Power Corporation of Canada - Financial results for 2009 and dividends

Readers are referred to the sections entitled "Forward-looking Statements" and "Non-GAAP Financial Measures" at the end of this release.

MONTREAL, March 11 /CNW Telbec/ - Power Corporation of Canada reported today operating earnings of $867 million or $1.81 per participating share for the year ended December 31, 2009, compared with $1,271 million or $2.70 per share in 2008.

The decrease in operating earnings reflects a lower contribution from Power Financial Corporation and also reflects a lower level of income from investments compared with 2008.

Other items, not included in operating earnings, were a net charge of $185 million or $0.41 per share in 2009. Other items in the period in 2009 include the Corporation's share of other items recorded by Power Financial, discussed below, as well as a non-cash impairment charge of $110 million related to the Corporation's investment in CITIC Pacific.

In 2008, other items, not included in operating earnings, were a net charge of $403 million or $0.89 per share. Other items in the period in 2008 include the Corporation's share of other items recorded by Power Financial, as well as other items recorded by the Corporation and by Power Technology Investment Corporation, a subsidiary.

As a result, net earnings were $682 million or $1.40 per share in 2009, compared with $868 million or $1.81 per share in 2008.

    
    FOURTH-QUARTER RESULTS
    ----------------------
    

The Corporation's operating earnings for the three-month period ended December 31, 2009 were $203 million or $0.42 per share, compared with $252 million or $0.53 per share in the same period in 2008.

Other items in the fourth quarter of 2009 were a net charge of $149 million or $0.32 per share, consisting mainly of the non-cash impairment charge on CITIC Pacific, compared with a net charge of $787 million or $1.73 per share in the same period in 2008, as described below.

As a result, net earnings for the fourth quarter of 2009 were $54 million or $0.10 per share, compared with a net loss of $535 million or $1.20 per share for the same period in 2008.

    
    RESULTS OF POWER FINANCIAL CORPORATION
    --------------------------------------
    

Power Financial Corporation's operating earnings for the year ended December 31, 2009 were $1,533 million or $2.05 per share, compared with $1,974 million or $2.69 per share in 2008.

The decrease in operating earnings reflects primarily the decrease in the contribution from the Power Financial's subsidiaries and Parjointco.

Other items, not included in operating earnings, were a net charge of $94 million or $0.13 per share in 2009, compared with a net charge of $637 million or $0.90 in 2008. Other items in 2009 essentially consisted of the share of non-recurring amounts recorded by IGM and Pargesa. The main components of other items in 2009 included a non-cash impairment charge of $66 million after tax on available for sale equity securities related to the market environment, a non-cash income tax benefit of $18 million resulting from decreases in Ontario corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets arising from the acquisition of Mackenzie Financial Corporation in 2001, and a premium of $14 million paid on the redemption of the Series A preferred shares on December 31, 2009 recorded by IGM. Also, other items in 2009 included the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola recorded by Pargesa in the first quarter of 2009.

The main components of other items in 2008 included the write-down of intangible assets and goodwill relating to the acquisition of Putnam in 2007 for an amount of $983 million; the gain from the sale of health business at Great-West Life & Annuity for an amount of $472 million, and the write-down of Pargesa's investments in Lafarge and Pernod Ricard for an amount of $328 million for 2008.

As a result, net earnings were $1,439 million or $1.92 per share in 2009, compared with $1,337 million or $1.79 per share in 2008.

Power Financial's operating earnings for the three-month period ended December 31, 2009 were $384 million or $0.51 per share, compared with $434 million or $0.59 per share in the same period in 2008.

Other items in the fourth quarter of 2009 were a charge of $44 million or $0.06 per share, compared with a charge of $1,207 million or $1.71 per share in the same period in 2008. The 2009 charge consists mainly of non-operating items of IGM. The 2008 charge is mainly composed of the write-down of intangible assets and goodwill relating to the acquisition of Putnam and the write-down of certain of Pargesa's investments, as discussed above.

As a result, net earnings for the fourth quarter of 2009 were $340 million or $0.45 per share, compared with a net loss of $773 million or $1.12 per share for the same period in 2008.

    
    DIVIDENDS ON PREFERRED SHARES
    -----------------------------
    

The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:

    
    -------------------------------------------------------------------------
    Type of
    Shares       Record Date        Payment Date       Amount
    -------------------------------------------------------------------------
    1986 Series  March 25, 2010     April 15, 2010     To be determined in
                                                       accordance with the
                                                       articles of the
                                                       Corporation
    -------------------------------------------------------------------------
    Series A     March 25, 2010     April 15, 2010     35 cents
    -------------------------------------------------------------------------
    Series B     March 25, 2010     April 15, 2010     33.4375 cents
    -------------------------------------------------------------------------
    Series C     March 25, 2010     April 15, 2010     36.25 cents
    -------------------------------------------------------------------------
    Series D     March 25, 2010     April 15, 2010     31.25 cents
    -------------------------------------------------------------------------


    DIVIDENDS ON PARTICIPATING SHARES
    ---------------------------------
    

The Board of Directors also declared a quarterly dividend of 29 cents on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable March 31, 2010 to shareholders of record March 23, 2010.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred and subordinate voting shares are eligible dividends.

