CINRAM
FIRST QUARTER REPORT 2003
Unaudited first quarter ended March 31, 2003 and 2002
(PHOTO OF RACE CAR)
A RECORD
PERFORMANCE
(CINRAM LOGO)
CINRAM ANNOUNCES 2003 FIRST QUARTER RESULTS
For the first quarter ended March 31, 2003, consolidated revenue increased by 8%
to $195.1 million, up from $181.4 million in the prior year first quarter.
Earnings before interest expense, investment income and income taxes (EBIT*)
increased to $17.7 million, compared to $6.2 million in 2002. Net earnings
increased to $10.9 million or $0.20 diluted per share, compared to $4.0 million
or $0.07 diluted per share in the prior year first quarter.
In the United States, first quarter revenue increased by 8%, led by a
significant increase in DVD unit shipments, combined with higher distribution
services revenue. In Canada, first quarter revenue increased by 31%, driven by
the growth in DVD unit shipments, primarily from the recent signing of an
exclusive DVD replication supply agreement. In Europe, revenue decreased by 12%,
the result of lower CD and VHS video cassette shipments, partially offset by
higher DVD unit sales. Early in 2003, the Company completed the sale of its
facility in the Netherlands, resulting in a charge to earnings of $4.6 million.
This charge was reflected in our 2002 year end results.
The demand for DVDs continues to exceed expectations. In the 2003 first
quarter, DVD sales represented 37% of consolidated revenue, up from 25% in the
prior year. Accordingly, the Company has placed orders for additional DVD
capacity, scheduled for initial delivery in May. Once this equipment is
installed, the Company will have a daily capacity of 1 million units for North
America.
Gross profit for the 2003 first quarter increased to $34.0 million from
$24.9 million during the same period last year. As a percentage of revenue,
gross profit increased to 17% in the 2003 first quarter, compared to 14% in the
prior year first quarter. The increase in gross profit resulted from a shift in
product mix to DVDs, improved production efficiencies and the increased ability
to manufacture DVD orders in house.
Selling, general and administrative expense for the 2003 first quarter
decreased slightly to $18.0 million compared to $18.2 million during the same
period last year. This decrease was partly due to the fact that costs associated
with the VHS video cassette and music cassette facility in the Netherlands are
no longer included in the 2003 results. As a percentage of revenue, selling,
general and administrative expense decreased to 9.2% during the 2003 first
quarter, as compared to 10.0% in the prior year period.
As at March 31, 2003, the Company's gross cash position was $183.0 million
compared to $164.2 million as at December 31, 2002, and the net cash position,
consisting of cash and cash equivalents less bank operating loans and long-term
debt, was $135.6 million compared to $110.2 million as of the end of 2002. The
increase in the cash balances is directly attributable to the Company's strong
cash flow from operations during the quarter.
DIVIDEND
The Board of Directors has declared a quarterly dividend of $0.03 per share,
payable on June 30, 2003 to the shareholders of record at the close of business
on June 15, 2003.
OUTLOOK
Cinram remains optimistic about its performance for the balance of the year
given the continued strong demand for DVDs, which should more than offset any
declines in other media products.
cinram 01 2003
ABOUT CINRAM INTERNATIONAL INC.
Cinram International Inc. is one of the world's largest independent providers of
pre-recorded multimedia products and logistic services. With facilities in North
America and Europe, Cinram manufactures and distributes pre-recorded DVDs, VHS
video cassettes, audio CDs, music cassettes and CD-ROMs for motion picture
studios, music labels, publishers and computer software companies around the
world. Since its inception, the Company has continuously demonstrated its
ability to evolve with changes in technology and consumer preferences.
CINRAM INTERNATIONAL INC. FORWARD-LOOKING STATEMENTS
Certain statements included in this release constitute "forward looking
statements." Such forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or results of the multimedia
duplication/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 Company's products and services; multimedia
duplication/replication industry conditions and capacity; the ability of the
Company to implement its business strategy; the Company's ability to retain
major customers and participate in such customer's migration from VHS and audio
formats to DVD; the Company's ability to invest successfully in new
technologies; and other factors which are described in the Company's filings
with the Securities Commission.
