Corus Entertainment announces fiscal 2010 third quarter results
- Consolidated segment profit increases 20% in the third quarter
- Consolidated revenues increase 12% in the third quarter, with
Television specialty ad growth of 14% and Radio revenue growth of 9%
- Basic earnings per share of $0.39 for the quarter compared to a loss
of $1.81 last year
TORONTO, July 14 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced its third quarter financial results today.
"This was an exceptional quarter for Corus, with advertising sales strong for both Television and Radio. We also benefited from our cost control initiatives," said John Cassaday, President and CEO of Corus Entertainment. "Ad sales continue to pace well ahead in our fourth quarter as the overall economy continues to recover. We are confident in our ability to achieve our earnings guidance for the full fiscal year."
Financial Highlights
--------------------
(unaudited) Three months ended Nine months ended
(in thousands of May 31, May 31,
Canadian dollars -------------------------------------------------
except per share 2010 2009 2010 2009
amounts) -------------------------------------------------
Revenues
Radio 71,426 65,508 198,190 198,971
Television 147,013 129,846 435,242 394,526
-------------------------------------------------
218,439 195,354 633,432 593,497
-------------------------------------------------
-------------------------------------------------
Segment profit
Radio 21,877 16,072 52,266 45,193
Television 59,452 50,672 179,724 162,433
Corporate (7,511) (5,328) (19,502) (13,859)
-------------------------------------------------
73,818 61,416 212,488 193,767
-------------------------------------------------
-------------------------------------------------
Net income (loss) 31,411 (145,030) 119,922 (75,368)
-------------------------------------------------
-------------------------------------------------
Earnings (loss)
per share
Basic $ 0.39 $ (1.81) $ 1.49 $ (0.94)
Diluted $ 0.39 $ (1.81) $ 1.48 $ (0.94)
Consolidated Results
--------------------
Consolidated revenues for the three months ended May 31, 2010 were $218.4 million, up 12% from $195.4 million last year. Consolidated segment profit was $73.8 million, up 20% from $61.4 million last year. Net income for the quarter was $31.4 million ($0.39 basic and diluted), compared to a net loss of $145.0 million (loss of $1.81 basic and diluted) last year. Net income for the prior year includes a $172.5 million after-tax broadcast license and goodwill impairment charge. Removing the impact of this item results in adjusted third quarter basic earnings per share of $0.34 in the prior year.
Consolidated revenues for the nine months ended May 31, 2010 were $633.4 million, up 7% from $593.5 million last year. Consolidated segment profit was $212.5 million, up 10% from $193.8 million last year. Net income for the nine-month period was $119.9 million ($1.49 basic and $1.48 diluted), compared to a net loss of $75.4 million (loss of $0.94 basic and diluted) last year. Net income for the nine-month period includes a $16.2 million reversal of a disputed regulatory fee accrual, a $14.2 million recovery due to income tax rate changes and a debt refinancing loss of $14.3 million.
Operational Results
-------------------
Radio
- Revenues increased by 9% in the third quarter and were flat for the
year-to-date.
- Segment profit increased by 36% in the third quarter and 16% for the
year-to-date.
- Revenues for the quarter increased 19% in Ontario, increased 10% in
Quebec and other, and returned to growth in the West.
Television
- Revenues increased by 13% in the third quarter and 10% for the
year-to-date.
- Segment profit increased by 17% in the third quarter and 11% for the
year-to-date.
- Advertising revenues increased by 11% in the third quarter and
increased by 4% year-to-date.
- Specialty advertising revenues increased by 14% in the third quarter
and 5% for the year-to-date.
- Subscriber revenues increased by 13% in the third quarter and 11% for
the year-to-date.
- Movie Central finished the quarter with 970,000 subscribers, up 2%
from last year.
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, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, Nickelodeon (Canada), W Network, CosmoTV, VIVA, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press and radio stations including CKNW, CFOX, CKOI, 98.5 FM, Q107 and 102.1 the Edge. Corus creates engaging branded entertainment experiences for its audiences across multiple platforms. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) exchanges. Experience Corus on the web at www.corusent.com.
