 2010. The declared dividend per share and the declared distribution per unit were $0.635 and $0.630, respectively, during these periods. The payout ratios for these periods were 71% and 63%, respectively.

This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in our Annual Information Form and in this news release. Those risks and uncertainties include adverse factors generally encountered in the film exhibition industry such as poor film product and unauthorized copying; the risks associated with national and world events, including war, terrorism, international conflicts, natural disasters, extreme weather conditions, infectious diseases, changes in income tax legislation; and general economic conditions. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex Inc., Cineplex Galaxy Income Fund or Cineplex Entertainment Limited Partnership, their financial or operating results or their securities.

About Cineplex Inc.

Cineplex is the largest motion picture exhibitor in Canada and owns, leases or has a joint-venture interest in 130 theatres with 1,351 screens serving approximately 70 million guests annually. Headquartered in Toronto, Canada, Cineplex operates theatres from British Columbia to Quebec and is the exclusive provider of UltraAVX and the largest exhibitor of digital 3D and IMAX projection technologies in the country. Proudly Canadian and with a workforce of approximately 10,000 employees, the company operates the following top tier brands: Cineplex Odeon, Galaxy, Famous Players, Colossus, Coliseum, SilverCity, Cinema City and Scotiabank Theatres. Cineplex shares are traded on the Toronto Stock Exchange ("TSX") under the symbol "CGX". For more information, visit www.cineplex.com.

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

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


                          Thursday, August 11, 2011                         
                           10:00 a.m. Eastern Time                          

In order to participate in the conference call, please dial 416-644-3416 or outside of Toronto dial 1-800-814-4860 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 4458040 to access the call.


--  If you cannot participate in the live mode, a replay will be available.
    Please dial 416-640-1917 or 1-877-289-8525 and enter code 4458040#. The
    replay will begin at 12:00 p.m. Eastern Time on Thursday, August 11,
    2011 and end at 11:59 p.m. Eastern Time on Thursday, August 18, 2011.

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

--  Thank you in advance for your interest and participation. 

Cineplex Inc.                                                               
Interim Consolidated Balance Sheets                                         
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                


                                            June 30, 2011  December 31, 2010

Assets                                                                      

Current assets                                                              
Cash and cash equivalents               $          49,167  $          85,343
Trade and other receivables                        40,691             57,950
Inventories                                         4,384              3,767
Prepaid expenses and other current                                          
 assets                                            10,487              3,848
                                      --------------------------------------

                                                  104,729            150,908

Property, equipment and leaseholds                382,895            413,657

Deferred income taxes                              14,925             25,689

Interests in joint ventures                        29,220                 92

Intangible assets                                  88,860             93,397

Goodwill                                          608,929            608,929
                                      --------------------------------------


                                        $       1,229,558  $       1,292,672
                                      --------------------------------------
                                      --------------------------------------

Liabilities                                                                 

Current liabilities                                                         
Accounts payable and accrued expenses $          66,751   $          83,700 
Share or unit-based compensation                  3,447              14,307 
Dividends or distributions payable                6,252                   - 
Income taxes payable                              6,059                  87 
Deferred revenue                                 56,176              82,027 
Capital lease obligations                         2,325               2,242 
Fair value of interest rate swap                                            
 agreements                                       5,750               5,482 
                                     ---------------------------------------

                                                146,760             187,845 

Non-current liabilities                                                     
Share or unit-based compensation                  6,530               8,014 
Long-term debt                                  234,033             233,588 
Fair value of interest rate swap                                            
 agreements                                       1,280               3,298 
Capital lease obligations                        27,701              28,885 
Post-employment benefit obligations               4,644               4,534 
Other liabilities                                99,028              98,964 
Deficiency interest in joint venture              9,935              12,338 
Convertible debentures                           84,549             116,481 
Liability for exchangeable interests                  -               3,851 
                                     ---------------------------------------

