Corus Entertainment Announces Fiscal 2014 Third Quarter Results - FOX 18 Quad Cities News and Weather

Corus Entertainment Announces Fiscal 2014 Third Quarter Results

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SOURCE Corus Entertainment Inc.

  • Consolidated revenues up 14% for the quarter and 11% year-to-date
  • Consolidated segment profit up 23% for the quarter and 16% year-to-date
  • Adjusted net income attributable to shareholders of $41.6 million, up 21% in the quarter
  • Adjusted basic earnings per share attributable to shareholders of $0.49, up 20% in the quarter
  • Free cash flow of $182.4 million year-to-date, up from $121.1 million in the prior year

TORONTO, July 10, 2014 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"In the third quarter, the Company delivered impressive double-digit revenue and segment profit growth fueled by our newly acquired television and radio assets," said John Cassaday, President and Chief Executive Officer of Corus Entertainment.  "While we experienced continued softness in the ad markets, we are encouraged by the ratings strength of our flagship networks W and YTV, which have maintained a leadership position with their core audiences, as well as the strong ratings gains from our family brands CMT and ABC Spark. The strength of our recent acquisitions, combined with our core business, continue to drive shareholder value with strong free cash flow and adjusted earnings per share growth for the Company."


Financial Highlights






Three months ended

Nine months ended 


May 31,

May 31, 

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

2014 

2013(3) 

2014 

2013(3)

Revenues





  Television

 170,565 

 139,995 

 500,615 

 429,960  

  Radio

 43,476 

 47,078 

 130,844 

 139,679  


 214,041 

 187,073 

 631,459 

 569,639  






Segment profit (1)





  Television

 75,679 

 58,154 

 216,237 

 176,786  

  Radio

 11,678 

 14,874 

 35,985 

 43,484  

  Corporate

 (7,626)

 (8,464)

 (20,933)

 (20,227) 


 79,731 

 64,564 

 231,289 

 200,043  






Net income (loss) attributable to shareholders

 (30,325) 

 89,913 

 126,682 

 148,016  

Adjusted net income attributable to shareholders (1) (2)

 41,602 

 34,519 

 123,560 

 111,110  






Basic earnings (loss) per share

($ 0.36)

$ 1.07

$ 1.49

$ 1.77 

Adjusted basic earnings per share (1) (2)

$ 0.49

$ 0.41

$ 1.46

$ 1.33 

Diluted earnings (loss) per share

($ 0.36)

$ 1.07

$ 1.49

$ 1.76 






Free cash flow (1)

 59,399 

 41,475 

 182,440 

 121,084  






(1) Adjusted net income attributable to shareholders, adjusted basic earnings per share, segment profit, segment profit margin and free cash flow do not have standardized meanings prescribed by IFRS.  The Company reports on segment profit, segment profit margin 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 2014 Report to Shareholders.  

(2) For the three months ended May 31, 2014, excludes radio broadcast license and goodwill impairment charges of $75.0 million ($0.85 per share), business acquisition, integration and restructuring costs of $0.6 million ($0.01 per share), capital asset impairment charges of $1.2 million ($0.01 per share) and a decrease in the purchase price obligation of $2.0 million ($0.02 per share).  For the nine month period ended May 31, 2014, 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,  radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $41.2 million ($0.47 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share), and investment impairment related charges of $3.3 million ($0.04 per share).  For the three and nine month periods ended May 31, 2013, excludes the impact of a gain on disposition of the Food Network Canada investment of $55.4 million ($0.66 per share), while for the nine month period, the impact of debt refinancing costs of $25.0 million ($0.22 per share) are excluded as well. 

(3)  Prior period figures have been restated to reflect the changes in accounting standards described in note 3 to the interim condensed consolidated financial statements contained in the 2014 Report to Shareholders.  

