TVA Group Inc.
TSX : TVA.B

TVA Group Inc.

March 07, 2011 11:12 ET

TVA Group Reports Net Income of $19.8 Million for the Fourth Quarter Ended December 31, 2010

MONTREAL, CANADA--(Marketwire - March 7, 2011) - TVA Group Inc. (the "Corporation") (TSX:TVA.B) announces that it recorded net income of $19.8 million, or $0.83 per share, for the last quarter of 2010, compared with $21.1 million, or $0.89 per share, in the corresponding quarter of 2009. Excluding the favourable adjustment related to Canadian Radio-television and Telecommunications Commission ("CRTC") Part II licence fees recorded in the last quarter of 2009, the Corporation's operating income1 was $29.8 million, compared with $23.2 million in the same quarter of 2009, an increase of 28.6%.

Fourth quarter operating highlights:

  • The Television sector's normalized operating income1 increased by $6,035,000, or 28.2%, compared with the same quarter of last year, mainly because of the following factors:

    • a 26.6% increase in the TVA Network's normalized operating income, due to a 5.5% decrease in operating expenses and stable advertising revenues;

    • 19.5% growth in advertising revenues and 14.2% growth in the specialty services' subscription revenues;

    • recognition of operating income for the TVA Films division, compared with an operating loss of $2,809,000 in the same quarter of 2009;

  • The Publishing sector's operating income increased by 34.0% compared with the same quarter of last year, from $1,772,000 in 2009 to $2,374,000 in 2010.

"We are pleased with the financial results for the fourth quarter and the financial year overall, as we posted growth in normalized operating income in both of those periods. In the last quarter of 2010, TVA Network's advertising revenues grew slightly by 0.4%, while those of our specialty services increased by 19.5%, compared with the same quarter of 2009. For the period of September 27, 2010 to January 2, 2011, TVA Network achieved 26.2 market shares, which greatly exceeds our competitors. Our specialty services grew their market shares by 26.9%, in particular LCN, which achieved 3.9 market shares, and addikTV, with 1.1 share," said Pierre Dion, President and Chief Executive Officer of the Corporation.

1 See definitions below.

"The 6.3% growth in operating revenues for the Publishing sector, in particular the 9.0% growth in advertising revenues, enabled us to offset a 3.3% increase in operating expenses and significantly increase our operating income for the quarter. The profit margin for the quarter was 12.3%, compared with 9.8% in the same quarter of 2009," said Mr. Pierre Dion.

Cash flows provided by operating activities remained relatively stable at $10.5 million for the quarter, compared with $10.7 million in the same quarter of 2009.

Growth in 2010

For the fiscal year ended December 31, 2010, the Corporation's consolidated normalized operating income was $76.2 million, compared with $71.0 million for the previous fiscal year, a 7.2% increase. Consolidated operating revenues totalled $448.2 million, compared with $439.0 million in 2009, a 2.1% increase. For the same period, the Corporation generated net income of $38.2 million, or $1.61 per share, compared with $49.1 million, or $2.05 per share, in 2009.

Dividend

TVA Group Inc.'s Board of Directors today declared a dividend of $0.05 per share, payable on April 6, 2011 to Class A and B shareholders of record as at March 22, 2011. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canada Income Tax Act and its provincial counterpart.

The Corporation

TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in the creation, the production and distribution of audiovisual products, and in magazine publishing. TVA Group Inc. is one of the largest private sector producers and the largest private sector broadcaster of French-language entertainment, information and public affairs programming, and magazine publishing in North America. TVA Group Inc. also operates SUN TV, a conventional station in Toronto. The Corporation's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.

The audited consolidated financial statements with notes and the annual Management's Discussion and Analysis can be consulted on TVA Group Inc.'s Web site at: www.tva.canoe.ca.

Definitions

Operating income or operating loss

In its analysis of operating results, the Corporation defines operating income (loss) as earnings (loss) before amortization of property, plant and equipment and intangible assets, financial expenses, restructuring costs of operations, impairment of assets and other, income taxes, minority interest and share of income of company subject to significant influence. Operating income (loss) as defined above is not a measure of results that is consistent with Canadian Generally Accepted Accounting Principles ("GAAP"). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with Canadian GAAP. Operating income (loss) is used by the Corporation because management believes it is a meaningful measure of performance.

This measure is used by senior management and the Board of Directors to evaluate the consolidated results of the Corporation and the results of its sectors. Measurements such as operating income and operating loss are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is active. The Corporation's definition of operating income (loss) may not be identical to similarly titled measures reported by other companies.

Normalized operating income (loss)

Normalized operating income (loss) is defined as operating income adjusted for adjustments related to CRTC Part II licence fees. Normalized operating income (loss) presents operating results had the adjustments related to CRTC Part II licence fees for the periods in question been excluded. Normalized operating income (loss) as defined above is not a measure of results that is consistent with Canadian GAAP. Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with Canadian GAAP. Normalized operating income (loss) is used by the Corporation because management believes it is a meaningful measure of performance. The Corporation's definition of normalized operating income (loss) may not be identical to similarly titled measures reported by other companies.

