Pat Marshall - VP, Communications & IR Ellis Jacob - President & CEO Gord Nelson - CFO

Tim Casey - BMO Capital Markets Paul Steep - Scotia Capital Derek Lessard - TD Securities Rob Peters - Credit Suisse Haran Posner - RBC Capital Markets Rob Goff - Euro Pacific

Good morning. Before beginning the call, we'd like to remind you that certain statements being made are forward-looking and subject to various risks and uncertainties.

Such forward-looking statements are based on management's beliefs and assumptions regarding the information currently available. Actual results could differ materially from those expressed in the forward-looking statements.

Factors that could cause results to vary include among other things, adverse factors generally encountered in the film-exhibition industry, risks associated with national and world events, discovery of undisclosed material liabilities and general economic conditions. I will now turn the call over to Ellis Jacob.

Thank you, Pat. Welcome to Cineplex Inc.’

s second quarter 2015 conference call. Thank you for joining us today.

I will begin by providing a brief overview of our record second quarter results as well as the summary of our key accomplishments during the period. I will also highlight few of the most anticipated films for the balance of 2015.

At the conclusion of my remarks, our Chief Financial Officer, Gord Nelson will provide an in-depth overview of our financials. As always, once Gord has concluded his remarks, we will hold the question-and-answer period.

Cineplex delivered record results for the second quarter of 2015. All revenue sources increased during the quarter resulting in all-time quarterly records for total revenue which increased 6.8% to $345.5 million and adjusted EBITDA which increased 9.9% to $65.3 million due to increased Box Office food service and media revenue.

Box Office revenue was up 2.6% and attendance was up 2% versus the prior year period. The Top 3 films during this quarter, Avengers: Age of Ultron, Jurassic World and Furious7 represent the top films of 2015 and collectively have grossed more than $1.4 billion in domestic Box Office to-date.

These films represented 43.5% of our total Box Office revenue as compared to 29.2% last year with Top 3 films and ranked in the Top 10 grossing films of all-time. The increase in film cost for this quarter was anomaly and largely driven by the quality of the movies and the concentration of these top performing films.

Now let's take a look at our key accomplishments during the period. During the quarter, we opened up 13 screens Cineplex Cinemas Markham & VIP just northeast of Toronto.

This brings up VIP Cinemas to 14 locations and 53 screens by June 30. We also acquired the single screen IMAX Theatre at Galeries de la Capitale and Quebec City.

The expansion of our premium experiences remains the strategic priority for Cineplex. Premium Box Office represented 46.3% of our total Box Office in Q2 2015, and this is our highest quarterly premium percentage ever.

During the quarter we added seven UltraAVX Auditorium bringing us to a total of 77. We installed D-Box Systems into five theatres now bringing us to a total of 33 locations.

In addition to the Quebec City IMAX acquisition, we added IMAX Markham Theatre and on July 1st added an IMAX Auditorium to Cineplex Cinemas Winston Churchill. These installations bring our total IMAX Auditoriums to 23.

As an example of the success of these offerings, Cineplex all three [ph] IMAX Auditoriums accounted for 13 of the Top 20 premium large format screens in North America for the opening weekend of Mission: Impossible - Rogue Nation and accounted for 12 of the Top 20 VLS for Jurassic World. In July we announced an agreement with Paramount Pictures whereby Cineplex Entertainment in Canada and AMC Theatres in the U.S.

will pass the new distribution model for two movies in the horror genre. The studio will share percentage of the revenue received from transactional digital sales in the U.S.

and Canada and in an exchange for a shorter video. Cineplex will benefit in two ways with revenue earned from online sales including super ticket and from the new revenue source generated from the share of the digital sales earned off other platforms.

Each of the partners is pleased to be looking together to test new business models and window options. It is important to note that this is not a test or traditional blockbuster film that will play in theatres for several weeks.

We have chosen a very specific film genre to gather as much learning as possible. We believe it is an important first step to finding a model that works for exhibition and distribution while not impacting the success of the traditional theatrical window.

Switching to food service, we set new record for food service revenue and CPP in the second quarter of 2015 with CPP increasing 8.3% to $5.50 versus $5.08 in the prior year, a new all-time quarterly record. This growth was driven by higher transaction values, increased purchase incidence, extended offerings and growth in our VIP cinemas program.

We want to extend a warm welcome and special thanks to our new Toronto Blue Jays pitcher David Price who famously tweeted that the Toronto Blue Jays have the best popcorn in the world. Thank you, David as Cineplex wholeheartedly agrees and is proud to supply them with that world's best popcorn.

