WWE releases first quarter results - May 2006 through July 2006, more
On Thursday, August 31, 2006 at 4:19 PM EST WWE issued the following press release this morning:
World Wrestling Entertainment, Inc. Reports Q1 Results
$15.6 Million Operating Income
$0.16 E.P.S.
STAMFORD, Conn.,--(BUSINESS WIRE)--Aug. 31, 2006--World Wrestling Entertainment, Inc., (NYSE: WWE) today announced financial results for its first fiscal quarter ended July 28, 2006. Revenues totaled $93.3 million as compared to $93.8 million in the prior year quarter and operating income was $15.6 million as compared to $15.8 million in the prior year quarter. The Company reported net income of $11.3 million, or $0.16 per share, as compared to $11.2 million, or $0.16 per share, in the prior year quarter.
"One of our key achievements in the current quarter was the successful re-launch of the ECW® brand," stated Linda McMahon, Chief Executive Officer. "The ECW resurgence in the quarter included an ECW branded pay-per-view event, a live event tour, and a summer cable television run on the SCI FI Channel. Based on its popularity, the SCI FI Channel will continue to broadcast the ECW television program through December 2007.
"Our results this quarter are positively impacted by the continued strength of our Home Video business," continued Mrs. McMahon. "This is evidenced by the more than 1.1 million DVDs sold, representing our best selling quarter ever."
Comparability of Quarters
Due to our arrangement with USA Network, the current quarter reflects the absence of all domestic cable advertising revenues, which accounted for approximately $8.0 million in revenues in the prior year quarter. Also, the Company aired four pay-per-view events during the current quarter as compared to five events in the prior year quarter. The additional event in the prior year quarter, Backlash®, contributed approximately $4.3 million in revenues, and $2.1 million in profit contribution.
Results By Business Segment for the 1st Quarter
We modified our business segment reporting to include four reportable segments in the fourth quarter of Fiscal 2006. Results from the prior year quarter have been adjusted for comparability to the new segment reporting structure. Based on our decision to change the financial reporting to a calendar year basis, we are currently in an eight month transition period from May 1, 2006, through December 31, 2006. Consequently, this quarter is referred to as Q1 of the 2006 transition period.
The following chart reflects net revenues and profit contribution by
segment for the quarters ended July 28, 2006, and July 29, 2005.
(Dollars in millions)
July 28, July 29,
Net Revenues 2006 2005
------------ ---------- ----------
Live and Televised Entertainment $ 64.4 $ 71.9
Consumer Products 23.3 18.2
Digital Media 5.6 3.7
WWE Films -- --
----------- ----------
Total $ 93.3 $ 93.8
=========== ==========
July 28, July 29,
Profit Contribution 2006 2005
---------- ----------
Live and Televised Entertainment $ 25.2 $ 29.7
Consumer Products 13.1 10.4
Digital Media 1.7 1.2
WWE Films -- --
----------- ----------
Total operating income $ 40.0 $ 41.3
=========== ==========
Profit contribution margin 43% 44%
----------- ----------
Live and Televised Entertainment
Revenues from our Live and Televised Entertainment businesses were $64.4
million for the current quarter as compared to $71.9 million in the prior year
quarter, a decrease of 10%, reflecting the absence of domestic cable
advertising revenues.
the prior year quarter. There were four pay-per-view events produced in the
current quarter as compared to five events in the prior year quarter.
The details for the number of buys (in 000's) are as follows:
Event Q1 Transition 06 Q1 F06
--------- ---------------- -------
Backlash(R) - 273
Judgment Day(R) 231 236
ECW(R) One Night Stand 280 268
Vengeance(R) 313 320
Great American Bash(R) 224 233
Prior events 166 115
----------------- --------------
Total 1,214 1,445
================= ==============
- Beginning with the ECW One Night Stand pay-per-view, the North
American retail price was increased by $5.00 to $39.99 in order to bring
the price closer in line with similar sporting events. This represents
our first increase in the Pay-Per-View retail price in more than four
years.
- International buys, which generate lower revenues per buy, comprised
approximately 40% of total buys in the current quarter as compared to
28% of total buys in the prior year quarter.
- Live Event revenues were $15.9 million as compared to $16.5 million in
the first quarter of last year.
