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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| TVA Group Inc | TSX:TVA.B | Toronto | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.05 | 4.39% | 1.19 | 1.20 | 1.29 | 1.19 | 1.13 | 1.15 | 4,300 | 20:07:06 |
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TVA Group Inc. (TSX:TVA.B)(the "Company") announces that it recorded net income
of $1.5 million, or $0.06 per share, for the first quarter of 2010, compared
with $6.5 million, or $0.27 per share, in the corresponding quarter of 2009.
First quarter operating highlights:
-- Decrease in the Television sector's operating income(1) of $5,695,000,
or 56.9%, compared with the same quarter of last year. This decrease is
mainly due to the following factors:
-- a 68.7% drop in TVA Network's operating income, primarily due to a
5.7% decrease in advertising revenues and an increase in programming
costs;
-- an increase in the operating loss from the activities of TVA Films;
partially offset by:
-- a 24.4% increase in operating income from the specialty services,
despite significant investment in the programming grids of all
services;
-- a 36.8% decrease in the operating loss from the Toronto SUN TV
station, explained by a 17.4% increase in advertising revenues and
lower programming costs.
-- Growth of 6.7% in the Publishing sector's operating income against the
same year-ago quarter, from $2,336,000 in 2009 to $2,492,000 in 2010.
The Company's consolidated operating income dropped 44.9% to $6.8 million,
compared with $12.3 million in the same quarter of 2009.
"The financial results in the Television sector are an indication of just how
precarious advertising revenues are. The Vancouver Olympic Games in February
2010 definitely cost us advertising revenues and audience ratings. However,
driven by its original programming and news coverage, the TVA Network achieved
26 market shares for the period of January 11 to March 28, 2010 and boasted
eight of the 10 most-watched shows in Quebec(2). Our specialty services
continued their growth with a 24.4% increase in operating income. We are also
pleased with the launch of our new multi-platform franchise for preschoolers,
YOOPA, which includes a specialty channel, a magazine and an interactive Web
site," said Pierre Dion, President and Chief Executive Officer of the Company.
1 Refer to operating income definition on the next page.
2 Source: PPM, all 2 years and +
"The Publishing sector's advertising revenues decreased slightly by 2.3%,
whereas subscription revenues increased by 7.7% over the same quarter of 2009,
which resulted in an increase in operating income of 6.7% and a profit margin of
14.0%, compared with 12.9% in the same quarter of 2009, while we also continued
to protect our market shares," concluded Mr. Dion.
Cash flows used in operating activities were $6.1 million for the first quarter,
against $5.6 million for the corresponding year-ago period. The slight increase
in cash flows used was essentially due to a decrease in cash flows generated by
current operation.
Dividend
TVA Group Inc.'s Board of Directors today declared a dividend of $0.05 per
share, payable on June 9, 2010 to Class A and B shareholders of record as at May
25, 2010. 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 Company
TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated
communications company involved in broadcasting, creation, production and
distribution of audiovisual products, and magazine publishing. TVA Group Inc. is
the largest private sector broadcaster of French-language entertainment,
information and public affairs programming, and magazine publishing in North
America and one of the largest private sector producers. The Company also
operates SUN TV, a general-interest station in Toronto. Its Class B shares are
listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
The unaudited consolidated financial statements for the three-month period ended
March 31, 2010, with notes and interim Management's Discussion and Analysis can
be consulted on the Company's Web site at: www.tva.canoe.ca.
Definition of operating income or operating loss
In its analysis of operating results, the Company defines operating income
(loss) as earnings (loss) before amortization, financial expenses, restructuring
costs of operations and other, income taxes, non-controlling 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 is used by the
Company 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 Company and the results of its sectors.
Measurements such as operating income are also commonly used by the investment
community to analyze and compare the performance of companies in the industries
in which the Company is active. The Company's definition of operating income may
not be identical to similarly titled measures reported by other companies.
For the reconciliation between the operating income and the net income used in
the Company's financial statements, please refer to our interim Management's
Discussion and Analysis for the three-month period ended March 31, 2010,
available on the www.sedar.com and www.tva.canoe.ca Web sites.
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 Company'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), programming content and production costs risks, credit
risk, government regulation risks, governmental assistance risks, changes in the
economic conditions and fragmentation of the media landscape and labour
relations risks. 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 Company's actual
results to differ from current expectations, please refer to the Company's
public filings at www.sedar.com and www.tva.canoe.ca including, in particular,
the "Risks and Uncertainties" section of the Company's annual Management's
Discussion and Analysis for the year ended December 31, 2009.
