Corus Entertainment Announces Fiscal 2015 Fourth Quarter and Year-End Results

  • Record free cash flow of $201.2 million, up 15% for the fiscal year
  • Consolidated revenues down 4% for the quarter and down 2% for the fiscal year
  • Consolidated segment profit down 5% for the quarter and down 4% for the fiscal year
  • Net earnings attributable to shareholders of $17.8 million for the quarter and loss of $25.2 million for the fiscal year
  • Adjusted basic earnings per share of $0.28 per share for the quarter and $1.57 for the fiscal year
  • Consolidated segment profit margins of 34% for the fiscal year

 

TORONTO, Oct. 22, 2015 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.

"We were very pleased to deliver record-breaking free cash flow and maintain our margins this year, despite soft advertising revenues," said Doug Murphy, President and Chief Executive Officer, Corus Entertainment. "This is an exciting time for us. Our newly appointed Executive Leadership Team is fully focused on the successful execution of our strategic priorities, which are driving our transformation from a traditional broadcaster to an integrated media and content business. Though we are still in the early stages, we are confident that we have the right strategies in place and pleased with our progress to-date. The optimization of our premium portfolio of Kids brands, with the successful launch of Disney Channel (Canada) and rollout of our suite of innovative TV Everywhere apps, represents the first in a series of strategic steps we are taking to return the Company to growth."


Financial Highlights 











Three months ended


Year ended 



August 31,


August 31, 

(unaudited - in thousands of Canadian dollars except per share amounts) 


2015


2014


2015


2014

Revenues 










Television


154,338


159,809


653,770


660,424


Radio


39,261


41,748


161,545


172,592



193,599


201,557


815,315


833,016










Segment profit(1)










Television


52,575


57,036


260,129


273,273


Radio


8,503


9,502


37,007


45,487


Corporate


(5,585)


(8,189)


(19,949)


(29,122)



55,493


58,349


277,187


289,638










Net income (loss) attributable to shareholders 


17,835


23,727


(25,154)


150,408

Adjusted net income attributable to shareholders(1) (2)


23,967


26,785


135,922


150,344










Basic earnings (loss) per share 


$ 0.21


$ 0.28


$ (0.29)


$ 1.77

Adjusted basic earnings per share(1) (2)


$ 0.28


$ 0.31


$   1.57


$ 1.77

Diluted earnings (loss) per share 


$ 0.21


$ 0.28


$ (0.29)


$ 1.76










Free cash flow(1)


45,170


(7,164)


201,213


175,276



(1) 

Adjusted net income (loss) attributable to shareholders, adjusted basic earnings per share, segment profit, and free cash flow do not have standardized meanings prescribed by IFRS. The Company reports on segment profit and free cash flow because they are key measures used to evaluate performance. For definitions and explanations, see discussion under the Key Performance Indicators section of the 2015 Report to Shareholders

(2)

For the three months ended August 31, 2015, excludes business acquisition, integration and restructuring charges of $8.3 million ($0.07 per share). For the year ended August 31, 2015, excludes radio broadcast license and goodwill impairment charges of $130.0 million ($1.44 per share), intangible impairment charges of $51.8 million ($0.44 per share), business acquisition, integration and restructuring charges of $19.0 million ($0.15 per share), offset by a gain on distribution of investment of $17.0 million ($0.17 per share). For the three months ended August 31, 2014, excludes business acquisition, integration and restructuring costs of $5.6 million ($0.04 per share) and investment impairment recovery of $1.0 million ($0.01 per share). For the year ended August 31, 2014, excludes the impact of a $127.9 million ($1.51 per share) gain on remeasurement to fair value of the Company's 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $46.8 million ($0.51 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share), and investment impairment related charges of $2.3 million ($0.03 per share).