- There were 86 events, including 2 international events, during the
quarter as compared to 70 events, including 7 international events,
during the same period last year.
- North American average attendance increased to approximately 5,300 in
the current quarter as compared to 4,600 in the prior year quarter.
- International events generated approximately $0.3 million in the
current quarter as compared to $5.7 million in the prior year quarter.
The two events in the current quarter were performed in emerging
territories in Latin America while the seven events in the prior year
quarter consisted of two tours that performed in well established
markets including Japan and the United Kingdom.
- Seven ECW live events were produced in the current quarter, generating
approximately $0.2 million with an average ticket price of approximately
$26.00 and average attendance of approximately 1,000. While we continue
to develop and grow the brand, ECW events are currently held in smaller
venues which generate lower average attendance and revenues per event.
- Venue Merchandise revenues were $4.7 million as compared to $3.3
million in the first quarter of last year, primarily reflecting the
increase in North American attendance. Also, the venue merchandise per
capita spending by our fans increased by approximately $0.40 to $11.00
in the current quarter.
- Television Rights Fees revenues were $22.2 million as compared to
$20.0 million in the prior year quarter. This increase is partially due
to the rights fees received from our ECW telecasts.
- Television Advertising revenues were $1.1 million as compared to $10.4
million in the prior year quarter. This decline was due to our
television distribution agreement with USA Network, which became
effective in October 2005. Due to this change, we no longer participate
in domestic television advertising sales. Advertising revenues in the
current quarter include sales of advertising on our Canadian television
programs and various sponsorship packages.
Consumer Products
Revenues from our Consumer Products businesses were $23.3 million versus
$18.2 million in the prior year quarter, a 28% increase.
- Home Video net revenues were $14.5 million as compared to $8.5 million
in the prior year quarter, reflecting a 55% increase in gross units
sold. Our WrestleMania® 22 DVD sold approximately 345,000 gross units
in the quarter, representing our best selling title to date. Based on
the strength of this release, combined with the release of several other
successful titles, we shipped approximately 1.1 million units in the
current quarter.
- Licensing revenues were $5.6 million as compared to $7.5 million in
the prior year quarter, reflecting decreases in novelty and multimedia
game product sales. The prior year quarter reflected sales of our
WrestleMania 21 videogame while no new videogames were released in the
comparable period this year.
- Magazine Publishing net revenues were $3.1 million as compared to $2.1
million in the prior year quarter, reflecting an additional issue sold
in the current quarter. Beginning in July, we began publishing WWE®
Magazine, which replaces our two former magazines, Raw® and SmackDown®.
Digital Media
Revenues from our Digital Media related businesses were $5.6 million as
compared to $3.7 million in the prior year quarter, a 51% increase.
- WWE.com revenues were $2.1 million as compared to $1.7 million in the
prior year quarter, reflecting additional revenues from advertising and
wireless based content.
- WWE Shop revenues were $3.3 million as compared to $1.8 million in the
prior year quarter, primarily due to a 68% increase in the number of
orders processed during the current quarter.
WWE Films
Our first feature film, See No Evil, was released on May 19, 2006, and
generated approximately $15.0 million in gross domestic box office receipts
and is currently being distributed in international theatrical markets. WWE
does not participate in any revenues associated with this film project until
the print and advertising costs incurred by our distributor have been
recouped. Accordingly, no revenues have been recorded in the current
quarter.
Profit Contribution (Net revenues less cost of revenues)
Profit contribution for the quarter was $40.0 million as compared to
$41.3 million in the prior year quarter. Total profit contribution margin
was approximately 43% for the current quarter as compared to 44% for the
prior year quarter. The decline in the profit contribution is due in part to
the absence of domestic television advertising revenues in our Live and
Televised Entertainment segment.
Selling, general and administrative expenses
SG&A expenses were $22.5 million for the current quarter as compared
to $22.8 million in the prior year quarter.
EBITDA
EBITDA was approximately $17.5 million in the current quarter as compared
to $18.5 million in the prior year.
Cash Flows
Net cash provided by continuing operations was $2.4 million for the
quarter ended July 28, 2006, as compared to $21.6 million for the quarter
ended July 29, 2005. In the current quarter we spent approximately $12.6
million on the production of feature films and approximately $1.5 million
for the purchase of additional film libraries.