                                                614,460             697,798 

Equity                                                                      
Share capital                                   756,527                   - 
Unit capital                                          -             710,121 
Deficit                                        (137,177)           (113,120)
Accumulated other comprehensive loss             (4,252)             (3,534)
Contributed surplus                                   -               1,407 
                                     ---------------------------------------

                                                615,098             594,874 
                                     ---------------------------------------

                                      $       1,229,558   $       1,292,672 
                                     ---------------------------------------
                                      --------------------------------------


Cineplex Inc.                                                               
Interim Consolidated Statements of Operations                               
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

                     Three months  Three months    Six months    Six months 
                            ended         ended         ended         ended 
                         June 30,      June 30,      June 30,      June 30, 
                             2011          2010          2011          2010 
Revenues                                                                    
Box office            $   151,135   $   143,608   $   281,091   $   302,400 
Concessions                76,209        72,236       141,363       146,565 
Other                      31,063        26,559        57,345        48,652 
                     -------------------------------------------------------
                          258,407       242,403       479,799       497,617 
                     -------------------------------------------------------
Expenses                                                                    
Film cost                  79,783        77,909       145,327       164,430 
Cost of concessions        16,257        14,985        29,905        31,778 
Depreciation and                                                            
 amortization              17,318        19,716        34,690        39,593 
(Gain) loss on                                                              
 disposal of assets        (1,020)          745          (483)        1,509 
Other costs               117,303       107,285       230,779       223,796 
                     -------------------------------------------------------
                          229,641       220,640       440,218       461,106 
                     -------------------------------------------------------

Income before                                                               
 undernoted                28,766        21,763        39,581        36,511 

Share of loss of                                                            
 joint ventures             2,867           892           394         1,685 
Change in fair value                                                        
 of financial                                                               
 instruments                    -        (4,446)            -          (537)
Interest expense            5,912         5,793        11,611        11,472 
Interest income              (191)          (89)         (423)         (173)
                     -------------------------------------------------------

Income before income                                                        
 taxes                     20,178        19,613        27,999        24,064 
                     -------------------------------------------------------

Provision for                                                               
 (recovery of) income                                                       
 taxes                                                                      
Current                     6,038             3         6,038             3 
Deferred                      700        (2,556)        9,369        (1,897)
                     -------------------------------------------------------
                            6,738        (2,553)       15,407        (1,894)
                     -------------------------------------------------------

Net income            $    13,440   $    22,166   $    12,592   $    25,958 
                     -------------------------------------------------------
                     -------------------------------------------------------


Cineplex Inc.                                                               
Interim Consolidated Statements of Comprehensive Income                     
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

                   Three months  Three months     Six months     Six months 
                          ended         ended          ended          ended 
                  June 30, 2011 June 30, 2010  June 30, 2011  June 30, 2010 

Net income         $     13,440  $     22,166   $     12,592   $     25,958 
                 -----------------------------------------------------------

Other                                                                       
 comprehensive                                                              
 income (loss)                                                              
Changes in fair                                                             
 value of                                                                   
 interest rate                                                              
 contracts                  604          (852)         1,523            382 
Associated                                                                  
 deferred income                                                            
 taxes (recovery)           168        (1,163)         2,241         (1,236)
                 -----------------------------------------------------------

Other                                                                       
 comprehensive                                                              
 income (loss)              436           311           (718)         1,618 
                 -----------------------------------------------------------

Comprehensive                                                               
 income            $     13,876  $     22,477   $     11,874   $     27,576 
                 -----------------------------------------------------------
                 -----------------------------------------------------------


Cineplex Inc.                                                               
Interim Consolidated Statements of Changes in Equity                        
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

For the six months ended June 30, 2011                                      

                                                                Contributed 
                           Unit capital     Share capital           Surplus 

Balance - January 1,                                                        
 2011                   $       710,121   $             -   $         1,407 

