"In addition to a very strong financial performance, Cineplex completed a number of theatre projects including the opening of two new theatres - Cineplex Odeon Windermere and VIP Cinemas in Edmonton, and Galaxy Cinemas Pergola Commons, in south Guelph; Cineplex Odeon Brossard Cinemas was expanded adding four new VIP Cinema auditoriums; and Cineplex Odeon McGillivray and VIP Cinemas in Winnipeg, was opened following an extensive renovation and rebrand. We also acquired four AMC theatres - three in the GTA and one in Montreal. We completed the rollout of digital projection technology and added 16 UltraAVX auditoriums to bring our total to 39. Our digital commerce initiatives continued to advance with the addition of new digital content, devices and playback functionality and the launch of UltraViolet at the Cineplex Store. We achieved strong metrics on our website and mobile apps with significant growth in online and mobile ticket sales and the launch of e-gift cards. Our SCENE loyalty program added a record 900,000 new members to bring our total membership to 4.3 million. Cineplex's continued investment in the enhancement of the exhibition experience and the diversification of our business model contributed to the record year in 2012 and positions us well for the future."
EBITDA and adjusted free cash flow are not measures recognized by generally accepted accounting principles ("GAAP") and do not have standardized meanings in accordance with such principles. Therefore, EBITDA and adjusted free cash flow may not be comparable to similar measures presented by other issuers. EBITDA is calculated by adding back to net income, income tax expense, amortization and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for gains and losses on disposal of assets, gains on acquisition of businesses and the share of income or loss of the Canadian Digital Cinema Partnership ("CDCP"). Adjusted free cash flow is a non-GAAP measure generally used by Canadian corporations, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Management uses adjusted EBITDA and adjusted free cash flow to evaluate performance primarily because of the significant effect certain unusual or non-recurring charges and other items have on EBITDA from period to period. For a detailed reconciliation of net income to EBITDA and adjusted EBITDA and from cash provided by operating activities to adjusted free cash flow, please refer to Cineplex's management's discussion and analysis filed on www.sedar.com.
KEY DEVELOPMENTS IN 2012
The following describes certain key business initiatives undertaken during 2012 in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported record annual box office revenues of $638.3 million and record annual BPP of $8.97 during 2012, up from the previous records of $597.8 million (set in 2010) and $8.74 (set in 2011). Attendance was also an annual record for Cineplex, with 71.2 million patrons exceeding the previous record of 70.0 million set in 2009.-- Opened two new theatres, Cineplex Odeon Windermere and VIP Cinemas in Edmonton Alberta, featuring 11 screens including one UltraAVX and three VIP auditoriums on April 17, and Galaxy Cinemas Pergola Commons in Guelph, Ontario featuring eight screens on December 14.-- Completed the renovation of Cineplex Odeon McGillivray and VIP Cinemas in Winnipeg, Manitoba on November 2, transforming the property into a cutting-edge, first run theatre complete with 11 screens including one UltraAVX and three VIP auditoriums. Also added four new VIP screens to Cineplex Odeon Brossard and VIP Cinemas in Brossard, Quebec, a suburb of Montreal, which opened on December 14.-- Continued the expansion of UltraAVX, the next evolution of the audio visual entertainment experience in Canada, with 16 new UltraAVX auditoriums added to the circuit in 2012. At December 31, 2012, Cineplex has 39 UltraAVX auditoriums.-- Completed the acquisition of AMC Ventures Inc., which owned four theatres located in Toronto, Mississauga and Oakville, Ontario and Montreal, Quebec.-- Cineplex completed the planned conversion of its theatre circuit to digital projection, including the theatres acquired from AMC, and added 149 3D screens during the year.