    
    Forward-looking Statements
    --------------------------
    

Certain statements in this press release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's and its subsidiaries' current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates) the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable base on information currently available to management, they may prove to be incorrect.

Other than as specifically required by law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Corporation's business is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada, available at www.sedar.com.

    
    Non-GAAP Financial Measures
    ---------------------------
    

In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:

    
    - operating earnings; and
    - other items, which include the after-tax impact of any item that
      management considers to be of a non recurring nature or that could make
      the period-over-period comparison of results from operations less
      meaningful, and also include the Corporation's share of any such item
      presented in a comparable item manner by its subsidiaries.
    

Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.

Following the announcement in 2007 of GWL&A's sale of its health care business, which closed on April 1, 2008, the results from Lifeco's U.S. health care business are presented in the consolidated financial statements as "discontinued operations", in accordance with GAAP. Power Corporation's share of these results is included in operating earnings, while the Corporation's share of the gain realized on the sale is included in other items.

Operating earnings and operating earnings per share are non-GAAP financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.

Attachments: Financial Information

    
                         POWER CORPORATION OF CANADA

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    As at December 31
    (in millions of Canadian dollars)                         2009      2008
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                                5,385     5,323
    -------------------------------------------------------------------------
    Investments
      Shares                                                 7,463     6,098
      Bonds                                                 67,942    66,943
      Mortgages and other loans                             17,356    18,034
      Loans to policyholders                                 6,957     7,622
      Real estate                                            3,101     3,190
    -------------------------------------------------------------------------
                                                           102,819   101,887
    Funds held by ceding insurers                           10,839    11,447
    Investments at equity                                    2,677     2,820
    Intangible assets                                        4,502     4,794
    Goodwill                                                 8,760     8,712
    Future income taxes                                      1,281     1,796
    Other assets                                             6,744     6,921
    -------------------------------------------------------------------------
                                                           143,007   143,700
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                                 98,059    97,895
      Other                                                  4,592     4,732
    Deposits and certificates                                  907       959
    Funds held under reinsurance contracts                     186       192
    Debentures and other borrowings                          6,375     5,745
    Preferred shares of subsidiaries                           660     1,569
    Capital trust securities and debentures                    540       658
    Future income taxes                                      1,136       808
    Other liabilities                                        6,402     7,405
    -------------------------------------------------------------------------
                                                           118,857   119,963
    -------------------------------------------------------------------------

    Non-controlling interests                               14,321    13,980
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Non-participating shares                                 787       791
      Participating shares                                     526       509
    Contributed surplus                                        117       103
    Retained earnings                                        8,742     8,612
    Accumulated other comprehensive income (loss)             (343)     (258)
    -------------------------------------------------------------------------
                                                             9,829     9,757
    -------------------------------------------------------------------------
                                                           143,007   143,700
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For additional information, refer to the 2009 Audited Consolidated
    Financial Statements.


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                       Three months ended    For the years
                                           December 31            ended
                                           (unaudited)         December 31
    -------------------------------------------------------------------------
    (in millions of Canadian dollars,
     except per share amounts)            2009      2008      2009      2008
    -------------------------------------------------------------------------
    Revenues
    Premium income                       4,324     4,782    18,033    30,007
    Net investment income
      Regular net investment income      1,388     1,472     6,254     6,262
      Change in fair value on
       held-for-trading assets            (566)     (359)    3,453    (5,148)
    -------------------------------------------------------------------------
                                           822     1,113     9,707     1,114
    Fee and media income                 1,467     1,366     5,412     5,978
    -------------------------------------------------------------------------
                                         6,613     7,261    33,152    37,099
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities             4,283     4,815    23,809    26,774
    Commissions                            579       526     2,088     2,172
    Operating expenses                   1,069     1,057     4,153     4,147
    Financing charges                      112        76       523       445
    -------------------------------------------------------------------------
                                         6,043     6,474    30,573    33,538
    -------------------------------------------------------------------------
                                           570       787     2,579     3,561
    Share of earnings (losses)
     of investments at equity                1        (2)      136       169
    Other income (charges), net           (128)   (2,401)     (180)   (2,383)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                             443    (1,616)    2,535     1,347
    Income taxes                            76      (690)      531        38
    Non-controlling interests              313      (391)    1,322       775
    -------------------------------------------------------------------------
    Earnings from continuing
     operations                             54      (535)      682       534
    Earnings from discontinued
     operations                              -         -         -       334
    -------------------------------------------------------------------------
    Net earnings                            54      (535)      682       868
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating share
      - Basic                             0.10     (1.20)     1.40      1.81
    -------------------------------------------------------------------------
      - Diluted                           0.10     (1.20)     1.40      1.80
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    For the
     three months ended
     December 31, 2009
    (unaudited)
    (in millions of                                  Par-
     Canadian dollars)        Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------

