##### 



Second Quarter Report to Shareholders HIGHLIGHTS (Unaudited)
    
    Three months ended
    
    Six months ended(thousands of Canadian dollars
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,except per share data)
    
    2004
    
    2003
    
    2004
    
    2003Revenues
    
    
    155,019
    
    
    
    147,542
    
    
    
    339,981
    
    
    
    313,484Segment profit(1)Radio
    
    
    7,734
    
    
    
    7,115
    
    
    
    25,535
    
    
    
    23,210Television
    
    
    26,495
    
    
    
    22,775
    
    
    
    66,283
    
    
    
    56,937Content
    
    
    2,830
    
    
    
    2,580
    
    
    
    5,435
    
    
    
    2,622Corporate
    
    
    (2,985
    )
    
    
    (785
    )
    
    
    (5,716
    )
    
    
    (3,082
    )Eliminations
    
    
    (5
    )
    
    
    (254
    )
    
    
    (199
    )
    
    
    (298
    )34,069
    
    
    
    31,431
    
    
    
    91,338
    
    
    
    79,389Net income
    
    
    8,305
    
    
    
    7,028
    
    
    
    14,005
    
    
    
    15,234Earnings per shareBasic and diluted
    
    $
    0.19
    
    
    $
    0.16
    
    
    $
    0.33
    
    
    $
    0.36Weighted average number of
shares outstanding (in thousands)Basic
    
    
    42,733
    
    
    
    42,641
    
    
    
    42,700
    
    
    
    42,641Diluted
    
    
    43,030
    
    
    
    42,641
    
    
    
    42,900
    
    
    
    42,641
 Significant Events in the Quarter  
    
    Corus early adopted the amended Canadian standard for expensing
stock-based compensation on a prospective basis. As a result, $0.7

million in stock option expense was recorded for the six-month period
ending February 29, 2004.
    
    Corus Radio division implemented a number of station format changes
designed to ensure future competitiveness in key markets. The changes
included: Edmontons CKNG FM re-launched as 92.5 JOE FM; Kingston
switched Country 96 to 96.3 JOE-FM; and Calgarys The Peak 107.3
changed from adult contemporary to classic rock, Q107 Calgary.
    
    On December 9, 2003, Corus announced a semi-annual dividend for
holders of its Class A and Class B shares of $0.02 and $0.025
respectively, paid on December 31, 2003.
    
    On December 10, 2003, the Broadcast Bureau of Measurement (BBM)
released the Fall radio ratings which confirmed Corus Radios position
as the leading radio broadcaster in Canada in terms of audience
tuning. Corus group of 50 radio stations reach 29.2% of Canadians, a
21% lead over the nearest competitor. Corus also maintained its
leadership position in number of hours tuned with a 31% lead over the
nearest competitor.
    
    On January 8, 2004, Movie Central announced it had secured the
exclusive pay window rights in Western Canada to new seasons from the
HBO Original Series The Sopranosand Six Feet Under.The agreement
marks the networks continued position as the first Canadian broadcast
home for all HBO Original Series and Films and for the first time,
provides for simultaneous showing with U.S. audiences.
    
    On February 23, 2004, Corus was named Employer of the Year by Canadian
Women in Communications (CWC). The award, established to raise the
profile of women working in the   1 Segment profit (which corresponds to the line item #Operating income before
the following# in the consolidated statements of income and retained earnings
(deficit)) is calculated as revenues less operating, general and administrative
expenses and is the measure used by management to evaluate the operating
performance of its business segments. See also note 4 to the consolidated
financial statements. Segment profit was previously referred to as EBITDA.
EBITDA is a supplemental earnings measure that does not have any standardized
meaning prescribed by Canadian generally accepted accounting principles.
 Corus 1




---



##### 



industry, recognized Corus for its success in implementing programs that
support a positive work environment for all employees. Significant Events Subsequent to the Quarter  
    
    During and subsequent to the second quarter, Nelvana announced a
number of important deals for its upcoming state-of-the-art 3D
preschool series, Miss Spiders Sunny Patch Friends. Fisher-Price
Inc. signed on as the international master toy licensee for a range of
infant and pre-school products in North and South America. Kristin
Davis will be the new voice of the series title character which makes
its U.S. debut on Nick Jr. in the fall. The Company also signed a
multi-tier agreement with TF1, Frances leading broadcaster and
Nelvanas partner in Franklin,for broadcast, home video and
merchandising rights for the series in France; and a co-production
agreement was finalized with Glasgow-based Absolute Digital Pictures
and London-based broadcaster Five.
    
    On March 29, 2004 Nelvana announced the expansion of its international
sales team with the addition of Martha Van Gelder as Senior VP, Sales
and Distribution.
    
    On March 29, 2004 Nelvana announced a co-production agreement with The
Lord of the Rings Academy Award®-winning Weta Workshop for the
comedy-adventure series, Jane and the Dragon.
    
    On March 30, 2004, Corus and Astral Media Inc. announced their
intention to exchange a number of radio assets in the province of
Québec, subject to regulatory approval. The transaction will bring
Corus radio station total to 53, with presence in nine of Canadas
top 10 markets and 15 radio stations in the province of Quebec.
    
    On April 22, 2004, Corus announced that its Board of Directors
approved a semi-annual dividend for holders of its Class A and Class B
shares of $0.02 and $0.025 respectively. The dividend will be paid on
June 30, 2004 to shareholders of record on June 15, 2004. Managements Discussion and Analysis The following should be read in conjunction with Managements Discussion and
Analysis, Consolidated Financial Statements and the Notes thereto included in
our August 31, 2003 Annual Report. All amounts are stated in Canadian dollars
unless specified otherwise. Overview of Consolidated Results Corus delivered strong results for its second quarter ending February 29, 2004,
highlighted by advertising revenue growth in specialty television and continued
momentum from Nelvanas Branded Consumer Products business. Second Quarter Results Revenues Revenues for the second quarter were $155.0 million, up 5% from $147.5 million
last year. Television and Content experienced increases of 5% and 18%
respectively, while Radio was down 2% from the prior year. Operating, general and administrative expenses Operating, general and administrative expenses for the second quarter were
$121.0 million, up 4% from $116.1 million in the prior year. Operating,
general and administrative expenses as a percentage of revenues decreased to
78% in the quarter from 79% last year. Television and Radio improved their
segment profit margins compared to the same period last year, while Contents
segment profit margin Corus 2




