Cineplex Inc. (TSX:CGX) ("Cineplex") today released its financial results for
the three months and year ended December 31, 2013.
Fourth Quarter Results
----------------------------------------------------------------------------
Period over Period
2013 2012 (i) Change (ii)
----------------------------------------------------------------------------
Total Revenues $ 323.2 million $ 298.7 million 8.2%
----------------------------------------------------------------------------
Attendance 18.9 million 18.6 million 1.6%
----------------------------------------------------------------------------
Other Revenues $ 52.2 million $ 41.8 million 25.0%
----------------------------------------------------------------------------
Net Income $ 20.2 million $ 32.7 million -38.3%
----------------------------------------------------------------------------
Box office revenues
per patron ("BPP")
(iii) $ 9.42 $ 9.18 2.6%
----------------------------------------------------------------------------
Concession revenues
per patron ("CPP")
(iii) $ 4.94 $ 4.65 6.2%
----------------------------------------------------------------------------
Adjusted EBITDA (iii) $ 54.1 million $ 57.5 million -5.8%
----------------------------------------------------------------------------
Adjusted EBITDA Margin
(iii) 16.8% 19.3% -2.5%
----------------------------------------------------------------------------
Adjusted Free Cash
Flow per Share (iii) $ 0.5769 $ 0.5403 6.8%
----------------------------------------------------------------------------
Earnings per Share
("EPS") - Basic $ 0.32 $ 0.53 -39.6%
----------------------------------------------------------------------------
EPS excluding gain on
acquisition - basic
(iii) $ 0.32 $ 0.51 -37.3%
----------------------------------------------------------------------------
EPS - Diluted $ 0.32 $ 0.52 -38.5%
----------------------------------------------------------------------------
EPS excluding gain on
acquisition - diluted
(iii) $ 0.32 $ 0.51 -37.3%
----------------------------------------------------------------------------
Full Year Results
----------------------------------------------------------------------------
Year over Year
2013 2012 (i) Change (ii)
----------------------------------------------------------------------------
Total Revenues $1,171.3 million $1,092.5 million 7.2%
----------------------------------------------------------------------------
Attendance 72.7 million 71.2 million 2.1%
----------------------------------------------------------------------------
Other Revenues $ 155.6 million $ 124.9 million 24.6%
----------------------------------------------------------------------------
Net Income $ 83.6 million $ 120.5 million -30.6%
----------------------------------------------------------------------------
BPP (iii) $ 9.15 $ 8.97 2.0%
----------------------------------------------------------------------------
CPP (iii) $ 4.82 $ 4.63 4.1%
----------------------------------------------------------------------------
Adjusted EBITDA (iii) $ 202.4 million $ 200.5 million 1.0%
----------------------------------------------------------------------------
Adjusted EBITDA Margin
(iii) 17.3% 18.4% -1.1%
----------------------------------------------------------------------------
Adjusted Free Cash
Flow per Share (iii) $ 2.4580 $ 2.0785 18.3%
----------------------------------------------------------------------------
EPS - Basic $ 1.33 $ 1.98 -32.8%
----------------------------------------------------------------------------
EPS excluding gain on
acquisition - basic
(iii) $ 1.33 $ 1.57 -15.3%
----------------------------------------------------------------------------
EPS - Diluted $ 1.32 $ 1.97 -33.0%
----------------------------------------------------------------------------
EPS excluding gain on
acquisition - diluted
(iii) $ 1.32 $ 1.57 -15.9%
----------------------------------------------------------------------------
i. Effective January 1, 2013, Cineplex implemented International Financial
Reporting Standard ("IFRS") 11, Joint Arrangements, retrospectively. As
a result, certain comparative items presented in this news release for
2012 have been revised.
ii. Period over period change calculated based on thousands of dollars
except percentage and per share values. Changes in percentage amounts
are calculated as 2013 value less 2012 value.
iii.Adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flow per
common share of Cineplex, EPS excluding gain on acquisition, BPP and CPP
are measures that do not have a standardized meaning under generally
accepted accounting principles ("GAAP"). These measures as well as other
non-GAAP financial measures reported by Cineplex are defined in the
'Non-GAAP Financial Measures' section at the end of this news release.
"2013 was another strong year for Cineplex as we exceeded prior year results in
several key reporting metrics," said Ellis Jacob, President and CEO, Cineplex
Entertainment. "Total revenues of $1.2 billion were up 7.2% and we achieved our
highest ever annual adjusted EBITDA of $202.4 million."
"Film product was a little weaker this year for the Canadian industry especially
compared to the record year in 2012. However, Cineplex continued to perform
strongly, generating record BPP, CPP and media results. We completed two
strategic acquisitions which positions us well for future growth. The
acquisition of 24 Empire theatres in Atlantic Canada makes Cineplex the only
Canadian exhibitor with a truly coast-to-coast presence, and the acquisition of
EK3 Technologies Inc., positions us well for continued growth in the indoor
digital signage sector throughout North America. Our media business continued to
show strong gains with revenues increasing 30% in 2013. Membership in the SCENE
loyalty program surpassed 5.3 million in 2013 and the program expanded into
Atlantic Canada. In our interactive business, we made strong strategic
advancements, launching SuperTicket, introducing Digital Tuesdays, and
re-launching both Cineplex.com and CineplexStore.com."
"During 2013 we executed two significant strategic acquisitions and implemented
a number of key initiatives in our existing and emerging businesses. These
actions have resulted in meaningful new opportunities to drive growth in 2014
and beyond."
KEY DEVELOPMENTS IN 2013
The following describes certain key business initiatives and results undertaken
and achieved during 2013 in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported both record annual box office revenues of $665.3 million and
BPP of $9.15 during 2013, an increase over the previous records of
$638.3 million and $8.97, each set in 2012. Attendance was also an
annual record for Cineplex, with 72.7 million patrons exceeding the
previous record of 71.2 million set in 2012.
-- Acquired the Atlantic Theatres, providing Cineplex with a national
coast-to-coast presence and theatres in ten provinces.
-- Acquired two theatres located in Vancouver, British Columbia from
Festival Theatres Ltd.
-- Opened two new theatres, Cineplex Cinemas Abbotsford and VIP in
Abbotsford, British Columbia which includes three VIP auditoriums, and
Galaxy Cinemas Sarnia located in Sarnia, Ontario. The Sarnia location
replaced an existing Cineplex theatre which was closed at the time of
the new theatre opening.
-- Added UltraAVX (16), 3D (178) and IMAX (2) screens in strategic
locations across the circuit, which contributed to the percentage of box
office revenues from premium-priced product (see 'Non-GAAP Financial
Measures' section of this news release) increasing to 38.7% in 2013
compared to 30.9% in 2012.
MERCHANDISING
-- Reported record annual concession revenues of $350.4 million and CPP of
$4.82, exceeding the previous records of $329.3 million and $4.63, both
set in 2012.
-- Opened two new XSCAPE entertainment centres in 2013, bringing the total
number across the circuit to 10.
-- Cineplex's first stand-alone food service business, YoYo's Yogurt Cafe,
opened at the Pergola Commons complex in Guelph, Ontario.
-- Continued the retail branded outlet optimization at theatre locations,
with the continued expansion of Cineplex's Outtakes and Poptopia branded
locations at select theatres. At December 31, 2013 there were 89
Outtakes and 12 Poptopia locations across Cineplex's circuit.
-- Substantially completed the digital menu board rollout across the
circuit.
-- Deployed a comprehensive slate of promotional programs to drive purchase
incidence and transaction value including new partnership and product
launches with EA Sports and Toys "R" Us.
MEDIA
-- Reported record annual media revenues of $109.6 million, which exceeded
the prior year media revenues by $25.3 million (30.0%) with showtime and
pre-show revenues as well as CDN revenues accounting for the majority of
the increase.
-- Completed the acquisition of EK3 Technologies Inc. ("EK3"), subsequently
renamed CDN, in the third quarter. CDN designs, installs, manages and
consults on some of the largest digital merchandising networks in North
America, with networks viewed by more than 1.8 billion shoppers
annually. CDN contributed $10.9 million to media revenues in 2013.
-- Entered into an agreement to provide specialty media services to select
Oxford Properties malls and shopping centres.
ALTERNATIVE PROGRAMMING
-- Alternative programming in 2013 included strong performances from the
Metropolitan Opera: Live in HD series, ethnic film programming,
performances from the National Theatre in London (such as The Audience
featuring Helen Mirren), sports programming as well as concert
performances and the Classic Film Series.
-- Hosted the first-ever Cineplex EA Sports NHL 14 Premiere Tournament at
Cineplex Cinemas Yonge-Dundas, providing fans of EA Sports NHL game
franchise an exclusive first opportunity to play one of the most
anticipated video games of 2013.
-- Distributed and presented the faith-based, family-focused film Home Run
in select theatres.
INTERACTIVE
-- Cineplex.com and the Cineplex Store websites were relaunched with a
brand new responsive design format, providing customers with a more
user-friendly experience including simplified search, streamlined
purchase and payment functionality and consistency of experience across
device types.
-- Launched SuperTicket, a first-ever bundled offering that allows movie-
goers to purchase a movie admission ticket and pre-order the UltraViolet
digital download of a movie at the same time. SuperTicket was offered on
select releases in 2013, including Pacific Rim, The Smurfs 2, The
Hobbit: The Desolation of Smaug and Anchorman 2.
-- During the fourth quarter, introduced the "$2.50 Digital Tuesday"
marketing campaign and launched the annual Cineplex Store Holiday
Campaign, with both campaigns delivering incremental visits and higher
sales volumes compared to the prior year period.
-- Cineplex, in partnership with Buyatab Online, was recognized with a
national industry award for the Cineplex eGift Card and related
marketing program at the 2013 PX Prepaid & Payment Awards.
-- Cineplex.com registered a 15% increase in page views, a 17% increase in
unique visitors and a 20% increase in visits 2013 compared to the prior
year.
-- As of December 31, 2013, the Cineplex mobile app has been downloaded 8.3
million times and recorded more than 255 million app sessions. The app
is ranked 10th in Canada amongst all mobile brands by unique visitors.
LOYALTY
-- Membership in the SCENE loyalty program increased more than 1.0 million
members in 2013, reaching a membership of 5.3 million at December 31,
2013.
-- SCENE ran programs with various partners including Telus, Winners, The
Stratford Shakespeare Festival, Virgin Mobile, Cara Foods and Rogers
during 2013.
CORPORATE
-- During 2013, the board of directors of Cineplex (the "Board") announced
a monthly dividend increase to $0.1200 per Share ($1.4400 on an annual
basis) up from $0.1125 per Share ($1.3500 on an annual basis) effective
with the May 2013 dividend.
-- Cineplex entered into an amended and restated credit agreement (the
"Credit Facilities") and issued convertible subordinated debentures. The
proceeds from the issuance of the convertible debentures and the Credit
Facilities were used to finance the acquisition of the Atlantic Theatres
acquired in the fourth quarter of 2013.
-- During 2013, Cineplex was named one of Canada's 10 Most Admired
Corporate Cultures in the large enterprise category, one of 10 national
recipients of the Canada's Passion Capitalist award, and winner of the
Canadian Foundation for Physically Disabled Persons' Corporate Award.
OPERATING RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2013
Total revenues
Total revenues for the three months ended December 31, 2013 increased $24.5
million (8.2%) to $323.2 million as compared to the prior year period. Total
revenues for the year ended December 31, 2013 increased $78.8 million (7.2%) to
$1.2 billion as compared to the prior year period. A discussion of the factors
affecting the changes in box office, concession and other revenues for the
period is provided on the following pages.
Non-GAAP measures discussed throughout this news release, including adjusted
EBITDA, adjusted free cash flow, attendance, BPP, premium priced product, same
store metrics, CPP, film cost percentage, concession cost percentage and
concession margin per patron are defined and discussed in the 'Non-GAAP
Financial Measures' section of this news release.
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):
----------------------------------------------------------------------------
Box office revenues Fourth Quarter Full Year
------------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Box office revenues $177,692 $170,524 4.2% $665,306 $638,296 4.2%
Attendance (i) 18,872 18,577 1.6% 72,703 71,198 2.1%
Box office revenue per
patron (i) $ 9.42 $ 9.18 2.6% $ 9.15 $ 8.97 2.0%
BPP excluding premium
priced product (i) $ 8.52 $ 8.57 -0.6% $ 8.29 $ 8.26 0.4%
Canadian industry
revenues (ii) -6.2% -2.8%
Same store box office
revenues (i) $162,918 $168,623 -3.4% $603,282 $613,202 -1.6%
Same store attendance
(i) 17,343 18,367 -5.6% 66,333 68,589 -3.3%
% Total box from
premium priced
product (i) 40.3% 29.2% 11.1% 38.7% 30.9% 7.8%
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release.
