Corus Entertainment announces fiscal 2011 third quarter results

(PRNewswire) — l>
  • Monthly dividend increase of 16%
  • Consolidated revenues up 7% and segment profit up 11%
  • Television specialty ad growth of 15%
  • Radio revenue growth of 4% in Ontario offset by a 7% decline in the West
  • Basic earnings per share from continuing operations of $0.48 for the quarter compared to $0.35 last year
  • TORONTO, July 14, 2011 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

    "We are very pleased to have achieved double digit segment profit growth for the third consecutive quarter. The successful conversion of strong top line growth and cost containment initiatives resulted in outstanding operating leverage," said John Cassaday, President and CEO of Corus Entertainment.  "Once again, this growth was powered by our core television business and demonstrates strength across our Kids, Pay, Women's and Merchandising brands."

    Financial Highlights                              
                                   
    (unaudited)     Three months ended       Nine months ended
    (in thousands of Canadian dollars except per share amounts)     May 31,       May 31,
                2011              2010              2011              2010 
    Revenues                              
      Radio     50,745        51,374        148,031        144,852 
      Television     161,043        147,013        476,989        435,242 
          211,788        198,387        625,020        580,094 
    Segment profit                              
      Radio     16,000        17,506        44,186        44,230 
      Television     68,535        59,452        205,652        179,724 
      Corporate     (7,258)       (7,511)       (22,948)       (19,502)
          77,277        69,447        226,890        204,452 
                                   
    Net income from continuing operations     39,229        28,255        110,344        112,486 
                                   
    Basic earnings per share                              
      From continuing operations     $ 0.48       $ 0.35       $ 1.35       $ 1.40
      From discontinued operations     $     —       $ 0.04       $ 0.08       $ 0.09
          $ 0.48       $ 0.39       $ 1.43       $ 1.49

    Consolidated Results from Continuing Operations

    Consolidated revenues for the three months ended May 31, 2011 were $211.8 million , up 7% from $198.4 million last year.  Consolidated segment profit was $77.3 million , up 11% from $69.4 million last year. Net income for the quarter was $39.2 million ( $0.48 basic and $0.47 diluted), compared to $28.3 million ( $0.35 basic and diluted) last year.

    Consolidated revenues for the nine months ended May 31, 2011 were $625.0 million , up 8% from $580.1 million last year.  Consolidated segment profit was $226.9 million , up 11% from $204.5 million last year.  Net income for the nine month period was $110.3 million ( $1.35 basic and $1.34 diluted), compared to a net income of $112.5 million ( $1.40 basic and $1.39 diluted) last year.  Net income for the nine month period for the prior year includes a debt refinancing cost of $14.3 million , a $14.0 million reversal of a disputed regulatory fee accrual and a $14.2 million recovery due to income tax rate changes.  Removing the impact of these items results in an adjusted nine month basic earnings per share of $1.22 in the prior year.

    Operational Results - Highlights

    Television

    • Segment revenues increased 10% in both the third quarter and year-to-date
    • Segment profit increased 15% in the third quarter and 14% year-to-date
    • Specialty advertising revenues increased 15% both in the third quarter and year-to-date
    • Subscriber revenues increased 5% in the third quarter and 7% year-to-date
    • Movie Central finished the quarter with 1,024,000 subscribers, up 6% from the third quarter of 2010

    Radio

    • Segment revenues decreased 1% in the third quarter and increased 2% year-to-date
    • Revenues for the quarter increased 4% in Ontario and declined in the West by 7%
    • Segment profit decreased 9% in the third quarter and was flat year-to-date

    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, 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 May 31, 2011 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, 2011 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 1.800.679.0308 and for local/international callers is 416.981.9080.  PowerPoint slides for the call will be posted at 1:45 p.m. ET on July 14, 2011 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
                     
    (unaudited)       As at Ma y 31,       As at August 31,
    (in thousands of Canadian dollars)              2011              2010 
    ASSETS                
    Current                
    Cash and cash equivalents       60,425        7,969 
    Accounts receivable       189,909        161,645 
    Income taxes recoverable       —        1,781 
    Prepaid expenses and other       9,797        17,040 
    Program and film rights       146,039        159,526 
    Future tax asset       5,482        6,129 
    Current assets of discontinued operations       —        14,951 
    Total current assets       411,652        369,041 
                     
