Company News: Page (1) of 1 - 07/10/14

Corus Entertainment Announces Fiscal 2014 Third Quarter Results

 

July 10, 2014 --
  • Consolidated revenues up 14% for the quarter and 11% year-to-date
  • Consolidated segment profit up 23% for the quarter and 16% year-to-date
  • Adjusted net income attributable to shareholders of $41.6 million, up 21% in the quarter
  • Adjusted basic earnings per share attributable to shareholders of $0.49, up 20% in the quarter
  • Free cash flow of $182.4 million year-to-date, up from $121.1 million in the prior year

TORONTO, July 10, 2014 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"In the third quarter, the Company delivered impressive double-digit revenue and segment profit growth fueled by our newly acquired television and radio assets," said John Cassaday, President and Chief Executive Officer of Corus Entertainment. "While we experienced continued softness in the ad markets, we are encouraged by the ratings strength of our flagship networks W and YTV, which have maintained a leadership position with their core audiences, as well as the strong ratings gains from our family brands CMT and ABC Spark. The strength of our recent acquisitions, combined with our core business, continue to drive shareholder value with strong free cash flow and adjusted earnings per share growth for the Company."



Financial Highlights






Three months ended

Nine months ended


May 31,

May 31,

(unaudited - in thousands of Canadian dollars except per share amounts)

2014

2013(3)

2014

2013(3)

Revenues





Television

170,565

139,995

500,615

429,960

Radio

43,476

47,078

130,844

139,679


214,041

187,073

631,459

569,639






Segment profit (1)





Television

75,679

58,154

216,237

176,786

Radio

11,678

14,874

35,985

43,484

Corporate

(7,626)

(8,464)

(20,933)

(20,227)


79,731

64,564

231,289

200,043






Net income (loss) attributable to shareholders

(30,325)

89,913

126,682

148,016

Adjusted net income attributable to shareholders (1) (2)

41,602

34,519

123,560

111,110






Basic earnings (loss) per share

($ 0.36)

$ 1.07

$ 1.49

$ 1.77

Adjusted basic earnings per share (1) (2)

$ 0.49

$ 0.41

$ 1.46

$ 1.33

Diluted earnings (loss) per share

($ 0.36)

$ 1.07

$ 1.49

$ 1.76






Free cash flow (1)

59,399

41,475

182,440

121,084






(1) Adjusted net income attributable to shareholders, adjusted basic earnings per share, segment profit, segment profit margin and free cash flow do not have standardized meanings prescribed by IFRS. The Company reports on segment profit, segment profit margin and free cash flow because they are key measures used to evaluate performance. For definitions and explanations, see discussion under the Key Performance Indicators section of the 2014 Report to Shareholders.

(2) For the three months ended May 31, 2014, excludes radio broadcast license and goodwill impairment charges of $75.0 million ($0.85 per share), business acquisition, integration and restructuring costs of $0.6 million ($0.01 per share), capital asset impairment charges of $1.2 million ($0.01 per share) and a decrease in the purchase price obligation of $2.0 million ($0.02 per share). For the nine month period ended May 31, 2014, excludes the impact of a $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, radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $41.2 million ($0.47 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share), and investment impairment related charges of $3.3 million ($0.04 per share). For the three and nine month periods ended May 31, 2013, excludes the impact of a gain on disposition of the Food Network Canada investment of $55.4 million ($0.66 per share), while for the nine month period, the impact of debt refinancing costs of $25.0 million ($0.22 per share) are excluded as well.

(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. On December 20, 2013, the Company received Canadian Radio-television and Telecommunications Commission ("CRTC") approval to complete the acquisition of the remaining 50% interest in TELETOON that it did not already own, as well as the acquisition of Historia and Sries+, s.e.n.c. ("H&S"). These acquisitions closed on January 1, 2014. On January 24, 2014, the CRTC approved the Company's acquisition of the Ottawa-based radio stations (CKQB-FM and CJOT-FM) and the transaction closed on January 31, 2014. As a result of these business combinations, the Company's consolidated results for fiscal 2014 reflect 100% interest in TELETOON effective September 1, 2013, 100% interest in H&S effective January 1, 2014, and 100% interest in the two Ottawa-based radio stations effective January 31, 2014 (refer to note 17 of the interim condensed consolidated financial statements for further details on all acquisitions).

