Paccar (TG:PAE)
Historical Stock Chart
From Sep 2019 to Sep 2024
Peace Arch Entertainment Group Inc. announces second quarter
results
TORONTO, April 27 /PRNewswire-FirstCall/ -- Peace Arch Entertainment Group
Inc. (AMEX and TSX: PAE) is pleased to announce its results for the three and
six months ended February 29, 2004.
The Company delivered the feature films "Direct Action" and "The Keeper" and 8
episodes of a 13 episode television series "Campus Vets" in the quarter. The
Company also closed a marketing and film enhancement deal for two of its films,
"The Keeper" and "Hollywood Flies". During the quarter, the Company was in
production of 7 new feature films. This compares to the delivery of 3 feature
films, 5 episodes of a 13 episode prime-time television series and 2
documentary specials for the same period in the prior year.
The Company's revenue totaled $7.7 million for the quarter, compared with $10.1
million for the second quarter of FY2003. The decrease in revenue reflects the
Company's delivery of an additional feature film in the second quarter of
FY2003.
The Company reported net earnings of $1.5 million or $0.09 basic earnings per
share and $0.07 diluted earnings per share, for the six months ended February
29, 2004 compared with net earnings of $4.8 million, or $0.80 basic earnings
per share and $0.56 diluted earnings per share for the FY2003 comparable
period. For the FY2003 comparable period, the Company reported net earnings of
$0.2 million before a one-time gain on modification of debt of $4.6 million.
The Company reported year-to-date earnings from operations before undernoted,
as indicated in the financial statements, of $2.0 million for the six months
compared with $132,000 for the FY2003 comparable prior period. Earnings from
operations before the undernoted, which the Company defines as revenue less
amortization of investment in film and television programming, other production
and distribution costs, selling, general and administrative costs and other
amortization, is a non-GAAP measure. The Company considers earnings from
operations to be a meaningful performance measure as it provides an
approximation of the Company's operational results.
Peace Arch Entertainment Group Inc., one of Canada's foremost entertainment
companies, creates, develops, produces and distributes feature films and
proprietary television programming for worldwide markets. Peace Arch
Entertainment Group Inc. has offices in Vancouver, Toronto and London, England.
This press release includes statements that may constitute forward-looking
statements, usually containing the words "believe", "estimate","project",
"expect", or similar expressions. These statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements. Factors that would cause or contribute to such differences include,
but are not limited to, continued acceptance of the Company's products and
services in the marketplace, competitive factors, dependence upon third-party
vendors, availability of capital and other risks detailed in the Company's
periodic report filings with the Securities and Exchange Commission. By making
these forward-looking statements, the Company undertakes no obligation to
update these statements for revisions or changes after the date of this
release.
For media inquires, please contact:
Nicole Spracklin
Peace Arch Entertainment Group Inc.
Tel: (416) 487-0377 (ext. 237)
Email:
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED BALANCE SHEETS
As at February 29, 2004 and February 28, 2003 and August 31, 2003
(Expressed in thousands of Canadian dollars)
-------------------------------------------------------------------------
February 29, August 31, February 28,
2004 2003 2003
-------------------------------------------------------------------------
(unaudited) (audited) (unaudited)
ASSETS
Cash and cash equivalents $ 344 $ 911 $ 1,059
Accounts and other receivables 27,895 14,747 11,472
Investment in film and television
programming 19,653 20,805 14,769
Prepaid expenses and deposits 487 407 401
Property and equipment 70 35 761
Deferred financing costs - - 493
-------------------------------------------------------------------------
$ 48,449 $ 36,905 $ 28,955
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Production loans $ 18,964 $ 17,973 $ 13,241
Accounts payable and accrued
liabilities 6,939 2,973 2,584
Deferred revenue 3,238 8,823 4,116
Deferred gain - - 371
Distribution obligation 2,312 2,312 -
Promotion and advertising
obligation (note 5) 10,158 - -
Non-controlling interest (note 6) 346 - 27
Term loans - - 4,678
Obligation to issue shares 3,076 2,887 -
-------------------------------------------------------------------------
45,033 34,968 25,017
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital Stock 35,888 35,878 35,750
Contributed surplus 337 337 -
Other paid-in capital 680 680 1,189
Deficit (33,489) (34,958) (33,001)
-------------------------------------------------------------------------
3,416 1,937 3,938
-------------------------------------------------------------------------
$ 48,449 $ 36,905 $ 28,955
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Approved by the Board of Directors