    Tax credits receivable       47,992        39,597 
    Investments and other assets       44,595        22,595 
    Property, plant and equipment       168,541        147,905 
    Program and film rights       111,696        88,484 
    Film investments       103,975        100,454 
    Broadcast licenses       541,248        541,248 
    Goodwill       671,827        671,827 
    Long-term assets of discontinued operations       —        78,104 
            2,101,526        2,059,255 
                     
    LIABILITIES AND SHAREHOLDERS' EQUITY                
    Current                
    Accounts payable and accrued liabilities       211,357        193,342 
    Income taxes payable       14,667        336 
    Current liabilities of discontinued operations       —        9,744 
    Total current liabil ities       226,024        203,422 
                     
    Long-term debt       620,114        691,891 
    Other long-term liabilities       98,256        88,003 
    Future tax liability       93,336        89,651 
    Long-term liabilities of discontinued operations       —        12,285 
    Total liabilit ies       1,037,730        1,085,252 
                     
    Non-controlling interest       18,947        18,055 
                     
    SHAREHOLDERS' EQUITY                
    Share capital       879,058        856,655 
    Contributed surplus       9,142        11,780 
    Retained earnings       169,663        98,669 
    Accumulated other comprehensive loss       (13,014)       (11,156)
    Total share holders' equity       1,044,849        955,948 
            2,101,526        2,059,255 

     

     

    CORUS ENTERTAINMENT INC.
    CONSOLIDATED STATEMENTS OF INCOME
                                   
          Three months ended       Nine months ended
    (unaudited)     May 3 1 ,       May 31 ,
    (in thousands of Canadian dollars except per share amounts)            2011              2010               2011              2010 
    Revenues     211,788        198,387        625,020        580,094 
    Direct cost of sales, general and                              
      administrative expenses     134,511        128,940        398,130        375,642 
    Depreciation     6,203        4,716        18,364        13,365 
    Interest expense     14,693        15,002        45,883        34,549 
    Disputed regulatory fees     —        —        —        (14,015)
    Debt refinancing     —        —        —        14,256 
    Restructuring     93        —        2,342        — 
    Other expense (income), net     (969)       6,421        (2,211)       7,788 
    Income from continuing operations before income taxes                              
       and non-controlling interest     57,257        43,308        162,512        148,509 
    Income tax expense     14,900        13,093        45,212        31,555 
    Non-controlling interest     3,128        1,960        6,956        4,468 
    Net income for the period from continuing operations     39,229        28,255        110,344        112,486 
    Net income for the period from discontinued operations     —         3,156        6,743        7,436 
    Net income for the period     39,229        31,411        117,087        119,922 
                                   
    Basic earnings per share                              
    From continuing operations     $ 0.48       $ 0.35       $ 1.35       $ 1.40
    From discontinued operations     $     —       $ 0.04       $ 0.08       $ 0.09
          $ 0.48       $ 0.39       $ 1.43       $ 1.49
                                   
    Diluted earnings per share                              
    From continuing operations     $ 0.47       $ 0.35       $ 1.34       $ 1.39
    From discontinued operations     $     —       $ 0.04       $ 0.08       $ 0.09
          $ 0.47       $ 0.39       $ 1.42       $ 1.48
                                   
     
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   
          Three months ended       Nine months ended
    (unaudited)     May 31 ,       May 31 ,
    (in thousands of Canadian dollars)            2011              2010               2011              2010 
    Net income for the period     39,229        31,411        117,087        119,922 
    Other comprehensive income (loss), net of tax                              
      Unrealized foreign currency translation adjustment           (16)       (1,857)       (540)
      Unrealized change in fair value of available-for-sale                              
         investments, net of tax     (77)       277       (1)       289
      Unrealized change in fair value of cash flow hedges,                              
         net of tax     —         —         —         3,431 
      Recognition of change in fair value of cash flow                              
         hedge in net income, net of tax     —         —         —         9,244 
          (73)       261        (1,858)       12,424 
    Comprehensive income for t he period     39,156        31,672        115,229        132,346 

     

     

    CORUS ENTERTAINMENT INC.
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   
          Three months ended       Nine months ended
    (unaudited)     May 31,       May 31 ,
    (in thousands of Canadian dollars)            2011              2010               2011              2010 
    Share capital                              
    Balance, beginning of period     869,622        846,747        856,655        840,602 
    Issuance of shares under stock option plan     5,043        5,779        12,954        10,510 
    Other     4,393        1,307        9,449        2,721 
    Balance, end of period     879,058        853,833        879,058        853,833 
                                   