Effect of corporate                                                         
 conversion                    (710,121)          744,760            (1,407)
Net income                            -                 -                 - 
Other comprehensive                                                         
 loss                                 -                 -                 - 
Dividends declared                    -                 -                 - 
Long-term incentive                                                         
 plan obligation                      -            (3,410)                - 
Long-term incentive                                                         
 plan shares                          -             1,888                 - 
Issuance of shares on                                                       
 conversion of                                                              
 debentures                           -            13,289                 - 
                       -----------------------------------------------------

Balance - June 30, 2011 $             -   $       756,527   $             - 
                       -----------------------------------------------------


                            Accumulated                                     
                                  other                                     
                          comprehensive                                     
                                   loss           Deficit             Total 

Balance - January 1,                                                        
 2011                   $        (3,534)  $      (113,120)  $       594,874 

Effect of corporate                                                         
 conversion                           -                 -            33,232 
Net income                            -            12,592            12,592 
Other comprehensive                                                         
 loss                              (718)                -              (718)
Dividends declared                    -           (36,649)          (36,649)
Long-term incentive                                                         
 plan obligation                      -                 -            (3,410)
Long-term incentive                                                         
 plan shares                          -                 -             1,888 
Issuance of shares on                                                       
 conversion of                                                              
 debentures                           -                 -            13,289 
                       -----------------------------------------------------

Balance - June 30, 2011 $        (4,252)  $      (137,177)  $       615,098 
                       -----------------------------------------------------

For the six months ended June 30, 2010                                      


                                                                 Contributed
                            Unit capital      Share capital          surplus

Balance - January 1,                                                        
 2010                    $       703,706    $             -  $             -

Net income                             -                  -                -
Other comprehensive                                                         
 income                                -                  -                -
Distributions declared                 -                  -                -
Long-term incentive                                                         
 plan units                       (1,063)                 -            1,407
Issuance of units on                                                        
 conversion of                                                              
 debentures                        1,598                  -                -
Issuance of units under                                                     
 the exchange agreement            1,599                  -                -
                       -----------------------------------------------------

Balance - June 30, 2010  $       705,840    $             -  $         1,407
                       -----------------------------------------------------


                            Accumulated                                     
                                  other                                     
                          comprehensive                                     
                                   loss           Deficit             Total 

Balance - January 1,                                                        
 2010                   $        (7,501)  $       (91,396)  $       604,809 

Net income                            -            25,958            25,958 
Other comprehensive                                                         
 income                           1,618                 -             1,618 
Distributions declared                -           (35,880)          (35,880)
Long-term incentive                                                         
 plan units                           -                 -               344 
Issuance of units on                                                        
 conversion of                                                              
 debentures                           -                 -             1,598 
Issuance of units under                                                     
 the exchange agreement               -                 -             1,599 
                       -----------------------------------------------------

Balance - June 30, 2010 $        (5,883)  $      (101,318)  $       600,046 
                       -----------------------------------------------------


Cineplex Inc.                                                               
Interim Consolidated Statements of Cash Flows                               
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

                     Three months  Three months    Six months    Six months 
                            ended         ended         ended         ended 
                         June 30,      June 30,      June 30,      June 30, 
                             2011          2010          2011          2010 

