Corus Entertainment Announces Fiscal 2013 Third Quarter Results

Corus Entertainment Announces Fiscal 2013 Third Quarter Results




-- Net income attributable to shareholders up 108% in the quarter
-- Specialty advertising and subscriber revenues up 9% and 2%,
respectively, in the quarter
-- Consolidated merchandising, distribution and other revenues
declined 23% in the quarter
-- Consolidated segment profit down 10% in the quarter
-- Free cash flow of $128.0 million year-to-date


TORONTO, July 11, 2013 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter and nine months year-to-date
financial results today.



"The third quarter was challenging on a number of fronts, most notably,
advertising softness in Radio continued and our merchandising,
production and distribution businesses faced tough year-over-year
comparatives," said John Cassaday, President and Chief Executive
Officer, Corus Entertainment. "We did deliver triple-digit growth in
net income and earnings per share, and specialty advertising revenues
increased by 9%, with growth in our key brands.  Despite these
impressive gains in our core television broadcast business, our
expectations for a stronger back half have not materialized and we will
miss the lower end of our segment profit guidance.  Free cash flow
guidance remains unchanged. Looking ahead, we are excited about the
opportunity to expand our business through acquisitions that will
enable us to enter the Ottawa radio and Quebec specialty television
markets, subject to CRTC approval."






Financial Highlights

Three months ended Nine months ended

May 31, May 31,

(unaudited - in thousands of 2013 2012 2013 2012
Canadian dollars except per share
amounts)

Revenues

Television 152,982 154,749 470,228 503,075

Radio 47,078 49,329 139,679 143,577

200,060 204,078 609,907 646,652



Segment profit(1)

Television 61,816 66,732 192,310 207,648

Radio 14,874 16,151 43,484 42,432

Corporate (8,464) (7,227) (20,227) (20,963)

68,226 75,656 215,567 229,117



Net income attributable to 89,913 43,221 148,016 125,340
shareholders

Adjusted net income attributable 34,519 43,221 111,110 125,340
to shareholders (1) (2)



Basic earnings per share $ 1.07 $ 0.52 $ 1.77 $ 1.51

Adjusted basic earnings per share $ 0.41 $ 0.52 $ 1.33 $ 1.51
(1) (2)

Diluted earnings per share $ 1.07 $ 0.51 $ 1.76 $ 1.50



Free cash flow (1) 44,573 55,354 128,432 130,185



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

(2) Excludes the impact of $25.0 million ($0.22 per share) pre-tax debt
refinancing costs and a gain on disposition of the Company's
non-controlling interest in Food Network Canada of $55.4 million ($0.66
per share).





Consolidated Results from Operations


Consolidated revenues for the three months ended May 31, 2013 were
$200.1 million, down 2% from $204.1 million last year.  Consolidated
segment profit was $68.2 million, down 10% from $75.7 million last
year.  Net income attributable to shareholders for the quarter was
$89.9 million ($1.07 per share basic and diluted), up 108% compared to
$43.2 million ($0.52 per share basic and $0.51 per share diluted) last
year.  Net income for the 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
earnings per share basic) in the quarter.



Consolidated revenues for the nine months ended May 31, 2013 were $609.9
million, down 6% from $646.7 million last year.  Consolidated segment
profit was $215.6 million, down 6% from $229.1 million last year.  Net
income attributable to shareholders for the nine months was $148.0
million ($1.77 per share basic and $1.76 per share diluted), up 18%
compared to $125.3 million ($1.51 per share basic and $1.50 per share
diluted) last year.  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 earnings
per share basic) in the current year.


Operational Results - Highlights

Television


-- Segment revenues decreased 1% in Q3 and 7% year-to-date
-- Specialty advertising revenues increased 9% in Q3 and 1%
year-to-date
-- Subscriber revenues increased 2% for Q3 and were flat
year-to-date
-- Merchandising, distribution and other revenues declined 26% in
Q3 and 31% year-to-date
-- Segment profit(1) decreased 7% in Q3 and year-to-date
-- Segment profit margin of 41% year-to-date
-- Movie Central finished the quarter with 1,009,000 subscribers,
up 33,000 year-to-date

Radio


-- Segment revenues decreased 5% in Q3 and 3% year-to-date
-- Segment profit(1) decreased 8% in Q3, but increased 2%
year-to-date
-- Segment profit margin of 31% year-to-date

Other


-- Acquired the remaining 49% interest in ABC Spark and disposed
of the Company's non-controlling interest in Food Network
Canada in the quarter for a gain of $55.4 million.
-- Entered into agreements to establish Radio presence in Ottawa,
consolidate ownership of TELETOON and acquire 100% of Historia
and Séries+. These transactions are subject to CRTC approval.


