Rainmaker Income Fund
TSX : RNK.UN

Rainmaker Income Fund

November 15, 2005 02:15 ET

Rainmaker Income Fund Reports Third Quarter Results to September 30, 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 15, 2005) - Rainmaker Income Fund (the "Fund") (TSX:RNK.UN) today reported its financial results for the three months and nine months ended September 30, 2005.

Selected financial results of the Fund are as follows:



All amounts are in 000's of dollars, except per unit figures

Three months Nine months
ended September 30, ended September 30,
2005 2004 2005 2004
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Revenue 9,501 6,890 17,184 22,384
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Expenses
Operating 5,318 3,799 11,831 13,447
General and
administration 843 563 1,921 1,620
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6,161 4,362 13,752 15,067
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Earnings before
undernoted items 3,340 2,528 3,432 7,317
Depreciation and
amortization 1,150 813 2,845 2,396
Life insurance
proceeds - (3,000) - (3,000)
Other 143 96 125 424
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Earnings before income
tax 2,047 4,619 462 7,497
Income tax expense
(recovery) 15 (63) (231) 60
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Earnings before non-
controlling interest 2,032 4,682 693 7,437
Non-controlling
interest (44) (258) 37 (410)
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Net earnings for the
period 1,988 4,424 730 7,027
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Net earnings per unit -
basic 0.13 0.41 0.06 0.66
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Net earnings per unit -
diluted 0.13 0.41 0.06 0.65
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Three months ended September 30, 2005 compared with September 30, 2004

Revenue

All amounts are in 000's of dollars
Three months
ended September 30,
2005 2004
-------------------
Rainmaker LP
Video Post 3,593 3,254
Visual Effects 1,917 2,508
Film Lab 669 892
Other 310 236
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6,489 6,890
EP Canada LP (Note 1) 2,555 -
Canada Film Capital LP (Note 1) 457 -
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9,501 6,890
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Note 1 - Results are from August 4, 2005, the date of
acquisition


Revenue for the three months increased to $9.5 million in 2005 from $6.9 million in 2004. Rainmaker LP had a decrease in revenue of $401 thousand, which was offset by the revenue of $3.0 million resulting from the acquisitions of EP Canada LP and Canada Film Capital LP.

Revenue for Rainmaker LP for the three months decreased 6% to $6.5 million in 2005 from $6.9 million in 2004 due to a drop in revenue from visual effects. Revenue from visual effects was down during the third quarter as we were not involved in any large scale projects, whereas in the prior year the results included one significant project. The number of projects which capture the images during production using high definition cameras instead of film continues to increase. 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.

Operating and general and administration expenses

Operating expenses for the three months increased $1.5 million to $5.3 million in 2005 from $3.8 million in 2004. Operating expenses for Rainmaker LP decreased to $3.6 million in 2005 from $3.8 million in 2004, which as a percentage of revenue operating expenses were 56% in 2005 and 55% in 2004. Corporate operating costs increased $173 thousand in 2005 from 2004. Finally, the acquisitions of EP Canada LP and Canada Film Capital LP together accounted for an increase in operating expenses of $1.5 million.

General and administration expenses for the three months increased to $843 thousand in 2005 from $563 thousand in 2004. The acquisitions of EP Canada LP and Canada Film Capital LP together accounted for the increase in general and administration expenses.

Net earnings for the period

Earnings for the three months decreased to $2.0 million in 2005 from $4.4 million in 2004, which included the proceeds of life insurance of $3.0 million. If the proceeds of the life insurance are excluded from 2004 then earnings for the three months increased $600 thousand to $2.0 million in 2005 from $1.4 million in 2004. The acquisitions of EP Canada LP and Canada Film Capital LP together accounted for an increase in earnings of $900 thousand, while Rainmaker LP had earnings of $1.1 million, a decrease of $300 from 2004 thousand due to lower revenue.



Nine months ended September 30, 2005 compared with September 30, 2004

Revenue

All amounts are in 000's of dollars
Nine months
ended September 30,
2005 2004
-------------------
Rainmaker LP
Video Post 7,598 8,966
Visual Effects 4,234 10,276
Film Lab 1,401 2,377
Other 939 765
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14,172 22,384
EP Canada LP (Note 1) 2,555 -
Canada Film Capital LP (Note 1) 457 -
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17,184 22,384
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Note 1 - Results are from August 4, 2005, the date of
acquisition


Revenue for the nine months decreased to $17.2 million in 2005 from $22.4 million in 2004. The decrease of $5.2 million was as a result of a decrease in the revenue from Rainmaker LP of $8.2 million, which was principally in visual effects, offset by an increase in revenue of $3.0 million resulting from the acquisitions of EP Canada LP and Canada Film Capital LP.

Revenue for Rainmaker LP for the nine months decreased 37% to $14.2 million in 2005 from $22.4 million in 2004 due principally to a drop in revenue from visual effects. Revenue from visual effects was down during the third quarter as in 2004 we had completed three large visual effects projects whereas in the same period in 2005 we have completed no large scale projects. In addition revenue for Rainmaker LP's video post and film lab combined are down $2.3 million reflecting the slow first six months of 2005 experienced by the industry.

Operating and general and administration expenses

Operating expenses for the nine months decreased $1.6 million to $11.8 million in 2005 from $13.4 million in 2004. The acquisitions of EP Canada LP and Canada Film Capital LP together accounted for the $1.5 million increase in operating expenses Operating expenses for Rainmaker LP decreased to $10.1 million in 2005 from $13.4 million in 2004 as result of lower revenue. As a percentage of revenue operating expenses were 71% in 2005 and 60% in 2004 reflecting lower productivity from the lower revenue level.

General and administration expenses for the nine months increased to $1.9 million in 2005 from $1.6 million in 2004. The acquisitions of EP Canada LP and Canada Film Capital LP together accounted for the increase in general and administration expenses.

Net earnings for the period

Earnings for the nine months decreased to $730 thousand in 2005 from $7.0 million in 2004, which included the proceeds of life insurance of $3.0 million. If the proceeds of the life insurance are excluded from 2004 then earnings decreased $3.3 million to $730 thousand in 2005 from $4.0 million in 2004. The decrease was solely attributable to the drop in revenue in Rainmaker LP, which resulted in a net loss from Rainmaker LP of $170 thousand for the nine months ended September 30, 2005. The acquisitions of EP Canada LP and Canada Film Capital LP together resulted in earnings of $900 thousand.

The Fund is an unincorporated open-ended limited purpose trust located in Vancouver, British Columbia. The Fund indirectly owns three operating limited partnerships. Rainmaker Limited Partnership ("Rainmaker LP") is one of North America's leading film and video post production organizations, providing superior service, using innovative technology and world-class talent to design, build and shape content for film, television and new media productions. EP Canada Limited Partnership (EP Canada LP") is a leading provider of payroll services for the film and television industry across Canada. Canada Film Capital Limited Partnership provides tax credit administration services and financing of tax credits through factoring for film and television productions across Canada.

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 the Fund 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 the Fund undertakes no obligation to update the forward-looking statements should there be a change in conditions, or in management's estimates or opinions.

The contents of this press release have neither been approved nor disapproved by any regulatory authority.

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