Corus Entertainment Announces Fiscal 2012 Fourth Quarter and Year-End Results

  • Specialty advertising revenues up 7% in the quarter
  • Consolidated segment profit margin up 290 basis points in the quarter, with Television and Radio margins of 40% and 30%, respectively, for the fiscal year
  • Free cash flow(1) up 15% in fiscal 2012 to $155.1 million
  • Adjusted net income attributable to shareholders(1)(3) up 9% in the quarter and 10% for the fiscal year
  • Adjusted basic earnings per share(1)(3) up 6% in the quarter and 8% for the fiscal year
  • Segment profit up 8% for the quarter and 1% for the fiscal year

TORONTO, Oct. 25, 2012 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.

"Corus finished the year with strong gains in specialty advertising revenues and segment profit for the fourth quarter.  We are particularly pleased with our excellent segment profit margins and record free cash flow," said John Cassaday, President and CEO of Corus Entertainment.  "Looking ahead, we are confident that disciplined cost controls, coupled with our portfolio of assets, position us well for continued growth in fiscal 2013."

Financial Highlights (from continuing operations)                        
                         
(unaudited)     Three months ended     Year ended
(in thousands of Canadian dollars except per share amounts)     August 31,     August 31,
      2012     2011     2012     2011
Revenues                        
  Television     147,874     152,567     650,949     629,556
  Radio (2)     47,750     47,626     191,327     195,657
      195,624     200,193     842,276     825,213
Segment profit (1)                        
  Television     54,490     50,940     262,138     261,124
  Radio (2)     14,995     14,899     57,427     59,085
  Corporate     (8,623)     (9,360)     (29,586)     (34,323)
      60,862     56,479     289,979     285,886
                         
Net income attributable to shareholders     23,341     27,670     148,681     141,511
Adjusted net income attributable to shareholders (1) (3)     30,175     27,670     155,515     141,511
                         
Basic earnings per share     $ 0.28     $ 0.34     $ 1.79     $ 1.73
Adjusted basic earnings per share(1)(3)     $ 0.36     $ 0.34     $ 1.87     $ 1.73
Diluted earnings per share     $ 0.28     $ 0.33     $ 1.78     $ 1.72
                         
Free Cash Flow(1)     24,962     31,887     155,147     134,861

(1) See definitions and discussion under Key Performance Indicators in MD&A.
(2) Reflects the disposition of the Quebec Radio operations, which occurred on February 1, 2011, as discontinued operations in all periods presented.
(3) Excludes the impact of a $6.8 million ($0.08 per share) non-cash tax expense related to an increase in the Ontario long-term tax rate which was substantively enacted in the fourth quarter 2012.

 

Consolidated Results from Continuing Operations

Consolidated revenues for the three months ended August 31, 2012 were $195.6 million, down 2% from $200.2 million last year.  Consolidated segment profit for the quarter was $60.9 million, up 8% from $56.5 million last year.  Net income attributable to shareholders for the quarter was $23.3 million ($0.28 per share basic and diluted), down 16% compared with $27.7 million ($0.34 per share basic and $0.33 per share diluted) last year.  On June 20, 2012, the Ontario government passed legislation cancelling planned future corporate tax rate reductions.  Accordingly, the Company remeasured certain deferred tax assets and liabilities resulting in a non-cash tax expense of $6.8 million ($0.08 per share) in the fourth quarter 2012.  Excluding the impact of this item, adjusted basic earnings per share was $0.36 in the fourth quarter 2012, up 6% from the prior year.

Consolidated revenues for the year ended August 31, 2012 were $842.3 million, up 2% from $825.2 million last year.  Consolidated segment profit for the fiscal year was $290.0 million, up 1% from $285.9 million last year.  Net income attributable to shareholders for the fiscal year was $148.7 million ($1.79 per share basic and $1.78 per share diluted), up 5% compared to $141.5 million ($1.73 per share basic and $1.72 per share diluted) last year.  Excluding the impact of the income tax rate changes that occurred in the fourth quarter 2012, adjusted basic earnings per share was $1.87 in the current year, up 8% from the prior year.  Free cash flow(1) from continuing operations for fiscal 2012 was $155.1 million, up 15% from $134.9 million last year.

