Cinram Reports 2010 Second Quarter Results

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

TORONTO, Aug. 10 /PRNewswire-FirstCall/ - Cinram International Income Fund ("Cinram" or the "Fund") (TSX: CRW.UN) today reported its 2010 second quarter and year to date financial results. The Fund reported revenue of $255.9 million in the 2010 second quarter compared to $298.4 million in the second quarter of 2009. Earnings before interest, taxes and amortization (EBITA(1)), excluding other charges, improved by 12 percent to $25.9 million from $23.2 million in the second quarter of 2009. As a percent of revenue, EBITA excluding other charges improved 30 percent to 10.1 percent in 2010 from 7.8 percent in 2009. The increase in EBITA was the result of labour and overhead efficiencies combined with lower fixed costs incurred during the quarter. The Fund reported net loss from continuing operations for the 2010 second quarter of $8.9 million or $0.16 per unit (basic) compared with net earnings from continuing operations of $7.2 million or $0.13 per unit (basic) in 2009. On a year to date basis, revenue decreased to $554.7 million from $599.4 million, while EBITA excluding other charges, improved by 20 percent to $61.5 million from $51.3 million in the prior year.

"The results for the 2010 second quarter were generally consistent with our expectations. While revenue was slightly lower than forecast, the improved margins continue to reflect the results of the ongoing cost saving activities", commented Steve Brown, Chief Executive Officer. "Given the termination of the Warner Home Video contract effective August 1st, results for the 2010 third quarter are expected to be below prior year".

Balance sheet and liquidity

As a result of the maturity of the senior credit facility in May 2011, being less than one year from maturity, the entire debt balance has been recorded as a current liability in our June 30, 2010 balance sheet. As a result, our working capital balance is in a negative position.

"We are currently working with our financial advisors, Goldman Sachs, on a number of refinancing alternatives", commented John Bell, Chief Financial Officer. "We are optimistic that we will complete a refinancing of the senior credit facility before the 2011 maturity."

As of June 30, 2010, our net debt position (term debt excluding unamortized transaction costs, less cash and cash equivalents) improved to $255.6 million, compared with $273.3 million at the end of 2009. During the first six months of 2010, our cash balance increased by $3.3 million to $125.4 million from $122.1 million at year end.

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