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Alliance Communications Corporation Announces Fiscal 98 First Quarter Results

TORONTO, Aug. 25 /PRNewswire/ -- Alliance Communications Corporation (Nasdaq: ALLIF; Toronto, Montreal: AAC.A, AAC.B) today announced financial results for the three months ended June 30, 1997. All currency amounts are in Canadian dollars.

Consolidated revenues for the first quarter of 1998 were $66,556,000 compared to $63,517,000 reported in the same period last year. Net earnings and earnings per common share for the quarter were $7,795,000 and $0.59 respectively ($4,777,000 and $0.36 excluding the gain on sale of investment), compared to $955,000 and $0.10 reported in last year's fiscal first quarter.

Overall gross margins increased from 19.5% of gross revenue or $12.4 million, in the first quarter of fiscal 1997 to 28% of revenue, or $18.6 million this year. Gross Margin from our core production, distribution and broadcasting businesses increased from 18.8% last year, or $11.7 million to 25.7%, or $15.4 million this year.

Alliance Motion Pictures posted a 27.8% increase in year over year revenue of $41,804,000 from $32,700,000 reported in last year's first quarter. The improved returns are attributable in part to strong international sales which, in addition to The Sweet Hereafter, were achieved by another film from our Alliance Independent Films label, the Sundance Festival award winner, In The Company of Men. Alliance Releasing added to the division's strong performance in the quarter with films such as Austin Powers, The English Patient, and Shine.

Lower revenues in Alliance Television in the first quarter of 1998 of $11,635,000 compared to $21,738,000 in the first quarter of 1997 were due primarily to decreased production revenues. In the first quarter of the prior year, eight hours were delivered compared to 10.5 hours in the current quarter; however, the prior year's results reflected the premium budgets of two pilots, including the two hour Once A Thief, resulting in higher revenues in the division.

Revenues for Alliance Equicap increased quarter over quarter, to $6,599,000 from $1,375,000 last year, when sales were lower due to uncertainties at that time regarding the marketability of tax shelters. Of revenues, $452,000 was generated by Equicap Financial Corporation, which did not complete it's first transaction until the third quarter in the prior year.

Alliance Broadcasting recorded increased revenues of $5,636,000 compared to $4,686,000. This strong performance reflects growth in both advertising and subscriber revenues.

Alliance Multimedia posted revenues of $882,000 down from $3,018,000 reported in last year's first quarter. The decrease in revenues was due to lower revenues in the animation production division, where five episodes of Beast Wars were delivered in the first quarter in the prior year compared to one episode of Captain Star delivered in the current quarter.

Alliance Communications Corporation is an international, integrated entertainment company with five operating units which include Alliance Motion Pictures, Alliance Television, Alliance Broadcasting, Alliance Multimedia and Alliance Equicap with headquarters in Toronto and offices in Montreal, Vancouver, Los Angeles, Paris and Shannon. Shares trade in Toronto and Montreal (AAC.A, AAC.B) and on Nasdaq (ALLIF).
 ALLIANCE COMMUNICATIONS CORPORATION
 CONSOLIDATED BALANCE SHEETS
 As at June 30, 1997 and March 31, 1997
 (In thousands of Canadian dollars)
 As at As at
 June 30, 1997 Mar. 31, 1997
 (Unaudited)


ASSETS
 Cash and short-term investments $5,679 $10,777
 Accounts receivable 210,279 167,739


Investment in film and television programs
 and program rights 186,371 149,410
 Property and equipment 10,394 10,314
 Other assets 16,779 15,482
 Total $429,502 $353,722


LIABILITIES
 Operating loan and bank indebtedness $44,513 $3,361
 Accounts payable and accrued liabilities 104,675 109,491
 Income taxes 14,541 10,927
 Deferred revenue 90,824 62,980
 Convertible debenture 16,500 16,500
 Minority interest 45 39
 Total 271,098 203,298


SHAREHOLDERS' EQUITY
 Capital stock 89,021 88,836
 Retained earnings 69,383 61,588
 Total 158,404 150,424
 Total $429,502 $353,722
 ALLIANCE COMMUNICATIONS CORPORATION
 CONSOLIDATED STATEMENTS OF EARNINGS
 For the Three Months Ended June 30, 1997 and June 30, 1996


