Corus Entertainment announces fiscal 2011 fourth quarter and year-end results
- Net income from continuing operations of $141.3 million ($1.73 per share basic) for the fiscal year, up 18% from $119.7 million ($1.48 per share basic) last year
- Free cash flow from continuing operations of $133.3 million
- Consolidated revenues up 7% in the fourth quarter and 8% for the fiscal year
- Segment profit up 14% for the quarter and 12% for the fiscal year
- Television segment profit up 14% for the fiscal year
- Radio achieves segment profit margin of 30% for the fiscal year
TORONTO, Oct. 26, 2011 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.
"Corus had an excellent year highlighted by double digit segment profit growth and a 45% dividend increase," said John Cassaday, President and CEO of Corus Entertainment. "Corus achieved its segment profit guidance and exceeded free cash flow guidance as a result of tight cost controls in Radio coupled with exceptional revenue and segment profit growth in Television. Our annual segment profit guidance included the Quebec Radio business for a full year, so if not for the divestiture of Quebec, we would have been at the high end of our guidance range or exceeded it."
Financial Highlights | ||||
(unaudited) | Three months ended | Year ended | ||
(in thousands of Canadian dollars except per share amounts) | August 31, | August 31, | ||
2011 | 2010 | 2011 | 2010 | |
Revenues | ||||
Radio | 47,626 | 47,581 | 195,657 | 192,433 |
Television | 152,567 | 139,855 | 629,556 | 575,097 |
200,193 | 187,436 | 825,213 | 767,530 | |
Segment profit | ||||
Radio | 14,899 | 13,201 | 59,085 | 57,431 |
Television | 52,880 | 46,955 | 258,532 | 226,679 |
Corporate | (9,248) | (8,639) | (32,196) | (28,141) |
58,531 | 51,517 | 285,421 | 255,969 | |
Net income from continuing operations | 29,210 | 4,164 | 141,274 | 119,662 |
Basic earnings per share | ||||
From continuing operations | $ 0.35 | $ 0.05 | $ 1.73 | $ 1.48 |
From discontinued operations | $ — | $ 0.03 | $ 0.06 | $ 0.09 |
$ 0.35 | $ 0.08 | $ 1.79 | $ 1.57 |
Consolidated Results from Continuing Operations
Consolidated revenues for three months ended August 31, 2011 were $200.2 million, up 7% from $187.4 million last year. Consolidated segment profit was $58.5 million, up 14% from $51.5 million last year. Net income for the quarter was $29.2 million ($0.35 basic and diluted), compared to $4.2 million ($0.05 basic and diluted) last year.
Consolidated revenues for fiscal year ended August 31, 2011 were $825.2 million, up 8% from $767.5 million last year. Consolidated segment profit was $285.4 million, up 12% from $256.0 million last year. Net income for the fiscal year was $141.3 million ($1.73 basic and $1.72 diluted), compared to a net income of $119.7 million ($1.48 basic and $1.47 diluted) last year. Net income for the prior year includes a debt refinancing cost of $14.3 million, a $14.0 million reversal of a disputed regulatory fee accrual and a $14.3 million recovery due to income tax rate changes. Removing the impact of these items results in adjusted basic earnings per share of $1.31 in the prior year. Free cash flow from continuing operations for fiscal 2011 was $133.3 million, exceeding our guidance of $100.0 million.
Operational Results - highlights
Television
- Segment revenues increased 9% both in the fourth quarter and for the fiscal year
- Segment profit increased 13% in the fourth quarter and 14% for the fiscal year
- Specialty advertising revenues decreased 6% in the fourth quarter, but increased 11% for the fiscal year
- Subscriber revenues increased 3% in the fourth quarter and 6% for the fiscal year
- Movie Central finished the fiscal year with 984,000 subscribers, up 2% from the prior year
Radio
- Segment revenues for the fourth quarter remained consistent with the prior year, but increased 2% for the fiscal year
- Segment profit increased 13% in the fourth quarter and 3% for the fiscal year
- Achieved segment profit margin target of 30% for the fiscal year
Corus Entertainment Inc. reports in Canadian dollars.
About Corus Entertainment Inc.
