(CANWEST GLOBAL LOGO)
CANWEST GLOBAL
COMMUNICATIONS CORP.
NEWS RELEASE
For Immediate Release
November 2, 2004
CANWEST'S 2004 NET EARNINGS FROM CONTINUING OPERATIONS INCREASE 69% TO
$194 MILLION
Fourth quarter earnings from continuing operations $60 million, debt reduced
WINNIPEG - CanWest Global Communications Corp. today reported financial results
for its fourth quarter and for its fiscal year ended August 31, 2004.
Consolidated net earnings from continuing operations for the year were $194
million, or $1.10 per share, an increase of 69% as compared to net earnings from
continuing operations of $115 million, or $0.60 per share, for the prior year.
Net earnings for the year reflected a number of one-time transactions, including
gains of approximately $117 million in the fourth quarter on the sale of
CanWest's shares in Ulster TV and the effective disposition of a 30% interest in
CanWest's New Zealand broadcasting assets. As a result of the early retirement
of certain indebtedness, CanWest recorded foreign currency exchange gains of $36
million, the write-off of deferred financing costs of $5 million, interest rate
and foreign currency swap losses of $111 million. In addition, a net loss of
$208 million from Fireworks Entertainment was recorded in losses of discontinued
operations. The net loss for the year was $13 million versus net earnings of $46
million last year.
In its public reporting, the Company provides revenue and EBITDA results on both
a consolidated basis and a combined basis. The consolidated financial results
reflect the Company's investment in the TEN Group on an equity accounted basis,
including CanWest's share of TEN's net earnings, but excluding revenues and
EBITDA of TEN from consolidated revenues and EBITDA. The combined results
include the Company's 56.6% proportionate share of TEN's revenue and EBITDA.
Consolidated and combined net earnings are the same.
FINANCIAL HIGHLIGHTS ON A CONSOLIDATED AND COMBINED BASIS
For the twelve months ended August 31, 2004:
- The Company's consolidated revenues for the year were $2,113
million compared to consolidated pro forma revenues of $2,100
million for the same period in 2003. Pro forma 2003 results
provide a comparison based upon the same asset base as existed
during the year ended August 31, 2004. Pro forma results for
2003 exclude the revenue and EBITDA contributions of newspaper
operations that were sold in February 2003.
- Consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) for the year were $447 million compared
to pro forma consolidated EBITDA of $469 million for the prior
year.
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- Consolidated and combined net earnings from continuing
operations were $194 million, or $1.10 per share, for the
year, up 69% from the $115 million, or $0.60 per share,
reported for fiscal 2003.
- Combined revenues increased by 4% to $2,566 million from pro
forma combined revenues of $2,473 million for the prior fiscal
year.
- Combined EBITDA of $600 million in fiscal 2004 reflected an
increase of 6% from the $568 million combined pro forma result
for the prior year.
For the three months ended August 31, 2004:
- Consolidated revenues for the fourth quarter, traditionally a
weaker quarter for the media industry, were $470 million
compared to $464 million for the same period in 2003.
- Consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) for the quarter ended August 31, 2004
were $58 million compared to consolidated EBITDA of $66
million for the corresponding quarter in 2003.
- Consolidated and combined net earnings from continuing
operations for the fourth quarter were $60 million, or $0.34
per share, compared to $8 million, or $0.05 per share,
reported for the same period in fiscal 2003.
- Consolidated and combined net earnings for the quarter were
$62 million, or $0.35 per share, compared to a loss of $45
million or $0.25 per share for the same period in fiscal 2003.
- Combined revenues for the fourth quarter were $580 million, an
increase of 3% from combined revenues of $563 million for same
quarter of the previous year.
- Combined EBITDA were $94 million for the fourth quarter, 9%
higher than the $86 million for the fourth quarter of fiscal
2003.
Results from continuing operations exclude revenues from Fireworks Entertainment
for both years, as Fireworks was classified as a discontinued operation during
fiscal 2004. The Company's financial results for prior periods have been
reclassified on this basis. The Company recorded a net loss from discontinued
operations of $208 million in 2004, compared to $69 million for the prior year.
