Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for
the fourth quarter of 2012 and the full year of 2012.
Annual Results
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Year over
Year
2012 2011 Change (i)
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Total Revenues $ 1,091.9 million $ 998.2 million 9.4%
Attendance 71.2 million 66.1 million 7.8%
Other Revenues $ 124.2 million $ 129.2 million -3.8%
Net Income $ 120.5 million $ 49.3 million 144.6%
Adjusted EBITDA $ 200.5 million $ 173.2 million 15.8%
Adjusted EBITDA Margin 18.4% 17.3% 1.1%
Adjusted Free Cash Flow
per Share $ 2.0785 $ 1.9657 5.7%
Basic Earnings per Share $ 1.98 $ 0.86 130.2%
Diluted Earnings per Share $ 1.97 $ 0.85 131.8%
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(i) Year over Year 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.
Fourth Quarter Results
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Period
over
Period
2012 2011 Change (i)
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Total Revenues $ 298.7 million $ 241.7 million 23.6%
Attendance 18.6 million 15.1 million 23.3%
Other Revenues $ 41.8 million $ 39.8 million 4.9%
Net Income $ 32.7 million $ 10.9 million 199.2%
Adjusted EBITDA $ 57.5 million $ 40.1 million 43.4%
Adjusted EBITDA Margin 19.3% 16.6% 2.7%
Adjusted Free Cash Flow per
Share $ 0.5403 $ 0.3570 51.3%
Basic Earnings per Share $ 0.53 $ 0.19 178.9%
Diluted Earnings per Share $ 0.52 $ 0.19 173.7%
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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.
"2012 was the best year on record for Cineplex," said Ellis Jacob, President and
CEO, Cineplex Entertainment. "Total revenues of $1.1 billion increased 9.4%
versus the prior year, and are the highest in the company's history. As compared
to 2011, box office revenues of $638.3 million increased 10.6%, concession
revenues of $329.3 million increased 12.9%, resulting in adjusted EBITDA of
$200.5 million, an increase of 15.8% and net income of $120.5 million, an
increase of 144.6%. Theatre attendance reached a new all-time high of 71.2
million, an increase of 7.8% versus 2011."
"In addition to a very strong financial performance, Cineplex completed a number
of theatre projects including the opening of two new theatres - Cineplex Odeon
Windermere and VIP Cinemas in Edmonton, and Galaxy Cinemas Pergola Commons, in
south Guelph; Cineplex Odeon Brossard Cinemas was expanded adding four new VIP
Cinema auditoriums; and Cineplex Odeon McGillivray and VIP Cinemas in Winnipeg,
was opened following an extensive renovation and rebrand. We also acquired four
AMC theatres - three in the GTA and one in Montreal. We completed the rollout of
digital projection technology and added 16 UltraAVX auditoriums to bring our
total to 39. Our digital commerce initiatives continued to advance with the
addition of new digital content, devices and playback functionality and the
launch of UltraViolet at the Cineplex Store. We achieved strong metrics on our
website and mobile apps with significant growth in online and mobile ticket
sales and the launch of e-gift cards. Our SCENE loyalty program added a record
900,000 new members to bring our total membership to 4.3 million. Cineplex's
continued investment in the enhancement of the exhibition experience and the
diversification of our business model contributed to the record year in 2012 and
positions us well for the future."
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 2012
The following describes certain key business initiatives undertaken during 2012
in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported record annual box office revenues of $638.3 million and record
annual BPP of $8.97 during 2012, up from the previous records of $597.8
million (set in 2010) and $8.74 (set in 2011). Attendance was also an
annual record for Cineplex, with 71.2 million patrons exceeding the
previous record of 70.0 million set in 2009.
-- Opened two new theatres, Cineplex Odeon Windermere and VIP Cinemas in
Edmonton Alberta, featuring 11 screens including one UltraAVX and three
VIP auditoriums on April 17, and Galaxy Cinemas Pergola Commons in
Guelph, Ontario featuring eight screens on December 14.
-- Completed the renovation of Cineplex Odeon McGillivray and VIP Cinemas
in Winnipeg, Manitoba on November 2, transforming the property into a
cutting-edge, first run theatre complete with 11 screens including one
UltraAVX and three VIP auditoriums. Also added four new VIP screens to
Cineplex Odeon Brossard and VIP Cinemas in Brossard, Quebec, a suburb of
Montreal, which opened on December 14.
-- Continued the expansion of UltraAVX, the next evolution of the audio
visual entertainment experience in Canada, with 16 new UltraAVX
auditoriums added to the circuit in 2012. At December 31, 2012, Cineplex
has 39 UltraAVX auditoriums.
-- Completed the acquisition of AMC Ventures Inc., which owned four
theatres located in Toronto, Mississauga and Oakville, Ontario and
Montreal, Quebec.
-- Cineplex completed the planned conversion of its theatre circuit to
digital projection, including the theatres acquired from AMC, and added
149 3D screens during the year.
MERCHANDISING
-- Recorded record annual concession revenues of $329.3 million and record
annual CPP of $4.63, exceeding the previous records of $294.7 million
(set in 2010) and $4.41 (set in 2011).
-- Cineplex's subsidiary New Way Sales ("NWS") acquired Starburst Coin
Machines Inc. ("SCM") in exchange for cash and a 50% interest in NWS,
creating a joint venture named Cineplex Starbust Inc. ("CSI"). CSI
supplies and services all of the games in Cineplex's circuit, while also
supplying equipment to third party arcades, amusement centres, bowling
alleys, amusement parks and theatre circuits, in addition to owning and
operating Playdium, a family entertainment centre located in
Mississauga, Ontario.
-- Completed the retrofit of 19 Outtakes locations to Outtakes Backstage
Bistros, which include expanded menu items and a more upscale look and
feel. At December 31, 2012, Cineplex owned and operated 68 Outtakes
locations, of which 21 are Outtakes Backstage Bistros.
-- Added four Poptopia locations across the circuit, Cineplex's premium
flavoured popcorn brand. At December 31, 2012, Cineplex owns and
operates six Poptopia locations.
-- 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.
-- Opened four new XSCAPE entertainment centres in 2012, bringing the total
number of XSCAPE entertainment centres to eight.
MEDIA
-- Media revenues in the second half of 2012 exceeded the same period in
2011 by 6.1%. For the full year, media revenues decreased 7.0% compared
to the record year for media revenues in 2011. The uncertain economic
environment prevalent in the first half of 2012 contributed to the
decrease in media revenues.
-- Cineplex Digital Media Inc. ("CDM") continued to grow, with revenues in
2012 exceeding the prior year by 27.7%.
-- Expanded Cineplex's exclusive partnership with Timeplay, a leading
developer of mobile-based interactive marketing and content solutions,
across theatres located in the Greater Toronto Area and Vancouver.
-- In the 2012 Fall study by the Print Measurement Bureau, Cineplex
Magazine and Le magazine Cineplex earned outstanding readership numbers,
with Cineplex Magazine ranking as the 8th most read magazine in Canada,
with a circulation of over 725,000 copies per issue, and Le magazine
Cineplex reaching circulation of over 200,000 copies per issue.
-- Cineplex Magazine and Le magazine Cineplex were added to the Apple
Newsstand at the App Store.
ALTERNATIVE PROGRAMMING
-- The highly successful Metropolitan Opera series continued its strong
performance in Cineplex's theatres.
-- Other alternative programming during the year included ethnic films,
live sporting events such as World Wrestling Entertainment, the
Wimbledon tennis finals in 3D and the 100th Grey Cup, the Family
Favourites film series, the Classic Film Series and performances from
the National Theatre Live from London.
INTERACTIVE
-- Launched Apple MAC streaming capability and UltraViolet redemption on
the Cineplex Store. Cineplex is the first retailer in Canada and the
only motion picture exhibitor in the world offering UltraViolet
redemption.
-- Cineplex e-gift cards were added to the Cineplex Store.
-- Added theatre ticketing, SCENE access and e-gift card access to the
Apple Passbook.
-- Integrated the Cineplex Store app on LG smart televisions and set-top
boxes. In addition to LG products, the app is also available on select
Samsung smart televisions and blu-ray players.
-- Cineplex.com registered a 56% increase in page views and a 26% increase
in unique visitors during 2012 compared to the prior year, registering
418.2 million page views and 36.5 million unique visitors during the
year.
-- The Cineplex mobile brand app ranks 9th in Canada and first among
retailers based on the most recent ComScore MobiLens rankings.
LOYALTY
-- Membership in the SCENE loyalty program surpassed the 4.0 million member
mark during the year, increasing by approximately 0.9 million members
during 2012 to 4.3 million.
-- As part of the Cineplex Tuesdays program launched in 2012, SCENE members
get 10% off all ticket prices on Tuesdays across the circuit, which are
generally discounted.
-- 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.
-- SCENE ran programs with various partners including Cara Foods, Telus,
Sirius Satellite Radio, Virgin Mobile, Samsung, Winners, Rogers and
Adidas.
During 2012, the board of directors of Cineplex (the "Board") announced a
monthly dividend increase to $0.1125 per Share ($1.3500 on an annual basis) up
from $0.1075 per Share ($1.2900 on an annual basis) effective with the May 2012
dividend.
On December 31, 2012, Cineplex's convertible debentures matured. At maturity,
convertible debentures with a principal amount of $1.1 million were settled in
cash (see Section 9, Shares outstanding).
In November, Cineplex was recognized as a national winner as one of Canada's 10
most admired corporate cultures in 2012 by Waterstone Human Capital, in the
Enterprise division for companies with revenues in excess of $500 million.
During 2011, Cineplex was recognized as a regional winner in the Enterprise
division.
OPERATING RESULTS FOR THE FOURTH QUARTER AND FULL YEAR
Total revenues
Total revenues for the three months ended December 31, 2012 increased $57.0
million (23.6%) to $298.7 million as compared to the prior year period. Total
revenues for the year ended December 31, 2012 increased $93.7 million (9.4%) to
$1.1 billion as compared to the prior year. Revenues for the current year
periods were positively impacted by the acquisition of the four theatres from
AMC during the third quarter of 2012 (revenues of $12.4 million for the three
months ended December 31, 2012 and $21.0 million for the year ended December 31,
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 full year (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 Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Box office revenues $170,524 $133,735 27.5% $638,296 $577,348 10.6%
Attendance 18,577 15,070 23.3% 71,198 66,059 7.8%
Box office revenue per
patron $ 9.18 $ 8.87 3.5% $ 8.97 $ 8.74 2.6%
BPP excluding premium
priced product $ 8.57 $ 8.19 4.6% $ 8.26 $ 8.10 2.0%
Canadian industry
revenues (i) 18.0% 6.3%
Same store box office
revenues $160,495 $133,363 20.3% $616,857 $573,501 7.6%
Same store attendance 17,573 15,026 17.0% 69,052 65,604 5.3%
% Total box from 3D,
UltraAVX, VIP & IMAX 29.2% 30.2% -1.0% 30.9% 29.4% 1.5%
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(i) The Motion Picture Theatre Associations of Canada ("MPTAC") reported
that the Canadian exhibition industry reported a box office revenue
increase of 16.7% for the period from September 28, 2012 to December 27,
2012 as compared to the period from September 30, 2011 to December 29,
2011. On a basis consistent with Cineplex's calendar reporting period
(October 1 to December 31), the Canadian industry box office revenue
increase is estimated to be 18.0%. MPTAC reported that the Canadian
exhibition industry reported a box office revenue increase of 5.6% for the
period from December 30, 2011 to December 27, 2012 as compared to the
period from December 31, 2010 to December 29, 2011. On a basis consistent
with Cineplex's calendar reporting period (January 1 to December 31), the
Canadian industry box office revenue is estimated to be an increase of
6.3%.
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Box office continuity Fourth Quarter Full Year
Box Attendance Box Attendance
Office Office
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2011 as reported $133,735 15,070 $577,348 66,059
Same store attendance change 22,610 2,547 30,149 3,449
Impact of same store BPP change 4,522 - 13,208 -
New and acquired theatres 10,029 1004 19,502 1,935
Disposed and closed theatres (372) (44) (1,911) (245)
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2012 as reported $170,524 18,577 $638,296 71,198
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Fourth Quarter
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Fourth Quarter 2012 Top Fourth Quarter 2011 Top IMAX 3D% Box
Cineplex Films IMAX 3D % Box Cineplex Films
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1 Skyfall X 15.2% 1 The Twilight Saga:
Breaking Dawn 1 9.4%
2 The Hobbit: An 2 Mission: Impossible -
Unexpected Journey X X 10.6% Ghost Protocol X 6.1%
3 The Twilight Saga: 3 Puss in Boots X X 6.0%
Breaking Dawn 2 X 8.0%
X 5.4% 4 Sherlock Holmes: A
4 Wreck-It Ralph Game of Shadows 5.2%
5 Hotel Transylvania X 4.7% 5 Immortals X 4.3%
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Box office revenues increased $36.8 million, or 27.5%, to $170.5 million during
the fourth quarter of 2012, compared to $133.7 million recorded in the same
period in 2011. The increase was primarily due to a 23.3% increase in attendance
as a result of the strong slate of films in the current quarter compared to the
prior year period, as well as the impact of the four theatres acquired from AMC
in the third quarter of 2012. The $170.5 million in box office revenues is a
quarterly record for Cineplex, exceeding the previous record of $162.5 million
reported in the third quarter of 2011.
BPP increased 3.5% from $8.87 in the fourth quarter of 2011 to $9.18 in the
current year period. Three of the top five releases during the period were
screened in 3D and three in IMAX, compared to two of the top releases in the
prior year period shown in 3D and two in IMAX. Outside of the top five, there
were more 3D releases in the 2011 period which contributed to the percentage of
box office from premium-priced product (3D, UltraAVX, IMAX and VIP), decreasing
from 30.2% in the prior year period to 29.2% in the current quarter. The four
theatres acquired from AMC which are located in major metropolitan areas and
have higher ticket prices than those in smaller markets contributed to the
higher BPP, as well as the composition of the film slate which featured less
product catering to children in the current year period compared to the prior
year, also increasing the BPP.
Full Year
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Full Year 2012 Top Full Year 2011 Top
Cineplex Films IMAX 3D % Box Cineplex Films IMAX 3D % Box
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1 Marvel's The Avengers X X 5.7% 1 Harry Potter and the
Deathly Hallows 2 X X 4.4%
2 The Dark Knight Rises X 4.5% 2 Transformers: Dark of
the Moon X X 3.3%
3 Skyfall X 4.1% 3 Pirates of the
Caribbean: On Stranger
Tides X X 2.5%
4 The Hunger Games X 3.8% 4 The Twilight Saga:
Breaking Dawn 1 2.2%
5 The Amazing Spider- 5 The Hangover 2 2.1%
Man X X 2.8%
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Box office revenues for 2012 were $638.3 million or 10.6% higher than the prior
year period, and represent an annual record for Cineplex. The strong performance
of the four major blockbusters released in 2012 (Marvel's The Avengers, The Dark
Knight Rises, Skyfall and The Hunger Games) were the main contributors to the
$60.9 million increase in box office revenue during the year. These four
blockbusters were all released at different times during the year with one
opening in each quarter, contributing to Cineplex's record annual attendance.
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 2012 increased $0.23, or 2.6%, from $8.74 in 2011 to $8.97,
an annual record. This increase was primarily due to the increase in revenues
from premium-priced product. Premium-priced offerings accounted for 30.9% of
Cineplex's box office revenues in the 2012, compared to 29.4% in the prior year.
The top five films in the 2012 period were all screened in IMAX and two in 3D
(2011 - three in IMAX and three 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 in 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 was a key
factor resulting in Cineplex outperforming the Canadian industry box office
revenue growth during 2012.
Concession revenues
The following table highlights the movement in concession revenues, attendance
and CPP for the quarter and the full year (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 Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Concession revenues $ 86,409 $68,161 26.8% $329,332 $291,638 12.9%
Attendance 18,577 15,070 23.3% 71,198 66,059 7.8%
Concession revenue per
patron $ 4.65 $ 4.52 2.9% $ 4.63 $ 4.41 5.0%
Same store concession
revenues $ 82,358 $68,043 21.0% $319,637 $290,076 10.2%
Same store attendance 17,573 15,026 17.0% 69,052 65,604 5.3%
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Concession revenue
continuity Fourth Quarter Full Year
Concession Attendance Concession Attendance
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2011 as reported $ 68,161 15,070 $ 291,638 66,059
Same store attendance
change 11,535 2,547 15,249 3,449
Impact of same store CPP
change 2,780 - 14,312 -
New and acquired theatres 4,051 1,004 8,795 1,935
Disposed and closed
theatres (118) (44) (662) (245)
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2012 as reported $ 86,409 18,577 $ 329,332 71,198
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Fourth Quarter
Concession revenues increased 26.8% as compared to the prior year quarter
primarily due to the 23.3% increase in attendance. CPP increased from $4.52 in
the fourth quarter of 2011 to $4.65 in the same period in 2012, a 2.9% increase
and a quarterly record for Cineplex, a fourth quarter record. Cineplex believes
a focus on revised concession offerings, its RBO 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.
Full Year
Concession revenues increased 12.9% as compared to the prior year period, due to
the 7.8% increase in attendance and the 5.0% increase in CPP. CPP increased from
$4.41 in 2011 to $4.63 in 2012. This represents an annual CPP record for
Cineplex, $0.22 higher than the previous record from 2011.
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.
Other revenues
The following table highlights the movement in media, games and other revenues
for the quarter and the full year (in thousands of Canadian dollars):
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Other revenues Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Media $ 30,980 $ 28,667 8.1% $ 84,870 $ 91,242 -7.0%
Games 1,361 2,128 -36.0% 6,379 7,584 -15.9%
Other 9,416 8,997 4.7% 32,989 30,383 8.6%
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Total $ 41,757 $ 39,792 4.9% $ 124,238 $ 129,209 -3.8%
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Fourth Quarter
Other revenues increased 4.9% to $41.8 million in the fourth quarter of 2012
compared to the prior year period. This increase was due to higher media
revenues, which were $31.0 million, up $2.3 million, or 8.1%, when compared to
the prior year period. This increase was primarily due to higher CDM revenues
($2.9 million), partially offset by decreases in other media categories. In
addition to expanding its ongoing digital network management contracts, CDM
completed several large equipment installation projects in the fourth quarter of
2012.
The games revenue decrease is due to the formation of CSI on January 31, 2012,
with the acquisition by NWS of the gaming business of SCM. With the creation of
the CSI joint venture, revenues from CSI are included in the 'Share of loss of
joint ventures' line in the Statements of Operations. The games revenues for the
fourth quarter of 2011 include the results of NWS ($0.9 million). The addition
of four new XSCAPE entertainment centres since the fourth quarter of 2011
partially offset the decrease in games revenue due to the creation of CSI in the
first quarter of 2012 and the reclassification of the NWS revenue to the share
of loss of joint ventures line on the statements of operations. Other revenues
increased primarily due to increased revenues from enhanced guest service
initiatives and auditorium rentals, partially offset by lower breakage revenues.
Full Year
Other revenues decreased 3.8% from $129.2 million in 2011 to $124.2 million
during 2012. Media revenues for 2012 decreased $6.4 million, or 7.0%, 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
offset by a 6.1% increase in media revenues in the second half of 2012. 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. CDM continued
to report growth in revenues, increasing from $10.8 million in 2011 to $13.7
million in 2012.
The decrease in games revenue was due to the impact of the acquisition of NWS
and the subsequent formation of CSI. The results of NWS are included in the
comparative period for May to December 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 $2.5 million for the 2011 period). This decrease
was partially offset by the impact of the four new XSCAPE entertainment centres
added since 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 the film cost
percentage for the quarter and the full year (in thousands of Canadian dollars,
except film cost percentage):
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Film cost Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Film cost $ 87,477 $ 68,757 27.2% $ 331,281 $ 299,404 10.6%
Film cost
percentage 51.3% 51.4% -0.1% 51.9% 51.9% NM
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Fourth 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 increase in the fourth quarter of 2012 compared to the prior year
period was due to the increase in box office revenue, partially offset by the
impact of the 0.1% 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 fourth quarter of 2012 being lower than the average film
settlement rate in the 2011 period.
Full Year
The year to date increase in film cost was due to the 10.6% increase in box
office revenues. The film cost percentage was the same for both 2012 and 2011.
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 full year (in thousands of Canadian dollars, except
concession cost percentage and concession margin per patron):
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Cost of
concessions Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Concession cost $ 18,077 $ 14,015 29.0% $ 68,398 $ 60,737 12.6%
Concession cost
percentage 20.9% 20.6% 0.3% 20.8% 20.8% NM
Concession margin
per patron $ 3.68 $ 3.59 2.5% $ 3.66 $ 3.50 4.6%
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Fourth 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 26.8% increase in concession
revenues and the 0.3% increase in the concession cost percentage during the
period. The concession margin per patron increased from $3.59 in the fourth
quarter of 2011 to $3.68 in the same period in 2012, reflecting the impact of
the higher CPP during the period.
Full Year
The increase in concession cost during the period was due to the 12.9% increase
in concession revenues. The concession cost percentage was 20.8% in each of the
years.
Despite the 10% discount offered to SCENE members and SCENE points offered on
select combo offerings, 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 full year (in thousands of Canadian
dollars):
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Amortization expenses Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
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Amortization of property,
equipment and leaseholds $13,412 $14,571 -8.0% $56,139 $59,145 -5.1%
Amortization of intangible
assets and other 3,522 2,241 57.2% 5,919 8,970 -34.0%
-------------------------------------------------
Amortization expenses as
reported $16,934 $16,812 0.7% $62,058 $68,115 -8.9%
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The quarterly and year to date decrease in amortization of property, equipment
and leaseholds of $1.2 million and $3.0 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. Decommissioning the 35 millimeter
projectors due to the circuit's conversion to digital also contributed to the
decrease in amortization of property, equipment and leaseholds.
The increase in amortization of intangible assets and other in the fourth
quarter of 2012 compared to the prior year period is due to the amortization of
certain trade name assets that are being phased out by Cineplex. These assets
were previously classified as indefinite lived assets however during the fourth
quarter of 2012 their classification was changed to definite lived with
amortization being recorded over the anticipated rebranding schedule of the
associated theatres. For the year-to-date period, the decrease in amortization
of intangible assets and other relates to certain intangible assets that became
fully amortized during the first quarter of 2012, offset by the amortization of
the trade name assets discussed above.
(Gain) loss on disposal of assets
The following table shows the movement in the (gain) loss on disposal of assets
during the quarter and the full year (in thousands of Canadian dollars):
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(Gain) loss on Fourth Quarter Full Year
disposal of assets 2012 2011 Change 2012 2011 Change
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(Gain) loss on
disposal of assets $ (3,138) $ 731 NM $ (2,352) $ 735 NM
----------------------------------------------------------------------------
Fourth Quarter
During the fourth quarter of 2012, Cineplex recorded a gain of $3.1 million on
the disposal of assets, including a gain of $3.7 million on the sale of land
during the quarter, partially offset by losses on certain assets that were sold
or otherwise disposed of. The fourth quarter of 2011 resulted in a loss of $0.7
million on certain assets that were sold or otherwise disposed.
Full Year
For the year ended December 31, 2012, disposal of assets resulted in a gain of
$2.4 million on the disposal of assets, including a gain of $3.7 million on the
sale of land discussed above, partially offset by losses on certain assets that
were sold or otherwise disposed. For the year ended December 31, 2011, disposal
of assets resulted in a loss of $0.7 million, comprised of losses recorded on
assets that were sold or otherwise disposed of, offset by a gain on the sale of
a 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
The gain on acquisition represents the gain recorded on the acquisition of AMC
Ventures Inc. The gain was revised in the fourth quarter of 2012 based on the
finalization of AMC Ventures Inc.'s final tax return.
----------------------------------------------------------------------------
(Gain) on acquisition Fourth Quarter Full Year
of business 2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
(Gain) on acquisition
of business $ (930) $ - NM $ (24,752) $ - NM
----------------------------------------------------------------------------
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 full year (in thousands of
Canadian dollars):
----------------------------------------------------------------------------
Other costs Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Theatre occupancy
expenses $ 45,498 $ 39,842 14.2% $ 174,259 $ 163,696 6.5%
Other operating
expenses 74,056 64,095 15.5% 258,973 246,289 5.2%
General and
administrative
expenses 15,200 12,981 17.1% 57,137 56,440 1.2%
--------------------------------------------------------
Total other costs $ 134,754 $ 116,918 15.3% $ 490,369 $ 466,425 5.1%
----------------------------------------------------------------------------
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for
the quarter and the full year (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Theatre occupancy
expenses Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Rent $ 30,936 $ 27,334 13.2% $ 116,586 $ 110,580 5.4%
Other occupancy 15,343 13,057 17.5% 59,628 55,148 8.1%
One-time items
(i) (781) (549) 42.3% (1,955) (2,032) -3.8%
----------------------------------------------------------------------------
Total $ 45,498 $ 39,842 14.2% $ 174,259 $ 163,696 6.5%
----------------------------------------------------------------------------
(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.
----------------------------------------------------------------------------
Theatre occupancy
continuity Fourth Quarter Full Year
Occupancy Occupancy
----------------------------------------------------------------------------
2011 as reported $ 39,842 $ 163,696
Impact of new theatres 5,082 10,169
Impact of disposed theatres (122) (1,386)
Same store rent change 280 507
One-time items (232) 77
Other 648 1,196
----------------------------------------------------------------------------
2012 as reported $ 45,498 $ 174,259
----------------------------------------------------------------------------
Fourth Quarter
Theatre occupancy expenses increased $5.7 million during the fourth quarter of
2012 compared to the prior year period. This increase was primarily due to the
four theatres acquired from AMC in the third quarter of 2012 ($4.9 million). The
increase in the Other category primarily relates to higher real estate taxes in
the current quarter compared to the prior year period.
Full Year
The increase in theatre occupancy expenses of $10.6 million for 2012 compared to
the prior year was primarily due to the four theatres acquired from AMC in the
third quarter of 2012 ($9.1 million). The increase in the Other category
primarily relates to higher real estate taxes in the current year compared to
the prior year period.
Other operating expenses
The following table highlights the movement in other operating expenses during
the quarter and the full year (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Other operating Fourth Quarter Full Year
expenses 2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Other operating
expenses $ 74,056 $ 64,095 15.5% $ 258,973 $ 246,289 5.2%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other operating continuity Fourth Quarter Full Year
In thousands Other Operating Other Operating
----------------------------------------------------------------------------
2011 as reported $ 64,095 $ 246,289
Impact of new theatres 2,853 6,119
Impact of disposed theatres (212) (1,815)
Same store payroll change 2,840 4,350
Marketing change 178 1,297
Media 1,786 (504)
New Way Sales (855) (1,868)
Theatre refurbishment payment - (1,014)
Other 3,371 6,119
----------------------------------------------------------------------------
2012 as reported $ 74,056 $ 258,973
----------------------------------------------------------------------------
Fourth Quarter
Other operating expenses during the fourth quarter of 2012 increased $10.0
million or 15.5% compared to the prior year period. The impact of new and
acquired net of disposed theatres was a $2.6 million increase to the category
primarily due to the four theatres acquired from AMC which accounted for $2.1
million of the $2.6 million increase. As a result of higher business volumes
during the current year period, same-store payroll costs increased $2.8 million
and media costs increased $1.8 million due to higher equipment sales by CDM.
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.
The major movement in the Other category include the following:
-- Higher credit card service fees due to the higher sales volumes during
the period ($0.6 million).
-- Increased spending for new business initiatives including Cineplex's
interactive business ($0.6 million).
-- Higher utility costs in the 2012 period compared to the prior year
period ($0.2 million).
-- Higher digital projector rental costs due to the roll-out of digital
projectors by CDCP that commenced in June 2011 ($0.2 million).
-- Higher theatre operating costs including cleaning, ticket paper, and
projector bulb expense, due to the higher business volumes in the
current year period.
Total theatre payroll costs accounted for 41.7% of total operating expenses
during the fourth quarter of 2012 as compared to 41.4% for the same period one
year earlier due in part to minimum wage increases.
Full Year
For the year ended December 31, 2012, other operating expenses increased $12.7
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
$4.3 million increase to the category primarily due to the four theatres
acquired from AMC which accounted for $3.9 million of the $4.3 million increase.
Cost increases included higher same-store payroll expenses related to the
increased business volumes ($4.4 million), higher marketing costs ($1.3 million)
and the $6.1 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 ($0.5 million) and the impact of NWS which was contributed into CSI in
January 2012 ($1.9 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 to higher sales volumes during the
period ($1.6 million).
-- Increased spending for new business initiatives including Cineplex's
interactive business ($0.7 million).
-- Higher utility costs during 2012 compared to the prior year ($1.3
million).
-- Higher digital projector rental costs due to the roll-out of digital
projectors by CDCP that commenced in June 2011 ($0.9 million).
-- Higher theatre operating costs including cleaning, ticket paper, and
projector bulb expense relating to the higher business volumes during
the year.
Total theatre payroll accounted for 44.4% of total other operating expenses in
2012, compared to 43.7% in the prior year 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 full year, including Share based
compensation costs, and G&A net of these costs (in thousands of Canadian
dollars):
----------------------------------------------------------------------------
G&A expenses Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
G&A excluding LTIP and
Option Plan expense $ 12,591 $ 10,779 16.8% $ 46,624 $ 40,832 14.2%
LTIP (i) 2,176 1,503 44.8% 8,442 7,542 11.9%
Option plan 433 699 -38.1% 2,071 8,066 -74.3%
---------------------------------------------------
G&A expenses as reported $ 15,200 $ 12,981 17.1% $ 57,137 $ 56,440 1.2%
----------------------------------------------------------------------------
(i) LTIP includes the expense for the LTIP program as well as the expense
for the executive and Board deferred share unit plans.
Fourth Quarter
G&A expenses increased $2.2 million during the fourth quarter of 2012 compared
to the prior year period, due to a $0.7 million increase in LTIP expenses, a
$0.2 million increase in professional fees and a $1.6 million increase in
payroll related and general cost increases. These increases were partially
offset by lower expenses under the option plan ($0.3 million).
Effective January 1, 2012, the Board 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.
Full Year
G&A expenses for 2012 increased $0.7 million compared to the prior year period,
due to higher professional fees ($1.6 million) relating to the creation of CSI,
an internal corporate reorganization effected on January 1, 2012 and the costs
relating to the acquisition of AMC Ventures Inc., higher payroll related and
general cost increases ($4.2 million) and higher LTIP expenses ($0.9 million).
These increases were partially offset by the $6.0 million decrease in the option
plan expense.
Share of loss 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 2011, 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 components of share of loss of joint ventures
during the quarter and the full year (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Share of loss of joint
ventures Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Share of (income) loss
of CDCP $ (834) $ (560) NM $ (2,222) $ 1,658 NM
Share of (income) of
CSI (170) - NM (932) - NM
Share of loss (income)
of SCENE 1,588 1,902 -16.5% 4,638 (1,440) NM
Share of loss (income)
of other joint
ventures 2 19 -89.5% (109) 51 NM
-----------------------------------------------------
Total loss of joint
ventures $ 586 $ 1,361 -56.9% $ 1,375 $ 269 411.2%
----------------------------------------------------------------------------
Fourth Quarter
The decrease from a loss of $1.4 million in the fourth quarter of 2011 to a loss
of $0.6 million in the current period is primarily due to the activities of
SCENE, CDCP and CSI:
-- SCENE's loss in the fourth quarter of 2012 was $0.3 million smaller than
the loss in the prior year period due to less marketing spend in the
current year period compared to the prior year.
-- CDCP generated income of $0.8 million in the fourth quarter of 2012,
$0.3 million higher than the prior year period due in part to the full
roll-out of digital projectors being completed in 2012.
-- The results of CSI, formed January 31, 2012 and therefore not included
in the prior year comparative, contributed a $0.2 million positive
variance year over year.
Full Year
The increase from a loss of $0.3 million in 2011 to a loss of $1.4 million in
the current year is mainly 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 $6.1
million year over year.
-- CDCP in the 2011 period includes $2.2 million of start-up costs offset
by income of $0.5 million, which when compared to the income of $2.2
million generated in the current year period, results in a positive
variance of $3.9 million year over year.
-- The results of CSI, formed January 31, 2012 and therefore not included
in the prior year comparative, contributed a $0.9 million positive
variance year over year.
EBITDA and adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for the three months
and year ended December 31, 2012 as compared to the three months and year ended
December 31, 2011 (expressed in thousands of Canadian dollars, except adjusted
EBITDA margin):
----------------------------------------------------------------------------
EBITDA Fourth Quarter Full Year
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
EBITDA $ 61,864 $ 39,906 55.0% $ 227,547 $ 170,625 33.4%
Adjusted EBITDA $ 57,507 $ 40,102 43.4% $ 200,484 $ 173,174 15.8%
Adjusted EBITDA
margin 19.3% 16.6% 2.7% 18.4% 17.3% 1.1%
----------------------------------------------------------------------------
Adjusted EBITDA for the fourth quarter of 2012 increased $17.4 million, or
43.4%, as compared to the prior year period. The increase over the prior year
period was primarily due to the record fourth quarter exhibition and concession
revenues recorded in the period. The four theatres acquired from AMC in the
third quarter of 2012 contributed $0.6 million to adjusted EBITDA in the fourth
quarter. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total
revenues, was 19.3%, up 2.7% from 16.6% in the prior year period.
Adjusted EBITDA for the year ended December 31, 2012 increased $27.3 million, or
15.8%, as compared to the prior year period. The increase is primarily due to
the higher exhibition and concession revenues due to the record theatre
attendance. The impact of the four theatres acquired from AMC had a $0.2
million, or 0.1%, negative impact on adjusted EBITDA in the year-to-date period.
Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues,
was 18.4%, compared to 17.3% in the prior year period. Excluding the impact of
the AMC theatres, adjusted EBITDA margin was 18.7% for 2012.
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 theatres
acquired from AMC. 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 fourth quarter of 2012, adjusted free cash flow per common share of
Cineplex was $0.5403 as compared to $0.3570 in the prior year period. The
declared dividends per common share of Cineplex were $0.3375 in the fourth
quarter of 2012 and $0.3225 in the prior year period. The payout ratios for
these periods were 62% and 90%, respectively.
For the year ended December 31, 2012, adjusted free cash flow per common share
of Cineplex was $2.0785 as compared to $1.9657 in the prior year. The declared
dividends per commons share of Cineplex were $1.3300 in 2012 and $1.2800 in the
prior year. The payout rations for these periods were 64% and 65%, 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 134 theatres with
1,449 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 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, February 7, 2013
10:00 a.m. Eastern Time
In order to participate in the conference call, please dial 416-644-3414 or
outside of Toronto dial 1-800-814-4859 at least five to ten minutes prior to
10:00 a.m. Eastern Time. Please quote the conference ID 4590520 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 4590520#. The
replay will begin at 12:00 p.m. Eastern Time on Thursday, February 7,
2013 and end at 11:59 p.m. Eastern Time on Thursday, February 14, 2013.
-- Note that media will be participating in the call in listen-only mode.
-- Thank you in advance for your interest and participation.
Cineplex Inc.
Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, December 31,
2012 2011
Assets
Current assets
Cash and cash equivalents $ 47,774 $ 48,992
Trade and other receivables 70,625 67,185
Inventories 5,187 4,118
Prepaid expenses and other current assets 3,047 3,727
---------------------------
126,633 124,022
Non-current assets
Property, equipment and leaseholds 418,142 389,532
Deferred income taxes 53,528 12,052
Interests in joint ventures 41,764 26,163
Intangible assets 78,460 84,379
Goodwill 608,929 608,929
---------------------------
$ 1,327,456 $ 1,245,077
---------------------------
---------------------------
December 31, December 31,
2012 2011
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 127,318 $ 112,285
Dividends payable 7,063 6,285
Share-based compensation - 1,331
Income taxes payable 13,654 17,485
Deferred revenue 94,397 83,907
Finance lease obligations 2,222 2,411
Fair value of interest rate swap agreements 513 565
Convertible debentures - 76,864
----------------------------
245,167 301,133
----------------------------
Non-current liabilities
Share-based compensation 12,223 9,466
Long-term debt 148,066 167,531
Fair value of interest rate swap agreements 273 1,199
Finance lease obligations 20,548 26,474
Post-employment benefit obligations 6,274 5,688
Other liabilities 141,319 103,727
Deficiency interests in joint ventures 6,272 8,250
----------------------------
334,975 322,335
----------------------------
Total liabilities 580,142 623,468
----------------------------
Equity
Share capital 847,235 764,801
Deficit (102,547) (140,469)
Accumulated other comprehensive loss (1,142) (2,723)
Contributed surplus 3,768 -
----------------------------
747,314 621,609
----------------------------
$ 1,327,456 $ 1,245,077
----------------------------
----------------------------
Cineplex Inc.
Consolidated Statements of Operations
(expressed in thousands of Canadian dollars, except net income per share)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three months ended
December 31, Year ended December 31,
-------------------------------------------------
2012 2011 2012 2011
Revenues
Box office $ 170,524 $ 133,735 $ 638,296 $ 577,348
Concessions 86,409 68,161 329,332 291,638
Other 41,757 39,792 124,238 129,209
-------------------------------------------------
298,690 241,688 1,091,866 998,195
-------------------------------------------------
Expenses
Film cost 87,477 68,757 331,281 299,404
Cost of concessions 18,077 14,015 68,398 60,737
Depreciation and
amortization 16,934 16,812 62,058 68,115
(Gain) loss on disposal of
assets (3,138) 731 (2,352) 735
(Gain) on acquisition of
business (930) - (24,752) -
Other costs 134,754 116,918 490,369 466,425
Share of loss of joint
ventures 586 1,361 1,375 269
Interest expense 2,090 6,968 12,585 24,854
Interest income (58) (94) (205) (898)
-------------------------------------------------
255,792 225,468 938,757 919,641
-------------------------------------------------
Income before income taxes 42,898 16,220 153,109 78,554
-------------------------------------------------
Provision for (recovery of)
income taxes
Current 8,795 5,482 31,436 17,493
Deferred 1,399 (193) 1,189 11,801
-------------------------------------------------
10,194 5,289 32,625 29,294
-------------------------------------------------
Net income $ 32,704 $ 10,931 $ 120,484 $ 49,260
-------------------------------------------------
-------------------------------------------------
Basic net income per share $ 0.53 $ 0.19 $ 1.98 $ 0.86
Diluted net income per
share $ 0.52 $ 0.19 $ 1.97 $ 0.85
Cineplex Inc.
Consolidated Statements of Comprehensive Income
(expressed in thousands of Canadian dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three months ended Year ended December
December 31, 31,
-----------------------------------------
2012 2011 2012 2011
Net income $ 32,704 $ 10,931 $ 120,484 $ 49,260
-----------------------------------------
Other comprehensive (loss) income
Income (loss) on hedging
instruments 225 (242) 2,486 3,704
Associated deferred income taxes
expense (190) (12) (905) (2,893)
Actuarial losses of post-employment
benefit obligations (190) (812) (190) (812)
Associated deferred income taxes
recovery 50 210 50 210
-----------------------------------------
Other comprehensive (loss) income (105) (856) 1,441 209
-----------------------------------------
Comprehensive income $ 32,599 $ 10,075 $ 121,925 $ 49,469
-----------------------------------------
-----------------------------------------
Cineplex Inc.
Consolidated Statements of Changes in Equity
(expressed in thousands of Canadian dollars)
For the years ended December 31, 2012 and 2011
------------------------------------------------------------------------
------------------------------------------------------------------------
Unit Share Contributed
capital capital surplus
Balance - January 1, 2012 $ - $ 764,801 $ -
Net income - - -
Other comprehensive income - - -
-----------------------------------
Total comprehensive income
Share option liabilities reclassified - - 6,850
Dividends declared - - -
Long-term incentive plan obligation - (4,818) -
Long-term incentive plan shares - 6,471 -
Share option expense - - 2,071
Issuance of shares on exercise of
options - 5,873 (5,372)
Issuance of shares on conversion of
debentures - 75,844 219
Shares repurchased and cancelled - (936) -
-----------------------------------
Balance - December 31, 2012 $ - $ 847,235 $ 3,768
-----------------------------------
-----------------------------------
Cineplex Inc.
Consolidated Statements of Changes in Equity
(expressed in thousands of Canadian dollars)
For the years ended December 31, 2012 and 2011
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Accumulated
other
comprehensive
loss Deficit Total
Balance - January 1, 2012 $ (2,723) $ (140,469) $ 621,609
Net income - 120,484 120,484
Other comprehensive income 1,581 (140) 1,441
---------------------------------------
Total comprehensive income 1,581 120,344 121,925
Share option liabilities reclassified - - 6,850
Dividends declared - (81,572) (81,572)
Long-term incentive plan obligation - - (4,818)
Long-term incentive plan shares - - 6,471
Share option expense - - 2,071
Issuance of shares on exercise of
options - - 501
Issuance of shares on conversion of
debentures - - 76,063
Shares repurchased and cancelled - (850) (1,786)
---------------------------------------
Balance - December 31, 2012 $ (1,142) $ (102,547) $ 747,314
---------------------------------------
---------------------------------------
Unit Share Contributed
capital capital surplus
Balance - January 1, 2011 $ 710,121 $ - $ 1,407
Net income - - -
Other comprehensive income - - -
----------------------------------------
Total comprehensive income
Effect of corporate conversion (710,121) 744,760 (1,407)
Dividends declared - - -
Long-term incentive plan obligation - (1,599) -
Long-term incentive plan shares - 1,888 -
Issuance of shares on conversion of
debentures - 21,515 -
Shares repurchased and cancelled - (1,763) -
----------------------------------------
Balance - December 31, 2011 $ - $ 764,801 $ -
----------------------------------------
----------------------------------------
Accumulated
other
comprehensive
loss Deficit Total
Balance - January 1, 2011 $ (3,534) $ (113,120) $ 594,874
Net income - 49,260 49,260
Other comprehensive income 811 (602) 209
---------------------------------------
Total comprehensive income 811 48,658 49,469
Effect of corporate conversion - - 33,232
Dividends declared - (74,344) (74,344)
Long-term incentive plan obligation - - (1,599)
Long-term incentive plan shares - - 1,888
Issuance of shares on conversion of
debentures - - 21,515
Shares repurchased and cancelled - (1,663) (3,426)
---------------------------------------
Balance - December 31, 2011 $ (2,723) $ (140,469) $ 621,609
---------------------------------------
---------------------------------------
Cineplex Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Three months ended Year ended December
December 31, 31,
-------------------------------------------
2012 2011 2012 2011
Cash provided by (used in)
Operating activities
Net income $ 32,704 $ 10,931 $ 120,484 $ 49,260
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 16,934 16,812 62,058 68,115
Amortization of tenant
inducements, rent averaging
liabilities and fair value
lease contract liabilities (1,432) (1,011) (5,033) (3,955)
Accretion of debt issuance
costs and other non-cash
interest 143 139 562 840
(Gain) loss on disposal of
assets (3,138) 731 (2,352) 735
(Gain) on acquisition of
business (930) - (24,752) -
Deferred income taxes 1,399 (193) 1,189 11,801
Interest rate swap agreements -
non-cash interest (295) 3,072 1,485 4,215
Non-cash share-based
compensation 433 37 2,108 330
Accretion of convertible
debentures 24 290 323 1,368
Net change in interests in
joint ventures 1,160 984 5,987 (1,876)
Tenant inducements 1,643 1,565 7,615 7,150
Changes in operating assets and
liabilities 64,498 59,395 9,653 38,294
-------------------------------------------
Net cash provided by operating
activities 113,143 92,752 179,327 176,277
-------------------------------------------
Investing activities
Proceeds from sale of assets 2,550 136 3,683 1,958
Purchases of property, equipment
and leaseholds (22,446) (19,821) (71,923) (60,624)
Acquisition and formation of
businesses, net of cash acquired - 51 (2,811) (3,229)
Additional equity funding of CDCP (3,940) 22 (4,188) (356)
-------------------------------------------
Net cash used in investing
activities (23,836) (19,612) (75,239) (62,251)
-------------------------------------------
Financing activities
Dividends paid (20,955) (18,858) (80,794) (68,059)
Repayments under credit facility,
net (20,000) (65,000) (20,000) (65,000)
Payments under finance leases (531) (576) (2,104) (2,242)
Proceeds from issuance of shares - - 501 -
Acquisition of long-term
incentive plan shares - - - (9,793)
Deferred financing fees - 58 - (1,857)
Shares repurchased and cancelled - (3,051) (1,786) (3,426)
Repayment of convertible
debentures at maturity (1,123) - (1,123) -
-------------------------------------------
Net cash used in financing
activities (42,609) (87,427) (105,306) (150,377)
-------------------------------------------
Increase (decrease) in cash and
cash equivalents during the
period 46,698 (14,287) (1,218) (36,351)
Cash and cash equivalents -
Beginning of period 1,076 63,279 48,992 85,343
-------------------------------------------
Cash and cash equivalents - End
of period $ 47,774 $ 48,992 $ 47,774 $ 48,992
-------------------------------------------
-------------------------------------------
Supplemental information
Cash paid for interest $ 2,866 $ 4,322 $ 10,293 $ 18,084
Cash paid for income taxes $ 5,281 $ 30 $ 35,268 $ 95
Cineplex Inc.
Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDA
----------------------------------------------------------------------------
Three months ended Year ended December
December 31, 31,
2012 2011 2012 2011
-------------------------------------------
Net income $ 32,704 $ 10,931 $ 120,484 $ 49,260
Depreciation and amortization 16,934 16,812 62,058 68,115
Interest expense 2,090 6,968 12,585 24,854
Interest income (58) (94) (205) (898)
Current income tax expense 8,795 5,482 31,436 17,493
Deferred income tax expense
(recovery) 1,399 (193) 1,189 11,801
-------------------------------------------
EBITDA $ 61,864 $ 39,906 $ 227,547 $ 170,625
(Gain) loss on disposal of assets (3,138) 731 (2,352) 735
(Gain) on acquisition of business (930) - (24,752) -
CDCP equity (income) loss (i) (834) (560) (2,222) 1,658
Depreciation and amortization -
joint ventures (ii) 474 25 1,927 156
Future income taxes - joint
ventures (ii) 53 - 289 -
Current income taxes - joint
ventures (ii) 18 - 47 -
-------------------------------------------
Adjusted EBITDA $ 57,507 $ 40,102 $ 200,484 $ 173,174
----------------------------------------------------------------------------
(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 Fourth Quarter Year to Date
2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Theatre occupancy
expenses $ 45,498 $ 39,842 14.2% $ 174,259 $ 163,696 6.5%
Other operating
expenses 74,056 64,095 15.5% 258,973 246,289 5.2%
General and
administrative
expenses 15,200 12,981 17.1% 57,137 56,440 1.2%
-------------------------------------------------------
Total other costs $ 134,754 $ 116,918 15.3% $ 490,369 $ 466,425 5.1%
----------------------------------------------------------------------------
Cineplex Inc.
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
December 31, Year ended December 31,
2012 2011 2012 2011
----------------------------------------------------
Cash provided by
operating activities $ 113,143 $ 92,752 $ 179,327 $ 176,277
Less: Total capital
expenditures net of
proceeds on sale of
assets (19,896) (19,685) (68,240) (58,666)
----------------------------------------------------
Standardized free cash
flow/Standardized
distributable cash 93,247 73,067 111,087 117,611
Add/(Less):
Changes in operating
assets and liabilities
(i) (64,498) (59,395) (9,653) (38,294)
Changes in operating
assets and liabilities
of joint ventures (i) (574) 377 (4,612) 2,145
Tenant inducements (ii) (1,643) (1,565) (7,615) (7,150)
Principal component of
finance lease
obligations (531) (576) (2,104) (2,242)
Growth capital
expenditures and other
(iii) 8,654 10,838 41,640 40,769
Share of (loss) income
of joint ventures, net
of non-cash
depreciation (iv) (893) (1,896) (1,381) 1,545
Cash invested in CDCP
(iv) (190) 22 (438) (356)
----------------------------------------------------
Adjusted free cash flow $ 33,572 $ 20,872 $ 126,924 $ 114,028
----------------------------------------------------
----------------------------------------------------
Average number of Shares
outstanding 62,137,513 58,461,523 61,065,540 58,009,953
Adjusted free cash flow
per Share $ 0.5403 $ 0.3570 $ 2.0785 $ 1.9657
----------------------------------------------------------------------------
(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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Cineplex Inc.
Gord Nelson
Chief Financial Officer
(416) 323-6602
Cineplex Inc.
Pat Marshall
Vice President Communications and Investor Relations
(416) 323-6648
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