Corus Entertainment Announces Fiscal 2015 First Quarter Results

Corus Entertainment Announces Fiscal 2015 First Quarter Results


-- Record high consolidated revenues and segment profit for the quarter
-- Annual dividend increased by $0.05 per share
-- Television revenues and segment profit up 2% for the quarter
-- Net income attributable to shareholders of $51.9 million for the quarter
-- Adjusted basic earnings per share of $0.60 per share, down 8% for the
quarter
TORONTO, Jan. 13, 2015 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its first quarter financial results today.

"In the first quarter, the Company's recent acquisitions drove consolidated revenue and segment profit growth in a soft advertising market. In addition, we continued to deliver strong ratings in Television, particularly on our Women's and Family networks," said John Cassaday, President and Chief Executive Officer of Corus Entertainment. "Looking forward, signs of a recovery in television advertising demand are materializing and we expect this to gain traction as the year progresses. We are also encouraged by our recent repositioning of key large market Radio stations, which is starting to translate into improved ratings, particularly in Toronto, Vancouver and Calgary. Importantly, we are making good progress on our key strategic priorities, which will further strengthen our business going forward."









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

Three months ended

November 30,

(unaudited - in thousands of Canadian dollars except per share amounts) 2014 2013
---------------------------------------------------------------------- ---- ----

Revenues

Television 181,490 177,949

Radio 45,621 48,056
----- ------ ------

227,111 226,005
======= =======


Segment profit (1)

Television 83,779 82,524

Radio 12,820 15,837

Corporate (3,323) (6,085)
--------- ------ ------

93,276 92,276
====== ======

Net income attributable to shareholders 51,906 150,891

Adjusted net income attributable to shareholders (1) (2) 51,906 55,177
======================================================= ====== ======


Basic earnings per share $0.60 $1.78

Adjusted basic earnings per share (1) (2) $0.60 $0.65

Diluted earnings per share $0.60 $1.78
========================== ===== =====


Free cash flow (1) 33,382 49,636
================= ====== ======



(1) Adjusted net income attributable to
shareholders, adjusted basic earnings
per share, segment profit and free
cash flow do not have standardized
meanings prescribed by IFRS. The
Company reports on segment profit 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 2015 Report to
Shareholders.

(2) For the quarter ended November 30,
2013, 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, business
acquisition, integration and
restructuring costs of $21.9 million
($0.25 per share), an increase in the
purchase price obligation of $7.3
million ($0.09 per share), and
investment impairment related charges
of $3.3 million ($0.04 per share).
Consolidated Results from Operations

Consolidated revenues for the three months ended November 30, 2014 were $227.1 million, up from $226.0 million last year. Consolidated segment profit was $93.3 million, up 1% from $92.3 million last year. Net income attributable to shareholders for the quarter was $51.9 million ($0.60 per share basic and diluted), compared to net income attributable to shareholders of $150.9 million ($1.78 per share basic and diluted) last year. Net income attributable to shareholders for the prior year quarter includes charges related to a non-cash gain of $127.9 million ($1.51 per share) resulting from the remeasurement to fair value of the Company's 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, business acquisition, integration and restructuring costs of $21.9 million ($0.25 per share), an increase in the purchase price obligation of $7.3 million ($0.09 per share) and investment impairment charges of $3.3 million ($0.04 per share). Removing the impact of these items results in an adjusted basic earnings per share of $0.65 per share in the prior year.

Operational Results - Highlights

Television


-- Specialty advertising revenues increased 1% in Q1 2015
-- Subscriber revenues increased 8% in Q1 2015
-- Merchandising, distribution and other revenues declined 14% in Q1 2015
-- Segment profit((1)) increased 2% in Q1 2015
-- Segment profit margin((1)) of 46% in Q1 2015
Radio


-- Segment revenues decreased 5% in Q1 2015
-- Segment profit((1)) decreased 19% in Q1 2015
-- Segment profit margin((1)) of 28% in Q1 2015


