Cinram Reports 2009 Third Quarter Results

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

TORONTO, Nov. 10 /PRNewswire-FirstCall/ - 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.

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