For a reconciliation of operating income and normalized operating income to the net income measure used in the Corporation's financial statements, please refer to our Management's Discussion and Analysis for the financial year ended December 31, 2010, available on the www.sedar.com and www.tva.canoe.ca websites.

Forward-looking Information Disclaimer

The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation's actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as "propose," "will," "expect," "may," "anticipate," "intend," "estimate," "plan," "foresee," "believe" or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors), capital investment risks, credit risks, government regulation risks, governmental assistance risks, general changes in the economic environment and labour relations. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation's actual results to differ from current expectations, please refer to the Corporation's public filings available at www.sedar.com and www.tva.canoe.ca including, in particular, the "Risks and Uncertainties" section of the Corporation's Management's Discussion and Analysis for the year ended December 31, 2010.

The forward-looking statements in this news release reflect the Corporation's expectations as of March 7, 2011, and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.

TVA GROUP INC.
Consolidated statements of income
(unaudited)
(in thousands of dollars, except per share amounts)
 
  Three-month periods
ended December 31
  Years ended
December 31
 
    2010     2009     2010     2009  
                         
Operating revenues $ 133,387   $ 128,454   $ 448,192   $ 438,969  
Operating, selling and administrative expenses   103,541     96,233     372,040     358,942  
Amortization of property, plant and equipment and intangible assets  
4,147
    3,911     15,061    
14,274
 
Financial expenses   1,419     1,017     5,621     2,960  
Restructuring costs of operations, impairment of assets and other   792     -     9,138     (794 )
Income before income taxes, minority interest and share of income of company subject to significant influence $ 23,488   $ 27,293   $ 46,332   $ 63,587  
Income taxes   4,518     7,013     9,929     17,098  
Minority interest   (449 )   (254 )   (653 )   (1,906 )
Share of income of company subject to significant influence  
(406
)   (531 )   (1,116 )  
(728
)
NET INCOME $ 19,825   $ 21,065   $ 38,172   $ 49,123  
BASIC AND DILUTED EARNINGS PER SHARE $ 0.83   $ 0.89   $ 1.61  

$


2.05
 
 
 
 
Consolidated statements of Comprehensive Income
(unaudited)
(in thousands of dollars)
 
  Three-month periods
ended December 31
  Years ended
December 31
 
  2010 2009   2010 2009  
                     
Net Income $ 19,825 $ 21,065   $ 38,172 $ 49,123  
Gain on a derivative financial instrument   -   286     -   434  
Income taxes related to a derivative financial instrument   -   (88 )   -   (130 )
COMPREHENSIVE INCOME $ 19,825 $ 21,263   $ 38,172 $ 49,427  
 
 
 
TVA GROUP INC.
Consolidated statements of retained earnings
(unaudited)
(in thousands of dollars)
 
  Years ended
December 31
 
    2010     2009  

Balance at the beginning

$

 134,303
 
$

98,511
 
Net income   38,172     49,123  
Adjustment to transactions with related companies   (2,000 )   (7,247 )
Dividends paid   (4,754 )   (4,786 )
Share redemption - excess of purchase price over net carrying amount   -    
(1,298
)
Balance at the end $ 165,721   $ 134,303  
 
 
 
TVA GROUP INC.
Consolidated balance sheets
(unaudited)
(in thousands of dollars)
 
  Dec. 31, 2010 Dec. 31, 2009

ASSETS
       
Current assets        
  Cash $ 5,605 $ 1,924
  Accounts receivable   126,057   120,515
  Current income tax assets   7,104   1,078
  Programs, broadcast and distribution rights and inventories   60,122   54,774
  Prepaid expenses and other current asset   2,240   4,754
  Future income tax assets   2,710   4,818
    203,838   187,863
         
Broadcast and distribution rights   34,058   38,950
Investments   12,527   11,637
Property, plant and equipment   86,208   79,123
Licences and other intangible assets   89,214   86,789
Goodwill   71,981   71,981
Accrued benefit asset   16,426   8,900
Future income tax assets   25   280
  $ 514,277 $ 485,523
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities        
  Bank overdraft $ 3,557 $ 974
  Accounts payable and accrued liabilities   80,707   78,838
  Current income tax liabilities   171   8,490
  Broadcast and distribution rights payable   25,879   28,611
  Deferred revenues   7,122   7,401
    117,436   124,314
         
Long-term debt   90,338   88,580
Future income tax liabilities   28,551   28,951
Other liabilities   4,928   6,583
Minority interest   4,511   -
    245,764   248,428
         