(1) Segment profit and segment profit
margin do not have standardized
meanings prescribed by IFRS. The
Company reports on segment profit
and segment profit margin because
they are key measures used to
evaluate performance. For
definitions and explanations, see
discussion under the Key
Performance Indicators section of
the 2015 Report to Shareholders.
Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three month period ended November 30, 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 January 13, 2015 at 8:30 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 local and international callers is 416.981.9030 and for North America is 1.800.768.2950. 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 attributable to shareholders, segment profit margin, 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 Séries+, as well as Nelvana, Kids Can Press, Toon Boom and 39 radio stations including CKNW AM 980, Rock 101, 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 November 30, As at August 31,

(unaudited - in thousands of Canadian dollars) 2014 2014
--------------------------------------------- ---- ----

ASSETS

Current

Cash and cash equivalents 27,840 11,585

Accounts receivable 216,887 183,009

Income taxes recoverable - 9,768

Prepaid expenses and other 12,330 13,032
-------------------------- ------ ------


Total current assets 257,057 217,394
-------------------- ------- -------


Tax credits receivable 30,764 29,044

Intangibles, investments and other assets 60,214 47,630

Property, plant and equipment 141,483 143,618

Program and film rights 348,790 330,437

Film investments 62,794 63,455

Broadcast licenses 979,984 979,984

Goodwill 934,859 934,859

Deferred tax assets 36,534 38,161
------------------- ------ ------

2,852,479 2,784,582
========= =========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current

Accounts payable and accrued liabilities 229,543 170,411

Income taxes payable 3,611 -

Provisions 3,644 5,314
---------- ----- -----

Total current liabilities 236,798 175,725
------------------------- ------- -------


Long-term debt 894,680 874,251

Other long-term liabilities 123,099 171,793

Deferred tax liabilities 253,877 252,687
------------------------ ------- -------

Total liabilities 1,508,454 1,474,456
----------------- --------- ---------


SHAREHOLDERS' EQUITY

Share capital 974,526 967,330

Contributed surplus 8,622 8,385

Retained earnings 341,803 313,361

Accumulated other comprehensive income 4,649 3,767
-------------------------------------- ----- -----

Total equity attributable to shareholders 1,329,600 1,292,843

Equity attributable to non-controlling interest 14,425 17,283
----------------------------------------------- ------ ------

Total shareholders' equity 1,344,025 1,310,126
-------------------------- --------- ---------

2,852,479 2,784,582
========= =========


CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


Three months ended

November 30,

(unaudited - in thousands of Canadian dollars except per share amounts) 2014 2013
---------------------------------------------------------------------- ---- ----

Revenues 227,111 226,005

Direct cost of sales, general and administrative expenses 133,835 133,729

Depreciation and amortization 5,774 5,735

Interest expense 12,681 9,270

Business acquisition, integration and restructuring costs - 21,922

Gain on acquisition - (127,884)

Other expense, net 1,806 9,711
------------------ ----- -----


Income before income taxes 73,015 173,522

Income tax expense 19,833 21,180


Net income for the period 53,182 152,342
========================= ====== =======


Net income attributable to:

Shareholders 51,906 150,891

Non-controlling interest 1,276 1,451
------------------------ ----- -----

53,182 152,342
====== =======


Earnings per share attributable to shareholders:

Basic $0.60 $1.78

Diluted $0.60 $1.78
======= ===== =====


Net income for the period 53,182 152,342

Other comprehensive income (loss), net of tax:

Items that may be reclassified subsequently to income:

Unrealized foreign currency translation adjustment 1,230 375

Unrealized change in fair value of available-for-sale investments (310) 74

Unrealized change in fair value of cash flow hedges (38) -
--------------------------------------------------- --- ---

882 449
--- ---


Comprehensive income for the period 54,064 152,791
=================================== ====== =======


Comprehensive income attributable to:

Shareholders 52,788 151,340

Non-controlling interest 1,276 1,451
------------------------ ----- -----

54,064 152,791
====== =======


CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


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

At August 31, 2014 967,330 8,385 313,361 3,767 1,292,843 17,283 1,310,126

Comprehensive income - - 51,906 882 52,788 1,276 54,064

Dividends declared - - (23,464) - (23,464) (4,134) (27,598)

Issuance of shares under stock
option plan 1,711 (292) - - 1,419 - 1,419

Issuance of shares under dividend
reinvestment plan 5,485 - - - 5,485 - 5,485

Share-based compensation expense - 529 - - 529 - 529
-------------------------------- --- --- --- --- --- --- ---

