(CANWEST GLOBAL COMMUNICATIONS CORP. LOGO)
NEWS RELEASE
For Immediate Release
November 4, 2003
CANWEST 2003 NET EARNINGS TRIPLE
Reports 254% Increase in Net Earnings
WINNIPEG: CanWest Global Communications Corp. today reported financial results
for its fourth quarter and the year ended August 31, 2003. Consolidated net
earnings were $46 million, or $0.22 per share, for the year compared to $13
million, or $0.07 per share, for the prior year. The growth in net earnings
reflects improvement in earnings before interest, taxes, depreciation and
amortization (EBITDA) at all major broadcasting and publishing operations in
Canada and overseas, with substantial gains at Network TEN and the Company's
television and radio operations in New Zealand. Results in the current year
include a number of non-recurring items including restructuring provisions and
write downs of certain of the Company's film and television libraries, and
recovery of future income taxes at Network TEN. Excluding these non-recurring
charges, net earnings for the year would have been $62 million, or $0.31 per
share.
On a combined basis, which includes the Company's 57.1% proportional share of
Network TEN's financial results, EBITDA before non-recurring provisions for
restructuring and write downs of certain film and television program libraries
was $571 million. This represents an increase of 12% from the $510 million
combined pro forma result for the prior year. After including non-recurring
charges, combined EBITDA in fiscal 2003 was $518 million, a 1% improvement over
last year's pro forma combined result.
Combined revenues for the year increased by 8% to $2,651 million from pro forma
combined revenues of $2,450 million for fiscal 2002, and were slightly above
actual combined revenues of $2,592 million reported for the prior year.
Pro forma results for fiscal 2002 provide a comparison based upon the same asset
base as existed during the year ended August 31, 2003. Pro forma results for
2002, therefore, exclude the revenue and EBITDA contributions of certain
newspapers and related assets in Saskatchewan and the Atlantic provinces that
were sold in August 2002, and also exclude the contributions from February 16 to
August 31, 2002 of those small market newspaper and related assets in Ontario
that were sold on February 15, 2003.
On a consolidated basis, revenues for the 2003 fiscal year were $2,278 million
compared to $2,273 million for the previous year. Consolidated EBITDA before
non-recurring provisions for restructuring and write downs of certain film and
television program libraries, was $461 million for the fiscal year ended August
31, 2003, an 8% increase from the pro forma result of $428 million recorded for
the previous year. After including non-recurring charges, consolidated EBITDA
was $419 million in fiscal 2003.
SEGMENTED RESULTS FOR FISCAL 2003
Revenues for fiscal 2003 for the Company's newspaper and online operations,
including the National Post, were $1,169 million, 4% higher than pro forma
revenues of $1,129 for the same newspaper assets in fiscal 2002. Newspaper and
online EBITDA for the year increased by 7% to $258 million, compared to a pro
forma result of $242 million for the previous year. The
EBITDA improvement was primarily attributable to increased revenues and cost
reduction initiatives at all major newspapers.
Revenues for the Company's Canadian broadcasting operations for fiscal 2003
increased by 5% to $728 million from $692 million in fiscal 2002. EBITDA for the
year was $220 million, 15% higher than the $191 million recorded in the prior
year. A combination of increased revenues and cost containment accounted for the
improved results.
Network TEN's contribution to CanWest's combined EBITDA increased by 31% to $107
million for the year. A 39% increase in revenues at New Zealand television
resulted in EBITDA of $10 million in fiscal 2003 compared to an EBITDA loss of
$2 million in fiscal 2002. New Zealand radio recorded EBITDA growth of 27% to
$21 million compared to $16 million last year, while TV3 Ireland also maintained
its consistent positive growth trend, with CanWest's share of its EBITDA
increasing to $10 million for the year, up from $8 million last year.
Revenues for the year at CanWest Entertainment, the Company's program production
and distribution division, increased to $191 million from $157 million last
year. However, Entertainment recorded an EBITDA loss of $35 million as a result
of the persistent weakness in international markets. Entertainment also recorded
a $23 million write down in the carrying value of its film and television
program library. Earlier this year, the Company initiated a significant change
in business strategy at CanWest Entertainment, refocusing its development and
production activities primarily to support the programming needs of the
Company's Canadian television operations.
RESULTS FOR THE 4TH QUARTER ENDED AUGUST 31, 2003
On a combined basis, revenues in the fourth quarter, traditionally a weaker
quarter for the media industry, increased by 16% to $619 million compared to pro
forma combined revenues of $535 million for same quarter of the previous year.