We continue to focus on the expansion of our proprietary food service offerings during the quarter opening new locations for Outtakes, YoYo's Yogurt Café and Poptopia in our theatres. Throughout 2015, we will continue to grow both, our core concessions and proprietary offerings by refining our menu offering targeted marketing and promotional programs and leveraging the flexibility of our digital menu boards.

Earlier this year we announced plans to launch a new social entertainment destination called The Rec Room. The Rec Room features three main offerings; a large attractions area featuring state-of-the-art simulation games, redemption games and recreational games, a performance venue offering live entertainment such as musical acts, bands and comedians along with a theater-sized screen and an up-scaled casual dining restaurant.

With the strategic and concept development work largely behind us, we are entering the next phase of this project focusing on execution and building our first location at South Edmonton Common. We have a number of additional locations under negotiation and expect to announce these as they come to fruition in the weeks ahead.

As mentioned previously, Cineplex will acquire the remaining 50% equity that it doesn't already own in Cineplex Starburst Inc. This transaction will close during the third quarter of this year and we will provide more specific details at that time.

Our media business experienced strong growth in the second quarter compared to the prior year period. Cineplex Media revenues increased as a result of robust show time advertising sales, particularly among automotive and teleco clients.

As part of strategy to grow this business, we created offerings that leverage new technology to offer interactive customer experiences. These include Cineplex TimePlay, digital poster cases, and our interactive media zones.

The interactive media zone provides clients with interactive brand experiences featuring a large touch screens that offer gesture, motion, image and video capture technologies, as well as social media connectivity and participant data capture. We have installed an additional 12 interactive media zones in theater lobbies this year bringing our total at June 30 to 37 across Canada.

We believe these interactive and exponential media properties will provide future media revenue growth. Cineplex Digital Media revenues also grew in the second quarter, thanks to higher advertising revenue from the TimsTV and Oxford Properties networks.

We've seen opportunity to further grow our Digital Media business throughout North America by leveraging our proprietary technology, as well as network installation, management, creative services and advertising sales capabilities. Overall, our media businesses continue to be strong both in theatre and in the digital out-of-home space.

Our digital commerce offerings continue to gain traction in the second quarter of this year with Cineplex.com registering a 20% increase in unique visitors and a 22% increase in visits versus the prior year period. The Cineplex mobile app has been downloaded more than 12.2 million times as of June 30, 2015, recording nearly $667 million app sessions and making it one of Canada's most popular mobile brands.

At Cineplex still we continued to enhance a technology platform releasing support for broadcast in both iOS and Android Apps, as well as supporting super ticket offerings. The SCENE loyalty program continues to exceed our expectations adding more than 266,000 members to finish the first quarter at 6.8 million members.

In addition SCENE announced that later this year members will be able to earn and redeem points at more than 800 CARA restaurant locations across Canada. Thirdly, members can earn SCENE points that all milestones on each side restaurants with other CARA brands to launch later this year.

Strategic marketing partnerships such as those with CARA and SportChek helped us grow our member base and make the program even more valuable to existing members. Now, let's take a look at some of the films we have coming for late summer and for the balance of this year.

The third quarter got off to a strong start with Minions, Ant-man, FredWreck, and Mission: Impossible - Rogue Nation. Tom Cruise and director Christopher McQuarrie were in Toronto to help us launch the movie with a special premier including Q&A for guests and grieve for some of our senior members.

For the first five weeks of the third quarter, Canadian Box Office is up 14.1% compared to the U.S. which is up 9.2%.

These percentages vary from quarter-to-quarter depending on the type of movies and formats that they are playing. Now let's take a look ahead to see what films we have for the balance of the year.

These include the Ridley Scott directed film, The Martian, starring Matt Damon and Jessica Chastain. The film adaptation of the classic story based in Peter Pan's Never Land titled Pan starring Hugh Jackman.

The latest installment in the James Bond Series, Spectre. For the kids and all of us there the PinUs Movie in 3D, and the final film in The Hunger Games: Mockingjay Part 2.

Pixar's latest animated feature, The Good Dinosaur completes the lot. And in December, mark your calendars for 18th, we are looking forward to one of the most anticipated films, Star Wars: The Force Awaken.

Over the Christmas holiday there are number of films opening including Housan & the Chipmunks, the Road Chip for the kids, Joy starring Jennifer Lawrence, Bradley Cooper and Robert De Niro, Daddy's Home starring Will Ferrell and Mark Wahlberg, Concussion with Will Smith and Alec Baldwin. It's easy to see why the fourth quarter of 2015 is expected to be one of the biggest quarters in our history.