---



##### 



declined slightly. Corporate overhead increased by $2.2 million, primarily due
to accruals for performance share units and stock option expense. Depreciation Depreciation expense for the second quarter was $7.0 million, an increase of
$1.0 million from last year. The increase results from additional depreciation
taken in the quarter on facilities made redundant by the consolidation of
certain Radio operations across Canada. Amortization Amortization expense for the second quarter was $2.4 million, down from $3.1
million last year. The prior year includes a write-off of deferred financing
charges related to a credit facility that was cancelled by the Company in early
March 2003. Interest on long-term debt Interest expense for the second quarter was $14.8 million, down from $15.6
million last year primarily due to a lower average debt balance. The effective
interest rate for the second quarter was 8.6% compared to 8.8% in the prior
year. Other income, net Other income for the second quarter was $3.7 million, compared to $4.7 million
in the prior year. The current years quarter includes net derivative
transaction gains of $3.8 million, while the prior years quarter includes
foreign exchange gains of $4.0 million. Income taxes The effective tax rate for the second quarter was 34.4%, compared to the
statutory rate of 36.3%. Net income Net income for the second quarter was $8.3 million, up from $7.0 million last
year. Earnings per share for the first quarter was $0.19 basic and diluted,
compared with $0.16 basic and diluted last year. Year to Date Results Revenues Revenues for the six-month period were $340.0 million, up 8% from $313.5
million last year. Television and Content experienced increases of 8% and 26%
respectively, while Radio was flat compared to the prior year. Operating, general and administrative expenses Operating, general and administrative expenses for the six-month period were
$248.6 million, up 6% from $234.1 million in the prior year. Operating,
general and administrative expenses as a percentage of revenues decreased to
73% in the six-month period from 75% last year, as each of Corus segments have
improved their segment profit margin compared to the prior year. Corporate
overhead increased by $2.6 million, primarily due to accruals for performance
share units and stock option expense. Corus 3




---



##### 



Depreciation Depreciation expense for the six-month period was $13.1 million, compared to
$12.1 million in the same period last year. The increase results from
additional depreciation taken in the period on facilities made redundant by the
consolidation of certain Radio operations across Canada. Amortization Amortization expense for the six-month period was $4.6 million, down from $5.4
million last year. The decrease was due to a reduced cost base as deferred
pre-operating costs and radio reformatting costs became fully amortized. Interest on long-term debt Interest expense for the six-month period was $28.6 million, down from $31.1
million last year primarily due to a lower average debt balance. The effective
interest rate for the six-month period was 8.7% compared to 8.8% in the prior
year. Loss on sale of investments The loss on sale of investments of $1.0 million in the six-month period of
fiscal 2003 related to the disposition of various non-core assets. Other income, net Other income for the six-month period was $6.1 million, compared to other
income of $5.1 million in the prior year. The current years period includes
net derivative transaction gains of $3.3 million, while the prior years period
includes foreign exchange gains of $4.0 million. Restructuring charges The restructuring charges of $5.0 million in the six months of fiscal 2003
represented primarily workforce reductions in the Content division, reflective
of the reduced level of production slated for fiscal 2003 and beyond. Income taxes The effective tax rate for the six-month period was 70.0% compared to the
statutory rate of 36.3%. The first quarter was impacted by the Ontario
governments decision to cancel previously announced reductions to future tax
rates and to increase current tax rates. The change in Ontario rates caused an
increase in the Companys non-cash income tax expense and net future tax
liability position of $17.8 million. The effective tax rate for the six-month
period excluding the impact of the rate change adjustment was 35.1%. Net income Net income for the six-month period was $14.0 million, down from $15.3 million
last year. Earnings per share for the six-month period was $0.33 basic and
diluted, compared with $0.36 basic and diluted last year. Corus 4




---



##### 



Radio The Radio division comprises 50 radio stations situated primarily in eight of
the ten largest Canadian markets by population and in the densely populated
area of southern Ontario. Corus is Canadas leading radio operator in terms of
revenues and audience reach. Financial Highlights (Unaudited)
    
    Three months ended
    
    Six months ended(thousands of Canadian
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,dollars)
    
    2004
    
    2003
    
    2004
    
    2003Revenues
    
    
    47,839
    
    
    
    48,886
    
    
    
    108,577
    
    
    
    108,207Segment profit
    
    
    7,734
    
    
    
    7,115
    
    
    
    25,535
    
    
    
    23,210Segment profit margin (1)
    
    
    16
    %
    
    
    15
    %
    
    
    24
    %
    
    
    21
    %
 (1) Segment profit margin means segment profit as a percentage of
revenues. Revenues for the second quarter were $47.8 million, down 2% from the
corresponding period last year. The decline was due primarily to competitive
challenges in Western Canada, which were partially offset by the continued
strong performance from the Ontario region. Several format changes were
implemented in the quarter that will enable Corus balanced portfolio of
stations to continue competing effectively across Canada. For the six-month
period, revenues of $108.6 million were essentially unchanged from the prior
year. Operating, general and administrative expenses for the second quarter were
$40.1 million, down 4% from the corresponding period last year due to lower
variable costs associated with lower revenues and concerted efforts to control
fixed costs. For the six-month period, expenses of $83.0 million were 2% lower
than the prior year. Segment profit for the second quarter was $7.7 million, up 9% over the
corresponding period last year despite absorbing a decrease in revenues. For
the six-month period, segment profit of $25.5 million was 10% higher than the
prior year. Segment profit margin improved in the quarter to 16% from 15% last
year, and for the six-month period improved to 24% from 21% last year.
Although Corus Radio has continued to achieve significant margin improvement
over the prior year, the targeted goal of a 30% segment profit margin may not
be achieved within the current fiscal year. Corus 5




