Corus Entertainment Announces Fiscal 2012 Second Quarter Results

• Net income attributable to shareholders from continuing operations up 16%
• Consolidated revenues up 8% and segment profit up 4%
• Television revenue up 10% and segment profit up 1%
• Radio revenue down 1% and segment profit up 2%

TORONTO, April 12, 2012 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its second quarter financial results today.

"We are delighted with our second quarter results as we continued to grow our revenue and net income, despite a challenging ad sales environment," said John Cassaday, President and CEO of Corus Entertainment.  "Our portfolio of Women's brands delivered double digit ad growth, and our Kids business continued to grow on the strength of our Beyblade sales. Our Radio business also experienced a return to growth in the quarter.  The introduction of ABC Spark in March represents another exciting growth opportunity for Corus, and expands on our relationship with Disney."

Financial Highlights
(unaudited)			Three months ended				Six months ended
(in thousands of Canadian dollars except per share amounts)			February 29,		February 28,		February 29,		February 28,
			2012		2011		2012		2011
Revenues
	Television		163,299		148,429		348,326		315,946
	Radio ^(1)		42,384		42,647		94,248		97,286
			205,683		191,076		442,574		413,232
Segment profit
	Television		60,421		59,923		140,916		140,192
	Radio ^(1)		9,879		9,672		26,281		28,186
	Corporate		(8,053)		(9,617)		(13,736)		(17,740)
			62,247		59,978		153,461		150,638
Net income attributable to shareholders:
	From continuing operations		31,571		27,291		82,119		73,489
	From discontinued operations		—		3,501		—		5,023
			31,571		30,792		82,119		78,512
Basic earnings per share attributable to shareholders:
	From continuing operations		$ 0.38		$ 0.34		$ 0.99		$ 0.90
	From discontinued operations		—		$ 0.04		—		$ 0.06
			$ 0.38		$ 0.38		$ 0.99		$ 0.96

^(1)						Reflects the disposition of the Quebec Radio operations, which occurred on February 1, 2011, as discontinued operations in all periods presented.

 

Consolidated Results from Continuing Operations

Consolidated revenues for the three months ended February 29, 2012 were $205.7 million, up 8% from $191.1 million last year.  Consolidated segment profit was $62.2 million, up 4% from $60.0 million last year.  Net income attributable to Shareholders for the second quarter 2012 was $31.6 million ($0.38 basic and diluted), compared to $27.3 million ($0.34 basic and $0.33 diluted) last year.

Consolidated revenues for the six months ended February 29, 2012 were $442.6 million, up 7% from $413.2 million last year.  Consolidated segment profit was $153.5 million, up 2% from $150.6 million last year.  Net income attributable to Shareholders for the six month period was $82.1 million ($0.99 basic and diluted), compared to $73.5 million ($0.90 basic and diluted) last year.

Operational Results - Highlights

Television

• Segment revenues increased 10% in Q2 2012 and year-to-date
• Segment profit increased 1% in Q2 2012 and year-to-date
• Specialty advertising revenues increased 4% in Q2 2012 and year-to-date
• Subscriber revenues consistent with the prior year in Q2 2012 and year-to-date
• Merchandise, distribution and other revenue increased 46% in Q2 2012 and 55% year-to-date
• Movie Central finished Q2 2012 with 988,000 paid subscribers

Radio⁽¹⁾

• Segment revenues down 1% in Q2 2012 and down 3% year-to-date
• Segment expenses down 1% in Q2 2012 and down 2% year-to-date
• Segment profit increased 2% in Q2 2012 and down 7% year-to-date

⁽¹⁾ Radio results reflect the disposition of the Quebec Radio operations, which occurred on February 1, 2011, as discontinued operations in all periods presented.

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), ABC Spark, W Network, OWN: Oprah Winfrey Network (Canada), CosmoTV, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press and radio stations including CKNW AM 980, 99.3 The FOX, Country 105, 630 CHED, 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 Stock Exchange (CJR.B).  Experience Corus on the web at www.corusent.com.

