CORUS ENTERTAINMENT ANNOUNCES FISCAL 2011 SECOND QUARTER RESULTS

  • Consolidated revenues up 8% and segment profit up 11%
  • Television specialty ad growth of 14%
  • Radio revenue growth of 5% led by Ontario, up 11%
  • Basic earnings per share from continuing operations of $0.34 for the quarter compared to $0.18 last year ($0.30 on an adjusted basis last year)

TORONTO, April 14 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its second quarter financial results today.

"Strong advertising and subscriber revenue growth continued in the second quarter.  Coupled with our cost containment initiatives, we delivered double digit segment profit growth in both our Radio and Television divisions, demonstrating the power of operating leverage," said John Cassaday, President and CEO of Corus Entertainment.  "We are also pleased with two major accomplishments subsequent to the quarter - exceeding our key milestone of 1 million paid pay television subscribers and the launch of OWN on March 1st."

Financial Highlights        
         
(unaudited) Three months ended Six months ended
(in thousands of Canadian dollars except per share amounts) February 28, February 28,
  2011  2010  2011  2010 
Revenues        
  Radio 42,647  40,527  97,286  93,479 
  Television 148,429  136,973  315,946  288,228 
  191,076  177,500  413,23 381,707 
Segment profit        
  Radio 9,672  8,174  28,186  26,724 
  Television 59,017  53,204  137,117  120,272 
  Corporate (7,730) (6,328) (15,690) (11,991)
  60,959  55,050  149,613  135,005 
         
Net income from continuing operations 27,445  14,239  71,115  84,231 
         
Basic earnings per share        
  From continuing operations $ 0.34 $ 0.18 $ 0.87 $ 1.05
  From discontinued operations $ 0.05 $ 0.00 $ 0.08 $ 0.05
  $ 0.39 $ 0.18 $ 0.95 $ 1.10

Consolidated Results from Continuing Operations

Consolidated revenues for the three months ended February 28, 2011 were $191.1 million, up 8% from $177.5 million last year.  Consolidated segment profit was $61.0 million, up 11% from $55.1 million last year.  Net income for the quarter was $27.4 million ($0.34 basic and $0.33 diluted), compared to $14.2 million ($0.18 basic and diluted) last year.  Net income for the prior year includes a debt refinancing cost of $14.3 million.  Removing the impact of this item results in an adjusted second quarter basic earnings per share of $0.30 in the prior year.

Consolidated revenues for the six months ended February 28, 2011 were $413.2 million, up 8% from $381.7 million last year.  Consolidated segment profit was $149.6 million, up 11% from $135.0 million last year.  Net income for the six month period was $71.1 million ($0.87 basic and diluted), compared to a net income of $84.2 million ($1.05 basic and $1.03 diluted) last year.  Net income for the six month period 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 $14.2 million recovery due to income tax rate changes.  Removing the impact of these items results in an adjusted six month basic earnings per share of $0.88 in the prior year.

Operational Results - Highlights

Radio

  • Segment revenues increased 5% in the second quarter and 4% year-to-date
  • Segment profit increased 18% in the second quarter and 5% year-to-date
  • Revenues for the quarter increased 11% in Ontario and remained flat in the West

Television

  • Segment revenues increased 8% in the second quarter and 10% year-to-date
  • Segment profit increased 11% in the second quarter and 14% year-to-date
  • Specialty advertising revenues increased 14% in the second quarter and 15% year-to-date
  • Subscriber revenues increased 6% in the second quarter and 8% year-to-date
  • Movie Central finished the quarter with 989,000 subscribers, up 2% from the second quarter of 2010 (as at March 31, 2011, exceeded 1 million subscribers)

