The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

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

Thursday, October 25, 2012

Corus Entertainment Announces Fiscal 2012 Fourth Quarter and Year-End Results08:30 EDT Thursday, October 25, 2012Specialty advertising revenues up 7% in the quarterConsolidated segment profit margin up 290 basis points in the quarter, with Television and Radio margins of 40% and 30%, respectively, for the fiscal yearFree cash flow(1) up 15% in fiscal 2012 to $155.1 millionAdjusted net income attributable to shareholders(1)(3) up 9% in the quarter and 10% for the fiscal yearAdjusted basic earnings per share(1)(3) up 6% in the quarter and 8% for the fiscal yearSegment profit up 8% for the quarter and 1% for the fiscal yearTORONTO, Oct. 25, 2012 /CNW/ - 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  2011Revenues             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  825,213Segment 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  141,511Adjusted 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  $ 1.73Adjusted basic earnings per share(1)(3)  $ 0.36  $ 0.34  $ 1.87  $ 1.73Diluted 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 OperationsConsolidated 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 - HighlightsTelevisionSegment revenues decreased 3% in Q4 2012, but increased 3% for the fiscal yearSegment profit(1) increased 7% in Q4 2012 and was flat for the fiscal yearSpecialty advertising revenues increased 7% in Q4 2012 and were flat for the fiscal yearSubscriber revenues decreased 1%, both in Q4 2012 and for the fiscal yearMerchandising, distribution and other revenues decreased 16% in Q4 2012, but increased 21% for the fiscal yearMovie Central finished the fiscal year with 976,000 subscribersRadio(2)Segment revenues were flat in Q4 2012 and decreased 2% for the fiscal yearSegment 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  2010ASSETS         Current         Cash and cash equivalents  24,588  55,922  7,969Accounts receivable  173,421  178,531  175,134Income taxes recoverable  9,542  603  1,781Prepaid 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  39,597Intangibles, investments and other assets  42,390  39,980  22,699Property, plant and equipment  163,563  169,600  161,585Program and film rights  271,244  256,970  244,963Film investments  67,983  83,133  80,611Broadcast licenses  569,505  569,505  610,423Goodwill  674,393  671,827  695,029Deferred 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  192,839Provisions  2,322  5,267  13,048Total current liabilities  188,313  212,040  205,887          Long-term debt  518,258  600,796  691,891Other long-term liabilities  87,853  104,574  95,840Deferred tax liabilities  150,971  141,361  146,044Total liabilities  945,395  1,058,771  1,139,662          SHAREHOLDERS' EQUITY         Share capital  910,005  882,679  856,655Contributed surplus  7,835  10,299  12,706Retained earnings  198,445  143,717  62,509Accumulated other comprehensive income (loss)  (812)  (1,075)  342Total equity attributable to shareholders  1,115,473  1,035,620  932,212Equity attributable to non-controlling interest  20,617  19,200  18,055Total 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  2011Revenues  195,624  200,193  842,276  825,213Direct cost of sales, general and administrative expenses  134,762  143,714  552,297  539,327Depreciation  6,408  6,558  25,639  24,922Interest expense  12,242  13,793  52,269  57,276Restructuring  —   1,352  2,325  3,694Other expense (income), net  1,056  (1,849)  (3,646)  (4,060)             Income before income taxes  41,156  36,625  213,392  204,054Income tax expense  16,171  8,702  57,241  55,334             Net income for the period from continuing operations  24,985  27,923  156,151  148,720Net income for the period from discontinued operations  —  —  —  5,023Net 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  153,743Other 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) Sharecapital Contributedsurplus Retainedearnings Accumulatedothercomprehensiveincome (loss) Totalattributable toshareholders Non-controllinginterest Totalequity               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 7,470 153,464Actuarial 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 —  10,046Issuance of shares under dividend reinvestment plan 25,982 — —  —  25,982 —  25,982Shares repurchased (12,435) — (12,860) —  (25,295) —  (25,295)Share-based compensation expense —  1,158 —  —  1,158 —  1,158Repayment of executive stock purchase loans 111 —  —  —  111 —  111At August 31, 2012 910,005 7,835 198,445 (812) 1,115,473 20,617 1,136,090                                               Sharecapital Contributedsurplus Retainedearnings Accumulatedothercomprehensiveincome (loss)  Totalattributable toshareholders Non-controllinginterest Totalequity               At September 1, 2010 856,655 12,706 62,509 342 932,212 18,055 950,267Comprehensive income (loss) —  — 146,534 (984) 145,550 7,209 152,759Actuarial 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 —  9,711Issuance of shares under dividend reinvestment plan 14,657 — —  —  14,657 —  14,657Shares repurchased (1,976) — (1,729) —  (3,705) —  (3,705)Share-based compensation expense —  1,114 —  —  1,114 —  1,114Repayment of executive stock purchase loans 111 — — — 111 — 111Other — — —  —  — (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  2011OPERATING ACTIVITIES            Net income for the period  24,985  27,923  156,151  153,743Deduct 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)  16,881Payment 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  175,077Cash 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  —   7,971Net 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  —   —   —   74,996Cash 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  9,711Shares 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  —   —   —   61,734Net change in cash and cash equivalents during the period  (32,048)  (4,503)  (31,334)  47,953Cash and cash equivalents, beginning of period  56,636  60,425  55,922  7,969Cash 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  ConsolidatedRevenues  47,750  147,874  —   195,624Direct cost of sales, general and administrative expenses  32,755  93,384  8,623  134,762Segment profit (loss)(1)  14,995  54,490  (8,623)  60,862Depreciation  822  816  4,770  6,408Interest expense  160  5,786  6,296  12,242Other expense (income), net  199  459  398  1,056Income (loss) before income taxes   13,814  47,429  (20,087)  41,156               Three months ended August 31, 2011                 Radio  Television  Corporate  ConsolidatedRevenues  47,626  152,567  —   200,193Direct cost of sales, general and administrative expenses  32,727  101,627  9,360  143,714Segment profit (loss)(1)  14,899  50,940  (9,360)  56,479Depreciation  757  758  5,043  6,558Interest expense  154  6,729  6,910  13,793Restructuring  1,226  496  (370)  1,352Other 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  ConsolidatedRevenues  191,327  650,949  —   842,276Direct cost of sales, general and administrative expenses  133,900  388,811  29,586  552,297Segment profit (loss)(1)  57,427  262,138  (29,586)  289,979Depreciation  3,249  2,984  19,406  25,639Interest expense  —   25,136  27,133  52,269Restructuring  1,053  1,151  121  2,325Other 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  ConsolidatedRevenues  195,657  629,556  —   825,213Direct cost of sales, general and administrative expenses  136,572  368,432  34,323  539,327Segment profit (loss)(1)  59,085  261,124  (34,323)  285,886Depreciation  3,070  4,013  17,839  24,922Interest expense  2,552  22,788  31,936  57,276Restructuring  1,976  505  1,213  3,694Other 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  2011Advertising  85,650  83,052  386,045  389,925Subscriber fees  73,577  74,351  297,927  299,888Merchandising, distribution and other  36,397  42,790  158,304  135,400     195,624  200,193  842,276  825,213  SOURCE: Corus Entertainment Inc.For further information: John Cassaday President and Chief Executive Officer Corus Entertainment Inc. 416.479.6018 Tom Peddie Executive Vice President and Chief  Financial Officer   Corus Entertainment Inc. 416.479.6080 Sally Tindal Director, Communications Corus Entertainment Inc. 416.479.6107