Corus Entertainment announces fiscal 2009 fourth quarter and year-end results
- Consolidated segment profit increases 22% in the fourth quarter
- Consolidated revenues and segment profit hold flat for the year
- Strong free cash flow for the quarter and the year
"In a very tough economy Corus was able to match last year's record revenues and segment profit through the launch of strategic new services and cost reduction initiatives," said
Financial Highlights
--------------------
(unaudited) Three months ended Twelve months ended
(in thousands of August 31, August 31,
Canadian dollars ---------------------------------------------
except per share 2009 2008 2009 2008
amounts) ---------------------------------------------
Revenues
Radio 59,941 68,482 258,912 286,449
Television 135,488 117,349 530,014 500,966
Eliminations (208) (57) (208) (259)
---------------------------------------------
195,221 185,774 788,718 787,156
---------------------------------------------
---------------------------------------------
Segment profit
Radio 15,145 15,059 60,338 75,504
Television 46,712 38,396 209,145 199,605
Corporate (4,434) (6,220) (18,293) (22,979)
---------------------------------------------
57,423 47,235 251,190 252,130
---------------------------------------------
---------------------------------------------
Net income (loss) 18,733 17,406 (56,635) 129,835
---------------------------------------------
---------------------------------------------
Earnings (loss) per share
Basic $0.23 $0.21 $(0.71) $1.57
Diluted $0.23 $0.21 $(0.71) $1.54
Consolidated Results
--------------------
Consolidated revenues for the three months ended
Consolidated revenues for the year ended
Operational Results
-------------------
Radio
- Revenues decreased by 12% in the fourth quarter and 10% for the year.
- Segment profit increased by 1% in the fourth quarter and decreased by
20% for the year.
- Local airtime revenues down 12% for the fourth quarter and 10% for
the year.
- National airtime revenues down 23% for the fourth quarter and 17% for
the year.
- Revenue declines experienced in all regions in Canada for both the
fourth quarter and year.
- Broadcast license and goodwill impairment charge of $175.0 million
recorded in the third quarter.
- Restructuring provisions recorded of $5.4 million for the fourth
quarter and $8.6 million for the year as Corus aligns the cost
structure of this division with its strategic objectives.
Television
- Revenue growth of 15% in the fourth quarter and 6% for the year.
- Segment profit growth of 22% in the fourth quarter and 5% for the
year.
- Advertising revenues down 10% in the fourth quarter and 6% for the
year.
- Specialty advertising revenues down 10% in the fourth quarter and 5%
for the year.
- Toys and Food continue to be soft advertising categories in the Kids
area.
- Subscriber revenue growth of 19% in the fourth quarter and 14% for
the year.
- Subscriber revenues benefited from the launches of VIVA and HBO
Canada.
- Movie Central finished the year with 953,000 subscribers, up 7% from
last year.
Significant Events in the Quarter
---------------------------------
- On June 2, 2009, the Company's Nelvana Enterprises announced, in
partnership with d-rights Inc., the return of the internationally
successful Beyblade toy and programming franchise. Fifty-one new
episodes and a revamped toy line will launch in fall 2010.
- On June 3, 2009, the Company's Nelvana Enterprises, along with
partners Cartoon Network Enterprises and Spin Master Limited, won two
International Licensing Industry Merchandisers' Association (LIMA)
Awards for the Bakugan brand. Spin Master accepted the Overall Best
Licensed Program of the Year and all partners accepted the Best TV,
Film and Entertainment Hard Goods License of the Year.
- On June 30, July 31 and August 31, 2009, the Company paid a monthly
dividend of $0.049585 and $0.05 to holders of its Class A and Class B
Shares respectively.
- On July 14, 2009, the Company announced that it had reached an
agreement to purchase the specialty television services Drive-In
Classics and SexTV from CTVglobemedia. The transaction is subject to
approval by the Canadian Radio-television and Telecommunications
Commission (CRTC). The combined acquisition price for both services
is approximately $40 million Cdn.