Consolidated Results from Operations

For fiscal 2014, the operating results of TELETOON Canada Inc. ("TELETOON"), as well as its assets and liabilities, have been fully consolidated effective September 1, 2013 as a consequence of meeting the definition of control under IFRS 10 - Consolidated Financial Statements. Accordingly, a business combination had occurred in accordance with IFRS 3 – Business Combinations and as a result, TELETOON must be accounted for by applying the acquisition method.  On December 20, 2013, the Company received Canadian Radio-television and Telecommunications Commission ("CRTC") approval to complete the acquisition of the remaining 50% interest in TELETOON that it did not already own, as well as the acquisition of Historia and Séries+, s.e.n.c. ("H&S").  These acquisitions closed on January 1, 2014.  On January 24, 2014, the CRTC approved the Company's acquisition of the Ottawa-based radio stations (CKQB-FM and CJOT-FM) and the transaction closed on January 31, 2014.  As a result of these business combinations, the Company's consolidated results for fiscal 2014 reflect 100% interest in TELETOON effective September 1, 2013, 100% interest in H&S effective January 1, 2014, and 100% interest in the two Ottawa-based radio stations effective January 31, 2014 (refer to note 17 of the interim condensed consolidated financial statements for further details on all acquisitions). 

For fiscal 2013, as a result of retroactive application of IFRS 11 - Joint Arrangements, the Company is no longer permitted to proportionately consolidate its 50% equity interest in the operations of TELETOON up to August 31, 2013 (i.e. prior to the business combination on September 1, 2013) and is required to account for its investment using the equity method of accounting.  As a consequence, the Television revenues and segment profit for the third quarter of fiscal 2013 were reduced by $13.0 million and $3.7 million, respectively and instead, Corus' share of TELETOON's net income of $2.3 million was reported as Other expense (income) in the Consolidated Statements of Income and Comprehensive Income.  For the nine months ended May 31, 2013, the Television revenues and segment profit were reduced by $40.3 million and $15.5 million, respectively, and Corus' share of TELETOON's net income of $11.0 million was reported as Other expense (income) in the Consolidated Statements of Income and Comprehensive Income. The restatement did not change reported net income for fiscal 2013. 

Consolidated revenues for the three months ended May 31, 2014 were $214.0 million, up 14% from $187.1 million last year.  Consolidated segment profit was $79.7 million, up 23% from $64.6 million last year.  Net loss attributable to shareholders for the quarter was $30.3 million ($0.36 basic and diluted per share), compared to net income of $89.9 million ($1.07 basic and diluted per share) last year.  Net income attributable to shareholders for the third quarter includes radio broadcast license and goodwill impairment charges of $75.0 million, capital asset impairment charges of $1.2 million, business acquisition, integration and restructuring costs of $0.6 million and a decrease in the purchase price obligation of $2.0 million related to the acquisition of control of TELETOON.  Removing the impact of these items results in an adjusted net income of $41.6 million ($0.49 per share) in the quarter.  Net income attributable to shareholders for the prior year 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 per share) in the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2014 were $631.5 million, up 11% from $569.6 million last year.  Consolidated segment profit was $231.3 million, up 16% from $200.0 million last year.  Net income attributable to shareholders for the nine months ended May 31, 2014 was $126.7 million ($1.49 per share both basic and diluted)  compared to $148.0 million ($1.77 per share basic and $1.76 per share diluted) last year.  Net income attributable to shareholders for the nine months ended May 31, 2014 includes a non-cash gain of $127.9 million 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, radio broadcast license and goodwill impairment charges of $83.0 million, capital asset impairment charges of $1.2 million, business acquisition, integration and restructuring costs of $41.2 million, an increase in the purchase price obligation of $3.3 million and investment impairment related charges of $3.3 million.  Removing the impact of these items results in an adjusted net income of $123.6 million ($1.46 per share) for the current year-to-date. Prior 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 per share) in the prior year-to-date. 

Operational Results - Highlights

Television

  • Fiscal 2014 reflects consolidation of 100% interest in TELETOON, effective September 1, 2013 and 100% interest in Historia and Séries+, effective January 1, 2014; Fiscal 2013 was retroactively restated to apply IFRS 11 – Joint Arrangements, resulting in equity accounting for Corus' 50% economic interest in TELETOON (i.e. prior to the business combination on September 1, 2013)
  • Segment revenues increased 22% in Q3 2014 and 16% year-to-date
  • Specialty advertising revenues increased 42% in Q3 2014 and 38% year-to-date
  • Subscriber revenues increased 24% in Q3 2014 and 20% year-to-date
  • Merchandising, distribution and other revenues declined 27% in Q3 2014 and 33% year-to-date
  • Segment profit(1) increased 30% in Q3 2014 and 22% year-to-date
  • Segment profit margin(1) of 44% in Q3 2014 and 43% year-to-date