Operational Results - Highlights

Television

  • Segment revenues decreased 3% in Q4 2012, but increased 3% for the fiscal year
  • Segment profit(1) increased 7% in Q4 2012 and was flat for the fiscal year
  • Specialty advertising revenues increased 7% in Q4 2012 and were flat for the fiscal year
  • Subscriber revenues decreased 1%, both in Q4 2012 and for the fiscal year
  • Merchandising, distribution and other revenues decreased 16% in Q4 2012, but increased 21% for the fiscal year
  • Movie Central finished the fiscal year with 976,000 subscribers

Radio(2)

  • Segment revenues were flat in Q4 2012 and decreased 2% for the fiscal year
  • Segment profit(1) increased 1% in Q4 2012 and decreased 3% for the fiscal year

(1) See definitions and discussion under Key Performance indicators in MD&A.
(2) 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, children's animation and animation software.  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, Toon Boom 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 and year ended August 31, 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 October 25, 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 1.800.926.5230 and for local/international callers is 416.981.9039.  PowerPoint slides for the call will be posted 15 minutes prior the start of the call and can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Corus' annual investor day conference is scheduled for November 29, 2012 at 9:00 a.m. ET and will be webcast from 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
                   
(unaudited)     As at August 31,     As at August 31,     As at September 1,
(in thousands of Canadian dollars)     2012     2011     2010
ASSETS                  
Current                  
Cash and cash equivalents     24,588     55,922     7,969
Accounts receivable     173,421     178,531     175,134
Income taxes recoverable     9,542     603     1,781
Prepaid expenses and other     12,664     13,497     18,008
                   
Total current assets     220,215     248,553     202,892
                   
Tax credits receivable     43,865     43,108     39,597
Intangibles, investments and other assets     42,390     39,980     22,699
Property, plant and equipment     163,563     169,600     161,585
Program and film rights     271,244     256,970     244,963
Film investments     67,983     83,133     80,611
Broadcast licenses     569,505     569,505     610,423
Goodwill     674,393     671,827     695,029
Deferred tax assets     28,327     30,915     32,130
      2,081,485     2,113,591     2,089,929
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
Current                  
Accounts payable and accrued liabilities     185,991     206,773     192,839
Provisions     2,322     5,267     13,048
Total current liabilities     188,313     212,040     205,887
                   
Long-term debt     518,258     600,796     691,891
Other long-term liabilities     87,853     104,574     95,840
Deferred tax liabilities     150,971     141,361     146,044
Total liabilities     945,395     1,058,771     1,139,662
                   
SHAREHOLDERS' EQUITY                  
Share capital     910,005     882,679     856,655
Contributed surplus     7,835     10,299     12,706
Retained earnings     198,445     143,717     62,509
Accumulated other comprehensive income (loss)     (812)     (1,075)     342
Total equity attributable to shareholders     1,115,473     1,035,620     932,212
Equity attributable to non-controlling interest     20,617     19,200     18,055
Total shareholders' equity     1,136,090     1,054,820     950,267
      2,081,485     2,113,591     2,089,929

 
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                         
      Three months ended     Year ended
(unaudited)     August 31,     August 31,
(in thousands of Canadian dollars except per share amounts)     2012     2011     2012     2011
Revenues     195,624     200,193     842,276     825,213
Direct cost of sales, general and administrative expenses     134,762     143,714     552,297     539,327
Depreciation     6,408     6,558     25,639     24,922
Interest expense     12,242     13,793     52,269     57,276
Restructuring     —      1,352     2,325     3,694
Other expense (income), net     1,056     (1,849)     (3,646)     (4,060)
                         
Income before income taxes     41,156     36,625     213,392     204,054
Income tax expense     16,171     8,702     57,241     55,334
                         
Net income for the period from continuing operations     24,985     27,923     156,151     148,720
Net income for the period from discontinued operations                 5,023
Net income for the period     24,985     27,923     156,151     153,743
                         
Net income attributable to:                        
  Shareholders from continuing operations     23,341     27,670     148,681     141,511
  Shareholders from discontinued operations                 5,023
  Non-controlling interest     1,644     253     7,470     7,209
      24,985     27,923     156,151     153,743
                         
Basic earnings per share:                        
  From continuing operations     $ 0.28     $ 0.34     $ 1.79     $ 1.73
  From discontinued operations                 $ 0.06
      $ 0.28     $ 0.34     $ 1.79     $ 1.79
                         
