News Column

Cineplex Inc. Reports Second Quarter Results

August 6, 2014

TORONTO, ONTARIO--(Marketwired - Aug. 6, 2014) - Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for the three and six months ended June 30, 2014. Second Quarter Results ---------------------------------------------------------------------------- Period over Period Change 2014 2013 (i) ---------------------------------------------------------------------------- Total revenues $323.5 million$301.6 million 7.2% ---------------------------------------------------------------------------- Attendance 19.3 million 18.6 million 3.6% ---------------------------------------------------------------------------- Net income $ 23.2 million$ 28.5 million -18.7% ---------------------------------------------------------------------------- Box office revenues per patron ("BPP") (ii) $ 9.40 $ 9.36 0.4% ---------------------------------------------------------------------------- Concession revenues per patron ("CPP") (ii) $ 5.08 $ 4.81 5.6% ---------------------------------------------------------------------------- Adjusted EBITDA (ii) $ 59.4 million$ 58.7 million 1.2% ---------------------------------------------------------------------------- Adjusted EBITDA margin (ii) 18.4% 19.5% -1.1% ---------------------------------------------------------------------------- Adjusted free cash flow per common share of Cineplex ("Share") (ii) $ 0.7734$ 0.7347 5.3% ---------------------------------------------------------------------------- Earnings per Share ("EPS") - basic $ 0.37 $ 0.45 -17.8% ---------------------------------------------------------------------------- EPS - diluted $ 0.37 $ 0.45 -17.8% ----------------------------------------------------------------------------



Year to Date Results

---------------------------------------------------------------------------- Period over Period Change 2014 2013 (ii) ---------------------------------------------------------------------------- Total Revenues $603.5 million$549.7 million 9.8% ---------------------------------------------------------------------------- Attendance 36.6 million 34.8 million 5.0% ---------------------------------------------------------------------------- Net Income $ 28.3 million$ 37.4 million -24.3% ---------------------------------------------------------------------------- BPP (ii) $ 9.23 $ 9.18 0.5% ---------------------------------------------------------------------------- CPP (ii) $ 5.06 $ 4.76 6.3% ---------------------------------------------------------------------------- Adjusted EBITDA (ii) $ 90.3 million$ 90.4 million -0.1% ---------------------------------------------------------------------------- Adjusted EBITDA Margin (ii) 15.0% 16.4% -1.4% ---------------------------------------------------------------------------- Adjusted Free Cash Flow per Share (ii) $ 1.0656$ 1.1186 -4.7% ---------------------------------------------------------------------------- EPS - Basic $ 0.45 $ 0.60 -25.0% ---------------------------------------------------------------------------- EPS - Diluted $ 0.45 $ 0.59 -23.7% ---------------------------------------------------------------------------- i. Period over period change calculated based on thousands of dollars except percentage and per share values. Changes in percentage amounts are calculated as 2014 value less 2013 value. ii. Adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flow per common share of Cineplex, 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 measures section at the end of this news release.



"Total revenue for the second quarter of 2014 increased 7.2%, or $21.9 million compared to the prior year, due largely to the 2013 acquisitions of 24 Atlantic theatres and digital signage company Cineplex Digital Networks," said Ellis Jacob, President and CEO, Cineplex Entertainment. "The box office was impacted by the underperformance of a number of big summer titles and the shifting of release dates on certain films which resulted in a same store decrease in box office revenues of 4.2%, compared to the prior year quarter."

"Media revenues increased 17.6%, to $31.0 million primarily as a result of the acquisition of Cineplex Digital Networks. New second quarter records were established for BPP of $9.40 and CPP of $5.08. The CPP of $5.08 was a new all-time record. Food service revenues continued to be strong, increasing 9.3% to $98.0 million. Adjusted EBITDA increased 1.2% to $59.4 million as compared to the same period last year."

"While box office revenues fluctuate as a result of the product being released during each quarter, we continue to focus on diversification in related businesses including media, digital commerce, gaming, food service and alternative programming to offset the variability of our earnings. Our SCENE loyalty program added 200,000 members to reach 5.8 million during the quarter, we announced a partnership with Oxford Properties Group to create North America's first place-based digital ecosystem in ten high-profile shopping centres across Canada, and we launched a new digital commerce platform for CineplexStore."

KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2014

During the second quarter of 2014, the board of directors of Cineplex (the "Board") announced a monthly dividend increase of 4.2% to $0.1250 per Share ($1.50 on an annual basis) up from $0.1200 per Share ($1.44 on an annual basis) effective with the May 2014 dividend.

The following describes certain key business initiatives and results undertaken and achieved during the second quarter of 2014 in each of Cineplex's core business areas:

THEATRE EXHIBITION

-- Reported second quarter box office revenues of $181.4 million, an increase of $7.0 million over the $174.4 million reported in the prior year period due to the inclusion of the Atlantic Theatres. -- BPP was $9.40 for the period, a $0.04 (0.4%) increase from the prior year period. -- Opened Cineplex Cinemas Manning Town Centre in Edmonton, Alberta featuring ten auditoriums including one UltraAVX auditorium during the period. -- Opened Cineplex's popular VIP Cinema concept at Cineplex Cinemas Yonge Dundas and VIP, which includes five VIP auditoriums and a licensed lounge.



MERCHANDISING

-- Reported second quarter food service revenues of $98.0 million, an increase of $8.3 million over the $89.7 million reported in the prior year period due to the inclusion of the Atlantic Theatres. -- CPP was $5.08 for the period, an all-time quarterly record for Cineplex, and $0.27 (5.6%) higher than the $4.81 from the prior year period. -- Added four Poptopia and three YoYo's locations across the circuit during the second quarter of 2014. As at June 30, 2014, Cineplex owns and operates 15 Poptopia locations and five YoYo's locations. -- Opened four new XSCAPE entertainment centres in the second quarter of 2014, bringing the total number of XSCAPE locations at June 30, 2014 to 14.



