Corus Entertainment Announces Fiscal 2013 Fourth Quarter and Year-End Results
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Corus Entertainment Announces Fiscal 2013 Fourth Quarter and Year-End Results

(PRNewswire) — Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial results today.

"Fiscal 2013 was a challenging year, but we made progress on a number of fronts, creating the foundation for strong growth moving forward," said John Cassaday, President and Chief Executive Officer of Corus Entertainment. "We were pleased to see an increase in specialty advertising revenue across all of our core Television networks, ongoing ratings momentum, and continued gains in our Pay television business. These gains were offset by a decline in the fourth quarter in our Radio division and higher corporate costs. Our outlook for 2014 is positive and the fundamentals are in place for a strong year ahead. The recent reorganization of our leadership team will support our growth objectives and we are excited about the significant value that our pending acquisitions will bring to the business."

Financial Highlights              
  Three months ended   Year ended
  August 31,   August 31,
(unaudited - in thousands of Canadian dollars except per share amounts) 2013   2012   2013   2012
Revenues              
  Television 149,622   147,874   619,850   650,949
  Radio 44,012   47,750   183,691   191,327
  193,634   195,624   803,541   842,276
               
Segment profit (1)              
  Television 56,469   54,490   248,779   262,138
  Radio 11,664   14,995   55,148   57,427
  Corporate (13,688)   (8,623)    (33,915)   (29,586)
  54,445   60,862   270,012   289,979
               
Net income attributable to shareholders 11,879   23,341   159,895   148,681
Adjusted net income attributable to shareholders (1) (2) 25,816   31,519    138,573   158,556
               
               
Basic earnings per share $ 0.14   $ 0.28   $ 1.91   $ 1.79
Adjusted basic earnings per share (1) (2) $ 0.31   $ 0.38   $ 1.65   $ 1.90
Diluted earnings per share $ 0.14   $ 0.28   $ 1.90   $ 1.78
               
Free cash flow (1) 25,704   24,962   154,136   155,147
               
(1) See definitions and discussion under Key Performance Indicators in MD&A.
(2) For the year ended August 31, 2013, excludes the impact of $25.0 million ($0.22 per share) debt refinancing costs,
gain on disposition of the Company's non-controlling interest in Food Network Canada of $55.4 million ($0.66 per share),
broadcast license impairment of $5.7 million ($0.05 per share), business acquisition, integration and restructuring costs
of $7.3 million ($0.06 per share) and investment impairment charges of $7.1 million ($0.07 per share).

Consolidated Results from Operations

Consolidated revenues for the three months ended August 31, 2013 were $193.6 million, down 1% from $195.6 million last year.  Consolidated segment profit was $54.4 million, down 11% from $60.9 million last year as Corporate costs were up $5.1 million due primarily to achievement of performance incentives and higher share-based compensation.  Net income attributable to shareholders for the quarter was $11.9 million ($0.14 per share basic and diluted), down 49% compared to $23.3 million ($0.28 per share basic and diluted) last year.  Net income attributable to shareholders for the fourth quarter includes an impairment charge related to broadcast license impairments of $5.7 million, business acquisition, integration and restructuring costs of $5.2 million and investment impairment charges of $7.1 million.  Removing the impact of these items results in adjusted basic earnings per share attributable to shareholders of $0.31 per share in the quarter.  Net income attributable to shareholders for the fourth quarter of the prior year includes a charge due to an income tax rate change of $6.8 million and business acquisition, integration and restructuring costs of $1.8 million.  Removing the impact of these items results in an adjusted basic earnings per share attributable to shareholders of $0.38 per share in the prior quarter.

