Peace Arch releases late '07 figures
EmptyTORONTO -- Peace Arch Entertainment, the Canadian independent producer derailed by the arrest of its CEO late last year, reported a widened 2007 loss Tuesday as it released long-delayed financial results.
Toronto-based Peace Arch said that it lost CAN$5.7 million ($5.6 million) during the fiscal year ending Aug. 31, compared with a restated loss of CAN$4.6 million for 2006.
After a recent audit, Peace Arch said it restated results for the year through Aug. 31, 2006 to reflect higher interest expense on production loans and higher income tax charges.
Peace Arch said that its auditors uncovered a CAN$499,000 ($496,000) decrease in earnings for full-year 2006. The producer also recorded a CAN$459,000 ($456,000) decrease in earnings for the quarter ending Nov. 30, 2006, another CAN$1 million ($993,000) decrease in the quarter ending Feb. 28, 2007, and an additional CAN$775,000 ($770,000) decrease for the corresponding period to May 31, 2007.
Peace Arch said that its full-year 2007 results included a CAN$6.3 million ($6.25 million) write-down to reflect lower expectations for future sales of film projects produced before 2005.
After its earnings restatement, the Canadian producer said it has taken steps to improve its financial reporting controls.
Full-year 2007 revenue came to CAN$61.8 million ($61.5 million), up 191% from a year-earlier CAN$21.3 million. Peace Arch attributed some of that to three acquisitions made in 2007: the Castle Hill/Dream film library, the Trinity Home Entertainment U.S. DVD distribution business and the Dufferin Gate Prods. studio facility in Toronto.
That growth was eclipsed last November by the arrest of Peace Arch CEO Gary Howsam by FBI agents as he attended the American Film Market.
Howsam, who was subsequently indicted on fraud charges, was replaced as CEO by major shareholder and co-chairman Jeff Sagansky, a former co-president of Sony Entertainment and Tri-Star Pictures president.
"Peace Arch is extremely well positioned to execute on its business plan," Sagansky told analysts during a conference call Tuesday.
He added that Peace Arch would focus on new acquisitions, despite a recent failure to acquire British distributor ContentFilm due to poor credit market conditions.
Sagansky also said that the Canadian producer will bolster its TV production arm and produce fewer direct-to-DVD titles and more theatrical movies with higher-profile talent.
Despite higher revenue, Peace Arch warned that it has a shortage of operating capital on hand and has begun a search for new financing.
"While the company continues to maintain its day-to-day activities and produce and distribute films and television programming, its working capital situation is severely constrained," Peace Arch said in regulatory filings.
If new financing is not secured, the producer warned that it "may be required to significantly reduce or limit operations."
In January, Sagansky and co-chairman Drew Craig agreed to provide the producer with a bridge loan worth CAN$2.65 million ($2.62 million) "for general corporate purposes."