Cinram Reports 2009 Second Quarter Results



    (All figures in U.S. dollars unless otherwise indicated)

    TORONTO, Aug. 11 /CNW/ - Cinram International Income Fund ("Cinram" or
the "Fund") (TSX: CRW.UN) today reported its 2009 second quarter financial
results. The Fund recorded a 22 per cent decrease in revenue to $301.0 million
in the 2009 second quarter from $386.3 million in the second quarter of 2008.
For the first six months of 2009, revenue decreased to $604.2 million from
$760.1 million in the same period in 2008. Earnings before interest, taxes and
amortization (EBITA(1)) was $23.1 million during the second quarter of 2009,
down from $35.8 million in the same quarter of 2008. The decline in EBITA was
the result of lower average selling prices for DVDs, which, coupled with lower
unit volumes, are the main drivers of Cinram's profit margins. For the first
six months of 2009, EBITA was $49.9 million compared to $84.0 million in 2008.
The Fund reported net earnings from continuing operations for the second
quarter of 2009 of $7.3 million or $0.13 per unit (basic) compared with a net
loss from continuing operations of $4.1 million or $0.07 per unit (basic) in
2008.
    On June 9, 2009, the Fund announced that Steve Brown had been appointed
President and Chief Executive Officer of the Fund effective June 15, 2009.
"Cinram's results for the second quarter of 2009 are generally consistent with
expectations. During the quarter, we intensified the focus on improving our
cost structure, and continued our balance sheet improvement through debt
repurchases at amounts below par", said Cinram chief executive officer Steve
Brown.
    As previously announced, on March 30, 2009 the Fund announced that its
lenders had approved an amendment to its subsidiaries' senior secured credit
facility to permit Cinram to use up to US$150.0 million to repurchase term
advances outstanding under the senior secured credit facility at prices below
par through one or more "modified Dutch" auctions during a one-year period
commencing on March 31, 2009, subject to certain conditions. During the 2009
second quarter, the Fund repurchased $33.8 million of debt at a cost of $20.2
million, resulting in a gain of $13.6 million. Subsequent to June 30, 2009,
the Fund repurchased $33.1 million of debt at a cost of $24.6 million,
resulting in a gain of $8.5 million. This gain will be recorded during the
third quarter of 2009.
    On April 9, 2009, the Fund completed the sale of substantially all of Ivy
Hill's assets and liabilities for net cash proceeds of $14.0 million, subject
to post closing working capital adjustments pursuant to the asset purchase
agreement. Ivy Hill's results were excluded from Cinram's continuing
operations for the three and six-month periods ended June 30, 2009 and 2008.

    
    Segment revenue

    -------------------------------------------------------------------------
                  Three months ended June 30        Six months ended June 30
    -------------------------------------------------------------------------
    (in thousands
     of US$)            2009            2008            2009            2008
    -------------------------------------------------------------------------
    Home
     Video    $223,965   74%  $272,298   70%  $444,594   73%  $551,840   72%
    CD          39,437   13%    59,428   15%  $ 76,535   13%   112,195   15%
    Video
     Game       16,600    6%    28,913    8%  $ 40,212    7%    50,744    7%
    Other       21,032    7%    25,670    7%  $ 42,847    7%    45,292    6%
    -------------------------------------------------------------------------
              $301,034  100%  $386,309  100%  $604,188  100%  $760,071  100%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Second quarter Home Video revenue (which includes replication and
distribution of DVDs and high-definition discs) was down 18 per cent to $224.0
million from $272.3 million in the 2008 second quarter due to lower DVD
replication volumes in North America combined with lower selling prices
globally. Cinram replicated 224 million DVDs in the second quarter of 2009,
compared to 246 million units in 2008. High-definition disc replication
revenue increased to $5.5 million in the second quarter of 2009 from $5.1
million in the comparable 2008 period.
    CD segment revenue (which includes replication and distribution of CDs)
was down 34 per cent in the second quarter to $39.4 million from $59.4 million
in 2008 in line with a corresponding decline in replication volumes.
    Revenue from the Video Game segment was down 43 per cent to $16.6 million
in the second quarter of 2009 from $28.9 million in 2008 reflecting declines
in this market associated with general economic trends.
    Revenue from our Other segment, which includes the Motorola distribution
business in both North America and Europe, combined with revenue from Vision
Worldwide Management LLC (Vision) decreased to $21.0 million in the second
quarter of 2009 from $25.7 million in 2008.
    For the six month period ended June 30, 2009, consolidated revenue
decreased 21 per cent to $604.2 million from $760.1 million in the
corresponding 2008 period due primarily to lower home video revenues resulting
from decreases in both units shipped and average selling prices.