For fiscal 2013, as a result of retroactive application of IFRS 11 - Joint Arrangements, the Company is no longer permitted to proportionately consolidate its 50% equity interest in 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 its investment using the equity method of accounting. As a consequence, the Television revenues and segment profit for the third quarter of fiscal 2013 were reduced by $13.0 million and $3.7 million, respectively and instead, Corus' share of TELETOON's net income of $2.3 million was reported as Other expense (income) in the Consolidated Statements of Income and Comprehensive Income. For the nine months ended May 31, 2013, the Television revenues and segment profit were reduced by $40.3 million and $15.5 million, respectively, and Corus' share of TELETOON's net income of $11.0 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 May 31, 2014 were $214.0 million, up 14% from $187.1 million last year. Consolidated segment profit was $79.7 million, up 23% from $64.6 million last year. Net loss attributable to shareholders for the quarter was $30.3 million ($0.36 basic and diluted per share), compared to net income of $89.9 million ($1.07 basic and diluted per share) last year. Net income attributable to shareholders for the third quarter includes radio broadcast license and goodwill impairment charges of $75.0 million, capital asset impairment charges of $1.2 million, business acquisition, integration and restructuring costs of $0.6 million and a decrease in the purchase price obligation of $2.0 million related to the acquisition of control of TELETOON. Removing the impact of these items results in an adjusted net income of $41.6 million ($0.49 per share) in the quarter. Net income attributable to shareholders for the prior year quarter includes a gain related to the sale of the Company's non-controlling interest in Food Network Canada of $55.4 million. Removing the impact of this item results in an adjusted net income attributable to shareholders of $34.5 million ($0.41 per share) in the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2014 were $631.5 million, up 11% from $569.6 million last year. Consolidated segment profit was $231.3 million, up 16% from $200.0 million last year. Net income attributable to shareholders for the nine months ended May 31, 2014 was $126.7 million ($1.49 per share both basic and diluted) compared to $148.0 million ($1.77 per share basic and $1.76 per share diluted) last year. Net income attributable to shareholders for the nine months ended May 31, 2014 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, radio broadcast license and goodwill impairment charges of $83.0 million, capital asset impairment charges of $1.2 million, business acquisition, integration and restructuring costs of $41.2 million, an increase in the purchase price obligation of $3.3 million and investment impairment related charges of $3.3 million. Removing the impact of these items results in an adjusted net income of $123.6 million ($1.46 per share) for the current year-to-date. Prior year-to-date net income includes a pre-tax charge for debt refinancing of $25.0 million and a gain related to the sale of the Company's non-controlling interest in Food Network Canada of $55.4 million. Removing the impact of these items results in an adjusted net income attributable to shareholders of $111.1 million ($1.33 per share) in the prior year-to-date.

Operational Results - Highlights

Television

  • Fiscal 2014 reflects consolidation of 100% interest in TELETOON, effective September 1, 2013 and 100% interest in Historia and Sries+, effective January 1, 2014; Fiscal 2013 was retroactively restated to apply IFRS 11 Joint Arrangements, resulting in equity accounting for Corus' 50% economic interest in TELETOON (i.e. prior to the business combination on September 1, 2013)
  • Segment revenues increased 22% in Q3 2014 and 16% year-to-date
  • Specialty advertising revenues increased 42% in Q3 2014 and 38% year-to-date
  • Subscriber revenues increased 24% in Q3 2014 and 20% year-to-date
  • Merchandising, distribution and other revenues declined 27% in Q3 2014 and 33% year-to-date
  • Segment profit(1) increased 30% in Q3 2014 and 22% year-to-date
  • Segment profit margin(1) of 44% in Q3 2014 and 43% year-to-date

Radio

  • Fiscal 2014 reflects consolidation of 100% interest in two Ottawa-based radio stations, CKQB-FM and CJOT-FM, effective January 31, 2014
  • Segment revenues decreased 8% in Q3 2014 and 6% year-to-date
  • Segment profit(1) decreased 21% in Q3 2014 and 17% year-to-date
  • Segment profit margin(1) of 27% in Q3 2014 and 28% year-to-date
  • Non-cash broadcast license and goodwill impairment charges of $75.0 million recorded in Q3 2014 and $83.0 million year-to-date.
(1)

Segment profit, segment profit margin and free cash flow do not have standardized meanings prescribed by IFRS. The Company reports on segment profit, segment profit margin and free cash flow because they are key measures used to evaluate performance. For definitions and explanations, see discussion under the Key Performance Indicators section of the 2014 Report to Shareholders.

