For immediate release
CINAR PROVIDES SHAREHOLDERS WITH
CONSOLIDATED FINANCIAL INFORMATION
Montréal, (Québec) Canada – February 26, 2003 -CINAR Corporation today released audited consolidated financial statements to shareholders for the year ended November 30, 2002.
Highlights of the Financial Information
Consolidated revenues increased by 6.4% from $132.6 million to $141.1 million and are attributed to a 10.9% increase in Education revenues and a 2.9% decrease in Entertainment revenues.
Consolidated gross margin increased 46% from $48.1 million in 2001 to $70.3 million in 2002.
Consolidated selling, general and administrative expenses decreased 8.2% from $52.1 million in 2001 to $47.8 million in 2002.
The Company realized a $1.9 million foreign exchange gain in fiscal 2002 due to the strengthening of the US dollar relative to the Canadian dollar. This compares to a $4.6 million foreign exchange gain in 2001.
The Company thus realized operating income before depreciation, amortization, interest and unusual items of $24.4 million in 2002 compared to $0.7 million in 2001.
The Company incurred $3.2 million of unusual items during 2002 essentially made up of professional fees and interest less amounts recovered from Globe-X. This compares to $23.9 million of unusual items recorded in 2001.
The Company recorded its share of the class action settlement in the fourth quarter in the amount of $23.8 million.
The Company’s share of earnings from the 20% equity invested in Teletoon increased 25.7% from $2.1 million in 2001 to $2.6 million in 2002 as a result of the continued success of the specialty animation channels.
The Company recorded a provision for income taxes of $5.3 million in 2002 compared to a provision of $3.4 million in 2001. A tax provision was recorded mainly as a result of net income earned in the US based Education division and unrecoverable withholding taxes payable in foreign jurisdictions on Entertainment revenue.
Net loss before discontinued operations for the year ended November 30, 2002 was $10.5 million or $0.26 per share compared to a loss of $32.1 million or $0.78 per share for the year ended November 30, 2001.
The Company recorded a gain from discontinued operations of $4 million or $0.10 per share in 2002 resulting from a reversal of prior year’s provision for closing costs related to terminating the operations of CINAR Multimedia. Since this division was sold in 2002, the Company was not required to incur these costs. This compares to a loss from discontinued operations of $9.9 million or $0.24 per share for 2001.
The net loss for the year ended November 30, 2002 was $6.5 million or $0.16 per share compared to a loss of $42 million or $1.02 per share for the corresponding period of 2001.
CINAR Corporation is an integrated entertainment and education company involved in the development, production, post-production and worldwide distribution of non-violent, quality programming and educational products for children and families. CINAR’s website is www.cinar.com.
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Contact :
George Rossi, C.A.
Senior Vice-President & CFO
CINAR Corporation
(514) 843-7070
grossi@cinar.com
CINAR CORPORATION
CONSOLIDATED BALANCE SHEETS
As at November 30
[In thousands of Canadian dollars]
2002 | 2001 | |
$ | $ | |
ASSETS | ||
Cash | 2,517 | 12,085 |
Short-term money market investments | 59,435 | 35,471 |
Amounts due from Globe-X Management Limited [net of allowance | ||
for uncollectible amounts of $55,331; 2001 - $57,966] | - | 1,454 |
Accounts receivable [net of allowance for doubtful | ||
accounts of $11,664; 2001 - $14,472] | 33,718 | 43,544 |
Related party receivables [net of allowance for uncollectible | ||
amounts of $29,145; 2001 - $29,168] | - | - |
Tax credits and income taxes receivable | 35,780 | 38,454 |
Inventories | 14,624 | 13,290 |
Film costs and acquired film libraries | 10,961 | 24,847 |
Fixed assets | 4,427 | 5,642 |
Goodwill | 88,182 | 92,167 |
Other assets | 7,622 | 6,211 |
257,266 | 273,165 | |
CINAR CORPORATION
CONSOLIDATED BALANCE SHEETS
As at November 30
[In thousands of Canadian dollars]
2002 | 2001 | |
$ | $ | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Liabilities: | ||
Accounts payable and accrued liabilities | 65,852 | 50,248 |
Deferred revenue | 2,315 | 7,127 |
Future income taxes | 4,888 | 3,417 |
Notes payable | 12,494 | - |
Total liabilities | 85,549 | 60,792 |
Shareholders’ equity: | ||