Cash provided by                                                            
 (used in)                                                                  
Operating activities                                                        
Net income            $    13,440   $    22,166   $    12,592   $    25,958 
Adjustments to                                                              
 reconcile net income                                                       
 to net cash provided                                                       
 by operating                                                               
 activities                                                                 
 Depreciation and                                                           
  amortization of                                                           
  property, equipment                                                       
  and leaseholds,                                                           
  deferred charges                                                          
  and intangible                                                            
  assets                   17,318        19,716        34,690        39,593 
 Amortization of                                                            
  tenant inducements,                                                       
  rent averaging                                                            
  liabilities and                                                           
  fair value lease                                                          
  contract                                                                  
  liabilities                (820)         (937)       (1,870)       (1,697)
 Amortization of debt                                                       
  issuance costs              231           191           464           379 
 (Gain) loss on                                                             
  disposal of assets       (1,020)          745          (483)        1,509 
 Deferred income                                                            
  taxes                       700        (2,556)        9,369        (1,897)
 Interest rate swap                                                         
  agreements - non-                                                         
  cash interest               (40)         (166)         (136)         (392)
 Non-cash share or                                                          
  unit-based                                                                
  compensation                 38          (114)          256         1,297 
 Change in fair value                                                       
  of financial                                                              
  instruments                   -        (4,446)            -          (537)
 Accretion of                                                               
  convertible                                                               
  debentures                  517           335           827           647 
 Net change in                                                              
  interests in joint                                                        
  ventures                   (970)        1,582        (3,438)        1,913 
Tenant inducements          1,195           598         4,050         1,007 
Changes in operating                                                        
 assets and                                                                 
 liabilities               (3,041)      (11,235)      (20,920)      (20,896)
                     -------------------------------------------------------
Net cash provided by                                                        
 operating activities      27,548        25,879        35,401        46,884 
                     -------------------------------------------------------

Investing activities                                                        
Proceeds from sale of                                                       
 assets                     1,733             -         1,740         1,350 
Purchases of                                                                
 property, equipment                                                        
 and leaseholds           (16,158)      (13,378)      (28,579)      (23,570)
Deposits for business                                                       
 acquisitions                   -        (3,970)            -        (3,970)
Acquisition of                                                              
 businesses, net of                                                         
 cash acquired             (3,280)       (1,022)       (3,280)       (1,022)
Additional equity                                                           
 funding of CDCP             (168)            -          (168)            - 
                     -------------------------------------------------------
Net cash used in                                                            
 investing activities     (17,873)      (18,370)      (30,287)      (27,212)
                     -------------------------------------------------------

Financing activities                                                        
Dividends or                                                                
 distributions paid       (18,327)      (17,940)      (30,397)      (35,864)
Borrowings under                                                            
 credit facility           12,000        10,000        27,000        15,000 
Repayment of credit                                                         
 facility                 (12,000)      (10,000)      (27,000)      (15,000)
Payments under                                                              
 capital leases              (555)         (495)       (1,100)         (980)
Acquisition of long-                                                        
 term incentive plan                                                        
 shares or units                -             -        (9,793)       (9,620)
                     -------------------------------------------------------
Net cash used in                                                            
 financing activities     (18,882)      (18,435)      (41,290)      (46,464)
                     -------------------------------------------------------


Decrease in cash and                                                        
 cash equivalents                                                           
 during the period         (9,207)      (10,926)      (36,176)      (26,792)

Cash and cash                                                               
 equivalents -                                                              
 Beginning of period       58,374        78,780        85,343        94,646 
                     -------------------------------------------------------

Cash and cash                                                               
 equivalents - End of                                                       
 period               $    49,167   $    67,854   $    49,167   $    67,854 
                     -------------------------------------------------------

Supplemental                                                                
 Information                                                                
Cash paid for                                                               
 interest             $     6,324   $     6,945   $    10,088   $    10,711 
Cash paid for income                                                        
 taxes - net          $        65   $         5   $        65   $        13 



Cineplex Inc.                                                               
Consolidated Supplemental Information                                       
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

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

                               Three months ended          Six months ended 
                                         June 30,                  June 30, 
                                2011         2010         2011         2010 
                         ---------------------------------------------------

Net income                $   13,440   $   22,166   $   12,592   $   25,958 

Depreciation and                                                            
 amortization (i)             17,361       19,788       34,774       39,731 
Interest expense               5,912        5,793       11,611       11,472 
Interest income                 (191)         (89)        (423)        (173)
Current income tax                                                          
 expense                       6,038            3        6,038            3 
Deferred income tax                                                         
 expense (recovery)              700       (2,556)       9,369       (1,897)
                         ---------------------------------------------------