Corus Entertainment Inc. is a Canadian-based media and entertainment company. Corus is a market leader in specialty television and radio with additional assets in pay television, television broadcasting, children's book publishing and animation. The Company's multimedia entertainment brands include YTV, Treehouse, Nickelodeon (Canada), W Network, OWN: Oprah Winfrey Network (Canada), CosmoTV, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press and radio stations including CKNW AM 980, 99.3 The FOX, Country 105, 630 CHED, Q107, and 102.1 the Edge. Corus creates engaging branded entertainment experiences for its audiences across multiple platforms. A publicly traded company, Corus is listed on the Toronto Stock Exchange (CJR.B). Experience Corus on the web at www.corusent.com.
The unaudited consolidated financial statements and accompanying notes for the three months and year ended August 31, 2011 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 26, 2011 at 3:00 p.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for North America is 1.800.945.5981 and for local/international callers is 416.981.9021. PowerPoint slides for the call will be posted at 2:45 p.m. ET on October 26, 2011 and can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.
This press release contains forward-looking information and should be read subject to the following cautionary language:
To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements related to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our Annual Information Form. Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.
CORUS ENTERTAINMENT INC. | ||
CONSOLIDATED BALANCE SHEETS | ||
(unaudited) | As at August 31, | As at August 31, |
(in thousands of Canadian dollars) | 2011 | 2010 |
ASSETS | ||
Current | ||
Cash and cash equivalents | 55,922 | 7,969 |
Accounts receivable | 178,531 | 161,645 |
Income taxes recoverable | 603 | 1,445 |
Prepaid expenses and other | 13,497 | 17,040 |
Program and film rights | 160,590 | 159,526 |
Future tax asset | 7,615 | 6,129 |
Current assets of discontinued operations | — | 15,287 |
Total current assets | 416,758 | 369,041 |
Tax credits receivable | 43,108 | 39,597 |
Intangibles, investments and other assets | 39,980 | 22,595 |
Property, plant and equipment | 169,600 | 147,905 |
Program and film rights | 99,543 | 88,484 |
Film investments | 102,540 | 100,454 |
Broadcast licenses | 541,248 | 541,248 |
Goodwill | 671,827 | 671,827 |
Long-term assets of discontinued operations | — | 78,104 |
2,084,604 | 2,059,255 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current | ||
Accounts payable and accrued liabilities | 212,607 | 193,342 |
Current liabilities of discontinued operations | — | 10,080 |
Total current liabilities | 212,607 | 203,422 |
Long-term debt | 600,796 | 691,891 |
Other long-term liabilities | 97,314 | 88,003 |
Future tax liability | 96,013 | 90,641 |
Long-term liabilities of discontinued operations | — | 11,295 |
Total liabilities | 1,006,730 | 1,085,252 |
Non-controlling interest | 19,200 | 18,055 |
SHAREHOLDERS' EQUITY | ||
Share capital | 882,679 | 856,655 |
Contributed surplus | 9,361 | 11,780 |
Retained earnings | 179,207 | 98,669 |
Accumulated other comprehensive loss | (12,573) | (11,156) |
Total shareholders' equity | 1,058,674 | 955,948 |
2,084,604 | 2,059,255 |
CORUS ENTERTAINMENT INC. | ||||
CONSOLIDATED STATEMENTS OF INCOME | ||||
Three months ended | Year ended | |||
(unaudited) | August 31, | August 31, | ||
(in thousands of Canadian dollars except per share amounts) | 2011 | 2010 | 2011 | 2010 |
Revenues | 200,193 | 187,436 | 825,213 | 767,530 |
Direct cost of sales, general and | ||||
administrative expenses | 141,662 | 135,919 | 539,792 | 511,561 |
