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

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


-- Specialty advertising revenues up 6% in the quarter and 2% for
the fiscal year
-- Consolidated segment profit down 11% in the quarter and 7% for
the fiscal year
-- Strong segment profit margins for Television (40%) and Radio
(30%) for the fiscal year
-- Basic earnings per share attributable to shareholders up 7% for
the fiscal year
-- Free cash flow of $154 million for the fiscal year


TORONTO, Oct. 24, 2013 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its fourth quarter and year-end financial
results today.



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




Financial Highlights

Three months ended Year ended

August 31, August 31,

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

Revenues

Television 149,622 147,874 619,850 650,949

Radio 44,012 47,750 183,691 191,327

193,634 195,624 803,541 842,276



Segment profit (1)

Television 56,469 54,490 248,779 262,138

Radio 11,664 14,995 55,148 57,427

Corporate (13,688) (8,623) (33,915) (29,586)

54,445 60,862 270,012 289,979



Net income attributable to
shareholders 11,879 23,341 159,895 148,681

Adjusted net income
attributable to shareholders
(1) (2) 25,816 31,519 138,573 158,556





Basic earnings per share $ 0.14 $ 0.28 $ 1.91 $ 1.79

Adjusted basic earnings per
share (1) (2) $ 0.31 $ 0.38 $ 1.65 $ 1.90

Diluted earnings per share $ 0.14 $ 0.28 $ 1.90 $ 1.78



Free cash flow(1) 25,704 24,962 154,136 155,147







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

(2) For the year ended August 31, 2013, excludes the impact of $25.0
million ($0.22 per share) debt refinancing costs,
gain on disposition of the Company's non-controlling interest in
Food Network Canada of $55.4 million ($0.66 per share),
broadcast license impairment of $5.7 million ($0.05 per share),
business acquisition, integration and restructuring costs
of $7.3 million ($0.06 per share) and investment impairment
charges of $7.1 million ($0.07 per share).





Consolidated Results from Operations


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



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


Operational Results - Highlights

Television


-- Segment revenues increased 1% in Q4 and decreased 5% for the
fiscal year
-- Specialty advertising revenue increased 6% in Q4 and 2% for the
fiscal year
-- Subscriber revenues increased 1% for Q4 and were flat for the
fiscal year
-- Merchandising, distribution and other revenues declined 3% in
Q4 and 24% for the fiscal year
-- Segment profit(1) increased 4% in Q4 and decreased 5% for the
fiscal year
-- Segment profit margin of 40% for the fiscal year
-- Movie Central finished the fiscal year with 996,000
subscribers, up 20,000 from the prior year

Radio


-- Segment revenues decreased 8% in Q4 and 4% for the fiscal year
-- Segment profit(1) decreased 22% in Q4 and 4% for the fiscal
year
-- Segment profit margin of 30% for the fiscal year

Other


-- Corporate expenses were up $5.1 million in Q4 and $4.3 million
for the fiscal year due to higher share-based compensation and
achievement of performance incentives.


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



Corus Entertainment Inc. reports in Canadian dollars.


About Corus Entertainment Inc.


Corus Entertainment Inc. is a Canadian-based media and entertainment
company. Corus is a market leader in specialty television and radio
with additional assets in pay television, television broadcasting,
children's book publishing, children's animation and animation
software. The Company's multimedia entertainment brands include YTV,
Treehouse, Nickelodeon (Canada), ABC Spark, W Network, OWN: Oprah
Winfrey Network (Canada), Cosmopolitan TV, Sundance Channel (Canada),
Movie Central, HBO Canada, Nelvana, Kids Can Press, Toon Boom and 37
radio stations including CKNW AM 980, 99.3 The FOX, Country 105, 630
CHED, Q107, and 102.1 the Edge. Corus creates engaging branded
entertainment experiences for its audiences across multiple platforms.
A publicly traded company, Corus is listed on the Toronto Stock
Exchange (CJR.B). Experience Corus on the web at www.corusent.com.



The unaudited consolidated financial statements and accompanying notes
for the three months and year ended August 31, 2013 and Management's
Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.



