Third Quarter Highlights:
- Net income up by $14.1 million
- Earnings per share up $0.33
- Pro forma*** revenues up 7%
- Pro forma EBITDA** up 13% (up 15% excluding new copyright payments in the Radio division)
- Radio revenues up 6%
- Pro forma TV EBITDA up 11% Nine Months Highlights
- Net income up 30%
- Earnings per share up 30% to $0.65
- Pro forma EBITDA up 8%
- Radio revenues up 8%
- Pro forma TV EBITDA up 16%
(July 24, 2003 – Toronto, Canada) Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced today a $14.1 million increase in net income for the third quarter due to strong advertising revenue growth in its radio and adult-targeted specialty television channels and improved performance at Nelvana.
Consolidated revenue for the third quarter ending May 31, 2003 was $155.3 million, flat compared to $154.9 million a year ago*, despite the disposition of selected assets in fiscal 2002 and 2003. On a pro forma basis, consolidated revenues were up 7% over prior year from $145.6 million. Net income for the quarter was $12.3 million or $0.29 per share, up from a loss of $1.8 million or loss per share of $0.04 last year. EBITDA for the quarter was $44.2 million, up 8% compared to $40.9 million last year. On a pro forma basis, consolidated EBITDA grew 13% from $39.1 million. The Company’s EBITDA margin for the third quarter improved from 26% to 29%.
“We continue to be satisfied that an ad recovery is underway and we’re on track to deliver on our EBITDA target for the year,” said John Cassaday, President and CEO of Corus Entertainment. “Radio and our adult-targeted television properties all grew nicely in the quarter. Revenue in our kids’ television business was soft but this was primarily due to timing-related shifts in advertiser spending.”
Corus Radio revenues increased to $60.1 million, up 6% from $56.8 million last year, driven by a 9% increase in major market national advertising sales for the quarter. EBITDA was $18.3 million, up 6% from $17.2 million last year. Radio earnings growth was limited by new copyright payments made in the quarter. Excluding the new copyright payments, Radio EBITDA grew by 11% in the quarter. Radio EBITDA margins for the quarter remained consistent over prior year at 30%.
W Network led the television group with a 24% gain in advertising revenue over third quarter last year as W continued to increase its share of viewers. Movie Central, Corus’ western-based pay television service finished the quarter with 648,000 subscribers, up 6% for the year. Overall, Corus Television contributed quarterly revenue of $75.0 million, down 6% on an actual basis from $79.9 million primarily as a result of the disposition of Viewer’s Choice in fiscal 2002, but relatively flat over prior year on a pro forma basis. EBITDA grew to $27.2 million, up 6% from $25.7 million last year. On a pro forma basis, EBITDA increased by 11%.
Nelvana’s results for the quarter reflect the planned decline in production volume and the continued focus on branded consumer products as a growth strategy for the division. The ongoing popularity of the Beyblade brand boosted results for the Branded Consumer Products business with pro forma revenue and EBITDA growth of 79% and 76% over prior year respectively. Overall, the Content division delivered $20.6 million in third quarter revenue, up 9% from last year and 47% on a pro forma basis over last year. EBITDA was $1.4 million for the quarter, up from a loss of $1.2 million last year and a $2.0 million loss on a pro forma basis in prior year.
Consolidated year-to-date revenues were $468.8 million, down on an actual basis from $502.7 million last year, reflecting asset dispositions. However, on a pro forma basis, consolidated revenues grew by 2% from $461.7. Net income year-to-date was up 30% to $27.6 million or $0.65 per share, compared to $21.2 million or $0.50 per share last year. EBITDA for the nine months was $123.6 million, compared to $121.2 million last year. However, on a pro forma basis, EBITDA is up 8% from $114.9 million last year.
In the Radio division, YTD revenues were $168.4 million, up 8% from last year. EBITDA increased by 10% to $41.5 million. Excluding the new copyright payment, Radio EBITDA grew by 17%. YTD EBITDA margins were 25% up from 24% in prior year. Television YTD revenue was $231.7 million compared to $234.8 million last year, but up 1% on a pro forma basis from $229.5 million. EBITDA was $84.1 million, up 11% compared to $75.5 million last year and up 16% on a pro forma basis from $72.5 million. Television YTD EBITDA margins were 36% compared to 32% a year ago.
In the Content division, YTD revenues were $72.2 million down from $114.4 million last year, but on a pro forma basis, revenue decreased 8%. EBITDA was $4.1 million compared to $11.3 million last year and $8 million on a pro forma basis.
“We’re very pleased with the results this quarter, particularly our strong growth in net income,” added Heather Shaw, Executive Chair of Corus Entertainment. “The Company continues to demonstrate its ability to assess the marketplace, adjust to changes and achieve its targets. The third quarter growth across all business divisions gives us some positive momentum for the balance of the year.”
Corus Entertainment is a Canadian-based media and entertainment company. Corus is a market leader in both specialty TV and Radio. Corus also owns Nelvana Limited, a leading international producer and distributor of children’s programming and products. The company’s other interests include publishing, television broadcasting and advertising services. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) Exchanges. Corus’ Web site can be found at corusentertainment.com.
* Last year’s results have been restated to adopt the proportionate consolidation of certain investments and new Canadian accounting standards for foreign currency translation
** EBITDA is provided to assist investors in determining the ability of the Company to generate cash from operations to cover financial charges before income and expense items from investing activities, income taxes and items not considered to be in the ordinary course of business. It is also widely used for valuation purposes. A reconciliation of EBITDA and net income is provided in the consolidated statements of income and retained earnings. EBITDA is calculated as net income before minority interest, equity earnings from investees, income tax expense, writedown on investments, hedge transaction loss, restructuring charges, other (income)/expense, loss/(gain) on sale of investments, interest on long-term debt, amortization and depreciation. A listing of these items is disclosed in the consolidated statements of income and retained earnings. These items are excluded in the determination of EBITDA as they are non-cash in nature, pre-tax, financing charges, income or expense from investing activities or are not considered to be in the ordinary course of business. EBITDA should not be considered in isolation of, or as a substitute for, (1) net income or loss, as an indicator of the Company’s operating performance, or (2) cash flows from operating, investing and financing activities, as a measure of the Company’s liquidity.
*** Pro forma information (including pro forma revenues; pro forma EBITDA and pro forma EBITDA margin) is provided to assist investors in comparing results between periods after giving effect to significant acquisitions and divestitures. In particular, results from the same period in fiscal 2002 have been adjusted to reflect operating results of all businesses reporting in the current period as if the businesses had been owned for the same number of days in the prior year. Pro forma information is provided on the basis of the Company’s reportable business segments (Television, Radio and Content) for revenues and EBITDA – the measure of profitability reviewed by the chief operating decision maker of these divisions, since there were acquisitions and/or dispositions in each of these divisions during fiscal 2002 or fiscal 2003.
Certain statements in this press release may constitute forward-looking statements and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current 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; and, changes in accounting standards. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. 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.
For further information, please contact:
President and Chief Executive Officer
Corus Entertainment Inc.
Senior Vice President & Chief Financial Officer
Corus Entertainment Inc.
Vice President, Communications
Corus Entertainment Inc.
Full financial details are available on the Corus Entertainment Web site at www.corusentertainment.com under Financial Info.