Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial
results for the third quarter of 2012.
Third Quarter Results
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Period over
Period
2012 2011 Change (i)
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Total Revenues $281.4 million $276.7 million 1.7%
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Attendance 18.3 million 18.5 million -1.0%
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Other Revenues $ 33.3 million $ 32.1 million 3.9%
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Net Income $ 51.7 million $ 25.7 million 100.9%
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Adjusted EBITDA $ 54.6 million $ 57.4 million -5.0%
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Adjusted EBITDA Margin 19.4% 20.8% -1.4%
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Adjusted Free Cash Flow per
Share $ 0.5737 $ 0.7133 -19.6%
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Basic Earnings per Share $ 0.84 $ 0.44 90.9%
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Diluted Earnings per Share $ 0.83 $ 0.44 88.6%
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i. Period over Period change calculated based on thousands of dollars
except percentage and per share values. Changes in percentage amounts
are calculated as 2012 value less 2011 value.
First Nine Months Results
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Period over
Period
2012 2011 Change (i)
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Total Revenues $793.2 million $756.5 million 4.8%
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Attendance 52.6 million 51.0 million 3.2%
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Other Revenues $ 82.5 million $ 89.4 million -7.8%
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Net Income $ 87.8 million $ 38.3 million 129.0%
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Adjusted EBITDA $143.0 million $133.1 million 7.4%
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Adjusted EBITDA Margin 18.0% 17.6% 0.4%
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Adjusted Free Cash Flow per
Share $ 1.5378 $ 1.6100 -4.5%
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Basic Earnings per Share $ 1.45 $ 0.67 116.4%
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Diluted Earnings per Share $ 1.45 $ 0.66 119.7%
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i. Period over Period change calculated based on thousands of dollars
except percentage and per share values. Changes in percentage amounts
are calculated as 2012 value less 2011 value.
"Total revenues for the third quarter increased 1.7% compared to
a year ago and our merchandising and media businesses delivered
strong results," said Ellis Jacob, President and CEO, Cineplex
Entertainment. "New third quarter records were established for CPP
of $4.68, up 5.6%, BPP of $8.84, up 0.8% and concession revenues of
$85.9 million, an increase of 4.6% versus the same period last
year. On a year-to-date basis, total revenues were up 4.8% and
Adjusted EBITDA was up 7.4%."
"In other areas of our business, we completed the conversion of
our circuit to digital projection and approximately 36% of our
screens are 3D enabled. We completed the acquisition of four
theatres (86 screens) from AMC and are in the process of
implementing a number of our programs to improve the business
results. Our SCENE loyalty program reached a new milestone
surpassing 4 million members and continues to grow. The Cineplex
mobile app has now been downloaded more than 4.1 million times and
recorded approximately 85 million app sessions. We are pleased with
the progress in our key initiatives and are encouraged by the
industry box office results for October and the quality of the film
product for the balance of the quarter."
EBITDA and adjusted free cash flow are not measures recognized
by generally accepted accounting principles ("GAAP") and do not
have standardized meanings in accordance with such principles.
Therefore, EBITDA and adjusted free cash flow 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, gains on acquisition of businesses and the
share of income or 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. Management uses adjusted EBITDA and adjusted free cash flow
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 provided by
operating activities to adjusted free cash flow, please refer to
Cineplex's management's discussion and analysis filed on
www.sedar.com.
KEY DEVELOPMENTS IN THE THIRD QUARTER OF 2012
The following describes certain key business initiatives
undertaken during the third quarter of 2012 in each of Cineplex's
core business areas:
THEATRE EXHIBITION
-- Completed the acquisition of AMC Ventures Inc., which owns four theatres
located in Toronto, Mississauga and Oakville, Ontario and Montreal,
Quebec.
-- BPP increased 0.8% from $8.77 in the third quarter of 2011 to $8.84 in
the current year period, which is a third quarter BPP record for
Cineplex.
-- As of September 30, 2012, Cineplex has completed the planned conversion
of its theatre circuit to digital projection.
MERCHANDISING
-- Reported record quarterly concession revenues of $85.9 million, a 4.6%
increase in concession revenues compared to the prior year period.
-- Reported record quarterly CPP of $4.68, up $0.25 or 5.6% over the third
quarter of 2011, exceeding the previous quarterly record of $4.66
recorded in the second quarter of 2012.
-- Continued the roll-out of digital menu boards at concession stands
throughout the circuit, providing a flexible platform to communicate
pricing, promotions and merchandising programs.
-- Began implementing Cineplex's merchandising strategies at the four
theatres acquired from AMC during the period. Cineplex believes its
merchandising expertise will positively impact concession revenues at
these locations.
MEDIA
-- Media revenues increased 3.6% compared to the prior year period due
primarily to growth in the Cineplex digital media ("CDM") business.
-- Recruited a new Senior Vice President, Sales, responsible for overseeing
sales across all channels and platforms, starting October 1, 2012.
ALTERNATIVE PROGRAMMING
-- The Wimbledon tennis finals were screened live in 3D at select theatres
across Canada during the quarter.
-- Other alternative programming during the third quarter of 2012 included
ethnic films, live events such as World Wrestling Entertainment,
concerts, and performances from the National Theatre Live from London.
INTERACTIVE
-- Cineplex.com registered a 36% increase in page views and a 19% increase
in visits during the third quarter of 2012 compared to the prior year
period, registering 104 million page views and 17 million visits during
the quarter.
-- As of September 30, 2012, the Cineplex app had been downloaded 4.1
million times and recorded 84.8 million app sessions.
-- Launched Cineplex online store ("Cineplex Store") playback on Apple iOS
devices.
-- Added theatre ticketing and SCENE to Apple Passbook, and were Canadian
launch partners with the Google TV app.
-- Added e-gift cards to the Cineplex Store.
-- Launched the Cineplex Store app on LG set-top boxes.
LOYALTY
-- Membership in the SCENE loyalty program increased by 0.3 million members
during the third quarter of 2012 to 4.1 million.
