Cineplex Galaxy Income Fund Reports Record Third Quarter Results
Tue Nov 10, 6:25 AMTORONTO, ONTARIO--(Marketwire - Nov. 10, 2009) - Cineplex Galaxy Income Fund (the "Fund") (TSX: CGX-UN.TO) today released its financial results for the third quarter of 2009.
Third Quarter Results
---------------------
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Three months Three months Period over
ended September ended September Period
30, 2009 30, 2008 Change
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Total Revenues $257.5 million $239.1 million +7.7%
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Attendance 18.8 million 18.0 million +4.4%
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Other Revenue $23.7 million $22.6 million +4.6%
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Net Income $20.4 million $18.4 million +11.0%
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Adjusted EBITDA $47.2 million $47.8 million -1.2%
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Adjusted EBITDA Margin 18.3% 20.0% -1.7%
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Distributable Cash Per Unit $0.670 $0.672 -0.3%
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Year to Date September 30, 2009 Results
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Nine months Nine months Period over
ended September ended September Period
30, 2009 30, 2008 Change
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Total Revenues $717.2 million $638.3 million +12.4%
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Attendance 52.9 million 48.3 million +9.6%
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Other Revenue $64.3 million $59.9 million +7.4%
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Net Income $44.0 million $22.1 million +98.8%
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Adjusted EBITDA $121.8 million $105.5 million +15.5%
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Adjusted EBITDA Margin 17.0% 16.5% +0.5%
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Distributable Cash Per Unit $1.679 $1.404 +19.6%
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Period over period change calculated based on thousands of dollars except
percentage and per unit values.
"Cineplex's revenue represents the highest quarterly total revenue recorded by the Fund since its inception," said Ellis Jacob, President and CEO, Cineplex Entertainment. "Adjusted EBITDA for the quarter, excluding the $2.4 million expense for the wind up of the Famous Players Defined Benefit Plan recorded during the period, would have increased to $49.6 million from $47.8 million in the prior year. We also realized continued theatre attendance growth of 4.4%, box office per patron (BPP) growth of 3.0% to $8.30 and concession per patron (CPP) growth of 4.5% to a new record of $4.15. We continued to add members to our SCENE loyalty program which reached the 2 million membership milestone shortly following the quarter end," said Jacob. EBITDA 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 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 non-controlling interests, extraordinary gains and gains or losses on disposal of assets. 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 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 distributable cash, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com. Third Quarter Results The results of the Fund for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008 are presented below. Total revenues for the three months ended September 30, 2009 increased $18.4 million to $257.5 million. Total revenues for the nine months ended September 30, 2009 increased $78.9 million to $717.2 million. A discussion of the factors affecting the changes in box office, concession and other revenues for the periods compared to the same periods in 2008 is provided below. Box office revenues The following table highlights the movement in box office revenues, attendance and box office revenues per patron ("BPP") for the quarter and the year to date (in thousands of dollars, except attendance reported in thousands of patrons, and per patron amounts):
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Box office
revenues Third Quarter Year to Date September 30
-----------------------------------------------------------
2009 2008 Change 2009 2008 Change
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Box office
revenues $ 155,884 $ 144,957 7.5% $ 437,544 $ 388,137 12.7%
Attendance 18,779 17,988 4.4% 52,901 48,262 9.6%
Box office
revenue per
patron $ 8.30 $ 8.06 3.0% $ 8.27 $ 8.04 2.8%
Canadian
industry
revenues (1) 8.6% 11.6%
Same store
box office
revenues $ 149,707 $ 143,018 4.7% $ 421,033 $ 382,090 10.2%
Same store
attendance 18,082 17,698 2.2% 50,991 47,306 7.8%
% Total box
from IMAX & 3D 16.4% 7.2% 127.8% 12.6% 3.4% 270.6%
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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 1.9%
for the period from July 3, 2009 to October 1, 2009 as compared to the
period from June 27, 2008 to September 25, 2008. On a basis consistent with
the Fund's calendar reporting period (July 1st to September 30th), the
Canadian industry box office increase is estimated to be 8.6%. The MPTAC
reported a box office increase of 10.2% for the period from January 2, 2009
to October 1, 2009 as compared to the period from December 28, 2007 to
September 25, 2008. On a basis consistent with the Fund's calendar reporting
period (January 1st to September 30th), the Canadian industry box office
increase is estimated to be 11.6%.