Radio

  • Fiscal 2014 reflects consolidation of 100% interest in two Ottawa-based radio stations, CKQB-FM and CJOT-FM, effective January 31, 2014
  • Segment revenues decreased 8% in Q3 2014 and 6% year-to-date
  • Segment profit(1) decreased 21% in Q3 2014 and 17% year-to-date
  • Segment profit margin(1) of 27% in Q3 2014 and 28% year-to-date
  • Non-cash broadcast license and goodwill impairment charges of $75.0 million recorded in Q3 2014 and $83.0 million year-to-date.
 (1)   

Segment profit, segment profit margin and free cash flow do not have standardized meanings prescribed by IFRS.  The Company reports on segment profit, segment profit margin 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 2014 Report to Shareholders.

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three and nine month periods ended May 31, 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 July 10, 2014 at 3:00 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 local and international callers is 1.416.981.9038 and for North America is 1.800.734.8582.  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, 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, 99.3 The FOX, 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 May 31,

As at August 31,

As at September 1,

(unaudited - in thousands of Canadian dollars)

2014 

2013(1) 

2012(1) 

ASSETS




Current




Cash and cash equivalents

 38,236 

 81,266 

 19,198 

Accounts receivable

 203,206 

 164,302 

 163,345 

Promissory note receivable

-  

 47,759 

-  

Income taxes recoverable

 4,789 

 351 

 9,542 

Prepaid expenses and other

 10,447 

 16,392 

 12,619 





Total current assets

 256,678 

 310,070 

 204,704 





Tax credits receivable

 45,133 

 41,564 

 43,865 

Intangibles, investments and other assets

 44,345 

 42,975 

 42,390 

Investment in joint venture

-  

 125,931 

 121,704 

Property, plant and equipment

 143,274 

 151,192 

 163,280 

Program and film rights

 287,442 

 232,587 

 229,306 

Film investments

 68,284 

 62,274 

 67,847 

Broadcast licenses

 979,984 

 515,036 

 520,770 

Goodwill

 937,191 

 646,045 

 646,045 

Deferred tax assets

 38,093 

 39,463 

 28,327 


 2,800,424 

 2,167,137 

 2,068,238 





LIABILITIES AND SHAREHOLDERS' EQUITY




Current




Accounts payable and accrued liabilities

 248,422 

 164,443 

 177,367 

Income taxes payable

-  

-  

 1,303 

Provisions

 3,912 

 3,941 

 2,322 

Total current liabilities

 252,334 

 168,384 

 180,992 





Long-term debt

 873,587 

 538,966 

 518,258 

Other long-term liabilities

 119,174 

 93,241 

 87,588 

Deferred tax liabilities

 254,504 

 145,713 

 145,310 

Total liabilities

 1,499,599 

 946,304 

 932,148 

SHAREHOLDERS' EQUITY




Share capital

 957,477 

 937,183 

 910,005 

Contributed surplus

 8,432 

 7,221 

 7,835 

Retained earnings

 315,185 

 256,517 

 198,445 

Accumulated other comprehensive income (loss)

 3,618 

 1,653 

 (812)

Total equity attributable to shareholders

 1,284,712 

 1,202,574 

 1,115,473 

Equity attributable to non-controlling interest

 16,113 

 18,259 

 20,617 

Total shareholders' equity

 1,300,825 

 1,220,833 

 1,136,090 


 2,800,424 

 2,167,137 

 2,068,238 

(1) Prior period figures have been restated to reflect the changes in accounting standards described in note 3
to the interim condensed consolidated financial statements contained in the 2014 Report to Shareholders.



CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME







Three months ended

Nine months ended


May 31,

May 31,

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

2014 

2013 (1)

2014 

2013 (1)

Revenues

 214,041 

 187,073 

 631,459 

 569,639 

Direct cost of sales, general and administrative expenses

 134,310 

 122,509 

 400,170 

 369,596 

Depreciation and amortization

 7,385 

 6,904 

 18,653 

 20,805 

Interest expense

 13,453 

 10,456 

 35,327 

 35,859 

Broadcast license and goodwill impairment

75,000 

-  

 83,000 

-  

Debt refinancing

-  

-  

-  

 25,033 

Business acquisition, integration and restructuring costs

 560 

 2,147 

 41,216 

 2,147 

Gain on acquisition

-  

 (55,394)

 (127,884)

 (55,394)

Other (income) expense, net

 (1,489)

 (2,193)

 7,216 

 (10,860)