The unaudited consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2010 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.
A conference call with Corus senior management is scheduled for July 14, 2010 at 2 p.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for North America is 1.800.926.6309 and for local/international callers it is 416.981.9035. PowerPoint slides for the call will be posted at 1:45 p.m. ET on July 14, 2010 and can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.
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
As at As at
(unaudited) May 31, August 31,
(in thousands of Canadian dollars) 2010 2009
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 34,629 10,922
Accounts receivable 170,937 146,784
Income tax recoverable - 7,267
Prepaid expenses and other 19,022 14,377
Program and film rights 141,937 146,195
Future tax asset 4,393 1,788
-------------------------------------------------------------------------
Total current assets 370,918 327,333
-------------------------------------------------------------------------
Tax credits receivable 37,207 26,698
Investments and other assets 24,802 23,693
Capital assets 120,258 76,450
Program and film rights 105,295 92,579
Film investments 97,451 92,180
Broadcast licenses 587,138 561,741
Goodwill 692,632 674,029
-------------------------------------------------------------------------
2,035,701 1,874,703
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 186,434 171,055
Income taxes payable 14,428 -
-------------------------------------------------------------------------
Total current liabilities 200,862 171,055
-------------------------------------------------------------------------
Long-term debt 681,343 651,767
Other long-term liabilities 82,827 73,360
Future tax liability 97,046 102,842
-------------------------------------------------------------------------
Total liabilities 1,062,078 999,024
-------------------------------------------------------------------------
Non-controlling interest 15,445 21,401
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 853,833 840,602
Contributed surplus 11,901 17,303
Retained earnings 104,027 20,380
Accumulated other comprehensive income (11,583) (24,007)
-------------------------------------------------------------------------
Total shareholders' equity 958,178 854,278
-------------------------------------------------------------------------
2,035,701 1,874,703
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited) Three months ended Nine months ended
(in thousands of Canadian May 31, May 31,
dollars except per share ---------------------------------------------
amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues 218,439 195,354 633,432 593,497
Direct cost of sales,
general and
administrative expenses 144,621 133,938 420,944 399,730
Depreciation 5,294 4,795 15,133 14,986
Interest expense 14,544 8,945 32,345 29,013
Broadcast license and
goodwill impairment - 175,000 - 175,000
Disputed regulatory fees - 1,476 (16,194) 4,188
Debt refinancing loss - - 14,256 -
Other expense (income),
net 6,006 2,330 7,345 (1,279)
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling interest 47,974 (131,130) 159,603 (28,141)
Income tax expense 14,603 12,417 35,213 44,123
Non-controlling interest 1,960 1,483 4,468 3,104
-------------------------------------------------------------------------
Net income (loss) for
the period 31,411 (145,030) 119,922 (75,368)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share
Basic $ 0.39 $ (1.81) $ 1.49 $ (0.94)
Diluted $ 0.39 $ (1.81) $ 1.48 $ (0.94)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited) Three months ended Nine months ended
(in thousands of Canadian May 31, May 31,
dollars except per share ---------------------------------------------
amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Net income (loss) for
the period 31,411 (145,030) 119,922 (75,368)
Other comprehensive
income (loss), net of tax
Unrealized foreign
currency translation
adjustment (16) (1,791) (540) 526
Unrealized change in
fair value of
available-for-sale
investments, net of tax 277 425 289 (355)
Recognition of change in
fair value of available-
for-sale assets in
net income - - - 2,077
Unrealized change in fair
value of cash flow
hedges, net of tax - 857 3,431 (8,650)
Recognition of change in
fair value of cash flow
hedge in net income,
net of tax - - 9,244 -
-------------------------------------------------------------------------
261 (509) 12,424 (6,402)
-------------------------------------------------------------------------
Comprehensive income
(loss) for the period 31,672 (145,539) 132,346 (81,770)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Three months ended Nine months ended