Commenting on the year-end and fourth quarter results, Leonard Asper, CanWest's
President and Chief Executive Officer, said "CanWest made important progress on
many fronts in 2004 that together resulted in a significant improvement in
overall results and that should contribute to positive financial results going
forward. All of our international operations, including TV3 Ireland, the TEN
Group in Australia and our New Zealand television and radio operations recorded
their best ever financial results in 2004, with all of those operations
generating substantial improvements in their respective EBITDA. Our newspaper
operations also achieved a significant EBITDA gain in a still difficult Canadian
advertising market. Together, these strong results more than offset
disappointing results from our Canadian television operations and underscore the
significant benefit derived from CanWest's diversified international mix of
media assets."
"The Company's balance sheet strengthened substantially in 2004 as a result of a
combination of asset sales, re-financings and the successful IPO of CanWest
MediaWorks (NZ) Limited in
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New Zealand. In October, the Company announced an exchange offer for Hollinger
Participation Trust Notes that, if successful, will further improve our balance
sheet. All in all, 2004 was a very good year for CanWest," added Mr. Asper.
"While debt reduction remains a top priority, our much improved balance sheet
now positions us to re-focus on growth, including organic expansion of our
existing operations, and through prudent acquisitions, either in growth markets
or where we can identify synergies with our existing operations."
SEGMENTED RESULTS FOR FISCAL 2004
Revenues for the Company's newspaper and online operations for the year were
$1,194 million, 2% higher than pro forma revenues of $1,168 million for the same
newspaper assets in fiscal 2003. Newspaper and online EBITDA for the year
increased by 8% to $267 million, compared to a pro forma result of $248 million
for the previous year. The EBITDA improvement was primarily attributable to
increased revenues and operating cost reductions. Total circulation was down
slightly, but newsprint costs, a major component of total operating costs, were
stable over the year. We were encouraged during the year by the take-up of paid
subscriptions to the new electronic newspapers that are now available online for
all CanWest major metropolitan newspapers, as well as the National Post.
TEN's contribution to CanWest's combined EBITDA increased by 36% to $145 million
for the year, the best ever result from TEN. TEN's television network retained
its ratings leadership in the 16-39 young adult market and moved into second
place in both the older 25-54 demographic and all viewers. Eye Corp, TEN's
out-of-home advertising operation, also recorded substantial growth compared to
the previous year, with revenues up by 19% and EBITDA by 221%.
CanWest MediaWorks (NZ) Limited in New Zealand also booked impressive growth
during the year. Revenues at TVWorks were up 14%, and resulted in EBITDA of $23
million in fiscal 2004, an increase of 131% from EBITDA of $10 million in fiscal
2003. RadioWorks' EBITDA was up 32% to $27 million, compared to $21 million last
year.
TV3 Ireland also maintained a consistent positive growth trend, with CanWest's
share of its EBITDA increasing to $11 million for the year, up from $10 million
last year.
The strong revenue growth trends of F2004 continued at all CanWest's
international operations as we moved into F2005.
Revenues for the Company's Canadian broadcasting operations for fiscal 2004
declined by 5% to $690 million from $730 million in fiscal 2003. EBITDA for the
year was $147 million, a decline of 32% from the $216 million recorded the prior
year. The combined effects of lower ratings in 2003, and increased competition
for advertising revenues accounted for the decline. However, strong spring
ratings arrested the downward trend and there are indications of year-on-year
revenue growth at Global Television as we move into the first quarter of fiscal
2005.
SEGMENTED RESULTS FOR THE 4TH QUARTER ENDED AUGUST 31, 2004
Newspaper and online operations recorded a 2% gain in revenues to $281 million
for the quarter, compared to revenues of $276 million for the fourth quarter of
fiscal 2003. EBITDA increased by 3% to $53 million from $52 million last year.