Diluted earnings per share:                        
  From continuing operations     $ 0.28     $ 0.33     $ 1.78     $ 1.72
  From discontinued operations                 $ 0.06
      $ 0.28     $ 0.33     $ 1.78     $ 1.78
                         
Net income for the period     24,985     27,923      156,151     153,743
Other comprehensive income (loss), net of tax                        
  Unrealized foreign currency translation adjustment     (1,485)     306      486     (1,551)
  Unrealized change in fair value of available-for-sale investments     31     135     (223)     134
  Actuarial (loss) gain on employee future benefits     (2,950)         (2,950)     433
      (4,404)     441     (2,687)     (984)
                         
Comprehensive income for the period     20,581     28,364     153,464     152,759
                         
Comprehensive income attributable to:                        
  Shareholders     18,937     28,111     145,994     145,550
  Non-controlling interest     1,644     253     7,470     7,209
      20,581     28,364     153,464     152,759

 
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   —      148,681   (2,687)   145,994   7,470   153,464
Actuarial loss transfer   —      (2,950)   2,950     —    — 
Dividends declared   —      (78,143)   —    (78,143)   (6,053)   (84,196)
Issuance of shares under stock option plan   13,668   (3,622)   —    —    10,046   —    10,046
Issuance of shares under dividend reinvestment plan   25,982     —    —    25,982   —    25,982
Shares repurchased   (12,435)     (12,860)   —    (25,295)   —    (25,295)
Share-based compensation expense   —    1,158   —    —    1,158   —    1,158
Repayment of executive stock purchase loans   111   —    —    —    111   —    111
At August 31, 2012   910,005   7,835   198,445   (812)   1,115,473   20,617   1,136,090
                             
                             
                             
    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)   —      146,534   (984)   145,550   7,209   152,759
Actuarial gain transfer   —      433   (433)   —    —    — 
Dividends declared   —      (64,030)   —    (64,030)   (5,107)   (69,137)
Issuance of shares under stock option plan   13,232   (3,521)   —    —    9,711   —    9,711
Issuance of shares under dividend reinvestment plan   14,657     —    —    14,657   —    14,657
Shares repurchased   (1,976)     (1,729)   —    (3,705)   —    (3,705)
Share-based compensation expense   —    1,114   —    —    1,114   —    1,114
Repayment of executive stock purchase loans   111         111     111
Other       —    —      (957)   (957)
At August 31, 2011   882,679   10,299   143,717   (1,075)   1,035,620   19,200   1,054,820

 
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                         
      Three months ended     Year ended
(unaudited)     August 31,     August 31,
(in thousands of Canadian dollars)     2012     2011     2012     2011
OPERATING ACTIVITIES                        
Net income for the period     24,985     27,923     156,151     153,743
Deduct earnings from discontinued operations     —      —      —      (5,023)
Add (deduct) non-cash items:                        
  Depreciation     6,408     6,558     25,639     24,922
  Amortization of program rights     46,543     43,958     186,348     173,521
  Amortization of film investments     10,052     13,938     32,001     40,316
  Deferred income taxes     8,186     521     12,921     4,110
  Share-based compensation expense     268     292     1,158     1,114
  Imputed interest     2,444     2,859     11,348     10,770
  Gain from asset disposition     —      (3,422)     —      (3,422)
  Gain on acquisition     —      —      (2,383)     — 
  Other     738     (457)     (2,052)     (2,860)
Net change in non-cash working capital balances related to operations     (3,939)     11,805     (13,199)     16,881
Payment of program and film rights     (65,422)     (62,511)     (196,689)     (177,325)
Net additions to film investments     (569)     (5,419)     (40,933)     (61,670)
Cash provided by operating activities from continuing operations     29,694     36,045     170,310     175,077
Cash used in operating activities from discontinued operations     —      —      —      (13,262)
Cash provided by operating activities     29,694     36,045     170,310     161,815
                         