We believe we are well positioned to amplify the strength of the year's film slate with our premium experiences and also through our food service and media offerings. Outside our theatres we will continue to diversify Cineplex reducing our alliance from the cyclical nature of Hollywood film products, particularly through our digital media and amusement gaming businesses, as well as the upcoming launch of The Rec Room.

Now, I will turn it over to Gord.

Thanks, Ellis. Now I am pleased to present the second quarter financial results for Cineplex Inc.

For your further reference, our financial statements and MD&A have been filed on SEDAR this morning and are also available on our Investor Relations website at cineplex.com. As Ellis mentioned, Cineplex reported all-time quarterly records for total revenues, attendance, BPP, CPP and adjusted EBITDA in the second quarter of 2015.

Cineplex's second quarter Box Office revenue was $186.2 million compared to $181.4 million in the prior year, as a result of attendance increase of 2% and an increase in average ticket price of 25%. Our average ticket price for the quarter decreased to $9.45, a quarterly record from the $9.40 reported in the second quarter of 2014.

Our premium product percentage increased to 46.3% of Box Office revenue in 2015 from 41.8% in 2014. The impact of premium price product on the average ticket price was $1.10 for this quarter as compared to $0.94 from the prior year.

Excluding premium product our average ticket price decreased by 1.3% as compared to the prior year quarter to $8.35, primarily due to mixtures within our alternative program event. Food service revenue increased 10.6% to $108.4 million as a result of the 8.3% increase to concession revenue per patron to $5.50, an all-time quarterly record.

The CPP growth was primarily a result of higher average transaction values as a result of expanded offerings, including offerings at Cineplex's VIP Cinemas. Total media revenue increased $4 million or 13% to $35 million for the quarter.

Cineplex Media revenue which is primarily theatre-based increased 15.2%, Cineplex Digital Media revenue increased 7.6% due to continued growth of new business opportunities, including the TimsTV network deployment and the Oxford Properties Group digital installations, partially offset by lower project revenues due to timing of project installations. These new business deployments will provide opportunities for continued advertising revenue growth in the future.

Turning briefly to our key expense line items, film cost for the quarter came in at 54.9% of Box Office revenue as compared to 52.3% reported in the prior years. The increase in the film cost percentage is a result of the concentration of the Box Office revenues from the Top 3 films in the current period.

These titles which rank in the Top 10 of all-time accounted for 43.5% of Box Office revenue as compared to the Top 3 representing 29.2% of Box Office revenue in 2014. The period-over-period film cost percentage increase is also impacted by the prior year being the lowest second quarter film cost percentage reported by Cineplex.

Cost of food service for Q2 2015 was 22.1% as compared to 21.6% in the prior year. Other costs of $155.3 million increased $6.3 million or 4.3%.

Other costs include theatre occupancy expenses, other operating expenses, and general and administrative expenses. Theatre occupancy expenses were $50.5 million for the quarter versus the prior year actual of $50.2 million.

Other operating expenses were $89.2 million for the quarter versus the prior year actual of $83.5 million, an increase of $5.7 million. Major reasons for the increase included an increase of $1.9 million due to impact of new and acquired theatres and other disposed theatres, higher settings to our payroll of $11 million due to higher business volumes, as well as minimum wage increases in provinces, higher marketing cost of $1.3 million due to the timing of campaigns, and costs of $0.9 million in the current year due to growing membership and support for the SportChek partners.

G&A expenses were $15.6 million for the quarter which was $0.4 million higher than the prior year, primarily due to a $0.4 million increase in long term and short term incentive program expenses. Interest expense of $5.5 million was $0.1 million lower than the prior year amount of $5.6 million, contributing to the decrease of $0.3 million decrease in cash interest as a result of lower average rates on revolving facility.

The company recorded tax expense of $11.1 million during the second quarter of 2015 comprised substantially of current tax expense. Our blended federal and provincial statutory tax rate currently is 26.5%.

The losses acquired on the AMC acquisition were fully utilized in 2014. Net CapEx for the second quarter was $20.4 million as compared to $19.2 million in the prior year.

We continue to estimate that net CapEx will be approximately $100 million for 2015. CapEx for 2015 will include rollout of The Rec Room, a continued rollout of premium offerings, new theatre construction, and digital signage and media initiatives.

Record revenues contributed to our strong Q2 results. We continue to remain comfortable with where Cineplex is positioned today.

Our strong balance sheet and lower leverage ratio allows us to continue to invest in future growth opportunities for the company and benefit from a future strong film product. That concludes our remarks for this morning, and we would now like to turn the call over to the conference operator.

Good morning. I just wanted to share about film cost, I totally understand the issue of concentration in the quarter but should we be thinking about higher film costs just the beginning of next year, given Star Wars is likely to dominate or is that too early to tell because a mix can change through the quarter.