Consolidated revenues for the year ended August 31, 2013 were $803.5 million, down 5% from $842.3 million last year.  Consolidated segment profit was $270.0 million, down 7% from $290.0 million last year.  Net income attributable to shareholders for the year was $159.9 million ($1.91 per share basic and $1.90 per share diluted), up 8% compared to $148.7 million ($1.79 per share basic and $1.78 per share diluted) last year.  Net income attributable to shareholders for the current fiscal year includes a charge for debt refinancing of $25.0 million, the gain related to the sale of the Company's non-controlling interest in Food Network Canada of $55.4 million, broadcast license impairments of $5.7 million, business acquisition, integration and restructuring costs of $7.3 million and investment impairment charges of $7.1 million.  Removing the impact of these items results in an adjusted net income attributable to shareholders of $138.6 million ($1.65 basic earnings per share attributable to shareholders) in the current year.  Net income attributable to shareholders for the prior fiscal year includes a charge due to an income tax rate change of $6.8 million and business acquisition, integration and restructuring costs of $4.2 million.  Removing the impact of these items results in an adjusted basic earnings per share attributable to shareholders of $1.90 per share in the prior year.  Free cash flow for the year ended August 31, 2013 was $154.1 million compared to $155.1 million in the prior year.

Operational Results - Highlights

Television

Radio

Other

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

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), Cosmopolitan TV, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press, Toon Boom and 37 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, 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 October 24, 2013 at 12:30 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 Canada is 1.866.229.4144 and for international callers is 1.847.585.4422.  Please note that the audience passcode for both dial-in numbers is 7565 565.  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 August 31,              
(unaudited - in thousands of Canadian dollars)     2013       2012
ASSETS              
Current              
Cash and cash equivalents     86,081       24,588
Accounts receivable     176,504       173,421
Promissory note receivable     47,759       — 
Income taxes recoverable     341       9,542
Prepaid expenses and other     16,416       12,664
               
Total current assets     327,101       220,215
               
Tax credits receivable     41,564       43,865
Intangibles, investments and other assets     42,975       42,390
Property, plant and equipment     151,398       163,563
Program and film rights     289,181       271,244
Film investments     62,734       67,983
Broadcast licenses     563,771       569,505
Goodwill     674,393       674,393
Deferred tax assets     39,463       28,327
      2,192,580       2,081,485
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current              
Accounts payable and accrued liabilities     172,663       185,991
Provisions     3,941       2,322
Total current liabilities     176,604       188,313
               
Long-term debt     538,966       518,258
Other long-term liabilities     105,020       87,853
Deferred tax liabilities     151,157       150,971
Total liabilities     971,747       945,395
               
SHAREHOLDERS' EQUITY              
Share capital     937,183       910,005
Contributed surplus     7,221       7,835
Retained earnings     256,517       198,445
Accumulated other comprehensive income (loss)     1,653       (812)
Total equity attributable to shareholders     1,202,574       1,115,473
Equity attributable to non-controlling interest     18,259       20,617
Total shareholders' equity     1,220,833       1,136,090
      2,192,580       2,081,485

                       
                       
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                       
    Three months ended     Year ended
    August 31,     August 31,
(unaudited - in thousands of Canadian dollars except per share amounts)   2013     2012     2013     2012
Revenues   193,634     195,624     803,541     842,276
Direct cost of sales, general and administrative expenses   139,189     134,762     533,529     552,297
Depreciation and amortization   6,031     6,408     26,903     25,639
Interest expense   10,473     12,242     46,332     52,269
Broadcast license and goodwill impairment   5,734     —      5,734     — 
Debt refinancing   —      —      25,033     — 
Business acquisition, integration and restructuring costs   5,196     1,841     7,343     4,166
Gain on sale of associated company   —      —      (55,394)     — 
Other expense (income), net   8,391     (785)     8,553     (5,487)
                       
Income before income taxes   18,620     41,156     205,508     213,392
Income tax expense   5,279     16,171     39,759     57,241
                       
Net income for the period   13,341     24,985     165,749     156,151
                       
Net income attributable to:                      
Shareholders   11,879     23,341     159,895     148,681
Non-controlling interest   1,462     1,644     5,854     7,470
    13,341     24,985     165,749     156,151
                       
Earnings per share attributable to shareholders:                      
    Basic   $ 0.14     $ 0.28     $ 1.91     $ 1.79
    Diluted   $ 0.14     $ 0.28     $ 1.90     $ 1.78
                       
