Cineplex earnings drop 6.7%

Attendance falls from 2007 to 18 mil

TORONTO -- Canada's Cineplex Entertainment has begun to feel the boxoffice chill.

The Toronto-based exhibition giant on Thursday reported earnings down 6.7% to CAN$23.1 million ($19.8 million) for the three months ending Sept. 30, compared with a profit of CAN$24.7 million in 2007. The slide was attributed to lower boxoffice and concession revenue.

Total revenue was off 2% at CAN$239.1 million ($206 million), compared with a year-earlier CAN$244 million. Attendance at its 192 theaters nationwide fell 6% year-over-year to 18 million visits.

Boxoffice revenue of CAN$145 million ($125 million) at Cineplex slipped 3.6% during the latest quarter, compared with 2007, short of the Canadian exhibition industry average drop of 4.5% for summer 2008.

Dominant boxoffice from Warner Bros.' "The Dark Knight" failed to live up to a 2007 summer buoyed by "Harry Potter and the Order of the Phoenix" and "Transformers."

In a conference call with analysts Thursday, Cineplex executives became the latest here to insist they are well-positioned to weather the current tight credit market and approaching recession.

"Our balance sheet is strong," Cineplex CEO Ellis Jacob said, as he pointed to renegotiated credit facilities and hedged interest rate risk.

Lower attendance brought lower film and concession costs, and Cineplex also posted lower interest and income tax expenses during the quarter.

"We remain positive on the balance of the year given the strong slate of films and the industry's historical boxoffice performance during difficult economic times," Jacob said.
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