-- SCENE became the first Canadian loyalty program to win prestigious
COLLOQUY Loyalty Awards, winning the award for "Innovation in Loyalty
Marketing" with its SCENEtourage initiative, as well as the award for
"Loyalty Innovation in Other Industries" for the mobile SCENE card.
OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2012
Total revenues
Total revenues for the three months ended September 30, 2012
increased $4.7 million, 1.7% to $281.4 million as compared to the
prior year period. Total revenues for the nine months ended
September 30, 2012 increased $36.7 million (4.8%) to $793.2 million
as compared to the prior year period. Exhibition revenues for the
current year periods were positively impacted by the acquisition of
the four theatres from AMC during the third quarter of 2012. 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 Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Box office revenues $162,133 $162,522 -0.2% $467,772 $443,613 5.4%
Attendance 18,348 18,542 -1.0% 52,621 50,989 3.2%
Box office revenue
per patron $ 8.84 $ 8.77 0.8% $ 8.89 $ 8.70 2.2%
Canadian industry
revenues (i) -5.4% 2.8%
Same store box
office revenues $154,302 $161,362 -4.4% $457,036 $440,684 3.7%
Same store
attendance 17,556 17,113 2.6% 51,545 50,631 1.8%
% Total box from 3D,
UltraAVX, VIP &
IMAX 31.4% 35.7% -4.3% 31.6% 29.1% 2.5%
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(i) The Motion Picture Theatre Associations of Canada ("MPTAC") reported
that the Canadian exhibition industry reported a box office revenue decrease
of 5.0% for the period from June 29, 2012 to September 27, 2012 as compared
to the period from July 1, 2011 to September 29, 2011. On a basis consistent
with Cineplex's calendar reporting period (July 1 to September 30), the
Canadian industry box office revenue decrease is estimated to be 5.4%. MPTAC
reported that the Canadian exhibition industry reported a box office revenue
increase of 2.4% for the period from December 30, 2011 to September 27, 2012
as compared to the period from December 31, 2010 to September 29, 2011. On a
basis consistent with Cineplex's calendar reporting period (January 1 to
September 30), the Canadian industry box office revenue is estimated to be
an increase of 2.8%.
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Box office continuity Third Quarter Year to Date
Box Office Attendance Box Office Attendance
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2011 as reported $ 162,522 18,542 $ 443,613 50,989
Same store attendance change (7,545) (861) 7,955 914
Impact of same store BPP
change 485 - -
New and acquired theatres 7,057 711 9,346 918
Disposed and closed theatres (386) (44) (1,539) (200)
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2012 as reported $ 162,133 18,348 $ 467,772 52,621
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Third Quarter
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Third Quarter 2012 Top % Third Quarter 2011 Top %
Cineplex Films IMAX 3D Box Cineplex Films IMAX 3D Box
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1 The Dark Knight 1 Harry Potter and the
Rises X 17.5% Deathly Hollows 2 X X 14.8%
2 The Amazing Spider- 2 Transformers: Dark
Man X X 10.7% of the Moon X X 9.6%
3 Ted 6.7% 3 The Smurfs X 6.0%
4 Ice Age: Continental 4 Captain America: The
Drift X X 6.0% First Avenger X 5.6%
5 The Bourne Legacy 4.9% 5 Rise of the Planet
of the Apes 5.6%
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Box office revenues decreased $0.4 million, or 0.2%, to $162.1
million during the third quarter of 2012, compared to $162.5
million recorded in the same period in 2011. The decrease was due
to a 1.0% decrease in attendance. The top five films during the
quarter outperformed the top five films from the prior year period
($74.3 million compared to $67.6 million), but the remainder of the
film slate underperformed compared to the prior year period. The
decrease was also mitigated by the acquisition of the four theatres
from AMC during the quarter which are not included in the prior
period results.
The decrease in box office revenues due to the attendance
decline was partially offset by a 0.8% increase in BPP, from $8.77
in the third quarter of 2011 to $8.84 in the current year period.
This BPP increase was due to the films during the period catering
to more mature audiences than the product in the prior year period,
as well as the contribution from the four theatres acquired from
AMC which are located in major metropolitan areas and have higher
ticket prices than those in smaller markets. Premium-priced product
(3D, UltraAVX, IMAX and VIP) accounted for 31.4% of box office
revenues in the current quarter, down from 35.7% in the prior year
period as only two of the top five releases during the period were
screened in 3D, compared to all four of the top releases in the
prior year period shown in 3D.
Cineplex's investment in premium-priced formats over the last
four years has positioned it to take advantage of the price
premiums offered on these formats, which has contributed to
Cineplex's BPP growth in the current period compared to the prior
year period. This investment in premium-priced offerings
contributed to Cineplex outperforming the Canadian industry during
the third quarter.
Year to Date
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Year to Date 2012 Top % Year to Date 2011 Top %
Cineplex Films IMAX 3D Box Cineplex Films IMAX 3D Box
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1 Marvel's The 1 Harry Potter and the
Avengers X X 7.7% Deathly Hallows 2 X X 5.7%
2 The Dark Knight 2 Transformers: Dark
Rises X 6.1% of the Moon X X 4.3%
3 The Hunger Games X 5.2% 3 Pirates of the
Caribbean: On
Stranger Tides X X 3.1%
4 The Amazing Spider- 4 The Hangover 2 2.7%
Man X X 3.7%
5 Dr. Seuss' The Lorax X X 2.7% 5 Bridesmaids 2.6%
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Box office revenues for the first nine months of 2012 were
$467.8 million or 5.4% higher than the prior year period. The
strong performance of the three major blockbusters released in 2012
(Marvel's The Avengers, The Dark Knight Rises and The Hunger Games)
were the main contributors to the $24.2 million increase in box
office revenue during the period. Attendance during the 2012 period
also benefited from the first week of January 2012 being a school
holiday week in most markets, whereas the same week in 2011 was
not. The acquisition of the four theatres from AMC during the third
quarter of 2012 also contributed to the box office revenue increase
in the current year period.
