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Press release from CNW Group


Monday, September 27, 2010

DHX MEDIA REPORTS FULL-YEAR RESULTS07:00 EDT Monday, September 27, 2010 << TSX: DHX >> HALIFAX, Sept. 27 /CNW/ - DHX Media Ltd. ("DHX Media" or the "Company") (TSX: "DHX"), a leading independent international producer and distributor of mainly children's entertainment content, is pleased to announce its audited financial results for the year ended June 30, 2010. << Highlights of Fiscal 2010 Results: (All amounts in Canadian dollars) - Revenues of $40.5 million, down 35% from $62.0 million in fiscal 2009; - Gross Margin increased to 41%, up from 36% in fiscal 2009; - EBITDA(1) of $4.2 million, a decrease of 56% from $9.4 million for fiscal 2009; - Net loss of $0.8 million ($0.02 per share), down from an net income of $0.4 million for fiscal 2009 ($0.01 per share); and - Television production deliveries totaled 248.5 half-hours, a decrease of 12% from 283.5 in fiscal 2009. (1) EBITDA represents income of the Company before amortization, interest and other income (expense), taxes, non-controlling interest, equity income, development expenses, stock-based compensation expense, costs associated with abandoned transactions, and impairment in value of certain investment in film and television programs. (See Annual MD&A definition of EBITDA for full details). >> Michael Donovan, Chairman and CEO, DHX Media commented, "The Company's financial results for the full fiscal year reflect the lagging impact of last year's recessionary effect on our broadcaster customers. As advertising activity has rebounded, new commissions have been announced and we have improved transparency towards increased business activity for fiscal 2011. DHX Media's strong balance sheet and increasingly diversified revenue base places it well to benefit from the expected upswing in activity.With our recently announced acquisition of Los Angeles-based W!LDBRAIN Entertainment and its hit preschool TV series Yo Gabba Gabba! on Nick Jr. in the U.S., together with the forthcoming U.S. launch of DHX Media's Animal Mechanicals series on The Hub on October 10th, 2010, the Company will increasingly be in the mainstream of the largest entertainment consuming market in the world. The Company looks forward to success on these titles in the coming months." << Consolidated Statements of Income and Comprehensive Income Data ------------------------------------------------------------------------- Year Ended June 30, ------------------------------------------ 2010 2009 2008 ------------------------------------------ ($000) ($000) ($000) (except per (except per (except per share data) share data) share data) ------------------------------------------ Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Data: (1) Revenues 40,471 61,969 52,379 Direct production costs and amortization of film and television produced 24,062 39,791 35,145 ------------------------------------------ Gross margin 16,409 22,178 17,234 ------------------------------------------ Selling, general, and administrative 12,984 13,787 12,082 Impairment in value of certain investment in film and television programs 557 494 2,782 Income before the following and discontinued operations 1,522 6,736 997 Income (loss) from strategic investments (47) 122 (59) Costs associated with abandoned transactions - (1,360) (104) Equity income (loss) (40) - 44 Gain on restructuring of investment 348 - - Foreign exchange (loss) gain (587) 409 (37) Amortization, interest and other expenses, net (2,500) (2,689) (1,690) Recovery of (provision for) income taxes 491 (1,375) (40) Net income (loss) and comprehensive income (loss) before discontinued operations (813) 1,843 (889) Discontinued operations, net of income tax - (1,468) (141) Net income (loss) and comprehensive income (loss) (813) 375 (1,030) Basic earnings (loss) before discontinued operations per common share (0.02) 0.04 (0.02) Diluted earnings (loss) before discontinued operations per common share (0.02) 0.04 (0.02) Basic earnings (loss) per common share (0.02) 0.01 (0.03) Diluted earnings (loss) per common share (0.02) 0.01 (0.03) Weighted average common shares outstanding Basic 48,580 43,066 39,039 Diluted 48,580 43,096 39,039 Consolidated Balance Sheet Data: Cash, restricted cash and short-term investments 22,018 11,086 9,570 Investment in film and television programs 29,892 35,827 49,981 Total assets 133,304 148,803 143,976 Total liabilites 53,125 88,253 85,783 Shareholders' equity 80,179 60,550 58,193 ------------------------------------------------------------------------- >> RevenuesRevenues for Fiscal 2010 were $40.47 million, down 35% for Fiscal 2009. The decrease in Fiscal 2010 was generally due to lower deliveries of proprietary programs versus Fiscal 2009. The global recession resulted in a slowdown in advertising dollars for some of our broadcast customers and therefore fewer orders and lower per half-hour license fee revenue. In calendar 2009 broadcasters did not commit to as many new shows and renewals as they had in calendar 