EBITDA                        43,260       45,105       73,961       75,094 

Change in fair value of                                                     
 financial instruments             -       (4,446)           -         (537)
(Gain) loss on disposal                                                     
 of assets                    (1,020)         745         (483)       1,509 
CDCP equity loss (ii)          2,153            -        2,153            - 
                         ---------------------------------------------------

Adjusted EBITDA           $   44,393   $   41,404   $   75,631   $   76,066 
                         ---------------------------------------------------

(i)   Includes the depreciation and amortization incurred by the joint      
      ventures (2011 - $43 for three months and $84 for six months, 2010 -  
      $72 for three months and $138 for six months)                         

(ii)  CDCP equity loss not included in adjusted EBITDA as CDCP is a limited-
      life financing vehicle that is funded by virtual print fees collected 
      from distributors.                                                    


Components of Other Costs                                                   
----------------------------------------------------------------------------

                                  Three months ended        Six months ended
                                            June 30,                June 30,
                                    2011        2010        2011        2010
                            ------------------------------------------------

Theatre occupancy expenses    $   41,274  $   40,442  $   82,815  $   81,060
Other operating expenses          60,341      55,355     116,573     113,776
General and administrative                                                  
 expenses                         15,688      11,488      31,391      28,960
                            ------------------------------------------------

Total other costs             $  117,303  $  107,285  $  230,779  $  223,796
                            ------------------------------------------------


Cineplex Inc.                                                               
Consolidated Supplemental Information                                       
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars, except number of shares/units  
and per share/unit data)                                                    

Adjusted Free Cash Flow and Distributable Cash                              
----------------------------------------------------------------------------

                             Three months ended            Six months ended 
                                       June 30,                    June 30, 
                             2011          2010          2011          2010 
                     -------------------------------------------------------

Cash provided by                                                            
 operating activities $    27,548   $    25,879   $    35,401   $    46,884 
Less: Total capital                                                         
 expenditures (i)         (14,425)      (13,378)      (26,839)      (23,570)
                     -------------------------------------------------------

Standardized free                                                           
 cash flow/                                                                 
 Standardized                                                               
 distributable cash        13,123        12,501         8,562        23,314 

Add/(Less):                                                                 

Changes in operating                                                        
 assets and                                                                 
 liabilities (ii)           3,041        11,235        20,920        20,896 
Changes in operating                                                        
 assets and                                                                 
 liabilities of joint                                                       
 ventures (ii)              3,837          (690)        3,832          (228)
Tenant inducements                                                          
 (iii)                     (1,195)         (598)       (4,050)       (1,007)

Principal component                                                         
 of capital lease                                                           
 obligations                 (555)         (495)       (1,100)         (980)
New build capital                                                           
 expenditures and                                                           
 other (iv)                11,675         9,970        21,765        17,046 
Share of profit                                                             
 (loss) of joint                                                            
 ventures, net of                                                           
 non-cash                                                                   
 depreciation (v)            (671)         (809)        1,843        (1,536)
Cash invested in CDCP                                                       
 (v)                         (219)            -          (219)            - 
                     -------------------------------------------------------

Adjusted free cash                                                          
 flow/ Distributable                                                        
 cash                 $    29,036   $    31,114   $    51,553   $    57,505 
                     -------------------------------------------------------

Less: Exchangeable                                                          
 interests share of                                                         
 distributable cash             -          (126)            -          (242)
                     -------------------------------------------------------

Adjusted free cash                                                          
 flow/ Distributable                                                        
 cash available to                                                          
 shareholders/                                                              
 unitholders          $    29,036   $    30,988   $    51,553   $    57,263 
                     -------------------------------------------------------


