International Entertainment News: Corus Entertainment announces fiscal 2010 second quarter results

Corus Entertainment announces fiscal 2010 second quarter results

- Consolidated segment profit increases 9% in the second quarter

- Consolidated revenues increase 6% in the second quarter, including specialty ad growth of 5%

- Adjusted basic earnings per share of $0.30 for the quarter compared to $0.31 last year

- Successful bond issue in the second quarter

TORONTO, April 14 /PRNewswire-FirstCall/ -- Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced its second quarter financial results today.

"We believe our results in the second quarter and the pacing we are enjoying in the third quarter indicate that the advertising recession is behind us," said John Cassaday, President and CEO of Corus Entertainment. "Corus' Specialty and Pay television categories and Ontario Radio sales are performing very well, and we are also benefiting from strong cost control which has allowed us to improve our margins."

Financial Highlights
--------------------

Segment profit
Radio 8,568 7,110 30,389 29,121
Television 53,204 47,491 120,272 111,761
Corporate (6,327) (3,592) (11,991) (8,531)
----------------------------------------------------
55,445 51,009 138,670 132,351
----------------------------------------------------
----------------------------------------------------

Net income 14,603 29,029 88,511 69,662
----------------------------------------------------
----------------------------------------------------
Earnings per share
Basic $0.18 $0.36 $1.10 $0.87
Diluted $0.18 $0.36 $1.08 $0.86

Consolidated Results
--------------------

Consolidated revenues for the three months ended February 28, 2010 were $192.7 million, up 6% from $181.4 million last year. Consolidated segment profit was $55.4 million, up 9% from $51.0 million last year. Net income for the quarter was $14.6 million ($0.18 basic and diluted), compared to net income of $29.0 million ($0.36 basic and diluted) last year. Net income for the quarter includes a debt refinancing loss of $14.3 million, while the prior year includes a gain of $7.2 million related to the disposition of a residential audio service. Removing the impact of these items results in adjusted second quarter basic earnings per share of $0.30 compared to $0.31 in the prior year.

Consolidated revenues for the six months ended February 28, 2010 were $415.0 million, up 4% from $398.1 million last year. Consolidated segment profit was $138.7 million, up 5% from $132.4 million last year. Net income for the six-month period was $88.5 million ($1.10 basic and $1.08 diluted), compared to net income of $69.7 million ($0.87 basic and $0.86 diluted) last year. In addition to the items noted above, net income for the six-month period also includes a $16.2 million reversal of a disputed regulatory fee accrual and a $14.2 million recovery due to income tax rate changes. Removing the impact of these items results in adjusted year-to-date basic earnings per share of $0.90 compared to $0.83 in the prior year.

Operational Results
-------------------

Radio

- Revenues decreased by 4% in the second quarter and 5% for the year-
to-date.
- Segment profit increased by 21% in the second quarter and 4% for the
year-to-date.
- Revenues for the quarter increased 4% in Ontario, decreased 12% in
the West and decreased 2% in Quebec and other.

Television

- Revenues increased by 11% in the second quarter and 9% for the
year-to-date.
- Segment profit increased by 12% in the second quarter and 8% for the
year-to-date.
- Advertising revenues increased by 3% in the second quarter and are
flat year-to-date.
- Specialty advertising revenues increased by 5% in the second quarter
and 1% for the year-to-date.
- Subscriber revenues increased by 14% in the second quarter and 11%
for the year-to-date.
- Movie Central finished the quarter with 973,000 subscribers, up 5%
from last year.

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, advertising services, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, Nickelodeon (Canada), W Network, CosmoTV, VIVA, Sundance Channel (Canada), Movie Central, HBO Canada, Nelvana, Kids Can Press and radio stations including CKNW, CFOX, CKOI, 98,5 FM, 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 (CJR.B) and New York (CJR) exchanges. Experience Corus on the web at www.corusent.com.

The unaudited consolidated financial statements and accompanying notes for the three and six months ended February 28, 2010 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 April 14, 2010 at 9 a.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 1-800-909-4891 and for local/international callers is 416-981-9039. PowerPoint slides for the call will be posted at 8:45 a.m. ET on April 14, 2010 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, program, 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, program, 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 BALANCE SHEETS

As at As at
(unaudited) February 28, August 31,
(in thousands of Canadian dollars) 2010 2009
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 40,467 10,922
Accounts receivable 158,575 146,784
Income taxes recoverable - 7,267
Prepaid expenses and other 15,518 14,377
Program and film rights 145,613 146,195
Future tax asset 2,790 1,788
-------------------------------------------------------------------------
Total current assets 362,963 327,333
-------------------------------------------------------------------------

Tax credits receivable 35,645 26,698
Investments and other assets 25,415 23,693
Property, plant and equipment 98,419 76,450
Program and film rights 101,413 92,579
Film investments 94,894 92,180
Broadcast licenses 587,138 561,741
Goodwill 692,632 674,029
-------------------------------------------------------------------------
1,998,519 1,874,703
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 170,650 171,055
Income taxes payable 6,747 -
-------------------------------------------------------------------------
Total current liabilities 177,397 171,055
-------------------------------------------------------------------------

Long-term debt 705,377 651,767
Other long-term liabilities 70,937 73,360
Future tax liability 95,583 102,842
-------------------------------------------------------------------------
Total liabilities 1,049,294 999,024
-------------------------------------------------------------------------

Non-controlling interest 14,360 21,401
-------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital 846,747 840,602
Contributed surplus 15,177 17,303
Retained earnings 84,785 20,380
Accumulated other comprehensive loss (11,844) (24,007)
-------------------------------------------------------------------------
Total shareholders' equity 934,865 854,278
-------------------------------------------------------------------------
1,998,519 1,874,703
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME

(unaudited)
(in thousands of Three months ended Six months ended
Canadian dollars February 28, February 28,
except per share ----------------------------------------------------
amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues 192,664 181,358 414,993 398,143
Direct cost of sales,
general and
administrative
expenses 137,219 130,349 276,323 265,792
Depreciation 5,323 5,199 9,839 10,191
Interest expense 9,653 9,666 17,801 20,068
Disputed regulatory
fees - 1,022 (16,194) 2,712
Debt refinancing loss 14,256 - 14,256 -
Other expense
(income),
net 3,123 (5,009) 1,339 (3,609)
-------------------------------------------------------------------------
Income before income
taxes and
non-controlling
interest 23,090 40,131 111,629 102,989
Income tax expense 7,157 10,831 20,610 31,706
Non-controlling
interest 1,330 271 2,508 1,621
-------------------------------------------------------------------------
Net income for the
period 14,603 29,029 88,511 69,662
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Earnings per share
Basic $0.18 $0.36 $1.10 $0.87
Diluted $0.18 $0.36 $1.08 $0.86
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of ----------------------------------------------------
Canadian dollars) 2010 2009 2010 2009
-------------------------------------------------------------------------
Net income for the
period 14,603 29,029 88,511 69,662
Other comprehensive
income (loss), net
of tax
Unrealized foreign
currency
translation
adjustment (79) 492 (524) 2,317
Unrealized change
in fair value of
available-for-sale
investments, net
of tax (27) 145 12 (780)
Recognition of
change in
fair value of
available-for-sale
assets in net
income - 2,077 - 2,077
Unrealized change
in fair value of
cash flow hedges,
net of tax 1,985 (2,176) 3,431 (9,507)
Recognition of
change in
fair value of
cash flow
hedge in net
income, net
of tax 9,244 - 9,244 -
-------------------------------------------------------------------------
11,123 538 12,163 (5,893)
-------------------------------------------------------------------------
Comprehensive income
for the period 25,726 29,567 100,674 63,769
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Contributed surplus
Balance, beginning of
period 14,394 13,115 17,303 17,304
Stock-based
compensation 954 1,401 1,853 2,350
Settlement of
long-term
incentive
plan - - (3,473) (5,138)
Exercise of stock
options (171) - (506) -
-------------------------------------------------------------------------
Balance, end of
period 15,177 14,516 15,177 14,516
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Retained earnings
Balance, beginning of
period 82,271 153,655 20,380 131,594
Net income for the
period 14,603 29,029 88,511 69,662
Dividends (12,089) (12,000) (24,106) (23,939)
Share repurchase
excess - - - (6,633)
-------------------------------------------------------------------------
Balance, end of
period 84,785 170,684 84,785 170,684
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Accumulated other
comprehensive
loss
Balance, beginning of
period (22,967) (26,581) (24,007) (20,150)
Other comprehensive
income (loss), net
of tax 11,123 538 12,163 (5,893)
-------------------------------------------------------------------------
Balance, end of
period (11,844) (26,043) (11,844) (26,043)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended Six months ended
(unaudited) February 28, February 28,
(in thousands of ----------------------------------------------------
Canadian dollars) 2010 2009 2010 2009
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income for the
period 14,603 29,029 88,511 69,662
Add (deduct) non-cash
items:
Depreciation 5,323 5,199 9,839 10,191
Amortization of
program and
film rights 41,490 39,034 83,216 76,517
Amortization of
film
investments 9,609 6,689 15,142 10,038
Future income taxes 1,908 2,887 (13,428) 7,610
Non-controlling
interest 1,330 271 2,508 1,621
Stock-based
compensation 2,145 1,431 3,330 2,012
Imputed interest 1,772 1,522 3,468 3,311
Debt refinancing
loss 14,256 - 14,256 -
Other gains (297) (5,632) (388) (5,429)
Net change in non-cash
working capital
balances related to
operations 18,095 22,148 (4,322) (7,507)
Payment of program
and film rights (42,663) (45,927) (84,273) (95,175)
Net additions to film
investments (15,036) (13,431) (32,997) (24,916)
-------------------------------------------------------------------------
Cash provided by
operating
activities 52,535 43,220 84,862 47,935
-------------------------------------------------------------------------

INVESTING ACTIVITIES
Additions to property,
plant and equipment (23,793) (3,789) (29,899) (5,784)
Business combinations - - (36,000) (74,950)
Cash held in escrow - - - 74,950
Net cash flows for
investments and
other assets 1,773 6,961 2,864 6,633
Decrease in public
benefits
associated with
acquisitions (240) (726) (478) (1,134)
-------------------------------------------------------------------------
Cash provided by
(used in)
investing
activities (22,260) 2,446 (63,513) (285)
-------------------------------------------------------------------------

FINANCING ACTIVITIES
Increase (decrease)
in bank loans (469,566) (17,179) (429,681) 13,670
Issuance of senior
unsecured
guaranteed notes 500,000 - 500,000 -
Financing and swap
termination fees (30,997) - (30,997) -
Issuance of shares
under stock
option plan 3,158 - 4,225 358
Shares repurchased - - - (15,083)
Dividends paid (10,973) (12,000) (22,647) (24,017)
Dividend paid to
non-controlling
interest (5,400) (325) (9,260) (2,994)
Other - 198 (3,444) 198
-------------------------------------------------------------------------
Cash provided by
(used in)
financing
activities (13,778) (29,306) 8,196 (27,868)
-------------------------------------------------------------------------
Net change in cash
and cash
equivalents
during the period 16,497 16,360 29,545 19,782
Cash and cash
equivalents,
beginning of
period 23,970 23,064 10,922 19,642
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of
period 40,467 39,424 40,467 39,424
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION

(unaudited)
(in thousands of Canadian dollars)

Divisional results

Three months ended
February 28, 2010
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 55,690 136,974 - 192,664
Direct cost of sales,
general and
administrative
expenses 47,122 83,770 6,327 137,219
-------------------------------------------------------------------------
Segment profit 8,568 53,204 (6,327) 55,445
Depreciation 1,598 1,871 1,854 5,323
Interest expense 212 1,180 8,261 9,653
Debt refinancing loss - - 14,256 14,256
Other expense (income),
net (18) 560 2,581 3,123
-------------------------------------------------------------------------
Income before income
taxes and
non-controlling
interest 6,776 49,593 (33,279) 23,090
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Three months ended
February 28, 2009
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 57,935 123,423 - 181,358
Direct cost of sales,
general and
administrative
expenses 50,825 75,932 3,592 130,349
-------------------------------------------------------------------------
Segment profit 7,110 47,491 (3,592) 51,009
Depreciation 1,631 2,444 1,124 5,199
Interest expense 228 1,357 8,081 9,666
Disputed regulatory
fees 526 496 - 1,022
Other expense (income),
net (751) (5,960) 1,702 (5,009)
-------------------------------------------------------------------------
Income before income
taxes and
non-controlling
interest 5,476 49,154 (14,499) 40,131
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Six months ended
February 28, 2010
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 126,764 288,229 - 414,993
Direct cost of sales,
general and
administrative
expenses 96,375 167,957 11,991 276,323
-------------------------------------------------------------------------
Segment profit 30,389 120,272 (11,991) 138,670
Depreciation 3,268 3,777 2,794 9,839
Interest expense 400 2,355 15,046 17,801
Disputed regulatory
fees (8,901) (7,293) - (16,194)
Debt refinancing loss - - 14,256 14,256
Other expense (income),
net 73 (693) 1,959 1,339
-------------------------------------------------------------------------
Income before income
taxes and
non-controlling
interest 35,549 122,126 (46,046) 111,629
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Six months ended
February 28, 2009
Radio Television Corporate Consolidated
-------------------------------------------------------------------------
Revenues 133,463 264,680 - 398,143
Direct cost of sales,
general and
administrative
expenses 104,342 152,919 8,531 265,792
-------------------------------------------------------------------------
Segment profit 29,121 111,761 (8,531) 132,351
Depreciation 3,273 4,785 2,133 10,191
Interest expense 454 2,400 17,214 20,068
Disputed regulatory
fees 1,362 1,350 - 2,712
Other expense (income),
net (571) (3,641) 603 (3,609)
-------------------------------------------------------------------------
Income before income
taxes and
non-controlling
interest 24,603 106,867 (28,481) 102,989
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Revenues by segment

(unaudited)
(in thousands of Three months ended Six months ended
Canadian dollars) February 28, February 28,
----------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Radio
West 19,844 22,502 46,077 53,602
Ontario 19,160 18,399 43,664 42,287
Quebec and other 16,686 17,034 37,023 37,574
-------------------------------------------------------------------------
55,690 57,935 126,764 133,463
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Television
Kids 56,147 50,908 124,646 113,937
Specialty and Pay 80,827 72,515 163,583 150,743
-------------------------------------------------------------------------
136,974 123,423 288,229 264,680
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Segment profit

(unaudited)
(in thousands of Three months ended Six months ended
Canadian dollars) February 28, February 28,
----------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Radio
West 5,053 6,190 14,754 18,764
Ontario 3,383 2,804 11,858 10,330
Quebec and other 132 (1,884) 3,777 27
-------------------------------------------------------------------------
8,568 7,110 30,389 29,121
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Television
Kids 22,257 19,297 55,566 50,241
Specialty and Pay 30,947 28,194 64,706 61,520
-------------------------------------------------------------------------
53,204 47,491 120,272 111,761
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Source: Corus Entertainment Inc.

CONTACT: John Cassaday, President and Chief Executive Officer, Corus
Entertainment Inc., (416) 642-3770; Tracy Ewing, Vice President,
Communications, Corus Entertainment Inc., (416) 642-3792; Tom Peddie, Senior
Vice President and Chief Financial Officer, Corus Entertainment Inc., (416)
642-3780

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Wednesday, April 14, 2010

Corus Entertainment announces fiscal 2010 second quarter results

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