Power Corporation of Canada - Six Month Operating Earnings Increase 29%
WINNIPEG, July 27 /CNW/ -
NET OPERATING EARNINGS
Power Corporation's share of operating earnings of its subsidiaries for
the six months ended June 30, 2000 increased to $234 million from $195 million
during the corresponding period in 1999, due primarily to an increase in
operating earnings at Power Financial Corporation.
The Corporation's other operating items, which include income from
investments, brought its total operating earnings for the period to $241
million or $1.07 per participating share as against $187 million or $0.83 per
share during the corresponding period in 1999, representing an increase of 29
per cent on a per share basis.
OTHER INCOME
The Corporation recorded other income of a non-recurring nature of $117
million or $0.53 per share in 2000 as against $127 million or $0.57 per share
during the same period in 1999. Other income of a non-recurring nature in 2000
consists primarily of gains recorded by Power Broadcasting Inc. on the
disposal of its radio and television assets as well as the disposal of its
U.S. operations. In 1999, other income consisted mainly of the gain resulting
from the PetroFina - Total merger during the first quarter.
NET EARNINGS
The Corporation's net earnings for the six months ended June 30, 2000
were $358 million or $1.60 per participating share, compared with $314 million
or $1.40 per share for the same period in 1999.
THREE MONTH RESULTS
For the three months ended June 30, 2000, the Corporation's share of
earnings from its subsidiaries was $132 million compared with $108 million
during the corresponding period in 1999. Operating earnings during the quarter
were $0.57 per share compared with $0.45 in 1999. Other income of a
non-recurring nature was $98 million or $0.44 per share, compared with $8
million or $0.04 in 1999. Consolidated net earnings were $226 million or $1.01
per share as against $111 million or $0.49 per share in 1999.
SUBSIDIARIES' RESULTS
Power Financial Corporation Power Financial Corporation reported an
increase in consolidated net earnings to $379 million or $1.05 per share for
the six months ended June 30, 2000 as against $499 million or $1.39 per share
during the same period in 1999.
GESCA LTEE AND POWER BROADCASTING INC.
The combined earnings from operations of Gesca Ltée and Power
Broadcasting Inc. decreased in 2000, as against the same period in 1999, due
to the disposal of assets of Power Broadcasting Inc. which contributed to
earnings for only part of the period.
DIVIDENDS
The Board of Directors today declared a dividend on the First Preferred
Shares, 1986 Series payable October 15, 2000 to shareholders of record
September 22, 2000 in an amount per share to be determined in accordance with
the Articles of Continuance of the Corporation.
A dividend of $0.35 per share was declared on the First Preferred Shares,
Series A payable October 15, 2000 to shareholders of record September 22,
2000. A dividend of $0.15 per share was declared on the participating
preferred and subordinate voting shares payable September 29, 2000 to
shareholders of record September 8, 2000.
Attachments: Consolidated Statements of Earnings
and Cash Flows (unaudited),
Segmented Information (unaudited),
Change in Accounting Policies and
Capital Stock and Option Plan (unaudited), and
Supplementary Financial Information (unaudited)
<<
POWER CORPORATION OF CANADA
CONSOLIDATED STATEMENTS OF EARNINGS
Millions
-------------------------------------------
For the three months For the six months
ended June 30 ended June 30
2000 1999 2000 1999
-----------------------------------------------------------------
Revenues
Premium income $ 2,407 $ 2,034 $ 4,720 $ 4,107
Investment income 977 935 1,939 1,863
Fees and media income 720 590 1,433 1,172
-------------------------------------------
4,104 3,559 8,092 7,142
-------------------------------------------
Expenses
Paid or credited to
policyholders
and beneficiaries
including
policyholder
dividends and
experience refunds 2,741 2,363 5,370 4,773
Commissions and
operating expenses 886 797 1,808 1,617
Interest expense 21 24 40 44
-------------------------------------------
3,648 3,184 7,218 6,434
-------------------------------------------
456 375 874 708
Share of earnings of
affiliate 27 17 34 24
Other income, net 146 12 174 196
-------------------------------------------
Earnings before income
taxes and non-controlling
interests 629 404 1,082 928
Income taxes 243 151 419 279
Non-controlling
interests 160 142 305 335
-------------------------------------------
Net earnings $ 226 $ 111 $ 358 $ 314
===========================================
Earnings per
participating share $ 1.01 $ 0.49 $ 1.60 $ 1.40
===========================================
(unaudited)
POWER CORPORATION OF CANADA
CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
----------------------
For the six months
ended June 30
2000 1999
-----------------------------------------------------------------
Operating activities
Net earnings $ 358 $ 314
Non-cash charges (credits)
Increase (decrease)
in policy liabilities 283 (543)
Decrease (increase) in funds
withheld by ceding insurers (607) 123
Amortization and depreciation 55 47
Deferred income taxes 49 24
Non-controlling interests 305 335
Other (327) (484)
----------------------
Cash from operating activities 116 (184)
----------------------
Financing activities
Dividends paid
By subsidiaries to
non-controlling interests (123) (111)
Non-participating shares (6) (2)
Participating shares (60) (53)
----------------------
(189) (166)
Acquisition of participating shares,
for cancellation (23) (2)
Issue of subordinate voting shares 1 1
Issue of non-participating shares 150
Repurchase of non-participating shares,
for cancellation (2)
Issue of common shares by subsidiaries 3 6
Issue of preferred shares by a subsidiary 200
Repurchase of preferred shares
by a subsidiary (200)
Repurchase of common shares by subsidiaries (39) (14)
Issue of subordinated capital income
securities 247
Issue of long-term debt, commercial paper
and other loans 106
Repayment of long-term debt, commercial
paper and other loans (1) (200)
Increase (decrease) in demand deposits 22 (1)
Decrease in term deposits (76) (31)
Decrease in certificates (5) (11)
Other (1) (6)
----------------------
(204) (27)
----------------------
Investment activities
Bond sales and maturities 8,703 10,793
Mortgage loan repayments 1,741 1,866
Sale of shares 145 153
Real estate sales 20 19
Change in loans to policyholders (217) 267
Change in repurchase agreements (118) (241)
Investment in subsidiaries (12)
Investment in bonds (7,754) (11,131)
Investment in mortgage loans (1,762) (1,466)
Investment in shares (734) (172)
Investment in real estate (78) (29)
Other 72 (16)
----------------------
6 43
----------------------
Decrease in cash and cash equivalents (82) (168)
Cash and cash equivalents,
beginning of year 1,891 1,978
----------------------
Cash and cash equivalents,
end of period $ 1,809 $ 1,810
======================
(unaudited)
POWER CORPORATION OF CANADA
SEGMENTED INFORMATION
Information on Profit Measure
-----------------------------------------------------------------
June 30, 2000 Lifeco Investors Parjointco Other Total
(in millions
of dollars)
-----------------------------------------------------------------
Revenues
Premium income 4,720 4,720
Investment income 1,806 57 76 1,939
Fees and media
income 793 514 126 1,433
-----------------------------------------------------------------
7,319 571 202 8,092
-----------------------------------------------------------------
Expenses
Insurance claims 5,370 5,370
Commissions, other
operating
expenses 1,325 329 154 1,808
Interest expense 11 29 40
-----------------------------------------------------------------
6,695 340 183 7,218
-----------------------------------------------------------------
624 231 19 874
Share of earnings
of affiliate 34 34
Other income - net 29 145 174
-----------------------------------------------------------------
Earnings before
income taxes and
non-controlling
interests 624 231 63 164 1,082
Income taxes 251 103 65 419
Non-controlling
interests 215 68 20 2 305
-----------------------------------------------------------------
Contribution to
consolidated
net earnings 158 60 43 97 358
=================================================================
Information on Profit Measure
-----------------------------------------------------------------
June 30, 1999 Lifeco Investors Parjointco Other Total
(in millions
of dollars)
-----------------------------------------------------------------
Revenues
Premium income 4,107 4,107
Investment income 1,780 56 27 1,863
Fees and media
income 589 453 130 1,172
-----------------------------------------------------------------
6,476 509 157 7,142
-----------------------------------------------------------------
Expenses
Insurance claims 4,773 4,773
Commissions,
other operating
expenses 1,167 302 148 1,617
Interest expense 20 24 44
-----------------------------------------------------------------
5,940 322 172 6,434
-----------------------------------------------------------------
536 187 (15) 708
Share of earnings
of affiliate 24 24
Other income - net 221 (25) 196
-----------------------------------------------------------------
Earnings before
income taxes and
non-controlling
interests 536 187 245 (40) 928
Income taxes 201 81 (3) 279
Non-controlling
interests 202 56 80 (3) 335
-----------------------------------------------------------------
Contribution to
consolidated
net earnings 133 50 165 (34) 314
=================================================================
Geographic information
-----------------------------------------------------------------
United
June 30 (in millions of dollars) Canada States Total
-----------------------------------------------------------------
Revenues - 2000 5,189 2,903 8,092
Revenues - 1999 4,623 2,519 7,142
=================================================================
(unaudited)
>>
POWER CORPORATION OF CANADA
CHANGES IN ACCOUNTING POLICIES
The interim unaudited consolidated financial statements of Power
Corporation of Canada (PCC) at June 30, 2000 have been prepared in accordance
with the generally accepted accounting policies and methods of computation
followed at the most recent annual report as at December 31, 1999, except for
the adoption of the Canadian Institute of Chartered Accountants (CICA)
handbook Section 3461 Employee Future Benefits and Section 3465 Income Taxes.
The adoption of Section 3461 by PCC effective January 1, 2000 results in
the recognition or accrual of all post retirement health and life insurance
benefits over the period of the employee's service. The adoption of Section
3465 by PCC, also effective January 1, 2000, results in the use of the
liability method of tax allocation whereby future income taxes represent
temporary differences between the tax basis of assets and liabilities and
their carrying values for accounting purposes. In addition, the liability
method requires all future income tax assets and liabilities to be remeasured
at the tax rate that is expected to apply when the temporary differences
reverse.
These changes in accounting policy have been applied retroactively
without restatement of prior years' financial statements and result in a total
charge to retained earnings of $41 million. These changes did not have a
material impact on the results of the current period.
<<
CAPITAL STOCK AND OPTION PLAN
Stated Capital
June 30,
(in millions) 2000
------------------------------------------------------
Non-participating shares
Cumulative Redeemable First Preferred
Shares, 1986 Series
Authorized - Unlimited number of shares
Issued 1,279,878 shares $ 63
Series A First Preferred Shares
Authorized - Unlimited number of shares
Issued 6,000,000 shares 150
---------
$ 213
=========
Participating shares
Participating Preferred Shares
Authorized - Unlimited number of shares
Issued 24,427,386 shares $ 27
Subordinate Voting Shares
Authorized - Unlimited number of shares
Issued 195,539,622 shares 322
---------
$ 349
=========
STOCK OPTION PLAN
Options were outstanding at June 30, 2000 to purchase, until
April 3, 2010, 8,975,930 shares at various prices from $7.28125
to $27.43125 per Share.
(unaudited)
POWER CORPORATION OF CANADA
SUPPLEMENTARY FINANCIAL INFORMATION
The sources of the consolidated net earnings of the Corporation
are as follows:
Millions
-----------------------------------------
For the three months For the six months
ended June 30 ended June 30
2000 1999 2000 1999
-----------------------------------------------------------------
Share of earnings
of subsidiaries $ 132 $ 108 $ 234 $ 195
Corporate activities* (4) (5) 7 (8)
---------------------------------------
Earnings from operations 128 103 241 187
Other income, net 98 8 117 127
---------------------------------------
Net earnings $ 226 $ 111 $ 358 $ 314
=======================================
Earnings per
participating share
Earnings from
operations $ 0.57 $ 0.45 $ 1.07 $ 0.83
=======================================
Net earnings $ 1.01 $ 0.49 $ 1.60 $ 1.40
=======================================
* Corporate activities consist of income from investments less
operating expenses, amortization and depreciation, and
income taxes.
(unaudited)