Cineplex's BPP for the first nine months of 2012 increased
$0.19, or 2.2%, from $8.70 in 2011 to $8.89 in the same period in
2012. This increase was primarily due to the increase in revenues
from premium-priced product. Premium-priced offerings accounted for
31.6% of Cineplex's box office revenues in the 2012 period,
compared to 29.1% in the prior year period. The top five films in
the 2012 period were screened in IMAX and three in 3D (2011 - three
in IMAX and three 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 Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Concession revenues $ 85,924 $ 82,114 4.6% $242,923 $223,477 8.7%
Attendance 18,348 18,542 -1.0% 52,621 50,989 3.2%
Concession revenue per
patron $ 4.68 $ 4.43 5.6% $ 4.62 $ 4.38 5.5%
Same store concession
revenues $ 82,317 $ 81,607 0.9% $237,620 $222,312 6.9%
Same store attendance 17,556 18,417 -4.7% 51,545 50,631 1.8%
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Concession revenue
continuity Third Quarter Year to Date
Concession Attendance Concession Attendance
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2011 as reported $ 82,114 18,542 $ 223,477 50,989
Same store attendance change (3,815) (861) 4,013 914
Impact of same store CPP
change 4,526 - 11,295 -
New and acquired theatres 3,212 711 4,682 918
Disposed and closed theatres (113) (44) (544) (200)
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2012 as reported $ 85,924 18,348 $ 242,923 52,621
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Third Quarter
Concession revenues increased 4.6% as compared to the prior year
quarter despite the 1.0% decrease in attendance. CPP increased from
$4.43 in the third quarter of 2011 to $4.68 in the same period in
2012, a 5.6% increase and a quarterly record for Cineplex, $0.02
higher than the previous record set in the second quarter of 2012.
Cineplex believes a focus on revised concession offerings, its
retail branded outlet program and improved product promotion
through the expansion of a digital menu board program have all
contributed to the higher CPP in the current period compared to the
prior year period.
While the 10% SCENE discount and SCENE points issued on
concession combo purchases reduce individual transaction values
which impacts CPP, Cineplex believes that this program drives
incremental visits and concession purchases, resulting in higher
overall concession revenues.
Year to Date
Concession revenues increased 8.7% as compared to the prior year
period, due to the 3.2% increase in attendance and the 5.5%
increase in CPP. CPP increased from $4.38 in the first nine months
of 2011 to $4.62 in the same period in 2012. This represents the
highest CPP Cineplex has recorded through the first nine 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 Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Media $ 22,996 $ 22,190 3.6% $ 53,890 $ 62,575 -13.9%
Games 1,644 2,492 -34.0% 5,018 5,456 -8.0%
Other 8,671 7,390 17.3% 23,573 21,386 10.2%
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Total $ 33,311 $ 32,072 3.9% $ 82,481 $ 89,417 -7.8%
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Third Quarter
Other revenues increased 3.9% to $33.3 million in the third
quarter of 2012. This increase was due to higher media revenues,
which during the third quarter of 2012 were $23.0 million, up $0.8
million, or 3.6%, when compared to the prior year period. This
increase was primarily due to higher revenues in Cineplex's Digital
Media business ($0.7 million). Showtime and pre-show advertising
returned to prior year levels in the third quarter of 2012.
The games revenue decrease is due to the formation of CSI on
January 31, 2012, with the acquisition by New Way Sales ("NWS") of
the gaming business of Starburst Coin Machines Inc. With the
creation of the CSI joint venture, revenues from CSI are included
in the 'Share of loss (income) of joint ventures' line in the
Statements of Operations. The Games revenues for the third quarter
of 2011 include the results of NWS ($1.2 million). The addition of
two new XSCAPE entertainment centres since the third quarter of
2011 partially offset the decrease in games revenue due to the
creation of CSI and related movement of CSI results to the joint
ventures line in the Statements of Operations. Other revenues also
increased due primarily to additional revenue arising from enhanced
guest service initiatives ($1.1 million).
Year to Date
Other revenues decreased 7.8% from $89.4 million in the first
nine months of 2011 to $82.5 million during the same period in
2012. Media revenues for the first nine months of 2012 decreased
$8.7 million, or 13.9%, from the prior year period. Declines in
Cineplex's media business were due in part to the challenging media
environment prevalent during the first half of 2012, partially
mitigated by the stronger CDM revenues in the third quarter.
Cineplex enjoys strong relationships with a number of national
advertisers and during the first half of the year the reduction in
campaigns from three major categories of these advertisers
contributed to the decrease in media revenues.
The decrease in games revenue was due to the impact of NWS and
the formation of CSI. The results of NWS are included in the
comparative period for May to September 2011 (following its
acquisition in May 2011) and for January 2012 (prior to the
formation of CSI described above - $0.4 million for the 2012 period
and $1.6 million for the 2011 period). This decrease was partially
offset by the impact of the new XSCAPE entertainment centres added
in the fourth quarter of 2011 as well as the higher attendance in
the current year period bringing more games traffic through the
theatres. The increase in the other category is primarily due to
higher auditorium rental and screening revenues as well as
additional revenue arising from enhanced guest service
initiatives.
Film cost
The following table highlights the movement in film cost and
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 Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Film cost $ 83,632 $ 85,320 -2.0% $243,804 $230,647 5.7%
Film cost percentage 51.6% 52.5% -0.9% 52.1% 52.0% 0.1%
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Third 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 decrease in the third
quarter of 2012 compared to the prior year period was due to the
decrease in box office revenue and the 0.9% 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 third quarter of 2012 being lower than the average film
settlement rate in the 2011 period.
Year to Date
The year to date increase in film cost was due to the 5.4%
increase in box office revenues and the 0.1% increase in film cost
percentage during the period. The increase 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
2012 period being higher than the average settlement rate in the
2011 period.
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 Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Concession cost $ 17,831 $ 16,817 6.0% $ 50,321 $ 46,722 7.7%
Concession cost
percentage 20.8% 20.5% 0.3% 20.7% 20.9% -0.2%
Concession margin
per patron $ 3.71 $ 3.52 5.4% $ 3.66 $ 3.47 5.5%
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Third 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 4.6% increase in concession revenues, partially
offset by the 0.3% increase in the concession cost percentage
during the period. The concession margin per patron increased from
$3.52 in the third quarter of 2011 to $3.71 in the same period in
2012, reflecting the impact of the higher CPP during the
period.