Significant Events Subsequent to the Quarter
--------------------------------------------
- On September 9, 2009, the Company launched DUSK, a rebranded
specialty channel formerly known as SCREAM. Catering to adults 18 -
49, DUSK offers viewers access to a ramped up lineup of suspense,
thriller and supernatural-based Hollywood feature films and
television series seven days a week, 24-hours-a-day. DUSK is a
partnership between the Company and CanWest Global Communications
Corp.
- On September 28, 2009, the Company announced plans to add
Nickelodeon, one of the world's leading entertainment brands for
kids, to its premier portfolio of kid-focused services. The channel
will launch at 6 a.m. ET on Monday, November 2, 2009. Nickelodeon in
Canada will be dedicated exclusively to Canadian kids and feature a
line-up of Nick's award-winning properties, from current live-action
comedies and animated favorites to classic hits.
- On September 28, 2009, the Company announced a partnership with FMQB
Productions, which will see Corus Radio's syndicated content
distributed to radio affiliates across the U.S. Under the
ExploreMusic banner, U.S. stations will now feature Alan Cross' The
Ongoing History of New Music and the ExploreMusic radio program a
swell as Jeff Woods' Legends of Classic Rock. Enthusiasm for the
programs was met quickly with WEDG/Buffalo and WRZX/Indianapolis
signing on as the first American affiliates to carry Corus Radio's
flagship programs.
- On September 29, 2009, the Company held its annual Investor Day and
updated investors on the Company's fiscal 2010 strategic priorities
and provided near-term financial guidance for the 2010 fiscal year.
The Company announced its fiscal 2010 guidance targets of
consolidated segment profit of $255 to $270 million, and free cash
flow of between $10 to $20 million. The Company also announced,
subject to CRTC approval, the rebranding of SexTV to W Movies and
announced the discontinuation of the Discovery Kids service effective
November 2, 2009.
- On September 29, 2009, the Company announced that its Board of
Directors had approved a discount for Class B Shares issued from
treasury pursuant to the terms of its Dividend Reinvestment Plan
("the Plan"). Under the Plan, eligible holders of Class A Shares and
Class B Shares may acquire additional Class B Shares through
reinvestment of the cash dividends paid on their respective
shareholdings. At this time, the Company's Board of Directors has
approved the issuance of shares from treasury at a two percent
discount from the average market price, as determined pursuant to the
terms of the Plan. This change will be effective for any dividends
payable on or after November 1, 2009, until such time as the Company
elects otherwise.
- On September 30, 2009, the Company paid a monthly dividend of
$0.049585 and $0.05 to holders of its Class A and Class B Shares
respectively.
- On October 7, 2009, The Honourable James Moore, Minister of Canadian
Heritage and Official Languages, announced a settlement between the
Government of Canada and members of the broadcasting industry on the
Part II license fee issue. The agreement has resulted in the Canadian
Association of Broadcasters and other named parties (including the
Company) discontinuing their appeal before the Supreme Court of
Canada challenging the validity of the fees that had been scheduled
to be heard on October 19, 2009. The settlement agreement includes
waiving Part II license fees that were not collected due to the
ongoing legal dispute for the broadcast years 2007, 2008 and 2009.
The Company will reverse its August 31, 2009 accrual of $16,194
million in the first quarter of fiscal 2010. Under this settlement,
the Government is also recommending that the CRTC develop a new Part
II fee regime, which would be effective commencing September 1, 2009.
Corus Entertainment Inc. reports in Canadian dollars.
About Corus Entertainment Inc.
------------------------------
Corus Entertainment Inc. is a Canadian-based media and entertainment company. Corus is a market leader in specialty television and radio with additional assets in pay television, advertising services, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, W Network, CosmoTV, VIVA, Movie Central, HBO
The audited consolidated financial statements and accompanying notes for the year ended
A conference call with Corus senior management is scheduled for
This press release contains forward-looking information and should be read subject to the following cautionary language:
To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements related to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our Annual Information Form. Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.