Average number of                                                           
 shares/units                                                               
 outstanding           57,770,425    56,974,020    57,620,340    56,937,983 
Adjusted free cash                                                          
 flow per share/                                                            
 Distributable cash                                                         
 per unit             $     0.503   $     0.544   $     0.895   $     1.006 

(i)   For the 2011 adjusted free cash flow calculations, total capital      
      expenditures are shown net of proceeds received on the sale of assets.
(ii)  Changes in operating assets and liabilities are not considered a      
      source or use of distributable cash.                                  
(iii) Tenant inducements received are for the purpose of funding new theatre
      capital expenditures and are not considered a source of distributable 
      cash.                                                                 
(iv)  New build capital expenditures and other represent expenditures on    
      Board approved projects as well as any expenditures for digital       
      equipment that will be incorporated into CDCP, and exclude maintenance
      capital expenditures. The 2011 figures are net of proceeds on asset   
      sales. The revolving credit facility was available to the Fund and is 
      available to Cineplex to fund Board approved projects.                
(v)   Excludes the share of loss of CDCP, as CDCP is a limited-life         
      financing vehicle funded by virtual print fees collected from         
      distributors. Cash invested into CDCP, as well as cash distributions  
      received from CDCP, are considered to be uses and sources of adjusted 
      free cash flow.                                                       


Cineplex Inc.                                                               
2010 IFRS Quarterly Interim Consolidated Balance Sheets                     
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

                      March 31,      June 30,  September 30,   December 31, 
                           2010          2010           2010           2010 
Assets                                                                      

Current assets                                                              
Cash and cash                                                               
 equivalents        $    78,780   $    67,854   $     75,033   $     85,343 
Trade and other                                                             
 receivables             32,700        32,123         36,253         57,950 
Inventories               3,588         3,774          3,726          3,767 
Prepaid expenses                                                            
 and other current                                                          
 assets                   9,066        13,611         10,619          3,848 
                   ---------------------------------------------------------

                        124,134       117,362        125,631        150,908 

Property, equipment                                                         
 and leaseholds         418,747       417,498        411,751        413,657 
Deferred income                                                             
 taxes                   23,469        27,185         25,556         25,689 
Interests in joint                                                          
 ventures                 1,651           808            216             92 
Intangible assets       101,054        98,256         95,990         93,397 
Goodwill                600,564       601,040        603,263        608,929 
                   ---------------------------------------------------------


                    $ 1,269,619   $ 1,262,149   $  1,262,407   $  1,292,672 
                   ---------------------------------------------------------
                   ---------------------------------------------------------
Liabilities                                                                 

Current liabilities                                                         
Accounts payable                                                            
 and accrued                                                                
 expenses           $    83,066   $    76,099   $     67,272   $     83,700 
Share or unit-based                                                         
 compensation             9,030         9,444         12,128         14,307 
Dividends and                                                               
 distributions                                                              
 payable                  6,001         6,009          6,017              - 
Income taxes                                                                
 payable                     11            11             87             87 
Deferred revenue         58,616        56,083         52,197         82,027 
Capital lease                                                               
 obligations              2,064         2,125          2,186          2,242 
Fair value of                                                               
 interest rate swap                                                         
 agreements               6,578         6,163          5,742          5,482 
                   ---------------------------------------------------------
                        165,366       155,934        145,629        187,845 
Non-current                                                                 
 liabilities                                                                
Share or unit-based                                                         
 compensation             3,959         4,294          5,848          8,014 
Long-term debt          233,308       233,489        233,672        233,588 
Fair value of                                                               
 interest rate swap                                                         
 agreements               4,290         5,224          5,039          3,298 
Capital lease                                                               
 obligations             30,582        30,026         29,461         28,885 
Post-employment                                                             
 benefit obligation       3,441         3,501          4,000          4,534 
Other liabilities       106,475       106,334        107,589         98,964 
Deficiency interest                                                         
 in joint venture         9,035         9,774         10,716         12,338 
Convertible                                                                 
 debentures             115,729       110,176        112,371        116,481 
Liability for                                                               
 exchangeable                                                               
 interests                5,068         3,351          3,571          3,851 
                   ---------------------------------------------------------

