October 25, 2012 at 08:30 AM EDT
Corus Entertainment Announces Fiscal 2012 Fourth Quarter and Year-End Results
  • Specialty advertising revenues up 7% in the quarter
  • Consolidated segment profit margin up 290 basis points in the quarter, with Television and Radio margins of 40% and 30%, respectively, for the fiscal year
  • Free cash flow(1) up 15% in fiscal 2012 to $155.1 million
  • Adjusted net income attributable to shareholders(1)(3) up 9% in the quarter and 10% for the fiscal year
  • Adjusted basic earnings per share(1)(3) up 6% in the quarter and 8% for the fiscal year
  • Segment profit up 8% for the quarter and 1% for the fiscal year

TORONTO, Oct. 25, 2012 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.

"Corus finished the year with strong gains in specialty advertising revenues and segment profit for the fourth quarter.  We are particularly pleased with our excellent segment profit margins and record free cash flow," said John Cassaday, President and CEO of Corus Entertainment.  "Looking ahead, we are confident that disciplined cost controls, coupled with our portfolio of assets, position us well for continued growth in fiscal 2013."

Financial Highlights (from continuing operations)
(unaudited) Three months ended Year ended
(in thousands of Canadian dollars except per share amounts) August 31,August 31,
2012 2011 2012 2011
Revenues
Television 147,874 152,567 650,949 629,556
Radio (2)47,750 47,626 191,327 195,657
195,624 200,193 842,276 825,213
Segment profit (1)
Television 54,490 50,940 262,138 261,124
Radio (2)14,995 14,899 57,427 59,085
Corporate (8,623) (9,360) (29,586) (34,323)
60,862 56,479 289,979 285,886
Net income attributable to shareholders23,341 27,670 148,681 141,511
Adjusted net income attributable to shareholders (1) (3)30,175 27,670 155,515 141,511
Basic earnings per share $ 0.28 $ 0.34 $ 1.79 $ 1.73
Adjusted basic earnings per share(1)(3)$ 0.36 $ 0.34 $ 1.87 $ 1.73
Diluted earnings per share $ 0.28 $ 0.33 $ 1.78 $ 1.72
Free Cash Flow(1)24,962 31,887 155,147 134,861

(1) See definitions and discussion under Key Performance Indicators in MD&A.
(2) Reflects the disposition of the Quebec Radio operations, which occurred on February 1, 2011, as discontinued operations in all periods presented.
(3) Excludes the impact of a $6.8 million ($0.08 per share) non-cash tax expense related to an increase in the Ontario long-term tax rate which was substantively enacted in the fourth quarter 2012.

Consolidated Results from Continuing Operations

Consolidated revenues for the three months ended August 31, 2012 were $195.6 million, down 2% from $200.2 million last year.  Consolidated segment profit for the quarter was $60.9 million, up 8% from $56.5 million last year.  Net income attributable to shareholders for the quarter was $23.3 million ($0.28 per share basic and diluted), down 16% compared with $27.7 million ($0.34 per share basic and $0.33 per share diluted) last year.  On June 20, 2012, the Ontario government passed legislation cancelling planned future corporate tax rate reductions.  Accordingly, the Company remeasured certain deferred tax assets and liabilities resulting in a non-cash tax expense of $6.8 million ($0.08 per share) in the fourth quarter 2012.  Excluding the impact of this item, adjusted basic earnings per share was $0.36 in the fourth quarter 2012, up 6% from the prior year.

Consolidated revenues for the year ended August 31, 2012 were $842.3 million, up 2% from $825.2 million last year.  Consolidated segment profit for the fiscal year was $290.0 million, up 1% from $285.9 million last year.  Net income attributable to shareholders for the fiscal year was $148.7 million ($1.79 per share basic and $1.78 per share diluted), up 5% compared to $141.5 million ($1.73 per share basic and $1.72 per share diluted) last year.  Excluding the impact of the income tax rate changes that occurred in the fourth quarter 2012, adjusted basic earnings per share was $1.87 in the current year, up 8% from the prior year.  Free cash flow(1) from continuing operations for fiscal 2012 was $155.1 million, up 15% from $134.9 million last year.

Operational Results - Highlights

Television

  • Segment revenues decreased 3% in Q4 2012, but increased 3% for the fiscal year
  • Segment profit(1) increased 7% in Q4 2012 and was flat for the fiscal year
  • Specialty advertising revenues increased 7% in Q4 2012 and were flat for the fiscal year
  • Subscriber revenues decreased 1%, both in Q4 2012 and for the fiscal year
  • Merchandising, distribution and other revenues decreased 16% in Q4 2012, but increased 21% for the fiscal year
  • Movie Central finished the fiscal year with 976,000 subscribers

Radio(2)

  • Segment revenues were flat in Q4 2012 and decreased 2% for the fiscal year
  • Segment profit(1) increased 1% in Q4 2012 and decreased 3% for the fiscal year

(1) See definitions and discussion under Key Performance indicators in MD&A.
(2) Radio results reflect the disposition of the Quebec Radio operations, which occurred on February 1, 2011, as discontinued operations in all periods presented.

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, children's animation and animation software.  The company's multimedia entertainment brands include YTV, Treehouse, Nickelodeon (Canada), ABC Spark, W Network, OWN: Oprah Winfrey Network (Canada), CosmoTV, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press, Toon Boom 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, 2012 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 25, 2012 at 1:00 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 1.800.926.5230 and for local/international callers is 416.981.9039.  PowerPoint slides for the call will be posted 15 minutes prior the start of the call and can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Corus' annual investor day conference is scheduled for November 29, 2012 at 9:00 a.m. ET and will be webcast from 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 STATEMENTS OF FINANCIAL POSITION
(unaudited) As at August 31, As at August 31, As at September 1,
(in thousands of Canadian dollars) 2012 2011 2010
ASSETS
Current
Cash and cash equivalents 24,588 55,922 7,969
Accounts receivable 173,421 178,531 175,134
Income taxes recoverable 9,542 603 1,781
Prepaid expenses and other 12,664 13,497 18,008
Total current assets220,215 248,553 202,892
Tax credits receivable 43,865 43,108 39,597
Intangibles, investments and other assets 42,390 39,980 22,699
Property, plant and equipment 163,563 169,600 161,585
Program and film rights 271,244 256,970 244,963
Film investments 67,983 83,133 80,611
Broadcast licenses 569,505 569,505 610,423
Goodwill 674,393 671,827 695,029
Deferred tax assets 28,327 30,915 32,130
2,081,485 2,113,591 2,089,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 185,991 206,773 192,839
Provisions 2,322 5,267 13,048
Total current liabilities188,313 212,040 205,887
Long-term debt 518,258 600,796 691,891
Other long-term liabilities 87,853 104,574 95,840
Deferred tax liabilities 150,971 141,361 146,044
Total liabilities945,395 1,058,771 1,139,662
SHAREHOLDERS' EQUITY
Share capital 910,005 882,679 856,655
Contributed surplus 7,835 10,299 12,706
Retained earnings 198,445 143,717 62,509
Accumulated other comprehensive income (loss) (812) (1,075) 342
Total equity attributable to shareholders 1,115,473 1,035,620 932,212
Equity attributable to non-controlling interest 20,617 19,200 18,055
Total shareholders' equity1,136,090 1,054,820 950,267
2,081,485 2,113,591 2,089,929

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended Year ended
(unaudited) August 31,August 31,
(in thousands of Canadian dollars except per share amounts) 2012 2011 2012 2011
Revenues 195,624 200,193 842,276 825,213
Direct cost of sales, general and administrative expenses 134,762 143,714 552,297 539,327
Depreciation 6,408 6,558 25,639 24,922
Interest expense 12,242 13,793 52,269 57,276
Restructuring —  1,352 2,325 3,694
Other expense (income), net 1,056 (1,849) (3,646) (4,060)
Income before income taxes 41,156 36,625 213,392 204,054
Income tax expense 16,171 8,702 57,241 55,334
Net income for the period from continuing operations24,985 27,923 156,151 148,720
Net income for the period from discontinued operations 5,023
Net income for the period24,985 27,923 156,151 153,743
Net income attributable to:
Shareholders from continuing operations 23,341 27,670 148,681 141,511
Shareholders from discontinued operations 5,023
Non-controlling interest 1,644 253 7,470 7,209
24,985 27,923 156,151 153,743
Basic earnings per share:
From continuing operations $ 0.28 $ 0.34 $ 1.79 $ 1.73
From discontinued operations $ 0.06
$ 0.28 $ 0.34 $ 1.79 $ 1.79
Diluted earnings per share:
From continuing operations $ 0.28 $ 0.33 $ 1.78 $ 1.72
From discontinued operations $ 0.06
$ 0.28 $ 0.33 $ 1.78 $ 1.78
Net income for the period24,985 27,923  156,151 153,743
Other comprehensive income (loss), net of tax
Unrealized foreign currency translation adjustment (1,485) 306  486 (1,551)
Unrealized change in fair value of available-for-sale investments 31 135 (223) 134
Actuarial (loss) gain on employee future benefits (2,950)(2,950) 433
(4,404) 441 (2,687) (984)
Comprehensive income for the period20,581 28,364 153,464 152,759
Comprehensive income attributable to:
Shareholders 18,937 28,111 145,994 145,550
Non-controlling interest 1,644 253 7,470 7,209
20,581 28,364 153,464 152,759

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)
(in thousands of Canadian dollars)
Share
capital
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
attributable to
shareholders
Non-
controlling
interest
Total
equity
At August 31, 2011882,67910,299143,717(1,075)1,035,62019,2001,054,820
Comprehensive income —  148,681 (2,687) 145,994 7,470 153,464
Actuarial loss transfer —  (2,950) 2,950 —  — 
Dividends declared —  (78,143) —  (78,143) (6,053) (84,196)
Issuance of shares under stock option plan 13,668 (3,622) —  —  10,046 —  10,046
Issuance of shares under dividend reinvestment plan 25,982 —  —  25,982 —  25,982
Shares repurchased (12,435) (12,860) —  (25,295) —  (25,295)
Share-based compensation expense —  1,158 —  —  1,158 —  1,158
Repayment of executive stock purchase loans 111 —  —  —  111 —  111
At August 31, 2012910,0057,835198,445(812)1,115,47320,6171,136,090
Share
capital
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss) 
Total
attributable to
shareholders
Non-
controlling
interest
Total
equity
At September 1, 2010856,65512,70662,509342932,21218,055950,267
Comprehensive income (loss) —  146,534 (984) 145,550 7,209 152,759
Actuarial gain transfer —  433 (433) —  —  — 
Dividends declared —  (64,030) —  (64,030) (5,107) (69,137)
Issuance of shares under stock option plan 13,232 (3,521) —  —  9,711 —  9,711
Issuance of shares under dividend reinvestment plan 14,657 —  —  14,657 —  14,657
Shares repurchased (1,976) (1,729) —  (3,705) —  (3,705)
Share-based compensation expense —  1,114 —  —  1,114 —  1,114
Repayment of executive stock purchase loans 111 111 111
Other —  —  (957) (957)
At August 31, 2011882,67910,299143,717(1,075)1,035,62019,2001,054,820

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Year ended
(unaudited) August 31,August 31,
(in thousands of Canadian dollars) 2012 2011 2012 2011
OPERATING ACTIVITIES
Net income for the period 24,985 27,923 156,151 153,743
Deduct earnings from discontinued operations —  —  —  (5,023)
Add (deduct) non-cash items:
Depreciation 6,408 6,558 25,639 24,922
Amortization of program rights 46,543 43,958 186,348 173,521
Amortization of film investments 10,052 13,938 32,001 40,316
Deferred income taxes 8,186 521 12,921 4,110
Share-based compensation expense 268 292 1,158 1,114
Imputed interest 2,444 2,859 11,348 10,770
Gain from asset disposition —  (3,422) —  (3,422)
Gain on acquisition —  —  (2,383) — 
Other 738 (457) (2,052) (2,860)
Net change in non-cash working capital balances related to operations (3,939) 11,805 (13,199) 16,881
Payment of program and film rights (65,422) (62,511) (196,689) (177,325)
Net additions to film investments (569) (5,419) (40,933) (61,670)
Cash provided by operating activities from continuing operations 29,694 36,045 170,310 175,077
Cash used in operating activities from discontinued operations —  —  —  (13,262)
Cash provided by operating activities29,694 36,045 170,310 161,815
INVESTING ACTIVITIES
Additions to property, plant and equipment (5,658) (13,389) (19,243) (45,991)
Business combination —  —  (4,104) — 
Proceeds from asset disposition —  7,971 —  7,971
Net cash flows for intangibles, investments and other assets (7,431) 1,601 (11,290) (2,456)
Other (75) (341) (635) (1,273)
Cash used in investing activities from continuing operations (13,164) (4,158) (35,272) (41,749)
Cash provided by investing activities from discontinued operations —  —  —  74,996
Cash provided by (used in) investing activities(13,164) (4,158) (35,272) 33,247
FINANCING ACTIVITIES
Decrease in bank loans (9,973) (19,616) (84,750) (92,838)
Issuance of shares under stock option plan —  205 10,046 9,711
Shares repurchased (21,407) (3,705) (25,295) (3,705)
Dividends paid (13,258) (10,956) (50,783) (45,528)
Dividends paid to non-controlling interest (1,630) —  (6,053) (5,107)
Other (2,310) (2,318) (9,537) (9,642)
Cash used in financing activities from continuing operations(48,578) (36,390) (166,372) (147,109)
Net change during the period in cash and cash equivalents from continuing operations (32,048) (4,503) (31,334) (13,781)
Net change during the period in cash and cash equivalents from discontinued operations —  —  —  61,734
Net change in cash and cash equivalents during the period (32,048) (4,503) (31,334) 47,953
Cash and cash equivalents, beginning of period 56,636 60,425 55,922 7,969
Cash and cash equivalents, end of period24,588 55,922 24,588 55,922

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited)
(in thousands of Canadian dollars)
Three months ended August 31, 2012
RadioTelevisionCorporateConsolidated
Revenues 47,750147,874— 195,624
Direct cost of sales, general and administrative expenses 32,75593,3848,623134,762
Segment profit (loss)(1)14,99554,490(8,623)60,862
Depreciation 8228164,7706,408
Interest expense 1605,7866,29612,242
Other expense (income), net 1994593981,056
Income (loss) before income taxes 13,81447,429(20,087)41,156
Three months ended August 31, 2011
RadioTelevisionCorporateConsolidated
Revenues 47,626 152,567 —  200,193
Direct cost of sales, general and administrative expenses 32,727 101,627 9,360 143,714
Segment profit (loss)(1) 14,899 50,940 (9,360) 56,479
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 12,519 45,894 (21,788) 36,625
Year ended August 31, 2012
RadioTelevisionCorporateConsolidated
Revenues 191,327650,949— 842,276
Direct cost of sales, general and administrative expenses 133,900388,81129,586552,297
Segment profit (loss)(1)57,427262,138(29,586)289,979
Depreciation 3,2492,98419,40625,639
Interest expense — 25,13627,13352,269
Restructuring 1,0531,1511212,325
Other expense (income), net 157(1,402)(2,401)(3,646)
Income (loss) before income taxes 52,968234,269(73,845)213,392
Year ended August 31, 2011
RadioTelevisionCorporateConsolidated
Revenues 195,657 629,556 —  825,213
Direct cost of sales, general and administrative expenses 136,572 368,432 34,323 539,327
Segment profit (loss)(1) 59,085 261,124 (34,323) 285,886
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 52,253 238,577 (86,776) 204,054

(1) See definitions and discussion under Key Performance Indicators in MD&A.

Revenues by type
Three months ended Year ended
August 31,August 31,
2012 2011 2012 2011
Advertising 85,650 83,052 386,045 389,925
Subscriber fees 73,577 74,351 297,927 299,888
Merchandising, distribution and other 36,397 42,790 158,304 135,400
195,624 200,193 842,276 825,213

SOURCE Corus Entertainment Inc.

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