The unaudited consolidated financial statements and accompanying notes for the three months ended February 29, 2012 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 April 12, 2012 at 1:00 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 1.800.734.8583 and for local/international callers is 416.981.9001.  PowerPoint slides for the call will be posted 15 minutes prior to the start of the call 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, distribution, 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, distribution, 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 STATEMENTS OF FINANCIAL POSITION
		As at February 29,			As at August 31,			As at September 1,
(unaudited - in thousands of Canadian dollars)		2012			2011			2010
ASSETS
Current
Cash and cash equivalents		65,575			55,922			7,969
Accounts receivable		175,170			178,531			175,134
Income taxes recoverable		4,692			603			1,781
Prepaid expenses and other		12,296			13,497			18,008
Total current assets		257,733			248,553			202,892
Tax credits receivable		56,671			43,108			39,597
Intangibles, investments and other assets		40,767			39,980			22,699
Property, plant and equipment		164,837			169,600			161,585
Program and film rights		264,572			256,970			244,963
Film investments		78,842			83,133			80,611
Broadcast licenses		569,505			569,505			610,423
Goodwill		671,827			671,827			695,029
Deferred tax asset		28,058			30,915			32,130
		2,132,812			2,113,591			2,089,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities		213,694			206,773			192,839
Provisions		3,057			5,267			13,048
Total current liabilities		216,751			212,040			205,887
Long-term debt		567,387			600,796			691,891
Other long-term liabilities		88,572			104,574			95,840
Deferred tax liability		143,128			141,361			146,044
Total liabilities		1,015,838			1,058,771			1,139,662
SHAREHOLDERS' EQUITY
Share capital		904,856			882,679			856,655
Contributed surplus		7,780			10,299			12,706
Retained earnings		186,090			143,717			62,509
Accumulated other comprehensive income (loss)		(629)			(1,075)			342
Total equity attributable to shareholders		1,098,097			1,035,620			932,212
Equity attributable to non-controlling interest		18,877			19,200			18,055
Total shareholder's equity		1,116,974			1,054,820			950,267
		2,132,812			2,113,591			2,089,929

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
		Three months ended				Six months ended
		February 29,		February 28,		February 29,		February 28,
(unaudited - in thousands of Canadian dollars)		2012		2011		2012		2011
Revenues		205,683		191,076		442,574		413,232
Direct cost of sales, general and  administrative expenses		143,436		131,098		289,113		262,594
Depreciation		6,653		6,053		12,892		12,161
Interest expense		13,410		14,717		26,837		28,790
Restructuring		—		—		—		2,250
Other income, net		(1,617)		(1,125)		(1,170)		(1,242)
Income before income taxes		43,801		40,333		114,902		108,679
Income tax expense		10,262		11,034		28,683		31,362
Net income for the period from continuing operations		33,539		29,299		86,219		77,317
Net income for the period from discontinued operations		—		3,501		—		5,023
Net income for the period		33,539		32,800		86,219		82,340
Net income attributable to:
	Shareholders from continuing operations	31,571		27,291		82,119		73,489
	Shareholders from discontinued operations	—		3,501		—		5,023
	Non-controlling interest	1,968		2,008		4,100		3,828
		33,539		32,800		86,219		82,340
Basic earnings per share attributable to shareholders:
	From continuing operations	$ 0.38		$ 0.34		$ 0.99		$ 0.90
	From discontinued operations	—		0.04		—		0.06
		$ 0.38		$ 0.38		$ 0.99		$ 0.96
Diluted earnings per share attributable to shareholders:
	From continuing operations	$ 0.38		$ 0.33		$ 0.99		$ 0.90
	From discontinued operations	—		0.04		—		0.06
		$ 0.38		$ 0.37		$ 0.99		$ 0.96
Net income for the period		33,539		32,800		86,219		82,340
Other comprehensive income (loss), net of tax
	Unrealized foreign currency translation adjustment	(587)		(1,108)		537		(1,861)
	Unrealized change in fair value of available-for-sale investments, net of tax	(17)		(95)		(91)		76
	Actuarial gain on employee future benefits	—		433		—		433
		(604)		(770)		446		(1,352)
Comprehensive income for the period		32,935		32,030		86,665		80,988
Comprehensive income attributable to:
	Shareholders	30,967		30,022		82,565		77,160
	Non-controlling interest	1,968		2,008		4,100		3,828
		32,935		32,030		86,665		80,988