    Contributed surplus                              
    Balance, beginning of period     10,274        15,177        11,780        17,303 
    Stock-based compensation     288        (1,181)       810        672 
    Settlement and modification of long-term incentive plan     —         (1,186)       —         (4,659)
    Exercise of stock options     (1,420)       (909)       (3,448)       (1,415)
    Balance, end of period     9,142        11,901        9,142        11,901 
                                   
    Retained earnings                              
    Balance, beginning of period     145,915        84,785        98,669        20,380 
    Net income for the period     39,229        31,411        117,087        119,922 
    Dividends     (15,481)       (12,169)       (46,093)       (36,275)
    Balance, end of period     169,663        104,027        169,663        104,027 
                                   
    Accumulated other comprehensive loss                              
    Balance, beginning of period     (12,941)       (11,844)       (11,156)       (24,007)
    Other comprehensive income (loss), net of tax     (73)       261        (1,858)       12,424 
    Balance, end of period     (13,014)       (11,583)       (13,014)       (11,583)

     

     

    CORUS ENTERTAINMENT INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   
          Three months ended       Nine months ended
    (unaudited)     May 3 1 ,       May 3 1 ,
    (in thousands of Canadian dollars)            2011              2010               2011              2010 
    OPERATING ACTIVITIES                              
    Net income for the period     39,229        31,411        117,087        119,922 
    Net income from discontinued operations     —        (3,156)       (6,743)       (7,436)
    Add (deduct) non-cash items:                              
       Depreciation     6,203        4,716        18,364        13,365 
       Amortization of program rights     44,301        40,901        129,528        123,974 
       Amortization of film investments     8,830        10,984        30,941        26,126 
       Future income taxes     2,541        (777)       3,365        (14,629)
       Non-controlling interest     3,128        1,960        6,956        4,468 
       Stock option expense     288        216        810        672 
       Imputed interest     2,827        2,458        7,911        5,926 
       Debt refinancing     —        —              14,256 
       Other     (809)       (60)       (2,403)       (448)
    Net change in non-cash working capital                              
       balances related to operations     7,353       14,489        (6,439)       18,688 
    Payment of program and film rights     (41,686)       (41,272)       (114,814)       (125,545)
    Net additions to film investments     (23,131)       (13,846)       (56,251)       (46,843)
    Cash provided by operating activities from                              
       continuing operations     49,074        48,024        128,312        132,496 
    Cash provided by (used in) operating activities from                              
       discontinued operations           325        (2,542)       715 
    Cash provided by operating activities     49,074        48,349        125,770        133,211 
                                   
    INVESTING ACTIVITIES                              
    Additions to property, plant and equipment     (5,387)       (21,846)       (32,602)       (51,352)
    Business combinations     —        —        —        (36,000)
    Net cash flows for investments and other assets     210        (580)       (4,057)       2,284 
    Decrease in public benefits associated with                              
      acquisitions     (350)       (601)       (932)       (1,079)
    Cash used in investing activities from                              
       continuing operations     (5,527)       (23,027)       (37,591)       (86,147)
    Cash provided by (used in) investing activities from                              
       discontinued operations     —        (322)       74,996        (715)
    Cash provided by (used in) investing activities     (5,527)       (23,349)       37,405        (86,862)
                                   
    FINANCING ACTIVITIES                              
    Decrease in bank loans     (28,458)       (24,895)       (73,222)       (454,576)
    Issuance of senior unsecured guaranteed notes     —        —        —        500,000 
    Financing and swap termination fees     (718)       —        (718)       (30,997)
    Issuance of shares under stock option plan     3,622        4,870        9,506        9,095 
    Dividends paid     (11,023)       (11,078)       (34,572)       (33,725)
    Dividends paid to non-controlling interest     (741)       —        (5,107)       (9,260)
    Other     (2,282)       265        (6,606)       (3,179)
    Cash used in financing a ctivities from continuing operations     (39,600)       (30,838)       (110,719)       (22,642)
    Net change in cash and cash equivalents during the period                              
       from continuing operations     3,947        (5,841)       (19,998)       23,707 
    Net change in cash and cash equivalents during the period                              
        from discontinued operations     —              72,454        — 
    Net change in cash and cash equivalents                              
       during the period     3,947        (5,838)       52,456        23,707 
    Cash and cash equivalents, beginning of period     56,478        40,467        7,969        10,922 
    Cash and cash equivalents, end of period     60,425        34,629        60,425        34,629 