Income (loss) before income taxes

(15,178)

 102,644 

173,761 

 182,453 

Income tax expense

 13,691 

 11,132 

 43,224 

 30,045 






Net income (loss) for the period

(28,869)

 91,512 

 130,537 

 152,408 






Net income (loss) attributable to:





Shareholders

(30,325)

 89,913 

 126,682 

 148,016 

Non-controlling interest

 1,456 

 1,599 

 3,855 

 4,392 


(28,869)

 91,512 

 130,537 

 152,408 






Earnings (loss) per share attributable to shareholders:





     Basic

($ 0.36)

$ 1.07

$ 1.49

$ 1.77

     Diluted

($ 0.36)

$ 1.07

$ 1.49

$ 1.76






Net income (loss) for the period

(28,869)

 91,512 

 130,537 

 152,408 

Other comprehensive income (loss), net of tax:





Items that may be reclassified subsequently to income:





Unrealized foreign currency translation adjustment

 (646)

 204 

 1,620 

 1,685 

Unrealized change in fair value of available-





   for-sale investments

 392 

 (368)

 454 

 (42)

Unrealized change in fair value of cash flow





   hedges

37 

-  

 (109)

-  


 (217)

 (164)

 1,965 

 1,643 






Comprehensive income (loss) for the period

(29,086)

 91,348 

 132,502 

 154,051 






Comprehensive income (loss) attributable to:





     Shareholders

(30,542)

 89,749 

 128,647 

 149,659 

     Non-controlling interest

 1,456 

 1,599 

 3,855 

 4,392 


(29,086)

 91,348 

 132,502 

 154,051 

(1) Prior period figures have been restated to reflect changes in accounting standards described in note 3 to the interim condensed
consolidated financial statements contained in the 2014 Report to Shareholders.


CORUS ENTERTAINMENT INC.


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY





























(unaudited - in thousands of Canadian dollars)

Share
capital

Contributed
surplus

Retained
earnings

Accumulated
other
comprehensive
income (loss)

Total equity
attributable
to shareholders

Non-
controlling
interest

Total
equity



At August 31, 2013

 937,183 

 7,221 

 256,517 

 1,653 

 1,202,574 

 18,259 

 1,220,833 


Comprehensive income

-  

-  

 126,682 

 1,965 

 128,647 

 3,855 

 132,502 


Dividends declared

-  

-  

 (68,014)

-  

 (68,014)

 (6,001)

 (74,015)


Issuance of shares under stock option plan

 1,737 

 (278)

-  

-  

 1,459 

-  

 1,459 


Issuance of shares under dividend reinvestment plan

 18,557 

-  

-  

-  

 18,557 

-  

 18,557 


Share-based compensation expense

-  

 1,489 

-  

-  

 1,489 

-  

 1,489 


At May 31, 2014

 957,477 

 8,432 

 315,185 

 3,618 

 1,284,712 

 16,113 

1,300,825 











At August 31, 2012

 910,005 

 7,835 

 198,445 

 (812)

 1,115,473 

 20,617 

 1,136,090 


Comprehensive income

-  

-  

 148,016 

 1,643 

 149,659 

 4,392 

 154,051 


Dividends declared

-  

-  

 (62,914)

-  

 (62,914)

 (5,715)

 (68,629)


Issuance of shares under stock option plan

 1,155 

 (2,200)

-  

-  

 (1,045)

-  

 (1,045)


Issuance of shares under dividend reinvestment plan

 20,350 

-  

-  

-  

 20,350 

-  

 20,350 


Shares repurchased

 (708)

-  

 (756)

-  

 (1,464)

-  

 (1,464)


Share-based compensation expense

-  

 1,162 

-  

-  

 1,162 

-  

 1,162 


Acquisition of non-controlling interest

-  

-  

 (17,231)

-  

 (17,231)

 (1,881)

 (19,112)


At May 31, 2013

 930,802 

 6,797 

 265,560 

 831 

 1,203,990 

 17,413 

 1,221,403 













CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS







Three months ended May 31,

Nine months ended May 31,

(unaudited - in thousands of Canadian dollars)

2014 

2013(1) 

2014 

2013(1) 

OPERATING ACTIVITIES





Net income (loss) for the period

 (28,869)

 91,512 

 130,537 

 152,408 

Add (deduct) non-cash items:





