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Cinram Reports 2010 Second Quarter Results

^{Published on 2010-08-10 13:45:35 - Market Wire}
 

 ------------------------------------------------------------------------- Three months ended June 30 Six months ended June 30 ------------------------------------------------------------------------- (in thousands of US$) 2010 2009 2010 2009 ------------------------------------------------------------------------- Home Video $203,764 80% $222,561 75% $442,795 80% $442,150 74% CD 30,318 12% 38,173 13% 60,776 11% 74,148 12% Video Game 10,451 4% 16,600 5% 27,750 5% 40,212 7% Other 11,389 4% 21,052 7% 23,345 4% 42,847 7% ------------------------------------------------------------------------- $255,922 100% $298,386 100% $554,666 100% $599,357 100% ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 Reconciliation of EBITA and EBIT to net earnings (loss) from continuing operations ------------------------------------------------------------------------- Three months ended Six months ended (unaudited, in June 30 June 30 thousands of U.S. dollars) 2010 2009 2010 2009 ------------------------------------------------------------------------- EBITA excluding other charges $ 25,887 $ 23,160 $ 61,460 $ 51,264 ------------------------------------------------------------------------- Other charges (income), net 4,821 226 (2,354) 1,526 ------------------------------------------------------------------------- EBITA(1) 21,066 22,934 63,814 49,738 ------------------------------------------------------------------------- Amortization of property, plant and equipment 12,885 22,341 28,062 44,480 Amortization of intangible assets 5,434 10,332 11,145 20,499 ------------------------------------------------------------------------- EBIT(2) 2,747 (9,739) 24,607 (15,241) ------------------------------------------------------------------------- Interest on debt 8,184 9,379 16,594 19,216 Other interest (income) and financing charges, net (1,034) (377) (377) 191 Gain on repurchase of debt - (13,622) - (13,622) Foreign exchange loss (gain) 10,127 (13,432) 10,463 (7,594) Investment income (36) (25) (123) (240) Income taxes (recovery) (5,618) 1,128 (992) (2,574) ------------------------------------------------------------------------- Net earnings (loss) from continuing operations $ (8,876) $ 7,210 $ (958) $(10,618) ------------------------------------------------------------------------- (1) EBITA is defined as earnings from continuing operations before interest expense, foreign exchange translation gain/losses, investment income, gain on repurchase of debt, other interest and financing charges, income taxes and amortization. It is a standard measure that is commonly reported and widely used in the industry to assist in understanding and comparing operating results. EBITA is not a defined term under generally accepted accounting principles (GAAP). Accordingly, this measure may not be comparable with other issuers and should not be considered as a substitute or alternative for net earnings or cash flow, in each case as determined in accordance with GAAP. See reconciliation of EBITA to net earnings under GAAP as found in the table above. (2) EBIT is defined as earnings (loss) from continuing operations before interest expense, foreign exchange translation gains/losses, investment income, gain on repurchase of debt, other interest and financing charges and incomes taxes, and is a standard measure that is commonly reported and widely used in the industry to assist in understanding and comparing operating results. EBIT is not a defined term under GAAP. Accordingly, this measure may not be comparable with other issuers and should not be considered as a substitute or alternative for net earnings or cash flow, in each case as determined in accordance with GAAP. See reconciliation of EBIT to net earnings under GAAP as found in the table above. 

 INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) ------------------------------------------------------------------------- June December 30 2010 31 2009 (unaudited) ------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $125,412 $122,072 Accounts receivable 167,343 273,243 Inventories 34,761 31,985 Income taxes receivable 620 5,005 Prepaid expenses 13,193 15,915 Assets held for sale - 6,047 Future income taxes 5,278 6,007 ------------------------------------------------------------------------- 346,607 460,274 Property, plant and equipment 198,693 234,684 Intangible assets 15,461 27,537 Goodwill 40,634 40,634 Other assets 17,997 21,571 ------------------------------------------------------------------------- $619,392 $784,700 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND UNITHOLDERS' DEFICIENCY Current liabilities: Accounts payable $ 35,289 $ 90,282 Accrued liabilities 154,827 226,856 Income taxes payable 22,064 20,277 Current portion of long-term debt 378,993 28,624 Current portion of obligations under capital leases 1,315 1,728 ------------------------------------------------------------------------- 592,488 367,767 Long-term debt - 363,396 Obligations under capital leases 1,529 2,337 Other long-term liabilities 34,920 43,637 Derivative instruments 17,372 25,225 Future income taxes 150 6,638 Unitholders' deficiency (27,067) (24,300) ------------------------------------------------------------------------- $619,392 $784,700 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INTERIM CONSOLIDATED STATEMENTS OF LOSS (unaudited, in thousands of U.S. dollars, except per unit/exchangeable LP unit amounts) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenue $255,922 $298,386 $554,666 $599,357 Cost of goods sold 206,044 253,858 448,492 510,610 ------------------------------------------------------------------------- Gross profit 49,878 44,528 106,174 88,747 Selling, general and administrative expenses 36,876 43,709 72,776 81,963 Amortization of intangible assets 5,434 10,332 11,145 20,499 Other charges (income), net 4,821 226 (2,354) 1,526 ------------------------------------------------------------------------- Earnings (loss) before the undernoted 2,747 (9,739) 24,607 (15,241) Interest on debt 8,184 9,379 16,594 19,216 Other interest (income) and financing charges, net (1,034) (377) (377) 191 Gain on repurchase of debt - (13,622) - (13,622) Foreign exchange loss (gain) 10,127 (13,432) 10,463 (7,594) Investment income (36) (25) (123) (240) ------------------------------------------------------------------------- Earnings (loss) from continuing operations before income taxes (14,494) 8,338 (1,950) (13,192) Income taxes (recovery) (5,618) 1,128 (992) (2,574) ------------------------------------------------------------------------- Earnings (loss) from continuing operations (8,876) 7,210 (958) (10,618) Loss from discontinued operations (5,077) (7,822) (5,134) (12,419) ------------------------------------------------------------------------- Net loss (13,953) (612) (6,092) (23,037) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) per unit from continuing operations: Basic $ (0.16) $ 0.13 $ (0.02) $ (0.19) Diluted $ (0.16) $ 0.13 $ (0.02) $ (0.19) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) per unit: Basic $ (0.26) $ (0.01) $ (0.11) $ (0.42) Diluted $ (0.26) $ (0.01) $ (0.11) $ (0.42) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of units and exchangeable limited partnership units outstanding, (in thousands): Basic 54,003 55,096 53,995 55,174 Diluted 54,003 55,565 53,995 55,174 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited, in thousands of U.S. dollars) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ------------------------------------------------------------------------- Net loss for the period $(13,953) $ (612) $ (6,092) $(23,037) Other comprehensive income, net of tax: Unrealized gain (loss) on translating financial statements of self-sustaining foreign operations 8,488 (16,049) (5,024) (16,971) Unrealized gain (loss) on hedges of net investment in self-sustaining foreign operations (7,675) 16,890 (2,986) 13,272 Partial release of cumulative translation adjustment 2,660 - 3,759 - ------------------------------------------------------------------------- Unrealized foreign exchange translation gain (loss), net of hedging activities 3,473 841 (4,251) (3,699) Net unrealized gain (loss) on derivatives designated as cash flow hedges - (235) - 1,418 Release of other comprehensive income due to de-designated hedge 4,102 - 7,377 - ------------------------------------------------------------------------- Other comprehensive income (loss) 7,575 606 3,126 (2,281) ------------------------------------------------------------------------- Comprehensive loss, net of tax $ (6,378) $ (6) $ (2,966) $(25,318) ------------------------------------------------------------------------- ------------------------------------------------------------------------- INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands of U.S. dollars) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ------------------------------------------------------------------------- Cash provided by (used in): Operating Activities: Net earnings (loss) from continuing operations $ (8,876) $ 7,210 $ (958) $(10,618) Items not involving cash: Amortization of property, plant and equipment 12,885 22,341 28,062 44,480 Amortization of intangible assets 5,434 10,332 11,145 20,499 Future income taxes (recovery) (2,860) 725 (5,759) (1,425) Gain on repurchase of debt - (13,622) - (13,622) Partial release of cumulative translation adjustment (1,647) - (548) - Release of other comprehensive income due to de-designation of hedge 4,102 - 7,377 - Mark-to-market adjustment of derivative liability (3,768) - (7,854) - Non-cash interest expense 600 600 1,200 1,266 Hedge ineffectiveness - (690) - (494) Loss (gain) on disposition of property, plant and equipment 33 42 (7,427) (1,737) Other 42 126 131 202 Change in non-cash operating working capital 9,274 5,548 3,499 61,827 ------------------------------------------------------------------------- 15,219 32,612 28,868 100,378 Financing Activities: Transaction costs (1,200) - (1,200) (1,521) Repayment/repurchase of debt and bank indebtedness (7,156) (29,698) (14,312) (66,386) Decrease in obligations under capital leases (538) (637) (1,220) (1,547) Financing of employee unit purchase loan 6 (486) 12 (486) ------------------------------------------------------------------------- (8,888) (30,821) (16,720) (69,940) Investing Activities: Purchase of property, plant and equipment (4,531) (12,357) (9,707) (29,725) Payment of acquisition earn-out amount - (16,131) - (16,131) Proceeds on disposition of property, plant and equipment - 3,638 13,475 26,642 Decrease (increase) in other assets 2,043 (2,121) 4,805 (125) Decrease in other long-term liabilities (6,255) (1,802) (8,717) (5,340) ------------------------------------------------------------------------- (8,743) (28,773) (144) (24,679) Cash provided by (used in) discontinued operating activities (852) (16,370) (1,377) (19,699) Cash provided by (used in) discontinued investing activities (736) 14,001 (736) 13,990 Foreign currency translation gain/(loss) on cash held in foreign currencies (4,605) 2,392 (6,551) 3,224 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (8,605) (26,959) 3,340 3,274 Cash and cash equivalents, beginning of period 134,017 103,582 122,072 73,349 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $125,412 $ 76,623 $125,412 $ 76,623 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents are comprised of: Cash 89,117 61,490 89,117 61,490 Cash equivalents 36,295 15,133 36,295 15,133 ------------------------------------------------------------------------- $125,412 $ 76,623 $125,412 $ 76,623 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information: Interest paid $ 8,395 $ 9,207 $ 16,625 $ 20,284 Income taxes paid (received) 2,263 1,549 (2,147) 1,694 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents are defined as cash and short-term deposits that have an original maturity of less than 90 days.