MEDIA

-- Reported second quarter Cineplex Media revenues of $21.2 million, a $2.5 million (10.5%) decrease against a strong comparator in the prior year period. -- Cineplex Digital Media revenues were $9.7 million, $7.1 million higher than the prior year period due to the acquisition of CDN in the third quarter of 2013, which contributed revenues of $7.0 million in the current period. -- Cineplex and Oxford Properties Group ("Oxford") announced plans to create North America's first place-based digital ecosystem to be added to 10 high-profile shopping centres across Canada, integrating architectural digital media, mobile technology, social media, experiential technologies, and digital media sales and analytics to inspire shoppers and influence purchase decisions.



ALTERNATIVE PROGRAMMING

-- Alternative programming in the second quarter of 2014 included performances from the Metropolitan Opera: Live in HD series, ethnic film programming, sports programming as well as national distribution of the film Legends of Oz - Dorothy's Return across the country. Also in the period, Cineplex partnered with HBO Canada to show the Season 4 finale of Game of Thrones live in participating theatres across Canada.



INTERACTIVE

-- Launched a new digital commerce platform for the Cineplex Store, supporting over 7,500 movies that can be rented, purchased or viewed on an expanded range of devices as well as adding download capabilities. -- Entered into a new strategic partnership with Samsung, where the Cineplex Store supports the new "Tab S" Android tablet, delivering rental movies direct to Samsung customers who register their devices with the Cineplex Store. -- Cineplex.com registered a 7% increase in page views and a 2% increase in visits during the second quarter of 2014 compared to the prior year period. -- At June 30, 2014, the Cineplex App had been downloaded 9.6 million times and recorded over 350 million app sessions.



LOYALTY

-- Membership in the SCENE loyalty program increased by 0.2 million members in the period, reaching a membership of 5.8 million at June 30, 2014.



OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014

Total revenues

Total revenues for the three months ended June 30, 2014 increased $21.9 million (7.2%) to $323.5 million as compared to the prior year period. Total revenues for the six months ended June 30, 2014 increased $53.8 million (9.8%) to $603.5 million as compared to the prior year period. A discussion of the factors affecting the changes in box office, food service, media and other revenues for the period is provided below.

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, food service cost percentage and concession margin per patron are defined and discussed in the non-GAAP measures section at the end 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 year to date (in thousands of Canadian dollars, except attendance reported in thousands of patrons, and per patron amounts, unless otherwise noted):

---------------------------------------------------------------------------- Box office revenues Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Box office revenues $181,419$174,383 4.0% $337,644$319,548 5.7% Attendance (i) 19,301 18,629 3.6% 36,573 34,820 5.0% Box office revenue per patron (i) $ 9.40$ 9.36 0.4% $ 9.23$ 9.18 0.5% BPP excluding premium priced product (i) $ 8.46$ 8.37 1.1% $ 8.34$ 8.30 0.5% Canadian industry revenues (ii) -6.4% -4.9% Same store box office revenues (i) $164,260$171,460 -4.2% $305,382$313,218 -2.5% Same store attendance (i) 17,408 18,319 -5.0% 32,852 34,140 -3.8% % Total box from premium priced product (i) 41.8% 42.2% -0.4% 40.1% 38.9% 1.2% ---------------------------------------------------------------------------- (i) See non-GAAP 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 7.9% for the period from April 4, 2014 to July 3, 2014 as compared to the period from April 5, 2013 to July 4, 2013. On a basis consistent with Cineplex's calendar reporting period (April 1 to June 30), the Canadian industry box office revenue change is estimated to be a decrease of 6.4%. MTAC reported that the Canadian exhibition industry reported a box office revenue decrease of 5.6% for the period from January 3, 2014 to July 3, 2014 as compared to the period from January 4, 2013 to July 4, 2013. On a basis consistent with Cineplex's calendar reporting period (January 1 to June 30), the Canadian industry box office revenues are estimated to be a decrease of 4.9%. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Box office continuity Second Quarter Year to Date Box Office Attendance Box Office Attendance ---------------------------------------------------------------------------- 2013 as reported $ 174,383 18,629 $ 319,548 34,820 Same store attendance change (8,522) (911) (11,823) (1,288) Impact of same store BPP change 1,321 - 3,987 - New and acquired theatres (i) 16,431 1,817 30,220 3,507 Disposed and closed theatres (i) (2,194) (234) (4,288) (466) ---------------------------------------------------------------------------- 2014 as reported $ 181,419 19,301 $ 337,644 36,573 ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. Represents theatres opened, acquired, disposed or closed subsequent to the start of the prior year comparative period. ----------------------------------------------------------------------------



Second Quarter

---------------------------------------------------------------------------- Second Quarter 2014 % Second Quarter 2013 % Top Cineplex Films 3D Box Top Cineplex Films 3D Box ---------------------------------------------------------------------------- 1 Captain America: The 1 Iron Man 3 X 13.6% Winter Soldier X 11.2% 2 X-Men: Days of Future 2 Star Trek: Into Darkness X 9.6% Past X 9.4% 3 The Amazing Spider-Man 2 X 8.6% 3 Man of Steel X 7.9% 4 Godzilla X 7.5% 4 Fast and Furious 6 6.8% 5 Maleficent X 6.1% 5 The Great Gatsby X 4.4% ----------------------------------------------------------------------------



Box office revenues increased $7.0 million, or 4.0%, to $181.4 million during the second quarter of 2014, compared to $174.4 million recorded in the same period in 2013. The increase was due to the impact of the Atlantic Theatres, which contributed $13.1 million to box office revenues during the period, net of a 4.2% decrease in same store box office revenues. The weaker film slate in the current period compared to the prior year resulted in a 5.0% decrease in same store attendance and the 4.2% decline in same store box office revenues.