((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 and nine months ended May 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 July 11,
2013 at 2:00 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 North America is 1.800.732.6870 and
for local/international callers is 416.620.9188.  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 May 31, As at August 31,

(unaudited - in thousands of Canadian 2013 2012
dollars)

ASSETS

Current

Cash and cash equivalents 78,281 24,588

Accounts receivable 187,016 173,421

Promissory note receivable 47,759 --

Income taxes recoverable -- 9,542

Prepaid expenses and other 13,035 12,664



Total current assets 326,091 220,215



Tax credits receivable 51,796 43,865

Intangibles, investments and other 44,181 42,390
assets

Property, plant and equipment 153,653 163,563

Program and film rights 267,500 271,244

Film investments 76,735 67,983

Broadcast licenses 569,505 569,505

Goodwill 674,393 674,393

Deferred tax assets 39,013 28,327

2,202,867 2,081,485



LIABILITIES AND SHAREHOLDERS' EQUITY

Current

Accounts payable and accrued liabilities 196,649 185,991

Income taxes payable 3,554 --

Provisions 943 2,322

Total current liabilities 201,146 188,313



Long-term debt 538,462 518,258

Other long-term liabilities 89,712 87,853

Deferred tax liabilities 152,144 150,971

Total liabilities 981,464 945,395





SHAREHOLDERS' EQUITY

Share capital 930,802 910,005

Contributed surplus 6,797 7,835

Retained earnings 265,560 198,445

Accumulated other comprehensive income 831 (812)
(loss)

Total equity attributable to 1,203,990 1,115,473
shareholders

Equity attributable to non-controlling 17,413 20,617
interest

Total shareholders' equity 1,221,403 1,136,090

2,202,867 2,081,485









CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



Three months ended Nine months ended

May 31, May 31,

(unaudited - in thousands of 2013 2012 2013 2012
Canadian dollars except per
share amounts)

Revenues 200,060 204,078 609,907 646,652

Direct cost of sales, general 131,834 128,422 394,340 417,535
and administrative expenses

Depreciation and amortization 6,926 6,339 20,872 19,231

Interest expense 10,456 13,190 35,859 40,027

Debt refinancing -- -- 25,033 --

Business acquisition, 2,147 2,325 2,147 2,325
integration and restructuring
costs

Gain on sale of associated (55,394) -- (55,394) --
company

Other (income) expense, net 82 (3,532) 162 (4,702)



Income before income taxes 104,009 57,334 186,888 172,236

Income tax expense 12,497 12,387 34,480 41,070



Net income for the period 91,512 44,947 152,408 131,166



Net income attributable to:

Shareholders 89,913 43,221 148,016 125,340

Non-controlling interest 1,599 1,726 4,392 5,826

91,512 44,947 152,408 131,166



Earnings per share attributable
to shareholders:

Basic $ 1.07 $ 0.52 $ 1.77 $ 1.51

Diluted $ 1.07 $ 0.51 $ 1.76 $ 1.50



Net income for the period 91,512 44,947 152,408 131,166

Other comprehensive income
(loss), net of tax

Items that may be
reclassified subsequently
to income:

Unrealized foreign 204 1,434 1,685 1,971
currency translation
adjustment

Unrealized change in fair (368) (163) (42) (254)
value of
available-for-sale
investments

(164) 1,271 1,643 1,717



Comprehensive income for the 91,348 46,218 154,051 132,883
period



Comprehensive income
attributable to:

Shareholders 89,749 44,492 149,659 127,057

Non-controlling interest 1,599 1,726 4,392 5,826

91,348 46,218 154,051 132,883









CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY







(unaudited - in Accumulated Total equity
thousands of other attributable Non-
Canadian Share Contributed Retained comprehensive to controlling Total
dollars) capital surplus earnings income (loss) shareholders interest equity

At August 31, 910,005 7,835 198,445 (812) 1,115,473 20,617 1,136,090
2012

Comprehensive -- -- 148,016 1,643 149,659 4,392 154,051
income

Dividends -- -- (62,914) -- (62,914) (5,715) (68,629)
declared

Issuance of 1,155 (2,200) -- -- (1,045) -- (1,045)
shares under
stock option
plan

Issuance of 20,350 -- -- -- 20,350 -- 20,350
shares under
dividend
reinvestment
plan

Shares (708) -- (756) -- (1,464) -- (1,464)
repurchased

Share-based -- 1,162 -- -- 1,162 -- 1,162
compensation
expense

Acquisition of -- -- (17,231) -- (17,231) (1,881) (19,112)
non-controlling
interest

At May 31, 2013 930,802 6,797 265,560 831 1,203,990 17,413 1,221,403



At August 31, 882,679 10,299 143,717 (1,075) 1,035,620 19,200 1,054,820
2011

Comprehensive -- -- 125,340 1,717 127,057 5,826 132,883
income

Dividends -- -- (58,123) -- (58,123) (5,523) (63,646)
declared

Issuance of 13,669 (3,623) -- -- 10,046 -- 10,046
shares under
stock option
plan

Issuance of 19,229 -- -- -- 19,229 -- 19,229
shares under
dividend
reinvestment
plan

Shares (2,110) -- (1,778) -- (3,888) -- (3,888)
repurchased

Share-based -- 890 -- -- 890 -- 890
compensation
expense

At May 31, 2012 913,467 7,566 209,156 642 1,130,831 19,503 1,150,334









CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



Three months ended Nine months ended
May 31, May 31,

(unaudited - in thousands of 2013 2012 2013 2012
Canadian dollars)