 

Consolidated Results from Operations

Consolidated revenues for the three months ended August 31, 2015 were $193.6 million, down 4% from $201.6 million last year.  Consolidated segment profit was $55.5 million, down 5% from $58.3 million last year.  Net income attributable to shareholders for the quarter was $17.8 million ($0.21 per share basic and diluted), compared to $23.7 million ($0.28 per share basic and diluted) last year.  Net income attributable to shareholders for the fourth quarter includes business acquisition, integration and restructuring costs of $8.3 million ($0.07 per share). Removing the impact of this item results in an adjusted net income attributable to shareholders of $24.0 million ($0.28 per share) in the quarter. Net income attributable to shareholders for the prior year quarter includes business acquisition, integration and restructuring costs of $5.6 million ($0.04 per share) and an investment impairment recovery of $1.0 million ($0.01 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of $26.8 million ($0.31 per share basic) for the prior year quarter.

Consolidated revenues for the year ended August 31, 2015 were $815.3 million, down 2% from $833.0 million last year. Consolidated segment profit was $277.2 million, down 4% from $289.6 million last year. Net loss attributable to shareholders for the year ended August 31, 2015 was $25.2 million ($0.29 loss per share basic and diluted) compared to net income attributable to shareholders of $150.4 million ($1.77 per share basic and $1.76 per share diluted) last year.  Net loss attributable to shareholders for the year ended August 31, 2015 includes Radio broadcast license and goodwill impairment charges of $130.0 million ($1.44 per share), intangible impairment charges of $51.8 million ($0.44 per share), and business acquisition, integration and restructuring costs of $19.0 million ($0.15 per share), offset by a gain on disposition of investment of $17.0 million ($0.17 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of $135.9 million ($1.57 per share) for the fiscal year.  Net income attributable to shareholders for the year ended August 31, 2014 includes a non-cash gain of $127.9 million ($1.51 per share) resulting from the remeasurement to fair value of the Company's 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $46.8 million ($0.51 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share) and investment impairment related charges of $2.3 million ($0.03 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of    $150.3 million ($1.77 per share) for the prior year.

Operational Results - Highlights

Television

  • Specialty advertising revenues decreased 10% in Q4 2015 and 6% for the year
  • Subscriber revenues decreased 1% in Q4 2015, but increased 2% for the year
  • Merchandising, distribution and other revenues increased 1% in Q4 2015 and 7% for the year
  • Segment profit(1) decreased 8% in Q4 2015 and 5% for the year
  • Segment profit margin(1) of 34% in Q4 2015 and 40% for the year

Radio

  • Segment revenues decreased 6% in both Q4 2015 and for the year
  • Segment profit(1) decreased 11% in Q4 2015 and 19% for the year
  • Segment profit margin(1) of 22% in Q4 2015 and 23% for the year

Corporate

  • Free cash flow(1) of $201.2 million for the year exceeding guidance of $180.0 million
  • Debt repayment of $75.0 million during the year
  • Net debt to segment profit ratio reduced to 2.8 times

 (1)

Free cash flow, segment profit and segment profit margin do not have standardized meanings prescribed by IFRS.  The Company reports on free cash flow, segment profit and segment profit margin because they are key measures used to evaluate performance.  For definitions and explanations, see discussion under the Key Performance Indicators section of the 2015 Report to Shareholders.

 

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three months and year ended August 31, 2015 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 22, 2015 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 local and international callers is 1.416.981.9080 and for North America is 1.800.697.8232.  Power Point 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.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of adjusted net income, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("GAAP") and may be different from non-GAAP measures used by other companies.  In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results.  A reconciliation of the Company's non-GAAP measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR.

Caution Concerning Forward-Looking Statements

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 relate 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 other 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.

About Corus Entertainment Inc.