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three and nine month periods ended May 31, 2014 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 July 10, 2014 at 3:00 p.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.416.981.9038 and for North America is 1.800.734.8582. 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.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of adjusted net income, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("GAAP") and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of the Company's non-GAAP measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR.

Caution Concerning Forward-Looking Statements

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 relate 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.

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 and Sries+, as well as Nelvana, Kids Can Press, Toon Boom and 39 radio stations including CKNW AM 980, 99.3 The FOX, Country 105, 630 CHED, Fresh FM London, JUMP! 106.9, 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.

CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION






As at May 31,

As at August 31,

As at September 1,

(unaudited - in thousands of Canadian dollars)

2014

2013(1)

2012(1)

ASSETS




Current




Cash and cash equivalents

38,236

81,266

19,198

Accounts receivable

203,206

164,302

163,345

Promissory note receivable

47,759

Income taxes recoverable

4,789

351

9,542

Prepaid expenses and other

10,447

16,392

12,619





Total current assets

256,678

310,070

204,704





Tax credits receivable

45,133

41,564

43,865

Intangibles, investments and other assets

44,345

42,975

42,390

Investment in joint venture

125,931

121,704

Property, plant and equipment

143,274

151,192

163,280

Program and film rights

287,442

232,587

229,306

Film investments

68,284

62,274

67,847

Broadcast licenses

979,984

515,036

520,770

Goodwill

937,191

646,045

646,045

Deferred tax assets

38,093

39,463

28,327


2,800,424

2,167,137

2,068,238





LIABILITIES AND SHAREHOLDERS' EQUITY




Current




Accounts payable and accrued liabilities

248,422

164,443

177,367

Income taxes payable

1,303

Provisions

3,912

3,941

2,322

Total current liabilities

252,334

168,384

180,992





Long-term debt

873,587

538,966

518,258

Other long-term liabilities

119,174

93,241

87,588

Deferred tax liabilities

254,504

145,713

145,310

Total liabilities

1,499,599

946,304

932,148

SHAREHOLDERS' EQUITY




Share capital

957,477

937,183

910,005

Contributed surplus

8,432

7,221

7,835

Retained earnings

315,185

256,517

198,445

Accumulated other comprehensive income (loss)

3,618

1,653

(812)

Total equity attributable to shareholders

1,284,712

1,202,574

1,115,473

Equity attributable to non-controlling interest

16,113

18,259

20,617

Total shareholders' equity

1,300,825

1,220,833

1,136,090


2,800,424

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

Nine months ended


May 31,

May 31,

(unaudited - in thousands of Canadian dollars except per share amounts)

2014

2013 (1)

2014

2013 (1)

Revenues

214,041

187,073

631,459

569,639

Direct cost of sales, general and administrative expenses

134,310

122,509

400,170

369,596

Depreciation and amortization

7,385

6,904

18,653

20,805

Interest expense

13,453

10,456

35,327

35,859

Broadcast license and goodwill impairment

75,000

83,000

Debt refinancing

25,033

Business acquisition, integration and restructuring costs

560

2,147

41,216

2,147

Gain on acquisition

(55,394)

(127,884)

(55,394)

Other (income) expense, net

(1,489)

(2,193)

7,216

(10,860)






Income (loss) before income taxes

(15,178)

102,644

173,761

182,453

Income tax expense

13,691

11,132

43,224

30,045






Net income (loss) for the period

(28,869)

91,512

130,537

152,408






Net income (loss) attributable to:





Shareholders

(30,325)

89,913

126,682

148,016

Non-controlling interest

1,456

1,599

3,855

4,392


(28,869)

91,512

130,537

152,408






Earnings (loss) per share attributable to shareholders:





Basic

($ 0.36)

$ 1.07

$ 1.49

$ 1.77

Diluted

($ 0.36)