Depreciation | 6,558 | 6,757 | 24,922 | 20,122 |
Interest expense | 13,793 | 13,987 | 57,276 | 44,222 |
Disputed regulatory fees | — | — | — | (14,015) |
Debt refinancing | — | — | — | 14,256 |
Restructuring | 1,352 | 12,924 | 3,694 | 12,924 |
Other expense (income), net | (1,849) | 11,689 | (4,060) | 19,477 |
Income from continuing operations before income taxes | ||||
and non-controlling interest | 38,677 | 6,160 | 203,589 | 158,983 |
Income tax expense | 9,214 | 580 | 55,106 | 33,437 |
Non-controlling interest | 253 | 1,416 | 7,209 | 5,884 |
Net income for the period from continuing operations | 29,210 | 4,164 | 141,274 | 119,662 |
Net income for the period from discontinued operations | — | 2,648 | 5,023 | 7,072 |
Net income for the period | 29,210 | 6,812 | 146,297 | 126,734 |
Basic earnings per share | ||||
From continuing operations | $ 0.35 | $ 0.05 | $ 1.73 | $ 1.48 |
From discontinued operations | $ — | $ 0.03 | $ 0.06 | $ 0.09 |
$ 0.35 | $ 0.08 | $ 1.79 | $ 1.57 | |
Diluted earnings per share | ||||
From continuing operations | $ 0.35 | $ 0.05 | $ 1.72 | $ 1.47 |
From discontinued operations | $ — | $ 0.03 | $ 0.06 | $ 0.09 |
$ 0.35 | $ 0.08 | $ 1.78 | $ 1.56 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Three months ended | Year ended | |||
(unaudited) | August 31, | August 31, | ||
(in thousands of Canadian dollars) | 2011 | 2010 | 2011 | 2010 |
Net income for the period | 29,210 | 6,812 | 146,297 | 126,734 |
Other comprehensive income (loss), net of tax | ||||
Unrealized foreign currency translation adjustment | 306 | 516 | (1,551) | (24) |
Unrealized change in fair value of available-for-sale | ||||
investments, net of tax | 135 | (89) | 134 | 200 |
Unrealized change in fair value of cash flow hedges, | ||||
net of tax | — | — | — | 3,431 |
Recognition of change in fair value of cash flow | ||||
hedge in net income, net of tax | — | — | — | 9,244 |
441 | 427 | (1,417) | 12,851 | |
Comprehensive income for the period | 29,651 | 7,239 | 144,880 | 139,585 |
CORUS ENTERTAINMENT INC. | ||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||
Three months ended | Year ended | |||
(unaudited) | August 31, | August 31, | ||
(in thousands of Canadian dollars) | 2011 | 2010 | 2011 | 2010 |
Share capital | ||||
Balance, beginning of period | 879,058 | 853,833 | 856,655 | 840,602 |
Issuance of shares under stock option plan | 278 | 1,517 | 13,232 | 12,027 |
Shares repurchased | (1,976) | — | (1,976) | — |
Issuance of shares under dividend reinvestment plan | 5,319 | 1,275 | 14,657 | 3,731 |
Other | — | 30 | 111 | 295 |
Balance, end of period | 882,679 | 856,655 | 882,679 | 856,655 |
Contributed surplus | ||||
Balance, beginning of period | 9,142 | 11,901 | 11,780 | 17,303 |
Stock-based compensation | 292 | 235 | 1,102 | 907 |
Settlement and modification of long-term incentive plan | — | — | — | (4,659) |
Exercise of stock options | (73) | (356) | (3,521) | (1,771) |
Balance, end of period | 9,361 | 11,780 | 9,361 | 11,780 |
Retained earnings | ||||
Balance, beginning of period | 169,663 | 104,027 | 98,669 | 20,380 |
Net income for the period | 29,210 | 6,812 | 146,297 | 126,734 |
Dividends declared | (17,937) | (12,170) | (64,030) | (48,445) |
Shares repurchased excess | (1,729) | — | (1,729) | — |
Balance, end of period | 179,207 | 98,669 | 179,207 | 98,669 |
Accumulated other comprehensive loss | ||||
Balance, beginning of period | (13,014) | (11,583) | (11,156) | (24,007) |
Other comprehensive income (loss), net of tax | 441 | 427 | (1,417) | 12,851 |
Balance, end of period | (12,573) | (11,156) | (12,573) | (11,156) |
CORUS ENTERTAINMENT INC. | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Three months ended | Year ended | |||