Corus Entertainment Inc. is a Canadian-based integrated media and content company that creates, broadcasts, licenses and delivers content across a variety of platforms for audiences around the world. The company's portfolio of multimedia offerings encompasses specialty television and radio with additional assets in pay television, television broadcasting, children's book publishing, children's animation, animation software, and technology and media services. Corus' 30 television brands include ABC Spark, Cartoon Network (Canada), CMT (Canada), Disney Channel (Canada), HBO Canada, Movie Central, Nickelodeon (Canada), OWN: Oprah Winfrey Network (Canada), Telelatino, TELETOON, Treehouse, W Network, YTV, Historia, La chaîne Disney, Séries+ and TÉLÉTOON. Its 39 radio brands include CKNW AM 980, Rock 101, Country 105, 630 CHED, Fresh Radio, JUMP! 106.9, Q107 and 102.1 the Edge. The company also owns Nelvana, an internationally renowned animation production company, Kids Can Press, Toon Boom and Quay Media Services. A publicly traded company, Corus is listed on the Toronto Stock Exchange (CJR.B). Experience Corus on the web at www.corusent.com.

CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION











As at August 31,



As at August 31,

(unaudited - in thousands of Canadian dollars)



2015



2014

ASSETS







Current







Cash and cash equivalents



37,422



11,585

Accounts receivable



164,600



183,009

Income taxes recoverable



12,439



9,768

Prepaid expenses and other



13,855



13,032








Total current assets



228,316



217,394








Tax credits receivable



25,958



29,044

Intangibles, investments and other assets



60,589



47,630

Property, plant and equipment



139,140



143,618

Program and film rights



315,899



330,437

Film investments



36,549



63,455

Broadcast licenses



956,984



979,984

Goodwill



827,859



934,859

Deferred tax assets



40,815



38,161




2,632,109



2,784,582








LIABILITIES AND SHAREHOLDERS' EQUITY







Current







Accounts payable and accrued liabilities



210,971



170,411

Current portion of long-term debt



150,000



Provisions



8,930



5,314

Total current liabilities



369,901



175,725








Long-term debt



651,002



874,251

Other long-term liabilities



138,833



171,793

Deferred tax liabilities



252,462



252,687

Total liabilities



1,412,198



1,474,456








SHAREHOLDERS' EQUITY







Share capital



994,571



967,330

Contributed surplus



9,471



8,385

Retained earnings



191,182



313,361

Accumulated other comprehensive income



7,353



3,767

Total equity attributable to shareholders



1,202,577



1,292,843

Equity attributable to non-controlling interest



17,334



17,283

Total shareholders' equity



1,219,911



1,310,126




2,632,109



2,784,582

 

CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME












Three months ended


Year ended



August 31,


August 31,

(unaudited - in thousands of Canadian dollars except per share amounts)


2015


2014


2015


2014

Revenues


193,599


201,557


815,315


833,016

Direct cost of sales, general and administrative expenses


138,106


143,208


538,128


543,378

Depreciation and amortization


6,138


5,415


24,057


24,068

Interest expense


12,369


12,993


50,936


48,320

Broadcast license and goodwill impairment




130,000


83,000

Intangible impairment




51,786


Business acquisition, integration and restructuring costs


8,337


5,576


19,032


46,792

Gain on acquisition





(127,884)

Other (income) expense, net


2,574


(1,476)


(10,117)


5,740










Income before income taxes


26,075


35,841


11,493


209,602

Income tax expense


6,031


10,208


30,993


53,433










Net income (loss) for the period


20,044


25,633


(19,500)


156,169










Net income (loss) attributable to:









Shareholders


17,835


23,727


(25,154)


150,408

Non-controlling interest


2,209


1,906


5,654


5,761



20,044


25,633


(19,500)


156,169










Earnings (loss) per share attributable to shareholders:











Basic


$ 0.21


$ 0.28


$ (0.29)


$ 1.77



Diluted


$ 0.21


$ 0.28


$ (0.29)


$ 1.76










Net income (loss) for the period


20,044


25,633


(19,500)


156,169

Other comprehensive income (loss), net of tax










Items that may be reclassified subsequently to income:











Unrealized foreign currency translation adjustment


1,148


100


4,158


1,720



Unrealized change in fair value of available-for-sale investments


(115)