The gains were attributable to a combination of a modest improvement in
advertising markets and operating cost reductions.
CanWest's non-Canadian operations all registered substantial year-over-year
gains for the quarter. CanWest's 56.6% share of results of TEN reflected a 12%
increase in EBITDA to $33
3
million for the quarter. Eye Corp. continued its strong recovery in the fourth
quarter, reporting revenue gains of 30% to $11 million and an increase of more
than 400% in EBITDA.
Fourth quarter EBITDA at TVWorks in New Zealand increased by 86% to $6 million
for the quarter on a 12% gain in revenues to $30 million. RadioWorks registered
similar positive momentum, with a 17% gain in EBITDA to $7 million for the
quarter on an increase of 14% in radio revenues.
CanWest's share of EBITDA from TV3 Ireland increased by 59% to $2 million for
the quarter
Fourth quarter revenues from Canadian television operations declined by 5% to
$131 million compared to $137 million last year. Television operations reported
a small EBITDA loss for the quarter. The Athens Olympics, which were carried by
another network, also had a detrimental impact on revenues in August.
Other highlights of the fourth quarter and for the period following the end of
the fiscal year include the following:
- CanWest received distributions from Network TEN of A$110
million in fiscal 2004 CanWest will receive interest on its
outstanding subordinated debentures of approximately A$39
million in December 2004 as a consequence of TEN's June 2004
dividend distribution. TEN's first distribution of interest
and dividends for fiscal 2005, which will be based upon its
earnings from July 1, 2004 to December 31, 2004, is expected
to be received in January 2005.
- In June, the Company successfully refinanced approximately
$911 million of its existing senior secured credit facility at
current favorable market terms. The refinancing will result in
annual interest cost savings of approximately $4.5 million and
extends maturity of the facilities until August 2009. The
refinancing also included a number of amendments to financial
covenants that increase the Company's future financial
flexibility.
- Also in June, the Company sold its 29.9% shareholding in
Ulster Television Plc. The cash proceeds of $144 million were
used to reduce bank debt. CanWest recorded a gain on the sale
of the UTV shares of approximately $52 million in the fourth
quarter.
- CanWest MediaWorks (NZ) Limited completed a successful IPO of
its shares, raising $84 million (NZ$100 million), and listed
on the New Zealand Stock Exchange in July. It used the funds
raised from the share issue, together with a concurrent $173
million (NZ$200 million) bank financing and further issuance
of 158.7 million shares to CanWest, to acquire all of
CanWest's New Zealand television and radio operations. CanWest
continues to hold 70% of the new company. Cash proceeds
received by the Company of $257 million (NZ$300 million) were
used to reduce bank debt. CanWest recorded a gain on the
transaction of $66 million in its fourth quarter.
- In October, the Company announced an exchange offer for
Hollinger Participation Trust Notes that, if successful, will
further strengthen the Company's balance sheet.
- Also in October, the Company announced the re-alignment of its
Canadian and international operations under the CanWest
MediaWorks and CanWest MediaWorks International banners. Rick
Camilleri was appointed as President of CanWest MediaWorks and
Tom Strike was named President of CanWest MediaWorks
International. Several other CanWest MediaWorks' senior
executive appointments
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were announced in October, including a new President for
Canadian Television and Radio, a new President for CanWest
Publications and a new President of Sales and Marketing.
CANWEST ANNOUNCES APPOINTMENT TO BOARD OF DIRECTORS
Following the regular meeting of the Board on November 2, the Company announced
the appointment of Frank King of Calgary to its Board of Directors. Mr. King is
President and Chief Executive Officer of Metropolitan Investment Corporation and
is the former Chairman and Chief Executive Officer of the XV Olympic Winter
Games, which were held in Calgary in 1988. Mr. King, 67, is a Director of the
Calgary Chamber of Commerce, Acclaim Energy Inc., Networc Health Inc., The
Westaim Corporation, Agrium Inc., and Wi-Lan Inc. and is a Trustee of Rio-Can
Real Estate Investment Trust.
The Company also announced that it had accepted the resignations of two of its
non-independent directors. Leaving the Board are Thomas C. Strike, President of
CanWest MediaWorks International and Richard C. Camilleri, President of CanWest
MediaWorks, both of whom were elected to the Board on an interim basis in
January 2004.
This press release contains certain comments or forward-looking statements that
are based largely upon 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 website:
www.canwestglobal.com.
CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.SV and CGS.NV,
www.canwestglobal.com) is an international media company, and also Canada's
largest media company. In addition to owning the Global Television Network,
CanWest is Canada's largest publisher of daily newspapers, and also owns,
operates and/or holds substantial interests in conventional television,
out-of-home advertising, specialty cable channels, Web sites and radio networks
in Canada, New Zealand, Australia and Ireland.
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For further information contact:
Geoffrey Elliot
Vice President, Corporate Affairs
Tel: (204) 956-2025
Fax: (204) 947-9841
gelliot@canwest.com
John Maguire
Chief Financial Officer
Tel: (204) 956-2025
Fax: (204) 947-9841
jmaguire@canwest.com
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CANWEST GLOBAL COMMUNICATIONS CORP. (1)
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED AUGUST 31
------------------------------------
2004 2003
REVENUE
TELEVISION
Canada 130,590 136,946
Australia - Network TEN 99,284 90,366
New Zealand - 3 and C4 29,682 26,426
Ireland - TV3 7,110 5,970
-------- --------
266,666 259,708
RADIO - NEW ZEALAND 21,418 18,746
PUBLICATIONS AND ONLINE - CANADA 280,807 276,290
OUTDOOR - AUSTRALIA 11,301 8,715
-------- --------
TOTAL COMBINED REVENUE(1) 580,192 563,459
Elimination of equity accounted affiliates(2) (110,585) (99,081)
-------- --------
TOTAL CONSOLIDATED REVENUE 469,607 464,378
======== ========
OPERATING PROFIT
TELEVISION
Canada (20) 9,513
Australia - Network TEN 33,054 29,511
New Zealand - 3 and C4 5,630 3,032
Ireland - TV3 1,712 1,078
-------- --------
40,376 43,134
RADIO - NEW ZEALAND 6,544 5,583
PUBLICATIONS AND ONLINE - CANADA 53,348 51,986
OUTDOOR - AUSTRALIA 2,330 454
-------- --------
SEGMENT OPERATING PROFIT 102,598 101,157
Corporate expenses 6,453 6,016
Restructuring and film and television program
impairment expenses 2,445 9,169
-------- --------
COMBINED OPERATING PROFIT (EBITDA)(1) 93,700 85,972
Elimination of equity accounted affiliates(2) (35,384) (19,649)
-------- --------
CONSOLIDATED OPERATING PROFIT (EBITDA) 58,316 66,323
======== ========
(1) Segmented results include the Company's 56.6% economic interest in
Network TEN.
(2) Elimination of proportionate interest in Australia's Network TEN and
Outdoor, which are equity accounted in the consolidated financial
statements.