Just wondering if you can give us any direction on how we should think about the Star Wars effect on some of your margins? Thanks.

Yes, the key in that situation will be depending on what Star Wars does on total Box Office and what percentage that Box Office is off the first quarter of 2016. Now again it's opening at the end of December 2015, so part of that will be in 2015 and the balance in 2016.

So it will very much depend on those two factors.

Ellis, do you have expectations of any other films in the first quarter from what you can see now that are likely to balance some of the dominance of Star Wars through the quarter?

Well, towards the end of the first quarter of 2016, I think there is a film that I think will be quite big, it's the Batman versus Superman movie. And then you've got Zootopia and other movies that I think could have a pretty decent Box Office.

But the difference is because it's crossing two quarters, you will feel the impact on both quarters but in the fourth quarter of this year you have a lot of other big movies. So you got the Bond movie which usually does extremely well in Canada, you've got Hunger Games, and you've got all of the Christmas movies plus Martian and a whole bunch of movies.

Thank you.

Good morning. On Rec Room, thanks for the update Ellis, could you maybe talk just a little bit about how we should think about going into the 16 number of locations you might enter or exit the year with us and the speed with which that appointment would roll out?

Well, I'll start by saying for Edmonton we are looking at opening it in the spring of 2016, and we probably will open about two locations in total in 2016 or up to as many as three. And then we will continue to roll them out at a faster pace.

The first one always takes a bit longer because you want to get everything buckled down and make sure it's right for the long term future of the business. And we are quite excited about it because of all the other assets that we have, that we can use to - maximize the value of the Rec Room.

Okay. And just shifting gears to the media initiatives for a second, if we talked about the CVM, could you talk about what the opportunity looks like in the U.S.

market and how you're sort of pursuing it? We touched on that last quarter as well.

Thanks.

Thanks, Paul, its Gord. We still believe that is a strong opportunity in the U.S.

We believe that the U.S. is under deployed out into Canada in the digital space, so we continue to see lots of opportunity there.

As we've described to you guys in the past, we have opened an office up in the U.S., we are actively involved in a number of discussions with a number of potential customers in the U.S. and we hope to have some news to share with you guys in future.

Okay. And then just one last quick one from me, if you look at CPP drivers, how should we think about the potential for growth above inflation in CPP in general across the circuit?

Thanks.

We don't visit investors, we typically talk to them on Tuesdays with general focus on increasing incidence of purchase in the increasing basket size. And historically we've talked about increasing the incidence of purchase and we've talked about optimization of our product offerings and ways of using our promotional or digital signage initiatives to increase basket size.

So first of all, let me comment on the results of where we are certainly on a year-to-date basis and where we're seeing the growth in CPP, it is actually somewhat equally divided between increasing incidence, increasing basket size, and the contributions of our VIP locations. And as we go forward, we're going to continue to expand our VIP presence, using our digital signage initiatives to promote the products and use our endeavor [ph] to cut dry some of our promotional messaging.

So we continue to believe that we're going to outperform CPI on a go forward basis based on a number of initiatives that are in place today.

Okay, thanks guys.

Thank you.

Good morning, everybody, just a couple of quick questions. As you mentioned, your premium content penetration reached a record high.

I'm just wondering if you can maybe add some color and help me understand why that didn't lead to maybe a more substantial jump in BPP?

Yes, it's Gord here. So, there is really couple of factors in that kind of core, so the non-premium products, there are really key factors at play here.

One was naturally a shift in the adult attendance mix within that category and that shift was about 2% shift out of the other which drive the price category into both child and some of the - and then the SCENE program. So that's a portion of the impact.

The other portion is and the alternative programming events where we had three offers playing during the last second quarter we only have one playing this quarter and there is a fairly sizeable shift from - through the premium priced alternative programming events into the lower priced event such as the family favorites.

And another question, just on the Cineplex Digital Media, are you still looking to double U.S. over the next two years, just we think it's off to a bit of a slow start?

What we've always said is sort of on a run rate basis at the beginning of 2016 and we believe that we've been a position where we would have doubled our revenue base, and yes, we're very encouraged with where we see things today and we're still consistent with that message.

Okay. And just for modelling, what can we expect for the tax rate going forward?

Well, we gave a cap on the tax rate of 26.5%, we'll we're just using that going forward. And as I mentioned, the AMC losses were fully utilized in the end of 2014.

Okay, thanks guys.

Thank you.

Hi, thanks for taking my questions, just a quick one for me. When we look at BPP trends, I was just wondering, I know you adjusted the SCENE point I believe for premium redemption, I think sticking - it is going to go into effect.