$ 1.07

$ 1.49

$ 1.76






Net income (loss) for the period

(28,869)

91,512

130,537

152,408

Other comprehensive income (loss), net of tax:





Items that may be reclassified subsequently to income:





Unrealized foreign currency translation adjustment

(646)

204

1,620

1,685

Unrealized change in fair value of available-





for-sale investments

392

(368)

454

(42)

Unrealized change in fair value of cash flow





hedges

37

(109)


(217)

(164)

1,965

1,643






Comprehensive income (loss) for the period

(29,086)

91,348

132,502

154,051






Comprehensive income (loss) attributable to:





Shareholders

(30,542)

89,749

128,647

149,659

Non-controlling interest

1,456

1,599

3,855

4,392


(29,086)

91,348

132,502

154,051

(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 - 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, 2013

937,183

7,221

256,517

1,653

1,202,574

18,259

1,220,833


Comprehensive income

126,682

1,965

128,647

3,855

132,502


Dividends declared

(68,014)

(68,014)

(6,001)

(74,015)


Issuance of shares under stock option plan

1,737

(278)

1,459

1,459


Issuance of shares under dividend reinvestment plan

18,557

18,557

18,557


Share-based compensation expense

1,489

1,489

1,489


At May 31, 2014

957,477

8,432

315,185

3,618

1,284,712

16,113

1,300,825











At August 31, 2012

910,005

7,835

198,445

(812)

1,115,473

20,617

1,136,090


Comprehensive income

148,016

1,643

149,659

4,392

154,051


Dividends declared

(62,914)

(62,914)

(5,715)

(68,629)


Issuance of shares under stock option plan

1,155

(2,200)

(1,045)

(1,045)


Issuance of shares under dividend reinvestment plan

20,350

20,350

20,350


Shares repurchased

(708)

(756)

(1,464)

(1,464)


Share-based compensation expense

1,162

1,162

1,162


Acquisition of non-controlling interest

(17,231)

(17,231)

(1,881)

(19,112)


At May 31, 2013

930,802

6,797

265,560

831

1,203,990

17,413

1,221,403













CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS







Three months ended May 31,

Nine months ended May 31,

(unaudited - in thousands of Canadian dollars)

2014

2013(1)

2014

2013(1)

OPERATING ACTIVITIES





Net income (loss) for the period

(28,869)

91,512

130,537

152,408

Add (deduct) non-cash items:





Depreciation and amortization

7,385

6,904

18,653

20,805

Broadcast license and goodwill impairment

75,000

83,000

Amortization of program and film rights

51,624

43,493

153,768

126,714

Amortization of film investments

4,201

7,691

13,256

17,399

Deferred income taxes

(637)

(3,250)

4,384

(9,976)

Increase (decrease) in purchase price obligation

(1,952)

3,336

Share-based compensation expense

528

430

1,489

1,162

Imputed interest

3,840

2,526

10,985

7,679

Tangible benefit obligation

31,916

Debt refinancing

25,033

Gain on sale of associated company

(55,394)

(55,394)

Gain on acquisition

(127,884)

Other

485

(4,174)

1,900

(12,624)

Net change in non-cash working capital





balances related to operations

14,870

1,978

3,312

(7,325)

Payment of program and film rights

(43,975)

(33,968)

(104,653)

(95,491)

Net additions to film investments

(19,017)

(14,709)

(32,765)

(48,943)

Cash provided by operating activities

63,483

43,039

191,234

121,447






INVESTING ACTIVITIES





Additions to property, plant and equipment

(3,435)

(2,853)

(7,715)

(10,317)

Business combinations

(5,265)

(496,706)

Dividends from investment in joint venture

1,290

9,041

Net cash flows for intangibles, investments and other assets

(2,321)

(2,321)

(7,395)

(9,287)

Other

(201)

(90)

(323)

(414)

Cash used in investing activities

(11,222)

(3,974)

(512,139)

(10,977)






FINANCING ACTIVITIES





Increase (decrease) in bank loans

(39,964)

333,101

(29,925)

Issuance of notes

550,000

Redemption of notes

(500,000)

(500,000)

Financing fees

(18,125)

(587)

(26,732)

Issuance of shares under stock option plan

566

135

1,459

884

Shares repurchased

(1,464)