BPP for the three months ended June 30, 2014 was $9.40, a $0.04 increase from the prior year period and a second quarter record for Cineplex. 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 declining less than the Canadian industry in the period, with the industry estimated to be down 6.4% in the period compared to Cineplex's same-store decline of 4.2%. Year to Date ---------------------------------------------------------------------------- Year to Date 2014 % Year to Date 2013 % Top Cineplex Films 3D Box Top Cineplex Films 3D Box ---------------------------------------------------------------------------- 1 The Lego Movie X 6.1% 1 Iron Man 3 X 7.4% 2 Captain America: The 2 Star Trek: Into Darkness X 5.2% Winter Soldier X 5.6% 3 X-Men: Days of Future 3 Man of Steel X 4.3% Past X 4.7% 4 The Amazing Spider-Man 2 X 4.3% 4 Fast and Furious 6 3.7% 5 Godzilla X 3.7% 5 Oz: The Great and Powerful X 3.7% ----------------------------------------------------------------------------



Box office revenues for the six months ended June 30, 2014 were $337.6 million, an increase of $18.1 million or 5.7% over the prior year due to the contribution from the Atlantic Theatres ($23.9 million) more than offsetting the same store revenue decrease of 2.5% due to a 3.8% same store attendance decline. Attendance and box office revenues in the period were impacted by the weaker film product in the first half of 2014 compared to the prior year period, and the impact of extreme weather conditions in certain areas of the country in the first quarter, particularly in the Atlantic provinces, where theatre closures, power outages and poor driving conditions deterred guests from visiting the theatres. The Canadian industry also under performed the US industry in the first quarter of the year, as certain films in the slate performed stronger in certain regions of the US market than they did in Canada.

Cineplex's BPP for the six months ended June 30, 2014 increased $0.05, or 0.5%, from $9.18 in the prior year period to $9.23 in the current period. This increase was primarily due to the increase in revenues from premium-priced product. Premium-priced offerings accounted for 40.1% of Cineplex's box office revenues in the six months ended June 30, 2014, compared to 38.9% in the prior year period. The top five films in the six months ended June 30, 2014 were all screened in 3D (2013 period - four in 3D). The BPP increase was partially mitigated by the top film during the period, The Lego Movie, catering to family audiences, resulting in a higher proportion of child tickets sold with a lower average ticket price.

Food service revenues

The following table highlights the movement in food service revenues, attendance and CPP for the quarter and the year-to-date (in thousands of Canadian dollars, except attendance and same store attendance reported in thousands of patrons, and per patron amounts):

---------------------------------------------------------------------------- Food service revenues Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Food service revenues $ 98,024$ 89,693 9.3% $ 185,167$ 165,572 11.8% Attendance (i) 19,301 18,629 3.6% 36,573 34,820 5.0% CPP (i) $ 5.08$ 4.81 5.6% $ 5.06$ 4.76 6.3% Same store food service revenues (i) $ 87,860$ 88,441 -0.7% $ 165,630$ 163,018 1.6% Same store attendance (i) 17,408 18,319 -5.0% 32,852 34,140 -3.8% ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. ----------------------------------------------------------------------------

---------------------------------------------------------------------------- Food service revenue continuity Second Quarter Year to Date Food Service Attendance Concession Attendance ---------------------------------------------------------------------------- 2013 as reported $ 89,693 18,629 $ 165,572 34,820 Same store attendance change (4,395) (911) (6,153) (1,288) Impact of same store CPP change 3,814 - 8,765 - New and acquired theatres (i) 9,854 1,817 18,748 3,507 Disposed and closed theatres (i) (942) (234) (1,765) (466) ---------------------------------------------------------------------------- 2014 as reported $ 98,024 19,301 $ 185,167 36,573 ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. Represents theatres opened, acquired, disposed or closed subsequent to the start of the prior year comparative period. ----------------------------------------------------------------------------



Second Quarter

Food service revenues are comprised primarily of concession revenues, which includes food sales at theatre locations as well as non-theatre locations. Food service revenues increased $8.3 million, or 9.3% as compared to the prior year period primarily due to the acquisition of the Atlantic Theatres, which contributed $8.0 million to food service revenues in the period, and the CPP increase from $4.81 in the second quarter of 2013 to $5.08 in the same period in 2014. This represents a quarterly CPP record for Cineplex and the second quarter in a row that exceeds $5.00 for CPP. Expanded offerings outside of core food service products are driving a higher average order value, resulting in the record CPP in the period.

Year to Date

Food service revenues increased $19.6 million, or 11.8% as compared to the prior year, due to the acquisition of the Atlantic Theatres ($15.5 million) and the 6.3% increase in CPP. CPP increased from $4.76 in the 2013 period to $5.06 in the current period, the highest CPP Cineplex has reported through the first six months of a year. Same store attendance decreased 3.8% compared to the prior year period, however same store food service revenues increased 1.6% due to the record CPP in the current period more than offsetting the impact of the same store attendance decline.

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.

Media revenues

The following table highlights the movement in media revenues for the quarter and the year-to-date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Media revenues Second Quarter Year to Date ------------------------------------------------------ 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Cineplex Media $ 21,241$ 23,722 -10.5% $ 37,192$ 37,834 -1.7% Cineplex Digital Media 9,749 2,628 271.0% 18,153 4,826 276.2% ------------------------------------------------------ Total $ 30,990$ 26,350 17.6% $ 55,345$ 42,660 29.7% ----------------------------------------------------------------------------



Second Quarter

Media revenues increased 17.6% to $31.0 million in the second quarter of 2014 compared to the prior year period. This increase was due to higher Cineplex Digital Media revenues, up $7.1 million as compared to the prior year period due to the inclusion of CDN's revenues of $7.0 million.

Cineplex Media revenues were $21.2 million, down $2.5 million (10.5%) from the prior year period, primarily due to lower showtime and pre-show revenues against a strong comparator, as the prior year period was a record second quarter for Cineplex Media revenues. Cineplex Media revenues are $5.4 million higher than the second quarter of 2012.

Year to Date

Media revenues increased $12.7 million in the six months ended June 30, 2014 compared to the prior year period. The increase was due to the $13.3 million increase in Cineplex Digital Media revenues arising from the acquisition of CDN.

Cineplex Media revenues were $0.6 million lower than the prior year period due to lower pre-show and showtime revenues due to the tough comparator against the prior year period record results, with declines in the packaged goods and electronics categories contributing to the decline. Cineplex Media revenues are $10.4 million higher than the first six months of 2012.