---



##### 



Television The Television division is composed of the following: specialty television
networks YTV, Treehouse TV, W Network, Corus 80% interest in CMT (Country
Music Television), 50.5% interest in Telelatino, 50% interest in Locomotion,
and 40% interest in Teletoon; Corus premium television services Movie Central
and Encore; interests in three digital television channels, Scream, Discovery
Kids and The Documentary Channel; Digital ADventure, a cable advertising
service; three local television stations; and Max Trax, a residential digital
audio service. Financial Highlights Three months ended
    
    Six months ended(Unaudited)
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,(thousands of Canadian dollars)
    
    2004
    
    2003
    
    2004
    
    2003Revenues
    
    
    75,171
    
    
    
    71,596
    
    
    
    169,374
    
    
    
    156,668Segment profit
    
    
    26,495
    
    
    
    22,775
    
    
    
    66,283
    
    
    
    56,937Segment profit margin (1)
    
    
    35
    %
    
    
    32
    %
    
    
    39
    %
    
    
    36
    %
 (1) Segment profit margin means segment profit as a percentage of revenues. Revenues for the second quarter were $75.2 million, up 5% over the
corresponding period last year. Continued growth in advertising revenue was
achieved, up 5% for the quarter. Strong subscriber revenue growth of 6% over
the prior year was also experienced, with Movie Central, Corus western-based
paid television service, finishing the quarter with 699,000 subscribers, up 6%
from August 31, 2003. For the six-month period, revenues of $169.4 million
represented an 8% increase over the prior year. Advertising and subscriber
revenues increased in the six-month period by 14% and 5% respectively. Operating, general and administrative expenses were $48.7 million for the
quarter, essentially unchanged from the prior year, and $103.1 million for the
six-month period, up 3% from the prior year. Amortization of program rights
and film investments have increased in proportion to increases in revenues,
while savings have been realized in general and administrative expenses. Segment profit for the second quarter was $26.5 million, up 16% from the prior
year. Segment profit margin for the quarter was 35%, up from to 32% last year.
For the six-month period, segment profit of $66.3 million represented a 16%
increase over the same period last year. Segment profit margin was 39%, up
from 36% last year. Corus 6




---



##### 



Content The Content division consists of the production and distribution of television
programs, merchandise licensing and publishing. Financial Highlights Three months ended
    
    Six months ended(Unaudited)
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,(thousands of Canadian dollars)
    
    2004
    
    2003
    
    2004
    
    2003Revenues- production and distribution
    
    
    14,656
    
    
    
    18,488
    
    
    
    29,185
    
    
    
    34,691- branded consumer products
    
    
    19,635
    
    
    
    10,456
    
    
    
    35,824
    
    
    
    16,92034,291
    
    
    
    28,944
    
    
    
    65,009
    
    
    
    51,611Segment profit- production and distribution
    
    
    (3,193
    )
    
    
    (287
    )
    
    
    (3,010
    )
    
    
    (840
    )- branded consumer products
    
    
    6,023
    
    
    
    2,867
    
    
    
    8,445
    
    
    
    3,4622,830
    
    
    
    2,580
    
    
    
    5,435
    
    
    
    2,622Segment profit margin (1)- production and distribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    - branded consumer products
    
    
    31
    %
    
    
    27
    %
    
    
    24
    %
    
    
    20
    %8
    %
    
    
    9
    %
    
    
    8
    %
    
    
    5
    %
 (1) Segment profit margin means segment profit as a percentage of revenues. Revenues for the second quarter were $34.3 million, an increase of 18% from the
prior year. For the six-month period, revenues of $65.0 million represented a
26% increase over the same period last year. Production and distribution revenues for the second quarter were $14.7 million,
down 21% from the prior year, due to the timing of license term start dates and
fewer episodes delivered in the current year. For the second quarter, 31
episodes were delivered compared to 36 in the same period last year. For the
six-month period, production and distribution revenue of $29.2 million
represented a 16% decrease from the prior year. This decrease resulted from a
reduced production slate, as 48 episodes and one direct-to-video feature were
delivered in the six-month period, compared to 89 episodes in the prior year.
This decrease was offset by an increase in library revenues, including home
video sales. The branded consumer products business delivered revenues for the second
quarter of $19.6 million, up 88% from the prior year. For the six-month
period, branded consumer products revenue was $35.8 million, up 112% from the
prior year. The tremendous growth in revenues was due to the continued success
of the Beyblademerchandising property. Operating, general and administrative expenses for the second quarter were
$31.5 million, up 19% from the prior year primarily as a result of higher cost
of sales associated with increased merchandising revenues. In addition, the
production and distribution business continues to be impacted by a challenging
library market and foreign exchange, specifically a low U.S. dollar, which has
lowered estimates of future revenues and resulted in a higher film amortization
rate. For the six-month period, expenses of $59.6 million were 22% higher than
the prior year. Segment profit for the second quarter was $2.8 million, compared to $2.6
million last year. Segment profit margin for the quarter was 8%, compared to
9% in the prior year. Segment profit for the six-month period was $5.4
million, an increase of 107% over the prior year, and segment profit margin has
increased to 8% from 5% in the prior year. Corus 7