   Depreciation and amortization

 7,385 

 6,904 

 18,653 

 20,805 

   Broadcast license and goodwill impairment

75,000 

-  

 83,000 

-  

   Amortization of program and film rights

 51,624 

 43,493 

 153,768 

 126,714 

   Amortization of film investments

 4,201 

 7,691 

 13,256 

 17,399 

   Deferred income taxes

(637)

 (3,250)

 4,384 

 (9,976)

   Increase (decrease) in purchase price obligation

 (1,952)

-  

3,336 

-  

   Share-based compensation expense

 528 

 430 

 1,489 

 1,162 

   Imputed interest

 3,840 

 2,526 

 10,985 

 7,679 

   Tangible benefit obligation

-  

-  

 31,916 

-  

   Debt refinancing

-  

-  

-  

 25,033 

   Gain on sale of associated company

-  

 (55,394)

-  

 (55,394)

   Gain on acquisition

-  

-  

 (127,884)

-  

   Other

 485 

 (4,174)

 1,900 

 (12,624)

Net change in non-cash working capital





   balances related to operations

14,870 

 1,978 

3,312 

 (7,325)

Payment of program and film rights

 (43,975)

 (33,968)

 (104,653)

 (95,491)

Net additions to film investments

 (19,017)

 (14,709)

 (32,765)

 (48,943)

Cash provided by operating activities

 63,483 

 43,039 

 191,234 

 121,447 






INVESTING ACTIVITIES





Additions to property, plant and equipment

 (3,435)

 (2,853)

 (7,715)

 (10,317)

Business combinations

 (5,265)

-  

 (496,706)

-  

Dividends from investment in joint venture

-  

 1,290 

-  

 9,041 

Net cash flows for intangibles, investments and other assets

 (2,321)

 (2,321)

 (7,395)

 (9,287)

Other

 (201)

 (90)

 (323)

 (414)

Cash used in investing activities

 (11,222)

 (3,974)

 (512,139)

 (10,977)






FINANCING ACTIVITIES





Increase (decrease) in bank loans

 (39,964)

-  

 333,101 

 (29,925)

Issuance of notes

-  

-  

-  

 550,000 

Redemption of notes

-  

 (500,000)

-  

 (500,000)

Financing fees

-  

 (18,125)

 (587)

 (26,732)

Issuance of shares under stock option plan

 566 

 135 

 1,459 

 884 

Shares repurchased

-  

-  

-  

 (1,464)

Dividends paid

 (16,380)

 (14,586)

 (48,316)

 (41,584)

Dividends paid to non-controlling interest

-  

 (599)

 (6,001)

 (5,715)

Other

 (532)

 (4,488)

 (1,781)

 (9,589)

Cash provided by (used in) financing activities

 (56,310)

 (537,663)

 277,875 

 (64,125)

Net change in cash and cash equivalents





   during the period

 (4,049)

 (498,598)

 (43,030)

 46,345 

Cash and cash equivalents, beginning of the period

 42,285 

 564,141 

 81,266 

 19,198 

Cash and cash equivalents, end of the period

 38,236 

 65,543 

 38,236 

 65,543 

(1) Prior period figures have been restated to reflect changes in accounting standards described in note 3 to the interim
condensed consolidated financial statements contained in the 2014 Report to Shareholders.


CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION


(unaudited - in thousands of Canadian dollars)







Three months ended May 31, 2014



Television

Radio

Corporate

Consolidated

Revenues

 170,565 

 43,476 

-  

 214,041 

Direct cost of sales, general






and administrative expenses

 94,886 

 31,798 

 7,626 

 134,310 

Segment profit (loss) (1)

 75,679 

 11,678 

 (7,626)

 79,731 

Depreciation and amortization




 7,385 

Interest expense




 13,453 

Broadcast license and goodwill impairment




75,000 

Business acquisition, integration and restructuring costs




 560 

Other income, net




 (1,489)

Loss before income taxes




(15,178)







Three months ended May 31, 2013



Television (2)

Radio

Corporate

Consolidated

Revenues

 139,995 

 47,078 

-  

 187,073 

Direct cost of sales, general






and administrative expenses

 81,841 

 32,204 

 8,464 

 122,509 

Segment profit (loss) (1)

 58,154 

 14,874 

 (8,464)

 64,564 

Depreciation and amortization




 6,904 

Interest expense




 10,456 

Gain on sale of associated company




 (55,394)