    Geographic revenue

    Second quarter North American revenue decreased 24 per cent to $184.1
million from $242.9 million in 2008, principally as a result of lower DVD
volumes and prices. North America accounted for 61 per cent of second quarter
consolidated revenue compared with 63 per cent in 2008.
    European revenue was down 18 per cent in the second quarter to $117.0
million from $143.4 million in 2008, due to lower unit sales for both DVDs and
CDs, primarily from our German operations combined with the foreign currency
translation impact. Excluding the impact of foreign currency translation,
European revenue decreased by five percent in the second quarter of 2009
compared to 2008. Second quarter European revenue represented 39 per cent of
consolidated sales compared with 37 per cent in the second quarter of 2008.

    Other financial highlights

    Gross profit for the quarter ended June 30, 2009, decreased to $45.1
million from $53.1 million in 2008, and gross profit margins increased to 15
per cent in the second quarter of 2009, from 14 per cent in the corresponding
2008 period, resulting from labour and overhead efficiencies realized during
the current year. The Fund also recorded amortization expense relating to
capital assets (included in the cost of goods sold) of $22.5 million compared
to $25.9 million in the second quarter of 2008. This reduction in amortization
results from the lower net book value of property, plant and equipment due to
the impairment charge of $57.2 million recorded at the end of 2008 as part of
Cinram's annual impairment test.
    Selling, general and administrative expenses for the quarter ended June
30, 2009 increased to $44.2 million from $42.8 million in 2008, primarily as a
result of severance charges associated with certain executive employees
combined with consulting fees incurred during the quarter. Selling, general
and administrative expenses were 15 per cent of revenue in the 2009 second
quarter, compared to 11 per cent in the prior year period.

    Balance sheet and liquidity

    The Fund had cash and cash equivalents on hand of $76.6 million and debt
of $567.2 million (excluding unamortized transaction costs and loan fees),
resulting in a net debt position of $490.6 million at June 30, 2009, compared
with a net debt position of $573.8 million at the end of 2008. During the
second quarter of 2009, the Fund reduced debt by $43.3 million primarily as a
result of debt repurchases following the amendment to the credit agreement on
March 30, 2009. During the second quarter of 2009, Cinram paid $12.4 million
for property, plant and equipment, including cash payments on DVD and wireless
equipment previously purchased.

    Unit data

    For the three-month period ended June 30, 2009, the basic weighted
average number of units and exchangeable limited partnership units outstanding
was 55.1 million compared with 57.0 million in 2008. During the first six
months of 2009, the Fund did not repurchase any units under its normal course
issuer bid.