(8)


(306)


446



Unrealized change in fair value of cash flow hedges


(3)


57


(266)


(52)



Actuarial (loss) gain on employee future benefits


686


(2,188)


686


(2,188)



1,716


(2,039)


4,272


(74)










Comprehensive income (loss) for the period


21,760


23,594


(15,228)


156,095










Comprehensive income (loss) attributable to:











Shareholders


19,551


21,688


(20,882)


150,334



Non-controlling interest


2,209


1,906


5,654


5,761



21,760


23,594


(15,228)


156,095

 

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 equity
attributable
to
shareholders


Non-
controlling
interest


Total
equity
















At August 31, 2014


967,330


8,385


313,361


3,767


1,292,843


17,283


1,310,126

Comprehensive income (loss)




(25,154)


4,272


(20,882)


5,654


(15,228)

Actuarial loss transfer




686


(686)




Dividends declared




(97,711)



(97,711)


(5,603)


(103,314)

Issuance of shares under stock option plan


6,741


(1,090)




5,651



5,651

Issuance of shares under dividend reinvestment plan


20,500





20,500



20,500

Share-based compensation expense



2,176




2,176



2,176

At August 31, 2015


994,571


9,471


191,182


7,353


1,202,577


17,334


1,219,911























(unaudited - in thousands of Canadian dollars)


Share
capital


Contributed
surplus


Retained
earnings


Accumulated
other
comprehensive
income (loss)


Total equity
attributable
to
shareholders


Non-
controlling
interest


Total
equity


At August 31, 2013


937,183


7,221


256,517


1,653


1,202,574


18,259


1,220,833

Comprehensive income (loss)




150,408


(74)


150,334


5,761


156,095

Actuarial gain transfer




(2,188)


2,188




Dividends declared




(91,376)



(91,376)


(6,737)


(98,113)

Issuance of shares under stock option plan


5,465


(862)




4,603



4,603

Issuance of shares under dividend reinvestment plan


24,682





24,682



24,682

Share-based compensation expense



2,026




2,026



2,026

At August 31, 2014


967,330


8,385


313,361


3,767


1,292,843


17,283


1,310,126

 

CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS












Three months ended

August 31,


Year ended

August 31,

(unaudited - in thousands of Canadian dollars)


2015


2014


2015


2014

OPERATING ACTIVITIES









Net income (loss) for the period


20,044


25,633


(19,500)


156,169

Adjustments to reconcile net income (loss) to cash provided by operating activities










Depreciation and amortization


6,138


5,415


24,057


24,068


Broadcast license and goodwill impairment




130,000


83,000


Intangible asset impairment




51,786



Amortization of program and film rights


51,676


53,871


213,457


207,639


Amortization of film investments


9,441


6,552


27,851


19,808


Deferred income taxes


751


1,254


(2,970)


5,638


Increase in purchase price obligation





3,336


Share-based compensation expense


334


537


2,176


2,026


Imputed interest


3,567


3,713


14,620


14,698


Tangible benefit obligation





31,916


Gain on disposition of investment




(16,964)



Gain on acquisition





(127,884)


Other


1,795


502


5,360


2,402

Net change in non-cash working capital balances related to operations


29,980


19,632


18,183


22,945

Payment of program and film rights


(67,539)


(121,282)


(202,728)


(225,935)

Net additions to film investments


(252)


7,416


(34,965)


(25,349)

Cash provided by operating activities


55,935


3,243


210,363


194,477










INVESTING ACTIVITIES









Additions to property, plant and equipment


(3,976)


(4,261)


(16,671)


(11,976)

Business combinations



(687)



(497,393)

Proceeds from disposition of investment




18,490


Net cash flows for intangibles, investments and other assets


(4,274)


(4,098)


(24,829)


(11,493)

Other


(2,515)


(5,061)


(5,905)


(5,384)