Change in Fiscal Year
As previously disclosed, the Company will switch to a calendar year basis
beginning with calendar year 2007. This change is intended to simplify our
communication with shareholders and will enable us to report our financial
results in a timeframe consistent with the majority of our media and
entertainment peers. We will issue one additional quarterly report for our
second fiscal quarter ending October 27, 2006, and will subsequently file a
transitional annual report for the eight months ended December 31, 2006.
Transition Period Outlook
We continue to expect the results of our 2006 transition period to be
approximately even with the $30 million of Net Income and $0.43 EPS from
continuing operations in the comparable prior year period.
Note: World Wrestling Entertainment, Inc., will host a conference call on
August 31, 2006, at 11:00 a.m. ET to discuss the Company's first quarter
earnings results for the 2006 transition period. All interested parties can
access the conference call by dialing 800-895-0231 (conference ID: WWE).
Please reserve a line 15 minutes prior to the start time of the conference
call. A presentation that will be referenced during the call can be found at
the Company web site at corporate.wwe.com.
A replay of the call will be available approximately three hours after the
conference call concludes, and can be accessed at corporate.wwe.com.
World Wrestling Entertainment, Inc., (NYSE: WWE
- News) is an integrated
media and entertainment company headquartered in Stamford, Conn. Additional
information on the Company can be found at wwe.com and corporate.wwe.com.
Trademarks: The names of all World Wrestling Entertainment televised and
live programming, talent names, images, likenesses, slogans and wrestling
moves and all World Wrestling Entertainment logos are trademarks, which are
the exclusive property of World Wrestling Entertainment, Inc. All other
trademarks are the property of their respective owners.
Forward-Looking Statements: This news release contains forward-looking
statements pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995, which are subject to various risks and
uncertainties. These risks and uncertainties include the conditions of the
markets for live events, broadcast television, cable television,
pay-per-view, Internet, entertainment, professional sports, and licensed
merchandise; acceptance of the Company's brands, media and merchandise
within those markets; uncertainties relating to litigation; risks associated
with producing live events both domestically and internationally;
uncertainties associated with international markets; risks relating to
maintaining and renewing key agreements, including television distribution
agreements; and other risks and factors set forth from time to time in
Company filings with the Securities and Exchange Commission. Actual results
could differ materially from those currently expected or anticipated.
World Wrestling Entertainment, Inc.
Consolidated Income Statements
(dollars and shares in thousands, except per share data)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
--------- ---------
Net revenues $ 93,267 $ 93,812
Cost of revenues 53,266 52,501
Selling, general and administrative expenses 22,508 22,815
Depreciation and amortization 1,860 2,696
-------- --------
Operating income 15,633 15,800
Investment income, net 2,486 1,872
Interest expense 137 152
Other expense, net (496) (73)
--------- ---------
Income from continuing operations before
income taxes 17,486 17,447
Provision for income taxes 6,184 6,269
-------- --------
Income from continuing operations 11,302 11,178
-------- --------
Income from discontinued operations, net of taxes - 2
-------- --------
Net income $ 11,302 $ 11,180
======== ========
Earnings per share - basic and diluted:
Continuing operations $ 0.16 $ 0.16
Discontinued operations 0.00 0.00
-------- --------
Net income $ 0.16 $ 0.16
======== ========
Shares used in per share calculations:
Basic 70,708 68,899
Diluted 71,364 69,627
World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
July 28, April 30,
2006 2006
---------------------
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 130,869 $ 175,203
Short-term investments 133,417 105,655
Accounts receivable, net 57,858 67,775
Inventory, net 2,544 1,788
Prepaid expenses and other current assets 11,017 11,140
Assets of discontinued operations 461 457
--------- ---------
Total current assets 336,166 362,018
PROPERTY AND EQUIPMENT, NET 67,857 67,570
FEATURE FILM PRODUCTION ASSETS 48,656 36,094
INTANGIBLE ASSETS, NET 2,738 1,461
OTHER ASSETS 12,060 12,247
--------- ---------
TOTAL ASSETS $ 467,477 $ 479,390
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 833 $ 817