    Revenues
    Premium income             4,324         -         -         -     4,324
    Net investment income
      Regular net
       investment income       1,461       (59)        -       (14)    1,388
      Change in fair value
       on held-for-trading
       assets                   (549)       (7)        -       (10)     (566)
    -------------------------------------------------------------------------
                                 912       (66)        -       (24)      822
    Fee and media income         765       609         -        93     1,467
    -------------------------------------------------------------------------
                               6,001       543         -        69     6,613
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     4,283         -         -         -     4,283
    Commissions                  391       213         -       (25)      579
    Operating expenses           759       149         -       161     1,069
    Financing charges             62        29         -        21       112
    -------------------------------------------------------------------------
                               5,495       391         -       157     6,043
    -------------------------------------------------------------------------
                                 506       152         -       (88)      570
    Share of earnings of
     investments at equity         -         -         1         -         1
    Other income (charges),
     net                           -         -        (8)     (120)     (128)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                   506       152        (7)     (208)      443
    Income taxes                  47        38         -        (9)       76
    Non-controlling
     interests                   259        71        (2)      (15)      313
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  200        43        (5)     (184)       54
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    200        43        (5)     (184)       54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    For the
     three months ended
     December 31, 2008
    (unaudited)
    (in millions of                                  Par-
     Canadian dollars)        Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,782         -         -         -     4,782
    Net investment income
      Regular net
       investment income       1,423        36         -        13     1,472
      Change in fair value
       on held-for-trading
       assets                   (368)        -         -         9      (359)
    -------------------------------------------------------------------------
                               1,055        36         -        22     1,113
    Fee and media income         743       549         -        74     1,366
    -------------------------------------------------------------------------
                               6,580       585         -        96     7,261
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     4,815         -         -         -     4,815
    Commissions                  360       206         -       (40)      526
    Operating expenses           746       163         -       148     1,057
    Financing charges             37        25         -        14        76
    -------------------------------------------------------------------------
                               5,958       394         -       122     6,474
    -------------------------------------------------------------------------
                                 622       191         -       (26)      787
    Share of earnings of
     investments at equity         -         -         2        (4)       (2)
    Other income (charges),
     net                      (2,248)        -      (376)      223    (2,401)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                (1,626)      191      (374)      193    (1,616)
    Income taxes                (744)       51         -         3      (690)
    Non-controlling
     interests                  (459)      110      (126)       84      (391)
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                 (423)       30      (248)      106      (535)
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                   (423)       30      (248)      106      (535)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    For the year ended
     December 31, 2009
    (in millions of                                  Par-
     Canadian dollars)        Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income            18,033         -         -         -    18,033
    Net investment income
      Regular net
       investment income       6,179        89         -       (14)    6,254
      Change in fair value
       on held-for-trading
       assets                  3,490       (27)        -       (10)    3,453
    -------------------------------------------------------------------------
                               9,669        62         -       (24)    9,707
    Fee and media income       2,839     2,250         -       323     5,412
    -------------------------------------------------------------------------
                              30,541     2,312         -       299    33,152
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities    23,809         -         -         -    23,809
    Commissions                1,370       808         -       (90)    2,088
    Operating expenses         2,946       614         -       593     4,153
    Financing charges            336       110         -        77       523
    -------------------------------------------------------------------------
                              28,461     1,532         -       580    30,573
    -------------------------------------------------------------------------
                               2,080       780         -      (281)    2,579
    Share of earnings of
     investments at equity         -         -       141        (5)      136
    Other income (charges),
     net                           -         -       (70)     (110)     (180)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                 2,080       780        71      (396)    2,535
    Income taxes                 345       221         -       (35)      531
    Non-controlling
     interests                   994       353        25       (50)    1,322
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  741       206        46       (311)    682
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -          -       -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    741       206        46       (311)    682
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    For the year ended
     December 31, 2008
    (in millions of                                  Par-
     Canadian dollars)        Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income            30,007         -         -         -    30,007
    Net investment income
      Regular net
       investment income       5,962       202         -        98     6,262
      Change in fair
       value on
       held-for-trading
       assets                 (5,161)        -         -        13    (5,148)
    -------------------------------------------------------------------------
                                 801       202         -       111     1,114
    Fee and media income       3,124     2,503         -       351     5,978
    -------------------------------------------------------------------------
                              33,932     2,705         -       462    37,099
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities    26,774         -         -         -    26,774
    Commissions                1,353       906         -       (87)    2,172
    Operating expenses         2,886       648         -       613     4,147
    Financing charges            296        91         -        58       445
    -------------------------------------------------------------------------
                              31,309     1,645         -       584    33,538
    -------------------------------------------------------------------------
                               2,623     1,060         -      (122)    3,561
    Share of earnings of
     investments at equity         -         -       183       (14)      169
    Other income (charges),
     net                      (2,248)        -      (364)      229    (2,383)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                   375     1,060      (181)       93     1,347
    Income taxes                (278)      293         -        23        38
    Non-controlling interests    334       494       (61)        8       775
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  319       273      (120)       62       534
    Contribution to
     consolidated earnings
     from discontinued
     operations                  334         -         -         -       334
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    653       273      (120)       62       868
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Power Corporation of Canada

For further information: For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, (514) 286-7400


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