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), 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 28, 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 April 14, 2011 at 9:00 a.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 1.800.678.2887 and for local/international callers is 416.641.6653.  PowerPoint slides for the call will be posted at 8:45 a.m. ET on April 14, 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, program, 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, program, 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 February 28,       As at August 31,
(in thousands of Canadian dollars)   2011        2010 
ASSETS            
Current            
Cash and cash equivalents   56,478        7,969 
Accounts receivable   187,286        161,645 
Income tax recoverable         1,781 
Prepaid expenses and other   11,634        17,040 
Program and film rights   146,186        159,526 
Future tax asset   5,758        6,129 
Current assets of discontinued operations         14,951 
Total current assets   407,342        369,041 
             
Tax credits receivable   43,948        39,597 
Investments and other assets   27,761        22,595 
Property, plant and equipment   170,694        147,905 
Program and film rights   108,306        88,484 
Film investments   94,919        100,454 
Broadcast licenses   541,248        541,248 
Goodwill   671,827        671,827 
Long-term assets of discontinued operations         78,104 
    2,066,045        2,059,255 
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current            
Accounts payable and accrued liabilities   212,163        193,342 
Income taxes payable   4,754        336 
Current liabilities of discontinued operations         9,744 
Total current liabilities   216,917        203,422 
             
Long-term debt   648,587        691,891 
Other long-term liabilities   79,068        88,003 
Future tax liability   91,086        89,651 
Long-term liabilities of discontinued operations         12,285 
Total liabilities   1,035,658        1,085,252 
             
Non-controlling interest   17,517        18,055 
             
SHAREHOLDERS' EQUITY            
Share capital   869,622        856,655 
Contributed surplus   10,274        11,780 
Retained earnings   145,915        98,669 
Accumulated other comprehensive income   (12,941)       (11,156)
Total shareholders' equity   1,012,870        955,948 
    2,066,045        2,059,255 
             

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME
         
  Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of Canadian dollars except per share amounts)     2011      2010      2011      2010 
Revenues 191,076  177,500  413,232  381,707 
Direct cost of sales, general and administrative expenses 130,117 122,450 263,619 246,702
Depreciation 6,053  4,745  12,161  8,649 
Interest expense 15,681  10,475  31,190  19,547 
Disputed regulatory fees (14,015)
Debt refinancing 14,256  14,256 
Restructuring 2,249 
Other expense (income), net (1,125) 3,141  (1,242) 1,367 
Income from continuing operations before income taxes and non-controlling interest   40,350  22,433 105,255  105,201
Income tax expense 10,897  6,864  30,312  18,462 
Non-controlling interest 2,008  1,330  3,828  2,508 
Net income for the period from continuing operations 27,445  14,239  71,115  84,231 
Net income for the period from discontinued operations 4,192  364  6,743  4,280 
Net income for the period 31,637  14,603  77,858  88,511 
         
Basic earnings per share        
  From continuing operations $ 0.34 $ 0.18 $ 0.87 $ 1.05
  From discontinued operations $ 0.05 $ 0.00 $ 0.08 $ 0.05
  $ 0.39 $ 0.18 $ 0.95 $ 1.10
         
Diluted earnings per share        
  From continuing operations $ 0.33 $ 0.18 $ 0.87 $ 1.03
  From discontinued operations $ 0.05 $ 0.00 $ 0.08 $ 0.05
  $ 0.38 $ 0.18 $ 0.95 $ 1.08
         
         
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of Canadian dollars except per share amounts)     2011      2010      2011      2010 
Net income for the period 31,637  14,603  77,858  88,511 
Other comprehensive income (loss), net of tax        
  Unrealized foreign currency translation adjustment (1,108) (79) (1,861) (524)
  Unrealized change in fair value of available-for-sale investments, net of tax (95)  (27)   76 12  
  Unrealized change in fair value of cash flow hedges, net of tax -   1,985   -   3,431
  Recognition of change in fair value of cash flow hedge in net income, net of tax   - 9,244   -   9,244
  (1,203) 11,123  (1,785) 12,163 
Comprehensive income for the period 30,434  25,726  76,073  100,674 
   

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
         
  Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of Canadian dollars)    2011     2010     2011     2010 
Share capital        
Balance, beginning of period 861,183  842,340  856,655  840,602 
Issuance of shares under stock option plan 4,988  3,329  7,911  4,731 
Other 3,451  1,078  5,056  1,414 
Balance, end of period 869,622  846,747  869,622  846,747 
         
