TORONTO — Alliance Atlantis has “turned the corner,” according to company brass, as the Toronto-based producer, broadcaster and distributor Monday posted a year-end loss of C$18.8 million ($13.8 million).
Net loss for fiscal 2003, ended March 31, was $13.8 million, compared to a profit of $20.2 million in fiscal 2002. An increase in amortization, higher interest costs, a $26.5 million writedown in the company’s stake in Headline Media and an increase in unusual items (such as provisions for severance costs) were largely to blame.
Judd Martin, chief financial officer of Alliance Atlantis Communications, told analysts in a conference call that the company’s three operating divisions were turning in strong performances, and cited the “below-the-line” end of the business for the red ink. “We believe this noise is very much behind us,” he said. “We have turned the corner with respect to free cash flow generation, and our debt is down.”
He also noted the losses are partially offset by foreign-exchange gains of $17.5 million in the fourth quarter.
Debt on decline
Debt at Alliance Atlantis fell during the year to $397.6 million from $451.7 million in 2002. Debt peaked in 2001 at $537.4 million.
Cash flow for the year was $27.1 million. This is the company’s third consecutive quarter of free cash flow. “It’s an important turning point at Alliance Atlantis,” Martin said, “as we move from a cash consumer to a cash generator.”
Revenue for the year totaled $654.8 million, down from $671.9 million for fiscal 2002.
Motion picture distribution revenue was $282.8 million, up 21% from a year ago, with the help of a solid release slate and increased revenues from U.K. subsidiary Momentum Pictures. During the year the company renewed multiyear output agreements with suppliers including New Line Cinema, Miramax Films and Universal Focus (formerly USA Films).
Revenues for the entertainment group were $236.3 million, down 27%, as the company put out fewer hours of higher margin programming, in accordance with its long-standing strategy of margin improvement and cost control.
‘CSI’ a contributor
The successful “CSI” franchise, which Alliance Atlantis shares with CBS, generated 33% of that division’s revenues for the year, up from 11% in fiscal 2002.
Broadcast group revenues enjoyed a jump of 26% to $120.7 million, on the strength of increased ad sales, which were up 51% year-to-year to $58.3 million.
The company noted that for the first two months of the current quarter, ad sales have continued to rise, jumping 46% from the same period a year ago.
On the advice of its auditor, AAC announced last week that it has changed the accounting treatment it gives its “CSI” franchise, restating its results from the second quarter of 2001 to the present. The change reduces its pre-tax earnings by $34.6 million for 2001, 2002 and 2003 but will increase the figure in future years, the company said last week.