The forward-looking statements in this news release reflect the Company's
expectations as of May 10, 2010, and are subject to change after this date. The
Company 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
March 31
-----------------------------------------------------------------------
Operating revenues $ 109,634 $ 109,799
Operating, selling and administrative
expenses 102,833 97,459
Amortization of property, plant and equipment
and intangible assets 3,597 3,433
Financial expenses (note 2) 1,275 689
Restructuring costs of operations and other
(note 3) 27 (827)
-----------------------------------------------------------------------
Income before income taxes, non-controlling
interest and share of income of company
subject to significant influence $ 1,902 $ 9,045
Income taxes 769 3,132
Non-controlling interest - (550)
Share of income of company subject to
significant influence (380) (32)
-----------------------------------------------------------------------
NET INCOME $ 1,513 $ 6,495
-----------------------------------------------------------------------
-----------------------------------------------------------------------
BASIC AND DILUTED EARNINGS PER SHARE (note
4c) $ 0.06 $ 0.27
-----------------------------------------------------------------------
-----------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Consolidated statements of Comprehensive Income
(unaudited)
(in thousands of dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three-month periods ended
March 31
---------------------------------------------------------------------------
2010 2009
---------------------------------------------------------------------------
Net income $ 1,513 $ 6,495
Other comprehensive income
Unrealized loss on a derivative financial
instrument (net of income taxes of $ 47)
- (92)
---------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 1,513 $ 6,403
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Consolidated statements of retained earnings
(unaudited)
(in thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three-month periods
ended March 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Balance, at beginning of period $ 134,303 $ 98,511
Net income 1,513 6,495
Dividends (1,188) (1,201)
Share redemption - excess of purchase price over
net carrying amount - (12)
-------------------------------------------------------------------------
Balance, at end of period $ 134,628 $ 103,793
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
TVA GROUP INC.
Consolidated balance sheets
(in thousands of dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
March 31, 2010 Dec. 31, 2009
---------------------------------------------------------------------------
---------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 2,204 $ 1,924
Accounts receivable 118,238 120,515
Current income tax assets 3,995 1,078
Programs, broadcast and distribution
rights and inventories 53,683 54,774
Prepaid expenses and other current asset 5,767 4,754
Future income tax assets 5,311 4,818
---------------------------------------------------------------------------
189,198 187,863
Broadcast and distribution rights 38,151 38,950
Investments 12,017 11,637
Property, plant and equipment 79,262 79,123
Future income tax assets 284 280
Accrued benefit asset 9,381 8,900
Licences and other intangible assets 86,851 86,789
Goodwill 71,981 71,981
---------------------------------------------------------------------------
$ 487,125 $ 485,523
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdraft $ 336 $ 974
Accounts payable and accrued liabilities 77,459 80,216
Current income tax liabilities 491 8,490
Broadcast and distribution rights payable 29,000 28,611
Deferred revenues 9,321 7,401
---------------------------------------------------------------------------
116,607 125,692
Long-term debt 99,691 88,580
Future income tax liabilities 29,361 28,951
Other long-term liabilities 4,046 5,205
---------------------------------------------------------------------------
249,705 248,428
Shareholders' equity
Capital stock (note 4) 98,647 98,647
Contributed surplus 4,145 4,145
Retained earnings 134,628 134,303
---------------------------------------------------------------------------
237,420 237,095
$ 487,125 $ 485,523
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of dollars)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods ended
March 31
--------------------------------------------------------------------------
2010 2009
--------------------------------------------------------------------------
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Net income $ 1,513 $ 6,495
Non-cash items
Amortization 3,689 3,455
Share of income of company subject to
significant influence (380) (32)
Future income taxes (93) (519)
Non-controlling interest - (550)
Other (481) (245)
--------------------------------------------------------------------------
Cash flows from current operations 4,248 8,604
Net change in non-cash items (10,314) (14,248)
--------------------------------------------------------------------------
Cash flows related to operating activities (6,066) (5,644)
--------------------------------------------------------------------------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Additions to property, plant and equipment (3,616) (5,040)
Additions to intangible assets (419) (387)
--------------------------------------------------------------------------
Cash flows related to investing activities (4,035) (5,427)
--------------------------------------------------------------------------
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Net change in bank overdraft (638) 5,253
Increase in long-term debt 11,019 3,735
Share redemption (note 4) - (30)
Dividends paid - (1,201)
--------------------------------------------------------------------------
Cash flows related to financing activities 10,381 7,757
--------------------------------------------------------------------------
Net change in cash 280 (3,314)
Cash, beginning of period 1,924 5,262
--------------------------------------------------------------------------
Cash, end of period $ 2,204 $ 1,948
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
Net interest paid (received) $ 206 $ (138)
Income taxes paid 11,778 4,105
Additions to property, plant and equipment
and intangible assets funded by accounts
payable and accrued liabilities 2,495 1,702
Other accounts receivable credited to
property, plant and equipment (254) -
--========================================================================
See accompanying notes to consolidated financial statements
TVA GROUP INC.