Cash used in investing activities


(10,765)


(14,107)


(28,915)


(526,246)










FINANCING ACTIVITIES









Increase (decrease) in bank loans


(29,807)


142


(74,670)


333,243

Financing fees




(750)


(587)

Issuance of shares under stock option plan



3,144


5,651


4,603

Dividends paid


(20,227)


(17,158)


(76,228)


(65,474)

Dividends paid to non-controlling interest


(1,050)


(736)


(5,603)


(6,737)

Other


(512)


(1,179)


(4,011)


(2,960)

Cash provided by (used in) financing activities


(51,596)


(15,787)


(155,611)


262,088










Net change in cash and cash equivalents during the period


(6,426)


(26,651)


25,837


(69,681)

Cash and cash equivalents, beginning of the period


43,848


38,236


11,585


81,266

Cash and cash equivalents, end of the period


37,422


11,585


37,422


11,585

 


CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION










(unaudited - in thousands of Canadian dollars)


















Three months ended August 31, 2015











Television


Radio


Corporate


Consolidated

Revenues


154,338


39,261



193,599

Direct cost of sales, general and administrative expenses


101,763


30,758


5,585


138,106

Segment profit (loss)(1)


52,575


8,503


(5,585)


55,493

Depreciation and amortization








6,138

Interest expense








12,369

Business acquisition, integration and restructuring costs








8,337

Other expense (income), net








2,574

Income before income taxes








26,075










Three months ended August 31, 2014











Television


Radio


Corporate


Consolidated

Revenues


159,809


41,748



201,557

Direct cost of sales, general and administrative expenses


102,773


32,246


8,189


143,208

Segment profit (loss)(1)


57,036


9,502


(8,189)


58,349

Depreciation and amortization








5,415

Interest expense








12,993

Business acquisition, integration and restructuring costs








5,576

Other expense (income), net








(1,476)

Income before income taxes








35,841










Year ended August 31, 2015











Television


Radio


Corporate


Consolidated

Revenues


653,770


161,545



815,315

Direct cost of sales, general and administrative expenses


393,641


124,538


19,949


538,128

Segment profit (loss) (1)


260,129


37,007


(19,949)


277,187

Depreciation and amortization








24,057

Interest expense








50,936

Broadcast license and goodwill impairment








130,000

Intangible asset impairment








51,786

Business acquisition, integration and restructuring costs








19,032

Other expense (income), net








(10,117)

Income before income taxes








11,493



 (1)

Segment profit does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see
discussion under the Key Performance Indicators section of the 2015 Report to Shareholders



Year ended August 31, 2014















Television


Radio


Corporate


Consolidated

Revenues




660,424


172,592



833,016

Direct cost of sales, general and administrative expenses




387,151


127,105


29,122


543,378

Segment profit (loss) (1)




273,273


45,487


(29,122)


289,638

Depreciation and amortization










24,068

Interest expense










48,320

Broadcast license and goodwill impairment










83,000

Gain on acquisition










(127,884)

Business acquisition, integration and restructuring costs










46,792

Other expense (income), net










5,740

Income before income taxes










209,602



(1)

Segment profit does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see
discussion under the Key Performance Indicators section of the 2015 Report to Shareholders


 

Revenues by type













Three months ended


Year ended




August 31,


August 31,




2015


2014


2015


2014

Advertising



78,052


85,063


377,375


404,344

Subscriber fees



85,379


86,075


340,320


335,274

Merchandising, distribution and other



30,168


30,419


97,620


93,398




193,599


201,557


815,315


833,016

 

SOURCE Corus Entertainment Inc.

For further information: Doug Murphy, President and Chief Executive Officer, Corus Entertainment Inc., 416.479.6649; Tom Peddie, FCPA, FCA, Executive Vice President and Chief Financial Officer, Corus Entertainment Inc., 416.479.6080; Sally Tindal, Vice President, Communications, Corus Entertainment Inc., 416.479.6107

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