Power Corporation of Canada - First quarter financial results and dividends

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

MONTREAL, May 13 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the three-month period ended March 31, 2010 were $219 million or $0.46 per share, compared with $189 million or $0.39 per share in the corresponding period of 2009.

The increase in operating earnings reflects a higher contribution from Power Financial Corporation, partly offset by a lower level of income from investments.

For the three-month period ended March 31, 2010, subsidiaries contributed $239 million to the Corporation's operating earnings, compared with $147 million in the corresponding period of 2009.

For the first quarter of 2010, other items were a positive contribution of $5 million or $0.01 per share, compared with a charge of $38 million or $0.08 per share in the first quarter of 2009, and consisted of the Corporation's share of non-operating results recorded by Power Financial.

Net earnings, including other items, for the three-month period ended March 31, 2010, were $224 million or $0.47 per share, compared with $151 million or $0.31 per share in the first quarter of 2009.

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

Power Financial Corporation's operating earnings for the three-month period ended March 31, 2010 were $381 million or $0.51 per share, compared with $252 million or $0.32 per share in the corresponding period in 2009.

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

For the first quarter of 2010, other items were a positive contribution of $8 million or $0.01 per share, compared with a net charge of $57 million or $0.08 per share in the first quarter of 2009, and consisted of Power Financial's share of non-operating earnings recorded by Pargesa.

Net earnings, including other items, for the three-month period ended March 31, 2010 were $389 million or $0.52 per share, compared with $195 million or $0.24 per share in the first quarter of 2009.

    
    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        June 23, 2010   July 15, 2010   To be determined in
                                                       accordance with the
                                                       articles of the
                                                       Corporation
    -------------------------------------------------------------------------
    Series A           June 23, 2010   July 15, 2010   35 cents
    -------------------------------------------------------------------------
    Series B           June 23, 2010   July 15, 2010   33.4375 cents
    -------------------------------------------------------------------------
    Series C           June 23, 2010   July 15, 2010   36.25 cents
    -------------------------------------------------------------------------
    Series D           June 23, 2010   July 15, 2010   31.25 cents
    -------------------------------------------------------------------------


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

The Board of Directors also declared a dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable June 30, 2010 to shareholders of record June 9, 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.

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

    -------------------------------------------------------------------------
                                                      March 31,
                                                          2010   December 31,
    (in millions of Canadian dollars)               (unaudited)         2009
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                            5,725         5,385
    -------------------------------------------------------------------------
    Investments
      Shares                                             7,490         7,463
      Bonds                                             67,328        67,942
      Mortgages and other loans                         16,950        17,356
      Loans to policyholders                             6,824         6,957
      Real estate                                        2,973         3,101
    -------------------------------------------------------------------------
                                                       101,565       102,819
    Funds held by ceding insurers                       10,130        10,839
    Investments at equity                                2,446         2,677
    Intangible assets                                    4,433         4,502
    Goodwill                                             8,766         8,760
    Future income taxes                                  1,179         1,281
    Other assets                                         6,940         6,744
    -------------------------------------------------------------------------
                                                       141,184       143,007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                             96,759        98,059
      Other                                              4,582         4,592
    Deposits and certificates                              902           907
    Funds held under reinsurance contracts                 319           186
    Debentures and other borrowings                      6,454         6,375
    Preferred shares of subsidiaries                       300           503
    Capital trust securities and debentures                538           540
    Future income taxes                                  1,198         1,136
    Other liabilities                                    6,185         6,402
    -------------------------------------------------------------------------
                                                       117,237       118,700
    -------------------------------------------------------------------------

    Non-controlling interests                           14,450        14,478
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Non-participating shares                             786           787
      Participating shares                                 536           526
    Contributed surplus                                    121           117
    Retained earnings                                    8,823         8,742
    Accumulated other comprehensive income (loss)         (769)         (343)
    -------------------------------------------------------------------------
                                                         9,497         9,829
    -------------------------------------------------------------------------
                                                       141,184       143,007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
    Three months ended March 31
    (unaudited) (in millions of Canadian dollars,
     except per share amounts)                            2010          2009
    -------------------------------------------------------------------------
    Revenues
    Premium income                                       4,610         4,709
    Net investment income
      Regular net investment income                      1,458         1,607
      Change in fair value on held-for-trading assets    1,502        (1,974)
    -------------------------------------------------------------------------
                                                         2,960          (367)
    Fee and media income                                 1,425         1,269
    -------------------------------------------------------------------------
                                                         8,995         5,611
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits, dividends and experience
     refunds, and change in actuarial liabilities        6,571         3,366
    Commissions                                            553           479
    Operating expenses                                   1,019         1,047
    Financing charges                                      113           112
    -------------------------------------------------------------------------
                                                         8,256         5,004
    -------------------------------------------------------------------------
                                                           739           607
    Share of earnings (losses) of investments at
     equity                                                 (3)          (21)
    Other income (charges), net                              8           (57)
    -------------------------------------------------------------------------
    Earnings before income taxes and non-controlling
     interests                                             744           529
    Income taxes                                           154           118
    Non-controlling interests                              366           260
    -------------------------------------------------------------------------
    Net earnings                                           224           151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating share
      - Basic                                             0.47          0.31
    -------------------------------------------------------------------------
      - Diluted                                           0.47          0.31
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     March 31, 2010           Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,610         -         -         -     4,610
    Net investment income
      Regular net investment
       income                  1,422        38         -        (2)    1,458
      Change in fair value
       on held-for-trading
       assets                  1,502         -         -         -     1,502
    -------------------------------------------------------------------------
                               2,924        38         -        (2)    2,960
    Fee and media income         736       611         -        78     1,425
    -------------------------------------------------------------------------
                               8,270       649         -        76     8,995
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     6,571         -         -         -     6,571
    Commissions                  363       215         -       (25)      553
    Operating expenses           718       161         -       140     1,019
    Financing charges             69        27         -        17       113
    -------------------------------------------------------------------------
                               7,721       403         -       132     8,256
    -------------------------------------------------------------------------
                                 549       246         -       (56)      739
    Share of earnings
     (losses) of
     investments at equity         -         -        (3)        -        (3)
    Other income (charges),
     net                           -         -         8         -         8
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests       549       246         5       (56)      744
    Income taxes                  86        65         -         3       154
    Non-controlling
     interests                   262       114         2       (12)      366
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    201        67         3       (47)      224
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three months ended                               Par-
     March 31, 2009           Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,709         -         -         -     4,709
    Net investment income
      Regular net investment
       income                  1,511        62         -        34     1,607
      Change in fair value
       on held-for-trading
       assets                 (1,967)       (9)        -         2    (1,974)
    -------------------------------------------------------------------------
                                (456)       53         -        36      (367)
    Fee and media income         680       510         -        79     1,269
    -------------------------------------------------------------------------
                               4,933       563         -       115     5,611
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     3,366         -         -         -     3,366
    Commissions                  307       192         -       (20)      479
    Operating expenses           740       159         -       148     1,047
    Financing charges             75        27         -        10       112
    -------------------------------------------------------------------------
                               4,488       378         -       138     5,004
    -------------------------------------------------------------------------
                                 445       185         -       (23)      607
    Share of earnings
     (losses) of
     investments at equity         -         -       (20)       (1)      (21)
    Other income (charges),
     net                           -         -       (57)        -       (57)
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests       445       185       (77)      (24)      529
    Income taxes                  78        52         -       (12)      118
    Non-controlling
     interests                   218        88       (26)      (20)      260
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    149        45       (51)        8       151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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