MONTREAL — Troubled Canuck kids TV producer Cinar Corp. reported a loss of C$42 million ($26.5 million) for the past year due to a number of unusual items related to the financial scandal that has plagued the company for the past two years.
Revenue for the year ended Nov. 30 was $83 million, with $54.5 million coming from Cinar Education and $28.5 million from Cinar Entertainment. Of the Cinar Entertainment revenues, $12 million came from production, $16 million from the film library.
Cinar reported a non-recurring charge of $15 million based on a number of unusual items. They included a non-cash charge of $8.6 million to write off the balance of the goodwill related to the February 2000 acquisition of Twin Sisters, an Ohio-based producer of children’s audio products. During the past year, Cinar laid off 54 of its 164 staffers and accrued $6.2 million in charges related to salaries, severance costs and employee benefits.
Cinar also spent $3.3 million to pay for services of external legal and financial advisers to investigate matters related to allegations of tax fraud and unauthorized transactions by previous management. During 2001, Cinar decided to divest its interest in Cinar Multimedia and has reclassified the subsid as a discontinued operation. Cinar recorded a loss from discontinued operations of $6.2 million.
Cost of sales for Cinar Entertainment was $25 million, which resulted in a gross profit for the entertainment division of $2.8 million. The low gross margin stem from Cinar’s continuing difficulties in securing financial partners for its productions. Cost of sales for Cinar Education was $25 million, resulting in a gross profit in the education division of $2.9 million.
A key element of the financial scandal at Cinar was the unauthorized investment of $122 million with Globe-X Management, a Bahamian investment company. Cinar reported it is still owed $37 million by Globe-X. Cinar is owed an additional $18 million by former directors and officers of the company.
Current financial results cannot be compared with the previous year’s results as those earlier results remain unaudited. These new results are audited.