OPERATING ACTIVITIES

Net income for the period 91,512 44,947 152,408 131,166

Add (deduct) non-cash items:

Depreciation and 6,926 6,339 20,872 19,231
amortization

Amortization of program and 49,476 46,317 142,077 139,805
film rights

Amortization of film 7,691 4,002 17,399 21,949
investments

Deferred income taxes (3,250) (51) (9,976) 4,735

Share-based compensation 430 298 1,162 890
expense

Imputed interest 2,526 2,894 7,679 8,904

Debt refinancing -- -- 25,033 --

Gain on sale of associated (55,394) -- (55,394) --
company

Gain on acquisition -- (2,383) -- (2,383)

Other (404) (2,000) (118) (2,790)

Net change in non-cash working 1,521 11,466 (8,025) (9,260)
capital balances related to
operations

Payment of program and film (38,895) (44,841) (106,327) (131,267)
rights

Net additions to film (14,709) (6,391) (48,943) (40,364)
investments

Cash provided by operating 47,430 60,597 137,847 140,616
activities



INVESTING ACTIVITIES

Additions to property, plant (2,856) (5,501) (10,328) (13,585)
and equipment

Business combination -- (4,104) -- (4,104)

Net cash flows for (2,321) (4,868) (9,287) (3,859)
intangibles, investments and
other assets

Other (90) (242) (414) (560)

Cash used in investing (5,267) (14,715) (20,029) (22,108)
activities



FINANCING ACTIVITIES

Decrease in bank loans -- (40,103) (29,925) (74,777)

Issuance of notes -- -- 550,000 --

Redemption of notes (500,000) -- (500,000) --

Financing fees (18,125) -- (26,732) --

Issuance of shares under stock 135 1,709 884 10,046
option plan

Shares repurchased -- -- (1,464) (3,888)

Dividends paid (14,586) (13,705) (41,584) (37,525)

Dividends paid to (599) -- (5,715) (4,423)
non-controlling interest

Other (4,488) (2,722) (9,589) (7,227)

Cash used in financing (537,663) (54,821) (64,125) (117,794)
activities

Net change in cash and cash (495,500) (8,939) 53,693 714
equivalents during the period

Cash and cash equivalents, 573,781 65,575 24,588 55,922
beginning of the period

Cash and cash equivalents, end 78,281 56,636 78,281 56,636
of the period









CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION



(unaudited - in thousands of Canadian dollars)



Three months ended May 31, 2013

Radio Television Corporate Consolidated

Revenues 47,078 152,982 -- 200,060

Direct cost of sales,
general

and administrative 32,204 91,166 8,464 131,834
expenses

Segment profit (loss)(1) 14,874 61,816 (8,464) 68,226

Depreciation and 6,926
amortization

Interest expense 10,456

Business acquisition, 2,147
integration and
restructuring costs

Gain on sale of associated (55,394)
company

Other expense, net 82

Income before income taxes 104,009



Three months ended May 31, 2012

Radio Television Corporate Consolidated

Revenues 49,329 154,749 -- 204,078

Direct cost of sales,
general

and administrative 33,178 88,017 7,227 128,422
expenses

Segment profit (loss)(1) 16,151 66,732 (7,227) 75,656

Depreciation and 6,339
amortization

Interest expense 13,190

Business acquisition, 2,325
integration and
restructuring costs

Other income, net (3,532)

Income before income taxes 57,334



Nine months ended May 31,
2013

Radio Television Corporate Consolidated

Revenues 139,679 470,228 -- 609,907

Direct cost of sales,
general

and administrative 96,195 277,918 20,227 394,340
expenses

Segment profit (loss)(1) 43,484 192,310 (20,227) 215,567

Depreciation and 20,872
amortization

Interest expense 35,859

Debt refinancing 25,033

Business acquisition, 2,147
integration and
restructuring costs

Gain on sale of associated (55,394)
company

Other expense, net 162

Income before income taxes 186,888



Nine months ended May 31,
2012

Radio Television Corporate Consolidated

Revenues 143,577 503,075 -- 646,652

Direct cost of sales,
general

and administrative 101,145 295,427 20,963 417,535
expenses

Segment profit (loss)(1) 42,432 207,648 (20,963) 229,117

Depreciation and 19,231
amortization

Interest expense 40,027

Business acquisition, 2,325
integration and
restructuring costs

Other income, net (4,702)

Income before income taxes 172,236



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









Revenues by type

Three months ended Nine months ended

May 31, May 31,

2013 2012 2013 2012

Advertising 99,040 97,076 297,440 300,395

Subscriber fees 75,924 74,285 224,703 224,350

Merchandising, distribution 25,096 32,717 87,764 121,907
and other

200,060 204,078 609,907 646,652






 


SOURCE Corus Entertainment Inc.

Corus Entertainment Inc.

CONTACT: John Cassaday 
President and Chief Executive Officer 
Corus Entertainment Inc. 
416.479.6018 

Tom Peddie 
Executive Vice President and Chief  
Financial Officer   
Corus Entertainment Inc. 
416.479.6080

Sally Tindal
Director, Communications
Corus Entertainment Inc.
416.479.6107


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