Combined EBITDA before non-recurring charges of $32 million recorded during the
quarter, was $69 million for the fourth quarter, 12% higher than the $62 million
for the fourth quarter of fiscal 2002 on a pro forma basis. The $32 million
non-recurring charges primarily reflected write downs in the carrying value of
the film and television library at CanWest Entertainment and programming
inventory at Network TEN.
Consolidated fourth quarter revenues in fiscal 2003 were $520 million, up 7%
compared to consolidated revenues of $484 million in the same quarter of the
prior fiscal year. Consolidated EBITDA for the fourth quarter after
non-recurring charges was $17 million compared to $53 million in fiscal 2002 and
$41 million on a pro forma basis in 2002.
The Company reported a net loss of $45 million, or $0.25 per share, in the
fourth quarter compared to a net loss of $104 million, or $0.59 per share, for
the same period last year. Net earnings on a combined basis and a consolidated
basis are the same.
Fourth quarter operating results, with the exception of CanWest Entertainment,
reflect significantly higher revenues and EBITDA at all CanWest media
operations.
SEGMENTED RESULTS FOR THE 4TH QUARTER ENDED AUGUST 31, 2003
Newspaper and online operations recorded an 8% gain in revenues to $269 million
for the quarter, compared to pro forma revenues of $248 million for the fourth
quarter of fiscal 2002. EBITDA increased by 33% to $52 million from a pro forma
result of $39 million last year. The gains were attributable to a combination of
improving advertising markets, system-wide cost reductions, continued progress
in reducing EBITDA losses at the National Post and substantial improvements at
CanWest's online operations, which registered modest EBITDA for the quarter
compared to an EBITDA loss in the same quarter last year.
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Fourth quarter revenues from Canadian television operations grew by 6% to $135
million compared to $127 million last year. EBITDA increased by 66% for the
quarter, to $13 million, with the gains attributable to a combination of
improved advertising markets, elimination of EBITDA losses at the Company's
start-up digital specialty channels, and effective control over costs.
CanWest's overseas operations all registered substantial year-over-year gains
for the quarter. CanWest's share of results at Network TEN resulted in a 43%
increase in EBITDA to $30 million. EBITDA from New Zealand television increased
by 44% to $3 million, while CanWest's share of EBITDA from TV3 Ireland also
increased by 27% to $1 million for the quarter. CanWest's radio operations in
New Zealand registered an 18% gain in EBITDA to $6 million for the quarter.
Revenues at CanWest Entertainment increased by 163% to $72 million for the
quarter, mainly due to varying delivery schedules for programming. Fireworks
reported an EBITDA loss of $30 million for the quarter compared to an EBITDA
loss of $5 million for the same quarter in fiscal 2002. As well, Entertainment
recorded a $23 million write down in the carrying value of its film and
television program library during the quarter.
Commenting on the results, Leonard Asper, CanWest's President and Chief
Executive Officer said, "Our 2003 results are excellent, with the exception of
Fireworks. EBITDA was up at all of our major broadcasting and publishing
operations in Canada and overseas, with spectacular results at Network TEN and
our TV and radio operations in New Zealand. The National Post's circulation
climbed significantly in the last few months of 2003 and into September 2004.
Our digital specialty channels, with an aggregate of 2.8 million subscribers,
became profitable in 2003, two years ahead of plan. Our online operations also
became profitable in 2003. The Company launched its first Canadian radio
station, COOL 99.1 FM, in Winnipeg last February, and we are set to launch a
second radio station, The BEAT FM, in Kitchener, Ontario, early in fiscal 2004.
In September, we launched COOL TV, our latest digital TV specialty channel. We
have other growth initiatives in the works."
Mr. Asper added that CanWest took a number of corporate initiatives that will
strengthen the Company going forward, "We finished selling our small market
newspapers and related assets, as well as our investment in SBS broadcasting.
The proceeds, approximately half a billion dollars, were all applied to the
reduction of our corporate debt. We also completed two significant re-financing
initiatives to restructure parts of our corporate debt, reducing our annual
interest costs by some $21 million."
Other highlights of the fourth quarter and for the period following the end of
the fiscal year include the following:
- - Based on dividends already declared and anticipated to be declared by TEN,
CanWest expects to receive an aggregate of approximately A$93 million in
cash distributions (dividends and subordinated debenture interest) from
TEN in the second quarter of fiscal 2004.