Capital stock | ||
Issued and outstanding | ||
5,233,402 Variable Multiple Voting (Class A) shares and | ||
34,735,998 Limited Voting (Class B) shares; | 487,128 | 501,182 |
[2001 - 5,233,402 Variable Multiple Voting (Class A) shares and | ||
35,750,568 Limited Voting (Class B) shares] | ||
Cumulative translation adjustment | 1,883 | 4,191 |
Deficit | (317,294) | (293,000) |
Total shareholders’ equity | 171,717 | 212,373 |
257,266 | 273,165 |
CINAR CORPORATION
CONSOLIDATED STATEMENTS OF DEFICIT
Years ended November 30
[In thousands of Canadian dollars]
2002 | 2001 | |
$ | $ | |
Balance, beginning of year | (293,000) | (250,977) |
Repurchase of shares on settlement agreement | (17,745) | - |
Net loss | (6,549) | (42,023) |
Balance, end of year | (317,294) | (293,000) |
CINAR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended November 30
[In thousands of Canadian dollars except per share amounts]
2002 | 2001 | |
$ | $ | |
Revenues | 141,092 | 132,643 |
Cost of sales | 70,757 | 84,495 |
Gross margin | 70,335 | 48,148 |
Expenses | ||
Selling, general and administrative | 47,814 | 52,072 |
Foreign exchange | (1,925) | (4,582) |
45,889 | 47,490 | |
Operating income before the following items | 24,446 | 658 |
Amortization of fixed assets | 2,337 | 2,921 |
Amortization of goodwill | 3,542 | 3,480 |
Interest | (559) | 1,132 |
Unusual items | 3,189 | 23,924 |
Earnings (loss) before the following items | 15,937 | (30,799) |
Class action settlement | (23,784) | - |
Share of net earnings of equity investment | 2,630 | 2,092 |
Loss before income taxes | (5,217) | (28,707) |
Provision for income taxes | 5,312 | 3,390 |
Net loss from continuing operations | (10,529) | (32,097) |
Discontinued operations | 3,980 | (9,926) |
Net loss | (6,549) | (42,023) |
Loss per Variable Multiple Voting (Class A) Share | ||
and Limited Voting (Class B) Share | ||
Basic, from continuing operations | ($0.26) | ($0.78) |
Basic, from discontinued operations | $0.10 | ($0.24) |
Basic | ($0.16) | ($1.02) |
Weighted average number of Variable Multiple Voting (Class A) | ||
shares and Limited Voting (Class B) shares outstanding | 40,195,271 | 40,983,970 |
CINAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended November 30 | |||
[In thousands of Canadian dollars] | |||
2002 | 2001 | ||
$ | $ | ||
OPERATING ACTIVITIES | |||
Net loss | (6,549) | (42,023) | |
Items not affecting cash: | |||
Amortization | 5,879 | 6,401 | |
Film costs and acquired film libraries | |||
amortization and write-downs | 21,545 | 23,950 | |
Write-off of goodwill | - | 13,687 | |
Write-off of net assets of discontinued operations | - | 10,422 | |
Share of net earnings of equity investment, | |||
net of dividends received of $1,147 (2001 - $1,090) | (1,483) | (1,002) | |
Gain on sale of investment | - | (100) | |
Increase (decrease) in allowance for Globe-X | (2,635) | (5,362) | |
Future income taxes | 1,632 | 1,018 | |
18,389 | 6,991 | ||
Decrease (increase) in accounts receivable | 9,826 | 24,855 | |
Decrease (increase) in tax credits | |||
and income taxes receivable | 2,674 | (5,873) | |
Decrease (increase) in inventories | (1,334) | 1,010 | |
Additions to film costs | (7,659) | (15,235) | |
Increase (decrease) in trade payables and | |||
accrued liabilities and related party receivables | 19,584 | 16,982 | |
Decrease in deferred revenue | (4,812) | (7,139) | |
Decrease in other assets | 71 | 54 | |
Discontinued operations | (3,980) | - | |
Cash provided by (used in) operating activities | 32,759 | 21,645 | |
FINANCING ACTIVITIES | |||
Repayment of term debt | - | (39,936) | |
Repurchase of shares on settlement agreement | (18,571) | - | |
Cash used in financing activities | (18,571) | (39,936) | |
INVESTING ACTIVITIES | |||
Proceeds on sale of business | - | 305 | |
Repayments from Globe-X | 3,795 | 6,769 | |
Additions to fixed assets | (1,122) | (1,203) | |
Cash provided by investing activities | 2,673 | 5,871 | |
TRANSLATION ADJUSTMENT | (2 465) | (1 943) | |
Increase (decrease) in cash and cash equivalents | 14 396 | (14 363) | |
Cash and cash equivalents, beginning of year | 47 556 | 61 919 | |
Cash and cash equivalents, end of year | 61 952 | 47 556 | |
Cash and cash equivalents are comprised of: | |||
Cash | 2 517 | 12 085 | |
Short-term money market investments | 59 435 | 35 471 | |
61 952 | 47 556 | ||
Interest paid | 701 | 2 070 | |
Income taxes paid | 742 | 5 205 | |
Participation costs paid | 3 290 | 6 127 | |