Movie Distribution Income Fund Announces Second Quarter Results



    
    -  Movie Distribution Income Fund sale at $10.00 cash per unit is
       scheduled to close on August 15, 2007
    

    TSX: FLM.UN

    TORONTO, Aug. 13 /CNW/ - Movie Distribution Income Fund (the "Fund")
today announced financial and operating results for Motion Picture
Distribution LP (the "Partnership") for the three months and six months ended
June 30, 2007.
    "As expected, results from our European operations continue to be strong
in the second quarter as the success of the theatrical releases from the first
quarter translate favourably into strong performances in the DVD windows,"
said John Bailey, Chief Executive Officer. "The Canadian results were
disappointing in the second quarter but we are looking forward to a solid
line-up of theatrical releases in the second half of the year."

    SECOND QUARTER RESULTS

    Revenue

    Consolidated revenue from the Partnership for the second quarter was
$87.4 million, an increase of $2.5 million compared to the prior year's
quarter. Revenue from the Partnership's library was $14.6 million in the
quarter, an increase of 23% compared to $11.9 million in the prior year's
quarter.
    In Canada, revenue of $53.6 million was down 4% compared to the prior
year's quarter. The theatrical slate which included Fracture and Hot Fuzz was
up against stronger comparables in the prior year's quarter with Scary Movie 4
and Take the Lead. A stronger DVD slate was offset by lower Canadian library
television sales in the quarter to domestic broadcasters. Television revenue
decreased to $11.8 million in the second quarter compared to $16.5 million in
the prior year's quarter. Revenue fluctuations for television series can be
significant when multiple seasons of series become available for sale.
    UK revenue of $21.5 million was down from $23.5 million in the prior
year's quarter. The decrease was mainly attributable to the decline in
television revenues as the prior year included TV sales of Lost in Translation
and Racing Stripes. The decline was partially mitigated by a stronger DVD
slate which included Miss Potter and Hannibal Rising.
    Revenue of $12.3 million in Spain was up significantly from $5.6 million
in last year's quarter. Theatrical revenue increased $4.5 million and included
The Messengers, Because I Said So and Happily N'Ever After. DVD revenue
increased $2.6 million from the prior year and included sales of The
Illusionist, Apocalypto and The Grudge 2. Television sales decreased
$0.4 million due to the timing of sales.

    Adjusted EBITDA(2)

    Consolidated adjusted EBITDA(2) of $5.3 million compared to $6.0 million
in the prior year's quarter.
    In Canada, adjusted EBITDA(2) of $3.9 million was down compared to
$8.0 million in the prior year's quarter. These results reflect lower
theatrical and television revenues and the impact of the P&A costs incurred in
the quarter relating to certain third quarter theatrical releases including
Hairspray. Retention costs accrued in the quarter also contributed to the
lower adjusted EBITDA.
    In the UK, EBITDA(1) of $1.0 million compared to a loss of $0.3 million
in the prior year's quarter. Direct profit margin of 21% in the current
quarter reflects the relative weighting of the higher DVD revenues and the
reductions in P&A spend in the quarter.
    In Spain, EBITDA(1) of $0.4 million compared to a loss of $1.7 million in
the prior year's quarter. Direct profit margins in the quarter reflect the
higher theatrical and DVD revenues.

    Amortization

    Amortization in the quarter was $0.1 million compared to $1.5 million in
the prior year's quarter. Amortization in the prior year's quarter includes a
$1.2 million partial write-down of intangible assets.

    Interest Expense

    Interest expense of $1.8 million in the quarter was comparable to the
prior year's quarter of $1.9 million.

    Tax Provision

    Income taxes of $0.4 million compared to an income tax recovery of
$0.7 million in the prior year's quarter.

    Net Income

    The Partnership's net income for the second quarter was $0.9 million
compared to $3.1 million in the prior year's quarter.

    Distributable Cash(3)

    Distributable Cash for the quarter was $3.3 million or $0.08 per unit
with a declared distribution per unit of $0.29 per unit. In the prior year's
quarter the Partnership recorded Distributable Cash of $4.8 million or
$0.12 per unit with a declared distribution per unit of $0.29.
    On a LTM basis, the Partnership has recorded Distributable Cash of
$43.2 million and a payout ratio of 105%.

    Liquidity

    Net debt(4) for the Partnership was $93.9 million at June 30, 2007
compared to $79.8 million at March 31, 2007. At June 30, 2007, the Partnership
had unused credit facilities totaling $15.5 million. The Partnership has
extended the maturity of its senior secured credit facilities through to
December 31, 2007.

    FIRST HALF RESULTS

    Consolidated revenue from the Partnership for the six months ended June
30, 2007 was $197.4 million, an increase of $9.7 million or 5% from the prior
year's period.
    Consolidated adjusted EBITDA of $12.7 million was comparable to the prior
year's period.
    The Partnership's net earnings for the first half was $5.3 million
compared to $8.3 million in the first half of 2006.
    Please refer to the attached appendix listing current and prior period
releases and library revenues. Selected titles from our 2007 release slate can
be found on the website at: www.moviedistributionincomefund.com.

    2007 OUTLOOK

    In Canada in the second half of 2007, we released Rush Hour 3 starring
Jackie Chan and Chris Tucker and expect to release The Nanny Diaries starring
Scarlett Johansson and Paul Giamatti, The Golden Compass (His Dark Materials)
starring Nicole Kidman, Daniel Craig and Ian McShane and Atonement starring
Keira Knightley and James McAvoy. On DVD in Canada, we expect to release Hot
Fuzz, Fracture, Hairspray, The Nanny Diaries and Rush Hour 3.
    In the United Kingdom in the second half of 2007, we expect to release
Control, The Last Legion starring Colin Firth and Ben Kingsley, P.S. I Love
You, Bratz, Death Proof and Planet Terror. On DVD we released The Illusionist
and Amazing Grace and expect to release Bratz.
    In Spain, we released Planet Terror and Next starring Nicolas Cage and
Julianne Moore and expect to release Death Proof, Bratz, School for Scoundrels
and The Hoax. DVD releases in 2007 are expected to include Next, Bratz, Death
Proof and Planet Terror.

    Basis of Presentation

    The Fund holds an indirect 49% limited partnership interest in the
Partnership and Alliance Atlantis Communications Inc. ("Alliance Atlantis")
indirectly holds the remaining 51% limited partnership interest.
    The financial statements released today include the presentation of the
consolidated financial and operating results of the Partnership for the three
and six months ended June 30, 2007.

    About Motion Picture Distribution LP and Movie Distribution Income Fund

    The Partnership is a leading distributor of motion pictures in Canada,
with a presence in motion picture distribution operations in the United
Kingdom and Spain. The Partnership distributes filmed entertainment to
theatres, on video and DVD, and to television broadcasters. Alliance Atlantis
(TSX: AAC.A, AAC.B) indirectly holds a 51% ownership interest in the
Partnership and Movie Distribution Income Fund (TSX: FLM.UN) indirectly holds
the remaining ownership interest in the Partnership.

    Forward-Looking Statements

    This press release, in particular the "2007 Outlook" section, includes
forward-looking statements, which are based on certain assumptions and reflect
the current expectations of Movie Distribution Income Fund (the "Fund") and
the Partnership. Forward-looking statements are those which are not historical
fact and include, but are not limited to, statements of the Fund's or the
Partnership's expectations and intentions. The reader should not place undue
reliance on them. They involve known and unknown risks, uncertainties and
other factors that may cause them to differ materially from the anticipated
future results or expectations expressed or implied by such forward-looking
statements. Important factors that could cause actual results to differ
materially from those set forth in the forward-looking statements include:
failure to complete, or a significant delay in completing, the Alliance
Atlantis Acquisition and the Movie Distribution Income Fund Sale, audience
acceptance of our filmed entertainment, our relationship with filmed
entertainment content suppliers; the loss of key personnel, technological
change that increases competition or facilitates the infringement of our
intellectual property, changes to the regulatory environment, actions of our
competitors and changes in the general economy. Additional information about
these factors and other factors are described in materials filed by the Fund
with the security regulatory authorities in Canada from time to time,
including the Fund's 2006 Annual Information Form. Neither the Fund nor the
Partnership undertakes any obligation to publicly update or revise any
forward- looking statements or information, whether as a result of new
information, future events or otherwise.

    This press release - including financial statements - is distributed via
Canada NewsWire (www.newswire.ca) and posted to Movie Distribution Income
Fund's website (www.moviedistributionincomefund.com). Notes to the
Consolidated Financial Statements are not distributed via Canada NewsWire and
are available on the Movie Distribution Income Fund's website.

    Management believes that, in addition to net earnings, EBITDA, Adjusted
EBITDA and Distributable Cash are useful complementary measures of operating
performance. However, EBITDA, Adjusted EBITDA and Distributable Cash are not
recognized measures under Canadian generally accepted accounting principles
("Canadian GAAP") and do not have a standardized meaning prescribed by
Canadian GAAP. Readers or users are cautioned that EBITDA, Adjusted EBITDA and
Distributable Cash should not be construed as an alternative to net earnings
determined in accordance with Canadian GAAP, as an indicator of performance,
or as an alternative to cash flows from operating, investing and financial
activities as a measure of liquidity and cash flows. Motion Picture
Distribution LP's method of calculating EBITDA, Adjusted EBITDA and
Distributable Cash may differ from the methods used by other entities and
accordingly, EBITDA, Adjusted EBITDA and Distributable Cash may not be
comparable to similarly titled measures used by other entities.

    
    (1) EBITDA is defined as earnings before interest, income taxes,
        amortization, non-controlling interest and foreign exchange gains and
        losses.

    (2) Adjusted EBITDA is defined as EBITDA less Fund expenses reimbursed by
        Distribution LP, plus non-cash compensation costs funded by the
        controlling shareholder.

    (3) Distributable cash is defined as EBITDA less maintenance property and
        equipment expenditures, interest expense, income taxes, the portion
        of EBITDA attributable to minority interests, Fund expenses
        reimbursed by Distribution LP and adding non-cash employee
        compensation charges.

    (4) Net debt is defined as amounts drawn on the term loan and revolving
        credit facilities less cash and cash equivalents



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

                       Movie Distribution Income Fund

                                  Q2 - 2007

                    Consolidated Financial Statements and
                          Supplemental Information
                     For the Three and Six Months ended
                           June 30, 2007 and 2006

                                 (Unaudited)

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


             The interim Consolidated Financial Statements have
                      not been reviewed by an auditor.
    


    Movie Distribution Income Fund

    Management's responsibility for financial reporting

    The accompanying unaudited interim consolidated financial statements,
Management's Discussion and Analysis ("MD&A") and all information contained in
this report of Movie Distribution Income Fund (the "Fund") are the
responsibility of management and have been approved by the Board of Trustees.
    The unaudited interim consolidated financial statements have been
prepared by management in accordance with Canadian generally accepted
accounting principles. When alternative methods of accounting exist,
management has chosen those it deems most appropriate in the circumstances.
The unaudited interim consolidated financial statements and MD&A include
amounts based on informed judgments and estimates of the expected effects of
current events and transactions with appropriate consideration to materiality.
In addition, in preparing the financial information management must make
determinations as to the relevancy of information to be included, and make
estimates and assumptions that affect reported information. The MD&A also
includes information regarding the impact of current transactions and events,
sources of liquidity and capital resources, operating trends, risks and
uncertainties. Actual results in the future may differ materially from the
present assessment of this information because future events and circumstances
may not occur as expected.
    Management maintains a system of internal accounting and administrative
controls. Such systems are designed to provide reasonable assurance that the
financial information is relevant, reliable and accurate, and assets are
appropriately accounted for and adequately safeguarded.
    The Board of Trustees of the Fund (the "Board") is responsible for
ensuring that management fulfills its responsibilities for financial reporting
and internal control, and is ultimately responsible for reviewing and
approving the unaudited interim consolidated financial statements and MD&A.
The Board is assisted in exercising its responsibilities through the Audit
Committee of the Board of Motion Picture Distribution Inc. (the "Audit
Committee").

    
    "John Bailey"                             "Lloyd A. Wiggins"

    JOHN BAILEY                               LLOYD A. WIGGINS
    Chief Executive Officer                   Chief Financial Officer

    August 13, 2007
    Toronto, Canada




    Movie Distribution Income Fund
    Consolidated Balance Sheets
    (In millions of Canadian dollars)
    (unaudited)
                                         June 30,  December 31,      June 30,
                                            2007          2006          2006
    -------------------------------------------------------------------------
    Assets
    Distribution receivable                  1.9           1.9           1.9
    Investment in Motion Picture
     Distribution LP                       139.8         154.8         148.2
    Future income taxes                      1.7             -             -
                                          -----------------------------------
                                           143.4         156.7         150.1
    -------------------------------------------------------------------------
    Liabilities
    Distribution payable to Unitholders      1.9           1.9           1.9

    Unitholders' equity
    Unitholders' equity                    141.5         154.8         148.2
                                          -----------------------------------
                                           143.4         156.7         150.1
    -------------------------------------------------------------------------



    Movie Distribution Income Fund
    Consolidated Statements of Earnings (Loss)
    (In millions of Canadian dollars - except per unit amounts)
    (unaudited)

                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                           2007     2006      2007      2006
    -------------------------------------------------------------------------
    Equity earnings (loss) from
     Investment in Motion Picture
     Distribution LP                      (1.0)     (0.1)     (0.2)      0.8
    Less: Administrative expenses          0.2       0.2       1.0       0.4
                                        -------------------------------------
    Earnings (loss) before income taxes   (1.2)     (0.3)     (1.2)      0.4
    Recovery of income taxes              (1.7)        -      (1.7)        -
                                        -------------------------------------
    Net earnings (loss) for the period     0.5      (0.3)      0.5       0.4
    -------------------------------------------------------------------------
    Earnings (loss)  per Unit            $0.03    $(0.02)    $0.03     $0.02
    -------------------------------------------------------------------------
    Weighted average Fund Units
     outstanding                          19.3      19.3      19.3      19.3
    -------------------------------------------------------------------------



    Movie Distribution Income Fund
    Consolidated Statements of Comprehensive Income (Loss)
    (In millions of Canadian dollars)
    (unaudited)

                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net earnings (loss) for the period     0.5      (0.3)      0.5       0.4
    Other comprehensive income
      Fund's share of Motion Picture
       Distribution LP's other
       comprehensive income (loss)        (3.2)      0.6      (3.2)      1.7
                                        -------------------------------------
    Total comprehensive income (loss)     (2.7)      0.3      (2.7)      2.1
    -------------------------------------------------------------------------



    Movie Distribution Income Fund
    Consolidated Statements of Unitholders' Equity
    (In millions of Canadian dollars)
    (unaudited)
                                                            Accumu-
                                                             lated
                              Accumu-                        other
                    Accumu-    lated    Contri-    Unit-    compre-
                    lated    distrib-    buted    holders'  hensive
                   earnings   utions    surplus   capital   income     Total
    -------------------------------------------------------------------------
    Balance at
    December
     31, 2006         29.5     (70.5)      0.7     193.5         -     153.2

    Transition
     adjustment          -         -         -         -       1.6       1.6
                     --------------------------------------------------------
    Balance at
    January 1, 2007   29.5     (70.5)      0.7     193.5       1.6     154.8
    Distributions
     declared            -     (11.1)        -         -         -     (11.1)
    Expenses borne
     by Distribution
     LP                  -         -       0.5         -         -       0.5
    Net earnings
     for the period    0.5         -         -         -         -       0.5
    Other
     comprehensive
     income (loss)       -         -         -         -      (3.2)     (3.2)
                     --------------------------------------------------------
    Balance at
    June 30, 2007     30.0     (81.6)      1.2     193.5      (1.6)    141.5
    -------------------------------------------------------------------------


                                                            Accumu-
                                                             lated
                              Accumu-                        other
                    Accumu-   lated     Contri-    Unit-    compre-
                    lated    distrib-    buted    holders'  hensive
                   earnings   utions    surplus   capital   income     Total
    -------------------------------------------------------------------------
    Balance at
    December 31,
     2005             15.7     (48.3)      0.3     193.5         -     161.2

    Transition
     adjustment          -         -         -         -      (4.2)     (4.2)
                     --------------------------------------------------------
    Balance at
    January 1,
     2006             15.7     (48.3)      0.3     193.5      (4.2)    157.0
    Distributions
     declared            -     (11.1)        -         -         -     (11.1)
    Expenses borne
     by Distribution
     LP                  -         -       0.2         -         -       0.2
    Net earnings
     for the period    0.4         -         -         -         -       0.4
    Other
     comprehensive
     income              -         -         -         -       1.7       1.7
                     --------------------------------------------------------
    Balance at
    June 30, 2006     16.1     (59.4)      0.5     193.5      (2.5)    148.2
    -------------------------------------------------------------------------




    Movie Distribution Income Fund
    Consolidated Statements of Cash Flows
    (In millions of Canadian dollars)
    (unaudited)

                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash and cash equivalents provided
     by (used in)

    Operating activities
    Net earnings (loss) for the period     0.5      (0.3)      0.5       0.4
    Items not affecting cash
      Future income taxes                 (1.7)        -      (1.7)        -
      Equity (earnings) loss from
       Investment in  Motion Picture
       Distribution LP                     1.0       0.1       0.2      (0.8)
      Expenses borne by Motion
       Picture Distribution LP             0.1       0.1       0.5       0.2
    Distributions received on
     Ordinary LP Units of
     Motion Picture Distribution LP        5.6       5.6      11.1      11.1
                                         ------------------------------------
                                           5.5       5.5      10.6      10.9
    -------------------------------------------------------------------------
    Financing activities
    Distributions paid to Unitholders     (5.6)     (5.6)    (11.1)    (11.1)
    Expenses borne by Motion Picture
     Distribution LP, contributed
     surplus                               0.1       0.1       0.5       0.2
                                         ------------------------------------
                                          (5.5)     (5.5)    (10.6)    (10.9)
    -------------------------------------------------------------------------
    Change in cash and cash equivalents      -         -         -         -
    Cash and cash equivalents
     - beginning and end of period           -         -         -         -
    -------------------------------------------------------------------------



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

                       Movie Distribution Income Fund
                          Supplemental Information
                     For the Three and Six Months Ended
                           June 30, 2007 and 2006
                                 (Unaudited)

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

    The interim Supplemental Information has not been reviewed by an auditor.
    


    Distributable Cash of Motion Picture Distribution LP

    Distributable cash is not a recognized measure under Canadian GAAP and
does not have a standardized meaning prescribed by Canadian GAAP.
Distributable cash and related measures may or may not be consistent with the
calculation of similar measures for other companies and should not be viewed
as alternatives to net earnings or other measures of performance calculated in
accordance with Canadian GAAP.
    Management uses distributable cash to measure operating performance and
therefore believes that distributable cash calculated from earnings before
undernoted is the most appropriate measure to help readers evaluate the
performance of the Fund.
    Management calculates distributable cash per LP Unit for Distribution LP
as follows:

    
                                         Three     Three       Six       Six
                                        months    months    months    months
                                         ended     ended     ended     ended
                                       June 30,  June 30,  June 30,  June 30,
    (In millions of Canadian dollars)     2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash from operating activities        (3.4)    (10.8)      8.1     (25.3)
    Add: Net change in other non-cash
          balances related to operations  (2.6)     24.4      (4.3)     39.8
         Investment in film and
          television programs             30.3      17.0      54.2      45.0
         Unrealized foreign exchange
          (gains) losses                   0.3      (1.2)        -      (2.2)
         Future income taxes              (0.4)      0.6         -       1.7
    Less: Maintenance, property
           and equipment expenditures      0.2         -       0.1      (0.2)
         Fund expenses reimbursed by
          Distribution LP                 (0.2)     (0.2)     (1.0)     (0.4)
         Amortization of film and
         television programs             (22.1)    (25.9)    (49.9)    (49.7)
         Amortization of intangible
          and other assets                   -      (0.2)     (0.2)     (0.4)
         Non-controlling interest          0.1         -       0.1         -
    Add: Cash to be received from
          majority partner for
          employee costs                   1.1       1.1       2.1       2.2
    -------------------------------------------------------------------------
    Distributable cash of
     Distribution LP                       3.3       4.8       9.2      10.5
    Distributable cash per
     Distribution LP unit                $0.08     $0.12     $0.23     $0.27
    -------------------------------------------------------------------------

    Distributions declared by
     Distribution LP                      11.3      11.3      22.6      22.6

    49.0% attributable to the Fund         5.6       5.6      11.1      11.1
    49.0% attributable to the
     Fund per Unit of the Fund           $0.29     $0.29     $0.58     $0.58
    Distributions declared by
     Distribution LP on Ordinary LP
     Units held by the Fund                5.6       5.6      11.1      11.1
    Distributions declared per
     Fund Unit                           $0.29     $0.29     $0.58     $0.58
    -------------------------------------------------------------------------
    


    Distributions declared exceeded distributable cash for the three and six
months ended June 30, 2007 by $8.0 million and $13.4 million. Distributions
declared for the three and six months ended June 30, 2006 exceeded
distributable cash by $6.5 million and $12.1 million. Consequently,
$8.0 million and $13.4 million for the three and six months ended June 30,
2007 were funded by increased borrowings on the credit facilities ($6.5
million - three months ended June 30, 2006; $12.1 million - six months ended
June 30, 2006).
    The distribution policy of Distribution LP is to distribute its available
cash to the maximum extent possible. Distributions will be made on the
Ordinary LP Units within 15 days of the end of each month and on the
Subordinated LP Units within 15 days of the end of each fiscal quarter.
Distributions will be paid to the limited partners of record on the last day
of the period in respect of which the distribution is to be paid.
    Alternatively, the calculation of distributable cash using the
consolidated statements of earnings as a reference point would be as follows:

    

                                         Three     Three       Six       Six
                                        months    months    months    months
                                         ended     ended     ended     ended
                                       June 30,  June 30,  June 30,  June 30,
    (In millions of Canadian dollars)     2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net earnings for the period as
     reported in Distribution LP
     under Canadian GAAP                   0.9       3.1       5.3       8.3
    Add: Amortization                      0.1       1.5       1.2       1.8
         Interest                          1.8       1.9       3.6       3.7
         Non-controlling Interest         (0.1)        -      (0.1)     (0.1)
         Foreign exchange (gains) losses   1.0      (1.1)      1.0      (1.9)
         Provision for (recovery of)
          income taxes                     0.4      (0.7)        -      (1.7)
         Loss on disposal of assets        0.1         -       0.1         -
    -------------------------------------------------------------------------
    Earnings before undernoted as
     reported in Distribution LP           4.2       4.7      11.1      10.1
    Less: Fund expenses reimbursed by
           Distribution LP                 0.2       0.2       1.0       0.4
    Add: Employee costs borne by
          majority partner                 1.3       1.5       2.6       3.0
    -------------------------------------------------------------------------
    Adjusted earnings before undernoted    5.3       6.0      12.7      12.7
    Less: Maintenance, property and
           equipment expenditures         (0.2)        -      (0.1)      0.2
          Interest expense                 1.8       1.9       3.6       3.7
          Provision for (recovery of)
           income taxes                    0.4      (0.7)        -      (1.7)
    -------------------------------------------------------------------------
    Distributable cash of
     Distribution LP                       3.3       4.8       9.2      10.5
    Distributable cash per
     Distribution LP unit                $0.08     $0.12     $0.23     $0.27
    -------------------------------------------------------------------------

    Distributions declared by
     Distribution LP                      11.3      11.3      22.6      22.6

    49.0% attributable to the Fund         5.6       5.6      11.1      11.1
    49.0% attributable to the Fund
     per Unit of the Fund                $0.29     $0.29     $0.58     $0.58
    Distributions declared by
     Distribution LP on Ordinary LP
     Units held by the Fund                5.6       5.6      11.1      11.1
    Distributions declared per
     Fund Unit                           $0.29     $0.29     $0.58     $0.58
    -------------------------------------------------------------------------





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

                       Motion Picture Distribution LP

                                  Q2 - 2007

                      Consolidated Financial Statements
                     For the Three and Six Months Ended
                           June 30, 2007 and 2006
                                 (Unaudited)

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

         The interim Consolidated Financial Statements have not been
                           reviewed by an auditor.
    


    Motion Picture Distribution LP
    Management's responsibility for financial reporting

    The accompanying unaudited interim consolidated financial statements and
Management's Discussion and Analysis ("MD&A") and all information contained in
this report of Motion Picture Distribution LP ("Distribution LP") are the
responsibility of management and have been approved by the Board of Directors.
    The unaudited interim consolidated financial statements have been
prepared by management in accordance with Canadian generally accepted
accounting principles. When alternative methods of accounting exist,
management has chosen those it deems most appropriate in the circumstances.
The unaudited interim consolidated financial statements and MD&A include
amounts based on informed judgments and estimates of the expected effects of
current events and transactions with appropriate consideration to materiality.
In addition, in preparing the financial information management must make
determinations as to the relevancy of information to be included, and make
estimates and assumptions that affect reported information. The MD&A also
includes information regarding the impact of current transactions and events,
sources of liquidity and capital resources, operating trends, risks and
uncertainties. Actual results in the future may differ materially from the
present assessment of this information because future events and circumstances
may not occur as expected.
    Management maintains a system of internal accounting and administrative
controls. Such systems are designed to provide reasonable assurance that the
financial information is relevant, reliable and accurate, and assets are
appropriately accounted for and adequately safeguarded.
    The Board of Directors of Motion Picture Distribution Inc. (the "Board"),
as general partner of Distribution LP, is responsible for ensuring that
management fulfills its responsibilities for financial reporting and internal
control, and is ultimately responsible for reviewing and approving the
unaudited interim consolidated financial statements and MD&A. The Board is
assisted in exercising its responsibilities through the Audit Committee of the
Board (the "Audit Committee").


    
    "John Bailey"                 "Lloyd A. Wiggins"

    JOHN BAILEY                   LLOYD A. WIGGINS
    Chief Executive Officer       Executive Vice President and
                                  Chief Financial Officer

    August 13, 2007
    Toronto, Canada




    Motion Picture Distribution LP
    Consolidated Balance Sheets
    (In millions of Canadian dollars)

                                              (unaudited)         (unaudited)
                                                 June 30, December   June 30,
                                                    2007  31, 2006      2006
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                       15.5      18.7      11.6
    Accounts receivable                            128.0     161.8      91.7
    Prepaid expenses and other assets                2.7       2.2       2.1
    Future income taxes                              3.7       3.9       4.5
    Investment in film and television
     programs                                      211.3     214.6     185.6
    Property and equipment                           1.3       1.7       2.8
    Intangible assets                                  -       0.9       1.2
    Goodwill                                        54.8      58.4      54.0
                                       --------------------------------------
                                                   417.3     462.2     353.5
    -------------------------------------------------------------------------
    Liabilities
    Distributions payable                            5.5       5.5       5.5
    Revolving credit facilities                     59.5      49.0      50.0
    Term loan                                       49.9      50.0      50.0
    Accounts payable and accrued
     liabilities                                   234.8     271.3     175.7
    Income taxes payable                             2.8       3.8       2.9
    Future income taxes                              0.6       0.6         -
    Deferred revenue                                13.9       8.5      15.3
                                       --------------------------------------
                                                   367.0     388.7     299.4
    -------------------------------------------------------------------------
    Non-controlling interest                        (0.1)        -       0.8
    Partners' Equity
    Partners' equity                                50.4      73.5      53.3
                                       --------------------------------------
                                                   417.3     462.2     353.5
    -------------------------------------------------------------------------



    Motion Picture Distribution LP
    Consolidated Statements of Earnings
    (In millions of Canadian dollars)
    (unaudited)

                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Revenue
      Domestic Distribution               53.6      55.8     125.6     130.5
      Momentum                            21.5      23.5      44.8      42.6
      Aurum                               12.3       5.6      27.0      14.6
                                       --------------------------------------
                                          87.4      84.9     197.4     187.7
    Direct operating expenses             71.5      70.2     162.6     157.2

    Direct Profit (Loss)
      Domestic Distribution                9.5      12.6      26.6      26.5
      Momentum                             4.5       2.4       7.8       3.9
      Aurum                                1.9      (0.3)      0.4       0.1
                                       --------------------------------------
                                          15.9      14.7      34.8      30.5
    Operating expenses
    Selling, general and administrative   10.4       8.5      21.1      17.4
    Employee costs borne by majority
     partner                               1.3       1.5       2.6       3.0
                                       --------------------------------------
                                          11.7      10.0      23.7      20.4
    Earnings (Loss) before undernoted
      Domestic Distribution                2.8       6.7      12.7      15.0
      Momentum                             1.0      (0.3)      1.1      (2.1)
      Aurum                                0.4      (1.7)     (2.7)     (2.8)
                                       --------------------------------------
                                           4.2       4.7      11.1      10.1
      Amortization                         0.1       1.5       1.2       1.8
      Interest                             1.8       1.9       3.6       3.7
      Non-controlling interest            (0.1)        -      (0.1)     (0.1)
      Loss on disposal of assets           0.1         -       0.1         -
      Foreign exchange (gains) losses      1.0      (1.1)      1.0      (1.9)
                                       --------------------------------------
    Earnings before income taxes           1.3       2.4       5.3       6.6
    Provision for (recovery of) income
     taxes                                 0.4      (0.7)        -      (1.7)
                                       --------------------------------------
    Net earnings for the period            0.9       3.1       5.3       8.3
    -------------------------------------------------------------------------



    Motion Picture Distribution LP
    Consolidated Statements of Comprehensive Income
    (In millions of Canadian dollars)
    (unaudited)
                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net earnings for the period            0.9       3.1       5.3       8.3
    Other comprehensive income
      Unrealized foreign currency
       translation gains (losses) on net
       assets of self-sustaining
       operations                         (6.7)      1.1      (6.6)      3.3
                                       --------------------------------------
    Total comprehensive income (loss)     (5.8)      4.2      (1.3)     11.6
    -------------------------------------------------------------------------



    Motion Picture Distribution LP
    Consolidated Statements of Partners' Equity
    (In millions of Canadian dollars)
    (unaudited)
                                                            Accumu-
                                                             lated
                               Accum-                        other
                              ulated    Contri-            compreh-
               Accumulated   distrib-    buted  Partners'   ensive
                  earnings  utions(1)  surplus   capital    income     Total
    -------------------------------------------------------------------------
    Balance at
     January 1,
     2007            146.6    (278.3)     32.1     169.9       3.2      73.5
    Distributions
     declared            -     (22.6)        -         -         -     (22.6)
    Fund expenses
     reimbursed by
     Distribution LP     -      (1.0)        -         -         -      (1.0)
    Employee costs
     borne by majority
     partner             -         -       1.8         -         -       1.8
    Net earnings for
     the period        5.3         -         -         -         -       5.3
    Other
     comprehensive
     income              -         -         -         -      (6.6)     (6.6)
                    ---------------------------------------------------------
    Balance at
     June 30, 2007   151.9    (301.9)     33.9     169.9      (3.4)     50.4
    -------------------------------------------------------------------------

                                                            Accumu-
                                                             lated
                               Accum-                        other
                              ulated    Contri-            compreh-
               Accumulated   distrib-    buted  Partners'   ensive
                  earnings  utions(1)  surplus   capital    income     Total
    -------------------------------------------------------------------------
    Balance at
    January 1,
     2006            103.8    (232.2)     28.8     169.9      (8.5)     61.8
    Distributions
     declared            -     (22.6)        -         -         -     (22.6)
    Fund expenses
     reimbursed by
     Distribution LP     -      (0.4)        -         -         -      (0.4)
    Employee costs
     borne by
     majority partner    -         -       2.7         -         -       2.7
    LTIP
     compensation
     obligation          -         -       0.2         -         -       0.2
    Net earnings
     for the period    8.3         -         -         -         -       8.3
    Other
     comprehensive
     income              -         -         -         -       3.3       3.3
                    ---------------------------------------------------------
    Balance at
     June 30, 2006   112.1    (255.2)     31.7     169.9      (5.2)     53.3
    -------------------------------------------------------------------------
    (1) Accumulated distributions include an initial equity distribution of
        $133.1 made on the transfer of net assets to Distribution LP as at
        October 15, 2003.




    Motion Picture Distribution LP
    Consolidated Statements of Cash Flows
    (In millions of Canadian dollars)
    (unaudited)

                                      Three months ended    Six months ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash and cash equivalents provided
     by (used in)
    Operating activities
    Net earnings for the period            0.9       3.1       5.3       8.3
    Items not affecting cash
      Amortization of film and television
       programs                           22.1      25.9      49.9      49.7
      Amortization of property and
       equipment                           0.1       0.2       0.3       0.5
      Amortization of intangible and
       other assets                          -       1.5       1.1       1.8
      Employee costs borne by majority
       partner, non-cash                   0.2       0.4       0.5       0.8
      Non-controlling interest            (0.1)        -      (0.1)     (0.1)
      Future income taxes                  0.4      (0.6)        -      (1.7)
      Unrealized net foreign exchange
       (gains) losses                      0.7       0.1       1.0       0.2
    Investment in film and television
     programs                            (30.3)    (17.0)    (54.2)    (45.0)
    Net changes in other non-cash
     balances related to operations        2.6     (24.4)      4.3     (39.8)
                                       --------------------------------------
                                          (3.4)    (10.8)      8.1     (25.3)
    -------------------------------------------------------------------------
    Investing activities
    Property and equipment                 0.2         -       0.1      (0.2)
    -------------------------------------------------------------------------
    Financing activities
    Revolving term credit facility        17.5      23.5      10.5      17.0
    Deferred financing costs              (0.3)        -      (0.3)        -
    Cash distributions paid              (11.3)    (11.3)    (22.6)    (22.6)
    Employee costs borne by majority
     partner, contributed surplus          0.2       0.2       1.3       2.1
    Fund expense reimbursed by
     Distribution LP                      (0.2)     (0.2)     (1.0)     (0.4)
                                       --------------------------------------
                                           5.9      12.2     (12.1)     (3.9)
    -------------------------------------------------------------------------
    Effect of exchange rate changes on
     cash and cash equivalents             0.7      (0.2)      0.7      (0.7)
                                       --------------------------------------
    Change in cash and cash equivalents    3.4       1.2      (3.2)    (30.1)
    Cash and cash equivalents -
     beginning of period                  12.1      10.4      18.7      41.7
                                       --------------------------------------
    Cash and cash equivalents - end of
     period                               15.5      11.6      15.5      11.6
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Supplemental cash flow information:
      Interest paid                        1.9       1.7       3.5       3.4
      Interest received                      -      (0.1)     (0.1)     (0.2)
      Income taxes paid                    1.0         -       1.0       0.2
    -------------------------------------------------------------------------



                                 APPENDIX A
                       MOVIE DISTRIBUTION INCOME FUND

    RELEASES SUMMARY

    ------------------------------------------------------------
    RELEASES        Three months ended       Three months ended
                         June 30, 2007            June 30, 2006
    ------------------------------------------------------------
                Theatrical         DVD   Theatrical         DVD

    Domestic            19          54           23          43
    Momentum             3          22            6          19
    Aurum                3          12            2          15
    ------------------------------------------------------------

    ------------------------------------------------------------
    RELEASES          Six months ended         Six months ended
                         June 30, 2007            June 30, 2006
    ------------------------------------------------------------
                Theatrical         DVD   Theatrical         DVD

    Domestic            41         111           40          85
    Momentum             9          42           10          29
    Aurum                9          28            5          25
    ------------------------------------------------------------

    LIBRARY REVENUE

    ------------------------------------------------------------------
                           Three months ended        Six months ended
                        June 30, 2007 vs 2006   June 30, 2007 vs 2006
    ------------------------------------------------------------------
    Library Revenue          14.6        11.9        40.0        28.0
    ------------------------------------------------------------------
    




For further information:

For further information: Lloyd. A. Wiggins, Executive VP & Chief
Financial Officer, Movie Distribution Income Fund, Tel: (416) 967-1174, Email:
lloyd.wiggins@allianceatlantis.com; Andrew Akman, Senior VP Finance -
Corporate Development & Investor Relations, Alliance Atlantis Communications,
Tel: (416) 966-7701, Email: andrew.akman@allianceatlantis.com

Organization Profile

MOVIE DISTRIBUTION INCOME FUND

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