Accounts payable 15,305 19,826
Accrued expenses and other liabilities 33,979 36,017
Deferred income 18,211 19,874
Liabilities of discontinued operations 294 294
--------- ---------
Total current liabilities 68,622 76,828
LONG-TERM DEBT 6,167 6,381
STOCKHOLDERS' EQUITY:
Class A common stock 229 227
Class B common stock 479 479
Additional paid-in capital 280,314 277,693
Accumulated other comprehensive income 58 355
Retained earnings 111,608 117,427
--------- ---------
Total stockholders' equity 392,688 396,181
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 467,477 $ 479,390
========= =========
World Wrestling Entertainment, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
--------- ---------
OPERATING ACTIVITIES:
Net income $ 11,302 $ 11,180
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations, net of
taxes - (2)
Revaluation of warrants 866 (639)
Depreciation and amortization 1,860 2,696
Amortization of investment income (122) (263)
Stock compensation costs 1,534 579
Provision for doubtful accounts - 370
Provision for inventory obsolescence 448 307
(Benefit) provision for deferred income taxes (587) 308
Changes in assets and liabilities:
Accounts receivable 9,917 7,179
Inventory (1,204) (534)
Prepaid expenses and other assets 123 200
Feature film production assets (12,562) (1,952)
Accounts payable (4,520) 243
Accrued expenses and other liabilities (3,154) 4,537
Deferred income (1,541) (2,588)
-------- --------
Net cash provided by continuing
operations 2,360 21,621
Net cash provided by discontinued
operations - 136
-------- --------
Net cash provided by operating
activities 2,360 21,757
-------- --------
INVESTING ACTIVITIES:
Purchase of property and equipment (1,890) (255)
Purchase of other film library assets (1,534) -
Purchase of short-term investments (45,854) (1,325)
Proceeds from sales or maturities of short-term
investments 17,850 5,470
-------- --------
Net cash (used in) provided by
continuing operations (31,428) 3,890
Net cash used in discontinued
operations - -
-------- --------
Net cash (used in) provided by
investing activities (31,428) 3,890
-------- --------
FINANCING ACTIVITIES:
Repayments of long-term debt (199) (184)
Dividends paid (16,954) (8,267)
Issuance of stock, net 229 187
Proceeds from exercise of stock options 1,291 529
Excess tax benefit from stock-based payment
arrangements 367 -
-------- --------
Net cash used in continuing operations (15,266) (7,735)
Net cash used in discontinued
operations - -
-------- --------
Net cash used in financing activities (15,266) (7,735)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (44,334) 17,912
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 175,203 56,568
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $130,869 $ 74,480
======== ========
World Wrestling Entertainment, Inc.
Supplemental Information - EBITDA
(dollars in thousands)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
----------- -----------
Net income reported on U.S. GAAP basis $ 11,302 $ 11,180
Income from discontinued operations, net - (2)
Provision for income taxes 6,184 6,269
Interest and other, net (1,852) (1,647)
Depreciation and amortization 1,860 2,696
---------- ----------
EBITDA $ 17,494 $ 18,496
========== ==========
Non-GAAP Measure:
EBITDA is defined as net income from continuing operations before
interest and other income, income taxes, depreciation and
amortization. Although it is not a recognized measure of performance
under U.S. GAAP, EBITDA is presented because it is a widely accepted
financial indicator of a company's performance. The Company uses
EBITDA to measure its own performance and to set goals for operating
managers. EBITDA should not be considered as an alternative to net
income, cash flows from operations or any other indicator of World
Wrestling Entertainment Inc.'s performance or liquidity, determined in
accordance with U.S. GAAP.
World Wrestling Entertainment, Inc.
Supplemental Information- Free Cash Flow
(dollars in thousands)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
Net cash provided by continuing operations $ 2,360 $ 21,621
Less cash used in capital expenditures:
Purchase of property and equipment (1,890) (255)
Purchase of other film library assets (1,534) -
----------- -----------
Free Cash Flow $ (1,064) $ 21,366
=========== ===========
Non-GAAP Measure:
We define Free Cash Flow as net cash provided by continuing operations
less cash used for capital expenditures. Although it is not a
recognized measure of liquidity under U.S. GAAP, Free Cash Flow
provides useful information regarding the amount of cash our
continuing business is generating after capital expenditures,
available for reinvesting in the business and for payment of
dividends.