(unaudited) | August 31, | August 31, | ||
(in thousands of Canadian dollars) | 2011 | 2010 | 2011 | 2010 |
OPERATING ACTIVITIES | ||||
Net income for the period | 29,210 | 6,812 | 146,297 | 126,734 |
Earnings from discontinued operations | — | (2,648) | (5,023) | (7,072) |
Add (deduct) non-cash items: | ||||
Depreciation | 6,558 | 6,757 | 24,922 | 20,122 |
Amortization of program rights | 44,277 | 41,976 | 173,805 | 165,950 |
Amortization of film investments | 11,679 | 12,330 | 42,620 | 38,456 |
Future income taxes | 521 | (598) | 3,886 | (15,227) |
Non-controlling interest | 253 | 1,416 | 7,209 | 5,884 |
Stock option expense | 292 | 235 | 1,102 | 907 |
Imputed interest | 2,859 | 2,709 | 10,770 | 8,635 |
Debt refinancing | — | — | — | 14,256 |
Gain on property disposal | (3,422) | — | (3,422) | — |
Other | (457) | 2,393 | (2,860) | 1,945 |
Net change in non-cash working capital | ||||
balances related to operations | 12,205 | (7,044) | 14,766 | 11,644 |
Payment of program and film rights | (62,511) | (41,765) | (177,325) | (167,310) |
Net additions to film investments | (5,419) | (17,208) | (61,670) | (64,051) |
Cash provided by operating activities from | ||||
continuing operations | 36,045 | 5,365 | 175,077 | 140,873 |
Cash provided by (used in) operating activities from | ||||
discontinued operations | — | 5,490 | (13,262) | 3,193 |
Cash provided by operating activities | 36,045 | 10,855 | 161,815 | 144,066 |
INVESTING ACTIVITIES | ||||
Additions to property, plant and equipment | (13,389) | (30,487) | (45,991) | (81,839) |
Business combinations | — | (4,000) | — | (40,000) |
Proceeds from property disposal | 7,971 | — | 7,971 | — |
Net cash flows for intangibles, investments and other assets | 1,601 | 461 | (2,456) | 2,745 |
Increase (decrease) in public benefits associated with acquisitions | (341) | 259 | (1,273) | (820) |
Cash used in investing activities from continuing operations | (4,158) | (33,767) | (41,749) | (119,914) |
Cash provided by (used in) investing activities from | ||||
discontinued operations | — | (495) | 74,996 | (1,210) |
Cash provided by (used in) investing activities | (4,158) | (34,262) | 33,247 | (121,124) |
FINANCING ACTIVITIES | ||||
Increase (decrease) in bank loans | (19,616) | 9,638 | (92,838) | (444,938) |
Issuance of senior unsecured guaranteed notes | — | — | — | 500,000 |
Financing and swap termination fees | (32) | — | (750) | (30,997) |
Issuance of shares under stock option plan | 205 | 1,161 | 9,711 | 10,256 |
Shares repurchased | (3,705) | — | (3,705) | — |
Dividend paid | (10,956) | (10,880) | (45,528) | (44,605) |
Dividend paid to non-controlling interest | — | (960) | (5,107) | (10,220) |
Capital lease payments and other | (2,286) | (2,212) | (8,892) | (5,391) |
Cash used in financing activities from continuing operations | (36,390) | (3,253) | (147,109) | (25,895) |
Net change during the period in cash and cash | ||||
equivalents from continuing operations | (4,503) | (31,655) | (13,781) | (4,936) |
Net change during the period in cash and cash | ||||
equivalents from discontinued operations | — | 4,995 | 61,734 | 1,983 |
Net change in cash and cash equivalents during the period | (4,503) | (26,660) | 47,953 | (2,953) |
Cash and cash equivalents, beginning of period | 60,425 | 34,629 | 7,969 | 10,922 |
Cash and cash equivalents, end of period | 55,922 | 7,969 | 55,922 | 7,969 |
CORUS ENTERTAINMENT INC. | |||||
BUSINESS SEGMENT INFORMATION | |||||
(unaudited) | |||||
(in thousands of Canadian dollars) | |||||
Three months ended August 31, 2011 | |||||
Radio | Television | Corporate | Consolidated | ||
Revenues | 47,626 | 152,567 | — | 200,193 | |
Direct cost of sales, general | |||||