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Box office continuity Third Quarter YTD September 30
Box Box
In thousands Office Attendance Office Attendance
-------------------------------------------------- ----------------------
2008 as reported $ 144,957 17,988 $ 388,137 48,262
Same store attendance change 3,103 384 29,764 3,685
Same store BPP change 3,586 - 9,179 -
New and acquired theatres 4,932 563 13,436 1,537
Disposed and closed theatres (694) (156) (2,972) (583)
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2009 as reported $ 155,884 18,779 $ 437,544 52,901
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Top Cineplex Films - Third Quarter 2009 compared to Third Quarter 2008
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Q3 2009 Top Cineplex % Total Box Q3 2008 Top Cineplex % Total Box
Films Films
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1 Harry Potter and the 12.3% 1 The Dark Knight 22.0%
Half-Blood Prince
2 Ice Age: Dawn of the 7.0% 2 Mamma Mia! 6.9%
Dinosaurs
3 District 9 6.3% 3 Hancock 6.4%
4 Inglourious Basterds 5.9% 4 Tropic Thunder 5.1%
5 Transformers: Revenge 5.9% 5 Journey to the Center 5.0%
of the Fallen of the Earth
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The third quarter of 2009 marked the fourth consecutive quarter that the Fund has reported its' highest-ever box office revenue for a given quarter. This has been achieved in spite of challenging economic conditions in Canada during this timeframe. The $155.9 million in box office represents the highest quarterly box office revenues recorded by the Fund since its inception, eclipsing the $151.4 million recorded in the second quarter of 2009. The increase in box office revenues as compared to the prior year was primarily due to a greater breadth of film product. While the third quarter of 2008 featured the strong performance of The Dark Knight, which finished as the second-highest grossing film of all-time in North America, the third quarter of 2009 benefited from film product catering to wider ranging audiences, and the success of the premium-priced 3D and IMAX product. Box office revenue per patron increased $0.24 (3.0%) from $8.06 in the third quarter of 2008 to $8.30 in the third quarter of 2009. The success of 3D films such as Ice Age: Dawn of the Dinosaurs, The Final Destination and Cloudy with a Chance of Meatballs as well as IMAX releases including Harry Potter and the Half-Blood Prince and Transformers: Revenge of the Fallen increased the Fund's overall box office revenue per patron, as these films are priced at a premium over regular ticket prices. Select ticket price increases implemented in November 2008 also contributed to this increase. The Fund's third quarter performance relative to industry was impacted by the strong regional performance in Quebec, where the Fund's market share is the lowest of the provinces in which the Fund operates, and the impact of certain independent non-traditional large-format locations. Concession revenues The following table highlights the movement in concession revenues, attendance and box office revenues per patron for the quarter and the year to date (in thousands of dollars, except attendance reported in thousands of patrons, and per patron amounts):
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Concession revenues Third Quarter Year to Date September 30
------------------------------------------------------
2009 2008 Change 2009 2008 Change
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Concession
revenues $ 77,995 $ 71,520 9.1% $ 215,346 $ 190,272 13.2%
Attendance 18,779 17,988 4.4% 52,901 48,262 9.6%
Concession
revenue per patron $ 4.15 $ 3.98 4.5% $ 4.07 $ 3.94 3.3%
Same store
concession
revenues $ 74,735 $ 70,405 6.2% $ 206,763 $ 186,556 10.8%
Same store
attendance 18,082 17,698 2.2% 50,991 47,306 7.8%
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Concession revenue
continuity Third Quarter YTD September 30
In thousands Concession Attendance Concession Attendance
--------------------------------------------------- -----------------------
2008 as reported $ 71,520 17,988 $ 190,272 48,262
Same store attendance change 1,528 384 14,532 3,685
Same store CPP change 2,802 - 5,675 -
New and acquired theatres 2,631 563 6,937 1,537
Disposed and closed theatres (486) (156) (2,070) (583)
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2009 as reported $ 77,995 18,779 $ 215,346 52,901