- - Global Television acquired 14 hours weekly of new US programming to
refresh its prime time viewing schedule, two of which, Vegas and Two and a
Half Men, topped the ratings for new shows. Friends and Frasier, now in
their final year of production, are expected to attract record audiences
for their finale shows.
- - Global also developed new Canadian shows. These include Train 48, which
had a successful three-month run on Global in 2003 and has been renewed
for a full season, and Wild Card, a new production that airs in the US on
the Lifetime Network. The popular Mike
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Bullard Show, which moves to the Global Television Network this season,
will air nightly beginning later in November.
- - In October, the Company's second television network in New Zealand, TV4,
was re-launched as C4, a music channel geared to youth and young adult
audiences. The new, low production cost format immediately attracted a
very positive audience response from its target 15-29 audience demographic
and promises to reverse EBITDA losses incurred by TV4 in recent years.
- - Cost reduction initiatives implemented during the year will further reduce
the Company's Canadian operating cost base by approximately $20 million
annually.
OUTLOOK
Looking ahead to 2004, Mr. Asper said, "Our most important task will be to press
ahead on the many projects that we have initiated over the past three years. We
have made tremendous strides in reducing both operating costs and debt servicing
costs. We will continue to explore opportunities to divest or monetize assets
that are not central to our future corporate strategy, and also explore other
opportunities to improve the CanWest balance sheet."
Mr. Asper added, "Ad markets for newspapers are showing renewed strength at the
close of fiscal 2003, and we see this positive momentum continuing into fiscal
2004. The outstanding results of our international broadcasting operations in
Australia, and New Zealand have carried over into the new fiscal year, and
should propel us to a strong 2004. The TV advertising market in Canada was,
however, less buoyant as we moved into the new fiscal year. The Company
anticipates that its substantial line-up of new shows on Global will score with
audiences, and help to maintain Global's traditional ratings leadership in its
chosen demographic. The Company's diverse sources of revenues and profits
protect it from weaknesses in one particular segment so we expect the strength
in the South Pacific, and Canadian newspapers, to provide the basis for a strong
2004."
The Company was saddened by the sudden passing on October 7, 2003 of its founder
and Chairman, I.H Asper O.C., O.M., Q.C. Mr. Asper will be greatly missed by his
family, and by all those who had the good fortune to know him. The Asper family
and all those in the Company who had the privilege of working in close proximity
to "Izzy" Asper were deeply touched and gratified by the many kind tributes and
condolences expressed by his countless friends, colleagues, competitors and
admirers.
On October 17, following a special meeting of the Board of Directors, the
Company announced the appointment of the Honourable Frank McKenna P.C., Q.C. as
Interim Chair of the Board. Mr. McKenna will serve for an indeterminate period
pending the election by the Board of a permanent Chair.
This press release contains certain comments or forward-looking statements that
are based largely on the Company's current expectations and are subject to
certain risks, trends and uncertainties. These factors could cause actual future
performance to vary materially from current expectations.
The Company's financial statements are available on the corporate Web site
www.canwestglobal.com.
CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.S and CGS.A,
www.canwestglobal.com) is an international media company. CanWest, Canada's
largest publisher of daily newspapers, owns, operates and/or holds substantial
interests in newspapers, conventional television, out-of-home advertising,
specialty cable channels, websites and radio
4
stations and networks in Canada, New Zealand, Australia, Ireland and the United
Kingdom. The Company's program production and distribution division operates in
several countries throughout the world.