CORUS ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands As at As at
of Canadian August 31, August 31,
dollars) 2009 2008
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 10,922 19,642
Accounts receivable 146,784 157,440
Income taxes recoverable 7,267 1,615
Prepaid expenses and other 14,377 10,135
Program and film rights 146,195 131,301
Future tax asset 1,788 9,593
-------------------------------------------------------------------------
Total current assets 327,333 329,726
-------------------------------------------------------------------------
Tax credits receivable 26,698 21,952
Investments and other assets 23,693 93,086
Property, plant and equipment 76,450 73,562
Program and film rights 92,579 103,163
Film investments 92,180 80,819
Broadcast licenses 561,741 533,491
Goodwill 674,029 797,854
-------------------------------------------------------------------------
1,874,703 2,033,653
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 171,055 196,026
-------------------------------------------------------------------------
Long-term debt 651,767 692,750
Other long-term liabilities 73,360 59,936
Future tax liability 102,842 87,699
-------------------------------------------------------------------------
Total liabilities 999,024 1,036,411
-------------------------------------------------------------------------
Non-controlling interest 21,401 20,237
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 840,602 848,257
Contributed surplus 17,303 17,304
Retained earnings 20,380 131,594
Accumulated other comprehensive loss (24,007) (20,150)
-------------------------------------------------------------------------
Total shareholders' equity 854,278 977,005
-------------------------------------------------------------------------
1,874,703 2,033,653
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
unaudited)
(in thousands of Three months ended Twelve months ended
Canadian dollars August 31, August 31,
except per share ---------------------------------------------
amounts) 2009 2008 2009 2008
-------------------------------------------------------------------------
Revenues 195,221 185,774 788,718 787,156
Direct cost of sales,
general and administrative
expenses 137,798 138,539 537,528 535,026
Depreciation 5,718 5,801 20,704 22,054
Interest expense 8,413 9,906 37,426 41,313
Broadcast license and
goodwill impairment - - 175,000 -
Disputed regulatory fees 1,070 1,202 5,258 10,936
Other expense, net 9,707 3,865 8,428 7,853
-------------------------------------------------------------------------
Income before income taxes
and non-controlling
interest 32,515 26,461 4,374 169,974
Income tax expense 12,227 8,395 56,350 35,519
Non-controlling interest 1,555 660 4,659 4,620
-------------------------------------------------------------------------
Net income (loss) for the
period 18,733 17,406 (56,635) 129,835
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share
Basic $0.23 $0.21 $(0.71) $1.57
Diluted $0.23 $0.21 $(0.71) $1.54
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three months ended Twelve months ended
(unaudited) August 31, August 31,
(in thousands of ---------------------------------------------
Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Net income (loss) for
the period 18,733 17,406 (56,635) 129,835
Other comprehensive income
(loss), net of tax
Unrealized foreign
currency translation
adjustment 192 1,031 718 (23)
Unrealized change in fair
value of available-
for-sale investments,
net of tax 102 (176) (253) (1,114)
Recognition of change in
fair value of available-for
sale assets in net income (385) - 1,692 -
Unrealized change in fair
value of cash flow hedges,
net of tax 2,636 (2,451) (6,014) (13,851)
-------------------------------------------------------------------------
2,545 (1,596) (3,857) (14,988)
-------------------------------------------------------------------------
Comprehensive income (loss)
for the period 21,278 15,810 (60,492) 114,847
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Three months ended Twelve months ended
(unaudited) August 31, August 31,
(in thousands of ---------------------------------------------
Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Share capital
Balance, beginning of
period 840,495 865,686 848,257 882,244
Issuance of shares under
stock option plan 107 1,555 597 12,338
Shares repurchased - (18,984) (8,450) (46,555)
Repayment of executive
stock purchase loans - - 198 230
-------------------------------------------------------------------------
Balance, end of period 840,602 848,257 840,602 848,257
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus
Balance, beginning of
period 15,870 15,741 17,304 10,250
