Rainmaker Income Fund

Rainmaker Income Fund

March 17, 2005 19:03 ET

Rainmaker Income Fund Reports Results for the Quarter and Year Ended December 31, 2004 and Declares Distribution for March 2005


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: RAINMAKER INCOME FUND

TSX SYMBOL: RNK.UN

MARCH 17, 2005 - 19:03 ET

Rainmaker Income Fund Reports Results for the Quarter
and Year Ended December 31, 2004 and Declares
Distribution for March 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 17, 2005) - Rainmaker
Income Fund ("Rainmaker") (TSX:RNK.UN) reports net earnings of $1.0
million for the fourth quarter and $8.4 million for the year ended
December 31, 2004.

Selected financial results of Rainmaker for the fourth quarter ended
December 31, 2004 are as follows:



Condensed consolidated statement of Operations (in 000's)

Three months ended
December 31,
2004 2003
-------------------
Revenue $ 6,377 $ 7,683
Operating costs $ 3,947 $ 4,942
General and administration costs $ 552 $ 513
Earnings before income taxes $ 1,042 $ 1,124
Net earnings $ 997 $ 2,067


Selected financial results of Rainmaker for the year ended December 31,
2004 are as follows:



Condensed consolidated statement of Operations (in 000's)

Year ended December 31,
2004 2003
----------------------
Revenue $ 28,761 $ 29,581
Operating costs $ 17,393 $ 16,352
General and administration costs $ 2,172 $ 2,089
Earnings before income taxes $ 8,541 $ 7,255
Net earnings $ 8,436 $ 7,141


Review of Operations

Three months ended December 31, 2004 compared to 2003

Revenue for the fourth quarter decreased by 17% to $6.4 million in 2004
from $7.7 million in 2003. The decrease in 2004 over 2003 reflects the
fact that in 2004 we were working on one large visual effects contract
whereas in 2003 we were working on two.

Operating costs decreased to $3.9 million in 2004 from $4.9 million in
2003. The decrease was a result of less operating activity, however, as
a percentage of revenue the operating costs decreased slightly to 62% in
2004 from 64% in 2003. General and administration expenses increased to
$552 thousand in 2004 from $513 thousand in 2003, primarily due to
higher office rent.

Year ended December 31, 2004 compared to 2003

Revenue decreased 3% to $28.8 million in 2004 from $29.6 million in
2003. Revenue from visual effects increased 10% to $13.2 million in 2004
from $12.0 million in 2003, primarily due to an increase in the amount
of work on feature films. We continue to see an increase in the number
of projects, which capture the images during production using high
definition cameras instead of film. While this change in capture format
has resulted in some new services in video post, it has also resulted in
a decrease in revenue from the film lab. The film lab revenue decreased
26% to $3.0 million in 2004 from $4.0 million in 2003. Video post
revenue decreased 9% to $11.5 million in 2004 from $12.6 million in
2003, primarily due to a decrease in film to tape transfers caused by
less film being used in the production process. The revenue in video
post of $11.5 million in 2004 is still near historically high levels.

Operating costs increased to $17.4 million in 2004 from $16.4 million in
2003, however 2004 included $898 thousand relating to visual effects
work outsourced with no mark up. If these costs are excluded, operating
costs for 2004 were $16.5 million, which was 59.2% of 2004 revenue,
whereas for 2003 operating costs were $16.4 million, which is 55% of
2003 revenue. General and administration expenses increased slightly to
$2.2 million in 2004 from $2.1 million in 2003, primarily due to higher
office rent.

Earnings before income taxes increased to $8.5 million in 2004 from $7.3
million in 2003 and net earnings increased to $8.4 million in 2004 from
$7.1 million in 2003. Both the earnings before income taxes and net
earnings for 2004 include $3.0 million relating to life insurance
proceeds, which if excluded would have resulted in earnings before
income taxes and net earnings for 2004 of $5.5 million and $5.4 million,
respectively.

Outlook

Production levels in British Columbia are currently below the production
levels at this time last year. Production decisions are made well in
advance of the commencement of production and the fact that the British
Columbia government's announcement regarding enhance tax credits was not
made until January 20, 2005 has, in our view, contributed to the current
slowdown in production. Feature film production is becoming more
important to Rainmaker as a greater portion of our business is coming
from visual effects for feature films. As well, the first quarter is
when most television pilots are shot. These projects have a very short
production period and while there are still meaningful financial
advantages of producing in British Columbia some studios determined that
it did not warrant the effort required to move a short production to
British Columbia. Accordingly, for the first time in its history,
Rainmaker has been faced with a significant slowdown in both television
and feature film business.

Rainmaker has experienced a significant decline in its revenues and
earnings in the first quarter of 2005. The second quarter is also
expected to be below expectations, although it should be significantly
better then the first quarter. However, based on Rainmaker's assessment
of improved production levels for both feature films and television in
the second half of 2005, and being mindful that the underlying factors
that have contributed to the development of British Columbia as a
significant centre for film and television production remain in place,
Rainmaker fully expects that more normal production levels will return
for the last six months of 2005.

Rainmaker does not anticipate any change in its monthly distributions,
however, the payment of distributions will be funded by Rainmaker's
existing cash reserves until such time as the business improves, which,
as noted above, is expected to be in the third quarter of 2005.

March 2005 Distribution

Rainmaker Income Fund ("Rainmaker") announces its monthly cash
distribution for the month of March 2005 of $0.04 per unit payable on
April 15, 2005 to unitholders of record at the close of business on
March 31, 2005.

Holders of units who are non-residents of Canada will be required to pay
all withholding taxes payable in respect of any distribution of income
by Rainmaker.

Rainmaker is an unincorporated open-ended limited purpose trust which is
located in Vancouver, British Columbia, Rainmaker, through its
predecessors, was established in 1979 and is one of North America's
leading film and video post production organizations using innovative
technology, superior service and world-class talent to design, build and
shape content for film, television and new media productions.

This press release and any related attachments may contain
forward-looking statements that involve a number of risks and
uncertainty. Among the important factors that could cause actual results
to differ materially from those indicated by such forward-looking
statements are market and general economic conditions and the risk
factors detailed from time to time in the periodic reports and documents
filed by Rainmaker with The Toronto Stock Exchange and other regulatory
authorities. Forward-looking statements are based on the estimates and
opinions of management on the date the statements are made, and
Rainmaker undertakes no obligation to update the forward-looking
statements should there be a change in conditions, or in management's
estimates or opinions.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Rainmaker Income Fund
    Mike Barnsley
    (604) 874-8700 or Toll Free: 1-800-616-4433
    (604) 872-8296 (FAX)
    ir_rnk@rainmaker.com
    www.rainmaker.com
    The contents of this press release have neither been approved nor
    disapproved by any regulatory authority.