---



##### 



Financial Position Total assets at February 29, 2004 were $1.97 billion compared to $1.94 billion
at August 31, 2003. The following discussion describes the significant changes
in the balance sheet since August 31, 2003. Current assets increased by $38.7 million. Cash and cash equivalents and
future tax asset increased by $37.9 million and $2.7 million respectively.
Accounts receivable decreased by $9.1 million. The increase in future tax
asset reflects a net increase in loss carry-forwards resulting from a tax loss
utilization plan implemented in the first quarter. The decrease in accounts
receivable reflects the seasonality of the broadcast business, as well as
efforts to reduce the Companys investment in working capital. Non-current assets decreased by $6.1 million. Tax credits receivable decreased
by $7.8 million due to tax credits collected during the period. Capital assets
decreased by $5.6 million as capital expenditures of $7.5 million were offset
by depreciation of $13.1 million. Program and film rights (current and
non-current) increased by $17.3 million, as accruals for acquired rights of
$69.3 million were offset by amortization of $52.1 million. Film investments
increased by $1.8 million, as gross film spending exceeded amortization for the
period. Deferred charges decreased by $4.6 million due to amortization. Current liabilities increased by $4.8 million. Accounts payable and accrued
liabilities increased by $9.7 million as a result of accruals for program
rights and merchandising rights holders participations. These accruals were
offset by lower trade accounts payable. Income taxes payable decreased by $4.9
million, as income taxes paid exceeded the current provision. Non-current liabilities increased by $13.4 million. Long-term debt decreased
by $22.8 million, resulting from a repayment of $2.6 million on the revolving
long-term operating facility and $20.2 million in foreign exchange translation
adjustments. Deferred credits increased by $13.9 million, as payments of $5.0
million for public benefits related to acquisitions were offset by $18.8
million in deferred foreign exchange gains for the period. Net future tax
liability (including current asset) increased by $17.1 million due primarily to
the cancellation of previously scheduled reductions to future tax rates. Share capital increased by $2.4 million due primarily to the exercise of
employee stock options. Contributed surplus increased by $0.7 million as a
result of expensing stock-based compensation for the period. Cumulative
translation adjustment increased by $1.6 million due to the effect of exchange
rate fluctuation on the translation of the net assets of self-sustaining
foreign operations. Liquidity and Capital Resources Cash flows Overall, the Companys cash and cash equivalents position increased by $42.5
million in the second quarter, and $37.9 million in the six-month period ended
February 29, 2004. Cash provided by operating activities for the second quarter was $54.3 million,
compared to $21.8 million last year. For the six-month period, cash provided
by operating activities was $52.1 million, compared to a use of cash in the
prior year of $18.7 million. This improvement was the result of an increase in
cash flow derived from operations, a reduction in investment in working
capital, as well as reduced expenditures related to film investments. Cash used in investing activities was $6.0 million for the second quarter
compared to $9.7 million last year. For the six-month period, cash used in
investing activities was $12.4 million, compared to $18.0 million in the prior
year. The decrease in cash used reflects a reduction in cash required for
investments, as well as decreased payments for public benefits associated with
acquisitions. Corus 8




---



##### 



Cash used by financing activities in the second quarter was $5.8 million
compared to $6.7 million last year. For the six-month period, cash used in
financing activities was $1.7 million, compared to source of cash of $26.1
million in the prior year. This change reflects the continued repayments of
long-term debt as a result of strong cash flow from operations. As well, Corus
paid its first semi-annual dividend of $1.1 million in the quarter. Net Debt At February 29, 2004, net debt (long-term debt net of cash and cash
equivalents) was $453.8 million, down from $514.6 million at August 31, 2003.
Adjusting for the foreign currency hedge on the senior subordinated notes, net
debt at February 29, 2004 was $556.9 million, down from $599.0 million at
August 31, 2003. Impact of New Accounting Pronouncements Adopted in 2004 Hedging Relationships In December 2001, the CICA issued Accounting Guideline-13, Hedging
Relationships(AcG 13). AcG 13 establishes new criteria for hedge accounting
and will apply to all hedging relationships in effect for the Companys fiscal
year commencing on September 1, 2003 under Canadian GAAP. To qualify for hedge
accounting, consistent with U.S. GAAP, the hedging relationship must be
appropriately documented at the inception of the hedge and there must be
reasonable assurance, both at the inception and throughout the term of the
hedge, that the hedging relationship will be effective. Effectiveness requires
a high correlation of changes in fair values or cash flows between the hedged
item and the hedge. In June 2002, the Emerging Issues Committee issued
EIC-128, Accounting for trading, speculative or non-hedging derivative
financial instruments, which establishes that a derivative financial instrument
that does not qualify for hedge accounting under AcG-13 should be recognized on
the balance sheet at fair value, with changes to fair value recognized in net
income. The Company has applied the recommendations to its hedging
relationships, and those that qualify continue to be accounted for using hedge
accounting. The adoption of these recommendations did not have a material
impact on the Companys consolidated financial statements. Stock-based Compensation and Other Stock-based Payments In October 2003, the CICA issued amended Handbook Section 3870, Stock-based
Compensation and Other Stock-based Payments, which requires that equity
instruments awarded to employees be measured and expensed, thus eliminating the
existing provisions which permit a company to only disclose the fair value.
Fair value of the equity instruments would be used to measure compensation
expense. As well, the transitional provisions that apply when a company adopts
the fair value method have been modified to harmonize with U.S. standards,
whereby alternative methods of transition to the fair value method are now
permitted. The transitional provisions include both retroactive and
prospective alternatives. However, the prospective method is only available to
enterprises that elect to apply the fair-value based method of accounting for
fiscal years beginning before January 1, 2004. The Company has elected to
adopt the prospective approach for its fiscal year commencing September 1,
2003, and as a result has recorded the $0.7 million in compensation costs
associated with stock options awarded to employees after August 31, 2003 in its
operating, general and administrative expenses for the six-month period ending
February 29, 2004. Corus 9




