Tax man bites into Alliance Q4

Empty

TORONTO -- Canadian broadcaster Alliance Atlantis Communications on Tuesday swung to a fourth-quarter loss after Canada's tax man ruled it overstated carry-forward tax losses.

Toronto-based Alliance Atlantis posted a loss of CAN$16.6 million ($14 million) for the three months ending Dec. 31, compared to earnings of CAN$24.8 million in 2005.

Alliance Atlantis, which is about to be taken over by rival CanWest Global Communications Corp. and Goldman Sachs & Co., pending regulatory approval, was forced after a recent tax audit to sharply raise its fourth-quarter tax provision by CAN$28.6 million ($24.3 million) to CAN$43.8 million, compared to the 2005 tax provision.

David Lazzarato, executive vp and CFO at Alliance Atlantis, told analysts during a conference call that Revenue Canada in December valued the broadcaster's carry-forward tax losses to be lower than earlier stated, causing the higher tax provision.

"The increase is mainly the result of certain expenses not deductible for tax and valuation allowances made against certain losses due to preliminary conclusions with respect to tax audits," the company said earlier in a statement.

Alliance Atlantis' tax rate for fiscal 2006 was 57.3%, up sharply from a year-earlier 34.4%.

The broadcaster posted fourth-quarter revenues of CAN$327.3 million ($277 million), against a year-earlier CAN$291.4 million, due in part to strong sales from a half-stake in the "CSI" TV series franchise and higher Canadian specialty channel subscription and air-time sales.

At the same time, Alliance Atlantis' bottom line also was dented by lower sales of library titles and a negative CAN$28.3 million ($24 million) impact from the effect of the weakening U.S. dollar.

Alliance Atlantis also recorded higher stock-based compensation costs following the recent run-up in its stock price ahead of the takeover by Canwest Global and Goldman Sachs.

For the full year, Alliance Atlantis posted earnings of CAN$48.6 million ($41.2 million) on revenue of CAN$1.17 billion ($991 million), compared to a profit of CAN$70.9 million on revenues of CAN$1.04 billion in 2005.

Alliance Atlantis shareholders will vote on the CAN$53.00 per-share takeover offer from CanWest Global and Goldman Sachs on April 5, and Canada's broadcast regulator will weigh up the deal later this year.

comments powered by Disqus