Notes to consolidated financial statements
Three-month periods ended March 31, 2010 and 2009 (unaudited)
(Amounts presented in the tables are expressed in thousands of dollars, except
per-share and per-option amounts)
TVA Group Inc. (the "Company"), incorporated under Part 1A of the Companies Act
(Quebec), is an integrated communications company with operations in two
business sectors : television and publishing (note 7).
1. Financial statement presentation
These interim unaudited consolidated financial statements have been prepared in
conformity with Canadian Generally Accepted Accounting Principles ("GAAP") with
the exception that they do not include all disclosures required for annual
consolidated statements and accordingly should be read in conjunction with the
Company's audited annual consolidated financial statements ended December, 31,
2009 and the notes thereto. The same accounting policies described in the annual
consolidated financial statements have been used herein.
The Company's businesses experience seasonality effects due to, among other
things, seasonal advertising patterns and their influence on people's viewing,
reading and listening habits. Because the Company depends on the sale of
advertising for a significant portion of its revenue, operating results are also
sensitive to prevailing economic conditions, including changes in local,
regional and national economic conditions, particularly as they may affect
advertising expenditures. Accordingly, the results of operations for interim
periods should not necessarily be considered indicative of full-year results.
Certain comparative figures for the previous period have been reclassified to
conform to the presentation adopted for the three-month period ended March 31,
2010.
2. Financial expenses
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Three-month periods ended
March 31
-----------------------------------------------------------------------
2010 2009
-----------------------------------------------------------------------
Interest on long-term debt $ 1,358 $ 725
Dividends on redeemable preferred shares - 261
Interest revenues on convertible bonds
issued by an affiliated company - (252)
Interest income (131) (72)
Amortization of deferred financing costs 92 22
Foreign exchange loss (gain) (44) 5
-----------------------------------------------------------------------
$ 1,275 $ 689
-----------------------------------------------------------------------
-----------------------------------------------------------------------
3. Restructuring costs of operations and other
During the first quarter of 2010, the Company recorded a provision for
restructuring costs of operations totalling $532,000 following the elimination
of a number of positions in the Television sector.
The balance of the provision for restructuring costs of operations was
$1,513,000 as at March 31, 2010 ($981,000 as at December 31, 2009). No payment
has been made during the quarter.
During the first quarter of 2009, based on new information available, the
Company remeasured its provision for restructuring costs relating to the
production activities of a former subsidiary, resulting in a downward adjustment
of the balance by $827,000.
In addition, during the quarter ended March 31, 2010, the Company recorded a
gain of $505,000 following an insurance settlement related to property, plant
and equipment.
4. Capital stock
a) Number of shares outstanding
---------------------------------------------------------------------
---------------------------------------------------------------------
March 31, 2010 Dec. 31, 2009
---------------------------------------------------------------------
Class A common shares 4,320,000 4,320,000
Class B shares 19,450,906 19,450,906
---------------------------------------------------------------------
23,770,906 23,770,906
---------------------------------------------------------------------
---------------------------------------------------------------------
b)Share redemption
Issuer bid
On March 17, 2010, the Company has filed a new notice of intent to repurchase
for cancellation between March 19, 2010 and March 18, 2011, in the normal course
of its activities, a maximum of 972,545 Class B shares which represent
approximately 5% of the Company's outstanding Class B shares. The Company
repurchases its Class B shares at the market price, at the time of the purchase,
plus brokerage fees. No shares were repurchased for cancellation in relation to
this normal course issuer bid during the quarter.