Contributed surplus        
Balance, beginning of period 11,392  14,394  11,780  17,303 
Stock-based compensation 289  954  522  1,853 
Settlement and modification of long-term incentive plan (3,473)
Exercise of stock options (1,407) (171) (2,028) (506)
Balance, end of period 10,274  15,177  10,274  15,177 
         
Retained earnings        
Balance, beginning of period 129,632  82,271  98,669  20,380 
Net income for the period 31,637  14,603  77,858  88,511 
Dividends (15,354) (12,089) (30,612) (24,106)
Balance, end of period 145,915  84,785  145,915  84,785 
         
Accumulated other comprehensive loss        
Balance, beginning of period (11,738) (22,967) (11,156) (24,007)
Other comprehensive income (loss), net of tax (1,203) 11,123  (1,785) 12,163 
Balance, end of period (12,941) (11,844) (12,941) (11,844)
         

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
         
  Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of Canadian dollars)       2011        2010        2011        2010 
OPERATING ACTIVITIES        
Net income for the period 31,637  14,603  77,858  88,511 
Earnings from discontinued operations (4,192) (364) (6,743) (4,280)
Add (deduct) non-cash items:        
   Depreciation 6,053  4,745  12,161  8,649 
  Amortization of program rights 43,152  41,404  85,227  83,073 
  Amortization of film investments 11,189  9,609  22,111  15,142 
   Future income taxes 778  1,828  824  (13,852)
   Non-controlling interest 2,008  1,330  3,828  2,508 
   Stock option expense 289  3,126  522  3,330 
   Imputed interest 2,484  1,772  5,084  3,468 
   Debt refinancing 14,256  14,256 
  Other (1,327) (297) (1,594) (388)
Net change in non-cash working capital balances related to operations 17,972  17,848  (13,792) 1,325 
Payment of program and film rights (34,975) (42,663) (73,128) (84,273)
Net additions to film investments (11,270) (15,036) (33,120) (32,997)
Cash provided by operating activities from continuing operations 63,798  52,161  79,238  84,472 
Cash provided by (used in) operating activities from discontinued operations (2,546)  373  (2,542)  389 
Cash provided by operating activities 61,252  52,534  76,696  84,861 
         
INVESTING ACTIVITIES        
Additions to property, plant and equipment (13,952) (23,421) (27,215) (29,506)
Business combinations (36,000)
Net cash flows for investments and other assets (3,382) 1,773  (4,267) 2,864 
Decrease in public benefits associated with acquisitions (357) (240) (582) (478)
Cash used in investing activities from continuing operations (17,691)  (21,888) (32,064)  (63,120)
Cash provided by (used in) investing activities from discontinued operations 75,000  (371) 74,996 (392)
Cash provided by (used in) investing activities 57,309  (22,259) 42,932  (63,512)
         
FINANCING ACTIVITIES        
Decrease in bank loans (74,956) (469,566) (44,764) (429,681)
Issuance of senior unsecured guaranteed notes 500,000  500,000 
Financing and swap termination fees (30,997) (30,997)
Issuance of shares under stock option plan 3,581  3,158  5,884  4,225 
Dividends paid (11,958) (10,973) (23,549) (22,647)
Dividend paid to non-controlling interest (160) (5,400) (4,366) (9,260)
Other (2,144) (4,324) (3,444)
Cash provided by (used in) financing activities from continuing operations (85,637) (13,778) (71,119) 8,196 
Cash provided by financing activities from discontinued operations - - - -
Cash provided by (used in) financing activities (85,637) (13,778) (71,119) 8,196 
Net change in cash and cash equivalents during the period from continuing operations      (39,530)  16,495  (23,945)  29,548 
Net change in cash and cash equivalents during the period from discontinued operations 72,454   72,454 (3)
Net change in cash and cash equivalents during the period 32,924   16,497  48,509  29,545 
Cash and cash equivalents, beginning of period 23,554   23,970  7,969  10,922 
Cash and cash equivalents, end of period 56,478   40,467  56,478  40,467 
         