Business acquisition, integration and restructuring costs




 2,147 

Other income, net




 (2,193)

Income before income taxes




 102,644 







Nine months ended May 31, 2014







Television

Radio

Corporate

Consolidated

Revenues

 500,615 

 130,844 

-  

 631,459 

Direct cost of sales, general






and administrative expenses

 284,378 

 94,859 

 20,933 

 400,170 

Segment profit (loss)(1)

 216,237 

 35,985 

 (20,933)

 231,289 

Depreciation and amortization




 18,653 

Interest expense




 35,327 

Broadcast license and goodwill impairment




 83,000 

Business acquisition, integration and restructuring costs




 41,216 

Gain on acquisition




 (127,884)

Other expense, net




 7,216 

Income before income taxes




 173,761 







Nine months ended May 31, 2013







Television (2)

Radio

Corporate

Consolidated

Revenues

 429,960 

 139,679 

-  

 569,639 

Direct cost of sales, general






and administrative expenses

 253,174 

 96,195 

 20,227 

 369,596 

Segment profit (loss) (1)

 176,786 

 43,484 

 (20,227)

 200,043 

Depreciation and amortization




 20,805 

Interest expense




 35,859 

Gain on sale of associated company




 (55,394)

Debt refinancing




 25,033 

Business acquisition, integration and restructuring costs




 2,147 

Other income, net




 (10,860)

Income before income taxes




 182,453 

(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 2014 Report to Shareholders.

(2) Prior period figures have been restated to reflect the changes in accounting standards described in note 3 to the interim
consolidated financial statements contained in the 2014 Report to Shareholders.

Revenues by type






Three months ended

Nine months ended


May 31,

May 31,

May 31,

May 31,


2014 

2013(1) 

2014 

2013(1) 

Advertising

 108,039 

 91,961 

 319,281 

 274,475 

Subscriber fees

 86,522 

 70,006 

 249,199 

 207,622 

Merchandising, distribution and other

 19,480 

 25,106 

 62,979 

 87,542 


 214,041 

 187,073 

 631,459 

 569,639 






(1) Prior period figures have been restated to reflect the changes in accounting standards described in note 3 to the interim condensed consolidated
financial statements contained in the 2014 Report to Shareholders.

Reconciliation of changes related to the retroactive adoption of IFRS 11 - Joint Arrangements in the consolidated statements of financial position, income and comprehensive income, and cash flows for the periods indicated.











Consolidated Statements of Financial Position






(in thousands of Canadian dollars)

August 31, 2013

September 1, 2012


Originally
Reported

IFRS 11
Adjustment

Restated

Originally
Reported

IFRS 11
Adjustment

Restated

Assets







Cash and cash equivalents

 86,081 

 (4,815)

 81,266 

 24,588 

 (5,390)

 19,198 

Accounts receivable

 176,504 

 (12,202)

 164,302 

 173,421 

 (10,076)

 163,345 

Promissory note receivable

 47,759 

-  

 47,759 

-  

-  

-  

Income taxes recoverable

 341 

 10 

 351 

 9,542 

-  

 9,542 

Prepaid expenses and other

 16,416 

 (24)

 16,392 

 12,664 

 (45)

 12,619 

Total current assets

 327,101 

 (17,031)

 310,070 

 220,215 

 (15,511)

 204,704 








Tax credits receivable

 41,564 

-  

 41,564 

 43,865 

-  

 43,865 

Intangibles, investments and other assets

 42,975 

-  

 42,975 

 42,390 

-  

 42,390 

Investments in joint venture

-  

 125,931 

 125,931 

-  

 121,704 

 121,704 

Property, plant and equipment

 151,398 

 (206)

 151,192 

 163,563 

 (283)

 163,280 

Program and film rights

 289,181 

 (56,594)

 232,587 

 271,244 

 (41,938)

 229,306 

Film investments

 62,734 

 (460)

 62,274 

 67,983 

 (136)

 67,847 

Broadcast licenses

 563,771 

 (48,735)

 515,036 

 569,505 

 (48,735)

 520,770 

Goodwill

 674,393 

 (28,348)

 646,045 

 674,393 

 (28,348)

 646,045 

Deferred tax assets

 39,463 

-  

 39,463 

 28,327 

-  

 28,327 


 2,192,580 

 (25,443)

 2,167,137 

 2,081,485 

 (13,247)