Year to Date
The increase in concession cost during the period was due to the
8.7% increase in concession revenues partially offset by the 0.2%
decrease in the concession cost percentage. Despite the 10%
discount offered to SCENE members, which contributes to a higher
concession cost percentage, Cineplex believes the SCENE program
drives incremental attendance and purchase incidence which
increases concession revenues and CPP.
Depreciation and amortization
The following table highlights the movement in depreciation and
amortization expenses during the quarter and the year to date (in
thousands of Canadian dollars):
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Amortization expenses Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Amortization of
property, equipment and
leaseholds $ 13,784 $ 14,372 -4.1% $ 42,727 $ 44,574 -4.1%
Amortization of
intangible assets and
other 230 2,241 -89.7% 2,397 6,729 -64.4%
----------------------------------------------------
Amortization expenses as
reported $ 14,014 $ 16,613 -15.6% $ 45,124 $ 51,303 -12.0%
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The quarterly and annual decrease in amortization of property,
equipment and leaseholds of $0.6 million and $1.8 million
respectively is due in part to the transfer of digital projection
equipment to CDCP in June 2011 resulting in lower asset values to
depreciate, as well as certain assets becoming fully amortized in
the third quarter of 2012. The declining 35 millimeter projector
base due to the circuit's conversion to digital also contributed to
the decrease in amortization of property, equipment and leaseholds.
The decrease in amortization of intangible assets and other relates
to certain intangible assets that became fully amortized during the
first quarter of 2012.
Loss on disposal of assets
The following table shows the movement in the loss on disposal
of assets during the quarter and year to date (in thousands of
Canadian dollars):
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Loss on disposal of
assets Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Loss on disposal of
assets $ 114 $ 487 -76.6% $ 786 $ 4 NM
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Third Quarter
For the third quarter of 2012, Cineplex recorded a loss of $0.1
million on the disposal of assets (2011 - $0.5 million).
Year to Date
For the nine months ended September 30, 2012, disposal of assets
resulted in a loss of $0.8 million on the disposal of assets. For
the nine months ended September 30, 2011, disposal of assets
resulted in a loss of $4.0 thousand, comprised of losses recorded
on assets that were sold or otherwise disposed of, offset by a gain
on the sale of the theatre during the second quarter of 2011 ($1.4
million) and a nominal gain recorded on the transfer of digital
projection assets to CDCP.
Gain on acquisition of business
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Gain on acquisition of
business Third Quarter Year to Date
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2012 2011 Change 2012 2011 Change
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Gain on acquisition of
business $(23,822) $ - NM $(23,822) $ - NM
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The gain on acquisition represents the gain recorded on the
acquisition of AMC Ventures Inc. during the third quarter of 2012
(see Section 1.3, Business acquisition).
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 ancillary businesses; 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 Third Quarter Year to Date
----------------------------------------------------
2012 2011 Change 2012 2011 Change
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Theatre occupancy
expenses $ 45,871 $ 41,040 11.8% $128,761 $123,855 4.0%
Other operating expenses 65,631 65,620 - 184,917 182,193 1.5%
General and
administrative expenses 13,146 12,068 8.9% 41,937 43,459 -3.5%
----------------------------------------------------
Total other costs $124,648 $118,728 5.0% $355,615 $349,507 1.7%
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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):
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Theatre occupancy
expenses Third Quarter Year to Date
--------------------------------------------------------
2012 2011 Change 2012 2011 Change
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Rent $ 30,379 $ 27,707 9.6% $ 85,650 $ 83,247 2.9%
Other occupancy 15,617 13,636 14.5% 44,285 42,091 5.2%
One-time items (i) (125) (303) -58.7% (1,174) (1,483) -20.8%
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Total $ 45,871 $ 41,040 11.8% $128,761 $123,855 4.0%
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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 excluding these one-time,
non-recurring items.
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Theatre occupancy continuity Third Quarter Year to Date
Occupancy Occupancy
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2011 as reported $ 41,040 $ 123,855
Impact of new theatres 4,359 4,974
Impact of disposed theatres (620) (1,265)
Same store rent change 319 305
One-time items 178 309
Other 595 583
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2012 as reported $ 45,871 $ 128,761
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Third Quarter
Theatre occupancy expenses increased $4.8 million during the
third quarter of 2012 compared to the prior year period. This
increase was primarily due to the four theatres acquired from AMC
on July 12 ($4.3 million). The increase in the Other category
primarily relates to higher real estate taxes in the current
quarter compared to the prior year period.
Year to Date
The increase in theatre occupancy expenses of $4.9 million for
the first nine months of 2012 compared to the prior year period was
primarily due to the four theatres acquired from AMC on July 12
($4.3 million). The increase in the Other category primarily
relates to higher real estate taxes in the current year period
compared to the prior year.
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):
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Other operating expenses Third Quarter Year to Date
---------------------------------------------------
2012 2011 Change 2012 2011 Change
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Other operating expenses $ 65,631 $ 65,620 - $184,917 $182,193 1.5%
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Other operating continuity Third Quarter Year to Date
Other Other
In thousands Operating Operating
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2011 as reported $ 65,620 $ 182,193
Impact of new theatres 2,362 3,257
Impact of disposed theatres (1,176) (1,603)
Same store payroll change 219 1,545
Marketing change 322 1,118
Media (34) (2,290)
New Way Sales (926) (1,013)
Theatre refurbishment payment (1,014) (1,014)
Other 258 2,724
----------------------------------------------------------------------------
2012 as reported $ 65,631 $ 184,917
----------------------------------------------------------------------------
Third Quarter
Other operating expenses during the third quarter of 2012 were
in line with the prior year period. The impact of new and acquired
net of disposed theatres was a $1.2 million increase to the
category primarily due to the four theatres acquired from AMC.
Other increases included higher marketing costs ($0.3 million) and
higher same-store payroll costs ($0.2 million). These increases
were partially offset by the impact of NWS ($0.9 million) as
expenses for NWS are included in other operating expenses in 2011
but not in 2012 due to the creation of CSI, and a $1.0 million
termination payment paid to a landlord in the prior year period to
refurbish theatre space for a disposed theatre.