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited)
(in thousands of Canadian dollars except per share amounts)
           
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   89,412   7,730   130,117
Segment profit (loss) 9,672  59,017  (7,730) 60,959 
Depreciation 738  816  4,499  6,053 
Interest expense 966  6,129  8,586  15,681 
Other expense (income), net (514) (1,585) 974  (1,125)
Income (loss) before income taxes and non-controlling interest   8,482   53,657   (21,789)   40,350
           
Three months ended February 28, 2010
    Radio Television Corporate Consolidated
Revenues 40,527  136,973  177,500 
Direct cost of sales, general and administrative expenses   32,353 83,769  6,328     122,450
Segment profit (loss) 8,174  53,204  (6,328) 55,050 
Depreciation 1,020  1,871  1,854  4,745 
Interest expense 1,034  1,180  8,261  10,475 
Debt refinancing 14,256  14,256 
Other expense (income), net 560  2,581  3,141 
Income (loss) before income taxes and non-        
  controlling interest 6,120  49,593  (33,280) 22,433 
           
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  178,829  15,690  263,619 
Segment profit (loss) 28,186  137,117  (15,690) 149,613 
Depreciation 1,496  2,519  8,146  12,161 
Interest expense 2,472  12,277  16,441  31,190 
Restructuring charges 671  1,575  2,249 
Other expense (income), net (494) (2,218) 1,470  (1,242)
Income (loss) before income taxes and non-        
  controlling interest 24,041  124,536  (43,322) 105,255 
         
Six months ended February 28, 2010        
    Radio Television Corporate Consolidated
Revenues 93,479  288,228  381,707 
Direct cost of sales, general        
  and administrative expenses 66,755  167,956  11,991  246,702 
Segment profit (loss) 26,724  120,272  (11,991) 135,005 
Depreciation 2,078  3,777  2,794  8,649 
Interest expense 2,146  2,355  15,046  19,547 
Disputed regulatory fees (6,722) (7,293) (14,015)
Debt refinancing 14,256  14,256 
Other expense (income), net 101  (693) 1,959  1,367 
Income (loss) before income taxes and non-        
  controlling interest 29,121  122,126  (46,046) 105,201 

Revenues by segment        
    Three months ended Six months ended
    February 28, February 28,
    2011  2010  2011  2010 
Radio        
West 19,737  19,846  45,802  46,078 
Ontario 22,910  20,681  51,484  47,401 
    42,64 40,527  97,286  93,479 
           
Television        
Kids 64,813  56,145  142,826  124,644 
Specialty and Pay 83,616  80,828  173,120  163,584 
    148,429  136,973  315,946  288,228 
           
Segment profit        
    Three months ended Six months ended
    February 28, February 28,
          2011       2010       2011       2010
Radio        
West 4,610  5,054  13,608  14,754 
Ontario 5,062  3,120  14,578  11,970 
    9,672  8,174  28,186  26,724 
           
Television        
Kids 22,936  22,257  64,362  55,566 
Specialty and Pay 36,081  30,947  72,755  64,706 
    59,01 53,204  137,117  120,272 
           
Revenues by type        
    Three months ended Six months ended
    February 28, February 28,
          2011        2010        2011        2010 
Advertising 82,179  77,373  202,499  188,483 
Subscriber fees 75,599  71,478  149,361  138,897 
Other 33,298  28,649  61,372  54,327 
    191,076  177,500  413,232  381,707 

 

 

 

 

SOURCE Corus Entertainment Inc.

For further information:

John Cassaday        Tom Peddie        Sally Tindal
President and Chief Executive Officer        Executive Vice President and Chief         Director, Communications
Corus Entertainment Inc.        Financial Officer          Corus Entertainment Inc.
416.479.6018        Corus Entertainment Inc.        416.479.6107
        416.479.6080

 


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