Power Corporation of Canada - Nine-Month 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, Nov. 12 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the nine-month period ended September 30, 2009 were $664 million or $1.39 per share, compared with $1,019 million or $2.16 per share in the corresponding period of 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.

For the nine-month period ended September 30, 2009, subsidiaries contributed $708 million to the Corporation's operating earnings, compared with $984 million in 2008.

Other items were a charge of $36 million or $0.08 per share in the nine-month period ended September 30, 2009, compared with earnings of $384 million or $0.84 per share in the corresponding period of 2008, and consisted mainly of the Corporation's share of non-operating results recorded by Power Financial. Included in the 2008 amount is $313 million representing the Corporation's share of the gain recorded by Great-West Lifeco on the disposal of its U.S. healthcare business.

As a result, net earnings for the period were $628 million or $1.31 per share, compared with $1,403 million or $3.00 per share in the corresponding period of 2008.

    
    THIRD-QUARTER RESULTS
    ---------------------
    

For the quarter ended September 30, 2009, operating earnings of the Corporation were $252 million or $0.53 per share, compared with $334 million or $0.71 per share in the third quarter of 2008.

For the three-month period ended September 30, 2009, subsidiaries contributed $288 million to the Corporation's operating earnings, compared with $293 million in 2008. The decrease in operating earnings in 2009 also reflects a lower level of income from investments compared with 2008.

Other items for the third quarter of 2009 were a charge of $2 million or $0.01 per share. For the corresponding period in 2008, other items were a charge of $2 million or $0.01 per share.

Net earnings for the quarter were $250 million or $0.52 per share in 2009, compared with $332 million or $0.70 per share in 2008.

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

Power Financial Corporation's operating earnings for the nine-month period ended September 30, 2009 were $1,149 million or $1.54 per share, compared with $1,540 million or $2.10 per share in the corresponding period in 2008.

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

Other items were a charge of $50 million or $0.07 per share for the nine-month period ended September 30, 2009 and consisted mainly of Power Financial's share of non-operating results recorded by Pargesa. For the nine-month period of 2008, other items were earnings of $570 million or $0.81 per share and consisted of Power Financial's share of non-operating earnings recorded by Lifeco and Pargesa.

Net earnings, including other items, for the nine-month period ended September 30, 2009 were $1,099 million or $1.47 per share, compared with $2,110 million or $2.91 per share in 2008.

For the quarter ended September 30, 2009, operating earnings of Power Financial were $455 million or $0.61 per share, compared with $459 million or $0.62 per share in the third quarter of 2008.

Other items for the third quarter of 2009 were a charge of $3 million, compared with a charge of $2 million for the same quarter in 2008.

Net earnings for the quarter were $452 million or $0.61 per share in 2009, compared with $457 million or $0.62 per share 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  December 23, 2009   January 15, 2010   To be determined in
                                                        accordance with the
                                                        articles of the
                                                        Corporation
    -------------------------------------------------------------------------
    Series A     December 23, 2009   January 15, 2010   35 cents
    -------------------------------------------------------------------------
    Series B     December 23, 2009   January 15, 2010   33.4375 cents
    -------------------------------------------------------------------------
    Series C     December 23, 2009   January 15, 2010   36.25 cents
    -------------------------------------------------------------------------
    Series D     December 23, 2009   January 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 December 31, 2009 to shareholders of record December 10, 2009.

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 readers are 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", "intends", "seeks", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances.

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, the assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of material 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 that the foregoing list of factors is not exhaustive of the factors that may affect any of the Corporation's and its subsidiaries' forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

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 (unaudited)