The major movement in the Other category include the
following:
-- Higher credit card service fees due in part to an increase in pre-sales
for The Dark Knight Rises ($0.2 million).
-- Higher utility costs due to the higher temperatures across Canada during
the current year period ($0.5 million).
-- Higher digital projector rental costs due to the roll-out of digital
projectors by CDCP that commenced in June 2011 ($0.2 million).
-- Lower 3D royalty costs due to less 3D content in the current year period
($0.8 million).
Total theatre payroll costs accounted for 45.3% of total
operating expenses during the third quarter of 2012 as compared to
43.1% for the same period one year earlier due in part to minimum
wage increases.
Year to Date
For the nine months ended September 30, 2012, other operating
expenses increased $2.7 million, due in part to the higher business
volumes in the 2012 period compared to the prior year. The impact
of new and acquired net of disposed theatres was a $1.7 million
increase to the category primarily due to the four theatres
acquired from AMC. Cost increases included higher same-store
payroll expenses related to the increased business volumes ($1.5
million), higher marketing costs ($1.1 million) and the $2.7
million increase in the Other category. These cost increases were
partially offset by lower media expenses due to the lower media
sales during the period ($2.3 million) and the impact of NWS which
was contributed into CSI in January 2012 ($1.0 million) as well as
a $1.0 million termination payment paid to a landlord in the prior
year period to refurbish theatre space for a disposed theatre.
The major movement in the Other category include the
following:
-- Higher credit card service fees due in part to an increase in pre-sales
for highly anticipated releases ($1.0 million).
-- Higher utility costs due to the higher temperatures across Canada during
the current year period ($1.2 million).
-- Higher digital projector rental costs due to the roll-out of digital
projectors by CDCP that commenced in June 2011 ($0.7 million).
-- Higher theatre operating costs including cleaning relating to the higher
business volumes during the period.
-- Lower 3D royalty costs due to less 3D content in the current year period
($1.3 million).
Total theatre payroll accounted for 45.5% of total other
operating expenses in the first nine months of 2012, compared to
44.6% in the prior year period due in part to minimum wage
increases.
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 Third Quarter Year to Date
----------------------------------------------------
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
G&A excluding LTIP and
Option Plan expense $ 11,163 $ 9,589 16.4% $ 34,033 $ 30,053 13.2%
LTIP (i) 1,550 1,626 -4.7% 6,266 6,039 3.8%
Option plan 433 853 -49.2% 1,638 7,367 -77.8%
----------------------------------------------------
G&A expenses as reported $ 13,146 $ 12,068 8.9% $ 41,937 $ 43,459 -3.5%
----------------------------------------------------------------------------
(i) LTIP includes the expense for the LTIP program as well as
the expense for the executive and Board deferred share unit
plans.
Third Quarter
G&A expenses increased $1.1 million during the third quarter
of 2012 compared to the prior year period, due to a $0.6 million
increase in professional fees in part relating to the acquisition
of the theatres from AMC and a $1.0 million increase in payroll
related and general cost increases. These increases were partially
offset by lower expenses under the option plan ($0.4 million) and
lower LTIP expenses ($0.1 million).
Effective January 1, 2012, the Board of Directors of Cineplex
invoked Cineplex's right to substitute a cashless exercise for any
requested exercise of options for cash, in accordance with the
terms of the option plan. As a result of the change in
administrative policy, the options may only be equity-settled, and
are considered equity, not liabilities. The expense amount for
options is determined at the time of their issuance, recognized
over the vesting period of the options. Existing options at the
time of the change in administrative policy have their remaining
expense determined at the time of the change in administrative
policy, recognized over the remaining vesting periods.
Year to Date
G&A expenses for the first nine months of 2012 decreased
$1.5 million compared to the prior year period, due to the $5.7
million decrease in the option plan expense. This decrease was
partially offset by higher professional fees ($1.4 million)
relating to the creation of CSI, an internal corporate
reorganization effected on January 1, 2012 and the theatres
acquired from AMC, higher payroll related and general cost
increases ($2.6 million), and higher LTIP costs ($0.2 million).
Share of loss (income) of joint ventures
Cineplex's joint ventures in 2012 include its 50% share of one
theatre in Quebec and one IMAX screen in Ontario, its 50% interest
in SCENE LP, its 78.2% interest in CDCP (formed in June 2011) and
its 50% interest in CSI (formed January 31, 2012). For the 2011
period, Cineplex's joint ventures included one theatre in Quebec,
one IMAX screen in Ontario, its interest in SCENE LP and its 78.2%
interest in CDCP. The following table highlights the movement in
the share of loss (income) of joint ventures during the quarter and
the year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Share of loss
(income) of joint
ventures Third Quarter Year to Date
-------------------------------------------------------
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Share of CDCP $ (462) $ 65 NM $ (1,388) $ 2,218 NM
Share of CSI (264) - NM (762) - NM
Share of SCENE 1,855 (1,494) NM 3,050 (3,342) NM
Share of other joint
ventures (105) (57) 84.2% (111) 32 NM
-------------------------------------------------------
Total loss (income)
of joint ventures $ 1,024 $ (1,486) -168.9% $ 789 $ (1,092) NM
----------------------------------------------------------------------------
Third Quarter
The movement from income of $1.5 million in the third quarter of
2011 to a loss of $1.0 million in the current period is primarily
due to the activities of SCENE, CDCP and CSI:
-- SCENE's results in the third quarter of 2011 include income relating to
an adjustment to SCENE's outstanding points balance due to certain
members having their points expired during the third quarter of 2011 due
to inactivity in the program. When compared to the current year period
the result is a negative variance of $3.3 million year over year.
-- CDCP generated income of $0.5 million in the third quarter of 2012,
which when compared to the modest loss in the prior year period, results
in a $0.5 million positive variance period over period.
-- The results of CSI, formed January 31, 2012 and therefore not included
in the prior year comparative, contributed a $0.3 million positive
variance year over year.