At November 30, 2014 974,526 8,622 341,803 4,649 1,329,600 14,425 1,344,025
==================== ======= ===== ======= ===== ========= ====== =========


At August 31, 2013 937,183 7,221 256,517 1,653 1,202,574 18,259 1,220,833

Comprehensive income - - 150,891 449 151,340 1,451 152,791

Dividends declared - - (21,602) - (21,602) (4,068) (25,670)

Issuance of shares under stock
option plan 160 (24) - - 136 - 136

Issuance of shares under dividend
reinvestment plan 5,860 - - - 5,860 - 5,860

Share-based compensation expense - 457 - - 457 - 457
-------------------------------- --- --- --- --- --- --- ---

At November 30, 2013 943,203 7,654 385,806 2,102 1,338,765 15,642 1,354,407
==================== ======= ===== ======= ===== ========= ====== =========


CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended

November 30,

(unaudited - in thousands of Canadian dollars) 2014 2013
--------------------------------------------- ---- ----

OPERATING ACTIVITIES

Net income for the period 53,182 152,342

Add (deduct) non-cash items:

Depreciation and amortization 5,774 5,735

Amortization of program and film rights 54,337 50,531

Amortization of film investments 6,921 3,912

Deferred income taxes 2,847 2,455

Increase in purchase price obligation - 7,344

Share-based compensation expense 529 457

Imputed interest 3,496 3,036

Tangible benefit obligation - 20,023

Gain on acquisition - (127,884)

Other 482 1,255

Net change in non-cash working capital balances related to operations (26,449) (22,659)

Payment of program and film rights (50,417) (28,091)

Net additions to film investments (13,815) (10,066)

Increase in restricted cash - (6,407)
--------------------------- --- ------

Cash provided by operating activities 36,887 51,983
------------------------------------- ------ ------


INVESTING ACTIVITIES

Additions to property, plant and equipment (2,823) (1,936)

Net cash flows for intangibles, investments and other assets (15,161) (1,907)

Other (511) (67)
----- ---- ---

Cash used in investing activities (18,495) (3,910)
--------------------------------- ------- ------


FINANCING ACTIVITIES

Increase in bank loans 19,791 -

Issuance of shares under stock option plan 1,419 136

Dividends paid (17,919) (15,698)

Dividends paid to non-controlling interest (4,134) (4,068)

Other (1,294) (665)
----- ------ ----

Cash used in financing activities (2,137) (20,295)
--------------------------------- ------ -------

Net change in cash and cash equivalents during the period 16,255 27,778

Cash and cash equivalents, beginning of the period 11,585 81,266
-------------------------------------------------- ------ ------

Cash and cash equivalents, end of the period 27,840 109,044
============================================ ====== =======


CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION


(unaudited - in thousands of Canadian dollars)


Three months ended November 30, 2014

Television Radio Corporate Consolidated
---------- ----- --------- ------------

Revenues 181,490 45,621 - 227,111

Direct cost of sales, general
and administrative expenses 97,711 32,801 3,323 133,835
----------------------------- ------ ------ ----- -------

Segment profit (loss)(1) 83,779 12,820 (3,323) 93,276

Depreciation and amortization 5,774

Interest expense 12,681

Other expense, net 1,806
------------------ -----

Income before income taxes 73,015
========================== ======


Three months ended November 30, 2013

Television Radio Corporate Consolidated
---------- ----- --------- ------------

Revenues 177,949 48,056 - 226,005

Direct cost of sales, general
and administrative expenses 95,425 32,219 6,085 133,729
----------------------------- ------ ------ ----- -------

Segment profit (loss)(1) 82,524 15,837 (6,085) 92,276

Depreciation and amortization 5,735

Interest expense 9,270

Gain on acquisition (127,884)

Business acquisition,
integration and
restructuring costs 21,922

Other expense, net 9,711
------------------ -----

Income before income taxes 173,522
========================== =======


(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 2015
Report to Shareholders.


Revenues by type


Three months ended

November 30,

2014 2013
---- ----

Advertising 120,966 123,372

Subscriber fees 85,414 79,115

Merchandising, distribution and other 20,731 23,518
------------------------------------- ------ ------

227,111 226,005
======= =======
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

Web Site: www.corusent.com


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