/s/ Gary Howsam Director /s/ Richard Watson Director
------------------- ----------------------
Gary Howsam Richard Watson
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended February 29, 2004
and February 28, 2003
(Expressed in thousands of Canadian dollars except per share information)
-------------------------------------------------------------------------
3 months ended 6 months ended
February February
2004 2003 2004 2003
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue $ 7,654 $ 10,091 $ 12,878 $ 11,724
Expenses
Amortization of
investment in film
and television
programming and other
production costs 5,329 8,824 9,633 10,084
Other production and
distribution costs 3 215 139 267
Selling, general and
administrative 624 732 1,129 1,097
Other amortization 4 41 6 144
-------------------------------------------------------------------------
5,960 9,812 10,907 11,592
-------------------------------------------------------------------------
Earnings from
operations
before undernoted 1,694 279 1,971 132
Interest income 7 87 7 129
Interest expense (1) (15) (2) (110)
Provision for share
issuance (note 4) (94) - (188) -
Gain on sale of assets - 32 - 65
Foreign exchange gain 26 25 27 23
Gain on modification
of debt - 4,604 - 4,604
Non-controlling
interest (note 6) (346) (27) (346) (27)
-------------------------------------------------------------------------
Earnings before
income taxes 1,286 4,985 1,469 4,816
Provision for income
taxes - - - -
-------------------------------------------------------------------------
Net earnings for
the period 1,286 4,985 1,469 4,816
Net earnings per
common share
BASIC $ 0.07 $ 0.84 $ 0.09 $ 0.80
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DILUTED $ 0.06 $ 0.60 $ 0.07 $ 0.56
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF DEFICIT
For the Three and Six Months Ended February 29, 2004
and February 28, 2003
(Expressed in thousands of Canadian dollars)
-------------------------------------------------------------------------
3 months ended 6 months ended
February February
2004 2003 2004 2003
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Deficit, beginning
of period $ (34,775) $ (37,986) $ (34,958) $ (37,817)
Net earnings
for the period 1,286 4,985 1,469 4,816
---------------------------------------------------
$ (33,489) $ (33,001) $ (33,489) $ (33,001)
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three and Six Months Ended February 29, 2004
and February 28, 2003
(Expressed in thousands of Canadian dollars)
-------------------------------------------------------------------------
3 months ended 6 months ended
February February
2004 2003 2004 2003
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from
operating activities
Net earnings
for the period $ 1,286 $ 4,985 $ 1,469 $ 4,816
Items affecting cash
Amortization of
film and television
programming and
other production
costs 5,329 8,824 9,633 10,084
Other amortization 4 41 6 144
Interest on debt
discount - (49) - -
Provision for
share issuance 94 - 188 -
Gain on modification
of debt - (4,604) - (4,604)
Gain of sale of
assets - (32) - (65)
Non-controlling
interest 346 27 346 27
Investment in film
and television
programming (5,013) (13,738) (8,482) (15,527)
Changes in non-cash
operating working
capital (5,241) (12,139) (4,686) (10,580)
---------------------------------------------------
(3,195) (16,685) (1,526) (15,705)
---------------------------------------------------
Cash flows from
investing activities
Increase in deferred
costs - (147) - (367)
Property and
equipment acquired (21) - (41) -
---------------------------------------------------
(21) (147) (41) (367)
---------------------------------------------------
Cash flows from
financing activities
Increase in bank
indebtedness 6,359 12,232 7,900 11,386
Increase (decrease)
in debt (3,045) 516 (6,910) (103)
Issuance of
common shares - 3,880 10 3,880
---------------------------------------------------
3,314 16,628 1,000 15,163
---------------------------------------------------
Increase (decrease)
in cash and cash
equivalents 98 (204) (567) (909)
Cash and cash
equivalents,
beginning of period 246 1,263 911 1,968
---------------------------------------------------
Cash and cash
equivalents,
end of period $ 344 $ 1,059 $ 344 $ 1,059
---------------------------------------------------
---------------------------------------------------
Supplemental cash flow
information
Interest paid 1 15 2 110
Income taxes paid - - - -
Income taxes recovered - - - -
Non-cash transactions
Obligation to issue
shares 94 - 188 -
Issuance of convertible
instruments and
reduction in value
of debt - 509 - 509
PEACE ARCH ENTERTAINMENT GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended February 29, 2004
and February 28, 2003
(unaudited)
(Dollar amounts in tables expressed in thousands of Canadian dollars)
1. Operations
Based in Toronto, Ontario, Canada, Peace Arch Entertainment Group
Inc., together with its subsidiaries, (collectively, the "Company")
is a fully integrated company that creates, develops, produces and
distributes film, television and video programming for world-wide
markets.