Three months ended March 31, 2003 2002
- -------------------------------------------------------
EBIT * $ 17,647 $ 6,186
Interest expense 1,099 1,297
Investment income (1,052) (644)
Income taxes 6,670 1,548
- -------------------------------------------------------
Net earnings $ 10,930 $ 3,985
=======================================================
* EBIT is defined herein as earnings before interest expense, investment income
and income taxes, 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 generally accepted accounting principles
("GAAP"). Accordingly, this measure 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.
- -s- ISIDORE PHILOSOPHE
ISIDORE PHILOSOPHE
CHIEF EXECUTIVE OFFICER
cinram 02 2003
2003 MANAGEMENT'S DISCUSSION AND ANALYSIS
This interim Management Discussion and Analysis ("MD&A") should be read in
conjunction with the MD&A in the Company's Annual Report for the year ended
December 31, 2002. External economic and industry factors remain substantially
unchanged, unless otherwise stated.
OVERVIEW
Net earnings for the first quarter of 2003 of $10.9 million increased from the
prior year first quarter earnings of $4.0 million, resulting from an increase in
DVD unit shipments across all regions, combined with higher distribution
revenues.
REVENUE
2003 first quarter revenue increased 8% to $195.1 million, an increase from
$181.4 million in the prior year period. Total multimedia units shipped
increased by 6% during the 2003 first quarter. The significant increase in DVD
unit shipments was partially offset by unit declines for audio CD, CD-ROM, audio
cassettes and VHS video cassettes. Furthermore, the Company experienced lower
average selling prices for all media formats during the first quarter of 2003 as
compared to the prior year period.
2003 first quarter revenue from the home video replication/duplication
segment increased to $121.1 million from $111.6 million in the prior year
period. DVD revenue increased by 62% in the 2003 first quarter as consumer
demand for this product continued to grow. The growth in DVD demand during the
first quarter of 2003 was offset by a 30% decrease in VHS video cassette
revenue, resulting from demand for DVDs replacing demand for VHS video
cassettes, combined with lower selling prices.
2003 first quarter revenue from the audio/ROM replication/duplication
segment decreased to $39.8 million from $52.2 million in the prior year period.
Audio CD revenue decreased 12%, resulting from lower unit shipments combined
with declining average selling prices. CD-ROM revenue decreased 32% from the
first quarter of last year, resulting from a decrease in demand from the
internet service provider market. Audio cassette revenue decreased 62% in the
first quarter of 2003 compared to the prior year period, as sales for this
format continue to decline throughout the industry. Furthermore, first quarter
revenue was negatively impacted by the sale of the Company's VHS video cassette
and audio cassette manufacturing facility in the Netherlands.
Distribution services revenue (included in "other" segment) increased to
$18.4 million during the first quarter of 2003, up from $12.1 million in the
prior year period. The growth in distribution service revenue is expected to
continue as customers offload their distribution requirements to manufacturers
such as Cinram.
GEOGRAPHIC SEGMENTS
NORTH AMERICA
North American revenue increased 14% to $155.0 million in the first quarter of
2003, up from $135.9 million in the first quarter of 2002, driven by revenue
growth in Canada, and to a lesser extent the United States.
In Canada, 2003 first quarter revenue increased 31%, reflecting additional
business from new DVD and distribution contracts, partially offset by lower
demand for CDs, audio cassettes and VHS video cassettes, combined with lower
selling prices. During the first
cinram 03 2003
quarter of 2003, revenue from Canadian operations represented 22% of
consolidated revenues, compared to 18% in the prior year.
In the United States, revenue increased 8% in 2003 from the first quarter
of 2002, reflecting continued growth in DVD unit shipments, combined with an
increase in distribution services revenue. The Company expects this trend to
continue given the growing consumer demand for DVDs. During the 2003 first
quarter, increased DVD revenue was partially offset by revenue declines for CD,
audio cassette and VHS video cassette. As a result, U.S. revenues represented
55% of consolidated revenue, consistent with the prior year.
In Mexico, 2003 first quarter revenue increased 31% from the prior year,
resulting from the increase in DVD and distribution revenue. This region
represented 3% of consolidated sales during the first quarter of 2003, compared
to 2% in the prior year.
EUROPE
In Europe, revenue decreased 12% to $40.1 million in the first quarter of 2003,
down from $45.5 million in the prior year comparable period, due to the sale of
the Company's facility in The Netherlands in early 2003. Excluding revenue from
this facility, revenue for Europe increased 2%, resulting from the increased
demand for DVDs and distribution services. European revenue represented 21% of
consolidated sales, down from 25% in the prior year.
In terms of individual territories, revenue in the UK decreased by 12% in
the first quarter of 2003 as unit shipments of VHS video cassettes declined,
partially offset by an increase in DVD unit sales.
In France, 2003 first quarter revenue increased by 9% in comparison to
prior year levels, due to increases in both DVD unit shipments and distribution
services revenue.
INDUSTRY SEGMENTS
Cinram's home video segment, consisting of DVDs and VHS videocassettes,
represented $121.1 million of revenue in the 2003 first quarter, increasing from
$111.6 million in the prior year comparable period. This segment accounted for
62% of consolidated revenue, consistent with the prior year.
DVD revenue increased 62% to $72.9 million from $45.0 million in the prior
year, reflecting increased consumer demand for this product across all
geographic regions, especially in the United States. DVD revenue represents 37%
of consolidated revenue in the first quarter of 2003, up from 25% in the first
quarter of 2002.
Video cassette revenue decreased by 30% to $44.6 million in the first
quarter of 2003, down from $63.5 million in the prior year, reflecting a
decrease in both unit shipments and selling prices. VHS video cassette revenue
represents 23% of consolidated revenue for the first quarter of 2003, down from
35% in the prior year period.
Revenue from Cinram's audio/ROM segment, consisting of audio CD, CD-ROM
and audiocassette, totaled $39.8 million in the first quarter of 2003,
decreasing from $52.2 million in the prior year comparable period. This segment
accounted for 20% of consolidated revenue during the 2003 first quarter, a
decrease from 29% in the prior year, as the Company experienced reduced unit
sales for audio CD, CD-ROM and audio cassette.
cinram 04 2003
2003 MANAGEMENT'S DISCUSSION AND ANALYSIS
(continued)
Audio CD revenue decreased 12% in the first quarter of 2003 from the prior
year comparable period due to declining selling prices. CD-ROM revenue decreased
32% during the 2003 first quarter compared to the prior year period, driven by
reduced orders associated with the internet service provider market.
Audio cassette revenue decreased 62% in the 2003 first quarter, due in
part to the sale of the Company's Netherlands facility. This facility accounted
for 35% of Cinram's audio cassette revenue in first quarter of 2002.
Distribution and fulfillment services revenue (included in "other"
segment) increased to $18.4 million in the first quarter of 2003, up from $12.1
million in the first quarter of 2002. The Company provides these services in
addition to manufacturing, as these services continue to be a key driver of
business, as well as a major influence in the Company's ability to secure
significant new contracts. Distribution and fulfillment services revenue
represents 9% of consolidated revenue in 2003, up from 7% in the first quarter
of 2002.
GROSS PROFIT
Gross profit was $34.0 million for the 2003 first quarter, compared to $24.9
million in the prior year comparable period. As a percentage of sales, gross
profit increased to 17%, compared to 14% over the past year. The increase is the
result of the continued shift in product mix towards DVDs which provide higher
margins on a per unit basis, combined with lower fixed overhead, particularly in
the United States.
Amortization expense from capital assets increased to $16.6 million in the
2003 first quarter, compared to $15.9 million in the prior year period, driven
by the increase in capital expenditures over the past few years, combined with
the accelerated amortization for VHS video cassette and CD equipment implemented
in the second quarter of 2002.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased slightly from prior year,
totaling $18.0 million in the first quarter of 2003, compared to $18.2 million
in the prior year. As a percentage of sales, selling, general and administrative
expenses decreased to 9% in the 2003 first quarter, compared to 10% in the prior
year period. The decrease in costs was the associated with the sale of the
Netherlands facility, effective January 2, 2003.
INTEREST EXPENSE
Interest expense decreased to $1.1 million in the first quarter of 2003,
compared to $1.3 million in 2002, resulting from the reduction in capital lease
obligations associated with the sale of the facility in The Netherlands.
INVESTMENT INCOME
Investment income increased to $1.1 million in the first quarter of 2003,
compared to $0.6 million in the first quarter of 2002, resulting from higher
average cash balances.
cinram 05 2003
INCOME TAXES
The Company's effective tax rate for the first quarter of 2003 is 38%, compared
to an effective rate of 28% in the comparable prior year period. The low
effective tax rate in the prior year includes income tax recoveries relating to
loss carry forwards previously not recorded in certain jurisdictions.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2003, the Company's net cash position, consisting of cash and
cash equivalents less bank operating loans and long-term debt, was $135.6
million compared to $110.2 million at December 31, 2002. This increase in the
net cash position is the result of cash flow from operations during the first
quarter of 2003.
The Company's working capital position was $194.4 million at the end of
the 2003 first quarter, up from $186.1 million as at December 31, 2002. Earnings
before interest expense, investment income and income taxes (EBIT*) was $17.6
million during the 2003 first quarter, compared to $6.2 million in the first
quarter of 2002.
During the first quarter of 2003, Cinram invested $10.9 million in capital
assets, the majority earmarked for increased DVD capacity in North America, as
the Company anticipates increasing capacity by 45% during the current year.
RISKS AND UNCERTAINTIES
The risks and uncertainties faced by the Company are substantially the same as
those disclosed in the MD&A section of its December 31, 2002 Annual Report.
Three months ended March 31, 2003 2002
- ---------------------------- ---- ----
EBIT * $ 17,647 $ 6,186
Interest expenses 1,099 1,297
Investment Income (1,052) (644)
Income taxes 6,670 1,548
-------- --------
NET EARNINGS $ 10,930 $ 3,985
======== ========
* EBIT is defined herein as earnings before interest expense, investment income
and income taxes, 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 generally accepted accounting principles
("GAAP"). Accordingly, this measure 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.
cinram 06 2003
CONSOLIDATED BALANCE SHEETS
(stated in thousands of Canadian dollars)
- ----------------------------------------------------------------------------------------
(UNAUDITED)
March 31, 2003 and December 31, 2002 2003 2002
- ------------------------------------ ---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $182,985 $164,216
Accounts receivable 190,889 223,385
Inventories 38,285 63,063
Prepaid expenses 16,927 11,137
Future income taxes 8,402 8,905
-------- --------
437,488 470,706
Capital assets 274,320 298,345
Assets under capital lease 9,406 13,300
Goodwill 6,522 6,789
Other assets 30,468 40,553
-------- --------
$758,204 $829,693
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $219,087 $257,464
Income taxes payable 11,614 13,602
Current portion of long-term debt 11,172 11,977
Current portion of obligations under capital leases 1,234 1,569
-------- --------
243,107 284,612
Long-term debt 36,203 42,012
Obligations under capital leases 8,371 16,318
Future income taxes 24,989 26,581
SHAREHOLDERS' EQUITY:
Capital stock (note 2) 240,408 240,408
Contributed surplus 182 182
Retained earnings 203,007 193,734
Foreign currency translation adjustment 1,937 25,846
-------- --------
445,534 460,170
-------- --------
$758,204 $829,693
======== ========
See accompanying notes to consolidated financial statements
cinram 07 2003
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(unaudited, stated in thousands of Canadian dollars, except per share amounts)
------------------------------------------------------------------------------
Three months ended March 31, 2003 and 2002 2003 2002
- ------------------------------------------ ---- ----
Revenue $ 195,106 $ 181,433
Cost of goods sold 161,090 156,512
--------- ---------
Gross profit 34,016 24,921
Selling, general and administrative expenses 18,015 18,204
Exchange (gain) loss on foreign currency balances (1,646) 531
--------- ---------
16,369 18,735
--------- ---------
Earnings before interest expense, investment
income and income taxes 17,647 6,186
Interest expense on long-term debt 892 727
Interest expense on capital leases 152 221
Interest expense - other 55 349
Investment (income) (1,052) (644)
--------- ---------
Earnings before income taxes 17,600 5,533
--------- ---------
Income taxes 6,670 1,548
--------- ---------
Net earnings 10,930 3,985
Retained earnings, beginning of period 193,734 143,669
Dividends declared (1,657) (1,097)
--------- ---------
Retained earnings, end of quarter $ 203,007 $ 146,557
========= =========
Earnings per share (note 4):
Basic $ 0.20 $ 0.07
Diluted 0.20 0.07
========= =========
Weighted average number of share outstanding (note 4):
Basic (in thousands) 55,197 54,839
Diluted (in thousands) 55,567 55,124
========= =========
See accompanying notes to consolidated financial statements.
cinram 08 2003
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, stated in thousands of Canadian dollars)
----------------------------------------------------
Three months ended March 31, 2003 and 2002 2003 2002
- ------------------------------------------ ---- ----
Cash provided by (used in):
OPERATIONS:
Net earnings $ 10,930 $ 3,985
Items not involving cash:
Amortization 16,626 15,999
Gain on disposition of capital assets (217) --
Unrealized foreign exchange (gain) (7,130) (63)
Net change in non-cash working capital 11,765 38,881
--------- ---------
31,974 58,802
FINANCING:
Decrease in bank operating loans -- (8,517)
Decrease in long-term debt (2,969) (2,159)
Decrease in obligations under capital lease (283) (850)
Issuance of common shares -- 232
Dividend paid (1,657) (1,097)
--------- ---------
(4,909) (12,391)
INVESTMENTS:
Purchase of capital assets (10,857) (4,387)
Proceeds on disposition of capital assets 381 --
Decrease in other assets 10,085 3,100
--------- ---------
(391) (1,287)
Foreign exchange (loss) gain on cash held in foreign currencies (7,905) 887
--------- ---------
Increase in cash and cash equivalents 18,769 46,011
Cash and cash equivalents, beginning of quarter 164,216 91,879
--------- ---------
Cash and cash equivalents, end of quarter $ 182,985 $ 137,890
========= =========
Supplemental Cash Flow Information:
Interest paid $ 937 $ 978
Income taxes paid 8,290 5,861
========= =========
See accompanying notes to consolidated financial statements.
cinram 09 2003
Three months ended March 31, 2003 and 2002 (unaudited, stated in thousands of
Canadian dollars, except common shares and per share information)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
These unaudited consolidated financial statements do not contain all
disclosures required by Canadian generally accepted accounting principles
("GAAP") for annual financial statements, and accordingly, these unaudited
consolidated financial statements should be read in conjunction with the
most recently prepared annual consolidated financial statements for the
year ended December 31, 2002.
The unaudited interim consolidated financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present
fairly the financial position of the Company as of March 31, 2003 and the
results of operations and cash flows for the three months then ended.
The Company's business follows a seasonal pattern, with pre-recorded
media sales traditionally being higher in the fourth quarter than in other
quarterly periods due to consumer holiday buying patterns. As a result, a
disproportionate portion of total revenues is typically earned in the
fourth quarter. The business seasonality results in performance for the
first quarter ended March 31, 2003, which is not necessarily indicative of
performance for the balance of the year.
The unaudited interim consolidated financial statements have been
prepared in accordance with Canadian GAAP and are based upon accounting
principles consistent with those used and described in note 1 to the
December 31, 2002 audited consolidated financial statements, except as
follows:
GUARANTEES:
(a) Effective January 1, 2003, the Company implemented Accounting
Guideline 14 "Disclosure of Guarantees", issued by the Canadian
Institute of Chartered Accountants, which requires a guarantor to
disclose in its notes to the consolidated financial statements
significant information about guarantees it has provided. Under this
Guideline, a guarantee is defined as a contract or indemnification
agreement, which requires the Company to make payments (cash,
financial instruments, other assets, the Company's own shares or the
provision of services) to a third party contingent on future events.
These payments are contingent on either (i) changes in an underlying
interest rate, security price, commodity price, foreign exchange
rate or other variables that are related to an asset, liability or
an equity security of the guaranteed party, (ii) the failure of
another party to pay its indebtedness when due (a "Guarantee"). The
disclosures are required even when the likelihood of the guarantor
having to make any payments under the Guarantee is remote.
The Company provided routine indemnification's, whose terms
range in duration and often are not explicitly defined. These
guarantees may include performance, pricing, delivery and customer
inventory. The maximum amount from these indemnification's cannot be
reasonably estimated. In some cases the Company has recourse against
other parties to mitigate its risk of loss from these guarantees.
Historically, the Company has not made significant payments relating
to these type of indemnification's.
cinram 10 2003
(unaudited, stated in thousands of Canadian dollars)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. CAPITAL STOCK:
The following table summarizes information on Capital Stock and
related matters at March 31, 2003:
Outstanding Exercisable
Warrants 1,700,000 1,700,000
Common shares 55,196,891 55,196,891
Common share stock options 2,756,340 1,774,171
3. STOCK BASED COMPENSATION
In accordance with CICA Handbook section 3870, the Company discloses
pro forma net earnings and earnings per share information as if the
Company had accounted for employee stock options under the fair
value method.
Had the Company determined compensation expense based on the
fair values at grant dates of the stock options consistent with the
fair value method, the Company's earnings per share would have been
reported as the pro forma amounts indicated below. The pro forma
disclosure omits the effects of awards granted before fiscal years
beginning on or after January 1, 2002.
Three months ended
March 31, 2003
Net earnings, as reported $ 10,930
Stock-based compensation expense 550
----------
Pro forma net earnings $ 10,380
==========
Basic earnings per share, as reported $ 0.20
Effect of stock-based compensation expense 0.01
----------
Pro forma basic earnings per share $ 0.19
==========
Diluted earnings per share, as reported $ 0.20
Effect of stock-based compensation expense 0.01
----------
Pro forma diluted earnings per share $ 0.19
==========
No options were granted by the Company during the quarter ended March 31,
2003. Also, no options were granted by the Company during the quarter
ended March 31, 2002 and as a result, comparative fair value disclosures
have not been provided.
The weighted average estimated fair value at the date of the grant
for options granted during the year ended December 31, 2002 was $5.28 per
share.
The fair value of each option granted during 2002 was estimated on
the date of the grant using the Black-Scholes fair value option pricing
model with the following assumptions:
cinram 11 2003
(unaudited, stated in thousands of Canadian dollars, except per share
information)
Risk-free interest rate 4.0%
Dividend yield 0.768%
Volatility factor of the future expected market
price of common shares 60%
Weighted average expected life of the options 5 years
The weighted average estimated fair value at the date of the grant for
options granted during the year ended December 31, 2002 was $5.28 per
share.
The fair value of each option granted during 2002 was estimated on
the date of the grant using the Black-Scholes fair value option pricing
model with the following assumptions: (unaudited, stated in thousands of
Canadian dollars, except per share information) Risk-free interest rate
4.0% Dividend yield 0.768% Volatility factor of the future expected market
price of common shares 60% Weighted average expected life of the options 5
years
For the purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting period .
4. EARNINGS PER SHARE:
The reconciliation of the numerator and denominator for the calculation of
basic and diluted earnings per share is as follows:
(all figures in 000s) Three months ended
---------------------
March 31, March 31,
2003 2002
--------- ---------
Earnings available to common shareholders $10,930 $ 3,985
BASIC EARNINGS PER SHARE
Weighted average number of shares outstanding 55,197 54,839
Basic earnings per share $ 0.20 $ 0.07
DILUTED EARNINGS PER SHARE
Weighted average number of shares outstanding 55,197 54,839
Dilutive effect of stock options 370 285
------- -------
Adjusted weighted average number of shares outstanding 55,567 55,124
Diluted earnings per share $ 0.20 $ 0.07
------- -------
cinram 12 2003
(unaudited, stated in thousands of Canadian dollars)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. SEGMENTED INFORMATION:
The Company has two reportable business segments, being audio/ROM
replication/duplication and home video replication/duplication.
The audio/ROM replication/duplication segment manufactures audio
cassettes, CDs and CD-ROMs and the home video
replication/duplication segment manufactures video cassettes and
DVDs.
The accounting policies of the segments are the same as those
described in the summary of accounting policies to the December 31,
2002 audited consolidated financial statements. The Company
evaluates segment performance based on earnings before interest
expense, investment income, unusual items and income taxes.
INDUSTRY SEGMENTS: Three months ended March 31, 2003 and 2002
- ------------------ ------------------------------------------
AUDIO/ROM HOME VIDEO
REPLICATION/ REPLICATION/
2003 DUPLICATION DUPLICATION OTHER TOTAL
- ---- ----------- ----------- ----- -----
REVENUE FROM
EXTERNAL CUSTOMERS $ 39,757 $121,135 $ 34,214 $195,106
EARNINGS BEFORE
INTEREST EXPENSE,
INVESTMENT INCOME,
AND INCOME TAXES 1,278 15,873 496 17,647
TOTAL ASSETS 154,501 470,745 132,958 758,204
AMORTIZATION OF CAPITAL ASSETS 4,213 10,694 1,719 16,626
CAPITAL EXPENDITURES 33 10,680 144 10,857
Audio/ROM Home Video
replication/ replication/
2002 duplication duplication Other Total
- ---- ----------- ----------- ----- -----
Revenue from
external customers $ 52,247 $111,644 $ 17,542 $181,433
Earnings before
interest expense,
investment income,
and income taxes 1,437 4,732 17 6,186
Total assets 194,397 416,188 72,275 682,860
Amortization of capital assets 4,625 9,821 1,553 15,999
Capital expenditures 408 2,377 1,602 4,387
cinram 13 2003
(unaudited, stated in thousands of Canadian dollars)
GEOGRAPHIC SEGMENTS: Three months ended March 31, 2003 and 2002
UNITED
2003 CANADA STATES FRANCE OTHER TOTAL
- ---- ------ ------ ------ ----- -----
REVENUE FROM
EXTERNAL
CUSTOMERS $ 42,965 $106,422 $ 28,864 $ 16,855 $195,106
CAPITAL ASSETS AND
GOODWILL 70,004 177,688 40,412 2,144 290,248
United
2002 Canada States France Other Total
- ---- ------ ------ ------ ----- -----
Revenue from
external
customers $ 32,855 $ 98,749 $ 26,395 $ 23,434 $181,433
Capital assets and
goodwill 62,769 200,009 40,642 8,788 312,208
(CINRAM LOGO) CINRAM INTERNATIONAL INC.
CORPORATE HEAD OFFICE
2255 Markham Road
Toronto, Ontario, Canada M1B 2W3
Telephone (416) 298-8190
Fax (416) 298-0612
www.cinram.com