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Concession revenues increased 9.1% as compared to the prior period, due to the 4.4% increase in attendance and a 4.5% increase in average concession revenue per patron, which increased from $3.98 in the third quarter of 2009 to $4.15 in the third quarter of 2009. The $4.15 CPP represents the Fund's highest ever quarterly CPP, $0.06 higher than the second quarter of 2009 which represented the Fund's previous highest quarterly CPP at $4.09. The increase in CPP compared to the prior period is due in part to the film slate, which catered to more family audiences in the third quarter of 2009 as compared to the prior year, with three of top five films during the quarter (Harry Potter and the Half-Blood Prince, Ice Age: Dawn of the Dinosaurs and Transformers: Revenge of the Fallen) catering to the family demographic, who tend to be higher concession spenders. The Fund believes that an improved product offering mix designed to encourage consumers to make purchases outside of the core concession offerings, as well as process improvements designed to increase speed of service also contributed to this year-over-year increase. During the third quarter of 2009, the Fund launched the 'Telus Tuesdays' program which it believes will drive incremental attendance and concession purchase incidence on Tuesdays. Management believes that concession revenues will continue to be dependent on overall theatre attendance and that the current economic conditions will not have a material impact on concession revenues. 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 dollars):
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Other revenues Third Quarter Year to Date September 30
-----------------------------------------------------
2009 2008 Change 2009 2008 Change
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Media $ 16,751 $ 16,547 1.2% $ 43,692 $ 41,040 6.5%
Games 1,304 1,310 -0.5% 3,639 3,850 -5.5%
Other 5,606 4,769 17.6% 16,957 14,969 13.3%
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Total $ 23,661 $ 22,626 4.6% $ 64,288 $ 59,859 7.4%
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Media revenues for the third quarter of 2009 were $16.8 million, up $0.2 million from the prior year period. The third quarter of 2009 includes a $1.0 million increase in non-cash barter revenue, and a $1.0 million decrease in cash-settled media revenue. Rather than settling cash-based transactions, during 2008 and 2009 the Fund entered into a number of cross-promotional non-cash barter agreements with certain promotional partners to provide radio and television promotions for the Fund's business initiatives. During the third quarter of 2009 the Fund recognized $2.0 million in media revenue and $1.7 million in marketing costs related to these transactions (third quarter of 2008: $1.1 million in media revenue and $1.1 million in marketing costs). Other revenues are up $0.8 million, 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 dollars, except film cost percentage):
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Film cost Third Quarter Year to Date September 30
---------------------------------------------------------
2009 2008 Change 2009 2008 Change
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Film cost $82,024 $ 76,212 7.6% $ 229,336 $ 202,850 13.1%
Film cost percentage 52.6% 52.6% 0.0% 52.4% 52.3% 0.3%
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Film cost varies primarily with box office revenue. The quarterly increase was due to the 7.5% increase in box office revenues. Film cost percentage for both the third quarter of 2009 and 2008 was 52.6%. 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 dollars, except Concession Cost Percentage):
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Cost of
concessions Third Quarter Year to Date September 30
--------------------------------------------------------
2009 2008 Change 2009 2008 Change
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Concession cost $ 16,517 $ 14,690 12.4% $ 44,613 $ 40,000 11.5%
Concession cost
percentage 21.2% 20.5% 3.1% 20.7% 21.0% -1.5%
Concession
margin per patron $ 3.27 $ 3.16 3.5% $ 3.23 $ 3.11 3.9%
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Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in concession cost period over period was due to the 4.4% increase in attendance, increased purchase incidence and the higher Concession Cost Percentage. This increase in Concession Cost Percentage was due to the improved product offering mix, designed to encourage consumers to make purchases outside of the core concession offerings. These non-core offerings tend to have lower margins than popcorn and fountain drinks. Despite this increase in concession cost percentage, the concession margin per patron increased from $3.16 in the third quarter of 2008 to $3.27 in the same period in 2009. The 'Telus Tuesdays' program is designed to increase concession purchase incidence on Tuesdays, however due to the discounted nature of the combo offering, will have a negative impact on the Concession Cost Percentage. Occupancy expense The following table highlights the movement in occupancy expenses for the quarter and the year to date, including non-recurring one-time benefits of lease-related amounts recognized during the period (in thousands of dollars):
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Occupancy expense Third Quarter Year to Date September 30
---------------------------------------------------------
2009 2008 Change 2009 2008 Change
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Occupancy expenses $ 39,154 $ 38,541 1.6% $ 118,172 $ 116,525 1.4%
One-time benefits $ (614) $ (477) 28.7% $ (1,561) $ (2,670) -41.5%
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Occupancy expense increased $0.6 million, primarily due to the incremental costs associated with new and acquired theatres ($1.1 million), offset by the impact of disposed and closed theatres ($0.4 million) and higher one-time benefits of lease related amounts recognized in 2009 as compared to the prior period ($0.1 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 dollars):
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Other operating expenses Third Quarter Year to Date September 30
----------------------------------------------------
2009 2008 Change 2009 2008 Change
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Other operating
expenses $58,801 $ 52,370 12.3% $ 165,317 $ 144,334 14.5%
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Other operating expenses increased $6.4 million due to the incremental impact of new and acquired theatres ($1.7 million), increased theatre payroll due to minimum wage increases and increased theatre staffing in response to higher theatre attendance in the third quarter of 2009 as compared to the same period in 2008 ($1.7 million), costs related to expanded service offerings such as the elimination of charges for online ticketing and 3D technology licensing payments ($0.9 million), additional marketing costs ($1.1 million) primarily arising from the non-cash barter agreements previously discussed under 'Other revenues' and additional costs relating to servicing new clients and new business initiatives such as the Cineplex Store and Cineplex Digital Media ($1.4 million). These increases were offset by the impact of disposed and closed theatres ($0.4 million). Total theatre payroll accounted for 47.1% of the total expenses in other operating expenses during the third quarter of 2009, as compared to 48.3% for the same period in 2008. 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 the Fund's Long-Term Incentive Plan ("LTIP") and unit option plan costs, and G&A net of these costs (in thousands of dollars):
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G&A expenses Third Quarter Year to Date September 30
---------------------------------------------------
2009 2008 Change 2009 2008 Change
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G&A excluding LTIP,
option plan expense
and pension settlement $ 8,893 $ 7,842 13.4% $ 27,548 $ 24,100 14.3%
LTIP $ 2,092 $ 1,658 26.2% $ 7,068 $ 4,965 42.4%
Option plan $ 460 $ - NM $ 938 $ - NM
Pension plan settlement $ 2,360 $ - NM $ 2,360 $ - NM
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G&A costs as reported $ 13,805 $ 9,500 45.3% $ 37,914 $ 29,065 30.4%