2. Future Operations
The interim consolidated financial statements have been prepared on
the "going concern" basis, which assumes the realization of assets
and the settlement of liabilities in the normal course of operations.
The application of the "going concern" basis is dependent upon the
Company achieving profitable operations to generate sufficient cash
flows to fund continuing operations or, in the absence of adequate
cash flows from operations, obtaining additional financing to meet
its obligations as they come due. These consolidated financial
statements do not reflect adjustments that would be necessary if the
"going concern" basis is not appropriate.
3. Significant Accounting Policies
(a) Basis of Presentation
The interim consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally
accepted in Canada for interim financial reporting. Accordingly, they
do not include all of the information and footnote disclosures
necessary for complete financial statements in conformity with
Canadian generally accepted accounting principles. The interim
consolidated financial statements have been prepared in a manner
which is consistent with the accounting policies described in the
Company's Annual Report for the year ended August 31, 2003 and should
be read in conjunction therewith.
The interim consolidated financial statements include the accounts of
the Company and its subsidiaries. All material intercompany balances
and transactions have been eliminated.
(b) Comparative Figures
Certain comparative figures have been restated to conform to the
basis of presentation adopted for the current period.
(c) Earnings before interest, taxes, depreciation and amortization
(EBITDA)
EBITDA is comprised of net earnings from operations before the
undernoted plus other amortization. EBITDA is not a measure
recognized under Canadian or United States generally accepted
accounting principles. The calculation of EBITDA may be different
from that presented by other companies and therefore may not be
comparable to other companies. Management believes EBITDA is an
important measure of the Company's earnings and its ability to
generate cash from its core business activities.
(d) Non-controlling interest
Non-controlling interest represents the interests of arm's length
parties' ownership position in the Company's business interests in
which the Company controls.
4. Debt Restructuring
During the year ended August 31, 2002, the Company entered into an
agreement with Fremantle Enterprises Inc. ("Fremantle"), an existing
trade creditor, whereby Fremantle agreed to exchange its trade
payable balance of $7,783,000 for a term loan secured by a charge on
the assets of the Company and a secured interest in certain
copyrights to productions. The promissory note bore interest at 10%
per annum and was intended to mature on June 30, 2004.
Effective January 30, 2003, the Company and Fremantle agreed to
restructure the remaining $7,580,000 of term debt due to Fremantle.
Fremantle agreed that the revised source of debt repayments and
security would be restricted to the business, assets, and
undertakings of the Company as they existed immediately prior to
January 30, 2003 (the pre-existing assets). The new debt has no fixed
repayment dates. Interest, which continues to accrue at 10% per
annum, and principal are payable from the income streams of the
pre-existing assets, subject to priority interests. The revised terms
also exclude a previous right of prepayment by the Company of all
outstanding amounts.
Pursuant to the Debt Repayment Agreement dated January 30, 2003, the
Company has also agreed that if any amount of the Fremantle debt,
including unpaid interest, remains outstanding as of December 31,
2004, Fremantle will, for a period of 90 days, have the right to
convert such unpaid amount to Class B Subordinate Voting Shares in
the capital of the company at the lesser of either (a) $5.00 per
share or (b) the average trading close price of the shares for the 30
days prior to December 31, 2004, provided that in no event shall the
conversion price be less than $3.00 per share.
The modification of the debt is treated for accounting purposes as a
settlement of the original debt, as the present value of cash flows
under the terms of the modified debt instrument is at least 10%
different from the carrying amount of the original debt. The fair
value of the debt after modification is based on the discounted
expected future cash flows of the pre-existing assets. The Company
recorded a gain on modification of the debt, for the year ended
August 31, 2003.
Release and reconstitution of a loan guarantee
During the year ended August 31, 2001, the Company guaranteed a loan
due to Comerica Bank - California ("Comerica") to a maximum of
US$2,075,000 on behalf of a co-production partner. During the year
ended August 31, 2002, the co-production partner defaulted on its
loan payments. As at August 31, 2002, the amount of the outstanding
related debt was $1,675,000 (US$1,075,000) and the Company recognized
its obligation as debt and receivable due from the co-producer. The
receivable was written off at August 31, 2002.