Dividends paid

(16,380)

(14,586)

(48,316)

(41,584)

Dividends paid to non-controlling interest

(599)

(6,001)

(5,715)

Other

(532)

(4,488)

(1,781)

(9,589)

Cash provided by (used in) financing activities

(56,310)

(537,663)

277,875

(64,125)

Net change in cash and cash equivalents





during the period

(4,049)

(498,598)

(43,030)

46,345

Cash and cash equivalents, beginning of the period

42,285

564,141

81,266

19,198

Cash and cash equivalents, end of the period

38,236

65,543

38,236

65,543

(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 May 31, 2014



Television

Radio

Corporate

Consolidated

Revenues

170,565

43,476

214,041

Direct cost of sales, general






and administrative expenses

94,886

31,798

7,626

134,310

Segment profit (loss) (1)

75,679

11,678

(7,626)

79,731

Depreciation and amortization




7,385

Interest expense




13,453

Broadcast license and goodwill impairment




75,000

Business acquisition, integration and restructuring costs




560

Other income, net




(1,489)

Loss before income taxes




(15,178)







Three months ended May 31, 2013



Television (2)

Radio

Corporate

Consolidated

Revenues

139,995

47,078

187,073

Direct cost of sales, general






and administrative expenses

81,841

32,204

8,464

122,509

Segment profit (loss) (1)

58,154

14,874

(8,464)

64,564

Depreciation and amortization




6,904

Interest expense




10,456

Gain on sale of associated company




(55,394)

Business acquisition, integration and restructuring costs




2,147

Other income, net




(2,193)

Income before income taxes




102,644







Nine months ended May 31, 2014







Television

Radio

Corporate

Consolidated

Revenues

500,615

130,844

631,459

Direct cost of sales, general






and administrative expenses

284,378

94,859

20,933

400,170

Segment profit (loss)(1)

216,237

35,985

(20,933)

231,289

Depreciation and amortization




18,653

Interest expense




35,327

Broadcast license and goodwill impairment




83,000

Business acquisition, integration and restructuring costs




41,216

Gain on acquisition




(127,884)

Other expense, net




7,216

Income before income taxes




173,761







Nine months ended May 31, 2013







Television (2)

Radio

Corporate

Consolidated

Revenues

429,960

139,679

569,639

Direct cost of sales, general






and administrative expenses

253,174

96,195

20,227

369,596

Segment profit (loss) (1)

176,786

43,484

(20,227)

200,043

Depreciation and amortization




20,805

Interest expense




35,859

Gain on sale of associated company




(55,394)

Debt refinancing




25,033

Business acquisition, integration and restructuring costs




2,147

Other income, net




(10,860)

Income before income taxes




182,453

(1) Segment profit does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see 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
consolidated financial statements contained in the 2014 Report to Shareholders.

Revenues by type






Three months ended

Nine months ended


May 31,

May 31,

May 31,

May 31,


2014

2013(1)

2014

2013(1)

Advertising

108,039

91,961

319,281

274,475

Subscriber fees

86,522

70,006

249,199

207,622

Merchandising, distribution and other

19,480

25,106

62,979

87,542


214,041

187,073

631,459

569,639






(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.

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
Reported

IFRS 11
Adjustment

Restated

Originally
Reported

IFRS 11
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








Shareholders' Equity







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 May 31, 2013

Nine months ended May 31, 2013


Originally
Published

IFRS 11
Adjustment

Restated

Originally
Published

IFRS 11
Adjustment

Restated








Revenues

200,060

(12,987)

187,073

609,907

(40,268)

569,639

Direct cost of sales, general and







administrative expenses

131,834

(9,325)

122,509

394,340

(24,744)

369,596

Segment profit

68,226

(3,662)

64,564

215,567

(15,524)

200,043

Depreciation and amortization

6,926

(22)

6,904

20,872

(67)

20,805

Interest expense

10,456

10,456

35,859

35,859

Debt refinancing

25,033

25,033

Business acquisition, integration and restructuring costs

2,147

2,147

2,147

2,147

Gain on sale of associated company

(55,394)

(55,394)

(55,394)

(55,394)

Other expense (income), net

82

(5)

77

162

(16)

146

Income from joint venture

(2,270)

(2,270)

(11,006)

(11,006)

Income before income taxes

104,009

(1,365)

102,644

186,888

(4,435)

182,453

Income tax expense

12,497

(1,365)

11,132

34,480

(4,435)

30,045

Net income for the period

91,512

91,512

152,408

152,408








Net income attributable to:







Shareholders

89,913

89,913

148,016

148,016

Non-controlling interest

1,599

1,599

4,392

4,392


91,512

91,512

152,408

152,408








Earnings per share attributable to shareholders:







Basic

$ 1.07

$ 1.07

$ 1.77

$ 1.77

Diluted

$ 1.07

$ 1.07

$ 1.76

$ 1.76















Net income for the period

91,512

91,512

152,408

152,408








Other comprehensive income (loss), net of tax:







Items that may be reclassified subsequently to income:







Unrealized foreign currency translation adjustment

204

204

1,685

1,685

Unrealized change in fair value of available-for-sale investments

(368)

(368)

(42)

(42)


(164)

(164)

1,643

1,643

Comprehensive income for the period

91,348

91,348

154,051

154,051








Comprehensive income attributable to:







Shareholders

89,749

89,749

149,659

149,659

Non-controlling interest

1,599

1,599

4,392

4,392


91,348

91,348

154,051

154,051


Consolidated Statements of Cash Flows







(in thousands of Canadian dollars)

Three months ended May 31, 2013

Nine months ended May 31, 2013


Originally
Published

IFRS 11
Adjustment

Restated

Originally
Published

IFRS 11
Adjustment

Restated

Operating Activities







Net income for the period

91,512

91,512

152,408

152,408

Add (deduct) non-cash items:







Depreciation and amortization

6,926

(22)

6,904

20,872

(67)

20,805

Amortization of program and film rights

49,476

(5,983)

43,493

142,077

(15,363)

126,714

Amortization of film investment

7,691

7,691

17,399

17,399

Deferred income taxes

(3,250)

(3,250)

(9,976)

(9,976)

Share-based compensation expense

430

430

1,162

1,162

Imputed interest

2,526

2,526

7,679

7,679

Debt refinancing

25,033

25,033

Gain on sale of associated company

(55,394)

(55,394)

(55,394)

(55,394)

Other

(404)

(3,770)

(4,174)

(118)

(12,506)

(12,624)

Net change in non-cash working capital balances related to operations

1,521

457

1,978

(8,025)

700

(7,325)

Payment of program and film rights

(38,895)

4,927

(33,968)

(106,327)

10,836

(95,491)

Net additions to film investment

(14,709)

(14,709)

(48,943)

(48,943)

Cash provided by operating activities

47,430

(4,391)

43,039

137,847

(16,400)

121,447








Investing Activities







Additions to property, plant and equipment

(2,856)

3

(2,853)

(10,328)

11

(10,317)

Dividends from investments in joint venture

1,290

1,290

9,041

9,041

Net cash flows for intangibles, investments and other assets

(2,321)

(2,321)

(9,287)

(9,287)

Other

(90)

(90)

(414)

(414)

Cash used in investing activities

(5,267)

1,293

(3,974)

(20,029)

9,052

(10,977)








Financing Activities







Decrease in bank loans

(29,925)

(29,925)

Issuance of notes

550,000

550,000

Redemption of notes

(500,000)

(500,000)

(500,000)

(500,000)

Financing fees

(18,125)

(18,125)

(26,732)

(26,732)

Issuance of shares under stock option plan

135

135

884

884

Shares repurchased

(1,464)

(1,464)

Dividends paid

(14,586)

(14,586)

(41,584)

(41,584)

Dividends paid to non-controlling interest

(599)

(599)

(5,715)

(5,715)

Other

(4,488)

(4,488)

(9,589)

(9,589)

Cash used in financing activities

(537,663)

(537,663)

(64,125)

(64,125)








Net change in cash and cash equivalents during the period

(495,500)

(3,098)

(498,598)

53,693

(7,348)

46,345

Cash and cash equivalents, beginning of the period

573,781

(9,640)

564,141

24,588

(5,390)

19,198

Cash and cash equivalents, end of the period

78,281

(12,738)

65,543

78,281

(12,738)

65,543

SOURCE Corus Entertainment Inc.

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