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General and administrative costs increased $4.3 million as a result of a one-time settlement loss of $2.4 million relating to the Retirement Plan for Salaried Employees of Famous Players, increased costs under the LTIP and option plans ($0.9 million) and increased direct costs ($1.0 million). The direct costs increased due to a $0.6 million increase in head office payroll, and higher professional fees ($0.4 million). Professional fees during the quarter are primarily related to consulting costs relating to the Fund's general ledger system upgrade undertaken to provide reporting enhancements in preparation for the Fund's transition to IFRS. The Fund reported income before undernoted ("adjusted EBITDA") for the three and nine months ended September 30, 2009 of $47.3 million and $121.8 million, respectively, as compared to income before undernoted of $47.8 million and $105.5 million, respectively, for the prior year periods. These changes were due to the aggregate effect of the factors described previously. The adjusted EBITDA figures for the 2009 periods include a one-time settlement loss of $2.4 million relating to the wind-up of the Famous Players defined benefit pension plan. Distributable Cash For the three months ended September 30, 2009, distributable cash per Fund unit was $0.670 as compared to $0.672 for the three months ended June 30, 2008. The declared distributions per Fund unit were $0.315 for both the three months ended September 30, 2009 and 2008. The payout ratios were approximately 47% for each of these periods. During the twelve months ended September 30, 2009 and 2008, the Fund generated distributable cash of $2.131 and $1.664, respectively, as compared to declared distributions of $1.260 and $1.225, respectively. The payout ratios for these periods were approximately 59% and 74%, respectively. Presentation Prior to 2009, Cineplex presented and discussed the results of Cineplex Entertainment Limited Partnership (the "Partnership") as the Fund equity accounted for its investment in the Partnership prior to Q2 2007 and, as such, the consolidated financial statements of the Fund did not provide comparative results on a line-by-line basis. As a result of the Fund's step acquisitions in the Partnership, there are differences in the valuation bases of certain assets and liabilities between the Fund and the Partnership. These valuation differences give rise to differences in certain non-cash expenses (primarily included in the occupancy category) which result in differences in reported results between the Fund and the Partnership. In its filed Management's Discussion and Analysis, the Fund provides a reconciliation of the Fund and the Partnership reported results. For Q3 2009, the Fund reported Adjusted EBITDA of $47.3 million, and the Partnership reported Adjusted EBITDA of $48.2 million. Trustee Change Howard Beck, founding Trustee and Chairman of Cineplex Galaxy Income Fund, has decided to retire from the Chair position on the Board with Cineplex. Phyllis Yaffe has since been appointed as Chair of the Board. 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 and 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 Entertainment, its financial or operating results or its securities. About Cineplex Entertainment LP As the largest motion picture exhibitor in Canada, Cineplex Entertainment LP owns, leases or has a joint-venture interest in 130 theatres with 1,338 screens serving more than 63.5 million guests annually. Headquartered in Toronto, Canada, Cineplex Entertainment operates theatres from British Columbia to Quebec and is 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. The units of Cineplex Galaxy Income Fund, which owns approximately 99.6% of Cineplex Entertainment LP, are traded on the Toronto Stock Exchange (symbol CGX.UN). For more information, visit www.cineplex.com. Further information can be found in the disclosure documents filed by the Fund with the Canadian securities regulatory authorities, available at www.sedar.com. You are cordially invited to participate in a teleconference call with the management of the Partnership (TSX: CGX-UN.TO) to review our quarterly results. Ellis Jacob, Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call. The teleconference call is scheduled for:
Tuesday, November 10th, 2009
10:00 a.m. Eastern Time
In order to participate in the conference call, please dial (416) 644-3419 or outside of Toronto dial 1-877-974-0446 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 4178321 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 4178321#. The replay will begin at 12:00 p.m. Eastern Time on Tuesday, November 10th, 2009 and end at 11:59 p.m. Eastern Time on Tuesday, November 17th, 2009. - Note that media will be participating in the call in listen - only mode. - Thank you in advance for your interest and participation.
Cineplex Galaxy Income Fund
Interim Consolidated Supplemental Information
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDA
---------------------------------
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
------------------ ---------------------
Net income $ 20,401 $ 18,378 $ 43,996 $ 22,133
Amortization 19,739 20,840 60,336 63,307
Interest and accretion expense on
convertible debentures 1,912 1,887 5,596 5,550
Interest on long-term debt and
capital lease obligations 4,088 3,912 12,131 13,417
Interest income (60) (223) (261) (616)
Provision for (recovery of) income
taxes 1,162 (1,382) 882 (2,065)
------------------ ---------------------
EBITDA 47,242 43,412 122,680 101,726
Non-controlling interests 77 4,150 397 2,186
Extraordinary gain (67) - (1,059) -
(Gain) loss on disposal of assets (13) 228 (192) 1,582
------------------ ---------------------
Adjusted EBITDA $ 47,239 $ 47,790 $ 121,826 $ 105,494
------------------ ---------------------
------------------ ---------------------
Cineplex Galaxy Income Fund
Interim Consolidated Supplemental Information
(Unaudited)
---------------------------------------------
(expressed in thousands of Canadian dollars, except number of units and per
unit data)
Distributable Cash
------------------
For the three months ended For the nine months ended
September 30, September 30,
2009 2008 2009 2008
----------- --------------- ------------ -------------
----------- --------------- ------------ -------------
Cash provided by
operating
activities $ 28,611 $ 35,782 $ 90,157 $ 66,267
Less: Total capital
expenditures (10,534) (13,412) (33,672) (28,039)
----------- --------------- ------------ -------------
Standardized
distributable cash 18,077 22,370 56,485 38,228
Less:
Changes in operating
assets and
liabilities(i) 12,767 7,082 22,034 26,416
Tenant inducements(ii) - (736) (7,052) (3,001)
Principal component
of capital
lease obligations (428) (399) (1,263) (1,175)
Add:
New build capital
expenditures
and other(iii) 8,037 10,280 26,276 20,255
Non-cash components
in operating assets
and liabilities(iv) (180) (164) (519) (488)
----------- --------------- ------------ -------------
Distributable cash $ 38,273 $ 38,433 $ 95,961 $ 80,235
----------- --------------- ------------ -------------
----------- --------------- ------------ -------------
Less:
Non-controlling
interests
share of
distributable cash (167) (9,238) (1,745) (19,340)
----------- --------------- ------------ -------------
Distributable cash
available to
Fund unitholders $ 38,106 $ 29,195 $ 94,216 $ 60,895
----------- --------------- ------------ -------------
----------- --------------- ------------ -------------
Average number of
Fund units
outstanding 56,900,680 43,414,217 56,111,494 43,374,731
Distributable cash
per Fund unit $ 0.670 $ 0.672 $ 1.679 $ 1.404
(i) Changes in operating assets and liabilities are not considered a
source or use of distributable cash.
(ii) Tenant inducements received are for the purpose of funding new theatre
capital expenditures and are not considered a source of distributable
cash.
(iii) New build capital expenditures and other represent expenditures on
Board approved projects as well as any expenditures for digital
equipment anticipated to be reimbursed by a third-party digital
integrator, and exclude maintenance capital expenditures. The
Partnership's revolving credit facility is available to the Fund for
use to fund Board approved projects.
(iv) Certain non-cash components of other assets and liabilities are
indirectly excluded from distributable cash to the extent they reflect
permanent, not timing differences. Such items include the amortization
of deferred gains on sale-leaseback transactions and non-cash pension
adjustments relating to the Fund's acquisition of the Partnership.
Cineplex Galaxy Income Fund
Interim Consolidated Balance Sheets
--------------------------------------------
(expressed in thousands of Canadian dollars)
September 30, December 31,
2009 2008
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 35,838 $ 44,585
Accounts receivable 29,534 45,507
Inventories 3,826 4,014
Prepaid expenses and other current assets 9,723 3,733
------------ -----------
78,921 97,839
Property, equipment and leaseholds 435,862 455,885
Future income taxes 20,435 13,099
Deferred charges 854 953
Intangible assets 107,115 117,476
Goodwill 600,564 600,564
------------ -----------
$ 1,243,751 $ 1,285,816
------------ -----------
------------ -----------
September 30, December 31,
2009 2008
(unaudited)
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 65,902 $ 86,140
Distributions payable 6,001 6,001
Income taxes payable 44 48
Deferred revenue 54,512 76,929