---



##### 



Impairment of Long-lived Assets In April 2003, the CICA issued Handbook Section 3063, Impairment of Long-lived
Assets,thereby replacing the write-down provisions of Section 3061, Property,
Plant and Equipment. This new Section established standards for the
recognition, measurement and disclosure of the impairment of long-lived assets
by profit-oriented enterprises and harmonizes Canadian requirements with the
U.S impairment provisions of FASB Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.
Under the new Section, an impairment loss is measured as the amount by which
the long-lived assets carrying amount exceeds its fair value. This represents
a significant change to Canadian GAAP, which previously measured the amount of
the impairment as the difference between the long-lived assets carrying value
and its net recoverable amount (i.e. undiscounted cash flows plus residual
value). The Company has adopted the new Section effective September 1, 2003
and the application did not have a material impact on the Companys
consolidated financial statements. Risks and Uncertainties There have been no material changes in any risks or uncertainties facing the
Company since the year ended August 31, 2003. Forward-Looking Statements This Report to Shareholders contains forward-looking statements. The results
or events predicted in these statements may differ materially from actual
results or events. These forward-looking statements can generally be
identified by the use of statements that include phrases such as believe,
expect, anticipate, intend, plan, likely, will or similar words or
phrases. Similarly, statements that describe our objectives, plans or goals
are or may be forward-looking statements. These forward-looking statements are
based on our current expectations and our projections about future events.
However, whether actual results and developments will conform with our
expectations and projections is subject to a number of risks and uncertainties,
including, among other things: our ability to attract and retain advertising
revenues; audience acceptance of our television programs and cable networks;
our ability to recoup production costs, the availability of tax credits and the
existence of co-production treaties; our ability to compete in any of the
industries in which we do business; the opportunities (or lack thereof) that
may be presented to and pursued by us; conditions in the entertainment,
information and communications industries and technological developments
therein; changes in laws or regulations, policies and copyright tariffs or the
interpretation or application of those laws and regulations; our ability to
integrate and realize anticipated benefits from our acquisitions and to
effectively manage our growth; and changes in accounting standards. These are
not necessarily all of the important factors that could cause actual results to
differ materially from those expressed in any of our forward-looking
statements. Other unknown and
unpredictable factors could also harm our results. Consequently, there can be
no assurance that the actual results or developments anticipated by us will be
realized or, even if substantially realized, that they will
have the expected consequences to, or effects on, us. Unless otherwise
required by applicable securities laws, we disclaim any intention or obligation
to publicly update or revise any forward-looking statements whether as a result
of new information, future events or otherwise. On behalf of the Board, John M. Cassaday
    
    Heather A. ShawPresident and Chief Executive Officer
    
    Executive Chair
 April 22, 2004 Corus 10




---



##### 



CORUS ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS As at February 29,
    
    As at August 31,2004
    
    2003(thousands of Canadian dollars)
    
    [unaudited]
    
    [audited]ASSETSCurrentCash and cash equivalents
    
    
    81,812
    
    
    
    43,874Accounts receivable
    
    
    149,568
    
    
    
    158,689Prepaid expenses and other
    
    
    11,475
    
    
    
    11,385Program and film rights
    
    
    80,243
    
    
    
    73,107Future tax asset
    
    
    12,887
    
    
    
    10,230Total current assets
    
    
    335,985
    
    
    
    297,285Tax credits receivable
    
    
    19,316
    
    
    
    27,109Investments and other assets
    
    
    38,593
    
    
    
    38,786Capital assets
    
    
    83,800
    
    
    
    89,378Program and film rights
    
    
    38,560
    
    
    
    28,365Film investments
    
    
    136,383
    
    
    
    134,564Deferred charges
    
    
    21,994
    
    
    
    26,581Broadcast licenses
    
    
    509,040
    
    
    
    509,040Goodwill
    
    
    789,518
    
    
    
    789,5181,973,189
    
    
    
    1,940,626LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable and accrued liabilities
    
    
    183,415
    
    
    
    173,749Income taxes payable
    
    
    11,310
    
    
    
    16,182Total current liabilities
    
    
    194,725
    
    
    
    189,931Long-term debt [note 2]
    
    
    535,616
    
    
    
    558,437Deferred credits
    
    
    142,712
    
    
    
    128,802Future tax liability
    
    
    185,292
    
    
    
    165,556Other long-term liabilities
    
    
    8,130
    
    
    
    7,048Minority interest
    
    
    7,680
    
    
    
    6,175Total liabilities
    
    
    1,074,155
    
    
    
    1,055,949SHAREHOLDERS EQUITYShare capital [note 3]
    
    
    884,030
    
    
    
    881,631Contributed surplus
    
    
    650
    
    
    
    Retained earnings
    
    
    21,080
    
    
    
    8,135Cumulative translation adjustment [note 8]
    
    
    (6,726
    )
    
    
    (5,089
    )Total shareholders equity
    
    
    899,034
    
    
    
    884,6771,973,189
    
    
    
    1,940,626
 See accompanying notes Corus 11




---



##### 



CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT) (unaudited)
    
    Three months ended
    
    Six months ended(thousands of Canadian dollars
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,except per share amounts)
    
    2004
    
    2003
    
    2004
    
    2003Revenues
    
    
    155,019
    
    
    
    147,542
    
    
    
    339,981
    
    
    
    313,484Operating, general and
administrative expenses [note 8]
    
    
    120,950
    
    
    
    116,111
    
    
    
    248,643
    
    
    
    234,095Operating income before the following
    
    
    34,069
    
    
    
    31,431
    
    
    
    91,338
    
    
    
    79,389Depreciation
    
    
    7,019
    
    
    
    6,001
    
    
    
    13,112
    
    
    
    12,059Amortization
    
    
    2,365
    
    
    
    3,091
    
    
    
    4,587
    
    
    
    5,350Interest on long-term debt
    
    
    14,810
    
    
    
    15,626
    
    
    
    28,597
    
    
    
    31,121Loss on sale of investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    994Other income, net [note 8]
    
    
    (3,679
    )
    
    
    (4,692
    )
    
    
    (6,064
    )
    
    
    (5,060
    )Restructuring charges [note 5]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,025Income before income taxes
    
    
    13,554
    
    
    
    11,405
    
    
    
    51,106
    
    
    
    29,900Income tax expense
    
    
    4,664
    
    
    
    4,014
    
    
    
    35,761
    
    
    
    13,500Income before minority interest
    
    
    8,890
    
    
    
    7,391
    
    
    
    15,345
    
    
    
    16,400Minority interest
    
    
    (585
    )
    
    
    (363
    )
    
    
    (1,340
    )
    
    
    (1,076
    )Net income for the period
    
    
    8,305
    
    
    
    7,028
    
    
    
    14,005
    
    
    
    15,324Retained earnings (deficit), beginning of period
    
    
    13,835
    
    
    
    (23,590
    )
    
    
    8,135
    
    
    
    (31,886
    )Dividends paid
    
    
    (1,060
    )
    
    
    
    
    
    
    (1,060
    )
    
    
    Retained earnings (deficit), end of period
    
    
    21,080
    
    
    
    (16,562
    )
    
