Cinram Reports 2009 Third Quarter Results

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

TORONTO, Nov. 10 /CNW/ - Cinram International Income Fund ("Cinram" or the "Fund") (TSX: CRW.UN) today reported its third quarter financial results of 2009. "Cinram's results for the third quarter of 2009 are consistent with expectations. Although unit sales of DVD's and CD's were down from 2008, the increase in Blu-ray volume coupled with the company's increased operating efficiencies resulted in a strong financial performance. During the quarter, we intensified the focus on improving our cost structure and continued improving our balance sheet through debt reduction" commented Cinram Chief Executive Officer Steve Brown.

The Fund recorded a 15 per cent decrease in revenue to $351.2 million in the third quarter from $411.7 million in the third quarter of 2008. Excluding the effects of foreign exchange, revenue decreased by 12 per cent. For the first nine months of 2009, revenue decreased by 18 per cent to $955.4 million from $1,171.7 million in the same period in 2008 due to lower home video revenues resulting from decreases in both units shipped and average selling prices. Excluding the effects of foreign exchange, revenue decreased by 13 per cent. Earnings before interest, taxes and amortization (EBITA1) were $42.8 million during the third quarter of 2009, down from $56.9 million in the same quarter of 2008. The prior year results included a $15.8 million favourable adjustment to EBITA relating to a patent settlement. For the first nine months of 2009, EBITA was $92.7 million compared to $140.9 million in 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. The Fund reported net earnings from continuing operations for the third quarter of 2009 of $13.9 million or $0.26 per unit (basic) compared with net earnings from continuing operations of $1.5 million or $0.03 per unit (basic) in 2008.

In September, the Fund signed a three year extension of the replication services agreement with Lions Gate Entertainment Inc. "We are very pleased that we have extended the long standing relationship with a very important studio client" said Steve Brown.

During the third quarter of 2009, the Fund repurchased $38.1 million of debt at a cost of $28.2 million, resulting in a gain of $9.9 million. To date, the Fund has repurchased $96.9 million of debt at a cost of $68.6 million. "Debt reduction is a critical strategic objective of the Fund, and we will continue to focus on opportunities to repurchase our Senior Secured debt on favourable terms" commented John Bell, Cinram's Chief Financial Officer.

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 working capital adjustments. During the third quarter of 2009, the fund recorded working capital adjustments of $2.8 million, which will reduce net cash proceeds to $11.2 million. Ivy Hill's results were excluded from Cinram's continuing operations for the three and nine-month period ended September 30, 2009 and 2008.

Segment revenue

    
    -------------------------------------------------------------------------
                  Three months ended              Nine months ended
                     September 30                     September 30
    -------------------------------------------------------------------------
    (in thousands
     of US$)     2009            2008            2009             2008
    -------------------------------------------------------------------------
    Home
     Video   $276,706   79%  $298,403   72%  $721,300   76%   $850,243   73%
    CD         42,319   12%    57,003   14%   118,854   12%    169,198   14%
    Video
     Game      18,192    5%    26,545    7%    58,404    6%     77,289    7%
    Other      14,021    4%    29,702    7%    56,868    6%     74,994    6%
    -------------------------------------------------------------------------
             $351,238  100%  $411,653  100%  $955,426  100% $1,171,724  100%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Third quarter of 2009 Home Video revenue (which includes replication and distribution of DVDs and high-definition discs) was down seven per cent to $276.7 million from $298.4 million in the prior year third quarter due to lower DVD replication volumes in North America combined with lower selling prices. This decline was partially mitigated by the impact of foreign exchange rate differences between 2008 and 2009. Cinram replicated 299 million DVDs in the third quarter of 2009, a slight decrease from 300 million units in 2008. High-definition disc replication revenue increased to $4.7 million in the third quarter of 2009 from $2.3 million in the comparable 2008 period.

CD segment revenue (which includes replication and distribution of CDs) was down 26 per cent in the third quarter of 2009 to $42.3 million from $57.0 million in 2008 in line with a corresponding decline in replication and distribution volumes.

Revenue from the Video Game segment was down 31 per cent to $18.2 million in the third quarter of 2009 from $26.5 million in 2008 reflecting continued consumer spending declines in this segment of the market.

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 $14.0 million in the third quarter of 2009 from $29.7 million in 2008. The termination of the Motorola distribution business in Europe accounted for 42% of this decline.

Geographic revenue

Third quarter of 2009 North American revenue decreased 20 per cent to $199.6 million from $248.6 million in 2008, principally as a result of lower DVD volumes and prices. North America accounted for 57 per cent of third quarter consolidated revenue compared with 60 per cent in 2008.

European revenue was down seven per cent in the third quarter to $151.6 million from $163.0 million in 2008, due to lower CD unit sales from our German operations combined with the foreign currency translation impact. Excluding the impact of foreign currency translation, European revenue decreased by two percent in the third quarter of 2009 compared to 2008. Third quarter European revenue represented 43 per cent of consolidated sales compared with 40 per cent in the third quarter of 2008.

Other financial highlights

Gross profit for the quarter ended September 30, 2009 was $62.6 million, a reduction of $7.9 million from the $70.5 million in 2008, which included a favourable royalty adjustment of $15.8 million. The gross profit margins increased to 18 per cent in the third quarter of 2009, from 17 per cent in the corresponding 2008 period, resulting from labour and overhead efficiencies realized during the current quarter. The Fund also recorded amortization expense relating to capital assets (included in the cost of goods sold) of $21.2 million compared to $24.4 million in the third quarter of 2008. The 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 September 30, 2009 increased to $39.4 million from $38.0 million in 2008, primarily as a result of $4.0 million of combined severance charges and consulting fees incurred. Selling, general and administrative expenses were 11 per cent of revenue in the 2009 third quarter, compared to nine per cent in the prior year period.

Balance sheet and liquidity

The Fund had cash and cash equivalents on hand of $93.6 million and debt of $520.3 million (excluding unamortized transaction costs and loan fees), resulting in a net debt position of $426.7 million at September 30, 2009, compared with a net debt position of $573.8 million at the end of 2008. During the third quarter of 2009, the Fund reduced debt by $46.9 million as a result of mandatory debt repayments in addition to debt repurchases at amounts below par following the amendment to the credit agreement on March 30, 2009. During the third quarter of 2009, Cinram paid $8.1 million for property, plant and equipment, including payments on DVD equipment purchased in the prior year.

Unit data

For the three-month period ended September 30, 2009, the basic weighted average number of units and exchangeable limited partnership units outstanding was 54.5 million compared with 56.5 million in 2008. During the first nine months of 2009, the Fund did not repurchase any units under its normal course issuer bid.

    
    Reconciliation of EBITA and EBIT to net earnings from continuing
    operations
    -------------------------------------------------------------------------
                                    Three months ended     Nine months ended
                                          September 30          September 30
    (unaudited, in thousands
     of U.S. dollars)                  2009       2008       2009       2008
    -------------------------------------------------------------------------
    EBITA excluding other charges  $ 44,402   $ 56,908   $ 95,809   $141,428
    -------------------------------------------------------------------------
    Other charges, net                1,587          -      3,113        536
    -------------------------------------------------------------------------
    EBITA(1)                       $ 42,815   $ 56,908   $ 92,696   $140,892
    -------------------------------------------------------------------------
    Amortization of property,
     plant and equipment             21,215     24,392     65,695     74,980
    Amortization of intangible
     assets                          10,451     10,594     30,950     31,912
    -------------------------------------------------------------------------
    EBIT(2)                        $ 11,149   $ 21,922   $ (3,949)  $ 34,000
    -------------------------------------------------------------------------
    Interest expense                 10,123     11,555     29,548     35,137
    Gain on repurchase of debt       (9,853)         -    (23,475)         -
    Foreign exchange (gain) loss     (6,456)     7,577    (14,050)     2,499
    Investment income                  (194)      (452)      (527)    (1,511)
    Income taxes (recovery)           3,588      1,713        932     (7,162)
    -------------------------------------------------------------------------
    Net earnings from continuing
     operations                    $ 13,941   $  1,529   $  3,623   $  5,037
    -------------------------------------------------------------------------
    (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 translation 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 and EBITA
        including other charges, are not defined terms under generally
        accepted accounting principles (GAAP). Accordingly, these measures
        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 translation
        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, Blu-ray 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 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)

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

    ASSETS
    Current assets:
    Cash and cash equivalents                           $93,622      $73,349
    Accounts receivable                                 321,757      495,604
    Inventories                                          52,242       48,987
    Income taxes receivable                                 284       18,235
    Prepaid expenses                                     18,293       21,913
    Future income taxes                                   1,900        1,827
    -------------------------------------------------------------------------
                                                        488,098      659,915

    Property, plant and equipment                       296,716      361,804
    Goodwill                                             63,530       64,737
    Intangible assets                                    63,971       94,423
    Other assets                                         24,948       24,557
    -------------------------------------------------------------------------
                                                       $937,263   $1,205,436
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY (DEFICIENCY)
    Current liabilities:
    Accounts payable                                    $80,451     $203,619
    Accrued liabilities                                 246,773      247,968
    Income taxes payable                                 14,609       11,581
    Current portion of long-term debt                    35,245        6,750
    Current portion of obligations under capital leases   2,114        3,094
    -------------------------------------------------------------------------
                                                        379,192      473,012

    Long-term debt                                      481,097      636,299
    Obligations under capital leases                      2,701        3,926
    Other long-term liabilities                          44,859       43,625
    Derivative instruments                               27,069       26,586
    Future income taxes                                   4,071        5,208

    Unitholders' equity (deficiency)                     (1,726)      16,780
    -------------------------------------------------------------------------

                                                       $937,263   $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       Nine months ended
                                        September 30            September 30
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Revenue                     $351,238    $411,653    $955,426  $1,171,724
    Cost of goods sold           288,626     341,173     802,883     985,480
    -------------------------------------------------------------------------
    Gross profit                  62,612      70,480     152,543     186,244
    Selling, general and
     administrative expenses      39,425      37,964     122,429     119,796
    Amortization of
     intangible assets            10,451      10,594      30,950      31,912
    Other charges, net             1,587           -       3,113         536
    -------------------------------------------------------------------------
    Earnings (loss) before
     the undernoted               11,149      21,922      (3,949)     34,000
    Interest on long-term debt     9,147      11,392      28,363      34,473
    Other interest expense           976         163       1,185         664
    Gain on repurchase of debt    (9,853)          -     (23,475)          -
    Foreign exchange
     (gain) loss                  (6,456)      7,577     (14,050)      2,499
    Investment income               (194)       (452)       (527)     (1,511)
    -------------------------------------------------------------------------
    Earnings (loss) from
     continuing operations
     before income taxes          17,529       3,242       4,555      (2,125)
    Income taxes (recovery)        3,588       1,713         932      (7,162)
    -------------------------------------------------------------------------
    Earnings  from continuing
     operations                   13,941       1,529       3,623       5,037
    Earnings (loss) from
     discontinued operations      (4,460)        493     (17,179)    (13,482)
    -------------------------------------------------------------------------
    Net earnings (loss)           $9,481      $2,022    $(13,556)    $(8,445)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per unit from
     continuing operations:
      Basic                        $0.26       $0.03       $0.07       $0.09
      Diluted                      $0.25       $0.03       $0.07       $0.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) Loss per unit:
      Basic                        $0.17       $0.04      $(0.25)     $(0.15)
      Diluted                      $0.17       $0.04      $(0.25)     $(0.15)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of
     units and exchangeable
     limited partnership units
     outstanding, (in thousands):
      Basic                       54,530      56,481      54,956      56,864
      Diluted                     55,564      56,550      55,474      56,920
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30            September 30
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the period                   $9,481      $2,022    $(13,556)    $(8,445)
    Other comprehensive income,
     net of tax :
      Unrealized gain (loss) on
       translating financial
       statements of self-
       sustaining foreign
       operations                (12,445)       (507)    (29,416)     13,345
      Unrealized gain (loss) on
       hedges of net investment
       in self-sustaining
       operations                 12,627      (7,034)     25,899     (14,447)
      Partial release of
       cumulative translation
       adjustment                      -           -           -       1,203
    -------------------------------------------------------------------------
      Unrealized foreign
       exchange translation
       gain (loss), net of
       hedging activities            182      (7,541)     (3,517)        101
      Net unrealized gain
       (loss) on derivatives
       designated as cash flow
       hedges                     (1,897)       (874)       (479)      1,046
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)                (1,715)     (8,415)     (3,996)      1,147
    -------------------------------------------------------------------------
    Comprehensive income
     (loss), net of tax           $7,766     $(6,393)   $(17,552)    $(7,298)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY (DEFICIENCY)
    (unaudited, in thousands of U.S. dollars)
    Three and nine months ended September 30, 2008

    -------------------------------------------------------------------------
                                             Exchangeable Limited Contributed
                             Fund Units        Partnership units    surplus

                         Amount     Number     Amount     Number
    -------------------------------------------------------------------------
                                    (000's)               (000's)
    -------------------------------------------------------------------------

    Balance,
     January 1, 2008    $181,660     57,021       $298         98         $-
    Loss for the six
     months ended
     June 30, 2008             -          -          -          -          -
    Deferred units
     issued                    -          -          -          -        157
    Repurchase of
     units                  (414)      (130)         -          -          -
    Limited partnership
     units exchanged
     for Fund units          198         65       (198)       (65)         -
    Deferred units
     exchanged for
     Fund units              135         24          -          -       (135)
    Other comprehensive
     income                    -          -          -          -          -
    -------------------------------------------------------------------------
    Balance, June 30,
     2008               $181,579     56,980       $100         33        $22
    Earnings for
     the quarter               -          -          -          -          -
    Deferred units
     issued                    -          -          -          -         68
    Repurchase of
     units                (5,607)    (1,761)         -          -        (22)
    Other comprehensive
     loss                      -          -          -          -          -
    -------------------------------------------------------------------------
    Balance, September
     30, 2008           $175,972     55,219       $100         33        $68
    -------------------------------------------------------------------------


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

    --------------------------------------------------------------

    Balance,
     January 1, 2008          $-  $(223,854)  $111,966    $70,070
    Loss for the six
     months ended
     June 30, 2008             -    (10,467)         -    (10,467)
    Deferred units
     issued                    -          -          -        157
    Repurchase of
     units                     -       (315)         -       (729)
    Limited partnership
     units exchanged
     for Fund units            -          -          -          -
    Deferred units
     exchanged for
     Fund units                -          -          -          -
    Other comprehensive
     income                    -          -      9,562      9,562
    --------------------------------------------------------------
    Balance, June 30,
     2008                     $-  $(234,636)  $121,528    $68,593
    Earnings for
     the quarter               -      2,022          -      2,022
    Deferred units
     issued                    -          -          -         68
    Repurchase of
     units                     -     (2,727)         -     (8,356)
    Other comprehensive
     loss                      -          -     (8,415)    (8,415)
    --------------------------------------------------------------
    Balance, September
     30, 2008                 $-  $(235,341)  $113,113    $53,912
    --------------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY (DEFICIENCY)
    (unaudited, in thousands of U.S. dollars)
    Three and nine months ended September 30, 2009

    -------------------------------------------------------------------------
                                            Exchangeable Limited  Contributed
                             Fund Units       Partnership units      surplus

                         Amount     Number     Amount     Number
    -------------------------------------------------------------------------
                                    (000's)               (000's)
    -------------------------------------------------------------------------
    Balance,
     January 1, 2009    $175,990     55,223       $100         33         $-
    Loss for the six
     months ended
     June 30, 2009             -          -          -          -          -
    Deferred units
     issued                    -          -          -          -        203
    Limited partnership
     units exchanged
     for Fund units           12          4        (12)        (4)         -
    Issuance of
     employee unit
     purchase loans            -          -          -          -          -
    Other comprehensive
     loss                      -          -                     -
    -------------------------------------------------------------------------
    Balance, June 30,
     2009               $176,002     55,227        $88         29       $203
    Earnings for
     the quarter               -          -          -          -          -
    Deferred units
     issued                    -          -          -          -         91
    Issuance of
     employee unit
     purchase loans            -          -          -          -          -
    Other comprehensive
     loss                      -          -          -          -          -
    -------------------------------------------------------------------------
    Balance, September
     30, 2009           $176,002     55,227        $88         29       $294
    -------------------------------------------------------------------------


    --------------------------------------------------------------
                                           Accumulated    Total
                        Employee              other        Unit-
                            unit          comprehensive  holders'
                        purchase              income      equity
                            loan    Deficit   (loss)  (deficiency)
    --------------------------------------------------------------
    Balance,
     January 1, 2009          $-  $(258,425)   $99,115    $16,780
    Loss for the six
     months ended
     June 30, 2009             -    (23,037)         -    (23,037)
    Deferred units
     issued                    -          -          -        203
    Limited partnership
     units exchanged
     for Fund units            -          -          -          -
    Issuance of
     employee unit
     purchase loans         (486)         -          -       (486)
    Other comprehensive
     loss                      -          -     (2,281)    (2,281)
    --------------------------------------------------------------
    Balance, June 30,
     2009                  $(486) $(281,462)   $96,834    $(8,821)
    Earnings for
     the quarter               -      9,481          -      9,481
    Deferred units
     issued                    -          -          -         91
    Issuance of
     employee unit
     purchase loans         (762)         -          -       (762)
    Other comprehensive
     loss                      -          -     (1,715)    (1,715)
    --------------------------------------------------------------
    Balance, September
     30, 2009            $(1,248) $(271,981)   $95,119    $(1,726)
    --------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30            September 30
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Cash provided by (used in):
    Operating Activities:
      Net earnings from
       continuing operations     $13,941      $1,529      $3,623      $5,037
      Items not involving cash:
        Amortization              31,666      34,986      96,645     106,892
        Future income taxes
         (recovery)                  215        (607)     (1,210)      3,016
        Gain on repurchase
         of debt                  (9,853)          -     (23,475)          -
        Release of cumulative
         translation adjustment        -           -           -         536
        Non-cash interest expense    600         445       1,866       1,333
        Hedge ineffectiveness        490        (636)         (4)       (243)
        (Gain) loss on
         disposition of property,
         plant and equipment         184        (229)     (1,553)       (309)
        Other                         91          68         294         225
      Change in non-cash
       operating working capital  24,186     (60,890)     85,891      13,002
    -------------------------------------------------------------------------
                                  61,520     (25,334)    162,077     129,489
    Financing Activities:
      Transaction costs                -           -      (1,525)          -
      Repayment/repurchase of
       long-term debt and bank
       indebtedness              (37,075)     (1,688)   (103,457)    (31,732)
      Decrease in obligations
       under capital leases         (658)       (868)     (2,205)     (1,824)
      Financing of employee
       unit purchase loan           (762)          -      (1,248)          -
      Repurchase of units              -      (8,356)          -      (9,085)
      Distributions paid               -           -           -      (9,247)
    -------------------------------------------------------------------------
                                 (38,495)    (10,912)   (108,435)    (51,888)
    Investing Activities:
      Purchase of property,
       plant and equipment        (8,128)    (17,040)    (37,853)    (54,052)
      Acquisitions, net of cash        -      (3,392)          -      (5,386)
      Acquisition expense              -         248           -       1,003
      Payment of acquisition
       earnout amount                  -           -     (16,131)    (13,449)
      Proceeds on disposition
       of property, plant and
       equipment                   2,764         266      29,406         364
      Decrease (increase) in
       other assets                 (266)      2,696        (391)     (5,262)
      Increase (decrease) in
       other long-term
       liabilities                   129        (333)     (5,211)      1,203
    -------------------------------------------------------------------------
                                  (5,501)    (17,555)    (30,180)    (75,579)
      Cash provided by (used
       in) discontinued
       operating activities         (174)     (3,350)    (20,052)    (16,037)
      Cash provided by (used
       in) discontinued
       investing activities            -       1,552      13,990       6,964
    Foreign currency translation
     gain/(loss) on cash held
     in foreign currencies          (351)     (1,818)      2,873         810
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash equivalents    16,999     (57,417)     20,273      (6,241)
    Cash and cash equivalents,
     beginning of period          76,623     119,582      73,349      68,406
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period               $93,622     $62,165     $93,622     $62,165
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents
     are comprised of:
      Cash                       $66,086     $28,616     $66,086     $28,616
      Cash equivalents            27,536      33,549      27,536      33,549
    -------------------------------------------------------------------------
                                 $93,622     $62,165     $93,622     $62,165
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     information:
      Interest paid               $8,725     $10,482     $29,009     $34,967
      Income taxes received      (19,294)    (16,726)    (17,600)     (7,781)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents are defined as cash and short-term deposits
    that have an original maturity of less than 90 days.
    

SOURCE Cinram Group Inc.

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

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