Net income for the period   13,341     24,985     165,749     156,151
Other comprehensive income (loss), net of tax                      
  Items that may be reclassified subsequently to income:                      
    Unrealized foreign currency translation adjustment   648     (1,485)     2,333     486
    Unrealized change in fair value of available-for-sale investments   174     31     132     (223)
    Actuarial gain (loss) on employee future benefits   616     (2,950)     616     (2,950)
    1,438     (4,404)     3,081     (2,687)
                       
Comprehensive income for the period   14,779     20,581     168,830     153,464
                       
Comprehensive income attributable to:                      
    Shareholders   13,317     18,937     162,976     145,994
    Non-controlling interest   1,462     1,644     5,854     7,470
    14,779     20,581     168,830     153,464

                             
                             
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 equity
attributable
to
shareholders 		  Non-
controlling
interest 		  Total equity
                             
At August 31, 2012   910,005   7,835   198,445   (812)   1,115,473   20,617   1,136,090
Comprehensive income   —    —    159,895   3,081   162,976   5,854   168,830
Actuarial gain transfer   —    —    616   (616)   —    —    — 
Dividends declared   —    —    (84,452)   —    (84,452)   (6,331)   (90,783)
Issuance of shares under stock option plan   1,155   (2,200)   —    —    (1,045)   —    (1,045)
Issuance of shares under dividend reinvestment plan   26,731   —    —    —    26,731   —    26,731
Shares repurchased   (708)   —    (756)   —    (1,464)   —    (1,464)
Share-based compensation expense   —    1,586   —    —    1,586   —    1,586
Acquisition of non-controlling interest   —    —    (17,231)   —    (17,231)   (1,881)   (19,112)
At August 31, 2013   937,183   7,221   256,517   1,653   1,202,574   18,259   1,220,833
                             
At August 31, 2011   882,679   10,299   143,717   (1,075)   1,035,620   19,200   1,054,820
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, 2012   910,005   7,835   198,445   (812)   1,115,473   20,617   1,136,090

 
 
CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                       
    Three months ended
August 31, 		    Year ended
August 31,
(unaudited - in thousands of Canadian dollars)   2013     2012     2013     2012
OPERATING ACTIVITIES                      
Net income for the period   13,341     24,985     165,749     156,151
Add (deduct) non-cash items:                      
  Depreciation and amortization   6,031     6,408     26,903     25,639
  Broadcast license and goodwill impairment   5,734     —      5,734     — 
  Amortization of program and film rights   48,099     46,543     190,176     186,348
  Amortization of film investments   8,360     10,052     25,759     32,001
  Deferred income taxes   (1,356)     8,186     (11,332)     12,921
  Investment impairments   7,121     —     7,121     —
  Share-based compensation expense   424     268     1,586     1,158
  Imputed interest   4,137     2,444     11,816     11,348
  Debt refinancing   —      —      25,033     — 
  Gain on sale of associated company   —      —      (55,394)     — 
  Gain on acquisition   —      —      —      (2,383)
  Other   818     738     700     (2,052)
Net change in non-cash working capital balances related to operations   12,609     (3,939)     4,584     (13,199)
Payment of program and film rights   (79,000)     (65,422)     (185,327)     (196,689)
Net additions to film investments   2,869     (569)     (46,074)     (40,933)
Cash provided by operating activities   29,187     29,694     167,034     170,310
                       
INVESTING ACTIVITIES                      
Additions to property, plant and equipment   (2,715)     (5,658)     (13,043)     (19,243)
Business combinations   —      —      —      (4,104)
Net cash flows for intangibles, investments and other assets   (1,568)     (7,431)     (10,855)     (11,290)
Other   (238)     (75)     (652)     (635)
Cash used in investing activities   (4,521)     (13,164)     (24,550)     (35,272)
                       
FINANCING ACTIVITIES                      
Decrease in bank loans   —      (9,973)     (29,925)     (84,750)
Issuance of notes   —      —      550,000     — 
Redemption of notes   —      —      (500,000)     — 
Financing fees   —      —      (26,732)     — 
Issuance of shares under stock option plan   —      —      884     10,046
Shares repurchased   —      (21,407)     (1,464)     (25,295)
Dividends paid   (15,112)     (13,258)     (56,696)     (50,783)
Dividends paid to non-controlling interest   (616)     (1,630)     (6,331)     (6,053)
Other   (1,138)     (2,310)     (10,727)     (9,537)
Cash used in financing activities   (16,866)     (48,578)     (80,991)     (166,372)
Net change in cash and cash equivalents during the period   7,800     (32,048)     61,493     (31,334)
Cash and cash equivalents, beginning of the period   78,281     56,636     24,588     55,922
Cash and cash equivalents, end of the period   86,081     24,588     86,081     24,588

 
 
CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION
                       
(unaudited - in thousands of Canadian dollars)
                         
Three months ended August 31, 2013                      
    Television     Radio     Corporate     Consolidated
Revenues   149,622     44,012     —      193,634
Direct cost of sales, general and administrative expenses   93,153     32,348     13,688     139,189
Segment profit (loss)(1)   56,469     11,664     (13,688)     54,445
Depreciation and amortization                     6,031
Interest expense                     10,473
Broadcast license and goodwill impairment                     5,734
Business acquisition, integration and restructuring costs                     5,196
Other expense (income), net                     8,391
Income before income taxes                     18,620
                       
Three months ended August 31, 2012                      
      Television     Radio     Corporate     Consolidated
Revenues   147,874     47,750     —      195,624
Direct cost of sales, general and administrative expenses   93,384     32,755     8,623     134,762
Segment profit (loss)(1)   54,490     14,995     (8,623)     60,862
Depreciation and amortization                     6,408
Interest expense                     12,242
Business acquisition, integration and restructuring costs                     1,841
Other expense (income), net                     (785)
Income before income taxes                     41,156
                       
Year ended August 31, 2013                      
    Television     Radio     Corporate     Consolidated
Revenues   619,850     183,691     —      803,541
Direct cost of sales, general and administrative expenses   371,071     128,543     33,915     533,529
Segment profit (loss)(1)   248,779     55,148     (33,915)     270,012
Depreciation and amortization                     26,903
Interest expense                     46,332
Broadcast license and goodwill impairment                     5,734
Debt refinancing                     25,033
Business acquisition, integration and restructuring costs                     7,343
Gain on sale of associated company                     (55,394)
Other expense (income), net                     8,553 
Income before income taxes                     205,508
                       
Year ended August 31, 2012                      
    Television     Radio     Corporate     Consolidated
Revenues   650,949     191,327     —      842,276
Direct cost of sales, general and administrative expenses   388,811     133,900     29,586     552,297
Segment profit (loss)(1)   262,138     57,427     (29,586)     289,979
Depreciation and amortization                     25,639
Interest expense                     52,269
Business acquisition, integration and restructuring costs                     4,166
Other expense (income), net                     (5,487)
Income before income taxes                     213,392
(1) See definitions and discussion under Key Performance Indicators in MD&A.

                       
                       
Revenues by type                      
      Three months ended     Year ended
      August 31,     August 31,
      2013     2012     2013     2012
Advertising   84,035     85,650     381,475     386,045
Subscriber fees   74,268     73,577     298,971     297,927
Merchandising, distribution and other   35,331     36,397     123,095     158,304
      193,634     195,624     803,541     842,276

 

SOURCE Corus Entertainment Inc.

Contact:
Corus Entertainment Inc.
<p> <b>John Cassaday </b><br/> <b>President and Chief Executive Officer</b><br/> <b>Corus Entertainment Inc. </b><br/> <b>416.479.6018</b><br/> </p> <p> <b>Tom Peddie </b><br/> <b>Executive Vice President and Chief Financial Officer</b><br/> <b>Corus Entertainment Inc.</b><br/> <b>416.479.6080</b><br/> </p> <p> <b>Sally Tindal</b><br/> <b>Director, Communications</b><br/> <b>Corus Entertainment Inc.</b><br/> <b>416.479.6107</b> </p>