                        677,253       662,103        657,896        697,798 
Equity                                                                      
Unit capital            702,681       705,840        707,405        710,121 
Deficit                (105,528)     (101,318)       (99,229)      (113,120)
Accumulated other                                                           
 comprehensive loss      (6,194)       (5,883)        (5,072)        (3,534)
Contributed surplus       1,407         1,407          1,407          1,407 
                   ---------------------------------------------------------

                        592,366       600,046        604,511        594,874 
                   ---------------------------------------------------------

                    $ 1,269,619   $ 1,262,149   $  1,262,407   $  1,292,672 
                   ---------------------------------------------------------
                   ---------------------------------------------------------

Please refer to the 2010 Canadian GAAP quarterly unaudited interim consolidated financial statements of the Fund filed on www.SEDAR.com.

This table should be read in conjunction with the 2011 second quarter unaudited interim consolidated financial statements of Cineplex, in particular note 4 to those financial statements which describes Cineplex's transition to IFRS.


Cineplex Inc.                                                               
2010 IFRS Quarterly Interim Consolidated Statements of Operations           
(Unaudited)                                                                 
----------------------------------------------------------------------------
(expressed in thousands of Canadian dollars)                                

                               Q1            Q2            Q3            Q4 
                             2010          2010          2010          2010 
Revenues                                                                    
Box office            $   158,792   $   143,608   $   157,330   $   138,097 
Concessions                74,329        72,236        79,870        68,292 
Other                      22,093        26,559        31,061        34,159 
                     -------------------------------------------------------
                          255,214       242,403       268,261       240,548 
                     -------------------------------------------------------
Expenses                                                                    
Film cost                  86,521        77,909        81,038        71,254 
Cost of concessions        16,793        14,985        16,368        14,101 
Depreciation and                                                            
 amortization              19,877        19,716        23,754        19,012 
Loss (gain) on                                                              
 disposal of assets           764           745           (95)          990 
Other costs               116,511       107,285       115,115       117,233 
                     -------------------------------------------------------
                          240,466       220,640       236,180       222,590 
                     -------------------------------------------------------

Income before                                                               
 undernoted                14,748        21,763        32,081        17,958 

Share of loss of                                                            
 joint ventures               793           892           700         1,271 
Change in fair value                                                        
 of financial                                                               
 instruments                3,909        (4,446)        3,629         6,690 
Interest expense            5,679         5,793         5,848         5,846 
Interest income               (84)          (89)         (162)         (191)
                     -------------------------------------------------------

Income before income                                                        
 taxes                      4,451        19,613        22,066         4,342 
                     -------------------------------------------------------

Provision for                                                               
 (recovery of) income                                                       
 taxes                                                                      
Current                         -             3             -            27 
Deferred                      659        (2,556)        1,996           (80)
                     -------------------------------------------------------
                              659        (2,553)        1,996           (53)
                     -------------------------------------------------------

Net income            $     3,792   $    22,166   $    20,070   $     4,395 
                     -------------------------------------------------------

Adjusted EBITDA       $    34,662   $    41,404   $    55,070   $    36,718 
                     -------------------------------------------------------

Please refer to the 2010 Canadian GAAP quarterly unaudited interim consolidated financial statements of the Fund filed on www.SEDAR.com.

This table should be read in conjunction with the 2011 second quarter unaudited interim consolidated financial statements of Cineplex, in particular note 4 to those financial statements which describes Cineplex's transition to IFRS.

Contact Information

  • Cineplex Inc.
    Gord Nelson
    Chief Financial Officer
    (416) 323-6602

    Cineplex Inc.
    Pat Marshall
    Vice President Communications and Investor Relations
    (416) 323-6648
    www.cineplex.com