 2,068,238 








Liabilities and Shareholders' Equity







Accounts payable and accrued liabilities

 172,663 

 (8,220)

 164,443 

 185,991 

 (8,624)

 177,367 

Income taxes payable

-  

-  

-  

-  

 1,303 

 1,303 

Provisions

 3,941 

-  

 3,941 

 2,322 

-  

 2,322 

Total current liabilities

 176,604 

 (8,220)

 168,384 

 188,313 

 (7,321)

 180,992 

Long-term debt

 538,966 

-  

 538,966 

 518,258 

-  

 518,258 

Other long-term liabilities

 105,020 

 (11,779)

 93,241 

 87,853 

 (265)

 87,588 

Deferred tax liabilities

 151,157 

 (5,444)

 145,713 

 150,971 

 (5,661)

 145,310 

Total liabilities

 971,747 

 (25,443)

 946,304 

 945,395 

 (13,247)

 932,148 








Shareholders' Equity







Share capital

 937,183 

-  

 937,183 

 910,005 

-  

 910,005 

Contributed surplus

 7,221 

-  

 7,221 

 7,835 

-  

 7,835 

Retained earnings

 256,517 

-  

 256,517 

 198,445 

-  

 198,445 

Accumulated other comprehensive income (loss)

 1,653 

-  

 1,653 

 (812)

-  

 (812)

Total equity attributable to shareholders

 1,202,574 

-  

 1,202,574 

 1,115,473 

-  

 1,115,473 

Equity attributable to non-controlling interest

 18,259 

-  

 18,259 

 20,617 

-  

 20,617 

Total shareholders' equity

 1,220,833 

-  

 1,220,833 

 1,136,090 

-  

 1,136,090 


 2,192,580 

 (25,443)

 2,167,137 

 2,081,485 

 (13,247)

 2,068,238 















Consolidated Statements of Income and Comprehensive Income











(in thousands of Canadian dollars)

Three months ended May 31, 2013

Nine months ended May 31, 2013


Originally
Published

IFRS 11
Adjustment

Restated

Originally
Published

IFRS 11
Adjustment

Restated








Revenues

 200,060 

 (12,987)

 187,073 

 609,907 

 (40,268)

 569,639 

Direct cost of sales, general and







    administrative expenses

 131,834 

 (9,325)

 122,509 

 394,340 

 (24,744)

 369,596 

Segment profit

 68,226 

 (3,662)

 64,564 

 215,567 

 (15,524)

 200,043 

Depreciation and amortization

 6,926 

 (22)

 6,904 

 20,872 

 (67)

 20,805 

Interest expense

 10,456 

-  

 10,456 

 35,859 

-  

 35,859 

Debt refinancing

-  

-  

-  

 25,033 

-  

 25,033 

Business acquisition, integration and restructuring costs

 2,147 

-  

 2,147 

 2,147 

-  

 2,147 

Gain on sale of associated company

 (55,394)

-  

 (55,394)

 (55,394)

-  

 (55,394)

Other expense (income), net

 82 

 (5)

 77 

 162 

 (16)

 146 

Income from joint venture

-  

 (2,270)

 (2,270)

-  

 (11,006)

 (11,006)

Income before income taxes

 104,009 

 (1,365)

 102,644 

 186,888 

 (4,435)

 182,453 

Income tax expense

 12,497 

 (1,365)

 11,132 

 34,480 

 (4,435)

 30,045 

Net income for the period

 91,512 

-  

 91,512 

 152,408 

-  

 152,408 








Net income attributable to:







Shareholders

 89,913 

-  

 89,913 

 148,016 

-  

 148,016 

Non-controlling interest

 1,599 

-  

 1,599 

 4,392 

-  

 4,392 


 91,512 

-  

 91,512 

 152,408 

-  

 152,408 








Earnings per share attributable to shareholders:







Basic

$ 1.07 

-  

$ 1.07 

$ 1.77 

 -  

$ 1.77 

Diluted

$ 1.07 

-  

$ 1.07 

$ 1.76 

-  

$ 1.76 















Net income for the period

 91,512 

-  

 91,512 

 152,408 

-  

 152,408 








Other comprehensive income (loss), net of tax:







Items that may be reclassified subsequently to income:







Unrealized foreign currency translation adjustment

 204 

-  

 204 

 1,685 

-  

 1,685 

Unrealized change in fair value of available-for-sale investments

 (368)

