QUEBEC CITY, April 30 /PRNewswire-FirstCall/ -- Cossette Communication Group Inc. ("Cossette" or the "Company") recorded gross income of $60.1 million for the second quarter of fiscal 2008, ended March 31, 2008, up 7.2 per cent from $56.0 million from the corresponding quarter of the previous fiscal year. Net earnings amounted to $0.9 million ($0.05 per share), compared to $3.5 million ($0.21 per share) for the second quarter of 2007, a decrease of 75.4 per cent.
"The results of our second quarter did not reach the levels we expected. Gross income fell short of our expectations and also our results were impacted by severance and working notice charges incurred to realign our cost structure with anticipated business levels," said Claude Lessard, Chairman of the Board, Chief Executive Officer and President. "We are continuously seeking to improve our operating margins and our leadership team is aggressively focused on developing new business opportunities" he concluded.
For the quarter, earnings from operations were $2.3 million, compared with $6.8 million in 2007. Cash flows from operating activities before changes in non-cash working capital items reached 4.0 million, compared with $6.3 million in 2007.
First Half Review - For the six-month period ended March 31, 2008, gross income amounted to $119.3 million, up 8.2 per cent from $110.3 million reported in the first half of fiscal 2007. Net earnings in the first half of fiscal 2008 were $4.2 million ($0.25 per share) down from $7.0 million ($0.41 per share) for the same period in fiscal 2007, a decrease of 39.5 per cent.
Earnings from operations for the first half of fiscal 2008 were $7.8 million as compared to $12.6 million for the same period in 2007. Cash flows from operating activities before changes in non-cash working capital items in the first six months of fiscal 2008 were 9.6 million as compared to $11.9 million for the same period of fiscal year 2007.
Fiscal year 2008 - Financial Outlook
The Company has reviewed its policy of not providing a financial outlook and has determined that it is in its best interest and that of its shareholders to modify this policy and issue a financial outlook for the current fiscal year.
The Company forecasts gross income to be in the range of $243 to $246 million. The Company also forecasts its earnings from operations margin, excluding non-recurring charges, to be in the range of 10.0% to 11.0%.
This financial outlook is based on certain assumptions pertaining to the balance of fiscal year 2008; including a Canadian-US dollar exchange rate at or around parity, a Canadian dollar-pound sterling at or around (pnds stlg)0.5 and a gross income scenario that includes modest net new business gains and reductions in scope of work for an important client of the Company. The earnings from operations margin excludes non-recurring charges such as severance payments and working notice already incurred or that are expected to be incurred as a result of reductions in scope of work for an important client of the Company, and any readjustments to fair market value of acquisition related intangible assets and goodwill.
The Company's policy with respect to forward-looking information will be to provide information at the beginning of a fiscal year only, unless the Company determines that it has a reasonable basis to believe that actual results will differ materially from previously stated financial forward-looking information at which point in time it would issue an updated financial outlook. Please see "forward-looking statements" for additional information.
Management's Discussion and Analysis, containing a full analysis of financial results, is available on SEDAR (http://www.sedar.com/).
Cossette Communication Group Inc. offers a full range of leading-edge communication services to clients of all sizes, including some of the most prestigious brands in the world. A customer-driven organization built around highly specialized business units, Cossette also offers Convergent Communications(TM), a unique working method that brings added value to the client by integrating various services offered by the Group, including strategic planning and research, advertising, media planning and buying, sales promotion, CRM, database and direct marketing, interactive marketing and technology solutions, public relations and alliance marketing, branding and design, ethnic marketing, sports marketing, branded content and product placement and business-to-business communications (B2B practices). Cossette has approximately 1,650 employees and offices in Quebec City, Montreal, Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London, Moscow and Shanghai.
Forward-looking statements - This press release is not an offer of securities for sale. It may contain forward-looking statements concerning the Company's business, operations and strategies, including forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 in the United States.The Company cautions that, by their nature, forward-looking statements involve risks and uncertainties and the Company's actual results may differ materially from those expressed or implied in such statements, due to a variety of factors including downturns in general economic conditions and resulting changes in client business and marketing strategies, consolidation and globalisation of client brand strategies, the highly competitive nature of the communications industry, the greater resources available to much larger global agencies, low entry barriers for new competitors, dependence upon a limited number of clients contributing a significant percentage of income, inability to acquire new clients or new assignments from existing clients due to client policies prohibiting performance of similar services for competing products or companies, our ability to successfully integrate our acquired and to-be-acquired businesses and the retention of key management, creative and technical personnel. Reference should be made to the most recent annual Management's Discussion and Analysis for an in-depth description of major risk factors. The Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason, unless required by applicable laws. In the event the Company does update any forward-looking statements, no inference should be made that the Company will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
Financial analysts are invited to participate in a conference call with management tomorrow May 1, 2008, at 10:30 a.m. The media and any stakeholders may attend the call in listening mode only. Please dial (514) 861-1531 or 877-667-7766 (Canada & US) or 00-800-6578-9898 (Global Toll Free). A replay will be available at (416) 695-5800 or 800-408-3053, passcode 3259140#. until May 22, 2008 and on the investor relations section of our website at http://www.cossette.com/.
Appendix: Selected Financial Information Cossette Communication Group Inc. Selected Financial Information (in thousands of Canadian dollars, except for amounts per share) Results for the 3-month period ended March 31, 2008 (unaudited) 2008 2007 Gross income 60,050 56,020 Operating expenses 57,760 49,261 Earnings from operations 2,290 6,759 Earnings before income taxes and non-controlling interest 2,439 6,952 Earnings after income taxes 1,544 4,498 Non-controlling interest (672) (954) Net earnings 872 3,544 Cash flows from operations (before changes in non-cash working capital items) 3,999 6,258 Net earnings per share Basic 0.05 0.21 Diluted 0.05 0.21 Weighted average number of shares outstanding ('000) Basic 16,578 16,847 Diluted 16,621 16,929 Results for the 6-month period ended March 31, 2008 (unaudited) 2008 2007 Gross income 119,342 110,282 Operating expenses 111,564 97,721 Earnings from operations 7,778 12,561 Earnings before income taxes and non-controlling interest 8,110 13,237 Earnings after income taxes 5,358 8,583 Non-controlling interest (1,135) (1,601) Net earnings 4,223 6,982 Cash flows from operations (before changes in non-cash working capital items) 9,638 11,897 Net earnings per share Basic 0.25 0.41 Diluted 0.25 0.41 Weighted average number of shares outstanding ('000) Basic 16,600 16,934 Diluted 16,665 16,975 Balance sheet As at As at March 31, Sept. 30, 2008 2007 (unaudited) (audited) Cash and cash equivalents 5,833 3,484 Current assets 173,340 188,788 Intangible assets and deferred charges 5,683 6,384 Goodwill 85,297 84,244 Total assets 285,499 299,100 Short-term borrowings 19,941 - Current portion of long-term debt 27 411 Current portion of balances of purchase price of subsidiaries 5,795 16,009 Long-term debt 61 108 Balances of purchase price of subsidiaries 30 529 Shareholders' equity 136,158 132,123