Stock-based compensation 1,441 1,748 5,154 7,904
Settlement of long-term
incentive plan - - (5,138) -
Exercise of stock options (8) (185) (17) (850)
-------------------------------------------------------------------------
Balance, end of period 17,303 17,304 17,303 17,304
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings
Balance, beginning of
period 13,652 140,159 131,594 95,568
Cumulative impact of
accounting changes - - - (1,594)
-------------------------------------------------------------------------
Adjusted opening balance 13,652 140,159 131,594 93,974
Net income (loss) for the
period 18,733 17,406 (56,635) 129,835
Dividends (12,005) (12,088) (47,946) (47,326)
Share repurchase excess - (13,883) (6,633) (44,889)
-------------------------------------------------------------------------
Balance, end of period 20,380 131,594 20,380 131,594
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive loss
Balance, beginning of
period (26,552) (18,554) (20,150) (12,169)
Cumulative impact of
accounting changes - - - 7,007
-------------------------------------------------------------------------
Adjusted opening balance (26,552) (18,554) (20,150) (5,162)
Other comprehensive loss,
net of tax 2,545 (1,596) (3,857) (14,988)
-------------------------------------------------------------------------
Balance, end of period (24,007) (20,150) (24,007) (20,150)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Twelve months ended
(unaudited) August 31, August 31,
(in thousands of ---------------------------------------------
Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) for the
period 18,733 17,406 (56,635) 129,835
Add (deduct) non-cash items:
Depreciation 5,718 5,801 20,704 22,054
Broadcast license and
goodwill impairment - - 175,000 -
Amortization of program
rights 41,824 37,799 159,532 145,661
Amortization of film
investments 9,821 6,897 25,545 28,393
Future income taxes 4,827 (292) 13,637 (7,321)
Non-controlling interest 1,555 660 4,659 4,620
Stock-based compensation 1,442 1,999 4,974 7,971
Imputed interest 1,910 1,662 7,054 6,390
Other gains and losses 4,800 523 (432) 2,203
Net change in non-cash
working capital balances
related to operations (3,889) 18,922 (8,309) (11,018)
Payment of program and
film rights (45,616) (23,578) (189,583) (141,917)
Net additions to film
investments (9,185) (13,603) (42,907) (56,293)
-------------------------------------------------------------------------
Cash provided by operating
activities 31,940 54,196 113,239 130,578
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property,
plant and equipment (12,460) (7,450) (22,503) (17,552)
Business combinations (1,583) - (76,533) (774)
Cash held in escrow - (74,950) 74,950 (74,950)
Net cash flows for
investments and other
assets 338 (230) 6,966 (4,251)
Decrease in public
benefits associated with
acquisitions (1,308) (1,090) (2,744) (3,993)
-------------------------------------------------------------------------
Cash used in investing
activities (15,013) (83,720) (19,864) (101,520)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase (decrease) in
bank loans (29,921) 64,551 (40,219) 85,594
Issuance of shares under
stock option plan 99 1,370 580 11,488
Shares repurchased - (32,867) (15,083) (91,444)
Dividends paid (12,004) (12,257) (48,021) (46,284)
Dividend paid to non-
controlling interest - - (2,994) (1,742)
Other 3,444 (149) 3,642 (375)
-------------------------------------------------------------------------
Cash provided by (used in)
financing activities (38,382) 20,648 (102,095) (42,763)
-------------------------------------------------------------------------
Net change in cash and
cash equivalents during
the period (21,455) (8,876) (8,720) (13,705)
Cash and cash equivalents,
beginning of period 32,377 28,518 19,642 33,347
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 10,922 19,642 10,922 19,642
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited)
(in thousands of Canadian dollars)
Three months ended August 31, 2009
Elimi- Con-
Radio Television Corporate nations solidated
-------------------------------------------------------------------------
Revenues 59,941 135,488 - (208) 195,221
Direct cost of
sales, general
and admini-
strative
expenses 44,796 88,776 4,434 (208) 137,798
-------------------------------------------------------------------------
Segment profit 15,145 46,712 (4,434) - 57,423
Depreciation 1,848 2,634 1,236 - 5,718
Interest expense 231 1,296 6,886 - 8,413
Goodwill and
broadcast license
impairment - - - - -
Disputed
regulatory fees 563 507 - - 1,070
Other expense,
net 5,294 5,818 (1,405) - 9,707
-------------------------------------------------------------------------
