Rainmaker Entertainment Inc.
TSX VENTURE : RNK

Rainmaker Entertainment Inc.

March 22, 2011 08:30 ET

Rainmaker Reports Results for the Quarter and Year Ended December 31, 2010

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 22, 2011) - Rainmaker Entertainment Inc. (TSX:RNK) announced today its results for the year ended December 31, 2010.

The results for 2010 show significant improvement over 2009. Some of the highlights are:

  • Revenues increased $4.3 million or 29% over 2009.
  • Earnings before undernoted items improved by $4.9 million to a positive $2.2 million, up from a loss of $2.6 million in 2009.
  • Earnings from continuing operations increased $5.0 million to $0.003 million from a loss of $5.0 million in 2009.
  • Net earnings improved $5.8 million to $0.9 million from a loss of $4.9 million in 2009.

"We are continuing to evolve as a multifaceted animation studio working on both work-for-hire productions and developing several proprietary projects," said Warren Franklin, CEO of the company. "Our current slate includes several projects including a film based on the classic series ReBoot and two other theatrical movies: Ogo, based on Canada's famous water monster believed to reside in Lake Okanagan and Ting and Juma, the movie based on Rainmaker's own proprietary characters. Also we are developing a series of animated holiday specials based on the 1939 children's classic Country Bunny and the Little Gold Shoes originally written by DuBose Heyward."

"I want to thank all our employees for their dedication and first class work and to our shareholders for their continued support."

Selected Information

Below is selected information derived from the unaudited consolidated financial statements which have been prepared in accordance with Canadian generally accepted accounting principles.

Years ended December 31,          
All amounts are in 000's of dollars, except per share figures          
    2010 2009   2008
 
Revenue          
         Rainmaker Entertainment - Animation $ 19,472 $ 15,137 $ 28,969
         EP Canada - Payroll processing   - -   7,149
         Canada Film Capital - Tax credit services   - -   1,605
    19,472 15,137   37,723
Expenses          
         Operating   16,041 16,707   32,566
         General and administration   1,206 1,069   1,811
    17,247 17,776   34,377
Earnings (loss) before undernoted items   2,225 (2,639)   3,346
         Depreciation and amortization   1,993 2,539   3,385
         Amortization of intangible assets   737 868   1,769
         Gain on sale to Base 10 Group Inc.   (290) -   (2,305)
         Impariment charge for television property   250 -   -
         Amortization of deferred gain on sale of business interests   (282) (298)   (39)
         Gain on settlement of accounts payable   - -   (903)
         Interest expense   365 685   998
         Foreign exchange (gain) loss   (219) (822)   482
         Restructuring costs   - -   566
         Equity investment earnings   (352) (565)   (56)
         Other (income) expense   20 (57)   (469)
    2,222 2,350   3,428
Earnings (loss) before non-controlling interest          
   and discontinued operations   3 (4,989)   (82)
Non-controlling interest   - -   (45)
Net earnings (loss) from continuing operations   3 (4,989)   (127)
Gain on sale of discontinued operations   864 97   7,602
Net earnings (loss) and comprehensive income (loss) for the year $ 867 $ (4,892) $ 7,475
Earnings (loss) from continuing operations per share          
- basic and diluted   $0.00 ($0.29)   ($0.01)
Net earnings (loss) per share - basic and diluted   $0.05 ($0.28)   $0.43
Selected Financial Data          
As at December 31,          
All amounts are in 000's of dollars          
  2010   2009   2008
 
Current Assets $ 10,482 $ 9,882 $ 23,864
Long-term Assets 7,780   8,860   11,402
Total assets 18,262   18,742   35,266
Long-term financial liabilities 2,694   4,097   5,597
Shareholders' Equity 6,623   5,677   10,486

Results of Operations

Year ended December 31, 2010 compared to 2009

Revenue

Revenue increased $4.3 million to $19.4 million in 2010 from $15.1 million in 2009. The increase in revenue was due to increased production volumes in both the DVD division and on a feature film. There was also $0.3 million in revenue from licensing contracts of the Company's film library, compared to $0.1 million in 2009.

Operating and general and administration expenses

Operating expenses decreased $0.7 million to $16.0 million in 2010 from $16.7 million in 2009. This decrease was the result of increased tax credit incentives enacted by the BC Government in March 2010, which are recorded as an offset to operating expenses.

General and administration expenses increased $0.1 million to $1.2 million in 2010 from $1.1 million in 2009. This was primarily due to increased legal and accounting costs in 2010.

Depreciation and amortization of property, plant and equipment

Depreciation and amortization of property, plant and equipment decreased $0.5 million in 2010 to $2.0 million as compared to $2.5 million in 2009 due to decreasing book value of tangible assets from 2010 to 2009.

Amortization of intangible assets

Amortization of intangible assets decreased $0.2 million in 2010 to $0.7 million as compared to $0.9 million in 2009. This decrease was due to a reduction in the book value of depreciating assets from 2010 to 2009.

Interest expense

Interest expense decreased $0.3 million in 2010 to $0.4 million from $0.7 million in 2009. The interest on long- term debt decreased $0.2 million as the outstanding debentures were paid off in August 2009. Interest on lease obligations decreased $0.1 million.

Foreign exchange gain

There was a decrease in the foreign exchange gain of $0.6 million to $0.2 million in 2010 from a gain of $0.8 million in 2009. Included in the 2010 exchange gain is a $0.1 million unrealized gain from the revaluation of a derivative contract that expires in June 2011.

Equity earnings

Rainmaker's 30% interest in Base 10 Group Inc. is reported on an equity basis. For 2010 Rainmaker reported equity earnings of $0.4 million from this investment as compared to $0.6 million in 2009.

Earnings from continuing operations

Earnings from continuing operations increased $5.0 million in 2010 to $0.003 million from a loss $5.0 million in 2009. The increase was the result of increased production volumes in the DVD division and on the feature film, as well as increased tax credit subsidies. This was offset by an impairment charge taken on a television property for which the Company holds the distribution rights.

Gain on sale of discontinued operations

The gain on sale of discontinued operations for 2010 was $0.9 million. This represents the use of service credits from Deluxe more fully described in Note 4 of the accompanying financial statements. The gain on sale of discontinued operations for 2009 was $0.1 million.

Net earnings (loss) for the year

The net earnings for 2010 increased $5.8 million to $0.9 million from a loss of $4.9 million in 2009.

Selected Fourth Quarter Information        
 
Three months ended December 31,        
All amounts are in 000's of dollars, except per share figures        
    2010   2009
 
Revenue $ 4,422 $ 4,557
Expenses        
       Operating   3,483   3,661
       General and administration   378   329
    3,861   3,990
Earnings before undernoted items   561   567
       Depreciation and amortization   460   588
       Amortization of intangible assets   141   237
       Amortization of deferred gain on sale of business interests   (74)   (75)
       Equity investment earnings   (197)   (520)
       Impairment charge for television property   250   -
       Interest expense   96   121
       Foreign exchange gain   (125)   (138)
       Stock-based compensation   21   -
       Other income   (21)   (4)
 
    551   209
 
Earnings from continuing operations   10   358
Gain on sale of discontinued operations   749   -
Net earnings and comprehensive earnings for the period $ 759 $ 358
 
Net earnings from continuing operations per share - basic and diluted   0.00   0.02
Net earnings per share - basic and diluted   0.04   0.02

Other

Additional information and other publicly filed documents relating to Rainmaker, including the Annual Information Form, are available through the internet on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR"), which can be accessed at www.sedar.com.

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 Company 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 Company 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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