    
    21,080
    
    
    
    (16,562
    )Earnings per shareBasic and diluted
    
    $
    0.19
    
    
    $
    0.16
    
    
    $
    0.33
    
    
    $
    0.36Weighted average number of shares outstanding
[in thousands] [note 6]Basic
    
    
    42,733
    
    
    
    42,641
    
    
    
    42,700
    
    
    
    42,641Diluted
    
    
    43,030
    
    
    
    42,641
    
    
    
    42,900
    
    
    
    42,641
 See accompanying notes Corus 12




---



##### 



CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended
    
    Six months ended(unaudited)
    
    February 29,
    
    February 28,
    
    February 29,
    
    February 28,(thousands of Canadian dollars)
    
    2004
    
    2003
    
    2004
    
    2003OPERATING ACTIVITIES [note 7]Net income for the period
    
    
    8,305
    
    
    
    7,028
    
    
    
    14,005
    
    
    
    15,324Add (deduct) non-cash items:Depreciation
    
    
    7,019
    
    
    
    6,001
    
    
    
    13,112
    
    
    
    12,059Amortization of program and film rights
    
    
    27,244
    
    
    
    22,766
    
    
    
    52,071
    
    
    
    42,881Amortization of film investments
    
    
    12,846
    
    
    
    17,112
    
    
    
    27,904
    
    
    
    27,908Other amortization
    
    
    2,365
    
    
    
    3,091
    
    
    
    4,587
    
    
    
    5,350Future income taxes
    
    
    615
    
    
    
    (2,326
    )
    
    
    17,417
    
    
    
    (9,965
    )Loss on sale of investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    994Minority interest
    
    
    585
    
    
    
    363
    
    
    
    1,340
    
    
    
    1,076Foreign exchange loss (gain)
    
    
    952
    
    
    
    (3,108
    )
    
    
    (1,434
    )
    
    
    (3,053
    )Other
    
    
    1,567
    
    
    
    (30
    )
    
    
    2,313
    
    
    
    (30
    )Cash flow derived from operations
    
    
    61,498
    
    
    
    50,897
    
    
    
    131,315
    
    
    
    92,544Net change in non-cash working capital
balances related to operations
    
    
    30,517
    
    
    
    16,728
    
    
    
    (3,056
    )
    
    
    (16,458
    )Payment of program and film rights
    
    
    (26,550
    )
    
    
    (28,268
    )
    
    
    (50,136
    )
    
    
    (50,729
    )Net additions to film investments
    
    
    (12,069
    )
    
    
    (17,526
    )
    
    
    (26,330
    )
    
    
    (43,973
    )Other
    
    
    952
    
    
    
    6
    
    
    
    266
    
    
    
    (59
    )Cash provided by (used in) operating activities
    
    
    54,348
    
    
    
    21,837
    
    
    
    52,059
    
    
    
    (18,675
    )INVESTING ACTIVITIESAdditions to capital assets
    
    
    (3,748
    )
    
    
    (3,646
    )
    

    
    (7,534
    )
    
    
    (7,096
    )Net proceeds from business divestitures
    
    
    58
    
    
    
    788
    
    
    
    116
    
    
    
    1,988Decrease (increase) in investments
    
    
    238
    
    
    
    (4,149
    )
    
    
    60
    
    
    
    (6,852
    )Additions to deferred charges
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    (52
    )Decrease in public benefits associated with
acquisitions
    
    
    (2,541
    )
    
    
    (2,709
    )
    
    
    (5,014
    )
    
    
    (6,787
    )Other
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    819Cash used in investing activities
    
    
    (5,993
    )
    
    
    (9,699
    )
    
    
    (12,372
    )
    
    
    (17,980
    )FINANCING ACTIVITIESIncrease (decrease) in bank loans
    
    
    (5,000
    )
    
    
    (4,324
    )
    
    
    (2,637
    )
    
    
    28,353Decrease in other long-term liabilities
    
    
    (216
    )
    
    
    (2,396
    )
    
    
    (451
    )
    
    
    (2,478
    )Issuance of shares under stock option plan
    
    
    237
    
    
    
    
    
    
    
    2,189
    
    
    
    Dividends paid
    
    
    (1,060
    )
    
    
    
    
    
    
    (1,060
    )
    
    
    Other
    
    
    210
    
    
    
    
    
    
    
    210
    
    
    
    216Cash provided by (used in) financing activities
    
    
    (5,829
    )
    
    
    (6,720
    )
    
    
    (1,749
    )
    
    
    26,091Net increase (decrease) in cash and cash
equivalents during period
    
    
    42,526
    
    
    
    5,418
    
    
    
    37,938
    
    
    
    (10,564
    )Cash and cash equivalents, beginning of period
    
    
    39,286
    
    
    
    10,662
    
    
    
    43,874
    
    
    
    26,644Cash and cash equivalents, end of period
    
    
    81,812
    
    
    
    16,080
    
    
    
    81,812
    
    
    
    16,080
 See accompanying notes Corus 13




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  1.
    
    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIESThe interim consolidated financial statements include the accounts of Corus
Entertainment Inc. and its subsidiaries [Corus or the Company"]. The
notes presented in these interim consolidated financial statements include
only significant events and transactions occurring since the Companys last
fiscal year and are not fully inclusive of all matters normally disclosed in
the Companys annual audited financial statements. As a result, these
interim consolidated financial statements should be read in conjunction with
the Companys consolidated financial statements for the year ended August
31, 2003.These interim consolidated financial statements follow the same accounting
policies and methods of application as the most recent annual consolidated
financial statements except as follows:Hedging relationshipsEffective September 1, 2003, the Company has adopted the new accounting
guideline that establishes the criteria for identification, documentation
and effectiveness of hedging relationships for the purpose of applying hedge
accounting. At the same time, the Company adopted the emerging issues
abstract on accounting for trading, speculative or non-hedging derivative
financial instruments, which establishes that a derivative financial
instrument that does not qualify for hedge accounting under the accounting
guideline should be recognized on the balance sheet at fair value, with
changes in fair value recognized in net income. The Company has applied the
recommendations to its hedging relationships, and those that qualify
continue to be accounted for using hedge accounting. The adoption of these
recommendations did not have a material impact on the Companys consolidated
financial statements.Stock-based compensation and other stock-based paymentsEffective September 1, 2003, the Company prospectively adopted the amended
Canadian standard for stock-based compensation and other stock-based
payments which now requires that all stock-based compensation awards be
accounted for at fair value. For the purpose of measuring and expensing
compensation cost, the fair value of the options is amortized to income over
the options vesting period on a straight-line basis. The adoption of this
standard resulted in additional compensation expense of $0.7 million in the
six-month period ending February 29, 2004, with an equivalent adjustment to
contributed surplus.Impairments of long-lived assetsEffective September 1, 2003, the Company has adopted the new accounting
standard which modifies existing guidelines on long-lived assets impairment
measurements and establishes standards for the recognition, measurement and
disclosure of the impairment of long-lived assets. The adoption of this
standard did not have a material impact on the Companys consolidated financial
statements. Corus 14