Other revenues

The following table highlights the movement in games and other revenues for the quarter and the year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Other revenues Second Quarter Year to Date ------------------------------------------------------ 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Games $ 1,759$ 1,776 -1.0% $ 3,637$ 3,879 -6.2% Other 11,304 9,430 19.9% 21,722 18,043 20.4% ------------------------------------------------------ Total other revenues $ 13,063$ 11,206 16.6% $ 25,359$ 21,922 15.7% ----------------------------------------------------------------------------



Second Quarter

Other revenues include gaming revenues as well as revenues from the Cineplex Store, promotional activities, screenings, private parties, corporate events, breakage on gift card and voucher sales, revenues from in-theatre guest service initiatives and management fees. Games revenues do not include Cineplex's 50% share of results of CSI, which are included in "Share of income of joint ventures".

Other revenues increased 16.6% to $13.1 million in the second quarter of 2014 compared to the prior year period. This increase was primarily due to additional revenues arising from enhanced guest service initiatives and new business initiatives. Games revenues decreased 1.0% in the period, due to the 5.0% decrease in same store attendance, partially offset by the inclusion of the Atlantic Theatres ($0.1 million).

Year to Date

For the year-to-date period, other revenues have increased 15.7% compared to the prior year period due to additional revenues arising from enhanced guest service initiatives and new business initiatives. Games revenues in the prior year period include a life-to-date one-time increase to games revenues in the 2013 period of $0.5 million arising from a change in accounting policy regarding the recognition of revenue on the sale of XSCAPE gaming cards. Excluding this one-time amount, games revenues increased $0.2 million in the 2014 period compared to the same period in 2013 due to the inclusion of the Atlantic Theatres.

Film cost

The following table highlights the movement in film cost and the film cost percentage for the quarter and the year to date (in thousands of Canadian dollars, except film cost percentage):

---------------------------------------------------------------------------- Film cost Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Film cost $ 94,950$ 92,973 2.1% $175,408$166,362 5.4% Film cost percentage (i) 52.3% 53.3% -1.0% 52.0% 52.1% -0.1% ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. ----------------------------------------------------------------------------



Second 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 second quarter of 2014 compared to the prior year period was due to the increase in box office revenue, partially offset by the 1.0% decrease in film cost percentage. The decrease in film cost percentage is primarily due to the settlement rate on the top films during the second quarter of 2014 being lower than the average film settlement rate in the 2013 period.

Year to Date

The year to date increase in film cost was due to the 5.7% increase in box office revenues, partially offset by the 0.1% decrease in film cost percentage during the period. The decrease in the film cost percentage as compared to the prior year period is primarily due to the settlement rate on certain titles during the 2014 period being lower than the average settlement rate in the 2013 period.

Cost of food service

The following table highlights the movement in cost of food service and cost of food service as a percentage of food service revenues ("concession cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except percentages and margins per patron):

---------------------------------------------------------------------------- Cost of food service Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Cost of food service $ 21,147$ 19,173 10.3% $ 40,028$ 35,447 12.9% Concession cost percentage (i) 21.6% 21.4% 0.2% 21.6% 21.4% 0.2% Concession margin per patron (i) $ 3.98$ 3.79 5.0% $ 3.97$ 3.74 6.1% ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. ----------------------------------------------------------------------------



Second Quarter

Cost of food service varies primarily with theatre attendance as well as the quantity and mix of offerings sold. The increase in the cost of food service as compared to the prior year period was due to the higher food service revenues and the 0.2% increase in the concession cost percentage during the period. The concession margin per patron increased from $3.79 in the second quarter of 2013 to $3.98 in the same period in 2014, reflecting the impact of the higher CPP during the period.

Year to Date

The increase in the cost of food service as compared to the prior year period was due to the higher food service revenues and the 0.2% increase in the concession cost percentage during the period. The concession margin per patron increased from $3.74 in the prior year period to $3.97 in the current period, reflecting the impact of the higher CPP in the current period.

Despite the 10% discount offered to SCENE members and SCENE points offered on select offerings, which contributes to a higher concession cost percentage, Cineplex believes the SCENE program drives incremental attendance and purchase incidence which increases food service revenues and CPP.

Depreciation and amortization

The following table highlights the movement in depreciation and amortization expenses during the quarter and year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Depreciation and amortization expenses Second Quarter Year to Date ------------------------------------------------ 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Depreciation of property, equipment and leaseholds $17,333$14,209 22.0% $34,163$27,988 22.1% Amortization of intangible assets and other 1,862 2,318 -19.7% 3,700 5,837 -36.6% ------------------------------------------------ Depreciation and amortization expenses as reported $19,195$16,527 16.1% $37,863$33,825 11.9% ----------------------------------------------------------------------------



The quarterly increase in depreciation of property, equipment and leaseholds of $3.1 million and year to date increase of $6.2 million is primarily due to the impact of equipment and leasehold improvements relating to assets acquired through acquisitions and new theatre construction.

The decrease in amortization of intangible assets and other in the second quarter of 2014 and the year to date period compared to the prior year periods is due to the amortization of certain trade name assets included in the prior year period that were phased out by Cineplex at the end of 2013. 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 recorded through December 31, 2013. The 2014 periods include intangible amortization relating to customer relationships and internally developed software acquired as part of the acquisition of CDN which closed during the third quarter of 2013.

Loss on disposal of assets

The following table shows the movement in the loss on disposal of assets during the quarter and year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Loss on disposal of assets Second Quarter Year to Date ------------------------------------------------ 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Loss on disposal of assets $ 1,989$ 1,314 51.4% $ 1,933$ 2,376 -18.6% ----------------------------------------------------------------------------



During the second quarter of 2014, Cineplex recorded a loss of $2.0 million on the disposal of assets that were sold or otherwise disposed (2013 - $1.3 million). For the six months ended June 30, 2014, disposal of assets resulted in a loss of $1.9 million on the disposal of assets that were sold or otherwise disposed of (2013 - $2.4 million). The current year to date period includes $0.6 million gain on the sale of land that was previously a drive-in theatre which is offset by losses on certain assets that were sold or otherwise disposed of.

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 year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Other costs Second Quarter Year to Date ---------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Theatre occupancy expenses $ 50,229$ 46,826 7.3% $101,253$ 93,384 8.4% Other operating expenses 83,537 68,449 22.0% 167,748 132,917 26.2% General and administrative expenses 15,211 16,600 -8.4% 30,422 33,107 -8.1% ---------------------------------------------------------------------------- Total other costs $148,977$131,875 13.0% $299,423$259,408 15.4% ----------------------------------------------------------------------------



Theatre occupancy expenses

The following table highlights the movement in theatre occupancy expenses for the quarter and year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Theatre occupancy expenses Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Rent $ 33,775$ 31,434 7.4% $ 67,284$ 62,533 7.6% Other occupancy 17,845 16,340 9.2% 35,637 32,786 8.7% One-time items (i) (1,391) (948) 46.7% (1,668) (1,935) -13.8% ---------------------------------------------------------------------------- Total $ 50,229$ 46,826 7.3% $101,253$ 93,384 8.4% ---------------------------------------------------------------------------- (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 Second Quarter Year to Date Occupancy Occupancy ---------------------------------------------------------------------------- 2013 as reported $ 46,826$ 93,384 Impact of new and acquired theatres 3,731 7,897 Impact of disposed theatres (447) (935) Same store rent change (i) 388 706 One-time items (443) 267 Other 174 (66) ---------------------------------------------------------------------------- 2014 as reported $ 50,229$ 101,253 ---------------------------------------------------------------------------- (i) See non-GAAP measures section of this news release. ----------------------------------------------------------------------------



Second Quarter

Theatre occupancy expenses increased $3.4 million during the second quarter of 2014 compared to the prior year period. This increase was primarily due to the impact of new and acquired theatres net of disposed theatres ($3.3 million, of which $3.1 million relates to the Atlantic Theatres). The remaining increase was due to higher same store rent expenses due to rent increases at certain theatre properties as well as higher insurance costs (included in "Other"), net of the impact of one-time items.

Year to Date

The increase in theatre occupancy expenses of $7.9 million for the 2014 period compared to the prior year was due to the impact of new and acquired theatres net of disposed theatres ($7.0 million, of which $6.1 million relates to the Atlantic Theatres). The remaining increase was due to higher same store rent expenses due to rent increases at certain theatre properties and the impact of one-time items.

Other operating expenses

The following table highlights the movement in other operating expenses during the quarter and the year to date (in thousands of Canadian dollars):

---------------------------------------------------------------------------- Other operating expenses Second Quarter Year to Date ---------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- Theatre payroll $ 33,127$ 29,791 11.2% $ 65,480$ 57,807 13.3% Media 13,467 6,108 120.5% 25,877 11,768 119.9% Other 36,943 32,550 13.5% 76,391 63,342 20.6% ---------------------------------------------------- Other operating expenses $ 83,537$ 68,449 22.0% $167,748$132,917 26.2% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Other operating continuity Second Quarter Year to Date Other Operating Other Operating ---------------------------------------------------------------------------- 2013 as reported $ 68,449$ 132,917 Impact of new and acquired theatres 6,068 12,897 Impact of disposed theatres (700) (1,304) Same store payroll change (i) 446 1,917 Marketing change (590) 420 Media acquisitions 6,972 13,617 Media change, excluding media acquisitions 388 492 New business initiatives change 1,101 3,853 Other 1,403 2,939 ---------------------------------------------------------------------------- 2014 as reported $ 83,537$ 167,748 ---------------------------------------------------------------------------- See non-GAAP measures section of this news release. ----------------------------------------------------------------------------



Second Quarter

Other operating expenses during the second quarter of 2014 increased $15.1 million or 22.0% compared to the prior year period. The major components of the increase were the impact of CDN which was acquired in the third quarter of 2013 ($7.0 million), the impact of new and acquired theatres net of disposed theatres ($5.4 million), developing business initiatives including the Cineplex Store ($1.1 million), higher same-store payroll costs ($0.4 million) due in part to minimum wage increases, and other expenses ($1.4 million, discussed below). These increases were partially offset by lower marketing costs ($0.6 million) due to the timing of certain campaigns in the current period compared to the prior year.

The major movements in the Other category include the following:

-- The increase in 3D attendance due to the additional 132 3D screens added since June 30, 2013 resulted in higher 3D royalty costs ($0.4 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 credit card service fees due to higher sales volumes arising from the acquisition of the Atlantic Theatres ($0.2 million); and -- Higher other costs ($0.3 million) including ongoing theatre maintenance.



Year to Date

For the six months ended June 30, 2014, other operating expenses increased $34.8 million or 26.2% compared to the prior year period. The major components of this increase were the impact of new and acquired theatres net of disposed theatres ($11.6 million) primarily due to the addition of the Atlantic Theatres, the inclusion of CDN ($13.6 million), developing business initiatives including the Cineplex Store ($3.9 million), higher same-store payroll costs ($1.9 million) due in part to minimum wage increases, higher marketing costs ($0.4 million) partially due to advertising initiatives undertaken as part of Cineplex's partnership with the Canadian Olympic Committee, and other expenses ($2.9 million, discussed below).

The major movements in the Other category include the following:

-- The increase in 3D attendance due to the additional 132 3D screens added since June 30, 2013 resulted in higher 3D royalty costs ($0.6 million) as well as contributing to the higher cost of projector bulbs ($0.8 million) as 3D features require bulbs with higher output which significantly reduces the life of the bulbs; -- Higher credit card service fees due to higher sales volumes arising from the acquisition of the Atlantic Theatres ($0.4 million); -- Higher same-store utility costs ($0.3 million) due in part to the cold temperatures across parts of the country during the winter months in the current period; and -- Higher other costs ($0.8 million) including ongoing theatre maintenance.



General and administrative expenses

The following table highlights the movement in general and administrative ("G&A") expenses during the quarter and the year to date, including Share based compensation costs, and G&A net of these costs (in thousands of Canadian dollars):

---------------------------------------------------------------------------- G&A expenses Second Quarter Year to Date ---------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- G&A excluding LTIP and option plan expense $ 13,523$ 12,384 9.2% $ 27,252$ 25,123 8.5% LTIP (i) 1,245 3,824 -67.4% 2,324 7,184 -67.7% Option plan 443 392 13.0% 846 800 5.8% ---------------------------------------------------- G&A expenses as reported $ 15,211$ 16,600 -8.4% $ 30,422$ 33,107 -8.1% ----------------------------------------------------------------------------



(i) LTIP includes the expense for Cineplex's long-term incentive program ("LTIP") as well as the expense for the executive and Board deferred share unit plans.

Second Quarter

G&A expenses decreased $1.4 million during the second quarter of 2014 compared to the prior year period due to a $2.6 million decrease in LTIP expense partially offset by higher professional fees. The LTIP decrease is due in part to Cineplex's Share price decreasing from $42.07 at March 31, 2014 to $41.45 at June 30, 2014 compared to an increase from $34.48 at March 31, 2013 to $36.88 at June 30, 2013. G&A excluding LTIP and option plan expense increased $1.2 million due to higher professional fees relating to new business opportunities.

Year to Date

G&A expenses for the year to date period decreased $2.7 million compared to the prior year period, due to a $4.9 million decrease in LTIP expense due primarily to a decrease in Cineplex's Share price of 5.9% in the current period compared to an increase of 15.9% in the prior year period, partially offset by a $2.1 million increase in G&A excluding LTIP and option expense, due to a $0.8 million increase in head office payroll due to developing business initiatives and a $1.5 million increase in professional fees relating to new business opportunities and other ongoing initiatives.

EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") (see non-GAAP measures section of this news release)

The following table presents EBITDA and adjusted EBITDA for the three and six months ended June 30, 2014 as compared to the three and six months ended June 30, 2013 (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):

---------------------------------------------------------------------------- EBITDA Second Quarter Year to Date -------------------------------------------------------- 2014 2013 Change 2014 2013 Change ---------------------------------------------------------------------------- EBITDA $ 57,411$ 57,513 -0.2% $ 87,756$ 87,866 -0.1% Adjusted EBITDA $ 59,430$ 58,711 1.2% $ 90,311$ 90,401 -0.1% Adjusted EBITDA margin 18.4% 19.5% -1.1% 15.0% 16.4% -1.4% ----------------------------------------------------------------------------



Adjusted EBITDA for the second quarter of 2014 increased $0.7 million, or 1.2%, as compared to the prior year period. The increase as compared to the prior year period was primarily due to the acquisitions of the Atlantic Theatres and CDN, partially offset by the weaker film product resulting in lower same store attendance, lower showtime and pre-show media revenues due to a tough comparator with the prior year and higher professional fees relating to new business opportunities. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 18.4% in the current period, down from 19.5% in the prior year period.

Adjusted EBITDA for the six months ended June 30, 2014 decreased $0.1 million, or 0.1%, as compared to the prior year period, due to the weaker film product in the current period resulting in lower same store attendance, lower showtime and pre-show media revenues due to a tough comparator with the prior year and higher professional fees relating to new business opportunities. The contribution from the Atlantic Theatres and CDN largely offset the period over period decrease. Adjusted EBITDA margin for the period was 15.0%, down from 16.4% in the prior year period.

ADJUSTED FREE CASH FLOW

For the second quarter of 2014, adjusted free cash flow per common share of Cineplex was $0.7734 as compared to $0.7347 in the prior year period. The declared dividends per common share of Cineplex were $0.3700 in the second quarter of 2014 and $0.3525 in the prior year period. During the twelve months ended June 30, 2014, Cineplex generated adjusted free cash flow per Share of $2.4047, compared to $2.2326 per Share in the twelve months ended June 30, 2013. Cineplex declared dividends per Share of $1.4500 and $1.3650, respectively, in each period. The payout ratios for these periods were approximately 60.3% and 61.1%, respectively. Adjusted free cash flow per common share and the payout ratios for the 2014 and 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 and 2014 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, depreciation and amortization expense, and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for gains and losses on disposal of assets, the share of income or loss of 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 operating activities to adjusted free cash flow, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com.

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 food service 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 subsequent to the start of the prior year comparative period. For the three months ended June 30, 2014, the impact of the 29 locations that have been opened or acquired and three locations that have been closed or otherwise disposed of have been excluded, resulting in 130 theatres being included in the same store metrics. For the six months ended June 30, 2014, the impact of the 31 locations that have been opened or acquired and the three locations that have been closed or otherwise disposed of have been excluded, resulting in 128 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 food service costs divided by total food service revenues for the period.

Certain information included in this news release contains forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to Cineplex's objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to Cineplex's beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, including those described in Cineplex's Annual Information Form ("AIF") and in this news release. Those risks and uncertainties, both general and specific, give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Cineplex cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond Cineplex's control, could cause actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, risks generally encountered in the relevant industry, competition, customer, legal, taxation and accounting matters.

The foregoing list of factors that may affect future results is not exhaustive. When reviewing Cineplex's forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the "Risk Management" section of Cineplex's management's discussion and analysis.

Cineplex does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities law. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex or the Partnership, their financial or operating results or their securities. All forward-looking statements in this news release are made as of the date hereof and are qualified by these cautionary statements. Additional information, including Cineplex's AIF, can be found on SEDAR at www.sedar.com.

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 162 theatres with 1,638 screens from coast to coast, serving approximately 77 million guests annually 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 www.cineplex.com.

Further information can be found in the disclosure documents filed by Cineplex with the securities regulatory authorities, available at www.sedar.com.

You are cordially invited to participate in a teleconference call with the management of Cineplex (TSX: CGX) to review our quarterly results. Ellis Jacob, President and Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call. The teleconference call is scheduled for:

Wednesday, August 6, 2014

10:00 a.m. Eastern Time

In order to participate in the conference call, please dial 416-847-6330 or outside of Toronto dial 1-866-530-1533 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 7935875 to access the call.

-- If you cannot participate in the live mode, a replay will be available. Please dial 647-436-0148 or 1-888-203-1112 and enter code 7935875#. The replay will begin at 1:00 p.m. Eastern Time on Wednesday, August 6, 2014 and end at 1:00 p.m. Eastern Time on Wednesday, August 13, 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. Interim Condensed Consolidated Balance Sheets (Unaudited) (expressed in thousands of Canadian dollars) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- June 30, December 31, 2014 2013 Assets Current assets Cash and cash equivalents $ 14,499$ 44,140 Trade and other receivables 64,236 100,891 Inventories 6,877 7,234 Prepaid expenses and other current assets 11,872 6,838 ---------------------------- 97,484 159,103 Non-current assets Property, equipment and leaseholds 477,375 459,112 Deferred income taxes 8,493 17,635 Fair value of interest rate swap agreements - 92 Interests in joint ventures 45,779 44,359 Intangible assets 112,604 113,601 Goodwill 798,801 797,476 ---------------------------- $ 1,540,536$ 1,591,378 ---------------------------- ---------------------------- Liabilities Current liabilities Accounts payable and accrued expenses $ 114,087$ 157,333 Share-based compensation 6,587 12,151 Dividends payable 7,873 7,552 Income taxes payable 2,050 2,656 Deferred revenue 103,124 136,373 Finance lease obligations 2,528 2,394 Fair value of interest rate swap agreements 776 635 ---------------------------- 237,025 319,094 ---------------------------- Non-current liabilities Share-based compensation 11,865 15,622 Long-term debt 267,461 217,151 Fair value of interest rate swap agreements 1,255 - Finance lease obligations 16,402 17,722 Post-employment benefit obligations 6,601 6,522 Other liabilities 171,832 170,125 Convertible debentures 97,807 96,870 ---------------------------- 573,223 524,012 ---------------------------- Total liabilities 810,248 843,106 ---------------------------- Equity Share capital 853,870 853,411 Deficit (125,008) (107,323) Accumulated other comprehensive loss (2,860) (1,715) Contributed surplus 4,286 3,899 ---------------------------- 730,288 748,272 ---------------------------- $ 1,540,536$ 1,591,378 ---------------------------- ---------------------------- Cineplex Inc. Interim Condensed Consolidated Statements of Operations (Unaudited) (expressed in thousands of Canadian dollars, except net income per share) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, -------------------------------------------- 2014 2013 2014 2013 Revenues Box office $ 181,419$ 174,383$ 337,644$ 319,548 Food service 98,024 89,693 185,167 165,572 Media 30,990 26,350 55,345 42,660 Other 13,063 11,206 25,359 21,922 -------------------------------------------- 323,496 301,632 603,515 549,702 -------------------------------------------- Expenses Film cost 94,950 92,973 175,408 166,362 Cost of food service 21,147 19,173 40,028 35,447 Depreciation and amortization 19,195 16,527 37,863 33,825 Loss on disposal of assets 1,989 1,314 1,933 2,376 Other costs 148,977 131,875 299,423 259,408 Share of income of joint ventures (978) (1,216) (1,033) (1,757) Interest expense 5,583 1,998 10,800 3,714 Interest income (43) (59) (113) (137) -------------------------------------------- 290,820 262,585 564,309 499,238 -------------------------------------------- Income before income taxes 32,676 39,047 39,206 50,464 -------------------------------------------- Provision for income taxes Current 1,010 1,926 1,380 1,199 Deferred 8,461 8,578 9,550 11,906 -------------------------------------------- 9,471 10,504 10,930 13,105 -------------------------------------------- Net income $ 23,205$ 28,543$ 28,276$ 37,359 -------------------------------------------- -------------------------------------------- Basic net income per share $ 0.37$ 0.45$ 0.45$ 0.60 Diluted net income per share $ 0.37$ 0.45$ 0.45$ 0.59 Cineplex Inc. Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) (expressed in thousands of Canadian dollars) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, -------------------------------------------- 2014 2013 2014 2013 Net income $ 23,205$ 28,543$ 28,276$ 37,359 -------------------------------------------- Other comprehensive (loss) income Items that will be reclassified subsequently to net income: (Loss) income on hedging instruments (981) 1,610 (1,556) 844 Associated deferred income taxes recovery (expense) 260 (479) 411 (368) -------------------------------------------- Other comprehensive (loss) income (721) 1,131 (1,145) 476 -------------------------------------------- Comprehensive income $ 22,484$ 29,674$ 27,131$ 37,835 -------------------------------------------- Cineplex Inc. Interim Condensed Consolidated Statements of Changes in Equity (Unaudited) (expressed in thousands of Canadian dollars) For the six months ended June 30, 2014 and 2013 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Accumulated other Share Contributed comprehensive capital surplus loss Deficit Total Balance - January 1, 2014 $ 853,411$ 3,899$ (1,715)$(107,323)$ 748,272 Net income - - - 28,276 28,276 Other comprehensive (loss) - - (1,145) - (1,145) ------------------------------------------------------------- Total comprehensive income (1,145) 28,276 27,131 Dividends declared - - - (45,961) (45,961) Share option expense - 846 - - 846 Issuance of shares on exercise of options 459 (459) - - - ------------------------------------------------------------- Balance - June 30, 2014 $ 853,870$ 4,286$ (2,860)$(125,008)$ 730,288 ------------------------------------------------------------- ------------------------------------------------------------- Balance - January 1, 2013 $ 847,235$ 3,768$ (1,142)$(102,547)$ 747,314 Net income - - - 37,359 37,359 Other comprehensive income - - 476 - 476 ------------------------------------------------------------- Total comprehensive income 476 37,359 37,835 Dividends declared - - - (43,351) (43,351) Long-term incentive plan obligation 248 - - - 248 Share option expense - 800 - - 800 Issuance of shares on exercise of options 752 (752) - - - ------------------------------------------------------------- Balance - June 30, 2013 $ 848,235$ 3,816$ (666)$(108,539)$ 742,846 ------------------------------------------------------------- ------------------------------------------------------------- Cineplex Inc. Interim Condensed Consolidated Statements of Cash Flows (Unaudited) (expressed in thousands of Canadian dollars) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, -------------------------------------------- 2014 2013 2014 2013 Cash provided by (used in) Operating activities Net income $ 23,205$ 28,543$ 28,276$ 37,359 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization of property, equipment and leaseholds, and intangible assets 19,195 16,527 37,863 33,825 Amortization of tenant inducements, rent averaging liabilities and fair value lease contract liabilities (1,479) (1,708) (2,879) (3,277) Accretion of debt issuance costs and other non-cash interest 1,187 260 2,351 401 Loss on disposal of assets 1,989 1,314 1,933 2,376 Deferred income taxes 8,461 8,578 9,550 11,906 Interest rate swap agreements - non-cash interest (62) (234) (46) (569) Non-cash share-based compensation 443 391 846 1,047 Accretion of convertible debentures 467 - 938 - Net change in interests in joint ventures (860) (117) (1,240) (825) Tenant inducements - 348 2,842 3,305 Changes in operating assets and liabilities (12,106) 20,542 (58,511) (17,901) -------------------------------------------- Net cash provided by operating activities 40,440 74,444 21,923 67,647 -------------------------------------------- Investing activities Proceeds from sale of assets - 2 404 2 Purchases of property, equipment and leaseholds (19,225) (17,294) (50,695) (34,191) Acquisition of businesses, net of cash acquired (1,516) - (2,466) (3,822) Deposit for business acquisition - (5,000) - (5,000) Intangible assets addition (2,750) - (2,750) - Net cash received from (invested in) CDCP 769 (403) 769 (549) -------------------------------------------- Net cash used in investing activities (22,722) (22,695) (54,738) (43,560) -------------------------------------------- Financing activities Dividends paid (22,983) (21,682) (45,640) (42,873) Borrowings (repayments) under credit facility, net 10,000 (15,000) 50,000 - Payments under finance leases (595) (551) (1,186) (1,091) -------------------------------------------- Net cash (used in) provided by financing activities (13,578) (37,233) 3,174 (43,964) -------------------------------------------- Increase (decrease) in cash and cash equivalents 4,140 14,516 (29,641) (19,877) Cash and cash equivalents - Beginning of period 10,359 14,272 44,140 48,665 -------------------------------------------- Cash and cash equivalents - End of period $ 14,499$ 28,788$ 14,499$ 28,788 -------------------------------------------- -------------------------------------------- Supplemental information Cash paid for interest $ 5,018$ 1,989$ 7,421$ 3,847 Cash paid for income taxes $ 768$ 311$ 1,986$ 12,510 Cineplex Inc. Interim Consolidated Supplemental Information (Unaudited) (expressed in thousands of Canadian dollars) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------



Reconciliation to Adjusted EBITDA

----------------------------------------------------- ---------------------- Three months ended Six months ended June 30, June 30, 2014 2013 2014 2013 ---------------------- ---------------------- Net income $ 23,205$ 28,543$ 28,276$ 37,359 Depreciation and amortization 19,195 16,527 37,863 33,825 Interest expense 5,583 1,998 10,800 3,714 Interest income (43) (59) (113) (137) Current income tax expense 1,010 1,926 1,380 1,199 Deferred income tax expense 8,461 8,578 9,550 11,906 ---------------------- ---------------------- EBITDA $ 57,411$ 57,513$ 87,756$ 87,866 Loss on disposal of assets 1,989 1,314 1,933 2,376 CDCP equity income (i) (675) (779) (620) (1,112) Depreciation and amortization - joint ventures (ii) 564 562 1,084 1,081 Joint venture taxes and interest (ii) 141 101 158 190 ---------------------- ---------------------- Adjusted EBITDA $ 59,430$ 58,711$ 90,311$ 90,401 ----------------------------------------------------- ---------------------- (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). Cineplex Inc. Interim Consolidated Supplemental Information (Unaudited) (expressed in thousands of Canadian dollars, except number of shares and per share data) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------



Adjusted Free Cash Flow

---------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, 2014 2013 2014 2013 ---------------------------------------------------- Cash provided by operating activities $ 40,440$ 74,444$ 21,923$ 67,647 Less: Total capital expenditures net of proceeds on sale of assets (19,225) (17,292) (50,291) (34,189) ---------------------------------------------------- Standardized free cash flow 21,215 57,152 (28,368) 33,458 Add/(Less): Changes in operating assets and liabilities (i) 12,106 (20,542) 58,511 17,901 Changes in operating assets and liabilities of joint ventures (i) (118) (1,099) 207 (932) Tenant inducements (ii) - (348) (2,842) (3,305) Principal component of finance lease obligations (595) (551) (1,186) (1,091) Growth capital expenditures and other (iii) 14,281 10,890 38,328 22,924 Share of income of joint ventures, net of non- cash depreciation (iv) 1,041 1,071 1,664 1,871 Net cash received from (invested in) CDCP (iv) 769 (403) 769 (549) ---------------------------------------------------- Adjusted free cash flow $ 48,699$ 46,170$ 67,083$ 70,277 ---------------------------------------------------- ---------------------------------------------------- Average number of Shares outstanding 62,966,909 62,844,730 62,954,227 62,824,336 Adjusted free cash flow per Share $ 0.7734$ 0.7347$ 1.0656$ 1.1186 Dividends declared $ 0.3700$ 0.3525$ 0.7300$ 0.6900 ---------------------------------------------------------------------------- (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 Inc.Gord Nelson Chief Financial Officer (416) 323-6602 Cineplex Inc.Pat Marshall Vice President Communications and Investor Relations (416) 323-6648 www.cineplex.com Source: Cineplex Inc.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Marketwire (Canada)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters