CORUS ENTERTAINMENT INC. 
By
-- Monthly dividend increased 6.9%
-- Consolidated revenue up 8%
-- Consolidated segment profit up 9%
-- Adjusted basic earnings per share attributable to shareholders
of $0.65 per share
-- Strong segment profit margins for Television (46%) and Radio
(33%)
-- Fiscal 2014 results include 100% interest in TELETOON Canada
Inc. and fiscal 2013 is adjusted to equity account for Corus'
50% economic interest in TELETOON Canada Inc.
TORONTO, Jan. 14, 2014 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its first quarter financial results today.
"We have again benefited from our disciplined focus on cost controls, delivering excellent margins this quarter in the face of slow economic growth and tough year-over-year comparables in our merchandising business," said John Cassaday, President and Chief Executive Officer of Corus Entertainment. "This is a pivotal year for us. With our recently closed acquisition of TELETOON, Séries+ and Historia, combined with continued strong ratings on our core TV brands and increases from several of our newer brands, we are confident that Corus will see a return to solid growth in fiscal 2014."
Financial Highlights
Three months ended
November 30,
(unaudited - in thousands of Canadian dollars
except per share amounts) 2013 2012 (3)
Revenues
Television 177,949 157,622
Radio 48,056 52,324
226,005 209,946
Segment profit (1)
Television 82,524 70,522
Radio 15,837 18,956
Corporate (6,085) (4,961)
92,276 84,517
Net income attributable to shareholders 150,891 52,159
Adjusted net income attributable to
shareholders (1) (2) 55,177 52,159
Basic earnings per share $ 1.78 $ 0.63
Adjusted basic earnings per share (1) (2) $ 0.65 $ 0.63
Diluted earnings per share $ 1.78 $ 0.62
Free cash flow (1) 49,636 39,824
(1) See definitions and discussion under the Key Performance Indicators
section of the 2014 Report to Shareholders.
(2) For the quarter ended November 30, 2013, excludes the impact of
$127.9 million ($1.51 per share) gain on remeasurement to fair
value of the Company's 50% interest in TELETOON which was held
prior to consolidation on September 1, 2013, business acquisition,
integration and restructuring costs of $21.9 million ($0.25 per
share), an increase in the purchase price obligation of $7.3
million ($0.09 per share), and investment impairment related
charges of $3.3 million ($0.04 per share).
(3) Prior period figures have been restated to reflect the changes in
accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to
Shareholders.
Consolidated Results from Operations
For fiscal 2014, the operating results of TELETOON Canada Inc. ("TELETOON"), as well as its assets and liabilities, have been fully consolidated effective September 1, 2013 as a consequence of meeting the definition of control under IFRS 10 - Consolidated Financial Statements. Accordingly, a business combination had occurred in accordance with IFRS 3 - Business Combinations and as a result, TELETOON must be accounted for by applying the acquisition method. The Company held a 50% equity ownership interest in TELETOON as at November 30, 2013 and on December 20, 2013, received Canadian Radio-television and Telecommunication Commission ("CRTC") approval to complete the acquisition of the remaining 50% interest in TELETOON that it did not already own. The acquisition closed on January 1, 2014 (refer to 2014 Report to Shareholders note 15 for further details).
For fiscal 2013, as a result of retroactive application of IFRS 11 - Joint Arrangements, the Company is no longer permitted to proportionately consolidate the operations of TELETOON up to August 31, 2013 (i.e. prior to the business combination on September 1, 2013) and is required to account for this investment using the equity method of accounting. As a consequence, the Television segment's revenue and segment profit for the first quarter of fiscal 2013 were reduced by $16.2 million and $8.2 million, respectively and instead, Corus' share of TELETOON's net income of $6.0 million was reported as Other expense (income) in the Consolidated Statements of Income and Comprehensive Income. The restatement did not change reported net income for fiscal 2013.
Consolidated revenues for the three months ended November 30, 2013 were $226.0 million, up 8% from $209.9 million last year. Consolidated segment profit was $92.3 million, up 9% from $84.5 million last year. Net income attributable to shareholders for the quarter was $150.9 million ($1.78 both basic and diluted per share), compared to $52.2 million ($0.63 basic and $0.62 diluted per share) last year. Net income attributable to shareholders for the first quarter includes a non-cash gain of $127.9 million resulting from the remeasurement to fair value of the Company's 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, business acquisition, integration and restructuring costs of $21.9 million, an increase in the purchase price obligation of $7.3 million and investment impairment related charges of $3.3 million. Removing the impact of these items results in an adjusted basic earnings per share of $0.65 in the quarter.