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited - in thousands of Canadian dollars)	Share capital		Contributed surplus		Retained earnings		Accumulated other comprehensive income (loss)		Total attributable to shareholders		Non-controlling interest		Total equity
At August 31, 2011	882,679		10,299		143,717		(1,075)		1,035,620		19,200		1,054,820
Comprehensive income	—		—		82,119		446		82,565		4,100		86,665
Dividends declared	—		—		(37,968)		—		(37,968)		(4,423)		(42,391)
Issuance of shares under stock option plan	11,448		(3,111)		—		—		8,337		—		8,337
Issuance of shares under dividend reinvestment plan	12,839		—		—		—		12,839		—		12,839
Shares repurchased	(2,110)		—		(1,778)		—		(3,888)		—		(3,888)
Share-based compensation expense	—		592		—		—		592		—		592
At February 29, 2012	904,856		7,780		186,090		(629)		1,098,097		18,877		1,116,974
	Share capital		Contributed surplus		Retained earnings		Accumulated other comprehensive income (loss)		Total attributable to shareholders		Non-controlling interest		Total equity
At September 1, 2010	856,655		12,706		62,509		342		932,212		18,055		950,267
Comprehensive income (loss)	—		—		78,512		(1,352)		77,160		3,828		80,988
Actuarial gain transfer	—		—		433		(433)		—		—		—
Dividends declared	—		—		(30,612)		—		(30,612)		(4,366)		(34,978)
Issuance of shares under stock option plan	7,911		(2,028)		—		—		5,883		—		5,883
Issuance of shares under dividend reinvestment plan	5,056		—		—		—		5,056		—		5,056
Share-based compensation expense	—		548		—		—		548		—		548
At February 28, 2011	869,622		11,226		110,842		(1,443)		990,247		17,517		1,007,764

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
		Three months ended				Six months ended
		February 29,		February 28,		February 29,		February 28,
(unaudited - in thousands of Canadian dollars)		2012		2011		2012		2011
OPERATING ACTIVITIES
Net income for the period		33,539		32,800		86,219		82,340
Deduct earnings from discontinued operations		—		(3,501)		—		(5,023)
Add (deduct) non-cash items:
	Depreciation	6,653		6,053		12,892		12,161
	Amortization of program rights	46,433		42,847		93,488		85,389
	Amortization of film investments	7,960		10,591		17,947		18,877
	Deferred income taxes	3,424		352		4,786		824
	Share-based compensation expense	299		295		592		548
	Imputed interest	2,976		2,484		6,010		5,084
	Other	(547)		(1,327)		(790)		(1,594)
Net change in non-cash working capital balances related to operations		20,665		30,277		(20,726)		(2,400)
Payment of program and film rights		(50,997)		(34,975)		(86,426)		(73,128)
Net additions to film investments		(16,837)		(11,270)		(33,973)		(33,120)
Cash provided by operating activities from continuing operations		53,568		74,626		80,019		89,958
Cash used in operating activities from discontinued operations		—		(13,374)		—		(13,262)
Cash provided by operating activities		53,568		61,252		80,019		76,696
INVESTING ACTIVITIES
Additions to property, plant and equipment		(4,714)		(13,948)		(8,084)		(27,215)
Net cash flows for intangibles, investments and other assets		(122)		(3,382)		1,009		(4,267)
Other		(165)		(357)		(318)		(582)
Cash used in investing activities from continuing operations		(5,001)		(17,687)		(7,393)		(32,064)
Cash provided by investing activities from discontinued operations		—		74,996		—		74,996
Cash provided by (used in) investing activities		(5,001)		57,309		(7,393)		42,932
FINANCING ACTIVITIES
Decrease in bank loans		(34,674)		(74,956)		(34,674)		(44,764)
Issuance of shares under stock option plan		8,251		3,581		8,337		5,884
Shares repurchased		—		—		(3,888)		—
Dividends paid		(12,145)		(11,958)		(23,820)		(23,549)
Dividend paid to non-controlling interest		(200)		(160)		(4,423)		(4,366)
Other		(2,233)		(2,144)		(4,505)		(4,324)
Cash used in financing activities from continuing operations		(41,001)		(85,637)		(62,973)		(71,119)
Net change during the period in cash and cash equivalents from continuing operations		7,566		(28,698)		9,653		(13,225)
Net change during the period in cash and cash equivalents from discontinued operations		—		61,622		—		61,734
Net increase in cash and cash equivalents during the period		7,566		32,924		9,653		48,509
Cash and cash equivalents, beginning of period		58,009		23,554		55,922		7,969
Cash and cash equivalents, end of period		65,575		56,478		65,575		56,478