    
                         POWER CORPORATION OF CANADA

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                  September 30,
                                                          2009   December 31,
    (in millions of Canadian dollars)               (unaudited)         2008
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                            6,001         5,323
    -------------------------------------------------------------------------
    Investments
      Shares                                             7,439         6,240
      Bonds                                             68,173        66,801
      Mortgages and other loans                         17,643        18,034
      Loans to policyholders                             7,058         7,622
      Real estate                                        3,135         3,190
    -------------------------------------------------------------------------
                                                       103,448       101,887
    Funds held by ceding insurers                       11,258        11,447
    Investments at equity                                2,617         2,820
    Intangible assets                                    4,546         4,792
    Goodwill                                             8,743         8,712
    Future income taxes                                  1,421         1,796
    Other assets                                         6,626         6,894
    -------------------------------------------------------------------------
                                                       144,660       143,671
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                             99,033        97,895
      Other                                              4,547         4,732
    Deposits and certificates                              953           959
    Funds held under reinsurance contracts                 122           192
    Debentures and other borrowings                      6,150         5,745
    Preferred shares of subsidiaries                     1,610         1,569
    Capital trust securities and debentures                782           658
    Future income taxes                                  1,025           808
    Other liabilities                                    6,770         7,376
    -------------------------------------------------------------------------
                                                       120,992       119,934
    -------------------------------------------------------------------------

    Non-controlling interests                           13,870        13,980
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Non-participating shares                             788           791
      Participating shares                                 525           509
    Contributed surplus                                    114           103
    Retained earnings                                    8,837         8,612
    Accumulated other comprehensive income (loss)         (466)         (258)
    -------------------------------------------------------------------------
                                                         9,798         9,757
    -------------------------------------------------------------------------
                                                       144,660       143,671
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                   Three months ended      Nine months ended
                                      September 30            September 30
    -------------------------------------------------------------------------
    (unaudited) (in millions
     of Canadian dollars,
     except per share amounts)      2009        2008        2009        2008
    -------------------------------------------------------------------------
    Revenues
    Premium income                 4,336       3,912      13,709      25,225
    Net investment income
      Regular net investment
       income                      1,605       1,657       4,866       4,794
      Change in fair value
       on held-for-trading
       assets                      3,743      (2,258)      4,019      (4,793)
    -------------------------------------------------------------------------
                                   5,348        (601)      8,885           1
    Fee and media income           1,375       1,501       3,945       4,612
    -------------------------------------------------------------------------
                                  11,059       4,812      26,539      29,838
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities         8,687       2,173      19,526      21,959
    Commissions                      502         556       1,509       1,646
    Operating expenses             1,003       1,034       3,084       3,090
    Financing charges                143         113         411         369
    -------------------------------------------------------------------------
                                  10,335       3,876      24,530      27,064
    -------------------------------------------------------------------------
                                     724         936       2,009       2,774
    Share of earnings (losses)
     of investments at equity         73          61         135         171
    Other income (charges), net       (3)         (2)        (52)         18
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                       794         995       2,092       2,963
    Income taxes                     165         279         455         728
    Non-controlling interests        379         384       1,009       1,166
    -------------------------------------------------------------------------
    Earnings from continuing
     operations                      250         332         628       1,069
    Earnings from discontinued
     operations                        -           -           -         334
    -------------------------------------------------------------------------
    Net earnings                     250         332         628       1,403
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating
     share
      - Basic                       0.52        0.70        1.31        3.00
    -------------------------------------------------------------------------
      - Diluted                     0.52        0.70        1.30        2.99
    -------------------------------------------------------------------------



