Corus Entertainment Announces Fiscal 2012 Third Quarter Results

  • Year-to-date free cash flow(1) up 17%
  • Net income attributable to shareholders up 7%
  • Basic earnings per share up 6% to $0.52 per share
  • Consolidated revenues and segment profit(1) down 4%
  • Strong segment profit(1) margins at Television (43%) and Radio (33%)

TORONTO, July 12, 2012 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"Despite tough year-over-year comparables, we delivered a solid performance in the quarter, growing net income and earnings per share, maintaining our exceptional margins through rigorous cost controls and continuing to generate impressive free cash flow," said John Cassaday, President and CEO of Corus Entertainment. "Our specialty advertising revenues in the quarter were impacted by soft demand in the Kids segment, which overshadowed the continued strong performance in our Women's vertical and newer services, including ABC Spark. Looking ahead, our exceptional brands, superior programming and disciplined cost controls position us well for a recovery in the advertising market."

Financial Highlights              
               
(unaudited) Three months ended   Nine months ended
(in thousands of Canadian dollars except per share amounts) May 31,   May 31,
  2012   2011   2012   2011
Revenues              
  Television 154,749   161,043   503,075   476,989
  Radio (2) 49,329   50,745   143,577   148,031
  204,078   211,788   646,652   625,020
Segment profit(1)              
  Television 66,732   69,992   207,648   210,184
  Radio (2) 16,151   16,000   42,432   44,186
  Corporate (7,227)   (7,223)   (20,963)   (24,963)
  75,656   78,769   229,117   229,407
               
Net income attributable to shareholders:              
From continuing operations 43,221   40,352   125,340   113,841
From discontinued operations       5,023
  43,221   40,352   125,340   118,864
               
Basic earnings per share attributable to shareholders:              
  From continuing operations $ 0.52   $ 0.49   $ 1.51   $ 1.39
  From discontinued operations       0.06
  $ 0.52   $ 0.49   $ 1.51   $ 1.45

(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

Consolidated Results from Continuing Operations

Consolidated revenues for the three months ended May 31, 2012 were $204.1 million, down 4% from $211.8 million last year.  Consolidated segment profit(1) was $75.7 million, down 4% from $78.8 million last year.  Net income attributable to shareholders for the quarter was $43.2 million ($0.52 basic and $0.51 diluted), up 7% compared to $40.4 million ($0.49 basic and diluted) last year.

Consolidated revenues for the nine months ended May 31, 2012 were $646.7 million, up 3% from $625.0 million last year.  Consolidated segment profit(1) was $229.1 million, consistent with $229.4 million last year.  Net income attributable to shareholders for the nine months was $125.3 million ($1.51 basic and $1.50 diluted), up 10% compared to $113.8 million ($1.39 basic and $1.38 diluted) last year.

Operational Results - Highlights

Television

  • Segment revenues decreased 4% in Q3 2012, but increased 5% year-to-date
  • Segment profit(1) decreased 5% in Q3 2012 and 1% year-to-date
  • Specialty advertising revenues decreased 11% in the quarter and 1% year-to-date
  • Subscriber revenues decreased 2% in the quarter and 1% year-to-date
  • Merchandise, distribution and other revenue increased 8% in the quarter and 39% year-to-date
  • Movie Central finished the quarter with 975,000 subscribers

Radio(2)

  • Segment revenues decreased 3% in Q3 2012 and year-to-date
  • Segment profit(1) increased 1% in Q3 2012, but decreased 4% year-to-date

(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 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 and nine months ended May 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 July 12, 2012 at 2:00 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 416.641.6705.  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.

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 May 31,     As at August 31,     As at September 1,
(in thousands of Canadian dollars)   2012     2011     2010
ASSETS                
Current                
Cash and cash equivalents   56,636     55,922     7,969
Accounts receivable   182,520     178,531     175,134
Income taxes recoverable   3,036     603     1,781
Prepaid expenses and other   11,490     13,497     18,008
                 
Total current assets   253,682     248,553     202,892
                 
Tax credits receivable   52,215     43,108     39,597
Intangibles, investments and other assets   44,544     39,980     22,699
Property, plant and equipment   166,537     169,600     161,585
Program and film rights   263,068     256,970     244,963
Film investments   76,119     83,133     80,611
Broadcast licenses   569,505     569,505     610,423
Goodwill   674,138     671,827     695,029
Deferred tax asset   27,240     30,915     32,130
    2,127,048     2,113,591     2,089,929
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current                
Accounts payable and accrued liabilities   217,947     206,773     192,839
Provisions   3,930     5,267     13,048
Total current liabilities   221,877     212,040     205,887
                 
Long-term debt   527,594     600,796     691,891
Other long-term liabilities   84,374     104,574     95,840
Deferred tax liability   142,869     141,361     146,044
Total liabilities   976,714     1,058,771     1,139,662
                 
SHAREHOLDERS' EQUITY                
Share capital   913,467     882,679     856,655
Contributed surplus   7,566     10,299     12,706
Retained earnings   209,156     143,717     62,509
Accumulated other comprehensive income (loss)   642     (1,075)     342
Total equity attributable to shareholders   1,130,831     1,035,620     932,212
Equity attributable to non-controlling interest   19,503     19,200     18,055
Total shareholders' equity   1,150,334     1,054,820     950,267
    2,127,048     2,113,591     2,089,929

 
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                   
    Three months ended   Nine months ended
(unaudited)   May 31,   May 31,
(in thousands of Canadian dollars except per share amounts)   2012   2011   2012   2011
Revenues   204,078   211,788   646,652   625,020
Direct cost of sales, general and administrative expenses   128,422   133,019   417,535   395,613
Depreciation   6,339   6,203   19,231   18,364
Interest expense   13,190   14,693   40,027   43,483
Restructuring   2,325   92   2,325   2,342
Other income, net   (3,532)   (969)   (4,702)   (2,211)
Income before income taxes   57,334   58,750   172,236   167,429
Income tax expense   12,387   15,270   41,070   46,632
Net income for the period from continuing operations   44,947   43,480   131,166   120,797
Net income for the period from discontinued operations         5,023
Net income for the period   44,947   43,480   131,166   125,820
                 
Net income attributable to:                
     Shareholders from continuing operations   43,221   40,352   125,340   113,841
     Shareholders from discontinued operations         5,023
     Non-controlling interest   1,726   3,128   5,826   6,956
    44,947   43,480   131,166   125,820
                 
Basic earnings per share attributable to shareholders:                
     From continuing operations   $ 0.52   $ 0.49   $ 1.51   $ 1.39
     From discontinued operations         0.06
    $ 0.52   $ 0.49   $ 1.51   $ 1.45
                 
Diluted earnings per share attributable to shareholders:                
     From continuing operations   $ 0.51   $ 0.49   $ 1.50   $ 1.38
     From discontinued operations         0.06
    $ 0.51   $ 0.49   $ 1.50   $ 1.44
                 
Net income for the period   44,947   43,480   131,166   125,820
Other comprehensive income (loss), net of tax                
     Unrealized foreign currency translation adjustment   1,434   4   1,971   (1,857)
     Unrealized change in fair value of available-for-sale investments   (163)   (77)   (254)   (1)
     Actuarial gain on employee future benefits         433
    1,271   (73)   1,717   (1,425)
Comprehensive income for the period   46,218   43,407   132,883   124,395
                 
Comprehensive income attributable to:                
     Shareholders   44,492   40,279   127,057   117,439
     Non-controlling interest   1,726   3,128   5,826   6,956
    46,218   43,407   132,883   124,395

 
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       125,340   1,717   127,057   5,826   132,883
Dividends declared       (58,123)     (58,123)   (5,523)   (63,646)
Issuance of shares under stock option plan   13,669   (3,623)       10,046     10,046
Issuance of shares under dividend reinvestment plan   19,229         19,229     19,229
Shares repurchased   (2,110)     (1,778)     (3,888)     (3,888)
Share-based compensation expense     890       890     890
                             
At May 31, 2012   913,467   7,566   209,156   642   1,130,831   19,503   1,150,334
                             
                             
                             
(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 September 1, 2010   856,655   12,706   62,509   342   932,212   18,055   950,267
Comprehensive income (loss)       118,864   (1,425)   117,439   6,956   124,395
Actuarial gain transfer       433   (433)      
Dividends declared       (46,093)   —    (46,093)   (5,107)   (51,200)
Issuance of shares under stock option plan   12,954   (3,448)       9,506     9,506
Issuance of shares under dividend reinvestment plan   9,449         9,449     9,449
Share-based compensation expense     822       822     822
Other             (957)   (957)
                             
At May 31, 2011   879,058   10,080   135,713   (1,516)   1,023,335   18,947   1,042,282

 
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Three months ended   Nine months ended
(unaudited)   May 31,   May 31,
(in thousands of Canadian dollars)   2012   2011   2012   2011
OPERATING ACTIVITIES                
Net income for the period   44,947   43,480   131,166   125,820
Deduct earnings from discontinued operations         (5,023)
Add (deduct) non-cash items:                
  Depreciation   6,339   6,203   19,231   18,364
  Amortization of program rights   46,317   44,174   139,805   129,563
  Amortization of film investments   4,002   7,501   21,949   26,378
  Deferred income taxes   (51)   2,541   4,735   3,365
  Stock-based compensation expense   298   274   890   822
  Imputed interest   2,894   2,827   8,904   7,911
  Gain on acquisition   (2,383)     (2,383)  
  Other   (2,000)   (809)   (2,790)   (2,403)
Net change in non-cash working capital balances related to operations   11,466   7,700   (9,260)   5,300
Payment of program and film rights   (44,841)   (41,686)   (131,267)   (114,814)
Net additions to film investments   (6,391)   (23,131)   (40,364)   (56,251)
Cash provided by operating activities from continuing operations   60,597   49,074   140,616   139,032
Cash used in operating activities from discontinued operations         (13,262)
Cash provided by operating activities   60,597   49,074   140,616   125,770
                 
INVESTING ACTIVITIES                
Additions to property, plant and equipment   (5,501)   (5,387)   (13,585)   (32,602)
Business combination   (4,104)     (4,104)  
Net cash flows for intangibles, investments and other assets   (4,868)   210   (3,859)   (4,057)
Other   (242)   (350)   (560)   (932)
Cash used in investing activities from continuing operations   (14,715)   (5,527)   (22,108)   (37,591)
Cash provided by investing activities from discontinued operations         74,996
Cash provided by (used in) investing activities   (14,715)   (5,527)   (22,108)   37,405
                 
FINANCING ACTIVITIES                
Decrease in bank loans   (40,103)   (28,458)   (74,777)   (73,222)
Issuance of shares under stock option plan   1,709   3,622   10,046   9,506
Shares repurchased       (3,888)  
Dividends paid   (13,705)   (11,023)   (37,525)   (34,572)
Dividends paid to non-controlling interest     (741)   (4,423)   (5,107)
Other   (2,722)   (3,000)   (7,227)   (7,324)
Cash used in financing activities from continuing operations   (54,821)   (39,600)   (117,794)   (110,719)
Net change during the period in cash and cash equivalents from continuing operations   (8,939)    3,947    714    (9,278)
Net change during the period in cash and cash equivalents from discontinued operations         61,734
Net change in cash and cash equivalents during the period   (8,939)   3,947   714   52,456
Cash and cash equivalents, beginning of period   65,575   56,478   55,922   7,969
Cash and cash equivalents, end of period   56,636   60,425   56,636   60,425

 
CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
 
(unaudited)
(in thousands of Canadian dollars)
                       
Three months ended May 31, 2012                      
      Radio     Television     Corporate     Consolidated
Revenues   49,329     154,749         204,078
Direct cost of sales, general and administrative expenses   33,178     88,017     7,227     128,422
Segment profit (loss)(1)   16,151     66,732     (7,227)     75,656
Depreciation   870     816     4,653     6,339
Interest expense   (256)     6,118     7,328     13,190
Restructuring   1,053     1,151     121     2,325
Other expense (income), net   (55)     (866)     (2,611)     (3,532)
Income (loss) before income taxes   14,539     59,513     (16,718)     57,334
                         
Three months ended May 31, 2011                      
      Radio     Television     Corporate     Consolidated
Revenues   50,745     161,043         211,788
Direct cost of sales, general and administrative expenses   34,745     91,051     7,223     133,019
Segment profit (loss)(1)   16,000     69,992     (7,223)     78,769
Depreciation   817     736     4,650     6,203
Interest expense   (74)     6,182     8,585     14,693
Restructuring   79     6     7     92
Other expense (income), net   (515)     396     (850)     (969)
Income (loss) before income taxes   15,693     62,672     (19,615)     58,750
                         
Nine months ended May 31, 2012                      
      Radio     Television     Corporate     Consolidated
Revenues   143,577     503,075         646,652
Direct cost of sales, general and administrative expenses   101,145     295,427     20,963     417,535
Segment profit (loss)(1)   42,432     207,648     (20,963)     229,117
Depreciation   2,427     2,168     14,636     19,231
Interest expense   (160)     19,350     20,837     40,027
Restructuring   1,053     1,151     121     2,325
Other expense (income), net   (42)     (1,861)     (2,799)     (4,702)
Income (loss) before income taxes   39,154     186,840     (53,758)     172,236
                         
Nine months ended May 31, 2011                      
      Radio     Television     Corporate     Consolidated
Revenues   148,031     476,989         625,020
Direct cost of sales, general and administrative expenses   103,845     266,805     24,963     395,613
Segment profit (loss)(1)   44,186     210,184     (24,963)     229,407
Depreciation   2,313     3,255     12,796     18,364
Interest expense   2,398     16,059     25,026     43,483
Restructuring   750     9     1,583     2,342
Other expense (income), net   (1,009)     (1,822)     620     (2,211)
Income (loss) before income taxes   39,734     192,683     (64,988)     167,429

(1)See definitions and discussion under Key Performance Indicators in MD&A

                         
Revenues by type                        
        Three months ended     Nine months ended
        May 31,     May 31,
        2012     2011     2012     2011
Advertising     97,076     104,374     300,395     306,873
Subscriber fees     74,285     76,176     224,350     225,537
Merchandise, distribution and other     32,717     31,238     121,907     92,610
        204,078     211,788     646,652     625,020

 

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


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