-- 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.