                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     September 30, 2009       Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,336         -         -         -     4,336
    Net investment income
      Regular net investment
       income                  1,591        31         -       (17)    1,605
      Change in fair value
       on held-for-trading
       assets                  3,734         9         -         -     3,743
    -------------------------------------------------------------------------
                               5,325        40         -       (17)    5,348
    Fee and media income         728       582         -        65     1,375
    -------------------------------------------------------------------------
                              10,389       622         -        48    11,059
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     8,687         -         -         -     8,687
    Commissions                  319       205         -       (22)      502
    Operating expenses           726       148         -       129     1,003
    Financing charges             93        30         -        20       143
    -------------------------------------------------------------------------
                               9,825       383         -       127    10,335
    -------------------------------------------------------------------------
                                 564       239         -       (79)      724
    Share of earnings
     (losses) of
     investments at equity         -         -        73         -        73
    Other income (charges),
     net                           -         -        (3)        -        (3)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                   564       239        70       (79)      794
    Income taxes                  98        72         -        (5)      165
    Non-controlling
     interests                   262       105        24       (12)      379
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  204        62        46       (62)      250
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    204        62        46       (62)      250
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three months ended                               Par-
     September 30, 2008       Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             3,912         -         -         -     3,912
    Net investment income
      Regular net investment
       income                  1,539        49         -        69     1,657
      Change in fair value
       on held-for-trading
       assets                 (2,258)        -         -         -    (2,258)
    -------------------------------------------------------------------------
                                (719)       49         -        69      (601)
    Fee and media income         778       635         -        88     1,501
    -------------------------------------------------------------------------
                               3,971       684         -       157     4,812
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     2,173         -         -         -     2,173
    Commissions                  341       230         -       (15)      556
    Operating expenses           732       155         -       147     1,034
    Financing charges             76        22         -        15       113
    -------------------------------------------------------------------------
                               3,322       407         -       147     3,876
    -------------------------------------------------------------------------
                                 649       277         -        10       936
    Share of earnings
     (losses) of
     investments at equity         -         -        64        (3)       61
    Other income (charges),
     net                           -         -        (1)       (1)       (2)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                   649       277        63         6       995
    Income taxes                 187        78         -        14       279
    Non-controlling
     interests                   259       125        21       (21)      384
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  203        74        42        13       332
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    203        74        42        13       332
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Nine months ended                                Par-
     September 30, 2009       Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income            13,709         -         -         -    13,709
    Net investment income
      Regular net investment
       income                  4,718       148         -         -     4,866
      Change in fair value
       on held-for-trading
       assets                  4,039       (20)        -         -     4,019
    -------------------------------------------------------------------------
                               8,757       128         -         -     8,885
    Fee and media income       2,074     1,641         -       230     3,945
    -------------------------------------------------------------------------
                              24,540     1,769         -       230    26,539
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities    19,526         -         -         -    19,526
    Commissions                  979       595         -       (65)    1,509
    Operating expenses         2,187       465         -       432     3,084
    Financing charges            274        81         -        56       411
    -------------------------------------------------------------------------
                              22,966     1,141         -       423    24,530
    -------------------------------------------------------------------------
                               1,574       628         -      (193)    2,009
    Share of earnings
     (losses) of
     investments at
     equity                        -         -       140        (5)      135
    Other income (charges),
     net                           -         -       (62)       10       (52)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                 1,574       628        78      (188)    2,092
    Income taxes                 298       183         -       (26)      455
    Non-controlling
     interests                   735       282        27       (35)    1,009
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  541       163        51      (127)      628
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    541       163        51      (127)      628
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Nine months ended                                Par-
     September 30, 2008       Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income            25,225         -         -         -    25,225
    Net investment income
      Regular net investment
       income                  4,539       166         -        89     4,794
      Change in fair value
       on held-for-trading
       assets                 (4,793)        -         -         -    (4,793)
    -------------------------------------------------------------------------
                                (254)      166         -        89         1
    Fee and media income       2,381     1,954         -       277     4,612
    -------------------------------------------------------------------------
                              27,352     2,120         -       366    29,838
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities    21,959         -         -         -    21,959
    Commissions                  993       700         -       (47)    1,646
    Operating expenses         2,140       485         -       465     3,090
    Financing charges            259        66         -        44       369
    -------------------------------------------------------------------------
                              25,351     1,251         -       462    27,064
    -------------------------------------------------------------------------
                               2,001       869         -       (96)    2,774
    Share of earnings
     (losses) of
     investments at
     equity                        -         -       181       (10)      171
    Other income (charges),
     net                           -         -        12         6        18
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes
     and non-controlling
     interests                 2,001       869       193      (100)    2,963
    Income taxes                 466       242         -        20       728
    Non-controlling
     interests                   793       384        65       (76)    1,166
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  742       243       128       (44)    1,069
    Contribution to
     consolidated earnings
     from discontinued
     operations                  334         -         -         -       334
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                  1,076       243       128       (44)    1,403
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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