    
    Reconciliation of EBITA and EBIT to net earnings (loss) from continuing
    operations
    -------------------------------------------------------------------------
                                    Three months ended      Six months ended
    (unaudited, in thousands                   June 30               June 30
     of U.S. dollars)                  2009       2008       2009       2008
    -------------------------------------------------------------------------
    EBITA excluding other charges  $ 23,366   $ 36,192   $ 51,407   $ 84,520
    -------------------------------------------------------------------------
    Other charges, net                  226        365      1,526        536
    -------------------------------------------------------------------------
    EBITA(1)                       $ 23,140   $ 35,827   $ 49,881   $ 83,984
    -------------------------------------------------------------------------
    Amortization of property,
     plant and equipment             22,466     25,855     44,480     50,588
    Amortization of intangible
     assets                          10,332     10,718     20,499     21,318
    -------------------------------------------------------------------------
    EBIT(2)                        $ (9,658)  $   (746)  $(15,098)  $ 12,078
    -------------------------------------------------------------------------
    Interest expense                  9,008     11,084     19,425     23,582
    Gain on repurchase of debt      (13,622)         -    (13,622)         -
    Foreign exchange gain           (13,432)    (1,318)    (7,594)    (5,078)
    Investment income                   (57)      (413)      (333)    (1,059)
    Income taxes (recovery)           1,157     (6,001)    (2,656)    (8,875)
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations         $  7,288   $ (4,098)  $(10,318)  $  3,508
    -------------------------------------------------------------------------

    (1) EBITA is defined as earnings from continuing operations before other
        charges, impairment charges, gain on repurchase of debt, interest
        expense, investment income, income taxes, amortization and foreign
        exchange gain/loss. 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 may not be comparable with other issuers and 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 as earnings from continuing operations before
        impairment charges, interest expense, gain on repurchase of debt,
        investment income, income taxes and foreign exchange gain/loss, 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 may not be comparable with other issuers and 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.
    

    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 North America and Europe,
Cinram International Inc. manufactures and distributes pre-recorded DVDs,
BluRay Discs, audio CDs, and CD-ROMs for motion picture studios, music labels,
publishers and computer software companies around the world. Cinram also
provides distribution and logistics services to the telecommunications
industry in North America and Europe through its wireless subsidiaries. The
Fund's units are listed on the Toronto Stock Exchange under the symbol CRW.UN.
For more information, visit our website at www.cinram.com.

    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
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 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; the Fund's ability to refinance its
credit facilities upon maturity 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)

    -------------------------------------------------------------------------
                                                       June 30   December 31
                                                          2009          2008
                                                    (unaudited)
    -------------------------------------------------------------------------

    ASSETS
    Current assets:
    Cash and cash equivalents                       $   76,623    $   73,349
    Accounts receivable                                288,740       495,604
    Inventories                                         39,483        48,987
    Income taxes receivable                             17,645        18,235
    Prepaid expenses                                    16,125        21,913
    Future income taxes                                  1,841         1,827
    -------------------------------------------------------------------------
                                                       440,457       659,915

    Property, plant and equipment                      313,458       361,804
    Goodwill                                            63,159        64,737
    Intangible assets                                   73,843        94,423
    Other assets                                        24,683        24,557
    -------------------------------------------------------------------------
                                                    $  915,600    $1,205,436
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY (DEFICIENCY)
    Current liabilities:
    Accounts payable                                $   68,985    $  203,619
    Accrued liabilities                                201,805       247,968
    Income taxes payable                                12,209        11,581
    Current portion of long-term debt                   40,000         6,750
    Current portion of obligations
     under capital leases                                2,499         3,094
    -------------------------------------------------------------------------
                                                       325,498       473,012

    Long-term debt                                     522,748       636,299
    Obligations under capital leases                     2,974         3,926
    Other long-term liabilities                         44,730        43,625
    Derivative instruments                              24,674        26,586
    Future income taxes                                  3,797         5,208

    Unitholders' equity (deficiency)                    (8,821)       16,780
    -------------------------------------------------------------------------

                                                    $  915,600    $1,205,436
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
    (unaudited, in thousands of U.S. dollars, except per unit/exchangeable LP
    unit amounts)

