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Press release from PR Newswire

Corus Entertainment Announces Fiscal 2012 Second Quarter Results

Thursday, April 12, 2012

Corus Entertainment Announces Fiscal 2012 Second Quarter Results07:00 EDT Thursday, April 12, 2012 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 /PRNewswire/ - 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         SOURCE Corus Entertainment Inc (IR Group)For further information: <p> <b>John Cassaday </b><br/> <b>President and Chief Executive Officer </b><br/> <b>Corus Entertainment Inc. </b><br/> <b>416.479.6018 </b><br/> <br/> <b>Tom Peddie </b><br/> <b>Executive Vice P</b><b>resident and Chief </b><b>Financial Officer   </b><br/> <b>Corus Entertainment Inc. </b><br/> <b>416.479.6080</b><br/> <br/> <b>Sally Tindal</b><br/> <b>Director, Communications</b><br/> <b>Corus Entertainment Inc.</b><br/> <b>416.479.6107</b> </p>