May 31, May 31,
(unaudited) ----------------------------------------------
(in thousands of Canadian) 2010 2009 2010 2009
-------------------------------------------------------------------------
Share capital
Balance, beginning
of period 846,747 840,363 840,602 848,257
Issuance of shares under
stock option plan 5,779 132 10,510 490
Shares repurchased - - - (8,450)
Other 1,307 - 2,721 198
-------------------------------------------------------------------------
Balance, end of period 853,833 840,495 853,833 840,495
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus
Balance, beginning
of period 15,177 14,516 17,303 17,304
Stock-based compensation (1,181) 1,363 672 3,713
Settlement and
modification of long-term
incentive plan (1,186) - (4,659) (5,138)
Exercise of stock options (909) (9) (1,415) (9)
-------------------------------------------------------------------------
Balance, end of period 11,901 15,870 11,901 15,870
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings
Balance, beginning
of period 84,785 170,684 20,380 131,594
Net income for the period 31,411 (145,030) 119,922 (75,368)
Dividends (12,169) (12,002) (36,275) (35,941)
Share repurchase excess - - - (6,633)
-------------------------------------------------------------------------
Balance, end of period 104,027 13,652 104,027 13,652
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive loss
Balance, beginning
of period (11,844) (26,043) (24,007) (20,150)
Other comprehensive
income (loss),
net of tax 261 (509) 12,424 (6,402)
-------------------------------------------------------------------------
Balance, end of period (11,583) (26,552) (11,583) (26,552)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Nine months ended
(unaudited) May 31, May 31,
(in thousands of ----------------------------------------------------
Canadian dollars) 2010 2009 2010 2009
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) for the
period 31,411 (145,030) 119,922 (75,368)
Add (deduct) non-cash
items:
Depreciation 5,294 4,795 15,133 14,986
Broadcast license and
goodwill impairment - 175,000 - 175,000
Amortization of program
and film rights 40,958 41,191 124,174 117,708
Amortization of film
investments 10,984 5,686 26,126 15,724
Future income taxes (189) 1,200 (13,617) 8,810
Non-controlling interest 1,960 1,483 4,468 3,104
Stock option expense 216 344 672 971
Imputed interest 2,458 1,833 5,926 5,144
Debt refinancing loss - - 14,256 -
Other losses (gains) (60) 197 (448) (5,232)
Net changes in non-cash
working capital
balances related to
operations 10,435 4,263 8,987 (1,859)
Payment of program and
film rights (41,272) (48,792) (125,545) (143,967)
Net additions to film
investments (13,846) (8,806) (46,843) (33,722)
-------------------------------------------------------------------------
Cash provided by operating
activities 48,349 33,364 133,211 81,299
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property,
plant and equipment (22,168) (4,259) (52,067) (10,043)
Business combinations - - (36,000) (74,950)
Cash held in escrow - - - 74,950
Net cash flows for
investments and
other assets (580) (5) 2,284 6,628
Decrease in public
benefits
associated with
acquisitions (601) (302) (1,079) (1,436)
-------------------------------------------------------------------------
Cash used in investing
activities (23,349) (4,566) (86,862) (4,851)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Decrease in bank loans (24,895) (23,968) (454,576) (10,298)
Issuance of senior
unsecured
guaranteed notes - - 500,000 -
Financing and swap
termination fees - - (30,997) -
Issuance of shares under
stock option plan 4,870 123 9,095 481
Shares repurchased - - - (15,083)
Dividends paid (11,078) (12,000) (33,725) (36,017)
Dividend paid to
non-controlling
interest - - (9,260) (2,994)
Other 265 - (3,179) 198
-------------------------------------------------------------------------
Cash used in financing
activities (30,838) (35,845) (22,642) (63,713)
-------------------------------------------------------------------------
Net change in cash and
cash equivalents
during the period (5,838) (7,047) 23,707 12,735
Cash and cash equivalents,
beginning of period 40,467 39,424 10,922 19,642
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 34,629 32,377 34,629 32,377
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited)
(in thousands of Canadian dollars except per share amounts)
Three months ended
May 31, 2010
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 71,426 147,013 - 218,439
Direct cost of sales,
general and
administrative
expenses 49,549 87,561 7,511 144,621