(in thousands of Canadian dollars, except per share information)
 Unaudited
 Three Months Three Months
 Ended Ended
 June 30, 1997 June 30, 1996


REVENUE
 Alliance Television $11,635 $21,738
 Alliance Motion Pictures 41,804 32,700
 Alliance Equicap 6,599 1,375
 Alliance Broadcasting 5,636 4,686
 Alliance Multimedia 882 3,018
 Total revenues 66,556 63,517


DIRECT OPERATING EXPENSES
 Alliance Television 10,062 17,594
 Alliance Motion Pictures 30,872 27,998
 Alliance Equicap 3,414 655
 Alliance Broadcasting 2,908 2,412
 Alliance Multimedia 687 2,454
 Total direct operating expenses47,943 51,113


GROSS PROFIT
 Alliance Television 1,573 4,144
 Alliance Motion Pictures 10,932 4,702
 Alliance Equicap 3,185 720
 Alliance Broadcasting 2,728 2,274
 Alliance Multimedia 195 564
 Total gross profit 18,613 12,404


OTHER EXPENSES
 Other operating expenses 9,677 9,378
 Amortization 1,597 1,104
 Interest 458 470
 Minority interest 6 45
 Total 11,738 10,997
 EARNINGS BEFORE UNDERNOTED 6,875 1,407
 GAIN ON SALE OF INVESTMENT 4,535 0
 EARNINGS BEFORE INCOME TAXES 11,410 1,407
 PROVISION FOR INCOME TAXES 3,615 452
 NET EARNINGS FOR THE PERIOD 7795 $955
 EARNINGS PER COMMON SHARE 0.59 $0.10
 ALLIANCE COMMUNICATIONS CORPORATION
 CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
 For the Three Months Ended June 30, 1997 and June 30, 1996
 (in thousands of Canadian dollars)
 Unaudited
 Three Months Three Months
 Ended Ended
 June 30, 1997 June 30, 1996


CASH PROVIDED BY (USED IN):

OPERATING ACTIVITIES
 Net earnings for the period $7,795 $955


Items not affecting cash:

Amortization of investment in film
 and television programs 41,621 48,044


Amortization of program
 exhibition rights 2,638 2,280


Amortization of development costs
 and investment in scripts 750 450


Amortization of property and equipment
 and pre-operating costs 703 579


Amortization of broadcast
 licenses and goodwill 144 75
 Gain on sale of investment (4,535) 0
 Minority interest 6 45
 Deferred income taxes 233 452


Net changes in other non-cash
 balances related to operations(13,482) (16,751)
 Total 35,873 36,129


INVESTING ACTIVITIES

Investment in film and
 television programs (50,889) (44,792)


Film and television programs
 in progress (27,227) 7,915
 Program exhibition rights (1,095) (1,421)


Development costs and
 investment in scripts (2,759) (546)


Net additions to property
 and equipment (634) (1,344)


Net proceeds from sale of
 investment 4,594 0
 Total (78,010) (40,188)


FINANCING ACTIVITIES

Operating loan and bank
 indebtedness 41,152 13,180


Decrease (increase) in
 loans receivable (4,298) 0


Increase (decrease) in
 loans payable 0 85
 Issue of common shares 185 3
 37,039 13,268


INCREASE (DECREASE) IN CASH
 AND SHORT-TERM INVESTMENTS (5,098) 9,209


CASH AND SHORT-TERM INVESTMENTS,
 BEGINNING OF THE PERIOD 10,777 5,090


CASH AND SHORT-TERM INVESTMENTS,
 END OF THE PERIOD $5,679 $14,299


SOURCE Alliance Communications Corporation
 -0- 08/25/97


/CONTACT: George Burger, Executive Vice President of Alliance Communications Corp., 416-967-1174; or Andrea Kaimowitz or Press: Miriam Adler, 212-850-5600, or Karen Goulet - Toronto, 416-777-6711, all of Morgen- Walke Associates/

(ALLIF AAC.)

CO: Alliance Communications Corporation ST: Ontario IN: ENT SU: ERN

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