On March 17, 2009, the Company had filed a notice of intent to repurchase for
cancellation between March 19, 2009 and March 18, 2010, in the normal course of
its activities, a maximum of 985,210 Class B shares which represent
approximately 5% of the Company's outstanding Class B shares. The Company
repurchases its Class B shares at the market price, at the time of the purchase,
plus brokerage fees. No shares were repurchased for cancellation in relation to
this normal course issuer bid during the quarter (3,500 shares had been redeemed
for cancellation for a net cash consideration of $30,000 during the same quarter
of 2009).
Earnings per share
The following table provides the calculation of basic and diluted earnings per
share:
-------------------------------------------------------------------------
Three-month periods
ended March 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Net income $ 1,513 $ 6,495
Weighted average number of
basic and diluted shares
outstanding 23,770,906 24,023,876
Basic and diluted earnings
per share $ 0.06 $ 0.27
-------------------------------------------------------------------------
The diluted earnings per share calculation does not take into consideration the
potential dilutive effect of certain stock options of the Company, since their
impact is anti-dilutive. During the three-month period ended March 31, 2010,
878,809 options of the Company's plan (975,155 in 2009) were excluded from the
diluted earnings per share calculation.
5. Stock-based compensation and other stock-based payments
------------------------------------------------------------------------
------------------------------------------------------------------------
Three-month periodended March
31, 2010
------------------------------------------------------------------------
Conventional Quebecor Media
Class B stock Inc. stock
options options
------------------------------------------------------------------------
Balance as at December 31, 2009 975,155 226,649
Granted - 205,500
Exercised - (5,046)
Cancelled (96,346) (25,522)
------------------------------------------------------------------------
Balance as at March 31, 2010 878,809 401,581
------------------------------------------------------------------------
------------------------------------------------------------------------
Of the number of options outstanding as at March 31, 2010, 442,507 conventional
Class B stock options at an average exercise price of $17.65 and 54,396 Quebecor
Media Inc. stock options at an average exercise price of $45.20 could be
exercised.
During the three-month period ended March 31, 2010, the Company recorded a
compensation expense of $151,000 (no expense in the same quarter of 2009)
related to the conventional Class B stock options of the Company, as well as a
reversal of the compensation expense of $91,000 (expense of $210,000 in the same
quarter of 2009) related to Quebecor Media Inc. stock options.
6. Pension plans and other retirement benefits
The Company maintains defined benefit and defined contribution pension plans for
its employees. In addition, under an old plan, the Company maintains for certain
retired employees other retirement benefits, such as health, life and dental
insurance plans. Total costs for these benefits are as follows:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods
ended March 31
--------------------------------------------------------------------------
2010 2009
--------------------------------------------------------------------------
Pension plans
Defined benefit plans $ 370 $ 655
Defined contribution plans 821 739
Other retirement benefits $ 33 $ 33
--------------------------------------------------------------------------
--------------------------------------------------------------------------
7. Segmented information
Historically, the Company's business activities have been conducted in three
operating segments. As a result of changes made to the Company's management
structure, commencing in the first quarter of fiscal 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 income, as well as
information on assets:
----------------------------------------------------------------------
----------------------------------------------------------------------
Three-month periods ended
March 31
----------------------------------------------------------------------
2010 2009
----------------------------------------------------------------------
Operating revenues
Television $ 92,880 $ 92,493
Publishing 17,767 18,099
Intersegment items (1,013) (793)
----------------------------------------------------------------------
109,634 109,799
Operating, selling and administrative
expenses
Television 88,571 82,489
Publishing 15,275 15,763
Intersegment items (1,013) (793)
----------------------------------------------------------------------
102,833 97,459
Income before amortization, financial
expenses, restructuring costs of
operations and other, income taxes,
non-controlling interest and share of
income of company subject to
significant influence
Television 4,309 10,004
Publishing 2,492 2,336
Intersegment items - -
----------------------------------------------------------------------
$ 6,801 $ 12,340
----------------------------------------------------------------------
----------------------------------------------------------------------
The intersegment items mentioned above represent the elimination of normal
course business transactions made between the Company's business segments
regarding revenues and expenses.
----------------------------------------------------------
----------------------------------------------------------
March 31, 2010 December 31,2009
----------------------------------------------------------
Total assets
Television $ 401,837 $ 401,040
Publishing 85,288 84,483
----------------------------------------------------------
$ 487,125 $ 485,523
----------------------------------------------------------
----------------------------------------------------------
Goodwill
Television $ 2,539 $ 2,539
Publishing 69,442 69,442
----------------------------------------------------------
$ 71,981 $ 71,981
----------------------------------------------------------
----------------------------------------------------------
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