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30                   June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Revenue                $  301,034   $  386,309   $  604,188   $  760,071
    Cost of goods sold        255,914      333,208      514,257      644,307
    -------------------------------------------------------------------------
    Gross profit               45,120       53,101       89,931      115,764
    Selling, general and
     administrative
     expenses                  44,220       42,764       83,004       81,832
    Amortization of
     intangible assets         10,332       10,718       20,499       21,318
    Other charges, net            226          365        1,526          536
    -------------------------------------------------------------------------
    Earnings (loss) before
     the undernoted            (9,658)        (746)     (15,098)      12,078
    Interest on long-term
     debt                       9,379       11,350       19,216       23,081
    Other interest (income)
     expense                     (371)        (266)         209          501
    Gain on repurchase of
     debt                     (13,622)           -      (13,622)           -
    Foreign exchange gain     (13,432)      (1,318)      (7,594)      (5,078)
    Investment income             (57)        (413)        (333)      (1,059)
    -------------------------------------------------------------------------
    Earnings (loss) from
     continuing operations
     before income taxes        8,445      (10,099)     (12,974)      (5,367)
    Income taxes (recovery)     1,157       (6,001)      (2,656)      (8,875)
    -------------------------------------------------------------------------
    Earnings (loss) from
     continuing operations      7,288       (4,098)     (10,318)       3,508
    Loss from discontinued
     operations                (8,025)      (2,982)     (12,719)     (13,975)
    -------------------------------------------------------------------------
    Net earnings (loss)          (737)      (7,080)     (23,037)     (10,467)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per unit
     from continuing
     operations:
      Basic                $     0.13   $    (0.07)  $    (0.19)  $     0.06
      Diluted              $     0.13   $    (0.07)  $    (0.19)  $     0.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Loss per unit:
      Basic                $    (0.01)  $    (0.12)  $    (0.42)  $    (0.18)
      Diluted              $    (0.01)  $    (0.12)  $    (0.42)  $    (0.18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     number of units
     and exchangeable
     limited partnership
     units outstanding,
     (in thousands):
      Basic                    55,096       57,001       55,174       57,057
      Diluted                  55,565       57,001       55,174       57,107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (unaudited, in thousands of U.S. dollars)

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30                   June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Net loss for the
     period                $     (737)  $   (7,080)  $  (23,037)  $  (10,467)

    Other comprehensive
     income, net of tax:

      Unrealized gain (loss)
       on translating
       financial statements
       of self-sustaining
       foreign operations     (16,049)      (4,319)     (16,971)      13,852
      Unrealized gain (loss)
       on hedges of net
       investment in
       self-sustaining
       operations              16,890        2,491       13,272       (7,413)
      Partial release
       of cumulative
       translation
       adjustment                   -        1,032            -        1,203
    -------------------------------------------------------------------------
      Unrealized foreign
       exchange translation
       gain (loss), net of
       hedging activities         841         (796)      (3,699)       7,642
      Net unrealized gain
       (loss) on derivatives
       designated as cash
       flow hedges               (235)      14,434        1,418        1,920
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)                606       13,638       (2,281)       9,562
    -------------------------------------------------------------------------
    Comprehensive income
     (loss), net of tax    $     (131)  $    6,558   $  (25,318)  $     (905)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY (DEFICIENCY)
    (unaudited, in thousands of U.S. dollars)
    Three and six months ended June 30, 2008
    -------------------------------------------------------------------------
                                            Exchangeable limited
                         Fund units           partnership units   Contributed
                     Amount      Number      Amount       Number    surplus
    -------------------------------------------------------------------------
                                (000s)                  (000s)
    -------------------------------------------------------------------------
    Balance,
     January 1,
     2008         $  181,660      57,021  $      298          98  $        -

    Loss for the
     quarter               -           -           -           -           -

    Deferred
     units issued          -           -           -           -          87

    Repurchase of
     units              (414)       (130)          -           -           -

    Limited
     partnership
     units
     exchanged
     for Fund
     units               104          34        (104)        (34)          -

    Other
     comprehensive
     loss                  -           -           -           -           -

    -------------------------------------------------------------------------
    Balance,
     March 31,
     2008         $  181,350      56,925  $      194          64  $       87
    -------------------------------------------------------------------------

    Loss for
     the quarter           -           -           -           -           -

    Deferred
     units issued          -           -           -           -          70

    Limited
     partnership
     units
     exchanged
     for Fund
     units                94          31         (94)        (31)          -

    Deferred
     units
     exchanged
     for Fund
     units               135          24           -           -        (135)

    Other
     comprehensive
     loss                  -           -           -           -           -

    -------------------------------------------------------------------------
    Balance,
     June 30,
     2008         $  181,579      56,980    $    100          33    $     22
    -------------------------------------------------------------------------


    -------------------------------------------------------------
                                         Accumulated
                                               other       Total
                    Employee                 compre-       unit-
                        unit                 hensive     holders'
                    purchase                  income      equity
                        loan     Deficit      (loss) (deficiency)
    -------------------------------------------------------------

    -------------------------------------------------------------
    Balance,
     January 1,
     2008         $        -  $ (223,854) $  111,966  $   70,070

    Loss for the
     quarter               -      (3,387)          -      (3,387)

    Deferred
     units issued          -           -           -          87

    Repurchase of
     units                 -        (315)          -        (729)

    Limited
     partnership
     units
     exchanged
     for Fund
     units                 -           -           -           -

    Other
     comprehensive
     loss                  -           -      (4,076)     (4,076)

    -------------------------------------------------------------
    Balance,
     March 31,
     2008         $        -  $ (227,556) $  107,890  $   61,965
    -------------------------------------------------------------

    Loss for
     the quarter           -      (7,080)          -      (7,080)

    Deferred
     units issued          -           -           -          70

    Limited
     partnership
     units
     exchanged
     for Fund
     units                 -           -           -           -

    Deferred
     units
     exchanged
     for Fund
     units                 -           -           -           -

    Other
     comprehensive
     loss                  -           -      13,638      13,638

    -------------------------------------------------------------
    Balance,
     June 30,
     2008         $        -  $ (234,636) $  121,528  $   68,593
    -------------------------------------------------------------




    Three and six months ended June 30, 2009
    -------------------------------------------------------------------------
                                            Exchangeable limited
                         Fund units           partnership units   Contributed
                     Amount      Number      Amount       Number    surplus
    -------------------------------------------------------------------------
                                   (000s)                  (000s)
    -------------------------------------------------------------------------
    Balance,
     January 1,
     2009         $  175,990      55,223  $      100          33  $        -

    Loss for
     the quarter           -           -           -           -           -

    Deferred units
     issued                -           -           -           -          76

    Other
     comprehensive
     loss                  -           -           -           -           -

    -------------------------------------------------------------------------
    Balance,
     March 31,
     2009         $  175,990      55,223  $      100          33  $       76
    -------------------------------------------------------------------------

    Loss for
     the quarter           -           -           -           -           -

    Deferred units
     issued                -           -           -           -         127

    Limited
     partnership
     units
     exchanged
     for Fund
     units                12           4         (12)         (4)          -

    Issuance of
     shareholder
     loans                 -           -           -           -           -

    Other
     comprehensive
     loss                  -           -           -           -           -

    -------------------------------------------------------------------------
    Balance,
     June 30,
     2009         $  176,002      55,227  $       88          29  $      203
    -------------------------------------------------------------------------


    -------------------------------------------------------------
                                         Accumulated
                                               other       Total
                    Employee                 compre-       unit-
                        unit                 hensive     holders'
                    purchase                  income      equity
                        loan     Deficit      (loss) (deficiency)
    -------------------------------------------------------------

    -------------------------------------------------------------
    Balance,
     January 1,
     2009         $        -  $ (258,425) $   99,115  $   16,780

    Loss for
     the quarter           -     (22,300)          -     (22,300)

    Deferred units
     issued                -           -           -          76

    Other
     comprehensive
     loss                  -           -      (2,887)     (2,887)

    -------------------------------------------------------------
    Balance,
     March 31,
     2009         $        -  $ (280,725) $   96,228  $   (8,331)
    -------------------------------------------------------------

    Loss for
     the quarter           -        (737)          -        (737)

    Deferred units
     issued                -           -           -         127

    Limited
     partnership
     units
     exchanged
     for Fund
     units                 -           -            -          -

    Issuance of
     shareholder
     loans        $     (486)          -            -       (486)

    Other
     comprehensive
     loss                  -           -          606        606

    -------------------------------------------------------------
    Balance,
     June 30,
     2009         $     (486) $ (281,462) $    96,834 $   (8,821)
    -------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited, in thousands of U.S. dollars)

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30                   June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash provided by
     (used in):
    Operating Activities:
      Net earnings (loss)
       from continuing
       operations          $    7,288   $   (4,098)  $  (10,318)  $    3,508
      Items not involving
       cash:
        Amortization           32,798       36,573       64,979       71,906
        Future income
         taxes (recovery)         725        1,159       (1,425)       3,623
        Gain on repurchase
         of debt              (13,622)           -      (13,622)           -
        Release of cumulative
         translation
         adjustment                 -          365            -          536
        Non-cash interest
         expense                  600          444        1,266          888
        Hedge
         ineffectiveness         (690)          99         (494)         393
        Gain on disposition
         of property, plant
         and equipment             42           13       (2,055)         (80)
        Other                     126           70          202          157
      Change in non-cash
       operating working
       capital                  3,314        8,506       52,831       70,574
    -------------------------------------------------------------------------
                               30,581       43,131       91,364      151,505
    Financing Activities:
      Transaction costs            (4)           -       (1,525)           -
      Repayment/repurchase
       of long-term debt
       and bank indebtedness  (29,694)      (1,733)     (66,382)     (30,044)
      Decrease in obligations
       under capital leases      (637)        (613)      (1,547)        (956)
      Financing of employee
       unit purchase loan        (486)           -         (486)           -
      Repurchase of units           -            -            -         (729)
      Distributions paid            -            -            -       (9,247)
    -------------------------------------------------------------------------
                              (30,821)      (2,346)     (69,940)     (40,976)
    Investing Activities:
      Purchase of property,
       plant and equipment    (12,357)     (25,461)     (29,725)     (37,012)
      Acquisitions,
       net of cash                  -       (1,994)           -       (1,994)
      Acquisition expense           -          755            -          755
      Payment of acquisition
       earnout amount         (16,131)     (13,449)     (16,131)     (13,449)
      Proceeds on
       disposition of
       property, plant
       and equipment            3,445            3       26,449           98
      Increase in other
       assets                  (2,121)      (8,631)        (125)      (7,958)
      Increase (decrease)
       in other long-term
       liabilities             (1,802)         157       (5,022)       1,536
    -------------------------------------------------------------------------
                              (28,966)     (48,620)     (24,554)     (58,024)
      Cash provided by
       (used in)
       discontinued
       operating
       activities             (13,862)      (7,567)     (10,435)      (9,369)
      Cash provided by
       (used in)
       discontinued
       investing activities    14,001        5,716       13,990        5,412
    Foreign currency
     translation gain/(loss)
     on cash held in foreign
     currencies                 2,108         (921)       2,849        2,628
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash
     equivalents              (26,959)      (10,607)      3,274       51,176
    Cash and cash
     equivalents, beginning
     of period                103,582       130,189      73,349       68,406
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period                $   76,623   $   119,582  $   76,623   $  119,582
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash
     equivalents are
     comprised of:
      Cash                     61,490   $    78,035      61,490   $   78,035
      Cash equivalents         15,133        41,547      15,133       41,547
    -------------------------------------------------------------------------
                           $   76,623   $   119,582  $   76,623   $  119,582
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash
     flow information:
      Interest paid        $    9,207   $    12,048  $   20,284   $   24,485
      Income taxes
       paid (received)          1,549        (2,604)      1,694        8,945
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: John H. Bell, Tel: (416) 332-2902,
johnbell@cinram.com

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Cinram Group Inc.

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