I was just wondering how we should kind of think about that and whether or not that was more to kind of see some uplift on BPP given it seems like that was part of the potential headwind in the quarter?

We basically looked at the SCENE program and as you mentioned in November we will be changing the - both the fern and the burn categories and this was a result of really when the SCENE program was launched compared to today where we've got all of these premiums formats. And yes, it will help the BPP but I think it will take a little bit of time until it gets through into the system.

Fantastic, thank you. And maybe just a follow-up, I believe you had flagged it the Canada Box Office has outperformed or is outperforming the U.S.

Box Office quarter-to-date and we're seeing that kind of trend the opposite of last couple of quarters. Is there anything specifically you would flag as driving that so far?

Well, a lot of it had to do with the fact that in the second quarter the U.S. kids get off school or live-in we do and they work inside outside open and what you're seeing is the benefit of that once our kids across Canada got out of school.

Plus we are seeing better performance in sort of movies that opened in late June into our month of July, and our Quebec theatres are also performing better from an overall perspective with local product and the Hollywood films. But again, I also cautioned you that this can change depending on the movie that's released then what happens as far as the formats of the movies are created.

And Rob, just as a reminder, the U.S. will either tend to have a higher average screen count, so large blockbuster films in the U.S.

tends to outperform Canada whereas Canada's point is little bit more of a catch up game, so we're seeing a little bit of that catch up to titles such as Jurassic World [ph], which are released to in the second quarter.

Fantastic, thank you very much.

Thanks very much, good morning. Gord, maybe just a couple of questions for you.

First of all, the CapEx fixed rate, I guess $100 million, that's still the target for this year and I guess for the next couple of years. Could you maybe help us just break that up a little bit into the different components?

Yes. Look at us about $30 million of maintenance CapEx which is where we have typically held that number out.

There is about $40 million in growth CapEx, this benefit of $10 million in premium spending over the past number of years, so when you look at that growth CapEx over the $40 million and the $10 million, what I think you're going to see of all the transition overtime, is that primarily been exhibition related CapEx and that's going to transition into The Rec Room CapEx. And the number of bills, as we move out into longer term we'll likely decrease to the one to two number rather than the two to three number.

And then the balance is primarily going to be come from new initiatives such as digital deployments that come on our time.

Okay, now that's very helpful. And then maybe just on that digital front, Gord maybe you can just update us on the Cineplex digital side, where do we stand on the margins today?

As we've always think, there is a long lead time in the sales process, we've opened up the markets in the U.S., we see huge opportunity in the U.S. The margins are constrained in the short term as we're looking to build this business in the future.

On the long term basis you expect that the margins will be serving at 25% to 30% range on - but I can tell you right now they are not as we're looking to build the business in the future.

Thanks very much.

Good morning and thanks for taking my questions. My question would be on the East Port summer event series.

Could you perhaps provide some additional color on how you see this unfolding, is it more of a periodic event or is it a major theatre event? Additional color would be helpful.

Listen, East Ports as you will see is an evolving space, to-date we've seen a number of large live events occurring through at the world, to-date we are primarily been focused on broadcasting certain of these live events within our theatre and you know as we see markets evolve and market mass evolve, there is opportunity in [indiscernible] to get involved in these emerging spaces. So I think you will see some very interesting initiatives come out of Cineplex in this space going forward.

And any idea on how frequent these could become?

I think, look at the - as you see what's evolving today, as these events can, the frequency will definitely - what we're seeing today.

Okay, thank you very much.

First question, Gord, can you give us the percentage of admissions or percentage of concession sales that are coming from SCENE members? Maybe that's an offline answer, I'm sure it's not a silly as you keep in the top of your -

Yes, what I can tell you is this - a significant share of our ticket purchases in our concession sales come from SCENE participants. And with 6.8 million SCENE members, a significant portion of the Canadian population are holders of SCENE cards.

Second one maybe for Ellis, can you give us some perspective and the alternative content will - is there going to be a business in the interactive games, whether it's participatory or spectator based?

I think we've seen both in the U.S. and in Canada, the spectator part of it does extremely well but you know like when we did Optra, Jeff, we will continue to evaluate and look at opportunities beyond the spectator situation and see where we end up.

As you know, we've tried to be as innovative as possible and make those calculated investments based on what we think the future holds for the business.

I'm not sure the technology is perfect again on the participatory side but I was just curious if you guys evaluation on it. Thank you.

Thank you, sir.

Thank you all for joining us this morning. We look forward to speaking with you again on our third quarter conference call early in November.

Enjoy the rest of the summer. We hope to see you in our theatres.

Thank you.