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CANWEST GLOBAL COMMUNICATIONS CORP. (1)
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE YEAR ENDED AUGUST 31
----------------------------
2004 2003 2003
PROFORMA
REVENUE (2)
TELEVISION
Canada 690,302 730,407 730,407
Australia - Network TEN 409,204 336,362 336,362
New Zealand - 3 and C4 108,236 95,055 95,055
Ireland - TV3 34,152 32,490 32,490
---------- ---------- ----------
1,241,894 1,194,314 1,194,314
RADIO - NEW ZEALAND 86,717 73,400 73,400
PUBLICATIONS AND ONLINE - CANADA 1,193,627 1,208,180 1,168,224
OUTDOOR - AUSTRALIA 43,742 36,656 36,656
---------- ---------- ----------
TOTAL COMBINED REVENUE(1) 2,565,980 2,512,550 2,472,594
Elimination of equity accounted affiliates(3) (452,946) (373,018) (373,018)
---------- ---------- ----------
TOTAL CONSOLIDATED REVENUE 2,113,034 2,139,532 2,099,576
========== ========== ==========
OPERATING PROFIT
TELEVISION
Canada 147,430 216,346 216,346
Australia - Network TEN 145,328 106,975 106,975
New Zealand - 3 and C4 23,291 10,095 10,095
Ireland - TV3 10,591 9,729 9,729
---------- ---------- ----------
326,640 343,145 343,145
RADIO - NEW ZEALAND 27,488 20,751 20,751
PUBLICATIONS AND ONLINE - CANADA 267,343 258,496 248,391
OUTDOOR - AUSTRALIA 8,215 2,560 2,560
---------- ---------- ----------
SEGMENT OPERATING PROFIT 629,686 624,952 614,847
Corporate expenses 27,110 23,213 23,213
Restructuring and film and television program
impairment expenses 2,445 23,305 23,305
---------- ---------- ----------
COMBINED OPERATING PROFIT (EBITDA)(1) 600,131 578,434 568,329
Elimination of equity accounted affiliates(3) (153,543) (99,219) (99,219)
---------- ---------- ----------
CONSOLIDATED OPERATING PROFIT (EBITDA) 446,588 479,215 469,110
========== ========== ==========
(1) Segmented results include the Company's 56.6% economic interest in
Network TEN.
(2) Proforma results exclude the results of community newspapers sold
February 14, 2003.
(3) Elimination of proportionate interest in Australia's Network TEN and
Outdoor, which are equity accounted in the consolidated financial
statements.
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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,
2004 2003 2004 2003
REVENUE 469,607 464,378 2,113,034 2,139,532
Operating expenses 277,409 280,043 1,124,543 1,115,849
Selling, general and administrative expenses 131,437 119,159 539,458 531,479
Restructuring expenses 2,445 (1,147) 2,445 12,989
-------------- ------------ ------------- -------------
58,316 66,323 446,588 479,215
Amortization of intangibles 4,375 4,375 17,500 17,500
Amortization of property, plant and equipment 14,826 15,917 71,179 70,688
Other amortization 1,365 1,922 5,035 7,087
------------- ----------- ------------- -------------
OPERATING INCOME 37,750 44,109 352,874 383,940
Interest expense (72,822) (84,464) (310,572) (352,966)
Interest income 2,899 - 9,141 -
Amortization of deferred financing costs (2,002) (1,062) (7,864) (8,247)
Interest rate swap (losses) (100,660) (9,381) (110,860) (23,015)
Foreign exchange gains 41,338 4,477 45,104 3,918
Investment gains and losses net of write-down 113,254 (10,591) 110,794 9,240
Dividend income - - 3,738 3,532
------------- ----------- ------------- -------------
19,757 (56,912) 92,355 16,402
Provision (recovery) for income taxes (22,971) (12,770) (10,181) 2,533
-------------- ------------ -------------- -------------
EARNINGS BEFORE THE FOLLOWING 42,728 (44,142) 102,536 13,869
Minority interest (478) - (478) -
Interest in earnings of Network TEN 22,724 52,250 99,889 101,339
Interest in loss of other equity accounted
affiliates (69) (297) (625) (1,332)
Realized currency translation adjustments (5,138) 229 (7,023) 922
-------------- ----------- -------------- -------------
Net earnings from continuing operations 59,767 8,040 194,299 114,798
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS 2,199 (52,752) (207,777) (68,710)
-------------- ------------- -------------- --------------
Net earnings (loss) for the period 61,966 (44,712) (13,478) 46,088
============== ============= ============== =============
EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
BASIC $0.34 $0.05 $1.10 $0.60
DILUTED $0.34 $0.05 $1.10 $0.60
EARNINGS (LOSS) PER SHARE:
BASIC $0.35 ($0.25) ($0.08) $0.22
DILUTED $0.35 ($0.25) ($0.08) $0.22
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