and administrative expenses | 32,727 | 99,687 | 9,248 | 141,662 | |
Segment profit (loss) | 14,899 | 52,880 | (9,248) | 58,531 | |
Depreciation | 757 | 758 | 5,043 | 6,558 | |
Interest expense | 154 | 6,729 | 6,910 | 13,793 | |
Restructuring | 1,226 | 496 | (370) | 1,352 | |
Other expense (income), net | 243 | (2,937) | 845 | (1,849) | |
Income (loss) before income taxes and | |||||
non-controlling interest | 12,519 | 47,834 | (21,676) | 38,677 | |
Three months ended August 31, 2010 | |||||
Radio | Television | Corporate | Consolidated | ||
Revenues | 47,581 | 139,855 | — | 187,436 | |
Direct cost of sales, general | |||||
and administrative expenses | 34,380 | 92,900 | 8,639 | 135,919 | |
Segment profit (loss) | 13,201 | 46,955 | (8,639) | 51,517 | |
Depreciation | 980 | 4,404 | 1,373 | 6,757 | |
Interest expense (income) | 739 | (14) | 13,262 | 13,987 | |
Restructuring | 5,506 | 5,055 | 2,363 | 12,924 | |
Other expense (income), net | 6,481 | 1,585 | 3,623 | 11,689 | |
Income (loss) before income taxes and | |||||
non-controlling interest | (505) | 35,925 | (29,260) | 6,160 | |
Year ended August 31, 2011 | |||||
Radio | Television | Corporate | Consolidated | ||
Revenues | 195,657 | 629,556 | — | 825,213 | |
Direct cost of sales, general | |||||
and administrative expenses | 136,572 | 371,024 | 32,196 | 539,792 | |
Segment profit (loss) | 59,085 | 258,532 | (32,196) | 285,421 | |
Depreciation | 3,070 | 4,013 | 17,839 | 24,922 | |
Interest expense | 2,552 | 22,788 | 31,936 | 57,276 | |
Restructuring | 1,976 | 505 | 1,213 | 3,694 | |
Other expense (income), net | (766) | (4,759) | 1,465 | (4,060) | |
Income (loss) before income taxes and | |||||
non-controlling interest | 52,253 | 235,985 | (84,649) | 203,589 | |
Year ended August 31, 2010 | |||||
Radio | Television | Corporate | Consolidated | ||
Revenues | 192,433 | 575,097 | — | 767,530 | |
Direct cost of sales, general | |||||
and administrative expenses | 135,002 | 348,418 | 28,141 | 511,561 | |
Segment profit (loss) | 57,431 | 226,679 | (28,141) | 255,969 | |
Depreciation | 4,059 | 10,000 | 6,063 | 20,122 | |
Interest expense (income) | 3,555 | (677) | 41,344 | 44,222 | |
Disputed regulatory fees | (6,722) | (7,293) | — | (14,015) | |
Debt refinancing | — | — | 14,256 | 14,256 | |
Restructuring | 5,506 | 5,055 | 2,363 | 12,924 | |
Other expense (income), net | 6,993 | 2,148 | 10,336 | 19,477 | |
Income (loss) before income taxes and | |||||
non-controlling interest | 44,040 | 217,446 | (102,503) | 158,983 |
Revenues by segment | ||||
Three months ended | Year ended | |||
August 31, | August 31, | |||
2011 | 2010 | 2011 | 2010 | |
Radio | ||||
West | 22,324 | 22,251 | 91,625 | 93,470 |
Ontario | 25,302 | 25,330 | 104,032 | 98,963 |
47,626 | 47,581 | 195,657 | 192,433 | |
Television | ||||
Kids | 70,146 | 58,497 | 278,958 | 240,568 |
Specialty and Pay | 82,421 | 81,358 | 350,598 | 334,529 |
152,567 | 139,855 | 629,556 | 575,097 | |
Segment profit | ||||
Three months ended | Year ended | |||
August 31, | August 31, | |||
2011 | 2010 | 2011 | 2010 | |
Radio | ||||
West | 7,217 | 6,333 | 28,743 | 30,295 |
Ontario | 7,682 | 6,868 | 30,342 | 27,136 |
14,899 | 13,201 | 59,085 | 57,431 | |
Television | ||||
Kids | 23,032 | 18,327 | 115,355 | 97,126 |
Specialty and Pay | 29,848 | 28,628 | 143,177 | 129,553 |
52,880 | 46,955 | 258,532 | 226,679 | |
Revenues by type | ||||
Three months ended | Year ended | |||
August 31, | August 31, | |||
2011 | 2010 | 2011 | 2010 | |
Advertising | 83,052 | 85,385 | 389,925 | 373,607 |
Subscriber fees | 74,351 | 71,946 | 299,888 | 283,171 |
Merchandise, distribution and other | 42,790 | 30,105 | 135,400 | 110,752 |
200,193 | 187,436 | 825,213 | 767,530 |
SOURCE Corus Entertainment Inc.
Share this article