2008. Because of the 12-18 month lag between production and delivery this has resulted in fewer deliveries for Fiscal 2010.Proprietary production revenues for Fiscal 2010 of $18.27 million were down 59% compared to Fiscal 2009. For Fiscal 2010, the Company accounted for 248.5 half-hours - $18.27 million of proprietary film and television program production revenue. This represented a 12% decrease versus the 283.5 half-hours for Fiscal 2009, where the programs have been delivered and the license periods have commenced for consolidated entities. For Fiscal 2010, distribution revenues were at the lower end of Management's range, but in line with expectations.For Fiscal 2010, distribution revenues were down 9% from Fiscal 2009 as in the later half of 2010 the Company started to feel the lagging effect on distribution revenues of having fewer 2010 proprietary deliveries to take to market. For Fiscal 2010, the Company recognized revenue on several contracts throughout its existing library and delivered episodes of newer titles. Some of the more significant sales were on the following titles: The Latest Buzz Seasons I-III, Animal Mechanicals Seasons I-III, Franny's Feet Seasons I-III, Super Why! Season I, Kid vs. Kat Season I, Poppets Town Season I, Waybuloo Season I, The Guard Seasons I and II, Grandpa in My Pocket Seasons I and II, and Martha Speaks Season I.For Fiscal 2010, the Company earned $7.48 million for producer and service fee revenues, an increase of 181% over Fiscal 2009.For Fiscal 2010, music and royalty revenues increased 21% to $2.41 million. Music and royalty revenues are up as Management believes the Company's rights library is gaining critical mass. As the rights library gets larger there are more opportunities to realize growth in this area. New media revenues increased in Fiscal 2010 to $0.40 million. New media revenues have increased as the Company has undertaken new activities to support several of its proprietary series for Fiscal 2010, specifically That's So Weird, Animal Mechanicals, and This Hour Has 22 Minutes, and are in line with Management's expectations.Gross MarginGross margin for Fiscal 2010 was $16.41 million, a decrease in absolute dollars of 26% compared to $22.18 million for Fiscal 2009. Management was pleased with the overall margin at 41% of revenue for Fiscal 2010 which was above expectations. The Company continues to see integration efficiencies within its three main operating subsidiaries, particularly in funnelling Studio B and Halifax Film programs through the Decode distribution pipeline. The growing rights library has also resulted in increases in music, new media, and royalty opportunities, which continues to bolster the gross margin.Operating ExpensesOperating expenses for Fiscal 2010 were $14.89 million compared to $15.44 million for Fiscal 2009, a decrease of 4%. Selling, General, & Administrative costs for Fiscal 2010 were down 6% at $12.98 million compared to $13.79 million for Fiscal 2009. This decrease in SG&A was in line with Managements' targeted reductions.EBITDAIn Fiscal 2010, EBITDA was $4.16 million, a 56% decrease as compared to $9.39 million for Fiscal 2009. For Fiscal 2010 this was generally due to the decrease in gross margin dollars of $5.77 million, offset by a $0.81 million decrease in SG&A.DHX Media's complete financial statements are available at or on DHX Media Ltd.DHX Media Ltd. is a leading international producer and distributor of television programming and interactive content with an emphasis on children, family and youth markets. DHX Media Ltd. shares trade on AIM and are listed on the TSX, the Toronto Stock Exchange. DHX Media's production companies, Decode Entertainment, Halifax Film and Studio B Productions, are the producers or co-producers of 8 original television series and theatrical releases currently commissioned for production and maintain a growing library of over 2,300 half-hours of mostly children and youth-oriented television productions.www.dhxmedia.comDisclaimerThis press release contains forward looking statements with respect to the Company. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, such statements involve risks and uncertainties and are based on information currently available to the Company. Actual results may differ materially from those expressed or implied by such forward looking statements. Factors that could cause actual results or events to differ materially from current expectations, among other things, include risks related to market factors, customer contract interpretation, application of accounting policies and principles, and production related risks, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time including matters discussed under "Risk Factors" in the Company's short form prospectus dated April 9, 2010 and in the Company's Amended Annual Information Form incorporated by reference therein. These forward-looking statements are made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.%SEDAR: 00023380EFor further information: David A. Regan - EVP, Corporate Development & IR, +1 902-423-0260