Shareholders' equity        
  Capital stock   98,647   98,647
  Contributed surplus   4,145   4,145
  Retained earnings   165,721   134,303
    268,513   237,095
  $ 514,277 $ 485,523
 
 
 
TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of dollars)
 
  Three-month periods
ended December 31
  Years ended
December 31
 
  2010   2009   2010   2009  
                         
CASH FLOWS FROM OPERATING ACTIVITIES                        
  Net income $ 19,825   $ 21,065   $ 38,172   $ 49,123  
  Non-cash items                        
    Amortization   4,228     3,989     15,419     14,418  
    Restructuring costs of operations, impairment of assets and other 538   -   7,696   -  
    Share of income of company subject to significant influence  
(406
)   (531 )   (1,116 )  
(728
)
    Future income taxes   1,363     (936 )   1,940     (3,984 )
    Minority interest   (449 )   (254 )   (653 )   (1,906 )
  Cash flows from current operations   25,099     23,333     61,458     56,923  
  Net change in non-cash items   (14,569 )   (12,626 )   (38,911 )   (27,813 )
Cash flows from operating activities   10,530     10,707     22,547     29,110  
                         
CASH FLOWS FROM INVESTING ACTIVITIES                        
    Additions to property, plant and equipment   (6,524 )   (3,413 )   (18,352 )   (16,261 )
    Additions to intangible assets   (1,782 )   (2,653 )   (5,893 )   (6,710 )
    Disposal of a property, plant and equipment   -     -     760     -  
    Business disposal -   105   -   105  
    Net change in investments   -     -     226     11,977  
Cash flows from investing activities   (8,306 )   (5,961 )   (23,259 )   (10,889 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES                        
    Net change in bank overdraft   1,596     (912 )   2,583     827  
    (Decrease) increase in revolving term loan   (4,574 )   (75,044 )   1,361     (78,907 )
    Term loan   -     75,000     -     75,000  
    Deferred financing costs   39     (1,362 )   39     (1,362 )
    Minority interest 4,919   -   5,164   -  
    Redemption of redeemable preferred shared   -     -     -     (9,750 )
    Share redemption   -     -     -     (2,581 )
    Dividends paid   (1,188 )   (1,188 )   (4,754 )   (4,786 )
Cash flows from financing activities   792     (3,506 )   4,393     (21,559 )
Net change in cash   3,016     1,240     3,681     (3,338 )
Cash, at beginning of period   2,589     684     1,924     5,262  
Cash, at end of period $ 5,605   $ 1,924   $ 5,605   $ 1,924  
                         
SUPPLEMENTAL INFORMATION                        
    Net interest paid $ 2,367   $ 509   $ 5,225   $ 2,213  
    Net income taxes paid   1,657     3,357     22,331     13,006  
    Additions to property, plant and equipment and intangible assets funded by accounts payable and accrued liabilities               5,293     3,166  
    Government assistance and other receivables credited to property, plant and equipment             $ -   $ (688 )
 
 
 
TVA GROUP INC.
Segmented information
(unaudited)
(in thousands of dollars)

Historically, the Corporation's business activities have been conducted in three operating segments. As a result of a changes made in the Corporation's management during the first quarter of 2010, the former Distribution segment is now considered part of the Television segment. Prior period disclosures have been restated to reflect this new presentation.

The following tables include information on operating results, as well as information on assets:

    Three-month periods
ended December 31
    Years ended
December 31
 
    2010     2009     2010     2009  

Operating revenues
                       
Television $ 115,516   $ 111,342   $ 377,283   $ 368,325  
Publishing   19,260     18,121     75,004     73,974  
Intersegment items   (1,389 )   (1,009 )   (4,095 )   (3,330 )
    133,387     128,454     448,192     438,969  
Operating, selling and administrative expenses                        
Television   88,044     80,893     312,848     299,371  
Publishing   16,886     16,349     63,287     62,901  
Intersegment items   (1,389 )   (1,009 )   (4,095 )   (3,330 )
    103,541     96,233     372,040     358,942  
Income before amortization, financial expenses, restructuring costs of operations, impairment of assets and other, income taxes, minority interest and share of income of company subject to significant influence                        
Television   27,472     30,449     64,435     68,954  
Publishing   2,374     1,772     11,717     11,073  
Intersegment items   -     -     -     -  
  $ 29,846   $ 32,221   $ 76,152   $ 80,027  

The intersegment items mentioned above represent the elimination of normal course business transactions made between the Corporation's business segments regarding revenues and expenses.

    December 31, 2010   December 31, 2009
         
Total assets        
Television $ 429,933 $ 401,040
Publishing   84,344   84,483
         
  $ 514,277 $ 485,523
         
Goodwill        
Television $ 2,539 $ 2,539
Publishing   69,442   69,442
         
  $ 71,981 $ 71,981

Contact Information

  • TVA Group Inc.
    Denis Rozon, CA
    Vice-President and Chief Financial Officer
    514-598-2808