Year to Date
The movement from income of $1.1 million in the first nine
months of 2011 to a loss of $0.8 million in the current period is
primarily due to the activities of SCENE, CDCP and CSI:
-- SCENE's results in the 2011 period include income relating to a change
in accounting estimate for breakage resulting in a program-to-date
adjustment to its outstanding points liability as well as the adjustment
to SCENE's outstanding points balance due to certain members having
their points expired due to inactivity in the program. When compared to
the current year period the result is a negative variance of $6.4
million year over year.
-- CDCP in the 2011 period includes $2.2 million of start-up costs, which
when compared to the income of $1.4 million generated in the current
year period, results in a positive variance of $3.6 million year over
year.
-- The results of CSI, formed January 31, 2012 and therefore not included
in the prior year comparative, contributed a $0.8 million positive
variance year over year.
EBITDA and adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for
the three and nine months ended September 30, 2012 as compared to
the three and nine months ended September 30, 2011 (expressed in
thousands of Canadian dollars, except adjusted EBITDA margin):
----------------------------------------------------------------------------
EBITDA Third Quarter Year to Date
--------------------------------------------------------
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
EBITDA $ 77,941 $ 56,842 37.1% $165,683 $130,719 26.7%
Adjusted EBITDA $ 54,575 $ 57,441 -5.0% $142,977 $133,072 7.4%
Adjusted EBITDA
margin 19.4% 20.8% -1.4% 18.0% 17.6% 0.4%
----------------------------------------------------------------------------
Adjusted EBITDA for the third quarter of 2012 decreased $2.9
million, or 5.0%, as compared to the prior year period. The
decrease over the prior year period was primarily due to the lower
exhibition revenues recorded in the period, as well as the impact
of the four theatres acquired from AMC in the third quarter of
2012, which had a $0.8 million, or 1.5%, negative impact on
adjusted EBITDA in the quarter. Adjusted EBITDA margin, calculated
as adjusted EBITDA divided by total revenues, was 19.4%, down 1.4%
from 20.8% in the prior year period. Excluding the impact of the
theatres acquired from AMC, adjusted EBITDA margin was 20.3%.
Adjusted EBITDA for the nine months ended September 30, 2012
increased $9.9 million, or 7.4%, as compared to the prior year
period. The increase is primarily due to the higher exhibition and
concession revenues due to the higher theatre attendance. The
impact of the four theatres acquired from AMC in the third quarter
of 2012 had a $0.8 million, or 0.6%, negative impact on adjusted
EBITDA in the year-to-date period. Adjusted EBITDA margin,
calculated as adjusted EBITDA divided by total revenues, was 18.0%,
compared to 17.6% in the prior year period.
Cineplex believes its operating and programming expertise,
combined with its merchandising, media, marketing, interactive and
SCENE loyalty programs will positively and significantly improve
the operations of the four acquired theatres. Cineplex will invest
in each of the locations and may add UltraAVX auditoriums, VIP
auditoriums or XSCAPE entertainment centres to one or more of the
locations.
Adjusted Free Cash Flow
For the third quarter of 2012, adjusted free cash flow per
common share of Cineplex was $0.5737 as compared to $0.7133 in the
prior year period. The declared dividends per common share of
Cineplex were $0.3375 in the third quarter of 2012 and $0.3225 in
the prior year period. The payout ratios for these periods were 59%
and 45%, respectively.
For the first nine months of 2012, adjusted free cash flow per
common share of Cineplex was $1.5378 as compared to $1.6100 in the
prior year period. The declared dividends per commons share of
Cineplex were $0.9925 in the first nine months of 2012 and $0.9575
in the prior year period. The payout rations for these periods were
65% and 60%, 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. or Cineplex
Entertainment Limited Partnership, their financial or operating
results or their securities.
About Cineplex Inc.
Cineplex is one of Canada's leading entertainment companies and
operates one of the most modern and fully digitized motion picture
circuits in the world. A top-tier Canadian brand, Cineplex operates
numerous businesses including theatrical exhibition, food services,
gaming, alternative programming (Front Row Centre Events), Cineplex
Media, Cineplex Digital Solutions and the online sale of home
entertainment content through CineplexStore.com and on apps
embedded in various electronic devices. Cineplex is also a joint
venture partner in SCENE - Canada's largest entertainment loyalty
program.
Cineplex is headquartered in Toronto, Canada, and operates 133
theatres with 1,437 screens from British Columbia to Quebec,
serving approximately 70 million guests annually through the
following theatre brands: Cineplex Odeon, SilverCity, Galaxy
Cinemas, Colossus, Coliseum, Scotiabank Theatres, Cineplex VIP
Cinemas, Famous Players and Cinema City. Cineplex also owns and
operates the UltraAVX, Poptopia, and Outtakes brands. Cineplex
trades on the Toronto Stock Exchange under the symbol "CGX". More
information is available at 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, November 8, 2012
10:00 a.m. Eastern Time
In order to participate in the conference call, please dial
416-644-3418 or outside of Toronto dial 1-800-814-4861 at least
five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote
the conference ID 4570375 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 4570375#. The
replay will begin at 12:00 p.m. Eastern Time on Thursday, November 8,
2012 and end at 11:59 p.m. Eastern Time on Thursday, November 15, 2012.
-- 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)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
September 30, December 31,
2012 2011
Assets
Current assets
Cash and cash equivalents $ 1,076 $ 48,992
Trade and other receivables 36,042 67,185
Inventories 4,065 4,118
Prepaid expenses and other current assets 9,853 3,727
------------------------------
51,036 124,022
Non-current assets
Property, equipment and leaseholds 404,009 389,532
Deferred income taxes 53,961 12,052
Interests in joint ventures 40,793 26,163
Intangible assets 81,981 84,379
Goodwill 608,929 608,929
------------------------------
$ 1,240,709 $ 1,245,077
------------------------------
------------------------------
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 76,970 $ 112,285
Dividends payable 6,982 6,285
Share-based compensation - 1,331
Income taxes payable 10,221 17,485
Deferred revenue 53,287 83,907
Finance lease obligations 2,182 2,411
Fair value of interest rate swap agreements 543 565
Convertible debentures 14,557 76,864
------------------------------
164,742 301,133
------------------------------
Non-current liabilities
Share-based compensation 10,316 9,466
Long-term debt 167,936 167,531
Fair value of interest rate swap agreements 555 1,199
Finance lease obligations 21,119 26,474
Post-employment benefit obligations 5,914 5,688
Other liabilities 140,348 103,727
Deficiency interest in joint venture 8,082 8,250
------------------------------
354,270 322,335
------------------------------
Total liabilities 519,012 623,468
------------------------------
Equity
Share capital 833,720 764,801
Deficit (114,075) (140,469)
Accumulated other comprehensive loss (1,088) (2,723)
Contributed surplus 3,140 -
------------------------------
721,697 621,609
------------------------------
$ 1,240,709 $ 1,245,077
------------------------------
------------------------------
Cineplex Inc.