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  2.
    
    LONG TERM DEBT As at February 29,
    
    As at August 31,2004
    
    2003Bank loans
    
    
    34,728
    
    
    
    38,800Senior subordinated notes
    
    
    500,888
    
    
    
    519,637535,616
    
    
    
    558,437
  3.
    
    SHARE CAPITALAuthorizedThe Company is authorized to issue, upon approval of a majority of the
existing Class A shareholders, an unlimited number of Class A participating
shares (Class A Voting Shares), Class B non-voting participating shares
(Class B Non-Voting Shares), Class A Preferred Shares, and Class 1 and
Class 2 preferred shares.Issued and OutstandingThe changes in the Class A Voting and Class B Non-Voting Shares since August
31, 2003 are summarized as follows: Class A
    
    Class BVoting Shares
    
    Non-Voting Shares
    
    Total#
    
    $
    
    #
    
    $
    
    $Balance, August, 2003
    
    
    1,726,712
    
    
    
    26,743
    
    
    
    40,914,588
    
    
    
    854,888
    
    
    
    881,631Issuance of shares under
Stock Option Plan
    
    
    
    
    
    
    
    
    
    
    96,828
    
    
    
    2,189
    
    
    
    2,189Repayment of executive
stock purchase loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    210Balance, February 29, 2004
    
    
    1,726,712
    
    
    
    26,743
    
    
    
    41,011,416
    
    
    
    857,287
    
    
    
    884,030
  There were no significant changes to the outstanding share capital
subsequent to quarter end.Stock Option PlanUnder the Companys Stock Option Plan, the Company may grant options to
purchase Class B Non-Voting Shares to eligible officers, directors, and
employees of or consultants to the Company. The maximum number of shares
that can be reserved for issuance under the plan is 4,084,642. All options
granted are for terms not to exceed ten years from the grant date. The
exercise price of each option equals the market price of the Companys stock
on the date of the grant. Options vest 25% on each of the first, second,
third and fourth anniversary dates of the date of grant.As at February 29, 2004, the Company has outstanding stock options for
3,439,961 Class B Non-Voting Shares, of which 1,811,697 are exercisable. Corus 15




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  During the first two quarters of fiscal 2004, the Company granted 537,700
stock options with a weighted average exercise price of $24.02 per share,
and an estimated life of seven and a half years. The weighted average fair
value of the stock options granted in the first two quarters of fiscal 2004
was $9.73 per option.For options granted to employees up to August 31, 2003, had compensation
cost for the Companys Stock Option Plan been determined based on the fair
value based method of accounting for stock-based compensation, the Companys
net income and earnings per share would have been reduced to the pro forma
amounts indicated below: Three months ended
    
    Six months endedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Net Income
    
    
    8,305
    
    
    
    7,028
    
    
    
    14,005
    
    
    
    15,324Pro forma net income
    
    
    7,757
    
    
    
    3,249
    
    
    
    12,758
    
    
    
    11,287Pro forma basic and diluted
earnings per share
    
    $
    0.18
    
    
    $
    0.08
    
    
    $
    0.30
    
    
    $
    0.26
  The fair value of each option granted was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions: Six months endedFebruary 29,
    
    February 28,2004
    
    2003Expected life
    
    
    2.5 to 7.5 years
    
    
    
    Five yearsRisk-free interest rates
    
    
    3.7% to 5.0%
    
    
    
    4.9% to 5.0%Dividend yield
    
    
    0.19%
    
    
    
    0%Volatility
    
    
    39.3% to 42.1%
    
    
    
    39.3% to 41.1%
  For the purposes of pro forma disclosure, the estimated fair value of the
options is amortized to income over the options vesting period on a
straight-line basis.4.
    
    BUSINESS SEGMENT INFORMATIONThe Companys business activities are conducted through three reportable
operating segments:RadioThe Radio segment is comprised of 50 radio stations, situated primarily in
high growth urban centres in Canada. Revenues are derived from advertising
aired over these stations.TelevisionThe Television segment includes interests in several specialty television
networks, pay television, several conventional television stations, digital
audio services and cable advertising services. Revenues are generated from
subscriber fees and advertising. Corus 16




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  ContentThe Content segment includes the production and distribution of film and
television programs and the branded consumer products business [formerly
merchandise licensing and publishing businesses] of
Nelvana Limited which was acquired in fiscal 2001. Revenues are generated
from licensing of proprietary films and television programs, merchandise
licensing and publishing.The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Management evaluates the
business segments performance based on revenues less operating, general and
administrative expenses.(a)
    
    Revenues and segment profit Three months ended
    
    Six months endedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003RevenuesRadio
    
    
    47,839
    
    
    
    48,886
    
    
    
    108,577
    
    
    
    108,207Television
    
    
    75,171
    
    
    
    71,596
    
    
    
    169,374
    
    
    
    156,668Content  production and distribution
    
    
    14,656
    
    
    
    18,488
    
    
    
    29,185
    
    
    
    34,691 branded consumer
products
    
    
    19,635
    
    
    
    10,456
    
    
    
    35,824
    
    
    