For more information, please contact:
Geoffrey Elliot or John Maguire
Vice President, Corporate Affairs Chief Financial Officer
Tel: (204) 956-2025 Tel: (204) 956-2025
Fax: (204) 947-9841 Fax: (204) 947-9841
gelliot@canwest.com jmaguire@canwest.com
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CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS EXCEPT AS OTHERWISE NOTED)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
AUGUST 31 AUGUST 31 AUGUST 31 AUGUST 31
2003 2002 2003 2002
REVENUE 520,301 484,059 2,278,316 2,272,783
Operating expenses 345,713 302,848 1,257,836 1,244,263
Selling general and administrative expenses 135,427 128,699 559,047 558,214
Restructuring and film and television program
impairment expenses 21,718 - 42,771 -
---------- ---------- ---------- ----------
OPERATING PROFIT BEFORE AMORTIZATION (EBITDA) 17,443 52,512 418,662 470,306
Amortization of intangibles 4,375 4,375 17,500 17,500
Amortization of property, plant and equipment 16,933 19,290 72,050 74,654
Other amortization 1,922 1,839 7,087 6,670
---------- ---------- ---------- ----------
EARNINGS BEFORE FINANCING EXPENSES (EBIT) (5,787) 27,008 322,025 371,482
Financing expenses (84,040) (90,409) (363,518) (376,632)
Investment gains, losses and write-downs (10,591) (30,977) 9,240 32,043
Dividend income - - 3,532 3,241
Interest rate swap loss (9,381) - (23,015) -
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES (109,799) (94,378) (51,736) 30,134
Provision for (recovery of) income taxes (12,905) (24,794) 3,105 7,108
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE THE FOLLOWING (96,894) (69,584) (54,841) 23,026
Minority interests - - - 4,330
Interest in earnings (loss) of Network TEN 52,250 (34,003) 101,339 (11,815)
Interest in loss of equity accounted affiliates (297) (557) (1,332) (1,523)
Realized currency translation adjustments 229 - 922 (1,000)
---------- ---------- ---------- ----------
NET EARNINGS (LOSS)
(44,712) (104,144) 46,088 13,018
========== ========== ========== ==========
EARNINGS PER SHARE:(1)
NET EARNINGS (LOSS)
BASIC ($ 0.25) ($ 0.59) $ 0.22 $ 0.07
DILUTED ($ 0.25) ($ 0.59) $ 0.22 $ 0.07
(1) Earnings per share have been calculated on the basis of the weighted average
number of shares outstanding during the year of 177,140,694 (2002 -
176,956,800).
6
The following statements have been prepared on a combined basis to
proportionately consolidate the Company's 57.1% (57.5% to February 27, 2003)
interest in Network TEN. These financial statements are supplementary
information for shareholders, designed to provide more meaningful and complete
disclosure of the Company's operations.
CANWEST GLOBAL COMMUNICATIONS CORP.
COMBINED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT AS OTHERWISE NOTED)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
AUGUST 31 AUGUST 31 AUGUST 31 AUGUST 31
2003 2002 2003 2002
REVENUE 619,382 574,535 2,651,334 2,592,283
Operating expenses 544,240 493,318 2,057,153 2,012,514
---------- ---------- ---------- ----------
OPERATING PROFIT BEFORE UNDERNOTED 75,142 81,217 594,181 579,769
Corporate and development expenses 6,016 8,416 23,213 26,807
Restructuring and film and program impairment
expenses 32,034 - 53,087 -
---------- ---------- ---------- ----------
OPERATING PROFIT BEFORE AMORTIZATION (EBITDA) 37,092 72,801 517,881 552,962
Amortization of intangibles 4,375 4,375 17,500 17,500
Amortization of property, plant and equipment 19,640 21,531 81,041 82,292
Other amortization 2,016 2,114 7,451 7,731
---------- ---------- ---------- ----------
EARNINGS BEFORE FINANCING EXPENSES (EBIT) 11,061 44,781 411,889 445,439
Financing expenses (88,245) (94,382) (377,277) (389,800)
Investment gains, losses and write-downs (10,591) (40,879) 9,240 22,141
Dividend income - - 3,532 3,241
Interest rate swap loss (9,381) - (23,015) -
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES (97,156) (90,480) 24,369 81,021
Provision for (recovery of) income taxes (52,512) (4,883) (22,129) 42,364
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE THE FOLLOWING (44,644) (85,597) 46,498 38,657
Minority interests - 792 - 7,053
Goodwill impairment loss - (18,782) - (30,169)
Interest in loss of equity accounted affiliates (297) (557) (1,332) (1,523)
Realized currency translation adjustments 229 - 922 (1,000)
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) (44,712) (104,144) 46,088 13,018
========== ========== ========== ==========
EARNINGS PER SHARE: (1)
NET EARNINGS (LOSS)
BASIC ($ 0.25) ($ 0.59) $ 0.22 $ 0.07
DILUTED ($ 0.25) ($ 0.59) $ 0.22 $ 0.07
(1) Earnings per share have been calculated on the basis of the weighted average
number of shares outstanding during the year of 177,140,694 (2002 -
176,956,800).