A conference call with Corus senior management is scheduled for October
24, 2013 at 12:30 p.m. ET. While this call is directed at analysts and
investors, members of the media are welcome to listen in. The dial-in
number for the conference call for Canada is 1.866.229.4144 and for
international callers is 1.847.585.4422. Please note that the audience
passcode for both dial-in numbers is 7565 565. PowerPoint slides for
the call will be posted 15 minutes prior to the start of the call and
can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.


This press release contains forward-looking information and should be
read subject to the following cautionary language:

To the extent any statements made in this report contain information
that is not historical, these statements are forward-looking statements
and may be forward-looking information within the meaning of applicable
securities laws (collectively, "forward-looking statements"). These
forward-looking statements related to, among other things, our
objectives, goals, strategies, intentions, plans, estimates and
outlook, including advertising, distribution, merchandise and
subscription revenues, operating costs and tariffs, taxes and fees, and
can generally be identified by the use of the words such as "believe",
"anticipate", "expect", "intend", "plan", "will", "may" and other
similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events
or circumstances are forward-looking statements. Although Corus
believes that the expectations reflected in such forward-looking
statements are reasonable, such statements involve risks and
uncertainties and undue reliance should not be placed on such
statements. Certain material factors or assumptions are applied in
making forward-looking statements, including without limitation factors
and assumptions regarding advertising, distribution, merchandise and
subscription revenues, operating costs and tariffs, taxes and fees and
actual results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual results to
differ materially from these expectations include, among other things:
our ability to attract and retain advertising revenues; audience
acceptance of our television programs and cable networks; our ability
to recoup production costs, the availability of tax credits and the
existence of co-production treaties; our ability to compete in any of
the industries in which we do business; the opportunities (or lack
thereof) that may be presented to and pursued by us; conditions in the
entertainment, information and communications industries and
technological developments therein; changes in laws or regulations or
the interpretation or application of those laws and regulations; our
ability to integrate and realize anticipated benefits from our
acquisitions and to effectively manage our growth; our ability to
successfully defend ourselves against litigation matters arising out of
the ordinary course of business; and changes in accounting standards.
Additional information about these factors and about the material
assumptions underlying such forward-looking statements may be found in
our Annual Information Form. Corus cautions that the foregoing list of
important factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with
respect to Corus, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Unless
otherwise required by applicable securities laws, we disclaim any
intention or obligation to publicly update or revise any
forward-looking statements whether as a result of new information,
events or circumstances that arise after the date thereof or otherwise.







CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



As at August 31,

(unaudited - in thousands of Canadian
dollars) 2013 2012

ASSETS

Current

Cash and cash equivalents 86,081 24,588

Accounts receivable 176,504 173,421

Promissory note receivable 47,759 --

Income taxes recoverable 341 9,542

Prepaid expenses and other 16,416 12,664



Total current assets 327,101 220,215



Tax credits receivable 41,564 43,865

Intangibles, investments and other assets 42,975 42,390

Property, plant and equipment 151,398 163,563

Program and film rights 289,181 271,244

Film investments 62,734 67,983

Broadcast licenses 563,771 569,505

Goodwill 674,393 674,393

Deferred tax assets 39,463 28,327

2,192,580 2,081,485



LIABILITIES AND SHAREHOLDERS' EQUITY

Current

Accounts payable and accrued liabilities 172,663 185,991

Provisions 3,941 2,322

Total current liabilities 176,604 188,313



Long-term debt 538,966 518,258

Other long-term liabilities 105,020 87,853

Deferred tax liabilities 151,157 150,971

Total liabilities 971,747 945,395



SHAREHOLDERS' EQUITY

Share capital 937,183 910,005

Contributed surplus 7,221 7,835

Retained earnings 256,517 198,445

Accumulated other comprehensive income
(loss) 1,653 (812)

Total equity attributable to shareholders 1,202,574 1,115,473

Equity attributable to non-controlling
interest 18,259 20,617

Total shareholders' equity 1,220,833 1,136,090

2,192,580 2,081,485













CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



Three months ended Year ended

August 31, August 31,

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

Revenues 193,634 195,624 803,541 842,276

Direct cost of sales,
general and
administrative
expenses 139,189 134,762 533,529 552,297

Depreciation and
amortization 6,031 6,408 26,903 25,639

Interest expense 10,473 12,242 46,332 52,269

Broadcast license and
goodwill impairment 5,734 -- 5,734 --

Debt refinancing -- -- 25,033 --

Business acquisition,
integration and
restructuring costs 5,196 1,841 7,343 4,166

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

Other expense
(income), net 8,391 (785) 8,553 (5,487)



Income before income
taxes 18,620 41,156 205,508 213,392

Income tax expense 5,279 16,171 39,759 57,241



Net income for the
period 13,341 24,985 165,749 156,151



Net income
attributable to:

Shareholders 11,879 23,341 159,895 148,681

Non-controlling
interest 1,462 1,644 5,854 7,470

13,341 24,985 165,749 156,151



Earnings per share
attributable to
shareholders:

Basic $ 0.14 $ 0.28 $ 1.91 $ 1.79

Diluted $ 0.14 $ 0.28 $ 1.90 $ 1.78



Net income for the
period 13,341 24,985 165,749 156,151

Other comprehensive
income (loss), net of
tax

Items that may be
reclassified
subsequently to
income:

Unrealized foreign
currency
translation
adjustment 648 (1,485) 2,333 486

Unrealized change
in fair value of
available-for-sale
investments 174 31 132 (223)

Actuarial gain
(loss) on employee
future benefits 616 (2,950) 616 (2,950)

1,438 (4,404) 3,081 (2,687)



Comprehensive income
for the period 14,779 20,581 168,830 153,464



Comprehensive income
attributable to:

Shareholders 13,317 18,937 162,976 145,994

Non-controlling
interest 1,462 1,644 5,854 7,470

14,779 20,581 168,830 153,464













CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(unaudited - in 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,
2012 910,005 7,835 198,445 (812) 1,115,473 20,617 1,136,090

Comprehensive
income -- -- 159,895 3,081 162,976 5,854 168,830

Actuarial gain
transfer -- -- 616 (616) -- -- --

Dividends
declared -- -- (84,452) -- (84,452) (6,331) (90,783)

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

Issuance of
shares under
dividend
reinvestment
plan 26,731 -- -- -- 26,731 -- 26,731

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

Share-based
compensation
expense -- 1,586 -- -- 1,586 -- 1,586

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

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



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

Comprehensive
income -- -- 148,681 (2,687) 145,994 7,470 153,464

Actuarial loss
transfer -- -- (2,950) 2,950 -- -- --

Dividends
declared -- -- (78,143) -- (78,143) (6,053) (84,196)

Issuance of
shares under
stock option
plan 13,668 (3,622) -- -- 10,046 -- 10,046

Issuance of
shares under
dividend
reinvestment
plan 25,982 -- -- -- 25,982 -- 25,982

Shares
repurchased (12,435) -- (12,860) -- (25,295) -- (25,295)

Share-based
compensation
expense -- 1,158 -- -- 1,158 -- 1,158

Repayment of
executive stock
purchase loans 111 -- -- -- 111 -- 111

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













CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



Three months ended Year ended
August 31, August 31,

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

OPERATING
ACTIVITIES

Net income for the
period 13,341 24,985 165,749 156,151

Add (deduct)
non-cash items:

Depreciation and
amortization 6,031 6,408 26,903 25,639

Broadcast license
and goodwill
impairment 5,734 -- 5,734 --

Amortization of
program and film
rights 48,099 46,543 190,176 186,348

Amortization of
film investments 8,360 10,052 25,759 32,001

Deferred income
taxes (1,356) 8,186 (11,332) 12,921

Investment
impairments 7,121 -- 7,121 --

Share-based
compensation
expense 424 268 1,586 1,158

Imputed interest 4,137 2,444 11,816 11,348

Debt refinancing -- -- 25,033 --

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

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

Other 818 738 700 (2,052)

Net change in
non-cash working
capital balances
related to
operations 12,609 (3,939) 4,584 (13,199)