-------------------------------------------------------------------------
Segment profit 21,877 59,452 (7,511) 73,818
Depreciation 1,579 1,819 1,896 5,294
Interest expense 212 1,296 13,036 14,544
Other expense (income),
net (4) 1,256 4,754 6,006
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling
interest 20,090 55,081 (27,197) 47,974
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended
May 31, 2009
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 65,508 129,846 - 195,354
Direct cost of sales,
general and
administrative
expenses 49,436 79,174 5,328 133,938
-------------------------------------------------------------------------
Segment profit 16,072 50,672 (5,328) 61,416
Depreciation 1,677 2,174 944 4,795
Interest expense 243 1,467 7,235 8,945
Broadcast license and
goodwill impairment 175,000 - - 175,000
Disputed regulatory fees 821 655 - 1,476
Other expense (income),
net 3,165 (1,324) 489 2,330
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling
interest (164,834) 47,700 (13,996) (131,130)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended
May 31, 2010
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 198,190 435,242 - 633,432
Direct cost of sales,
general and
administrative
expenses 145,924 255,518 19,502 420,944
-------------------------------------------------------------------------
Segment profit 52,266 179,724 (19,502) 212,488
Depreciation 4,847 5,596 4,690 15,133
Interest expense 612 3,651 28,082 32,345
Disputed regulatory fees (8,901) (7,293) - (16,194)
Debt refinancing loss - - 14,256 14,256
Other expense (income),
net 69 563 6,713 7,345
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling
interest 55,639 177,207 (73,243) 159,603
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended
May 31, 2009
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 198,971 394,526 - 593,497
Direct cost of sales,
general and
administrative
expenses 153,778 232,093 13,859 399,730
-------------------------------------------------------------------------
Segment profit 45,193 162,433 (13,859) 193,767
Depreciation 4,950 6,959 3,077 14,986
Interest expense 697 3,867 24,449 29,013
Broadcast license and
goodwill impairment 175,000 - - 175,000
Disputed regulatory fees 2,183 2,005 - 4,188
Other expense (income),
net 2,594 (4,965) 1,092 (1,279)
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling
interest (140,231) 154,567 (42,477) (28,141)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenues by segment
Three months ended Nine months ended
May 31, May 31,
----------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Radio
West 25,142 25,061 71,219 78,663
Ontario 24,454 20,534 68,118 62,821
Quebec and other 21,830 19,913 58,853 57,487
-------------------------------------------------------------------------
71,426 65,508 198,190 198,971
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Television
Kids 57,425 50,340 182,071 164,277
Specialty and Pay 89,588 79,506 253,171 230,249
-------------------------------------------------------------------------
147,013 129,846 435,242 394,526
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segment profit
Three months ended Nine months ended
May 31, May 31,
----------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Radio
West 9,208 8,877 23,962 27,641
Ontario 8,302 5,132 20,160 15,462
Quebec and other 4,367 2,063 8,144 2,090
-------------------------------------------------------------------------
21,877 16,072 52,266 45,193
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Television
Kids 23,233 17,795 78,799 68,036
Specialty and Pay 36,219 32,877 100,925 94,397
-------------------------------------------------------------------------
59,452 50,672 179,724 162,433
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenues by type
Three months ended Nine months ended
May 31, May 31,
----------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Advertising 117,827 105,807 335,671 328,754
Subscriber fees 72,900 64,681 211,224 189,476
Other 27,712 24,866 86,537 75,267
-------------------------------------------------------------------------
218,439 195,354 633,432 593,497
-------------------------------------------------------------------------
-------------------------------------------------------------------------
%SEDAR: 00013131E %CIK: 0001100868
For further information: John Cassaday, President and Chief Executive Officer, Corus Entertainment Inc., 416.479.6018; Tom Peddie, Executive Vice President and Chief Financial Officer, Corus Entertainment Inc., 416.479.6080; Sally Tindal, Director, Communications, Corus Entertainment Inc., 416.479.6107
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