During the year ended August 31, 2003, the Company entered into a
Release and Reconstitution Agreement with Comerica which restructured
the terms of the loan guarantee. Repayment of the loan is restricted
to the ultimate proceeds of specific exploitation rights secured
under the original loan agreement and, subject to priority interests,
including repayment to Fremantle, to the pre-existing assets.
If any amount of the Comerica liability remains outstanding as of
December 31, 2005, Comerica will, for a period of 90 days, have the
right to convert such unpaid amount to Class B Subordinate Voting
Shares in the capital of the Company at a deemed price of $5.00 per
share. The modification of the Comerica obligations is treated for
accounting purposes as a settlement of the original debt, as the
present value of cash flows under the terms of the modified debt is
at least 10% different from the carrying amount of the original debt.
The fair value of the debt after modification is based on the
discounted expected future cash flows of the pre-existing assets.
Conversion instruments
As described, and in conjunction with the above, on January 30, 2003,
the Company issued a conversion instrument to Fremantle which permits
Fremantle to convert the amount of its outstanding debt including
unpaid accrued interest at December 31, 2004, if any, into Class B
Subordinate Voting Shares of the company for a period of 90 days
commencing on December 31, 2004. The conversion price will be the
lower of either (a) $5.00 per share or (b) the average closing price
of the Class B shares for the 30 days prior to December 31, 2004,
provided that in no event shall the conversion price be less than
$3.00 per share. Pursuant to the conversion instrument, 2,527,000
Class B shares, which represent the number of shares that could be
issued for the principal amount of debt of $7,580,000, have been
reserved for issuance.
As described, and in conjunction with the above, on January 30, 2003,
the Company issued a conversion instrument to Comerica which permits
Comerica to convert the amount of its outstanding loan at
December 31, 2005, if any, into Class B Subordinate Voting Shares of
the Company for a period of 90 days commencing on December 31, 2005
at a price of $5.00 per share. Pursuant to the conversion instrument,
366,000 Class B Shares, which represent the number of shares that
could be issued for the obligation of US$1,075,000, have been
reserved for issuance.
During the year ended August 31, 2003, the Company adopted the
Statement of Financial Accounting Standards (SFAS) No. 150,
"Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity," which established standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity.
Reorganization of a subsidiary, Peace Arch Project Development Corp.
(PAPDC)
During the year ended August 31, 2003, the Company carried out a
reorganization and rationalization of its assets, operations and
subsidiaries.
Pursuant to the reorganization, the Company's wholly owned
subsidiary, PAPDC, became the owner of substantially all of the
assets and business (collectively, the pre-existing assets) as at
January 30, 2003. The pre-existing assets consisted principally of
accounts and loans receivable, film and television programming
rights, and all shares and other securities (including intercompany
loans) held by the Company in its subsidiaries existing at
January 30, 2003.
At the same time, PAPDC and its subsidiaries directly or indirectly
were assigned substantially all of the pre-existing debts and
liabilities of the Company, including the Company's indebtedness to
Fremantle and Comerica. However, the Company continues to have a
conditional obligation to satisfy any remaining indebtedness to
Fremantle and Comerica by issuing a variable number of shares to
Fremantle and Comerica under Conversion Rights Certificates (the
conversion instruments) issued by the Company to each of them.
Subsequent to the reorganization of PAPDC described above, on
August 1, 2003, the Company sold all of its shares of PAPDC for
nominal consideration.
Pursuant to the terms of the Fremantle conversion instrument, the
Company has estimated the fair value of the obligation to issue
shares for the interest accrued for the six month period and has
taken a charge of $188,000 in the Company's consolidated statement of
operations.
5. Promotion and Advertising Obligation
During the quarter, the Company entered into promotional and film
enhancement agreements for two of its productions whereby the Company
has arranged for the support of the promotion and advertising
campaign for the two films during their release. The promotion and
advertising obligation is offset by an accounts receivable.
6. Non-controlling Interest
During the quarter, the Company delivered two productions and earned
profit in a subsidiary where each of these businesses consists of a
non-controlling interest in the ownership and entitlement to the
profit. These amounts are payable to the non-controlling interests as
and when dividends or profits from these businesses are declared and
paid to the non-controlling interests and the Company.
7. Segmented Information
Revenue by geographic location, based on the location of customers.