Interim Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------
2012 2011 2012 2011
Revenues
Box office $ 162,133 $ 162,522 $ 467,772 $ 443,613
Concessions 85,924 82,114 242,923 223,477
Other 33,311 32,072 82,481 89,417
--------------------------------------------
281,368 276,708 793,176 756,507
--------------------------------------------
Expenses
Film cost 83,632 85,320 243,804 230,647
Cost of concessions 17,831 16,817 50,321 46,722
Depreciation and amortization 14,014 16,613 45,124 51,303
Loss on disposal of assets 114 487 786 4
Gain on acquisition of business (23,822) - (23,822) -
Other costs 124,648 118,728 355,615 349,507
Share of loss (income) of joint
ventures 1,024 (1,486) 789 (1,092)
Interest expense 2,499 6,275 10,495 17,886
Interest income (44) (381) (147) (804)
--------------------------------------------
219,896 242,373 682,965 694,173
--------------------------------------------
Income before income taxes 61,472 34,335 110,211 62,334
--------------------------------------------
Provision for (recovery of)
income taxes
Current 9,053 5,973 22,641 12,011
Deferred 707 2,625 (210) 11,994
--------------------------------------------
9,760 8,598 22,431 24,005
--------------------------------------------
Net income $ 51,712 $ 25,737 $ 87,780 $ 38,329
--------------------------------------------
--------------------------------------------
Basic net income per share $ 0.84 $ 0.44 $ 1.45 $ 0.67
Diluted net income per share $ 0.83 $ 0.44 $ 1.45 $ 0.66
Cineplex Inc.
Interim Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------
2012 2011 2012 2011
Net income $ 51,712 $ 25,737 $ 87,780 $ 38,329
--------------------------------------------
Other comprehensive income
Income (loss) on hedging
instruments 196 (242) 2,457 1,281
Associated deferred income taxes
expense (107) (12) (822) (2,253)
--------------------------------------------
Other comprehensive income
(loss) 89 (254) 1,635 (972)
--------------------------------------------
Comprehensive income $ 51,801 $ 25,483 $ 89,415 $ 37,357
--------------------------------------------
--------------------------------------------
Cineplex Inc.
Interim Consolidated Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the nine months ended September 30, 2012 and 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Unit Share Contributed
capital capital surplus
Balance - January 1, 2012 $ - $ 764,801 $ -
Share option liabilities
reclassified - - 6,850
Net income - - -
Other comprehensive income - - -
Dividends declared - - -
Long-term incentive plan
obligation - (5,071) -
Long-term incentive plan shares - 6,471 -
Share option expense - - 1,638
Issuance of shares on exercise
of options - 5,348 (5,348)
Issuance of shares on
conversion of debentures - 62,606 -
Issuance of shares for cash - 501 -
Shares repurchased and
cancelled - (936) -
---------------------------------------------
Balance - September 30, 2012 $ - $ 833,720 $ 3,140
---------------------------------------------
---------------------------------------------
Balance - January 1, 2011 $ 710,121 $ - $ 1,407
Effect of corporate conversion (710,121) 744,760 (1,407)
Net income - - -
Other comprehensive loss - - -
Long-term incentive plan
obligation - (2,504) -
Dividends declared - - -
Long-term incentive plan shares - 1,888 -
Issuance of shares on
conversion of debentures - 19,080 -
Shares repurchased and
cancelled - (375) -
---------------------------------------------
Balance - September 30, 2011 $ - $ 762,849 $ -
---------------------------------------------
---------------------------------------------
Accumulated
other
comprehensive
loss Deficit Total
Balance - January 1, 2012 $ (2,723) $ (140,469) $ 621,609
Share option liabilities
reclassified - - 6,850
Net income - 87,780 87,780
Other comprehensive income 1,635 - 1,635
Dividends declared - (60,536) (60,536)
Long-term incentive plan
obligation - - (5,071)
Long-term incentive plan shares - - 6,471
Share option expense - - 1,638
Issuance of shares on exercise
of options - - -
Issuance of shares on
conversion of debentures - - 62,606
Issuance of shares for cash - - 501
Shares repurchased and
cancelled - (850) (1,786)
---------------------------------------------
Balance - September 30, 2012 $ (1,088) $ (114,075) $ 721,697
---------------------------------------------
---------------------------------------------
Balance - January 1, 2011 $ (3,534) $ (113,120) $ 594,874
Effect of corporate conversion - - 33,232
Net income - 38,329 38,329
Other comprehensive loss (972) - (972)
Long-term incentive plan
obligation - - (2,504)
Dividends declared - (55,485) (55,485)
Long-term incentive plan shares - - 1,888
Issuance of shares on
conversion of debentures - - 19,080
Shares repurchased and
cancelled - - (375)
---------------------------------------------
Balance - September 30, 2011 $ (4,506) $ (130,276) $ 628,067
---------------------------------------------
---------------------------------------------
Cineplex Inc.
Interim Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------
2012 2011 2012 2011
Cash provided by (used in)
Operating activities
Net income $ 51,712 $ 25,737 $ 87,780 $ 38,329
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 14,014 16,613 45,124 51,303
Amortization of tenant
inducements, rent averaging
liabilities and fair value
lease contract liabilities (1,436) (1,074) (3,601) (2,944)
Accretion of debt issuance
costs and other non-cash
interest 140 237 419 701
Loss on disposal of assets 114 487 786 4
Gain on acquisition of
business (23,822) - (23,822) -
Deferred income taxes 707 2,625 (210) 11,994
Interest rate swap agreements
- non-cash interest 16 1,279 1,780 1,143
Non-cash share-based
compensation 433 37 1,675 293
Accretion of convertible
debentures 43 251 299 1,078
Net change in interests in
joint ventures 1,187 578 4,827 (2,860)
Tenant inducements 727 1,535 5,972 5,585
Changes in operating assets and
liabilities (2,178) (181) (54,845) (21,101)
--------------------------------------------
Net cash provided by operating
activities 41,657 48,124 66,184 83,525
--------------------------------------------
Investing activities
Proceeds from sale of assets 4 82 1,133 1,822
Purchases of property, equipment
and leaseholds (15,878) (12,224) (49,477) (40,803)
Acquisition and formation of
businesses, net of cash
acquired 4,588 - (2,811) (3,280)
Additional equity funding of
CDCP (4) (210) (248) (378)
--------------------------------------------
Net cash used in investing
activities (11,290) (12,352) (51,403) (42,639)
--------------------------------------------
Financing activities
Dividends paid (20,908) (18,804) (59,839) (49,201)
Repayments under credit
facility, net (20,000) - - -
Payments under finance leases (520) (566) (1,573) (1,666)
Proceeds from issuance of shares - - 501 -
Acquisition of long-term
incentive plan shares - - - (9,793)
Deferred financing fees - (1,915) - (1,915)
Shares repurchased and cancelled - (375) (1,786) (375)
--------------------------------------------
Net cash used in financing
activities (41,428) (21,660) (62,697) (62,950)
--------------------------------------------
(Decrease) increase in cash and
cash equivalents during the
period (11,061) 14,112 (47,916) (22,064)
Cash and cash equivalents -
Beginning of period 12,137 49,167 48,992 85,343
--------------------------------------------
Cash and cash equivalents - End
of period $ 1,076 $ 63,279 $ 1,076 $ 63,279
--------------------------------------------
--------------------------------------------
Supplemental information
Cash paid for interest $ 1,955 $ 3,674 $ 7,427 $ 13,762
Cash paid for income taxes $ 5,385 $ - $ 29,987 $ 65
Cineplex Inc.
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,
2012 2011 2012 2011
--------------------------------------------
Net income $ 51,712 $ 25,737 $ 87,780 $ 38,329
Depreciation and amortization 14,014 16,613 45,124 51,303
Interest expense 2,499 6,275 10,495 17,886
Interest income (44) (381) (147) (804)
Current income tax expense 9,053 5,973 22,641 12,011
Deferred income tax expense
(recovery) 707 2,625 (210) 11,994
--------------------------------------------
EBITDA $ 77,941 $ 56,842 $ 165,683 $ 130,719
Loss on disposal of assets 114 487 786 4
Gain on acquisition of business (23,822) - (23,822) -
CDCP equity income (i) (462) 65 (1,388) 2,218
Depreciation and amortization -
joint ventures (ii) 539 47 1,453 131
Future income taxes - joint
ventures (ii) 236 - 236 -
Current income taxes - joint
ventures (ii) 29 - 29 -
--------------------------------------------
Adjusted EBITDA $ 54,575 $ 57,441 $ 142,977 $ 133,072
----------------------------------------------------------------------------
i. CDCP equity (income) loss not included in adjusted EBITDA as CDCP is a
limited-life financing vehicle that is funded by virtual print fees
collected from distributors.
ii. Includes the joint ventures with the exception of CDCP (see (i) above).
Components of Other Costs
----------------------------------------------------------------------------
Other costs Third Quarter Year to Date
----------------------------------------------------
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Theatre occupancy
expenses $ 45,871 $ 41,040 11.8% $128,761 $123,855 4.0%
Other operating expenses 65,631 65,620 - 184,917 182,193 1.5%
General and
administrative expenses 13,146 12,068 8.9% 41,937 43,459 -3.5%
-------------------------------------------
Total other costs $124,648 $118,728 5.0% $355,615 $349,507 1.7%
----------------------------------------------------------------------------
Cineplex Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars, except number of shares and per
share data)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted Free Cash Flow
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
----------------------------------------------------
Cash provided by
operating activities $ 41,657 $ 48,124 $ 66,184 $ 83,525
Less: Total capital
expenditures net of
proceeds on sale of
assets (15,874) (12,142) (48,344) (39,981)
----------------------------------------------------
Standardized free cash
flow 25,783 35,982 17,840 44,544
Add/(Less):
Changes in operating
assets and liabilities
(i) 2,178 181 54,845 21,101
Changes in operating
assets and liabilities
of joint ventures (i) (163) (2,064) (4,038) 1,768
Tenant inducements (ii) (727) (1,535) (5,972) (5,585)
Principal component of
finance lease
obligations (520) (566) (1,573) (1,666)
Growth capital
expenditures and other
(iii) 9,733 8,166 32,986 29,931
Share of (loss) income
of joint ventures, net
of non-cash
depreciation (iv) (711) 1,598 (488) 3,441
Cash invested in CDCP
(iv) (4) (159) (248) (378)
----------------------------------------------------
Adjusted free cash flow $ 35,569 $ 41,603 $ 93,352 $ 93,156
----------------------------------------------------
----------------------------------------------------
Average number of Shares
outstanding 61,996,063 58,323,720 60,705,608 57,857,376
Adjusted free cash flow
per Share $ 0.5737 $ 0.7133 $ 1.5378 $ 1.6100
----------------------------------------------------------------------------
i. Changes in operating assets and liabilities are not considered a
source or use of adjusted free cash flow.
ii. Tenant inducements received are for the purpose of funding new theatre
capital expenditures and are not considered a source of adjusted free
cash flow.
iii. Growth capital expenditures and other represent expenditures on Board
approved projects as well as any expenditures for digital equipment
that was contributed to CDCP, exclude maintenance capital
expenditures, and are net of proceeds on asset sales. Cineplex's
revolving facility is available to fund Board approved projects.
iv. Excludes the share of income or 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.
Contacts: 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
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