Cinram expands DVD and CD business

Cinram, a Toronto-based producer of multimedia products, has agreed to purchase the DVD and CD manufacturing operations of AOL Time Warner, as well as the company’s physical distribution business and other related businesses.
The purchase price is US$1.05 billion; the deal is expected to close in the fall of 2003. The acquisition includes manufacturing facilities in Pennsylvania, California and Germany.
Cinram has three Canadian facilities in Toronto. The company already manufactures and distributes pre-recorded DVDs, VHS videocassettes, audio CDs, CD-ROMs, and audio cassettes.
As part of this new transaction, Cinram will have exclusive long-term agreements with Warner Home Video, Warner Music Group and New Line Cinema to package and physically distribute their DVDs and CDs in North America and Europe.
Commenting on Cinram’s first quarter results, CEO Isidore Philosphe said the demand for DVDs continues to exceed expectations. DVD sales accounted for 37% of consolidated revenue in the quarter. Consolidated revenue for the first quarter, ended March 31, 2003, increased 8% to $195.1 million, up from $181.4 million in 2002.
The company also improved its gross profit during the quarter, reaching $34 million. The increase is attributed to the shift in product mix to DVDs, improved production efficiencies and the increased ability to manufacture DVD orders in-house.