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited - in thousands of Canadian dollars)
Three months ended February 29, 2012
			Radio			Television			Corporate			Consolidated
Revenues			42,384			163,299			—			205,683
Direct cost of sales, general and administrative expenses			32,505			102,878			8,053			143,436
Segment profit (loss)			9,879			60,421			(8,053)			62,247
Depreciation			779			787			5,087			6,653
Interest expense			(26)			6,374			7,062			13,410
Other expense (income), net			5			(2,363)			741			(1,617)
Income (loss) before income taxes			9,121			55,623			(20,943)			43,801
Three months ended February 28, 2011
			Radio			Television			Corporate			Consolidated
Revenues			42,647			148,429			—			191,076
Direct cost of sales, general and administrative expenses			32,975			88,506			9,617			131,098
Segment profit (loss)			9,672			59,923			(9,617)			59,978
Depreciation			738			816			4,499			6,053
Interest expense			966			5,165			8,586			14,717
Other expense (income), net			(514)			(1,585)			974			(1,125)
Income (loss) before income taxes			8,482			55,527			(23,676)			40,333
Six months ended February 29, 2012
			Radio			Television			Corporate			Consolidated
Revenues			94,248			348,326			—			442,574
Direct cost of sales, general and administrative expenses			67,967			207,410			13,736			289,113
Segment profit (loss)			26,281			140,916			(13,736)			153,461
Depreciation			1,557			1,352			9,983			12,892
Interest expense			96			13,232			13,509			26,837
Other expense (income), net			13			(995)			(188)			(1,170)
Income (loss) before income taxes			24,615			127,327			(37,040)			114,902
Six months ended February 28, 2011
			Radio			Television			Corporate			Consolidated
Revenues			97,286			315,946			—			413,232
Direct cost of sales, general and administrative expenses			69,100			175,754			17,740			262,594
Segment profit (loss)			28,186			140,192			(17,740)			150,638
Depreciation			1,496			2,519			8,146			12,161
Interest expense			2,472			9,877			16,441			28,790
Restructuring			671			3			1,576			2,250
Other expense (income), net			(494)			(2,218)			1,470			(1,242)
Income (loss) before income taxes			24,041			130,011			(45,373)			108,679
Revenues by type
			Three months ended						Six months ended
			February 29,			February 28,			February 29,			February 28,
			2012			2011			2012			2011
Advertising			83,870			82,179			203,319			202,499
Subscriber fees			75,924			75,599			150,065			149,361
Merchandising, distribution and other			45,889			33,298			89,190			61,372
			205,683			191,076			442,574			413,232

 

 

 

 

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