Operational Results - Highlights
Television
-- Fiscal 2014 reflects consolidation of 100% interest in
TELETOON; Fiscal 2013 retroactively restated to apply IFRS 11 -
Joint Arrangements, resulting in equity accounting for Corus'
50% economic interest in TELETOON
-- Segment revenues increased 13%
-- Specialty advertising revenues increased 35%
-- Subscriber revenues increased 14%
-- Merchandising, distribution and other revenues declined 33%
-- Segment profit(1) increased 17%
-- Segment profit margin of 46%
-- Movie Central finished the quarter with 974,000 subscribers
Radio
-- Segment revenues decreased 8%
-- Segment profit(1) decreased 16%
-- Segment profit margin of 33%
Other
-- Completed the acquisition of Historia, Séries+ and the
remaining 50% interest in TELETOON Canada Inc. on January 1,
2014
-- Awaiting CRTC approval on the acquisition of two Ottawa-based
radio stations, CKQB-FM and CJOT-FM
(1) See definitions and discussion under the Key Performance Indicators
section of the 2014 Report to Shareholders.
Corus Entertainment Inc. reports in Canadian dollars.
About Corus Entertainment Inc.
Corus Entertainment Inc. is a Canadian-based media and entertainment company that creates, broadcasts and licenses content across a variety of platforms for audiences around the world. The Company's portfolio of multimedia offerings encompasses specialty television and radio with additional assets in pay television, television broadcasting, children's book publishing, children's animation and animation software. Corus' brands include YTV, TELETOON, ABC Spark, W Network, OWN: Oprah Winfrey Network (Canada), HBO Canada, Historia, Séries+, as well as Nelvana, Kids Can Press, Toon Boom and 37 radio stations including CKNW AM 980, 99.3 The FOX, Country 105, 630 CHED, Fresh FM London, Q107 and 102.1 the Edge. 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 ended November 30, 2013 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 January 14, 2014 at 4:30 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 1.800.745.9476 and for local/international callers is 1.416.641.6705. PowerPoint slides for the call will be posted 15 minutes prior to the start of the call 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 STATEMENTS OF FINANCIAL POSITION
As at November As at August As at September
30, 31, 1,
(unaudited - in
thousands of
Canadian
dollars) 2013 2013 (1) 2012 (1)
ASSETS
Current
Cash and cash
equivalents 109,044 81,266 19,198
Restricted cash 6,407 -- --
Accounts
receivable 218,268 164,302 163,345
Promissory note
receivable 47,759 47,759 --
Income taxes
recoverable -- 351 9,542
Prepaid
expenses and
other 15,928 16,392 12,619
Total current
assets 397,406 310,070 204,704
Tax credits
receivable 43,290 41,564 43,865
Intangibles,
investments and
other assets 41,963 42,975 42,390
Investment in
joint venture -- 125,931 121,704
Property, plant
and equipment 147,958 151,192 163,280
Program and
film rights 297,604 232,587 229,306
Film
investments 67,869 62,274 67,847
Broadcast
licenses 799,036 515,036 520,770
Goodwill 863,026 646,045 646,045
Deferred tax
assets 38,904 39,463 28,327
2,697,056 2,167,137 2,068,238
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
Accounts
payable and
accrued
liabilities 201,258 164,443 177,367
Purchase price
obligation 261,159 -- --
Income taxes
payable 4,053 -- 1,303
Provisions 4,881 3,941 2,322
Total current
liabilities 471,351 168,384 180,992
Long-term debt 539,465 538,966 518,258
Other long-term
liabilities 130,226 93,241 87,588
Deferred tax
liabilities 201,607 145,713 145,310
Total
liabilities 1,342,649 946,304 932,148
Share capital 943,203 937,183 910,005
Contributed
surplus 7,654 7,221 7,835
Retained
earnings 385,806 256,517 198,445
Accumulated
other
comprehensive
income (loss) 2,102 1,653 (812)
Total equity
attributable to
shareholders 1,338,765 1,202,574 1,115,473
Equity
attributable to
non-controlling
interest 15,642 18,259 20,617
Total
shareholders'
equity 1,354,407 1,220,833 1,136,090
2,697,056 2,167,137 2,068,238
(1) Prior period figures have been restated to reflect the changes in
accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to
Shareholders.
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended
November 30,
(unaudited - in thousands of Canadian
dollars except per share amounts) 2013 2012 (1)
Revenues 226,005 209,946
Direct cost of sales, general and
administrative expenses 133,729 125,429
Depreciation and amortization 5,735 6,406
Interest expense 9,270 12,132
Business acquisition, integration and
restructuring costs 21,922 --
Gain on acquisition (127,884) --
Other expense (income), net 9,711 (5,529)
Income before income taxes 173,522 71,508
Income tax expense 21,180 17,492
Net income for the period 152,342 54,016
Net income attributable to:
Shareholders 150,891 52,159
Non-controlling interest 1,451 1,857
152,342 54,016
Earnings per share attributable to
shareholders:
Basic $ 1.78 $ 0.63
Diluted $ 1.78 $ 0.62
Net income for the period 152,342 54,016
Other comprehensive income (loss), net of
tax:
Items that may be reclassified
subsequently to income:
Unrealized foreign currency translation
adjustment 375 290
Unrealized change in fair value of
available-for-sale investments 74 290
449 580
Comprehensive income for the period 152,791 54,596
Comprehensive income attributable to:
Shareholders 151,340 52,739
Non-controlling interest 1,451 1,857
152,791 54,596
(1) Prior period figures have been restated to reflect changes in
accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to
Shareholders.
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited - Accumulated Total equity
in thousands other attributable Non-
of Canadian Share Contributed Retained comprehensive to controlling Total
dollars) capital surplus earnings income (loss) shareholders interest equity
At August 31,
2013 937,183 7,221 256,517 1,653 1,202,574 18,259 1,220,833
Comprehensive
income -- -- 150,891 449 151,340 1,451 152,791
Dividends
declared -- -- (21,602) -- (21,602) (4,068) (25,670)
Issuance of
shares under
stock option
plan 160 (24) -- -- 136 -- 136
Issuance of
shares under
dividend
reinvestment
plan 5,860 -- -- -- 5,860 -- 5,860
Share-based
compensation
expense -- 457 -- -- 457 -- 457
At November
30, 2013 943,203 7,654 385,806 2,102 1,338,765 15,642 1,354,407
At August 31,
2012 910,005 7,835 198,445 (812) 1,115,473 20,617 1,136,090
Comprehensive
income -- -- 52,159 580 52,739 1,857 54,596
Dividends
declared -- -- (20,050) -- (20,050) (5,013) (25,063)
Issuance of
shares under
dividend
reinvestment
plan 6,788 -- -- -- 6,788 -- 6,788
Shares
repurchased (708) -- (756) -- (1,464) -- (1,464)
Share-based
compensation
expense -- 340 -- -- 340 -- 340
At November
30, 2012 916,085 8,175 229,798 (232) 1,153,826 17,461 1,171,287
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
November 30,
(unaudited - in thousands of Canadian
dollars) 2013 2012 (1)
OPERATING ACTIVITIES
Net income for the period 152,342 54,016
Add (deduct) non-cash items:
Depreciation and amortization 5,735 6,406
Amortization of program and film rights 50,531 41,128
Amortization of film investments 3,912 6,207
Deferred income taxes 2,455 (1,294)
Increase in purchase price obligation 7,344 --
Share-based compensation expense 457 340
Imputed interest 3,036 2,525
Business acquisition, integration and
restructuring costs 20,023 --
Gain on acquisition (127,884) --
Other 1,255 (6,330)
Net change in non-cash working capital
balances related to operations (22,659) (24,478)
Payment of program and film rights (28,091) (24,625)
Net additions to film investments (10,066) (16,074)
Increase in restricted cash (6,407) --
Cash provided by operating activities 51,983 37,821
INVESTING ACTIVITIES
Additions to property, plant and equipment (1,936) (3,535)
Dividends from joint venture -- 4,890
Net cash flows for intangibles, investments
and other assets (1,907) 73
Other (67) (88)
Cash used in investing activities (3,910) 1,340
FINANCING ACTIVITIES
Increase in bank loans -- 9,985
Issuance of shares under stock option plan 136 --
Shares repurchased -- (1,464)
Dividends paid (15,698) (13,223)
Dividends paid to non-controlling interest (4,068) (4,313)
Other (665) (2,312)
Cash used in financing activities (20,295) (11,327)
Net change in cash and cash equivalents
during the period 27,778 27,834
Cash and cash equivalents, beginning of the
period 81,266 19,198
Cash and cash equivalents, end of the period 109,044 47,032
(1) Prior period figures have been restated to reflect changes in
accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to
Shareholders.
CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
(unaudited - in thousands of Canadian dollars)
Three months ended November 30, 2013
Television Radio Corporate Consolidated
Revenues 177,949 48,056 -- 226,005
Direct cost of
sales, general
and
administrative
expenses 95,425 32,219 6,085 133,729
Segment profit
(loss)(1) 82,524 15,837 (6,085) 92,276
Depreciation
and
amortization 5,735
Interest
expense 9,270
Business
acquisition,
integration
and
restructuring
costs 21,922
Gain on
acquisition (127,884)
Other expense,
net 9,711
Income before
income taxes 173,522
Three months ended November 30, 2012
Television Consolidated
(2) Radio Corporate (2)
Revenues 157,622 52,324 -- 209,946
Direct cost of
sales, general
and
administrative
expenses 87,100 33,368 4,961 125,429
Segment profit
(loss)(1) 70,522 18,956 (4,961) 84,517
Depreciation
and
amortization 6,406
Interest
expense 12,132
Other income,
net (5,529)
Income before
income taxes 71,508
Revenues by
type
Three months ended
November 30,
2013 2012(2)
Advertising 123,372 107,493
Subscriber
fees 79,115 69,412
Merchandising,
distribution
and other 23,518 33,041
226,005 209,946
(1) See definitions and discussion under the Key Performance Indicators
section of the 2014 Report to Shareholders.
(2) Prior period figures have been restated to reflect the changes in
accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to
Shareholders.
The following statements provide a reconciliation of changes related to the retroactive adoption of IFRS 11 - Joint Arrangements in the consolidated statements of financial position, income and comprehensive income, and cash flows for the periods indicated.
Consolidated Statements of Financial Position
(in thousands
of Canadian
dollars) August 31, 2013 September 1, 2012
Originally IFRS 11 Originally IFRS 11
Published Adjustment Restated Published Adjustment Restated
Assets
Cash and cash
equivalents 86,081 (4,815) 81,266 24,588 (5,390) 19,198
Accounts
receivable 176,504 (12,202) 164,302 173,421 (10,076) 163,345
Promissory note
receivable 47,759 -- 47,759 -- -- --
Income taxes
recoverable 341 10 351 9,542 -- 9,542
Prepaid
expenses and
other 16,416 (24) 16,392 12,664 (45) 12,619
Total current
assets 327,101 (17,031) 310,070 220,215 (15,511) 204,704
Tax credits
receivable 41,564 -- 41,564 43,865 -- 43,865
Intangibles,
investments and
other assets 42,975 -- 42,975 42,390 -- 42,390
Investments in
joint venture -- 125,931 125,931 -- 121,704 121,704
Property, plant
and equipment 151,398 (206) 151,192 163,563 (283) 163,280
Program and
film rights 289,181 (56,594) 232,587 271,244 (41,938) 229,306
Film
investments 62,734 (460) 62,274 67,983 (136) 67,847
Broadcast
licenses 563,771 (48,735) 515,036 569,505 (48,735) 520,770
Goodwill 674,393 (28,348) 646,045 674,393 (28,348) 646,045
Deferred tax
assets 39,463 -- 39,463 28,327 -- 28,327
2,192,580 (25,443) 2,167,137 2,081,485 (13,247) 2,068,238
Liabilities and
Shareholders'
Equity
Accounts
payable and
accrued
liabilities 172,663 (8,220) 164,443 185,991 (8,624) 177,367
Income taxes
payable -- -- -- -- 1,303 1,303
Provisions 3,941 -- 3,941 2,322 -- 2,322
Total current
liabilities 176,604 (8,220) 168,384 188,313 (7,321) 180,992
Long-term debt 538,966 -- 538,966 518,258 -- 518,258
Other long-term
liabilities 105,020 (11,779) 93,241 87,853 (265) 87,588
Deferred tax
liabilities 151,157 (5,444) 145,713 150,971 (5,661) 145,310
Total
liabilities 971,747 (25,443) 946,304 945,395 (13,247) 932,148
Share capital 937,183 -- 937,183 910,005 -- 910,005
Contributed
surplus 7,221 -- 7,221 7,835 -- 7,835
Retained
earnings 256,517 -- 256,517 198,445 -- 198,445
Accumulated
other
comprehensive
income (loss) 1,653 -- 1,653 (812) -- (812)
Total equity
attributable to
shareholders 1,202,574 -- 1,202,574 1,115,473 -- 1,115,473
Equity
attributable to
non-controlling
interest 18,259 -- 18,259 20,617 -- 20,617
Total
shareholders'
equity 1,220,833 -- 1,220,833 1,136,090 -- 1,136,090
2,192,580 (25,443) 2,167,137 2,081,485 (13,247) 2,068,238
Consolidated Statements of Income and Comprehensive Income
(in thousands of Canadian
dollars) Three months ended November 30, 2012
Originally IFRS 11
Published Adjustment Restated
Revenues 226,147 (16,201) 209,946
Direct cost of sales,
general and administrative
expenses 133,454 (8,025) 125,429
Segment profit 92,693 (8,176) 84,517
Depreciation and
amortization 6,429 (23) 6,406
Interest expense 12,132 -- 12,132
Other expense (income), net 506 (6,035) (5,529)
Income before income taxes 73,626 (2,118) 71,508
Income tax expense 19,610 (2,118) 17,492
Net income for the period 54,016 -- 54,016
Net income attributable to:
Shareholders 52,159 -- 52,159
Non-controlling interest 1,857 -- 1,857
54,016 -- 54,016
Earnings per share
attributable to
shareholders:
Basic $ 0.63 -- $ 0.63
Diluted $ 0.62 -- $ 0.62
Net income for the period 54,016 -- 54,016
Other comprehensive income
(loss), net of tax
Items that may be
reclassified subsequently
to income:
Unrealized foreign
currency translation
adjustment 290 -- 290
Unrealized change in
fair value of
available-for-sale
investments 290 -- 290
580 -- 580
Comprehensive income for the
period 54,596 -- 54,596
Comprehensive income
attributable to:
Shareholders 52,739 -- 52,739
Non-controlling interest 1,857 -- 1,857
54,596 -- 54,596
Consolidated Statements of Cash Flows
(in thousands of Canadian
dollars) Three months ended November 30, 2012
Originally IFRS 11
Published Adjustment Restated
Operating Activities
Net income for the period 54,016 -- 54,016
Add (deduct) non-cash items:
Depreciation and
amortization 6,429 (23) 6,406
Amortization of program
and film rights 45,693 (4,565) 41,128
Amortization of film
investment 6,207 -- 6,207
Deferred income taxes (1,294) -- (1,294)
Share-based compensation
expense 340 -- 340
Imputed interest 2,525 -- 2,525
Other (304) (6,026) (6,330)
Net change in non-cash
working capital balances
related to operations (29,133) 4,655 (24,478)
Payment of program and film
rights (27,626) 3,001 (24,625)
Net additions to film
investments (16,074) -- (16,074)
Cash provided by operating
activities 40,779 (2,958) 37,821
Investing Activities
Additions to property, plant
and equipment (3,542) 7 (3,535)
Dividends from joint venture -- 4,890 4,890
Net cash flows for
intangibles, investments and
other assets 73 -- 73
Other (88) -- (88)
Cash used in investing
activities (3,557) 4,897 1,340
Financing Activities
Increase in bank loans 9,985 -- 9,985
Shares repurchased (1,464) -- (1,464)
Dividends paid (13,223) -- (13,223)
Dividends paid to
non-controlling interest (4,313) -- (4,313)
Other (2,312) -- (2,312)
Cash used in financing
activities (11,327) -- (11,327)
Net change in cash and cash
equivalents during the
period 25,895 1,939 27,834
Cash and cash equivalents,
beginning of the period 24,588 (5,390) 19,198
Cash and cash equivalents,
end of period 50,483 (3,451) 47,032
SOURCE Corus Entertainment Inc.