2004 2003
$ $
Revenue
Canada 2,341 3,558
United States 2,923 2,542
Spain - 1,225
France - 1,940
Other foreign 7,614 2,459
-------------------
12,878 11,724
-------------------
-------------------
8. Related Party Transactions
The Company has entered into the following related party
transactions. These transactions are measured at the exchange amount,
which is the actual amount of consideration given as established and
agreed between the related parties.
(a) During the six months ended February 29, 2004, the Company paid
$79,000 (2003- $29,000) to a company controlled by a director and
officer of the Company for executive services rendered. These
expenditures are reflected in the Company's selling, general and
administrative expenses.
(b) During the six months ended February 29, 2004, the Company paid
$43,000 (2003 - $nil) to a director of the Company for legal
services rendered. These expenditures are reflected in the
Company's selling, general and administrative expenses.
(c) At February 29, 2004, the Company was indebted to a company
controlled by a director and officer of the Company in the amount
of $2,223,000. With the exception of $304,000, this loan bears
interest at the rate of prime plus 2% per annum.
(d) At February 29, 2004, the Company was owed $1,959,000 from
related party c) above, which is included in accounts and other
receivables. This balance is unsecured, non interest bearing and
has no specified repayment date.
9. Subsequent Events
The shareholders, at its shareholder meeting held on
February 11, 2004, approved the Company's plan to restructure its
share capital, by which all Class A Multiple Voting Shares and all
Class B Subordinate Voting Shares will be merged into one class of
common shares all having one vote each. The new common shares
commenced trading on March 16, 2004.
The symbol for the Company's common shares on the Toronto Stock
Exchange is "PAE". The previous symbols for the Company's Class A
Multiple Voting Shares ("PAE.A") and Class B Subordinate Voting
Shares ("PAE.B") on the Toronto Stock Exchange are no longer
applicable and will no longer be used. The symbol for the Company's
common shares on the American Stock Exchange remains "PAE".
SUPPLEMENTAL INFORMATION
For the convenience of the reader, operating results for the six months ended
February 29, 2004 and February 28, 2003 have been translated into US Dollars
using the average exchange rate in effect for the periods. The average rate
used for the six months ending February 29, 2004 was US$0.76 for each $1.00
Canadian. Balance sheet information has been translated into US Dollars using
the Bank of Canada noon spot rate in effect at the balance sheet dates. The
Bank of Canada noon spot rate in effect at February 29, 2004 was US$0.75 for
each $1.00 Canadian. These translations are not necessarily representative of
the amounts that would have been reported if the Company had historically
reported its financial statements in US Dollars. In addition, the rates
utilized are not necessarily indicative of rates in effect at any other time.
EBITDA - comprised of net earnings from operations before undernoted plus other
amortization.
PEACE ARCH ENTERTAINMENT GROUP INC.
UNITED STATES DOLLARS
Selected Financial and Operating Information
For the Six Months Ended February 29, 2004 and February 28, 2003
(Reported in accordance with generally accepted accounting principles
in Canada)
(Expressed in thousands of US Dollars except per share information)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2004 2003
(unaudited) (unaudited)
-------------------------------------------------------------------------
Revenue $ 9,756 $ 7,535
Earnings for the period 1,113 3,095
EBITDA 1,119 3,176
Diluted earnings per common share $ 0.05 $ 0.36
Selected Balance Sheet Information
As at February 29, 2004 and February 28, 2003
(Reported in accordance with generally accepted accounting principles
in Canada)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2004 2003
(unaudited) (unaudited)
-------------------------------------------------------------------------
Cash and cash equivalents $ 257 $ 711
Accounts and other receivables 20,817 7,699
Investment in film and television programming 14,666 9,912
Prepaid expenses and deposits 363 269
Property and equipment 52 511
Deferred financing costs - 331
Total Assets 36,156 19,433
Production loans 14,152 8,887
Accounts payable and accrued liabilities 5,178 1,734
Deferred revenue 2,416 2,762
Deferred gain - 249
Non-controlling interest 258 18
Debt - 3,140
Distribution obligation 1,725 -
Promotion and advertising obligation 7,581 -
Obligation to issue shares 2,296 -
Total Liabilities 33,607 16,790
Capital stock 26,782 23,993
Contributed surplus 251 -
Other paid-in capital 507 798
Deficit (24,992) (22,148)
Shareholders' equity 2,549 2,643
DATASOURCE: Peace Arch Entertainment Group Inc.
CONTACT: For media inquires, please contact: Nicole Spracklin, Peace
Arch Entertainment Group Inc., Tel: (416) 487-0377 (ext. 237), Email: