Cinram International Income Fund News
Cinram Reports First Quarter 2008 Results
"Our first quarter results were consistent with our expectations given the accelerated seasonality of our business," said Cinram chief executive officer
The Fund reported a net loss of
Segment revenue
First quarter home video revenue (which includes replication and distribution of DVDs and high-definition discs) was down 19 per cent to
————————————————————————————————————- Three months ended March 31 (in thousands of US$) 2008 2007 ————————————————————————————————————- Home Video $249,033 61% $307,506 69% CD 47,432 12% 54,251 12% Printing 51,191 13% 52,631 12% Video Game 21,829 5% - - Other 37,163 9% 29,558 7% ————————————————————————————————————- $406,648 100% $443,946 100% ————————————————————————————————————- ————————————————————————————————————-
CD segment revenue (which includes replication and distribution of CDs) decreased 13 per cent in the first quarter to
Cinram reported Video Game segment revenue of
Revenue from our Other segment (which includes Giant Merchandising, the new handset distribution business and revenue from the acquisition of Vision Worldwide Management LLC (Vision)) increased to
Geographic revenue
First quarter North American revenue was down 16 per cent to
European revenue increased 14 per cent in the first quarter to
Other financial highlights
Gross profit for the quarter ended
Balance sheet and liquidity
The Fund had cash and equivalents on hand of
Unit data
For the three-month period ended
Reconciliation of EBITA and EBIT to net earnings (loss) ————————————————————————————————————- Three months ended March 31 (unaudited, in thousands of U.S. dollars) 2008 2007 ————————————————————————————————————- EBITA excluding unusual items $42,709 $70,601 ————————————————————————————————————- Unusual items 3,371 1,020 ————————————————————————————————————- EBITA(1) $39,338 $69,581 ————————————————————————————————————- Amortization of property, plant and equipment 26,907 35,336 Amortization of intangible assets 10,600 16,227 ————————————————————————————————————- EBIT(2) $1,831 $18,018 ————————————————————————————————————- Interest expense 12,498 12,557 Foreign exchange gain (3,760) (496) Investment income (646) (1,615) Income taxes (recovery) (2,874) 400 ————————————————————————————————————- Net (loss) earnings $(3,387) $7,172 ————————————————————————————————————- (1) EBITA is defined herein as earnings before interest expense, investment income, income taxes, amortization and foreign exchange gain. It is a standard measure that is commonly reported and widely used in the industry to assist in understanding and comparing operating results. EBITA is not a defined term under generally accepted accounting principles (GAAP). Accordingly, this measure should not be considered as a substitute or alternative for net earnings or cash flow, in each case as determined in accordance with GAAP. See reconciliation of EBITA to net earnings under GAAP as found in the table above. (2) EBIT is defined herein as earnings before interest expense, investment income, foreign exchange gain and income taxes, and is a standard measure that is commonly reported and widely used in the industry to assist in understanding and comparing operating results. EBIT is not a defined term under GAAP. Accordingly, this measure should not be considered as a substitute or alternative for net earnings or cash flow, in each case as determined in accordance with GAAP. See reconciliation of EBIT to net earnings under GAAP as found in the table above. May 7 conference call and webcast
Cinram's management team will host a conference call to discuss its results on
Cinram International Income Fund will be holding its annual meeting of unitholders at
About Cinram
Cinram International Inc., an indirect, wholly-owned subsidiary of the Fund, is the world's largest provider of pre-recorded multimedia products and related logistics services. With facilities in
Certain statements included in this release constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or results of the multimedia duplication/replication industry, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, impact the demand for the Fund's products and services; multimedia duplication/replication industry conditions and capacity; the ability of the Fund to implement its business strategy; the Fund's ability to retain major customers; the Fund's ability to invest successfully in new technologies and other factors which are described in the Fund's filings with the securities commissions.
INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) ————————————————————————————————————- March 31 December 31 2008 2007 (unaudited) ————————————————————————————————————- ASSETS Current assets: Cash and cash equivalents $ 130,189 $ 68,406 Accounts receivable 360,192 588,551 Inventories 48,835 42,822 Income taxes receivable 38,473 21,708 Prepaid expenses 23,310 32,478 Future income taxes 18,853 19,337 ————————————————————————————————————- 619,852 773,302 Property, plant and equipment 454,235 463,374 Goodwill 53,796 55,326 Intangible assets 129,556 137,722 Other assets 11,272 11,945 Future income taxes 1,977 2,012 ————————————————————————————————————- $ 1,270,688 $ 1,443,681 ————————————————————————————————————- ————————————————————————————————————- LIABILITIES AND UNITHOLDERS' EQUITY Current liabilities: Bank indebtedness $ - $ 27,599 Accounts payable 141,738 233,902 Accrued liabilities 314,591 364,609 Distributions payable - 9,488 Income taxes payable 9,458 9,485 Current portion of long-term debt 6,750 6,750 Current portion of obligations under capital leases 2,493 2,462 ————————————————————————————————————- 475,030 654,295 Long-term debt 650,666 651,778 Obligations under capital leases 5,814 6,187 Other long-term liabilities 32,093 30,986 Derivative instruments 35,305 22,495 Future income taxes 9,815 7,870 Unitholders' equity: Fund units 181,350 181,660 Exchangeable limited partnership units 194 298 Contributed surplus 87 - Deficit (227,556) (223,854) Accumulated other comprehensive income 107,890 111,966 ————————————————————————————————————- 61,965 70,070 ————————————————————————————————————- $ 1,270,688 $ 1,443,681 ————————————————————————————————————- ————————————————————————————————————- INTERIM CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT) (unaudited, in thousands of U.S. dollars, except per unit/exchangeable LP unit amounts) ————————————————————————————————————- Three months ended March 31 2008 2007 ————————————————————————————————————- Revenue $ 406,648 $ 443,946 Cost of goods sold 345,620 367,405 ————————————————————————————————————- Gross profit 61,028 76,541 Selling, general and administrative expenses 45,226 41,276 Amortization of intangible assets 10,600 16,227 Unusual items 3,371 1,020 ————————————————————————————————————- Earnings before the undernoted 1,831 18,018 Interest on long-term debt 11,731 12,272 Other interest 767 285 Foreign exchange gain (3,760) (496) Investment income (646) (1,615) ————————————————————————————————————- Earnings (loss) before income taxes (6,261) 7,572 ————————————————————————————————————- Income taxes (recovery) (2,874) 400 ————————————————————————————————————- Net earnings (loss) (3,387) 7,172 Retained earnings (deficit), beginning of period as previously reported (223,854) 259,876 Repurchase of units (315) - Distributions declared - (40,722) ————————————————————————————————————- Retained earnings (deficit), end of period $ (227,556) $ 226,326 ————————————————————————————————————- ————————————————————————————————————- Earnings (loss) per unit: Basic $ (0.06) $ 0.12 Diluted (0.06) 0.12 ————————————————————————————————————- ————————————————————————————————————- Weighted average number of units and exchangeable LP units outstanding, (in thousands): Basic 57,115 58,358 Diluted 57,115 58,411 ————————————————————————————————————- ————————————————————————————————————- INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited, in thousands of U.S. dollars) ————————————————————————————————————- Three months ended March 31 2008 2007 ————————————————————————————————————- Net earnings (loss) for the period $ (3,387) $ 7,172 Other comprehensive income, net of tax: Unrealized gains on translating financial statements of self-sustaining foreign operations 18,172 159 Gain (loss) on hedges of unrealized foreign currency translation gains (9,904) 1,892 Partial release of cumulative translation adjustment 171 - ————————————————————————————————————- Unrealized foreign exchange translation gains, net of hedging activities 8,439 2,051 Net unrealized loss on derivatives designated as cash flow hedges (12,514) (1,546) ————————————————————————————————————- Other comprehensive income (loss) (4,075) 505 ————————————————————————————————————- Comprehensive income (loss) $ (7,462) $ 7,677 ————————————————————————————————————- ————————————————————————————————————- INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, In thousands of U.S. dollars) ————————————————————————————————————- Three months ended March 31 2008 2007 ————————————————————————————————————- Cash provided by (used in): Operating Activities: Net earnings (loss) $ (3,387) $ 7,172 Items not involving cash: Amortization 37,507 51,563 Future income taxes 2,464 (1,557) Release of cumulative translation adjustment 171 - Non-cash interest expense 444 297 Other 290 (24) Change in non-cash operating working capital 69,083 61,957 ————————————————————————————————————- 106,572 119,408 Financing Activities: Transaction costs - (2,414) Repayment of long-term debt and bank indebtedness (28,311) (3,608) Decrease in obligations under capital leases (343) (169) Issuance of units - 93 Repurchase of units (730) - Distributions paid (9,246) (40,722) ————————————————————————————————————- (38,630) (46,820) Investing Activities: Purchase of property, plant and equipment (11,984) (13,969) Proceeds on disposition of property, plant and equipment 496 53 Decrease (increase) in other assets 673 (14,507) Decrease in other long-term liabilities 1,107 182 ————————————————————————————————————- (9,708) (28,241) Foreign currency translation gain on cash held in foreign currencies 3,549 312 ————————————————————————————————————- Increase in cash and cash equivalents 61,783 44,659 Cash and cash equivalents, beginning of period 68,406 152,681 ————————————————————————————————————- Cash and cash equivalents, end of period $ 130,189 $ 197,340 ————————————————————————————————————- ————————————————————————————————————- Supplemental cash flow information: Interest paid $ 12,435 $ 12,423 Income taxes paid 11,549 11,274 ————————————————————————————————————- ————————————————————————————————————-
SOURCE Cinram International Income Fund
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