-  

 (368)

 (42)

-  

 (42)


 (164)

-  

 (164)

 1,643 

-  

 1,643 

Comprehensive income for the period

 91,348 

-  

 91,348 

 154,051 

-  

 154,051 








Comprehensive income attributable to:







Shareholders

 89,749 

-  

 89,749 

 149,659 

-  

 149,659 

Non-controlling interest

 1,599 

-  

 1,599 

 4,392 

-  

 4,392 


 91,348 

-  

 91,348 

 154,051 

-  

 154,051 


Consolidated Statements of Cash Flows







(in thousands of Canadian dollars)

Three months ended May 31, 2013

Nine months ended May 31, 2013


Originally
Published

IFRS 11
Adjustment

Restated

Originally
Published

IFRS 11
Adjustment

Restated

Operating Activities







Net income for the period

 91,512 

-  

 91,512 

 152,408 

-  

 152,408 

Add (deduct) non-cash items:







     Depreciation and amortization

 6,926 

 (22)

 6,904 

 20,872 

 (67)

 20,805 

     Amortization of program and film rights

 49,476 

 (5,983)

 43,493 

 142,077 

 (15,363)

 126,714 

     Amortization of film investment

 7,691 

-  

 7,691 

 17,399 

-  

 17,399 

     Deferred income taxes

 (3,250)

-  

 (3,250)

 (9,976)

-  

 (9,976)

     Share-based compensation expense

 430 

-  

 430 

 1,162 

-  

 1,162 

     Imputed interest

 2,526 

-  

 2,526 

 7,679 

-  

 7,679 

     Debt refinancing

-  

-  

-  

 25,033 

-  

 25,033 

     Gain on sale of associated company

 (55,394)

-  

 (55,394)

 (55,394)

-  

 (55,394)

     Other

 (404)

 (3,770)

 (4,174)

 (118)

 (12,506)

 (12,624)

Net change in non-cash working capital balances related to operations

 1,521 

 457 

 1,978 

 (8,025)

 700 

 (7,325)

Payment of program and film rights

 (38,895)

 4,927 

 (33,968)

 (106,327)

 10,836 

 (95,491)

Net additions to film investment

 (14,709)

-  

 (14,709)

 (48,943)

-  

 (48,943)

Cash provided by operating activities

 47,430 

 (4,391)

 43,039 

 137,847 

 (16,400)

 121,447 








Investing Activities







Additions to property, plant and equipment

 (2,856)

 3 

 (2,853)

 (10,328)

 11 

 (10,317)

Dividends from investments in joint venture

-  

 1,290 

 1,290 

-  

 9,041 

 9,041 

Net cash flows for intangibles, investments and other assets

 (2,321)

-  

 (2,321)

 (9,287)

-  

 (9,287)

Other

 (90)

-  

 (90)

 (414)

-  

 (414)

Cash used in investing activities

 (5,267)

 1,293 

 (3,974)

 (20,029)

 9,052 

 (10,977)








Financing Activities







Decrease in bank loans

-  

-  

-  

 (29,925)

-  

 (29,925)

Issuance of notes

-  

-  

-  

 550,000 

-  

 550,000 

Redemption of notes

 (500,000)

-  

 (500,000)

 (500,000)

-  

 (500,000)

Financing fees

 (18,125)

-  

 (18,125)

 (26,732)

-  

 (26,732)

Issuance of shares under stock option plan

 135 

-  

 135 

 884 

-  

 884 

Shares repurchased

-  

-  

-  

 (1,464)

-  

 (1,464)

Dividends paid

 (14,586)

-  

 (14,586)

 (41,584)

-  

 (41,584)

Dividends paid to non-controlling interest

 (599)

-  

 (599)

 (5,715)

-  

 (5,715)

Other

 (4,488)

-  

 (4,488)

 (9,589)

-  

 (9,589)

Cash used in financing activities

 (537,663)

-  

 (537,663)

 (64,125)

-  

 (64,125)








Net change in cash and cash equivalents during the period

 (495,500)

 (3,098)

 (498,598)

 53,693 

 (7,348)

 46,345 

Cash and cash equivalents, beginning of the period

 573,781 

 (9,640)

 564,141 

 24,588 

 (5,390)

 19,198 

Cash and cash equivalents, end of the period

 78,281 

 (12,738)

 65,543 

 78,281 

 (12,738)

 65,543 

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