Capital lease obligations - current portion 1,921 1,700
------------ -----------
128,380 170,818
Long-term debt 233,309 232,861
Fair value of interest rate swap agreements 15,121 20,628
Capital lease obligations - long-term portion 31,647 33,131
Accrued pension benefit liability 1,867 932
Other liabilities 113,002 108,380
Convertible debentures - liability component 100,675 99,834
------------ -----------
624,001 666,584
Non-controlling interests 2,713 149,860
Unitholders' equity 617,037 469,372
------------ -----------
$ 1,243,751 $ 1,285,816
------------ -----------
------------ -----------
Cineplex Galaxy Income Fund
Interim Consolidated Statements of Operations
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
Revenues
Box office $ 155,884 $ 144,957 $ 437,544 $ 388,137
Concessions 77,995 71,520 215,346 190,272
Other 23,661 22,626 64,288 59,859
----------------------------- -----------------------------
257,540 239,103 717,178 638,268
----------------------------- -----------------------------
Expenses
Film cost 82,024 76,212 229,336 202,850
Cost of
concessions 16,517 14,690 44,613 40,000
Occupancy 39,154 38,541 118,172 116,525
Other operating 58,801 52,370 165,317 144,334
General and
administrative 13,805 9,500 37,914 29,065
----------------------------- -----------------------------
210,301 191,313 595,352 532,774
----------------------------- -----------------------------
Income before
undernoted 47,239 47,790 121,826 105,494
Amortization 19,739 20,840 60,336 63,307
(Gain) loss on
disposal of
assets (13) 228 (192) 1,582
Interest and
accretion
expense on
convertible
debentures 1,912 1,887 5,596 5,550
Interest on
long-term debt
and capital lease
obligations 4,088 3,912 12,131 13,417
Interest income (60) (223) (261) (616)
----------------------------- -----------------------------
Income before
income taxes,
extraordinary
gain and non-
controlling
interests 21,573 21,146 44,216 22,254
----------------------------- -----------------------------
Provision for
(recovery of)
income taxes
Current (2) - 7 (4)
Future 1,164 (1,382) 875 (2,061)
----------------------------- -----------------------------
1,162 (1,382) 882 (2,065)
----------------------------- -----------------------------
Income before
extraordinary
gain and
non-controlling
interests 20,411 22,528 43,334 24,319
Extraordinary
gain 67 - 1,059 -
----------------------------- -----------------------------
Income before
non-controlling
interests 20,478 22,528 44,393 24,319
Non-controlling
interests 77 4,150 397 2,186
----------------------------- -----------------------------
Net income $ 20,401 $ 18,378 $ 43,996 $ 22,133
----------------------------- -----------------------------
----------------------------- -----------------------------
Cineplex Galaxy Income Fund
Interim Consolidated Statements of Unitholders' Equity and Comprehensive
Income
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)
For the nine months ended September 30, 2009
Accumulated
distributions
in excess of
Accumulated Accumulated accumulated
income distributions income
Balance -
December 31, 2008 $ 102,535 $ (190,881) $ (88,346)
Issuance of Fund units
under exchange
agreement - - -
LTIP compensation
obligation - - -
LTIP Fund units - - -
Distributions declared - (53,288) (53,288)
Net income 43,996 - 43,996
Other comprehensive
income - interest rate
swap agreements, net
of $961 of future
income tax provision - - -
Comprehensive
income for the
period - - -
--------------------------------------------
Balance -
September 30, 2009 $ 146,531 $ (244,169) $ (97,638)
--------------------------------------------
Accumulated
other Total
comprehensive Unitholders' Unitholders' Comprehensive
loss capital equity income
Balance -
December 31,
2008 $ (13,683) $ 571,401 $ 469,372 $ -
Issuance of
Fund units
under
exchange
agreement - 150,935 150,935 -
LTIP
compensation
obligation - 2,683 2,683 -
LTIP Fund
units - (2,912) (2,912) -
Distributions
declared - - (53,288) -
Net income - - 43,996 43,996
Other
comprehensive
income -
interest rate
swap
agreements,
net
of $961 of
future
income tax
provision 6,251 - 6,251 6,251
---------------
Comprehensive
income for
the
period - - - $ 50,247
-------------------------------------------------------------
Balance -
September 30,
2009 $ (7,432) $ 722,107 $ 617,037
--------------------------------------------
The sum of the accumulated distributions in excess of accumulated income and accumulated other comprehensive loss as at September 30, 2009 is $105,070.
