Corus Entertainment announces fiscal 2011 fourth quarter and year-end results

Oct 26, 2011, 08:30 ET from Corus Entertainment Inc.

  • Net income from continuing operations of $141.3 million ($1.73 per share basic) for the fiscal year, up 18% from $119.7 million ($1.48 per share basic) last year
  • Free cash flow from continuing operations of $133.3 million
  • Consolidated revenues up 7% in the fourth quarter and 8% for the fiscal year
  • Segment profit up 14% for the quarter and 12% for the fiscal year
  • Television segment profit up 14% for the fiscal year
  • Radio achieves segment profit margin of 30% for the fiscal year

TORONTO, Oct. 26, 2011 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.

"Corus had an excellent year highlighted by double digit segment profit growth and a 45% dividend increase," said John Cassaday, President and CEO of Corus Entertainment.  "Corus achieved its segment profit guidance and exceeded free cash flow guidance as a result of tight cost controls in Radio coupled with exceptional revenue and segment profit growth in Television.  Our annual segment profit guidance included the Quebec Radio business for a full year, so if not for the divestiture of Quebec, we would have been at the high end of our guidance range or exceeded it."

Financial Highlights        
         
(unaudited) Three months ended Year ended
(in thousands of Canadian dollars except per share amounts) August 31, August 31,
  2011  2010  2011  2010 
Revenues        
  Radio 47,626  47,581  195,657  192,433 
  Television 152,567  139,855  629,556  575,097 
  200,193  187,436  825,213  767,530 
Segment profit        
  Radio 14,899  13,201  59,085  57,431 
  Television 52,880  46,955  258,532  226,679 
  Corporate (9,248) (8,639) (32,196) (28,141)
  58,531  51,517  285,421  255,969 
         
Net income from continuing operations 29,210  4,164  141,274  119,662 
         
Basic earnings per share        
  From continuing operations $ 0.35 $ 0.05 $ 1.73 $ 1.48
  From discontinued operations $    — $ 0.03 $ 0.06 $ 0.09
  $ 0.35 $ 0.08 $ 1.79 $ 1.57

Consolidated Results from Continuing Operations

Consolidated revenues for three months ended August 31, 2011 were $200.2 million, up 7% from $187.4 million last year.  Consolidated segment profit was $58.5 million, up 14% from $51.5 million last year.  Net income for the quarter was $29.2 million ($0.35 basic and diluted), compared to $4.2 million ($0.05 basic and diluted) last year.

Consolidated revenues for fiscal year ended August 31, 2011 were $825.2 million, up 8% from $767.5 million last year.  Consolidated segment profit was $285.4 million, up 12% from $256.0 million last year.  Net income for the fiscal year was $141.3 million ($1.73 basic and $1.72 diluted), compared to a net income of $119.7 million ($1.48 basic and $1.47 diluted) last year.  Net income 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 $14.3 million recovery due to income tax rate changes.  Removing the impact of these items results in adjusted basic earnings per share of $1.31 in the prior year.  Free cash flow from continuing operations for fiscal 2011 was $133.3 million, exceeding our guidance of $100.0 million.

Operational Results - highlights

Television

  • Segment revenues increased 9% both in the fourth quarter and for the fiscal year
  • Segment profit increased 13% in the fourth quarter and 14% for the fiscal year
  • Specialty advertising revenues decreased 6% in the fourth quarter, but increased 11% for the fiscal year
  • Subscriber revenues increased 3% in the fourth quarter and 6% for the fiscal year
  • Movie Central finished the fiscal year with 984,000 subscribers, up 2% from the prior year

Radio

  • Segment revenues for the fourth quarter remained consistent with the prior year, but increased 2% for the fiscal year
  • Segment profit increased 13% in the fourth quarter and 3% for the fiscal year
  • Achieved segment profit margin target of 30% for the fiscal 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 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 and year ended August 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 October 26, 2011 at 3:00 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 1.800.945.5981 and for local/international callers is 416.981.9021.  PowerPoint slides for the call will be posted at 2:45 p.m. ET on October 26, 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, 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 BALANCE SHEETS
(unaudited) As at August 31, As at August 31,
(in thousands of Canadian dollars) 2011  2010 
ASSETS    
Current    
Cash and cash equivalents 55,922  7,969 
Accounts receivable 178,531  161,645 
Income taxes recoverable 603  1,445 
Prepaid expenses and other 13,497  17,040 
Program and film rights 160,590  159,526 
Future tax asset 7,615  6,129 
Current assets of discontinued operations —   15,287 
Total current assets 416,758  369,041 
     
Tax credits receivable 43,108  39,597 
Intangibles, investments and other assets 39,980  22,595 
Property, plant and equipment 169,600  147,905 
Program and film rights 99,543  88,484 
Film investments 102,540  100,454 
Broadcast licenses 541,248  541,248 
Goodwill 671,827  671,827 
Long-term assets of discontinued operations —   78,104 
  2,084,604  2,059,255 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current    
Accounts payable and accrued liabilities 212,607  193,342 
Current liabilities of discontinued operations —   10,080 
Total current liabilities 212,607  203,422 
     
Long-term debt 600,796  691,891 
Other long-term liabilities 97,314  88,003 
Future tax liability 96,013  90,641 
Long-term liabilities of discontinued operations —   11,295 
Total liabilities 1,006,730  1,085,252 
     
Non-controlling interest 19,200  18,055 
     
SHAREHOLDERS' EQUITY    
Share capital 882,679  856,655 
Contributed surplus 9,361  11,780 
Retained earnings 179,207  98,669 
Accumulated other comprehensive loss (12,573) (11,156)
Total shareholders' equity 1,058,674  955,948 
  2,084,604  2,059,255 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME
         
  Three months ended Year ended
(unaudited) August 31, August 31,
(in thousands of Canadian dollars except per share amounts) 2011  2010  2011  2010 
Revenues 200,193  187,436  825,213  767,530 
Direct cost of sales, general and        
  administrative expenses 141,662  135,919  539,792  511,561 
Depreciation 6,558  6,757  24,922  20,122 
Interest expense 13,793  13,987  57,276  44,222 
Disputed regulatory fees —   —   (14,015)
Debt refinancing —   —   —   14,256 
Restructuring 1,352  12,924  3,694  12,924 
Other expense (income), net (1,849) 11,689  (4,060) 19,477 
Income from continuing operations before income taxes        
   and non-controlling interest 38,677  6,160  203,589  158,983 
Income tax expense 9,214  580  55,106  33,437 
Non-controlling interest 253  1,416  7,209  5,884 
Net income for the period from continuing operations 29,210  4,164  141,274  119,662 
Net income for the period from discontinued operations —   2,648  5,023  7,072 
Net income for the period 29,210  6,812  146,297  126,734 
         
Basic earnings per share        
From continuing operations $ 0.35 $ 0.05 $ 1.73 $ 1.48
From discontinued operations $     — $ 0.03 $ 0.06 $ 0.09
  $ 0.35 $ 0.08 $ 1.79 $ 1.57
         
Diluted earnings per share        
From continuing operations $ 0.35 $ 0.05 $ 1.72 $ 1.47
From discontinued operations $    — $ 0.03 $ 0.06 $ 0.09
  $ 0.35 $ 0.08 $ 1.78 $ 1.56
         
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Three months ended Year ended
(unaudited) August 31, August 31,
(in thousands of Canadian dollars) 2011  2010  2011  2010 
Net income for the period 29,210  6,812  146,297  126,734 
Other comprehensive income (loss), net of tax        
  Unrealized foreign currency translation adjustment 306  516  (1,551) (24)
  Unrealized change in fair value of available-for-sale        
     investments, net of tax 135  (89) 134  200 
  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 
  441  427  (1,417) 12,851 
Comprehensive income for the period 29,651  7,239  144,880  139,585 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
         
  Three months ended Year ended
(unaudited) August 31, August 31,
(in thousands of Canadian dollars) 2011  2010  2011  2010 
Share capital        
Balance, beginning of period 879,058  853,833  856,655  840,602 
Issuance of shares under stock option plan 278  1,517  13,232  12,027 
Shares repurchased (1,976) —   (1,976) —  
Issuance of shares under dividend reinvestment plan 5,319 1,275 14,657 3,731
Other —   30   111  295 
Balance, end of period 882,679  856,655  882,679  856,655 
         
Contributed surplus        
Balance, beginning of period 9,142  11,901  11,780  17,303 
Stock-based compensation 292  235  1,102  907 
Settlement and modification of long-term incentive plan —   —   —   (4,659)
Exercise of stock options (73) (356) (3,521) (1,771)
Balance, end of period 9,361  11,780  9,361  11,780 
         
Retained earnings        
Balance, beginning of period 169,663  104,027  98,669  20,380 
Net income for the period 29,210  6,812  146,297  126,734 
Dividends declared (17,937) (12,170) (64,030) (48,445)
Shares repurchased excess (1,729) —   (1,729) —  
Balance, end of period 179,207  98,669  179,207  98,669 
         
Accumulated other comprehensive loss        
Balance, beginning of period (13,014) (11,583) (11,156) (24,007)
Other comprehensive income (loss), net of tax 441  427  (1,417) 12,851 
Balance, end of period (12,573) (11,156) (12,573) (11,156)

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
         
  Three months ended Year ended
(unaudited) August 31, August 31,
(in thousands of Canadian dollars) 2011  2010  2011  2010 
OPERATING ACTIVITIES        
Net income for the period 29,210  6,812  146,297  126,734 
Earnings from discontinued operations —   (2,648) (5,023) (7,072)
Add (deduct) non-cash items:        
   Depreciation 6,558  6,757  24,922  20,122 
   Amortization of program rights 44,277  41,976  173,805  165,950 
   Amortization of film investments 11,679  12,330  42,620  38,456 
   Future income taxes 521  (598) 3,886  (15,227)
   Non-controlling interest 253  1,416  7,209  5,884 
   Stock option expense 292  235  1,102  907 
   Imputed interest 2,859  2,709  10,770  8,635 
   Debt refinancing —   —   —   14,256 
   Gain on property disposal (3,422) —   (3,422) —  
   Other (457) 2,393  (2,860) 1,945 
Net change in non-cash working capital        
   balances related to operations 12,205  (7,044) 14,766  11,644 
Payment of program and film rights (62,511) (41,765) (177,325) (167,310)
Net additions to film investments (5,419) (17,208) (61,670) (64,051)
Cash provided by operating activities from        
   continuing operations 36,045  5,365  175,077  140,873 
Cash provided by (used in) operating activities from        
   discontinued operations —   5,490  (13,262) 3,193 
Cash provided by operating activities 36,045  10,855  161,815  144,066 
         
INVESTING ACTIVITIES        
Additions to property, plant and equipment (13,389) (30,487) (45,991) (81,839)
Business combinations —   (4,000) —   (40,000)
Proceeds from property disposal 7,971  —   7,971  —  
Net cash flows for intangibles, investments and other assets 1,601  461  (2,456) 2,745 
Increase (decrease) in public benefits associated with acquisitions (341) 259 (1,273) (820)
Cash used in investing activities from continuing operations (4,158) (33,767) (41,749) (119,914)
Cash provided by (used in) investing activities from        
   discontinued operations —   (495) 74,996  (1,210)
Cash provided by (used in) investing activities (4,158) (34,262) 33,247  (121,124)
         
FINANCING ACTIVITIES        
Increase (decrease) in bank loans (19,616) 9,638  (92,838) (444,938)
Issuance of senior unsecured guaranteed notes —   —   —   500,000 
Financing and swap termination fees (32) —   (750) (30,997)
Issuance of shares under stock option plan 205  1,161  9,711  10,256 
Shares repurchased (3,705) —   (3,705) —  
Dividend paid (10,956) (10,880) (45,528) (44,605)
Dividend paid to non-controlling interest —   (960) (5,107) (10,220)
Capital lease payments and other (2,286) (2,212) (8,892) (5,391)
Cash used in financing activities from continuing operations (36,390) (3,253) (147,109) (25,895)
Net change during the period in cash and cash         
   equivalents from continuing operations (4,503) (31,655) (13,781) (4,936)
Net change during the period in cash and cash        
    equivalents from discontinued operations —   4,995  61,734  1,983 
Net change in cash and cash equivalents during the period (4,503) (26,660) 47,953  (2,953)
Cash and cash equivalents, beginning of period 60,425  34,629  7,969  10,922 
Cash and cash equivalents, end of period 55,922  7,969  55,922  7,969 

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited)
(in thousands of Canadian dollars)
           
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  99,687  9,248  141,662 
Segment profit (loss) 14,899  52,880  (9,248) 58,531 
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 and        
  non-controlling interest 12,519  47,834  (21,676) 38,677 
           
Three months ended August 31, 2010
    Radio Television Corporate Consolidated
Revenues 47,581  139,855  —   187,436 
Direct cost of sales, general        
  and administrative expenses 34,380  92,900  8,639  135,919 
Segment profit (loss) 13,201  46,955  (8,639) 51,517 
Depreciation 980  4,404  1,373  6,757 
Interest expense (income) 739  (14)  13,262  13,987 
Restructuring 5,506  5,055  2,363  12,924 
Other expense (income), net 6,481  1,585  3,623  11,689 
Income (loss) before income taxes and        
  non-controlling interest (505) 35,925  (29,260) 6,160 
           
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  371,024  32,196  539,792 
Segment profit (loss) 59,085  258,532  (32,196) 285,421 
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 and        
  non-controlling interest 52,253  235,985  (84,649) 203,589 
           

Year ended August 31, 2010        
    Radio Television Corporate Consolidated
Revenues 192,433  575,097  —   767,530 
Direct cost of sales, general        
  and administrative expenses 135,002  348,418  28,141  511,561 
Segment profit (loss) 57,431  226,679  (28,141) 255,969 
Depreciation 4,059  10,000  6,063  20,122 
Interest expense (income) 3,555  (677)  41,344  44,222 
Disputed regulatory fees (6,722) (7,293) —   (14,015)
Debt refinancing —   —   14,256  14,256 
Restructuring 5,506  5,055  2,363  12,924 
Other expense (income), net 6,993  2,148  10,336  19,477 
Income (loss) before income taxes and        
  non-controlling interest 44,040  217,446  (102,503) 158,983 

Revenues by segment        
    Three months ended Year ended
    August 31, August 31,
    2011  2010  2011  2010 
Radio        
West 22,324  22,251  91,625  93,470 
Ontario 25,302  25,330  104,032  98,963 
    47,626  47,581  195,657  192,433 
           
Television        
Kids 70,146  58,497  278,958  240,568 
Specialty and Pay 82,421  81,358  350,598  334,529 
    152,567  139,855  629,556  575,097 
         
Segment profit        
    Three months ended Year ended
    August 31, August 31,
    2011  2010  2011  2010 
Radio        
West 7,217  6,333  28,743  30,295 
Ontario 7,682  6,868  30,342  27,136 
    14,899  13,201  59,085  57,431 
           
Television        
Kids 23,032  18,327  115,355  97,126 
Specialty and Pay 29,848  28,628  143,177  129,553 
    52,880  46,955  258,53 226,679 
           
Revenues by type        
    Three months ended Year ended
    August 31, August 31,
    2011  2010  2011  2010 
Advertising 83,052  85,385  389,925  373,607 
Subscriber fees 74,351  71,946  299,888  283,171 
Merchandise, distribution and other 42,790  30,105  135,400  110,752 
    200,193  187,436  825,213  767,530 

 

 

 

SOURCE Corus Entertainment Inc.