     

     

    CORUS ENTERTAINMENT INC.
    BUSINESS SEGMENT INFORMATION
                                   
    (unaudited)                              
    (in thousands of Canadian dollars except per share amounts)
                                     
    Three months ended May 31, 2011                              
            Radio       Television       Corporate       Consolidated
    Revenues     50,745        161,043        —         211,788 
    Direct cost of sales, general and administrative expenses     34,745        92,508        7,258        134,511 
    Segment profit (loss)     16,000        68,535        (7,258)       77,277 
    Depreciation     817        736        4,650        6,203 
    Interest expense     (74)       6,182        8,585        14,693 
    Restructuring     79                    93 
    Other expense (income), net     (515)       396        (850)       (969)
    Income (loss) before income taxes and non-controlling interest     15,693        61,215        (19,651)       57,257 
                                     
    Three months ended May 31, 2010                              
            Radio       Television       Corporate       Consolidated
    Revenues     51,374        147,013        —         198,387 
    Direct cost of sales, general and administrative expenses     33,868        87,561        7,511        128,940 
    Segment profit (loss)     17,506        59,452        (7,511)       69,447 
    Depreciation     1,001        1,819        1,896        4,716 
    Interest expense     670        1,296        13,036        15,002 
    Other expense (income), net     411        1,256        4,754        6,421 
    Income (loss) before income taxes and non-controlling interest     15,424        55,081        (27,197)       43,308 
                                     
    Nine months ended May 31, 2011                              
            Radio       Television       Corporate       Consolidated
    Revenues     148,031        476,989        —         625,020 
    Direct cost of sales, general and administrative expenses     103,845        271,337        22,948        398,130 
    Segment profit (loss)     44,186        205,652        (22,948)       226,890 
    Depreciation     2,313        3,255        12,796        18,364 
    Interest expense     2,398        18,459        25,026        45,883 
    Restructuring     750              1,583        2,342 
    Other expense (income), net     (1,009)       (1,822)       620        (2,211)
    Income (loss) before income taxes and non-controlling interest     39,734        185,751        (62,973)       162,512 
                                     
    Nine months ended May 31, 2010                              
            Radio       Television       Corporate       Consolidated
    Revenues     144,852        435,242        —         580,094 
    Direct cost of sales, general and administrative expenses     100,622        255,518        19,502        375,642 
    Segment profit (loss)     44,230        179,724        (19,502)       204,452 
    Depreciation     3,079        5,596        4,690        13,365 
    Interest expense     2,816        3,651        28,082        34,549 
    Disputed regulatory fees     (6,722)       (7,293)       —         (14,015)
    Debt refinancing     —         —         14,256        14,256 
    Other expense (income), net     512        563        6,713        7,788 
    Income (loss) before income taxes and non-controlling interest       44,545       177,207       (73,243)       148,509

     

     

    Revenues by segment        
              Three months ended         Nine months ended
              May 3 1 ,         May 3 1 ,
                     2011                2010                 2011                2010 
    Radio                                      
    West       23,499          25,142          69,301          71,219 
    Ontario       27,246          26,232          78,730          73,633 
              50 ,745          51,374          148,031          144,852 
                                             
    Television                                      
    Kids       65,986          57,425          208,812          182,071 
    Specialty and Pay       95,057          89,588          268,177          253,171 
              161,043          147,013          476,989          435,242 
                                             
    Segment profit                                      
              Three months ended         Nine months ended
              May 3 1 ,         May 3 1 ,
                     2011                 2010                 2011                 2010 
    Radio                                      
    West       7,918          9,208          21,526          23,962 
    Ontario       8,082          8,298          22,660          20,268 
              16 ,000          17,506          44,186          44,230 
                                             
    Television                                      
    Kids       27,961          23,233          92,323          78,799 
    Specialty and Pay       40,574          36,219          113,329          100,925 
              68,53         59,452          205,652          179,724 
                                             
    Revenues by type                                      
              Three months ended         Nine months ended
              May 3 1 ,         May 31 ,
                     2011                 2010                 2011                 2010 
    Advertising       104,374          99,739          306,873          288,222 
    Subscriber fees       76,176          72,328          225,537          211,225 
    Other       31,238          26,320          92,610          80,647 
              211,788          198,387          625,020          580,094 

      

     

    SOURCE Corus Entertainment Inc.

    Contact:
    Corus Entertainment Inc.

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