INVESTING ACTIVITIES                        
Additions to property, plant and equipment     (5,658)     (13,389)     (19,243)     (45,991)
Business combination     —      —      (4,104)     — 
Proceeds from asset disposition     —      7,971     —      7,971
Net cash flows for intangibles, investments and other assets     (7,431)     1,601     (11,290)     (2,456)
Other     (75)     (341)     (635)     (1,273)
Cash used in investing activities from continuing operations     (13,164)     (4,158)     (35,272)     (41,749)
Cash provided by investing activities from discontinued operations     —      —      —      74,996
Cash provided by (used in) investing activities     (13,164)     (4,158)     (35,272)     33,247
                         
FINANCING ACTIVITIES                        
Decrease in bank loans     (9,973)     (19,616)     (84,750)     (92,838)
Issuance of shares under stock option plan     —      205     10,046     9,711
Shares repurchased     (21,407)     (3,705)     (25,295)     (3,705)
Dividends paid     (13,258)     (10,956)     (50,783)     (45,528)
Dividends paid to non-controlling interest     (1,630)     —      (6,053)     (5,107)
Other     (2,310)     (2,318)     (9,537)     (9,642)
Cash used in financing activities from continuing operations     (48,578)     (36,390)     (166,372)     (147,109)
Net change during the period in cash and cash equivalents from continuing operations     (32,048)     (4,503)     (31,334)     (13,781)
Net change during the period in cash and cash equivalents from discontinued operations     —      —      —      61,734
Net change in cash and cash equivalents during the period     (32,048)     (4,503)     (31,334)     47,953
Cash and cash equivalents, beginning of period     56,636     60,425     55,922     7,969
Cash and cash equivalents, end of period     24,588     55,922     24,588     55,922

 
CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited)                        
(in thousands of Canadian dollars)                        
                           
Three months ended August 31, 2012                        
        Radio     Television     Corporate     Consolidated
Revenues     47,750     147,874     —      195,624
Direct cost of sales, general and administrative expenses     32,755     93,384     8,623     134,762
Segment profit (loss)(1)     14,995     54,490     (8,623)     60,862
Depreciation     822     816     4,770     6,408
Interest expense     160     5,786     6,296     12,242
Other expense (income), net     199     459     398     1,056
Income (loss) before income taxes     13,814     47,429     (20,087)     41,156
                           
Three months ended August 31, 2011                        
        Radio     Television     Corporate     Consolidated
Revenues     47,626     152,567     —      200,193
Direct cost of sales, general and administrative expenses     32,727     101,627     9,360     143,714
Segment profit (loss)(1)     14,899     50,940     (9,360)     56,479
Depreciation     757     758     5,043     6,558
Interest expense     154     6,729     6,910     13,793
Restructuring     1,226     496     (370)     1,352
Other expense (income), net     243     (2,937)     845     (1,849)
Income (loss) before income taxes     12,519     45,894     (21,788)     36,625
                           
Year ended August 31, 2012                        
        Radio     Television     Corporate     Consolidated
Revenues     191,327     650,949     —      842,276
Direct cost of sales, general and administrative expenses     133,900     388,811     29,586     552,297
Segment profit (loss)(1)     57,427     262,138     (29,586)     289,979
Depreciation     3,249     2,984     19,406     25,639
Interest expense     —      25,136     27,133     52,269
Restructuring     1,053     1,151     121     2,325
Other expense (income), net     157     (1,402)     (2,401)     (3,646)
Income (loss) before income taxes     52,968     234,269     (73,845)     213,392
                           
Year ended August 31, 2011                        
        Radio     Television     Corporate     Consolidated
Revenues     195,657     629,556     —      825,213
Direct cost of sales, general and administrative expenses     136,572     368,432     34,323     539,327
Segment profit (loss)(1)     59,085     261,124     (34,323)     285,886
Depreciation     3,070     4,013     17,839     24,922
Interest expense     2,552     22,788     31,936     57,276
Restructuring     1,976     505     1,213     3,694
Other expense (income), net     (766)     (4,759)     1,465     (4,060)
Income (loss) before income taxes     52,253     238,577     (86,776)     204,054

(1) See definitions and discussion under Key Performance Indicators in MD&A.

                         
Revenues by type                        
        Three months ended     Year ended
        August 31,     August 31,
        2012     2011     2012     2011
Advertising     85,650     83,052     386,045     389,925
Subscriber fees     73,577     74,351     297,927     299,888
Merchandising, distribution and other     36,397     42,790     158,304     135,400
        195,624     200,193     842,276     825,213

 

 

SOURCE Corus Entertainment Inc.



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