Payment of program
and film rights (79,000) (65,422) (185,327) (196,689)

Net additions to
film investments 2,869 (569) (46,074) (40,933)

Cash provided by
operating
activities 29,187 29,694 167,034 170,310



INVESTING
ACTIVITIES

Additions to
property, plant and
equipment (2,715) (5,658) (13,043) (19,243)

Business
combinations -- -- -- (4,104)

Net cash flows for
intangibles,
investments and
other assets (1,568) (7,431) (10,855) (11,290)

Other (238) (75) (652) (635)

Cash used in
investing
activities (4,521) (13,164) (24,550) (35,272)



FINANCING
ACTIVITIES

Decrease in bank
loans -- (9,973) (29,925) (84,750)

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

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

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

Issuance of shares
under stock option
plan -- -- 884 10,046

Shares repurchased -- (21,407) (1,464) (25,295)

Dividends paid (15,112) (13,258) (56,696) (50,783)

Dividends paid to
non-controlling
interest (616) (1,630) (6,331) (6,053)

Other (1,138) (2,310) (10,727) (9,537)

Cash used in
financing
activities (16,866) (48,578) (80,991) (166,372)

Net change in cash
and cash
equivalents during
the period 7,800 (32,048) 61,493 (31,334)

Cash and cash
equivalents,
beginning of the
period 78,281 56,636 24,588 55,922

Cash and cash
equivalents, end of
the period 86,081 24,588 86,081 24,588













CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION



(unaudited - in thousands of Canadian dollars)



Three months
ended August
31, 2013

Television Radio Corporate Consolidated

Revenues 149,622 44,012 -- 193,634

Direct cost of
sales, general
and
administrative
expenses 93,153 32,348 13,688 139,189

Segment profit
(loss)(1) 56,469 11,664 (13,688) 54,445

Depreciation
and
amortization 6,031

Interest
expense 10,473

Broadcast
license and
goodwill
impairment 5,734

Business
acquisition,
integration and
restructuring
costs 5,196

Other expense
(income), net 8,391

Income before
income taxes 18,620



Three months
ended August
31, 2012

Television Radio Corporate Consolidated

Revenues 147,874 47,750 -- 195,624

Direct cost of
sales, general
and
administrative
expenses 93,384 32,755 8,623 134,762

Segment profit
(loss)(1) 54,490 14,995 (8,623) 60,862

Depreciation
and
amortization 6,408

Interest
expense 12,242

Business
acquisition,
integration and
restructuring
costs 1,841

Other expense
(income), net (785)

Income before
income taxes 41,156



Year ended
August 31, 2013

Television Radio Corporate Consolidated

Revenues 619,850 183,691 -- 803,541

Direct cost of
sales, general
and
administrative
expenses 371,071 128,543 33,915 533,529

Segment profit
(loss)(1) 248,779 55,148 (33,915) 270,012

Depreciation
and
amortization 26,903

Interest
expense 46,332

Broadcast
license and
goodwill
impairment 5,734

Debt
refinancing 25,033

Business
acquisition,
integration and
restructuring
costs 7,343

Gain on sale of
associated
company (55,394)

Other expense
(income), net 8,553

Income before
income taxes 205,508



Year ended
August 31, 2012

Television Radio Corporate Consolidated

Revenues 650,949 191,327 -- 842,276

Direct cost of
sales, general
and
administrative
expenses 388,811 133,900 29,586 552,297

Segment profit
(loss)(1) 262,138 57,427 (29,586) 289,979

Depreciation
and
amortization 25,639

Interest
expense 52,269

Business
acquisition,
integration and
restructuring
costs 4,166

Other expense
(income), net (5,487)

Income before
income taxes 213,392





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













Revenues by type

Three months ended Year ended

August 31, August 31,

2013 2012 2013 2012

Advertising 84,035 85,650 381,475 386,045

Subscriber fees 74,268 73,577 298,971 297,927

Merchandising,
distribution and other 35,331 36,397 123,095 158,304

193,634 195,624 803,541 842,276







SOURCE Corus Entertainment Inc.

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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