Income before
income taxes and
non-controlling
interest 7,209 36,457 (11,151) - 32,515
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended August 31, 2008
Elimi- Con-
Radio Television Corporate nations solidated
-------------------------------------------------------------------------
Revenues 68,482 117,349 - (57) 185,774
Direct cost of
sales, general
and admini-
strative
expenses 53,423 78,953 6,220 (57) 138,539
-------------------------------------------------------------------------
Segment profit 15,059 38,396 (6,220) - 47,235
Depreciation 1,745 2,864 1,192 - 5,801
Interest expense 263 1,118 8,525 - 9,906
Disputed
regulatory fees 734 468 - - 1,202
Other expense,
net 3,757 1,206 (1,098) - 3,865
-------------------------------------------------------------------------
Income before
income taxes and
non-controlling
interest 8,560 32,740 (14,839) - 26,461
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Twelve months ended August 31, 2009
Elimi- Con-
Radio Television Corporate nations solidated
-------------------------------------------------------------------------
Revenues 258,912 530,014 - (208) 788,718
Direct cost of
sales, general
and admini-
strative
expenses 198,574 320,869 18,293 (208) 537,528
-------------------------------------------------------------------------
Segment profit 60,338 209,145 (18,293) - 251,190
Depreciation 6,798 9,593 4,313 - 20,704
Interest expense 928 5,163 31,335 - 37,426
Goodwill and
broadcast license
impairment 175,000 - - - 175,000
Disputed
regulatory fees 2,746 2,512 - - 5,258
Other expense,
net 7,888 853 (313) - 8,428
-------------------------------------------------------------------------
Income before
income taxes and
non-controlling
interest (133,022) 191,024 (53,628) - 4,374
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Twelve months ended August 31, 2008
Elimi- Con-
Radio Television Corporate nations solidated
-------------------------------------------------------------------------
Revenues 286,449 500,966 - (259) 787,156
Direct cost of
sales, general
and admini-
strative
expenses 210,945 301,361 22,979 (259) 535,026
-------------------------------------------------------------------------
Segment profit 75,504 199,605 (22,979) - 252,130
Depreciation 6,533 10,473 5,048 - 22,054
Interest expense 1,042 4,643 35,628 - 41,313
Disputed
regulatory fees 6,155 4,781 - - 10,936
Other expense,
net 3,594 6,855 (2,596) - 7,853
-------------------------------------------------------------------------
Income before
income taxes and
non-controlling
interest 58,180 172,853 (61,059) - 169,974
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
SUPPLEMENTAL FINANCIAL INFORMATION
Three months ended Twelve months ended
(unaudited) August 31, August 31,
(in thousands of ---------------------------------------------
Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Interest expense
Interest on long-term debt 6,398 7,913 29,350 33,049
Imputed interest on long-
term liabilities 1,910 1,662 7,054 6,390
Other interest 105 331 1,022 1,874
-------------------------------------------------------------------------
8,413 9,906 37,426 41,313
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other expense, net
Interest income (180) (437) (1,206) (1,042)
Foreign exchange losses (gains) (139) 500 1,739 823
Losses from equity investments 224 456 318 1,343
Restructuring charges 5,440 3,329 8,632 6,142
Gain on disposal - - (7,163) -
Investment impairment 3,799 - 6,228 -
Other 563 17 (120) 587
-------------------------------------------------------------------------
9,707 3,865 8,428 7,853
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Free cash flow
Cash provided by (used in):
Operating activities 31,940 54,196 113,239 130,578
Investing activities (15,013) (83,720) (19,864) (101,520)
-------------------------------------------------------------------------
16,927 (29,524) 93,375 29,058
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated statements of
cash flows
Interest paid 6,479 8,129 31,178 35,031
Interest received 180 437 1,206 1,042
Income taxes paid 18,214 10,580 50,104 46,796
-------------------------------------------------------------------------
-------------------------------------------------------------------------
%SEDAR: 00013131E %CIK: 0001100868
For further information: John Cassaday, President and Chief Executive Officer, Corus Entertainment Inc., (416) 642-3770; Tom Peddie, Senior Vice President and Chief Financial Officer, Corus Entertainment Inc., (416) 642-3780; Tracy Ewing, Vice President, Communications, Corus Entertainment Inc., (416) 642-3792
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