    16,920Eliminations
    
    
    (2,282
    )
    
    
    (1,884
    )
    
    
    (2,979
    )
    
    
    (3,002
    )155,019
    
    
    
    147,542
    
    
    
    339,981
    
    
    
    313,484Segment ProfitRadio
    
    
    7,734
    
    
    
    7,115
    
    
    
    25,535
    
    
    
    23,210Television
    
    
    26,495
    
    
    
    22,775
    
    
    
    66,283
    
    
    
    56,937Content  production and distribution
    
    
    (3,193
    )
    
    
    (287
    )
    
    
    (3,010
    )
    
    
    (840
    ) branded consumer
products
    
    
    6,023
    
    
    
    2,867
    
    
    
    8,445
    
    
    
    3,462Corporate
    
    
    (2,985
    )
    
    
    (785
    )
    
    
    (5,716
    )
    
    
    (3,082
    )Eliminations
    
    
    (5
    )
    
    
    (254
    )
    
    
    (199
    )
    
    
    (298
    )34,069
    
    
    
    31,431
    
    
    
    91,338
    
    
    
    79,389
  (b)
    
    Segment assets As at February 29,
    
    As at August 31,(thousands of Canadian dollars)
    
    2004
    
    2003Segment assetsRadio
    
    
    319,860
    
    
    
    331,143Television
    
    
    539,308
    
    
    
    528,049Content  production and distribution
    
    
    207,092
    
    
    
    223,969 branded consumer products
    
    
    17,341
    
    
    
    10,106Corporate
    
    
    890,357
    
    
    
    848,506Eliminations
    
    
    (769
    )
    
    
    (1,147
    )1,973,189
    
    
    
    1,940,626
 Corus 17




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  5.
    
    RESTRUCTURING CHARGESChanges in the restructuring accrual are summarized as follows: Balance at
    
    Paid during
    
    Balance atAugust 31, 2003
    
    the period
    
    February 29, 2004Workforce reduction and other
    
    
    1,514
    
    
    
    743
    
    
    
    771Contract settlement and lease costs
    
    
    2,054
    
    
    
    1,824
    
    
    
    2303,568
    
    
    
    2,567
    
    
    
    1,001
  6.
    
    EARNINGS PER SHARE  The following is a reconciliation of the numerator and denominators used for
the computation of the basic and diluted earnings per share amounts. Three months ended
    
    Six months endedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Net income for the period [numerator]
    
    
    8,305
    
    
    
    7,028
    
    
    
    14,005
    
    
    
    15,324Weighted average number of shares outstanding [denominator]Weighted average number of shares outstanding  basic
    
    
    42,733
    
    
    
    42,641
    
    
    
    42,700
    
    
    
    42,641Effect of dilutive securities
    
    
    297
    
    
    
    
    
    
    
    200
    
    
    
    Weighted average number of shares outstanding  diluted
    
    
    43,030
    
    
    
    42,641
    
    
    
    42,900
    
    
    
    42,641
 7. CONSOLIDATED STATEMENT OF CASH FLOWS Interest paid, interest received and income taxes paid and classified as
operating activities are as follows: Three months ended
    
    Six months endedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Interest paid
    
    
    636
    
    
    
    1,624
    
    
    
    28,658
    
    
    
    30,357Interest received
    
    
    1,075
    
    
    
    303
    
    
    
    1,455
    
    
    
    629Income taxes paid
    
    
    5,975
    
    
    
    3,560
    
    
    
    23,099
    
    
    
    16,406
 Corus 18




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  8.
    
    FOREIGN EXCHANGE GAINS AND LOSSES  The Company has reflected certain gains and losses in its consolidated
statements of income and retained earnings (deficit) as a result of exposure
to foreign currency exchange rate fluctuations. A portion of these gains
and losses relate to operating activities while others are of a financing
nature. Foreign exchange gains and losses are reflected in the consolidated
financial statements as follows: Three months ended
    
    Six months endedFebruary 29,
    
    February 28,
    
    February 29,
    
    February 28,2004
    
    2003
    
    2004
    
    2003Operating, general and
administrative expenses
    
    
    (717
    )
    
    
    (466
    )
    
    
    (1,185
    )
    
    
    (458
    )Other income, net
    
    
    1,129
    
    
    
    (4,015
    )
    
    
    (1,575
    )
    
    
    (3,960
    )Total foreign exchange loss (gain)
    
    
    412
    
    
    
    (4,481
    )
    
    
    (2,760
    )
    
    
    (4,418
    )
  An analysis of the cumulative translation adjustment shown separately in
shareholders equity at February 29, 2004 is as follows: Balance, August 31, 2003
    
    
    (5,089
    )Effect of exchange rate fluctuation on translation of net assets
of self-sustaining foreign operations
    
    
    (1,637
    )Balance, February 29, 2004
    
    
    (6,726
    )
  9.
    
    GUARANTEESGenerally, it is not the Companys policy to issue guarantees to
non-controlled affiliates or third parties, with limited exceptions.Many of the Companys agreements, specifically those related to acquisitions
and dispositions of business assets, included indemnification provisions
where the Company may be required to make payments to a vendor or purchaser
for breach of fundamental representation and warranty terms in the
agreements with respect to matters such as corporate status, title of
assets, environmental issues, consents to transfer, employment matters,
litigation, taxes payable and other potential material liabilities. The
maximum potential amount of future payments that the Company could be
required to make under these indemnification provisions is not reasonably
quantifiable as certain indemnifications are not subject to a monetary
limitation. At February 29, 2004, management believes there is only a
remote possibility that the indemnification provisions would require any
material cash payment.The Company indemnifies its directors and officers against any and all
claims or losses reasonably incurred in the performance of their service to
the Company to the extent permitted by law. The Company has acquired and
maintains liability insurance for its directors and officers as well as
those of its subsidiaries as a group. Corus 19




---



##### 



Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
February 29, 2004
(thousands of Canadian dollars except per share amounts)  10.
    
    COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTSCertain comparative consolidated amounts have been reclassified from those
previously presented to conform to the presentation of the fiscal 2004
consolidated financial statements. Corus 20