TORONTO, CANADA – November 8, 2006 /CNW/ – Movie Distribution Income Fund (the "Fund") today announced financial and operating results for Motion Picture Distribution LP (the "Partnership") for the three and nine months ended September 30, 2006.
"Our Canadian operations delivered very strong results this quarter due to theatrical successes such as Bon Cop Bad Cop, a solid DVD slate, and exceptional television sales from our library," said John Bailey, Chief Executive Officer. "In the United Kingdom we recorded solid revenue growth due to strong DVD sales. Our theatrical slate included Hoodwinked, which has earned pnds stlg 5.4 million at the UK box office to date. Despite a higher volume of releases in Spain, results were disappointing. We remain committed to investing in the future of our Spanish operations and have successfully acquired a number of high profile pictures for that territory for release in 2007."
THIRD QUARTER RESULTS
Consolidated revenue from the Partnership for the third quarter was $123.0 million, compared to $122.4 million in the prior year’s quarter. Revenue from the Partnership’s library was $33.7 million in the quarter compared to $14.8 million in the prior year’s quarter. Total sales to Alliance Atlantis during the quarter were $16.4 million compared to $6.7 million in the prior year’s quarter.
In Canada, revenue of $95.7 million was up 7% compared to the prior year’s quarter. Major theatrical releases in the quarter included Bon Cop Bad Cop which became the highest grossing Canadian film ever made.(5) DVD releases in the quarter included Scary Movie 4, Cheating Death: Final Destination 3,and Lucky Number Slevin. As expected, sales of Canadian content programming from our library drove a strong increase in television revenue during the quarter.
UK revenue of $19.9 million was up from $16.6 million in the prior year’s quarter. Theatrical and television revenues were essentially flat with the prior year. The revenue increase was primarily related to a strong DVD slate including Prime, Waiting and The Dark.
Aurum’s revenue decreased to $7.4 million from $16.7 million in the prior year’s quarter. Theatrical revenue declined by $2.5 million as the current quarter titles, including Domino, The Lazarus Child, Waiting and The Dark, did not attain the revenue levels of the prior year’s quarter theatrical slate, which included A Sound of Thunder and Valiant. DVD revenue decreased $1.1 million. Television revenue was down $5.7 million as current quarter sales from Mindhunters, A Sound of Thunder and Valiant faced an exceptionally strong comparable period which included The Lord of the Rings: The Two Towers, The Passion of the Christ and My Big Fat Greek Wedding.
Consolidated adjusted EBITDA of $20.2 million compared to $20.2 million in the prior year’s quarter.
In Canada, adjusted EBITDA of $23.3 million increased compared to $13.5 million in the prior year’s quarter. These results reflect higher direct profit primarily as a result of higher margin television sales related to our library, partly offset by non-recurring costs of $1.7 million related to personnel retention and professional fees.
In the UK, EBITDA of $1.4 million compared to $2.8 million in the prior year’s quarter. EBITDA margin during the quarter was 7% compared to an exceptionally high EBITDA margin of 17% in the prior year’s quarter due to product mix with relative weighting of higher margin DVD and television titles.
In Spain, EBITDA loss of $4.4 million compared to EBITDA of $3.9 million in the prior year’s quarter. The decline can be attributed to lower revenue, the weak theatrical performance of Domino which depressed margins and exceptionally strong television sales in the prior year’s period.
Amortization for the quarter was $0.2 million which is comparable to $0.3 million in the prior year’s quarter.
Interest expense for the quarter was $2.6 million compared to $1.0 million in the prior year’s quarter. The increase is the result of higher borrowings and a higher effective interest rate. For the period ending September 30, 2006, the effective interest rate was 7.9% compared to 5.3% as at September 30, 2005.
The Partnership’s net income for the quarter was $16.5 million compared to $14.5 million in last year’s quarter.
Distributable Cash for the quarter was $16.8 million or $0.42 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 $18.3 million or $0.46 per unit with a declared distribution per unit of $0.29. The decrease in Distributable Cash is primarily related to increased interest expense.
On a LTM basis, the Partnership has recorded Distributable Cash of $44.5 million and a payout ratio of 102%.
Net debt(4) for the Partnership was $84.8 million at September 30, 2006 compared to $88.4 million at June 30, 2006. At September 30, 2006 the Partnership had unused credit facilities totaling $27.7 million of which it was entitled to borrow $16.3 million. As previously discussed, the Partnership has extended the maturity of its senior secured credit facilities through to April 9, 2007.
Please refer to the attached appendix listing current and prior period releases and library revenues. Selected titles from our 2006 and 2007 release slates can be found on the website at: www.moviedistributionincomefund.com.
NINE MONTH RESULTS
Consolidated revenue from the Partnership for the nine months ended September 30, 2006 was $310.7 million, compared to $316.9 million from the
prior year’s period.
Consolidated adjusted EBITDA of $32.9 million compares to $33.5 million from the prior year’s period.
The Partnership’s net income for the nine months ended September 30, 2006 was $24.8 million compared to $14.5 million in the prior year’s period. The increase is primarily due to higher direct profit, lower operating expense,higher amortization, higher interest costs and unrealized foreign exchange gains during the current year’s period compared to unrealized foreign exchange losses during the prior year’s period.
In Canada, the fourth quarter theatrical slate is expected to include Texas Chainsaw Massacre: The Beginning (October 6th), Trailer Park Boys The
Movie (October 6th), The Queen, Bobby, The Nativity Story and Miss Potter. The DVD slate is expected to include Pulse, Bon Cop Bad Cop and Fearless.
In the UK, during the fourth quarter we expect to release The Last Kiss theatrically and District 13 on DVD.
In Spain, the Partnership expects to release El Gal, Apocalypto and The Illusionist during the fourth quarter. DVD releases are expected to include Waiting, Domino and The Best Man.
In Canada in 2007 we expect the theatrical slate to include Rush Hour 3 starring Jackie Chan and Chris Tucker, The Golden Compass (His Dark Materials) starring Nicole Kidman and Ian McShane, Grind House, which was written and directed by Quentin Tarantino and Robert Rodriguez, and Hairspray starring John Travolta and Michelle Pfeiffer. On DVD in Canada, we expect to release Snakes on a Plane, Texas Chainsaw Massacre: The Beginning and Catch a Fire.
In the United Kingdom during 2007 we expect theatrical releases to include Miss Potter starring Rene Zellweger and Ewan McGregor and The Painted Veil starring Naomi Watts and Edward Norton. DVD releases in 2007 are expected to include Hoodwinked and Miss Potter.
Theatrical releases in Spain in 2007 are expected to include Miss Potter,The Messengers, and The Grudge 2 starring Sarah Michelle Gellar and Jennifer Beals. DVD releases in 2007 are expected to include El Gal, Apocalypto and The Illusionist.