----------------------------------------------------------------------------
(ii) The Movie Theatre Association of Canada ("MTAC") reported that the
Canadian exhibition industry reported a box office revenue decrease of 6.7%
for the period from October 4, 2013 to January 2, 2014 as compared to the
period from October 5, 2012 to January 3, 2013. On a basis consistent with
Cineplex's calendar reporting period (October 1 to December 31), the
Canadian industry box office revenue change is estimated to be a decrease
of 6.2%. MTAC reported that the Canadian exhibition industry reported a box
office revenue decrease of 2.5% for the period from January 4, 2013 to
January 2, 2014 as compared to the period from January 6, 2012 to January
3, 2013. 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 a decrease of 2.8%.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Box office continuity Fourth Quarter Full Year
Box Office Attendance Box Office Attendance
----------------------------------------------------------------------------
2012 as reported $170,524 18,577 $638,296 71,198
Same store attendance change (9,401) (1,024) (20,168) (2,256)
Impact of same store BPP change 3,697 - 10,248 -
New and acquired theatres 14,590 1,510 40,820 4,241
Disposed and closed theatres (1,718) (191) (3,890) (480)
----------------------------------------------------------------------------
2013 as reported $177,692 18,872 $665,306 72,703
----------------------------------------------------------------------------
Fourth Quarter
----------------------------------------------------------------------------
Fourth Quarter 2013 Top Fourth Quarter 2012 Top
Cineplex Films 3D % Box Cineplex Films 3D % Box
----------------------------------------------------------------------------
1 The Hunger Games: Catching 1 Skyfall 15.2%
Fire 14.2%
2 The Hobbit: The Desolation 2 The Hobbit: An Unexpected
of Smaug X 11.0% Journey X 10.6%
3 Gravity X 10.6% 3 The Twilight Saga:
Breaking Dawn 2 8.0%
4 Frozen X 9.3% 4 Wreck-It Ralph X 5.4%
5 Thor: The Dark World X 8.8% 5 Hotel Transylvania X 4.7%
----------------------------------------------------------------------------
Box office revenues increased $7.2 million, or 4.2%, to $177.7 million during
the fourth quarter of 2013, compared to $170.5 million recorded in the same
period in 2012. The increase was due to the impact of the Atlantic Theatres,
which contributed $10.4 million to box office revenues during the period, net of
a 3.4% decrease in same store box office revenues due to a 5.6% decrease in same
store attendance as compared to the prior year period. The film slate in the
current period lacked the depth of the prior year period, resulting in the lower
same store attendance in the current period.
BPP for the three months ended December 31, 2013 was $9.42, a $0.24 increase
from the prior year period. The increase in BPP was due in part to the impact of
premium priced product, which accounted for 40.3% of box office revenues in the
current period, compared to 29.2% in the prior year period. The increase in the
percentage of box office revenues from premium priced product was positively
impacted by additional installations of UltraAVX, 3D, IMAX and VIP screens since
the end of 2012, as the film slate in the current period had four of the top
five films screened in 3D and four in IMAX, as compared to three in 3D and three
in IMAX in the prior year period. Cineplex continues to invest in premium priced
formats including 3D, UltraAVX, IMAX and VIP thereby positioning itself to
benefit from the premiums charged for these offerings. The strong performance of
Cineplex's premium-priced product resulted in Cineplex's same-store results
outperforming the Canadian industry in the period, with the industry estimated
to be down 6.2% in the period.
Full Year
----------------------------------------------------------------------------
Full Year 2013 Top Cineplex Full Year 2012 Top Cineplex
Films 3D % Box Films 3D % Box
----------------------------------------------------------------------------
1 The Hunger Games: Catching 1 Marvel's The Avengers X 5.7%
Fire 3.6%
2 Iron Man 3 X 3.6% 2 The Dark Knight Rises 4.5%
3 Despicable Me 2 X 3.0% 3 Skyfall 4.1%
4 The Hobbit: The Desolation 4 The Hunger Games 3.8%
of Smaug X 2.8%
5 Gravity X 2.7% 5 The Amazing Spider-Man X 2.8%
----------------------------------------------------------------------------
Box office revenues for the year ended December 31, 2013 were $665.3 million, an
increase of $27.0 million or 4.2% over the prior year. The Atlantic Theatres and
the full year inclusion of the results of the four theatres acquired from AMC in
July 2012 contributed $10.4 million and $18.6 million, respectively, to the
increase. Same store revenues decreased 1.6% compared to the prior year due to a
3.3% same store attendance decline. The prior year was a record year for box
office results in North America with film product in 2013 was not as strong as
2012 resulting in the same store attendance and revenue decrease.
Cineplex's BPP for the year ended December 31, 2013 increased $0.18, or 2.0%,
from $8.97 in 2012 to an annual Cineplex record of $9.15. This increase was
primarily due to the increase in revenues from premium-priced product.
Premium-priced offerings accounted for 38.7% of Cineplex's box office revenues
in the year ended December 31, 2013, compared to 30.9% in the prior year period.
The top five films in the year ended December 31, 2013 were all screened in IMAX
and four in 3D (2012 period - five in IMAX and two in 3D).
Cineplex's investment in premium-priced formats over the last five years has
positioned it to take advantage of the price premiums charged for 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 during 2013.
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):
----------------------------------------------------------------------------
Concession revenues Fourth Quarter Full Year
------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Concession revenues $93,294 $86,409 8.0% $350,353 $329,332 6.4%
Attendance (i) 18,872 18,577 1.6% 72,703 71,198 2.1%
Concession revenue per
patron (i) $ 4.94 $ 4.65 6.2% $ 4.82 $ 4.63 4.1%
Same store concession
revenues (i) $85,351 $85,673 -0.4% $322,191 $318,492 1.2%
Same store attendance (i) 17,343 18,367 -5.6% 66,333 68,589 -3.3%
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Concession revenue continuity Fourth Quarter Full Year
Concession Attendance Concession Attendance
----------------------------------------------------------------------------
2012 as reported $ 86,409 18,577 $ 329,332 71,198
Same store attendance change (4,776) (1,024) (10,475) (2,256)
Impact of same store CPP change 4,454 - 14,174 -
New and acquired theatres 7,841 1,510 18,914 4,241
Disposed and closed theatres (634) (191) (1,592) (480)
----------------------------------------------------------------------------
2013 as reported $ 93,294 18,872 $ 350,353 72,703
----------------------------------------------------------------------------
Fourth Quarter
Concession revenues increased $6.9 million, or 8.0% as compared to the prior
year period primarily due to the acquisition of the Atlantic Theatres, which
contributed $6.0 million to concession revenues in the period. CPP increased
from $4.65 in the fourth quarter of 2012 to $4.94 in the same period in 2013, a
6.2% increase and a quarterly record for Cineplex. Higher average transaction
values led to the record concession revenues in the period, as expanded
offerings outside of core concession products are driving higher average order
value. Despite a decline in same-store attendance of 5.6% in the period compared
to the prior year period, same store concession revenues decreased 0.4% as
record CPP mitigated the attendance decline.
Full Year
Concession revenues increased $21.0 million, or 6.4% as compared to the prior
year, due to the 2.1% increase in attendance and the 4.1% increase in CPP. CPP
increased from $4.63 in 2012 to $4.82 in 2013, an annual record for Cineplex,
exceeding the previous record set last year. The Atlantic Theatres contributed
$6.0 million to concession revenues during the period and the impact of the four
theatres acquired from AMC in July 2012, and therefore not fully reflected in
the prior year period, contributed $7.0 million. Same store attendance decreased
3.3% compared to the prior year, however same store concession revenues
increased 1.2% due to the record CPP in 2013 more than offsetting the same store
attendance decline in 2013.
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):
----------------------------------------------------------------------------
Other revenues Fourth Quarter Full Year
------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Media $39,196 $30,801 27.3% $109,581 $ 84,285 30.0%
Games 1,722 1,361 26.5% 7,616 6,379 19.4%
Other 11,303 9,606 17.7% 38,411 34,209 12.3%
----------------------------------------------------------------------------
Total $52,221 $41,768 25.0% $155,608 $124,873 24.6%
----------------------------------------------------------------------------
Fourth Quarter
Other revenues increased 25.0% to $52.2 million in the fourth quarter of 2013
compared to the prior year period. This increase was primarily due to higher
media revenues, which were $39.2 million, up $8.4 million, or 27.3%, when
compared to the prior year period. The increase was due to the newly acquired
CDN, which contributed $8.3 million to media revenues in the period. Cineplex
Media revenues, including pre-show and showtime, exceeded the prior year period
by $2.6 million. While Cineplex sold pre-show and showtime advertising for the
Atlantic Theatres prior to their acquisition, the acquisition benefited the
current period results as Cineplex now retains 100% of the media revenue where
previously only a share was received. The increases were offset by a $2.5
million decrease in CDM revenues due to several large equipment installation
projects completed in the prior year period.
The games revenue increase is primarily due to the addition of two new XSCAPE
entertainment centres in 2013. On January 31, 2012, Cineplex deconsolidated New
Way Sales ("NWS") and merged its operations with the amusement game and vending
assets of Starburst Coin Machines Inc. ("SCM"), to create CSI. Cineplex and SCM
both have a 50% interest in CSI. Cineplex's share of revenues and expenses from
CSI for the periods subsequent to January 31, 2012 are included in the 'Share of
income of joint ventures' line in the statements of operations.
The increase in the other category is primarily due to additional revenues
arising from enhanced guest service initiatives and new business initiatives.
Full Year
Other revenues increased 24.6% from $124.9 million in 2012 to $155.6 million
during 2013. The largest component of this increase was media revenues, which
increased $25.3 million, or 30.0%, from the prior year period. This increase was
primarily due to Cineplex Media revenues, which increased $15.9 million year
over year. Digital out-of-home media revenues contributed $9.4 million to the
increase. CDN contributed $10.9 million to this increase, offset by a $1.6
million decline in CDM revenues due to several large equipment installation
projects completed in the prior year.
The full year of 2013 includes a life-to-date one-time increase to games revenue
of $0.5 million recorded in the first quarter of 2013 due to a change in
accounting policy regarding the recognition of revenue on the sale of XSCAPE
gaming cards, which was substantially offset by the games revenues for the first
quarter of 2012 including the results of NWS for January 2012 ($0.4 million).
The remainder of the games revenue increase is due to the six XSCAPE locations
added since January 1, 2012, two of which were added in 2013. The increase in
the other category is primarily due to higher auditorium rental and screening
revenues as well as additional revenues arising from enhanced guest service
initiatives and new business 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):
----------------------------------------------------------------------------
Film cost Fourth Quarter Full Year
----------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Film cost $91,867 $87,477 5.0% $346,373 $331,281 4.6%
Film cost percentage (i) 51.7% 51.3% 0.4% 52.1% 51.9% 0.2%
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release
----------------------------------------------------------------------------
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 2013 compared to the prior year
period was due to the increase in box office revenue and the impact of the 0.4%
increase in film cost percentage. The increase in film cost percentage is
primarily due to the settlement rate on the top films during the fourth quarter
of 2013 being higher than the average film settlement rate in the 2012 period.
Full Year
The year to date increase in film cost was primarily due to the 4.2% increase in
box office revenues 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 2013 being higher than the average
settlement rate in 2012.
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):
----------------------------------------------------------------------------
Cost of concessions Fourth Quarter Full Year
--------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Concession cost $19,835 $18,077 9.7% $74,693 $68,398 9.2%
Concession cost percentage
(i) 21.3% 20.9% 0.4% 21.3% 20.8% 0.5%
Concession margin per
patron (i) $ 3.89 $ 3.68 5.7% $ 3.79 $ 3.66 3.6%
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release.
----------------------------------------------------------------------------
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 0.4% increase in the
concession cost percentage during the period. The concession margin per patron
increased from $3.68 in the fourth quarter of 2012 to $3.89 in the same period
in 2013, reflecting the impact of the higher CPP during the period.
Full Year
The increase in concession cost during the period was due to the 6.4% increase
in concession revenues and the 0.5% increase in the concession cost percentage
during the period. The concession margin per patron increased from $3.66 in the
2012 period to $3.79 in the current period, reflecting the impact of the higher
CPP during the period.
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):
----------------------------------------------------------------------------
Amortization expenses Fourth Quarter Full Year
----------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Amortization of property,
equipment and leaseholds $15,957 $13,446 18.7% $58,588 $56,244 4.2%
Amortization of intangible
assets and other 3,791 3,522 7.6% 12,302 5,919 107.8%
----------------------------------------------
Amortization expenses as
reported $19,748 $16,968 16.4% $70,890 $62,163 14.0%
----------------------------------------------------------------------------
The quarterly increase in amortization of property, equipment and leaseholds of
$2.5 million is primarily due to the impact of the purchases of equipment and
leasehold improvements relating to assets acquired through acquisitions and new
theatre construction. The year-to-date increase of $2.3 million is due to the
impact of the assets acquired through acquisitions and new theatre construction,
partially offset by certain assets becoming fully amortized in the third quarter
of 2012.
The increase in amortization of intangible assets and other in the fourth
quarter of 2013 and the full year compared to the prior year periods is due to
the amortization of certain trade name assets that are being phased out by
Cineplex. These assets were previously classified as indefinite life assets
however during the fourth quarter of 2012 their classification was changed to
finite life with amortization being recorded over the anticipated rebranding
schedule of the associated theatres. The 2013 periods also include intangible
amortization relating to customer relationships and internally developed
software acquired as part of the EK3 acquisition which closed during the third
quarter of 2013.
Loss (gain) on disposal of assets
The following table shows the movement in the loss (gain) on disposal of assets
during the quarter and the full year (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Loss (gain) on disposal of
assets Fourth Quarter Full Year
----------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Loss (gain) on disposal of
assets $432 $(3,138) NM $4,372 $(2,352) NM
----------------------------------------------------------------------------
During the fourth quarter of 2013, Cineplex recorded a loss of $0.4 million on
the disposal of assets that were sold or otherwise disposed (2012 - gain of $3.1
million due to a gain of $3.7 million recognized on the sale of land, offset by
losses on certain assets that were sold or otherwise disposed of). For the year
ended December 31, 2013, disposal of assets resulted in a loss of $4.4 million
on the disposal of assets that were sold or otherwise disposed, including the
disposition of two properties in Ontario (2012 - gain of $2.4 million due to the
sale of land offset by losses on certain assets that were sold or otherwise
disposed of).
(Gain) on acquisition of business
The gain on acquisition represents the gain recorded on the acquisition of AMC
Ventures Inc., which operated three leased theatres in Ontario and one leased
theatre in Quebec. The gain was revised in the fourth quarter of 2012 based on
the finalization of AMC Ventures Inc.'s final tax return (in thousands of
Canadian dollars):
----------------------------------------------------------------------------
(Gain) on acquisition of business Fourth Quarter Full Year
-----------------------------------------
2013 2012 Change 2013 2012 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
--------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Theatre occupancy expenses $ 48,658 $ 45,498 6.9% $188,388 $174,259 8.1%
Other operating expenses 91,430 75,495 21.1% 297,594 263,571 12.9%
General and administrative
expenses 17,937 15,326 17.0% 65,837 57,707 14.1%
----------------------------------------------------------------------------
Total other costs $158,025 $136,319 15.9% $551,819 $495,537 11.4%
----------------------------------------------------------------------------
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
----------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Rent $32,540 $30,936 5.2% $126,284 $116,586 8.3%
Other occupancy 16,715 15,343 8.9% 65,340 59,628 9.6%
One-time items (i) (597) (781) -23.6% (3,236) (1,955) 65.5%
----------------------------------------------------------------------------
Total $48,658 $45,498 6.9% $188,388 $174,259 8.1%
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
2012 as reported $45,498 $174,259
Impact of new and acquired theatres 3,274 15,850
Impact of disposed theatres (517) (1,082)
Same store rent change (i) 36 315
One-time items 184 (1,281)
Other 183 327
----------------------------------------------------------------------------
2013 as reported $48,658 $188,388
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release
----------------------------------------------------------------------------
Fourth Quarter
Theatre occupancy expenses increased $3.2 million during the fourth quarter of
2013 compared to the prior year period. This increase was primarily due to the
impact of new and acquired theatres net of disposed theatres ($2.8 million, of
which $2.2 million relates to the Atlantic Theatres).
Full Year
The increase in theatre occupancy expenses of $14.1 million for 2013 compared to
the prior year was due to the new and acquired theatres, primarily the four
theatres acquired from AMC in the third quarter of 2012 and the Atlantic
Theatres (net increase of $10.5 million for the AMC theatres and net increase of
$2.2 million for the Atlantic Theatres). This increase was partially offset by
the impact of favourable real estate tax reassessments included in the one-time
items line.
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 expenses Fourth Quarter Full Year
------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Theatre payroll $32,620 $30,863 5.7% $121,087 $115,013 5.3%
Media 14,692 8,769 67.5% 35,083 24,287 44.5%
Other 44,118 35,863 23.0% 141,424 124,271 13.8%
------------------------------------------------
Other operating expenses $91,430 $75,495 21.1% $297,594 $263,571 12.9%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other operating continuity Fourth Quarter Full Year
Other Operating Other Operating
----------------------------------------------------------------------------
2012 as reported $ 75,495 $ 263,571
Impact of new and acquired theatres 5,434 13,749
Impact of disposed theatres (583) (1,661)
Same store payroll change (i) (950) (471)
Marketing change 1,455 724
Media, excluding Cineplex Digital Networks (1,103) 1,571
Cineplex Digital Networks 7,026 9,225
New Way Sales - (299)
New business initiatives 1,447 2,288
Other 3,209 8,897
----------------------------------------------------------------------------
2013 as reported $ 91,430 $ 297,594
----------------------------------------------------------------------------
(i) See 'Non-GAAP Financial Measures' section of this news release
----------------------------------------------------------------------------
Fourth Quarter
Other operating expenses during the fourth quarter of 2013 increased $15.9
million or 21.1% compared to the prior year period. The major components of the
increase were the impact of the newly acquired CDN ($7.0 million), of new and
acquired theatres net of disposed theatres ($4.9 million), higher marketing
costs ($1.5 million), new business initiatives including the Cineplex Store
($1.4 million) and other expenses ($3.2 million, discussed below). These
increases were partially offset by lower media costs ($1.1 million) due to the
prior year period including several large equipment installation projects by
CDM, and lower same-store payroll costs ($0.9 million).
The major movements in the Other category include the following:
-- The increase in 3D attendance due to stronger 3D product and the
additional 178 3D screens added since December 31, 2012 resulted in
higher 3D royalty costs ($0.7 million) as well as contributing to the
higher cost of projector bulbs ($0.5 million) as 3D features require
bulbs with higher output which significantly reduces the life of the
bulbs.
-- Higher card costs for gift cards due to the record sales of Cineplex
gift cards during the period ($0.6 million).
-- Higher IMAX costs related to the higher number of IMAX screens in the
circuit in the period ($0.3 million).
-- Higher same-store utility costs ($0.3 million) due in part to the cold
temperatures across parts of the country during the period.
-- Higher credit card service fees due to higher sales volumes ($0.2
million).
Total theatre payroll costs accounted for 35.7% of total operating expenses
during the fourth quarter of 2013 as compared to 40.9% for the same period one
year earlier.
Full Year
For the year ended December 31, 2013, other operating expenses increased $34.0
million. The impact of new and acquired net of disposed theatres was a $12.1
million increase to the category primarily due to the four theatres acquired
from AMC which accounted for $5.2 million of the increase and the Atlantic
Theatres which accounted for $3.6 million of the increase. Cost increases
included higher media costs due to the higher media sales during the year ($10.8
million, with CDN contributing $9.2 million to this increase), new business
initiatives including the Cineplex Store ($2.3 million), higher marketing
expenses ($0.7 million), and a $8.9 million increase in the Other category
(discussed below). These increases were partially offset by lower same-store
payroll expenses ($0.5 million).
The major movements in the Other category include the following:
-- The increase in 3D attendance due to stronger 3D product and the
additional 178 3D screens added since December 31, 2012 resulted in
higher 3D royalty costs ($2.2 million) as well as contributing to the
higher cost of projector bulbs ($1.3 million) as 3D features require
bulbs with higher output which significantly reduces the life of the
bulbs.
-- Higher same-store utility costs during 2013 compared to the prior year
period ($1.1 million).
-- Higher credit card service fees due to higher sales volumes during the
year ($0.8 million).
-- Higher card costs for gift cards due to record sales of Cineplex gift
cards during the period ($0.8 million).
-- Costs relating to converting Cineplex's theatre circuit to energy-
efficient lighting systems ($0.6 million).
Total theatre payroll accounted for 40.7% of total other operating expenses in
the 2013 period, compared to 43.6% in the prior year period.
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
----------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
G&A excluding LTIP and option
plan expense $13,271 $12,717 4.4% $49,928 $47,194 5.8%
LTIP (i) 4,263 2,176 95.9% 14,321 8,442 69.6%
Option plan 403 433 -6.9% 1,588 2,071 -23.3%
----------------------------------------------
G&A expenses as reported $17,937 $15,326 17.0% $65,837 $57,707 14.1%
----------------------------------------------------------------------------
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 $2.6 million during the fourth quarter of 2013 compared
to the prior year period, due to a $2.1 million increase in LTIP expenses.
Cineplex's Share price increased $5.85 per Share, or 15.3%, during the quarter
and was the main contributor to the increase in LTIP expense. The remainder of
the increase was due in part to higher head office payroll due to new business
initiatives resulting in additional headcount.
Full Year
G&A expenses for 2013 increased $8.1 million compared to the prior year period,
primarily due to the $5.9 million increase in LTIP expenses, primarily due to
the Share price increase of $12.23 per Share, or 38.4%, during 2013. The
remainder of the increase was due in part to head office payroll expenses which
increased due to new business initiatives resulting in additional headcount.
Share of income of joint ventures
Cineplex's joint ventures in the 2013 period include its 50% share of one
theatre in Quebec and one IMAX screen in Ontario, its 78.2% interest in CDCP and
its 50% interest in CSI. For the 2012 period, Cineplex's joint ventures included
one theatre in Quebec, one IMAX screen in Ontario, its 78.2% interest in CDCP
and its 50% interest in CSI following its formation on January 31, 2012. The
following table highlights the components of share of income of joint ventures
during the quarter and the full year (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Share of income of joint
ventures Fourth Quarter Full Year
------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Share of (income) of CDCP $(688) $ (834) -17.5% $(2,336) $(2,222) 5.1%
Share of (income) of CSI (19) (170) -88.8% (1,254) (932) 34.5%
Share of (income) loss of
other joint ventures (139) 2 NM (260) (109) 138.5%
----------------------------------------------------------------------------
Total (income) of joint
ventures $(846) $(1,002) -15.6% $(3,850) $(3,263) 18.0%
----------------------------------------------------------------------------
Fourth Quarter
The decrease from income of $1.0 million in the fourth quarter of 2012 to income
of $0.8 million in the current period is due to a decreases in income from CSI
and CDCP, partially offset by income from the theatre joint ventures.
Under IFRS 11, Cineplex's 50% interest in SCENE LP is classified as a joint
operation and not a joint venture resulting in Cineplex recognizing its share of
the assets, liabilities, revenues and expenses of SCENE in its consolidated
financial statements on a line-by-line basis.
Full Year
The increase from income of $3.3 million in the 2012 period to income of $3.9
million in the current year is due to income increases in all of Cineplex's
joint ventures, with the largest dollar increase coming from CSI.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(see "Non-GAAP Financial Measures" section of this news release)
The following table presents EBITDA and adjusted EBITDA for the three months and
year ended December 31, 2013 as compared to the three months and year ended
December 31, 2012 (expressed in thousands of Canadian dollars, except adjusted
EBITDA margin):
----------------------------------------------------------------------------
EBITDA Fourth Quarter Full Year
----------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
EBITDA $53,894 $61,898 -12.9% $197,860 $227,652 -13.1%
Adjusted EBITDA $54,144 $57,507 -5.8% $202,441 $200,484 1.0%
Adjusted EBITDA margin 16.8% 19.3% -2.5% 17.3% 18.4% -1.1%
----------------------------------------------------------------------------
Adjusted EBITDA for the fourth quarter of 2013 decreased $3.4 million, or 5.8%,
as compared to the prior year period. The decrease as compared to the prior year
period was primarily due higher LTIP costs of $2.1 million due to the increase
in Cineplex's Share price during the period. Adjusted EBITDA margin, calculated
as adjusted EBITDA divided by total revenues, was 16.8% in the current period,
down from 19.3% in the prior year period.
Adjusted EBITDA for the year ended December 31, 2013 was $202.4 million compared
to $200.5 million in the prior year period. This increase was due to the strong
media revenues recorded throughout 2013 compared to the prior year, as well as
impact of CDN and the Atlantic Theatres, partially offset by higher LTIP costs
of $5.9 million.
ADJUSTED FREE CASH FLOW
For the fourth quarter of 2013, adjusted free cash flow per common share of
Cineplex was $0.5769 as compared to $0.5403 in the prior year period. The
declared dividends per common share of Cineplex were $0.3600 in the fourth
quarter of 2013 and $0.3375 in the prior year period. During the year ended
December 31, 2013, Cineplex generated adjusted free cash flow per Share of
$2.4580, compared to $2.0785 in the prior year period. Cineplex declared
dividends per Share of $1.4100 and $1.3300, respectively, in each period. The
payout ratios for these periods were approximately 57.4% and 64.0%,
respectively. Adjusted free cash flow per common share and the payout ratios for
the 2013 periods are positively impacted by Cineplex's use of loss carryforwards
acquired through Cineplex's acquisition of AMC Ventures Inc. in 2012, resulting
in Cineplex's cash income taxes in 2013 being substantially reduced.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted free cash flow are not measures recognized by 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. 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.
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, the share of income or loss of the Canadian
Digital Cinema Partnership ("CDCP") and depreciation, amortization, interest and
taxes of Cineplex's other joint ventures. Adjusted EBITDA margin is calculated
by dividing adjusted EBITDA by total revenues.
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.
For a detailed reconciliation of net income to EBITDA and adjusted EBITDA and
from cash used in or provided by operating activities to adjusted free cash
flow, please refer to Cineplex's management's discussion and analysis filed on
www.sedar.com.
Earnings per Share Metrics
The three months and year ended December 31, 2012 include a gain on the
acquisition of four theatres acquired from AMC Entertainment Inc. of $0.9
million and $24.8 million, respectively. Cineplex has presented basic and
diluted earnings per share net of gains on acquisitions to provide a more
comparable earnings per share metric between the current and prior year periods.
In the non-GAAP measure, earnings is defined as net income less the gain on
acquisition of business.
Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office revenue and
concession revenue such as BPP, CPP, BPP excluding premium priced product, and
concession margin per patron, as these are key measures used by investors to
value and assess Cineplex's performance, and are widely used in the theatre
exhibition industry. Management of Cineplex defines these metrics as follows:
Attendance: Attendance is calculated as the total number of paying patrons that
frequent Cineplex's theatres during the period.
BPP: Calculated as total box office revenues divided by total paid attendance
for the period.
BPP excluding premium priced product: Calculated as total box office revenues
for the period, less box office revenues from 3D, UltraAVX, VIP and IMAX
product; divided by total paid attendance for the period, less paid attendance
for 3D, UltraAVX, VIP and IMAX product.
CPP: Calculated as total concession revenues divided by total paid attendance
for the period.
Premium priced product: Defined as 3D, UltraAVX, IMAX and VIP film product.
Concession margin per patron: Calculated as total concession revenues less total
concession cost, divided by attendance for the period.
Same Store Analysis
Cineplex reviews and reports same store metrics relating to box office revenues,
concession revenues, rent expense and payroll expense, as these measures are
widely used in the theatre exhibition industry as well as other retail
industries.
Same store metrics are calculated by removing the results for all theatres that
have been opened, acquired, closed or otherwise disposed of during the periods.
For the three months ended December 31, 2013, the impact of the 30 locations
that have been opened or acquired and two locations that have been closed or
otherwise disposed of have been excluded, resulting in 129 theatres being
included in the same store metrics. For the year ended December 31, 2013, the
impact of the 35 locations that have been opened or acquired and the four
locations that have been closed or otherwise disposed of have been excluded,
resulting in 122 theatres being included in the same store metrics.
Cost of sales percentages
Cineplex reviews and reports cost of sales percentages for its two largest
revenue sources, box office revenues and concession revenues as these measures
are widely used in the theatre exhibition industry. These measures are reported
as film cost percentage and concession cost percentage, respectively, and are
calculated as follows:
Film cost percentage: Calculated as total film cost expense divided by total box
office revenues for the period.
Concession cost percentage: Calculated as total concession costs divided by
total concession revenues for the period.
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, Cineplex Digital
Networks, 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 161 theatres with
1,632 screens from coast to coast, through the following theatre brands:
Cineplex Odeon, SilverCity, Galaxy Cinemas, Scotiabank Theatres, Cineplex
Cinemas, and Cineplex VIP Cinemas. 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:
Tuesday, February 11, 2014 10:00 a.m. Eastern Time
In order to participate in the conference call, please dial 416-644-3414 or
outside of Toronto dial 1-800-814-4858 at least five to ten minutes prior to
10:00 a.m. Eastern Time. Please quote the conference ID 4665018 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 4665018#. The
replay will begin at 12:00 p.m. Eastern Time on Tuesday, February 11,
2014 and end at 11:59 p.m. Eastern Time on Tuesday, February 18, 2014.
-- 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,
2013 2012
Assets
Current assets
Cash and cash equivalents $ 44,140 $ 48,665
Trade and other receivables 100,891 77,278
Inventories 7,234 5,193
Prepaid expenses and other current assets 6,838 3,047
------------------------------
159,103 134,183
Non-current assets
Property, equipment and leaseholds 459,112 418,498
Deferred income taxes 17,635 53,528
Fair value of interest rate swap agreements 92 -
Interests in joint ventures 44,359 41,623
Intangible assets 113,601 78,460
Goodwill 797,476 608,929
------------------------------
$1,591,378 $1,335,221
------------------------------
------------------------------
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 157,333 $ 129,499
Share-based compensation 12,151 -
Dividends payable 7,552 7,063
Income taxes payable 2,656 13,654
Deferred revenue 136,373 106,253
Finance lease obligations 2,394 2,222
Fair value of interest rate swap agreements 635 513
------------------------------
319,094 259,204
------------------------------
Non-current liabilities
Share-based compensation 15,622 12,223
Long-term debt 217,151 148,066
Fair value of interest rate swap agreements - 273
Finance lease obligations 17,722 20,548
Post-employment benefit obligations 6,522 6,274
Other liabilities 170,125 141,319
Convertible debentures 96,870 -
------------------------------
524,012 328,703
------------------------------
Total liabilities 843,106 587,907
------------------------------
Equity
Share capital 853,411 847,235
Deficit (107,323) (102,547)
Accumulated other comprehensive loss (1,715) (1,142)
Contributed surplus 3,899 3,768
------------------------------
748,272 747,314
------------------------------
$1,591,378 $1,335,221
------------------------------
------------------------------
Cineplex Inc.
Consolidated Statements of Operations
(expressed in thousands of Canadian dollars, except net income per share)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
--------------------------------------------
2013 2012 2013 2012
Revenues
Box office $177,692 $170,524 $ 665,306 $ 638,296
Concessions 93,294 86,409 350,353 329,332
Other 52,221 41,768 155,608 124,873
--------------------------------------------
323,207 298,701 1,171,267 1,092,501
--------------------------------------------
Expenses
Film cost 91,867 87,477 346,373 331,281
Cost of concessions 19,835 18,077 74,693 68,398
Depreciation and amortization 19,748 16,968 70,890 62,163
Loss (gain) on disposal of
assets 432 (3,138) 4,372 (2,352)
(Gain) on acquisition of
business - (930) - (24,752)
Other costs 158,025 136,319 551,819 495,537
Share of income of joint
ventures (846) (1,002) (3,850) (3,263)
Interest expense 4,774 2,090 10,743 12,585
Interest income (83) (58) (307) (205)
--------------------------------------------
293,752 255,803 1,054,733 939,392
--------------------------------------------
Income before income taxes 29,455 42,898 116,534 153,109
--------------------------------------------
Provision for income taxes
Current 1,077 8,795 3,608 31,436
Deferred 8,210 1,399 29,369 1,189
--------------------------------------------
9,287 10,194 32,977 32,625
--------------------------------------------
Net income $ 20,168 $ 32,704 $ 83,557 $ 120,484
--------------------------------------------
--------------------------------------------
Basic net income per share $ 0.32 $ 0.53 $ 1.33 $ 1.98
Diluted net income per share $ 0.32 $ 0.52 $ 1.32 $ 1.97
Cineplex Inc.
Consolidated Statements of Comprehensive Income
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
-------------------------------------
2013 2012 2013 2012
Net income $20,168 $32,704 $83,557 $120,484
-------------------------------------
Other comprehensive (loss) income
Items that will be reclassified
subsequently to net income:
(Loss) income on hedging instruments (718) 29 (782) 2,486
Associated deferred income taxes
recovery (expense) (177) (83) 209 (905)
Items that will not be reclassified to
net income:
Actuarial gains (losses) of post-
employment benefit obligations 388 (190) 388 (190)
Associated deferred income taxes
recovery (102) 50 (102) 50
-------------------------------------
Other comprehensive (loss) income (609) (194) (287) 1,441
-------------------------------------
Comprehensive income $19,559 $32,510 $83,270 $121,925
-------------------------------------
-------------------------------------
Cineplex Inc.
Consolidated Statements of Changes in Equity
(expressed in thousands of Canadian dollars)
For the years ended December 31, 2013 and 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
Share Contributed comprehensive
capital surplus loss Deficit Total
Balance - January
1, 2013 $847,235 $ 3,768 $(1,142) $(102,547) $747,314
Net income - - - 83,557 83,557
Other comprehensive
income - - (573) 286 (287)
---------------------------------------------------------
Total comprehensive
income (573) 83,843 83,270
Dividends declared - - - (88,619) (88,619)
Long-term incentive
plan obligation 248 - - - 248
Issuance of
convertible
debentures 4,471 - - - 4,471
Share option
expense - 1,588 - - 1,588
Issuance of shares
on exercise of
options 1,457 (1,457) - - -
---------------------------------------------------------
Balance - December
31, 2013 $853,411 $ 3,899 $(1,715) $(107,323) $748,272
---------------------------------------------------------
---------------------------------------------------------
Balance - January
1, 2012 $764,801 $ - $(2,723) $(140,469) $621,609
Share option
liabilities
reclassified - 6,850 - - 6,850
Net income - - - 120,484 120,484
Other comprehensive
income - - 1,581 (140) 1,441
---------------------------------------------------------
Total comprehensive
income 1,581 120,344 121,925
Dividends declared - - - (81,572) (81,572)
Long-term incentive
plan obligation (4,818) - - - (4,818)
Long-term incentive
plan shares 6,471 - - - 6,471
Share option
expense - 2,071 - - 2,071
Issuance of shares
on exercise of
options 5,873 (5,372) - - 501
Issuance of shares
on conversion of
debentures 75,844 219 - - 76,063
Issuance of shares
for cash - - - - -
Shares repurchased
and cancelled (936) - - (850) (1,786)
---------------------------------------------------------
Balance - December
31, 2012 $847,235 $ 3,768 $(1,142) $(102,547) $747,314
---------------------------------------------------------
---------------------------------------------------------
Cineplex Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
----------------------------------------
2013 2012 2013 2012
Cash provided by (used in)
Operating activities
Net income $ 20,168 $ 32,704 $ 83,557 $120,484
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization of
property, equipment and
leaseholds, and intangible assets 19,748 16,968 70,890 62,163
Amortization of tenant
inducements, rent averaging
liabilities and fair value lease
contract liabilities (1,743) (1,432) (6,735) (5,033)
Accretion of debt issuance costs
and other non-cash interest 1,116 143 2,001 562
Loss (gain) on disposal of assets 432 (3,138) 4,372 (2,352)
(Gain) on acquisition of business - (930) - (24,752)
Deferred income taxes 8,210 1,399 29,369 1,189
Interest rate swap agreements -
non-cash interest (158) (295) (939) 1,485
Non-cash share-based compensation 393 433 1,826 2,108
Accretion of convertible
debentures 274 24 274 323
Net change in interests in joint
ventures (297) (639) (2,686) 4,356
Tenant inducements 500 1,643 5,417 7,615
Changes in operating assets and
liabilities 85,812 62,706 37,302 7,486
----------------------------------------
Net cash provided by operating
activities 134,455 109,586 224,648 175,634
----------------------------------------
Investing activities
Proceeds from sale of assets 1,451 2,550 3,573 3,683
Purchases of property, equipment and
leaseholds (15,845) (22,457) (62,410) (72,242)
Acquisition of business, net of cash (195,70 (238,33
acquired 4) - 8) (2,811)
Deposit for business acquisition 5,000 - - -
Net cash received from (invested in)
CDCP 535 (190) (50) (438)
----------------------------------------
Net cash used in investing (204,56 (297,22
activities 3) (20,097) 5) (71,808)
----------------------------------------
Financing activities
Dividends paid (22,632) (20,955) (88,130) (80,794)
Borrowings (repayments) under credit
facility, net 24,000 (20,000) 70,000 (20,000)
Repayment of debt acquired with
business - - (12,875) -
Payments under finance leases (615) (531) (2,277) (2,104)
Proceeds from issuance of shares - - - 501
Net Proceeds from issuance of
convertible debentures 103,469 - 103,469 -
Deferred financing fees (2,135) - (2,135) -
Shares repurchased and cancelled - - - (1,786)
Repayment of convertible debentures
at maturity - (1,123) - (1,123)
----------------------------------------
Net cash provided by (used in) (105,30
financing activities 102,087 (42,609) 68,052 6)
----------------------------------------
Increase (decrease) in cash and cash
equivalents 31,979 46,880 (4,525) (1,480)
Cash and cash equivalents -
Beginning of year 12,161 1,785 48,665 50,145
----------------------------------------
Cash and cash equivalents - End of
year $ 44,140 $ 48,665 $ 44,140 $ 48,665
----------------------------------------
----------------------------------------
Supplemental information
Cash paid for interest $ 3,626 $ 2,866 $ 9,421 $ 10,293
Cash paid for income taxes $ 905 $ 5,281 $ 14,148 $ 35,268
Cineplex Inc.
Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation to Adjusted EBITDA
----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
2013 2012 2013 2012
--------------------------------------
Net income $20,168 $32,704 $ 83,557 $120,484
Depreciation and amortization 19,748 16,968 70,890 62,163
Interest expense 4,774 2,090 10,743 12,585
Interest income (83) (58) (307) (205)
Current income tax expense 1,077 8,795 3,608 31,436
Deferred income tax expense 8,210 1,399 29,369 1,189
--------------------------------------
EBITDA $53,894 $61,898 $197,860 $227,652
Loss (gain) on disposal of assets 432 (3,138) 4,372 (2,352)
(Gain) on acquisition of business - (930) - (24,752)
CDCP equity (income) loss (i) (688) (834) (2,336) (2,222)
Depreciation and amortization - joint
ventures (ii) 518 440 2,139 1,822
Joint venture taxes and interest (ii) (12) 71 406 336
--------------------------------------
Adjusted EBITDA $54,144 $57,507 $202,441 $200,484
----------------------------------------------------------------------------
i. CDCP equity income 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
--------------------------------------------------
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Theatre occupancy expenses $ 48,658 $ 45,498 6.9% $188,388 $174,259 8.1%
Other operating expenses 91,430 75,495 21.1% 297,594 263,571 12.9%
General and administrative
expenses 17,937 15,326 17.0% 65,837 57,707 14.1%
--------------------------------------------------
Total other costs $158,025 $136,319 15.9% $551,819 $495,537 11.4%
----------------------------------------------------------------------------
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 Year ended
December 31, December 31,
2013 2012 2013 2012
----------------------------------------------------
Cash provided by
operating activities $ 134,455 $ 109,586 $ 224,648 $ 175,634
Less: Total capital
expenditures net of
proceeds on sale of
assets (14,394) (19,907) (58,837) (68,559)
----------------------------------------------------
Standardized free cash
flow 120,061 89,679 165,811 107,075
Add/(Less):
Changes in operating
assets and liabilities
(i) (85,812) (62,706) (37,302) (7,486)
Changes in operating
assets and liabilities
of joint ventures (i) (549) (363) (1,164) (7,619)
Tenant inducements (ii) (500) (1,643) (5,417) (7,615)
Principal component of
finance lease
obligations (615) (531) (2,277) (2,104)
Growth capital
expenditures and other
(iii) 2,561 8,665 31,011 41,959
Share of income of joint
ventures, net of non-
cash depreciation (iv) 593 661 3,855 3,152
Net cash invested in
CDCP (iv) 535 (190) (50) (438)
----------------------------------------------------
Adjusted free cash flow $ 36,274 $ 33,572 $ 154,467 $ 126,924
----------------------------------------------------
----------------------------------------------------
Average number of Shares
outstanding 62,875,151 62,137,513 62,843,248 61,065,540
Adjusted free cash flow
per Share $ 0.5769 $ 0.5403 $ 2.4580 $ 2.0785
----------------------------------------------------------------------------
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 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 Entertainment
Gord Nelson
Chief Financial Officer
(416) 323-6602
Cineplex Entertainment
Pat Marshall
Vice President Communications and Investor Relations
(416) 323-6648
(TSXV:SCM)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
(TSXV:SCM)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