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CANWEST GLOBAL COMMUNICATIONS CORP. (1)
COMBINED BUSINESS SEGMENT INFORMATION
(IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED)
FOR THE YEAR ENDED AUGUST 31
----------------------------
2003 2002 2002
ACTUAL ACTUAL PROFORMA
REVENUE (2)
TELEVISION
Canada 728,318 691,888 691,888
Australia - Network TEN 336,362 281,427 281,427
New Zealand - TV3 and TV4 95,752 69,079 69,079
Ireland - TV3 32,490 28,317 28,317
---------- ---------- ----------
1,192,922 1,070,711 1,070,711
RADIO - NEW ZEALAND 73,400 60,724 60,724
ENTERTAINMENT - CANADA 190,894 156,914 156,914
PUBLISHING AND ONLINE - CANADA 1,168,918 1,270,701 1,128,894
OUTDOOR - AUSTRALIA 36,656 38,074 38,074
Inter-segment revenues (11,456) (4,841) (4,841)
---------- ---------- ----------
TOTAL REVENUE 2,651,334 2,592,283 2,450,476
========== ========== ==========
OPERATING PROFIT
TELEVISION
Canada 220,099 190,752 190,752
Australia - Network TEN 106,975 81,782 81,782
New Zealand - TV3 and TV4 10,095 (1,938) (1,938)
Ireland - TV3 9,729 7,654 7,654
---------- ---------- ----------
346,898 278,250 278,250
RADIO - NEW ZEALAND 20,751 16,361 16,361
ENTERTAINMENT - CANADA (34,524) (743) (743)
PUBLISHING AND ONLINE - CANADA 258,496 285,027 242,306
OUTDOOR - AUSTRALIA 2,560 874 874
---------- ---------- ----------
SEGMENT OPERATING PROFIT 594,181 579,769 537,048
Corporate expenses 23,213 26,807 26,807
Restructuring and film and television
program impairment expenses 53,087 - -
---------- ---------- ----------
OPERATING PROFIT (EBTIDA) 517,881 552,962 510,241
========== ========== ==========
(1) Combined results include the Company's 57.1% (57.5% to February 27, 2003)
economic interest in Network TEN.
(2) Proforma results exclude the results of community newspapers sold in
August 2002 and exclude the results of the community newspapers sold in
February 2003 for the period from February 15, 2002 to August 31, 2002.
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CANWEST GLOBAL COMMUNICATIONS CORP. (1)
COMBINED BUSINESS SEGMENT INFORMATION
(IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED)
FOR THE THREE MONTHS ENDED AUGUST 31
------------------------------------
2003 2002 2002
ACTUAL ACTUAL PROFORMA
REVENUE (2)
TELEVISION
Canada 134,857 126,893 126,893
Australia - Network TEN 90,366 81,331 81,331
New Zealand - TV3 and TV4 26,203 20,341 20,341
Ireland - TV3 5,970 6,344 6,344
-------- -------- --------
257,396 234,909 234,909
RADIO - NEW ZEALAND 18,746 15,815 15,815
ENTERTAINMENT - CANADA 71,597 27,252 27,252
PUBLISHING AND ONLINE - CANADA 268,915 287,413 248,314
OUTDOOR - AUSTRALIA 8,715 9,146 9,146
Inter-segment Revenues (5,987) - -
-------- -------- --------
TOTAL REVENUE 619,382 574,535 535,436
======== ======== ========
OPERATING PROFIT
TELEVISION
Canada 13,266 7,978 7,978
Australia - Network TEN 29,511 20,693 20,693
New Zealand - TV3 and TV4 3,032 2,105 2,105
Ireland - TV3 1,078 847 847
-------- -------- --------
46,887 31,623 31,623
RADIO - NEW ZEALAND 5,583 4,713 4,713
ENTERTAINMENT - CANADA (29,768) (4,968) (4,968)
PUBLISHING AND ONLINE - CANADA 51,986 50,253 39,105
OUTDOOR - AUSTRALIA 454 (404) (404)
-------- -------- --------
SEGMENT OPERATING PROFIT 75,142 81,217 70,069
Corporate expenses 6,016 8,416 8,416
Restructuring and film and television
program impairment expenses 32,034 - -
-------- -------- --------
OPERATING PROFIT (EBITDA) 37,092 72,801 61,653
======== ======== ========
(1) Combined results include the Company's 57.1% (57.5% to February 27, 2003)
economic interest in Network TEN.
(2) Proforma results exclude the results of community newspapers sold in
August 2002 and exclude the results of the community newspapers sold in
February 2003 for the period from February 15, 2002 to August 31, 2002.
9