For the nine months ended September 30, 2008
Accumulated
distributions
in excess of
Accumulated Accumulated accumulated
income distributions income
Balance -
December 31, 2007 $ 73,532 $ (137,082) $ (63,550)
Issuance of Fund units
under exchange
agreement - - -
LTIP compensation
obligation - - -
LTIP Fund units - - -
Distributions declared - (40,124) (40,124)
Net income 22,133 - 22,133
Other comprehensive
loss - interest rate
swap agreements - - -
Comprehensive
income for the
period - - -
--------------------------------------------
Balance -
September 30, 2008 $ 95,665 $ (177,206) $ (81,541)
--------------------------------------------
Accumulated
other Total
comprehensive Unitholders' Unitholders' Comprehensive
income capital equity income
Balance -
December 31,
2007 $ 290 $ 570,728 $ 507,468 $ -
Issuance of
Fund units
under
exchange
agreement - 2,139 2,139 -
LTIP
compensation
obligation - 1,845 1,845 -
LTIP Fund
units - (3,691) (3,691) -
Distributions
declared - - (40,124) -
Net income - - 22,133 22,133
Other
comprehensive
loss -
interest
rate
swap
agreements (3,306) - (3,306) (3,306)
----------------
Comprehensive
income for
the period - - - $ 18,827
-----------------------------------------------------------
Balance -
September 30,
2008 $ (3,016) $ 571,021 $ 486,464
------------------------------------------
The sum of the accumulated distributions in excess of accumulated income and accumulated other comprehensive income as at September 30, 2008 is $84,557.
Cineplex Galaxy Income Fund
Interim Consolidated Statements of Cash Flows
(Unaudited)
--------------------------------------------
(expressed in thousands of Canadian dollars)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
Cash provided by (used
in)
Operating activities
Net income $ 20,401 $ 18,378 $ 43,996 $ 22,133
Adjustments to reconcile
net income to net cash
provided by operating
activities
Amortization of
property, equipment and
leaseholds, deferred
charges and intangible
assets 19,739 20,840 60,336 63,307
Amortization of tenant
inducements, rent
averaging
liabilities and fair
value lease contract
liabilities (462) (449) (631) (20)
Amortization of debt
issuance costs 151 150 448 445
(Gain) loss on disposal
of theatre assets (13) 228 (192) 1,582
Future income taxes 1,164 (1,382) 875 (2,061)
Cash flow hedges -
non-cash interest 81 (74) 129 1,310
Extraordinary gain (67) - (1,059) -
Non-controlling
interests 77 4,150 397 2,186
Accretion of convertible
debentures 307 287 840 800
Tenant inducements - 736 7,052 3,001
Changes in operating
assets and liabilities (12,767) (7,082) (22,034) (26,416)
----------------------- ------------------------
28,611 35,782 90,157 66,267
----------------------- ------------------------
Investing activities
Proceeds from sale of
assets 100 54 496 2,453
Purchases of property,
equipment and leaseholds (10,534) (13,412) (33,672) (28,039)
Cash acquired in
exchanges of LP units - - 639 -
Theatre shutdown
payment - (450) - (750)
Acquisition of Famous
branded magazines - - (231) (387)
Acquisition of Onsite
Media Network Inc., net
of cash acquired (42) - (1,702) -
----------------------- ------------------------
(10,476) (13,808) (34,470) (26,723)
----------------------- ------------------------
Financing activities
Distributions paid (17,921) (13,676) (51,872) (39,889)
Distributions paid by
the Partnership to
non-controlling
interests (82) (4,327) (2,136) (12,690)
Borrowings under credit
facility 3,000 3,000 30,000 13,000
Repayment of credit
facility (3,000) (3,000) (30,000) (13,000)
Payments under capital
leases (428) (399) (1,263) (1,175)
Acquisition of LTIP fund
units - - (9,163) (6,887)
----------------------- ------------------------
(18,431) (18,402) (64,434) (60,641)
----------------------- ------------------------
Increase (decrease) in
cash and cash
equivalents during the
period (296) 3,572 (8,747) (21,097)
Cash and cash
equivalents - Beginning
of period 36,134 19,585 44,585 44,254
----------------------- ------------------------
Cash and cash
equivalents - End of
year $ 35,838 $ 23,157 $ 35,838 $ 23,157
----------------------- ------------------------
----------------------- ------------------------
Supplemental Information
Cash paid for interest $ 3,374 $ 3,194 $ 12,503 $ 13,117
Cash paid for income
taxes - net - - 11 15
Cash received for
interest 43 217 237 595
ContactsGord Nelson Cineplex Galaxy Income Fund
Chief Financial Officer
(416) 323-6602
Pat Marshall
Cineplex Galaxy Income Fund
Vice President Communications and Investor Relations
(416) 323-6648
158.94 (1.43%)
